Interim report
Page 1
AS TALLINNA VESI Consolidated Interim Report for the 3rd quarter of 2026 30 October 2026
Page 2
2 Currency Thousand euros Start of reporting period End of reporting period Address Members of the Management Board Commercial register number Telephone Fax E-mail Website Field of activity 1 January 2026 30 September 2026 Ädala Str 10, Tallinn, Estonia Aleksandr Timofejev, Tarvi Thomberg, Taavi Gröön 10257326 +372 626 2200 +372 626 2300 tvesi@tvesi.ee www.tallinnavesi.ee Production, treatment and distribution of water, stormwater and wastewater disposal and treatment Contents MANAGEMENT REPORT 3 MANAGEMENT CONFIRMATION 20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 21 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 22 CONSOLIDATED STATEMENT OF CASH FLOWS 23 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 24 NOTES TO THE ACCOUNTS NOTE 1. ACCOUNTING PRINCIPLES 25 NOTE 2. CRITICAL ACCOUNTING ESTIMATES 25 NOTE 3. CASH EQUIVALENTS 26 NOTE 4. PROPERTY, PLANT AND EQUIPMENT 26 NOTE 5. INTANGIBLE ASSETS 27 NOTE 6. PROVISION FOR POSSIBLE FOURTH-PARTY CLAIMS 27 NOTE 7. SEGMENT REPORTING 28 NOTE 8. STAFF COSTS 29 NOTE 9. COST OF GOODS/SERVICES SOLD, MARKETING AND ADMINISTRATIVE EXPENSES 29 NOTE 10. OTHER INCOME / EXPENSES 30 NOTE 11. FINANCIAL INCOME AND EXPENSES 30 NOTE 12. DIVIDENDS 30 NOTE 13. EARNINGS PER SHARE 31 NOTE 14. RELATED PARTIES 31 NOTE 15. LIST OF SUPERVISORY COUNCIL MEMBERS 32
Page 3
3 MANAGEMENT REPORT In the third quarter of 2026, we continued to provide high quality water supply and sewerage services and continued investment projects to ensure the sustainability of our services. During the quarter, the company pumped 6.85 million m3 of clean drinking water into the water network and treated over 12.78 million m3 of wastewater. Group’s sales The Tallinna Vesi Group's sales in the third quarter of 2026 were €18.32 million, increasing 0.8%, or 0.15 million compared to the same period of the previous year. Sales were most affected by the increase in revenue from the sales of water services, while revenue from construction services fell by 33.2%, or 0.67 million, due to a drop in pipe construction projects. Revenue from the sale of water services increased by 4.5%, or €0.71 million, compared to the third quarter of last year, reaching €16.42 million. The sales were affected by a change in prices, which resulted from the need for investment and the move toward s harmonising water prices. The obligation to offer a uniform price to private and business customers from 1 July 2026 stems from the Public Water Supply and Sewerage Act. The price change to this effect was approved by the Competition Authority in May and it came into force on the date specified by law. At the same time, the company introduced a new, pollution-load-based pricing, meaning that customers whose activities cause more pollution will now have to pay more for wastewater treatment services. The company's operating profit in the third quarter was €5.47 million, which is 8.1% lower compared to the same period last year. The company's net profit has decreased by €1.0 million. The quarter ended with a profit of €3.96 million. The result was impacted by an increase in interest expenses and a decrease in revenue from construction services, as well as an increase in operating expenses. In the third quarter, investments were made in the amount of €16.4 million, which is nearly 13.2% more than in the same period in 2025. In 2026, Tallinna Vesi will continue to invest in ensuring a clean environment, as well as maintaining the high quality and continuity of its service. High-quality water supply and sewerage services During the third quarter of 2026, we provided reliable and secure water supply and sewerage services, as demonstrated by the quality indicators that remain at a consistently high level. Tap water quality was excellent throughout the quarter, meeting 99.4% of all quality requirements. During the third quarter, 704 water samples were taken. A survey on the strength of customer relationships, conducted in early summer in cooperation with the research company Emor, showed that the percentage of those who drink tap water reached as high as 92%, proving that people trust tap water. This is also r eflected in the popularity of public drinking water taps. Clean tap water has been ensured through an efficient water treatment process and regular monitoring of the water distribution network, along with the ongoing preventive maintenance activities and timely investments. We mainly use ice pigging technology to maintain our water networks. Using this technique, we cleaned 31 km of water mains in the third quarter. Since the introduction of ice pigging, 575 km of water mains have been cleaned using this method. This helps to ensure a consistent supply of high -quality drinking water from the public water supply system. Ice pigging that is currently unique in the Nordic countries is a pipe cleaning technology that involves pumping an ice slurry made of water and table salt thro ugh a pipe. Thanks to the prompt action of our staff, one water interruption lasted an average of 1 hour and 56 minutes in the third quarter, which is nearly half an hour less compared to the previous year. To reduce
Page 4
4 the inconvenience caused by interruptions to water service, we continue installing additional isolation valves on the water network. The quality of wastewater treated at the Paljassaare Wastewater Treatment Plant outperforms the effluent standards. This was also confirmed by the results of the third quarter of 2026. To keep the Baltic Sea clean, the company uses efficient treatment processes that helped to remove approximately 348 tonnes of solid waste, 236 tonnes of grit, 504 tonnes of nitrogen and 64 tonnes of phosphorus from wastewater during the third quarter of 2026. Investments The total investment planned for 2026 amounts to €60 million. These investments help us to further future-proof our infrastructure and to ensure the continuity of the vital service we provide, all the while keeping the price of the service affordable for o ur customers. Work is continuing at the Paljassaare Wastewater Treatment Plant on renovating the secondary clarifiers and reconstructing the wet well at the main pumping station. We are also optimising the wastewater treatment process by using artificial intelligence and smart technologies to reduce variable costs. The focus of investments is now shifting from wastewater treatment to modernising water treatment processes, including completely reconstructing ozonation and microfiltration processes. To increase the operational continuity of the water network, we built and renovated borehole pumping stations in the Kristiine and Lasnamäe districts and enhanced our ability to deploy reserve pumping stations in various locations across the city. Water network rehabilitation The rate of water loss in the water network was 10.26% in the third quarter, which is lower than in the same period last year (12.12% in 2025). To keep water loss rates low, the company continuously monitors the water distribution network online and continues with its planned rehabilitation programme. The interaction between smart meters and sensors installed in the water distribution network improves the flow of information about the state of the network. During the third quarter, we rehabilitated and constructed 12 kilometres of pipes. Of these, 4.2 kilometres (35%) were built using environmentally friendly no -dig techniques. We work closely with the City of Tallinn and other partners, such as Utilitas Tallinna Soojus, Reterra Estate, Alfa Property, and Rail Baltic, in order to carry out as many works as possible at the same time, thus saving the environment and causing as little disruption to city life and traffic as possible. During the quarter, we opened the capital's first coastal stormwater sedimentation pond in the Lahepea Street area of North Tallinn. This is an excellent example of a complex solution for addressing climate change and implementing a modern stormwater manag ement strategy. The sedimentation pond helps to reduce the risk of flooding in the surrounding area and treats rainwater before releasing it into the sea, thus helping to keep the Baltic Sea clean. Work on major construction projects continued in the third quarter on Kolde Avenue, Sõle Street and Keldrimäe Street, where the pavements were reinstated. Construction also continued at the Hipodroom intersection on Paldiski Road, where work is being carri ed out in multiple shifts. Construction started in the Vilde Street area of Mustamäe and the Mustamäe sewer system was reconstructed using no -dig techniques. Customer relations By the end of the third quarter of 2026, 97.1 per cent (about 21,000) of Tallinna Vesi's customers were using smart meters. The smart meter installation project will be completed during 2026. The new meters provide information on water consumption, allowin g leaks in customers' pipes to be detected as early as possible. This will help to protect the environment and minimise the risk of property damage caused
Page 5
5 by water emergencies. The transition to smart meters has received very positive feedback from customers. The meters provide the water company with a clear picture of how water moves within the service area. We provide our customers and consumers with a reliable service, part of which is the availability of important information about the service and the speed at which the enquiries are answered. In the third quarter of 2026, we responded to written enquiries within two working days in 93.9 per cent of cases. In 2026, we aim to further improve the speed and quality of our customer communications, a goal supported by the new customer management software launched in April. In the second half of April, we launched upgrades to improve our customers’ experience, including a new website, an improved self-service portal and a new visual identity. Online channels now offer tap water consumers more advice than ever before and enabl e better direct communication with the company. These upgrades are supported by a visual identity that symbolises the water cycle and the constant renewal that takes place in nature – we borrow water from nature and return it to nature as clean. We consider as complaints any enquiries received from customers that indicate dissatisfaction with the company's activities or the quality of the services provided. The aim of this is to gain a better understanding of the causes of customer dissatisfaction and to prevent complaints more effectively. In the third quarter of 2026, a total of 98 customer complaints were received, which is less compared to the same period a year ago (140 complaints in 2025). We are working to reduce the number of complaints, particularly those relating to water quality and blockages. In the third quarter of 2026, we failed to keep promises to our customers on one occasion. Partnerships During the third quarter, Tallinna Vesi's drinking water tanks provided refreshing drinking water at numerous events held in Tallinn and its surrounding areas, such as the gymnastics festival, the investment festival, Ironman, etc. Throughout the summer, 8 0 public drinking water taps are available for city residents and tourists to access high -quality tap water in public urban areas. In addition to Tallinn, the taps were opened for the first time this year in both Saue and Maardu. Public taps can be found o n the Tallinn’s official web map. Public taps have been installed in public areas that tend to attract large numbers of people, both locals and visitors, so that fresh drinking water would be available at all times. As well as providing tap water, the most environmentally friendly form of drinking water, our company is also actively involved in other environmental initiatives. For instance, we participated in three panel discussions on climate change and vital services at this year's Paide Opinion Festival. In August, we hosted the 54th Tallinna Vesi’s run around Lake Ülemiste, which brought together over 600 sports enthusiasts. This unique sporting event has a long tradition and takes place in the sanitary protection zone around Lake Ülemiste. This quarter, much attention was focused on the Paljassaare Wastewater Treatment Plant, as the plant celebrated its 45 th anniversary of starting operations. This anniversary provided an opportunity to recognise the plant's long -serving employees and review the most significant recent developments, as well as the innovations on the horizon.
Page 6
6 PERFORMANCE IN THE THIRD QUARTER OF 2026 Performance indicator Unit 2026 3rd quarter 2026 9 months 2025 3rd quarter 2025 9 months Drinking water Compliance of water quality at the customer’s tap % 99.4% 99.8% 98.0% 99.3% Water loss rate in the water distribution network % 10.3% 13.5% 12.2% 13.5% Average duration of interruption to water service per property h 1 h 56 min 2 h 04 min 2 h 09 min 1 h 52 min Wastewater Number of sewer blockages pc 56 275 67 255 Number of sewer collapses pc 20 70 8 46 Compliance of treated effluent with environmental requirements % 100% 100% 100% 100% Customer relations Number of customer enquiries pc 7 613 19 494 6 883 19 638 Responding to written enquiries at least within 2 working days % 93.9% 93.9% 99.5% 99.7% Number of failures to keep Promises to our customers pc 1 1 0 0
Page 7
7 FINANCIAL RESULTS OF THE THIRD QUARTER OF 2026 The Estonian economy is recovering from its recession and Eesti Pank forecasts that it will grow by around 2.5% this year and in the next two years. The risk of inflation rising casts a shadow over the outlook for economic growth. Inflation has come down over the past year, but price pressures have started to strengthen again. Rising prices in global markets for natural gas and fuels are already pushin g inflation up and are passing through directly into energy and transport costs and indirectly into the prices of many other goods and services. The fall in inflation may consequently prove temporary, and sentiment among companies and consumers will again be affected by energy prices and the geopolitical context. Central banks will raise policy interest rates to restrain high inflation, and this will then restrict investment and spending by companies and households. Due to the updated water prices since 1st of July 2026, the consolidated turnover has slightly increased in the 3rd quarter by €0.15 million compared to the same period of the previous year. The company's profit has decreased by € 1.00 million mainly due to higher interest rates , totalling €3.96 million in the 3rd quarter of 2026.
Page 8
8 MAIN FINANCIAL INDICATORS € million except key ratios Quarter 3 Variance 2026/ 2025 9 months Variance 2026/ 2025 2026 2025 2024 2026 2025 2024 Sales 18.32 18.17 16.39 0.81% 54.92 53.57 47.22 2.52% Gross profit 7.75 7.86 6.92 -1.45% 21.97 21.60 19.33 1.74% Gross profit margin % 42.29 43.26 42.21 -2.25% 40.01 40.31 40.93 -0.76% Operating profit before depreciation and amortisation 8.05 8.52 7.28 -5.56% 22.79 22.76 19.99 0.13% Operating profit before depreciation and amortisation margin % 43.93 46.90 44.39 -6.34% 41.50 42.49 42.34 -2.33% Operating profit 5.47 5.95 5.13 -8.12% 15.11 15.57 13.71 -2.95% Operating profit margin % 29.85 32.74 31.29 -8.84% 27.51 29.07 29.04 -5.34% Profit before taxes 4.09 5.04 4.07 -18.95% 11.32 12.76 10.51 -11.28% Profit before taxes margin % 22.30 27.76 24.80 -19.66% 20.62 23.82 22.26 -13.46% Net profit 3.96 4.96 3.93 -20.20% 8.12 9.76 9.13 -16.84% Net profit margin % 21.61 27.29 23.97 -20.82% 14.78 18.22 19.34 -18.89% ROA % 1.06 1.47 1.33 -27.99% 2.17 2.97 3.12 -26.98% Debt to total capital employed % 68.56 65.20 61.82 5.15% 68.56 65.20 61.82 5.15% ROE % 3.24 4.24 3.45 -23.58% 6.65 8.15 7.84 -18.48% Current ratio 0.68 0.83 0.83 -17.91% 0.68 0.83 0.83 -17.91% Quick ratio 0.63 0.76 0.78 -17.04% 0.63 0.76 0.78 -17.04% Investments into fixed assets 16.38 14.47 15.38 13.2% 40.80 37.11 33.42 9.9% Payout ratio % 80.06 79.80 79.41 80.06 79.80 79.80 Gross profit margin – Gross profit / Net sales Operating profit margin – Operating 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 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
Page 9
9 STATEMENT OF COMPREHENSIVE INCOME SALES The revenues from the main activities, i.e., sales of water and wastewater services in the 3rd quarter of 2026 were impacted by consumption and the price change effective from 01/07/2026. Given the stability of the company's business and the Estonia's macroeconomic forecast, we do not expect any increase in the sales of our water services in 2026. Consequently, the company does not foresee any significant changes in the consumption of water services in the long run. Pursuant to the legal requirements to harmonize private and business customers tariffs, the prices were revised as of 01/07/2026. In the 3rd quarter of 2026 , the group’s total sales were €18.32 million, being on the similar level compared to the same period of the previous year, when sales were € 18.17 million. Sales from water services both inside and outside the main service area accounted for 89.6% of the total sales , 7.4% of the sales came from construction services, 1.9% from other services and 1.1% from connection fees.
Page 10
10 Quarter 3 Variance 2026/2025 € thousand 2026 2025 2024 € % Water supply service 4,630 4,162 3,303 468 11.2% Wastewater disposal service 4,366 4,060 3,843 306 7.5% Total from private customers 8,996 8,222 7,146 774 9.4% Water supply service 1,506 1,770 1,935 -264 -14.9% Wastewater disposal service 2,095 2,372 2,222 -277 -11.7% Total from business customers 3,601 4,142 4,156 -541 -13.1% Water supply service 566 546 483 20 3.7% Wastewater disposal service 1,614 1,380 1,416 234 17.0% Stormwater disposal service 10 10 -208 0 0.0% Total from outside service area customers 2,190 1,936 1,690 254 13.1% Stormwater disposal and fire hydrants service 1,217 1,003 991 214 21.3% Excess pollution charges and sewer discharge service 415 402 365 13 3.2% Total from water services 16,419 15,705 14,349 714 4.5% Construction services 1,347 2,017 1,657 -670 -33.2% Connection fees 197 187 176 10 5.3% Other services 354 258 210 96 37.2% TOTAL REVENUE 18,317 18,167 16,393 150 0.8% Sales from water services were €16.42 million, showing an increase of 4.5% or €0.71 million increase compared to the 3rd quarter of 2025, resulting from an increase in water price starting 1 July 2026. The sales to private customers in the main service area increased by 9.4% or €0.77 million compared to the same period last year. In the third quarter of 2026, the sales to private customers amounted to €8.99 million. Sales to business customers in the main service area decreased by €0.54 compared to the same period last year, amounting to €3.60 million. The stormwater disposal and fire hydrants service in the main service area amounted to €1.22 million in the third quarter of 2026, increasing by 21.3% compared to the same period in 2025. The recognition of revenue is linked to the actual costs of providing the stormwater service during the reporting period and changes in line with the related costs. Sales from construction services were €1.35 million, decreasing by 33. 2% or € 0.67 million year -on- year. The decrease in revenue was mainly due to the lower amount of pipeline construction.
Page 11
11 COST OF GOODS AND SERVICES SOLD AND GROSS PROFIT The cost of goods and services sold amounted to €10.57 million in the 3rd quarter of 2026, being higher by 2.6% or €0.27 million compared to the equivalent period in 2025. Quarter 3 Variance 2026/2025 € thousand 2026 2025 2024 € % Water abstraction charges -308 -312 -318 4 1.3% Chemicals -778 -709 -711 -69 -9.7% Electricity -1,051 -1,012 -1,002 -39 -3.9% Pollution tax -324 -254 -184 -70 -27.6% Total direct production costs -2,461 -2,287 -2,215 -174 -7.6% Staff costs -2,779 -2,607 -2,522 -172 -6.6% Depreciation and amortisation -2,421 -2,407 -2,046 -14 -0.6% Construction services -1,194 -1,740 -1,341 546 31.4% Other costs -1,716 -1,266 -1,350 -450 -35.5% Other costs of goods/services sold total -8,110 -8,020 -7,259 -90 -1.1% Total cost of goods/services sold -10,571 -10,305 -9,474 -266 -2.6% Total direct production costs (water abstraction charges, chemicals, electricity, and pollution tax expenses) amounted to €2.46 million, increasing by 7.6% or €0.17 million compared to the same period in 2025. Direct production costs were mainly affected by the following factors: • The chemicals expense increased by 9.7% on compared with the same period in 2025, equivalent to €0.0 7 million. The increase was mainly driven by a 61% rise in the price of methanol used at the wastewater treatment plant. • The pollution tax increased by 27.6%, mainly due to the increase in the amounts of total nitrogen and total phosphorus used in the wastewater treatment process. Other costs of goods /services sold (staff costs, depreciation and amortisation, costs related to construction services and other costs of goods/services sold are at the same level compared to the same period last year. The changes in costs are as follows: • Construction services decreased by 31.4% compared to the same period in 2025, amounting to € 1.19 million. The level and change in construction services costs are directly related to revenue earned from construction services, the changes in which have been explained above in the revenue section. • Other expense Increased by 35.5% to €1.72 million, mainly due to higher asset maintenance costs and additional security service requirements. As a result of all above , the group’s gross profit amounted to €7.75 million in the third quarter of 2026, decreasing by 1.4% or €0.11 million compared to the gross profit of €7. 86 million in the same period of 2025.
Page 12
12 ADMINISTRATIVE AND MARKETING EXPENSES, OTHER INCOME AND EXPENSES Administrative and marketing expenses increased by 17.9% or €0.3 3 million compared to the same period in 2025, amounting to €2. 14 million. The increase was mainly due to higher costs of contracted services and IT services. Other income and expenses amounted to €0.14 million in the third quarter, compared to expenses of €0.09 million in the same period of 2025. OPERATING PROFIT As a result of the factors listed above the group’s operating profit for the for the third quarter of 2026 amounted to €5.47 million, decreasing by 8.1% or €0.48 million compared to the same period in 2025. FINANCIAL EXPENSES The group’s net financial income and expenses amounted to €1. 38 million, which is €0. 48 million higher than the net finance costs recorded in the third quarter of 2025. The increase was mainly driven by higher interest expenses resulting from the larger outstanding loan balance. In December 2025, an additional €25 million loan agreement was concluded with the Nordic Investment Bank. The term of the loan agreement is 15 years, and it forms part of the financing arrangement entered in 2023. In May 2026, the syndicated loan agreement with AS SEB Pank, Swedbank AS and OP Corporate Bank plc Estonian Branch was amended, increasing the available loan facility by €74 million. In August, an additional €5 million was drawn under the syndicated loan agreement, resulting in an outstanding loan balance of €182 million as of the end of the third quarter of 2026 (31 /1/2025: €160 million), at a floating interest rate. At the end of the third quarter of 2026, the average interest rate on loans was 3.59%, resulting in interest expenses of €1. 41 million. In the third quarter of 2025, the corresponding figures were an average interest rate of 3.11% and interest expenses of €0.90 million, with a loan balance of €146.00 million. NET PROFIT The group reported a net profit of €3.96 million in the third quarter of 2026, representing a decrease of €1.00 million compared to the same period in 2025. The decline in net profit was mainly driven by higher interest expenses resulting from the increased outstanding loan balance. FINANCIAL RESULTS FOR THE FIRST NINE MONTHS OF 2026 SALES During the first nine months of 2026 the group’s total sales amounted to €54.92 million. Compared to the same period in 2025, sales revenue increased by 2.5% or €1.35 million. Sales from water services in the first nine months of 2026 amounted to € 48.41 million, increasing by 5.3% or €2.43 million compared to the same period in 2025. Revenue from water services, both within and outside the main service area, accounted for 88.2% of the Group’s total sales revenue. Construction services accounted for 9.3% of total revenue, other services for 1.5%, and connection fees for 1.1%.
Page 13
13 9 months Variance 2026/2025 € thousand 2026 2025 2024 Euro % Water supply service 13,048 11,408 8,312 1,640 14.4% Wastewater disposal service 12,590 12,033 11,221 557 4.6% Total from private customers 25,638 23,441 19,534 2,197 9.4% Water supply service 5,022 5,554 6,276 -532 -9.6% Wastewater disposal service 6,908 6,958 6,656 -50 -0.7% Total from business customers 11,930 12,512 12,933 -582 -4.7% Water supply service 1,669 1,559 1,245 110 7.1% Wastewater disposal service 4,391 4,134 3,545 257 6.2% Stormwater disposal service 29 29 -55 0 0.0% Total from outside service area customers 6,089 5,722 4,737 367 6.4% Stormwater disposal and fire hydrants service 3,428 3,118 4,765 310 9.9% Excess pollution charges and sewer discharge service 1,325 1,184 1,099 141 11.9% Total from water services 48,410 45,977 43,066 2,433 5.3% Construction services 5,092 6,349 3,075 -1,257 -19.8% Connection fees 584 580 516 4 0.7% Other services 830 660 566 170 25.8% TOTAL REVENUE 54,916 53,566 47,223 1,350 2.5% In the first nine months of 2026, revenue from water services provided to private customers in the main service area increased by 9.4% to €25.64 million, mainly due to the changes in water service prices. Sales to business customers decreased by 4.7% to €11.9 million as a result of changes in prices. Sales to customers outside the main service area increased by 6.4% to €6.09 million, primarily driven by higher revenue from wastewater collection and water supply services. Sales from the operation and maintenance of the stormwater and fire hydrants system in the main service area amounted to €3.43 million by the end of the first nine months of 2026, increasing by 9.9% or €0.31 million compared to the same period in 2025. Sales from construction services amounted to € 5.09 million, decreasing by 19.8% or € 1.26 million compared to the previous year. The decrease in revenue was mainly due to lower sales of pipeline construction services and a reduced volume of road construction -related works.
Page 14
14 COST OF GOODS AND SERVICES SOLD AND GROSS AND OPERATING PROFITS 9 months Variance 2026/2025 € thousand 2026 2025 2024 € % Water abstraction charges -945 -940 -960 -5 -0.5% Chemicals -2,370 -2,242 -2,086 -128 -5.7% Electricity -3,217 -3,256 -3,499 39 1.2% Pollution tax -934 -902 -694 -32 -3.5% Total direct production costs -7,467 -7,340 -7,239 -127 -1.7% Staff costs -8,892 -8,392 -7,949 -500 -6.0% Depreciation and amortisation -7,198 -6,694 -5,990 -504 -7.5% Construction services -4,416 -5,419 -2,344 1,003 18.5% Other costs -4,973 -4,125 -4,373 -848 -20.6% Other costs of goods/services sold total -25,479 -24,630 -20,656 -849 -3.4% Total cost of goods/services sold -32,946 -31,971 -27,895 -975 -3.0% Cost of goods sold and services rendered in the first nine months of 2026 amounted to €32.95 million, which was €0. 97 million higher than in the same period of 2025. Total direct production costs (water abstraction charges, chemicals, electricity, and pollution tax expenses) amounted to € 7.47 million, remaining at a similar level compared to the previous year. Direct production costs were mainly affected by the following factors: • Chemicals compared to the same period in 2025, these costs increased by 5.7%, or €0.13 million. The growth in chemical expenses was mainly attributable to a 10% increase in the price of methanol used in wastewater treatment and a 28% increase in dosing volumes resulting from higher nitrogen loads entering the treatment plant, where methanol is used for nitrate removal. Other costs of goods/services sold (staff costs, depreciation and amortisation, construction services and other costs) amounted to €25.48 million, increasing by 3.4%. The main factors affecting the change in other costs of goods sold and services rendered were: • Staff costs increased by 6.0% or €0.50 million. • Construction services costs decreased by 18.5% or €1.00 million as a result of lower revenue from construction services, as explained above in the section on third-quarter results. • Other costs increased by 20.6% or €0. 85 million compared to the same period last year, reaching €4.97 million, mainly due to higher asset maintenance costs and additional security service requirements. The group’s gross profit for the first nine months of 2026 amounted to € 21.97 million, increasing by 1.7% or €0.38 million compared to the first nine months of 2025. The group’s operating profit Amounted to €15.11 million for the first nine months of 2026, which is 3.0%, or €0.46 million, lower than in the corresponding period of 2025. FINANCIAL EXPENSES The group’s net financial income and expenses amounted to €3.79 million, compared with net finance costs of €2.81 million in the first nine months of 2025. The increase in costs was primarily attributable to higher interest expenses arising from a larger outstanding loan balance subject to a higher Eu ribor rate.
Page 15
15 STATEMENT OF FINANCIAL POSITION As of the end of the third quarter of 2026, €40.80 million had been invested in property, plant and equipment. As at 30/09/2026, the Group's property, plant and equipment amounted to €361.17 million, of which the majority, €262.97 million, related to pipelines (31/12/2025: €253.04 million). The total value of non-current assets amounted to €365.35 million (31/12/2025: €341.35 million). Trade receivables, accrued income and prepayments amounted to €11.82 million at the end of the third quarter of 2026. The collection rate of receivables remained high at 99.73%, comparable to the corresponding figure of 99.74% at the end of September 2025. Current liabilities increased by €1.43 million compared to the end of 2025, reaching €26.33 million, primarily due to liabilities related to investments. Deferred income from connection fees increased by €1.59 million compared to the end of 2025, reaching €53.70 million. The provision for potential third -party claims remained broadly unchanged compared to the end of 2025 at €6.02 million. Further information on the provision is disclosed in Note 6 to the interim report. Subsequent to the reporting period AS Tallinna Vesi has signed an out -of-court settlement with Tallinn University of Technology to resolve a legal dispute concerning prices for water service, the parties entered into a settlement agreement on 9/10/2026. According to the settlement, Tallinn University of Technology will withdraw its claim and, as a compromise, Tallinna Vesi will pay €372 thousand — an amount comparable to half of the claimant's principal claim — and compensate for the agreed ancillary costs and the litigation costs. On 27/10/2026, Tallinna Vesi reached out-of-court settlements with Aktsiaselts Olerex, EfTEN SPV2 OÜ, EfTEN Sky OÜ and Kadrioru Ärikeskus OÜ in the historical water price difference disputes. The parties have entered into settlement agreements pursuant to which the claimants will withdraw their claims. Under the agreements, Aktsiaselts Olerex, EfTEN SPV2 OÜ, EfTEN Sky OÜ and Kadrioru Ärikeskus OÜ will discontinue their claims, while Tallinna Vesi will make settlement payments totalling €156 thousand, an amount broadly equivalent to 50% of the claimants' principal claims and will reimburse the agreed ancillary costs and legal costs. In the light of the out-of-court settlement agreements entered in October 2026, the Company will review in the fourth quarter of 2026 the provision established to cover potential third -party claims and assess whether any adjustment to the provision is required. More information about the provision is disclosed in note 6. The Group's outstanding loan balance amounted to €182 million ( 31/12/2025: €160 million). The NIB loan taken out in 2019 is being repaid over 11 years in equal principal instalments. The average interest rate on utilised loan facilities as of 30/09/2026 was 3.59%. The proportion of liabilities to total assets was 68.56%, compared to 65.20% at the same time in 2025. EMPLOYEES We believe it is important to treat our employees equally, involve them in the decision -making process and to inform them regularly. We consider the involvement of our staff in the decision -making process instrumental for them to understand and be able to support the company in its pursuits. Our staff can vary to a large degree in age, nationality, nature of work and in many other aspects. At AS Tallinna Vesi, people work in the offices, on the construction sites and at the treatment plant s. We have signed the Diversity Charter to affirm that we respect the diversity of our employees and value the principle of equal treatment, both within our own organization and in society at large. We do this by raising awareness of diversity issues among our employees and ensuring that these principles are respected. This requires us to be resourceful and flexible in our communication with the staff to involve, engage and listen to them. This is done using several means and channels of communication, such as regular staff meetings with the management, regular safety inspections carried out by members of management, digital screens, intranet, monthly newsletters, team events and meetings.
Page 16
16 Our everyday work is guided by our values: I am part of the team, I care, I am reliable, I am forward looking. As a socially responsible company, we value and develop our employees, by offering them new challenges, whilst also implementing succession planning activities. Safety at work is our top priority. We continuously train and develop a safe working culture in our company. In 202 6, AS Tallinna Vesi is continuing with the scholarship program for students launched in autumn 202 2. Through this program, we want to keep motivating students with good results. At the same time, this will give us a chance to promote the water sector and attract specialists with fresh expertise to join the company. In 202 6, we continue to work with three trade schools and three universities. In autumn 2023, we launched a scholarship program for employees of AS Ta llinna Vesi to recognize and motivate the employees within the company who invest in their development by studying at a trade school or university, thereby creating added value both for the company and the society at large. Recognizing and appreciating the diversity of our staff, we ensure that everyone, be it an existing or potential employee, is treated fairly and equally and provided with equal opportunities, where reasonable and practicable in the given circumstances. Within the company, we ensure that no one is discriminated against due to their age, gender, religion, cultural or ethnic origin, disability, sexual orientation or marital s tatus, or any other grounds. It is important for us to protect the health of our staff, so we offer additional vaccination options against COVID-19 virus, as well as influenza, tick-borne encephalitis, tetanus, and hepatitis, in accordance with the risk assessment prepared within the company. In addition to the above, we offer opportunities to stay healthy by using health insurance and sports facilities. We consider it important to develop our staff, which is why we have organized a wide range of training courses for skilled workers, specialists, and managers (for example, training on work involving an open flame, training on safe working in confined spaces, training for new managers, etc.). At the end of the third quarter of 2026, the Group employed 365 people, compared with 356 employees at the end of the third quarter of 2025. At the end of the third quarter of 2026, 358 employees worked on a full-time basis, compared with 350 employees in 2025. The average number of employees during the three-month period was 363 in 2026 and 365 in 2025. Gender breakdown of staff: As of 30/09/2026 As of 30/09/2025 Women Men Women Men Women Men Group 109 256 365 101 255 356 Management Team 13 8 21 12 15 27 Management Board 0 3 3 0 3 3 Supervisory Council 1 8 9 2 7 9 Labour costs in the third quarter of 2026 amounted to €4.03 million, of which €0.11 million was paid to the members of the Management Board and Supervisory Council (excluding social security taxes). The contingent liability in the event that the Supervisory Council were to replace the current members of the Management Board amounts to €0.19 million. DIVIDENDS Dividend allocation to the shareholders is recorded as a liability in the financial statement of the company at the time when the profit allocation and dividend payment is confirmed by the Annual General Meeting of Shareholders. Every year, the Supervisory Council evaluates , considering all the circumstances, the proposal for the dividend to be paid to shareholders and approves it to be presented for a vote by the Annual General Meeting of Shareholders.
Page 17
17 In the Annual General Meeting held on 23/04/2026, the Supervisory Council proposed to pay out €0.5 7 per share from the 202 5 profits. The pay -out is equal to 80% of earnings in 202 5. The proposal was approved by the Annual General Meeting, and the dividend pay-out is made on 20/05/2026. In the last five years, dividends have been paid as follows: AS Tallinna Vesi aims to distribute 50 –80% of the annual profit as dividends. Dividend payments are assessed annually considering the company’s earnings, investment needs, liquidity position and long - term financial targets. SHARE PERFORMANCE Tallinna Vesi is listed on Nasdaq Baltic Main List with trading code TVE1T and ISIN EE3100026436. As of 30/09/2026, Tallinna Vesi’s shareholders with a direct holding of more than 5% were as follows: • City of Tallinn (55.06%) • OÜ Utilitas (20.36%) The shareholder structure remained broadly stable in the third quarter of 2026 compared to the previous quarter. Of all shares, 16.71% were held by domestic individual investors, 5.84% by domestic corporate investors, 1.72% by foreign corporate investors a nd 0.31% by foreign individual investors. The holdings of the City of Tallinn and OÜ Utilitas remained unchanged. The free float accounted for 24.58% of the share capital, or 4,916,166 shares. Within the free float, domestic individual investors held 67.97% (+0.03 pp), domestic corporate investors 23.77% ( -0.32 pp), foreign corporate investors 7.00% (+0.13 pp) and foreign individual investors 1.27% (+0.17 pp). During the third quarter of 2026, the total number of shareholders decreased by 92, or 0.8%, to 11,437. The decrease was mainly attributable to a decline in the number of domestic individual shareholders. As of 30 September 2026, Tallinna Vesi’s share closing price was €10.85, down 3.98% from €11.30 at the end of the previous quarter. By comparison, the share price decreased by 1.4% in the third quarter of 2025. The OMX Tallinn index rose by 6.04% in the third quarter of 2026 (2025: -7.06%). In the third quarter of 2026, 2,567 trades were executed in the company’s shares, compared with 2,727 trades in the same period a year earlier. A total of 93,143 shares were traded, representing 0.47% of all shares (2025: 78,584 shares, or 0.39%). Trading turnover amounted to €1.02 million, exceeding the corresponding period of 2025 by €0.2 million.
Page 18
18 Closing Price and Adjusted OMXT vs Transactions Turnover CORPORATE STRUCTURE As of 30/09/2026, the group consisted of 2 companies. The subsidiary Watercom OÜ is 100% owned by AS Tallinna Vesi and fully consolidated in the company’s accounts. CORPORATE GOVERNANCE SUPERVISORY COUNCIL Supervisory Council organizes and arranges the management of the company and supervises the activities of the Management Board. According to the Articles of Association , the Supervisory Council members of AS Tallinna Vesi are elected or appointed for three years. The Supervisory Council has established two committees to advise Supervisory Council on audit and on nomination and remuneration matters. Further information about the Supervisory Council and committees is available in Note 1 5 to the financial statements, as well as on the company’s website: www.tallinnavesi.ee/en/about-us MANAGEMENT BOARD The 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 is required to act economically in the mo st efficient way taking into consideration the interest of the company and its shareholders and to ensure the sustainable development of the company in accordance with the set objectives and strategy. The Management Board and the Supervisory Council cooperate fully to safeguard the best interests of the company. The Management Board and the Supervisory Council hold regular meetings together at least once a quarter. At those meetings the Management Board informs the Supervisory Council about significant aspects of the company’s business and discuss the delivery of the company’s short - and long-term objectives and the risks that may affect them. The Management Board prepares a
Page 19
19 management report for every Supervisory Council meeting and submits it in advance with sufficient time for the Supervisory Council to study it. According to the Articles of Association, the Management Board consists of two to three members who are elected for five years. As of 30/09/2026, the Management Board of AS Tallinna Vesi has three members: Aleksandr Timofejev (with the term of office as a Chairman of the Management Board until 30/10/2026), Tarvi Thomberg (with the term of office as a Member of the Management Board until 08/11/2026 ) and Taavi Gröön (with the term of office as a Member of the Management Board until 23/05/2027). Further information on the members of the Management Board is available on the company’s website under www.tallinnavesi.ee/en/about-us. Additional information: Aleksandr Timofejev Chairman of the Board +372 6262 200 aleksandr.timofejev@tvesi.ee Tarvi Thomberg Member of the Management Board +372 6262 200 tarvi.thomberg@tvesi.ee Taavi Gröön Member of the Management Board +372 6262 200 taavi.groon@tvesi.ee
Page 20
20 MANAGEMENT CONFIRMATION The Management Board has prepared the consolidated interim accounts of AS Tallinna Vesi (the Company) and its subsidiary OÜ Watercom, together the Group, in the form of consolidated condensed financial statements for the 9 months period ended on 30 September of financial year 2026. The interim accounts have not been reviewed by the auditors. The condensed financial statements for the period ended on 30 September 2026 have been prepared following the accounting policies and the manner of presenting the information in line with the International Financial Reporting Standards as adopted by the EU . The condensed financial statements provide a fair presentation of the assets, liabilities, financial position and result of the operations and the cash-flows of the Group. The interim report gives a fair presentation of the main events and of their effect on the condensed financial statements. It includes description of the main risks and unclear aspects that can, based on the sensible judgement of the Management Board. The significant transactions with related parties are disclosed in the interim accounts. Any subsequent events that materially affect the valuation of assets and liabilities and have occurred until the completion of the consolidated financial statements on 30 October 2026 have been considered in preparing the financial statements. The Management Board considers AS Tallinna Vesi and its subsidiaries to be going concern entities. Aleksandr Timofejev Member of the Management Board Chief Executive Officer Tarvi Thomberg Member of the Management Board Chief Asset Management Officer Taavi Gröön Member of the Management Board Chief Financial Officer 30 October 2026 Introduction and photos of the Management Board members are published at company’s web page https://www.tallinnavesi.ee/en/about-us.
Page 21
21 CONSOLIDATED STATEMENT OF FINANCIAL POSITION as of as of € thousand 30 September 31 December ASSETS Note 2026 2025 CURRENT ASSETS Cash and cash equivalents 3 4,782 11,294 Trade receivables, accrued income and prepaid expenses 11,820 10,762 Inventories 1,340 1,163 TOTAL CURRENT ASSETS 17,942 23,219 NON-CURRENT ASSETS Property, plant, and equipment 4 361,182 338,654 Intangible assets 5 4,165 2,699 TOTAL NON-CURRENT ASSETS 365,347 341,353 TOTAL ASSETS 383,289 364,572 LIABILITIES AND EQUITY CURRENT LIABILITIES Current portion of long-term lease liabilities 649 765 Current portion of long-term loans 6,877 3,742 Trade and other payables 15,555 17,604 Prepayments 3,244 2,781 TOTAL CURRENT LIABILITIES 26,325 24,892 NON-CURRENT LIABILITIES Deferred income from connection fees 53,703 52,112 Leases 1,207 1,502 Loans 174,591 155,391 Provision for possible third-party claims 6 6,018 6,018 Deferred tax liability 687 697 Other payables 246 165 TOTAL NON-CURRENT LIABILITIES 236,452 215,885 TOTAL LIABILITIES 262,777 240,777 EQUITY Share capital 12,000 12,000 Share premium 24,734 24,734 Statutory legal reserve 1,278 1,278 Retained earnings 82,500 85,783 TOTAL EQUITY 120,512 123,795 TOTAL LIABILITIES AND EQUITY 383,289 364,572
Page 22
22 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the 9 months Quarter 3 ended on 30 September € thousand Note 2026 2025 2026 2025 Revenue 7 18,317 18,167 54,916 53,566 Cost of goods and services sold 9 -10,571 -10,307 -32,945 -31,970 GROSS PROFIT 7,746 7,860 21,971 21,596 Marketing expenses 9 -227 -222 -773 -716 General administration expenses 9 -1,916 -1,596 -5,713 -4,982 Other income and expenses 10 -136 -95 -375 -327 OPERATING PROFIT 5,467 5,947 15,110 15,571 Financial income 11 42 25 97 89 Financial expenses 11 -1,424 -928 -3,884 -2,898 PROFIT BEFORE TAXES 4,085 5,044 11,323 12,762 Income tax -127 -86 -3,206 -3,000 NET PROFIT FOR THE PERIOD 3,958 4,958 8,117 9,762 COMPREHENSIVE INCOME FOR THE PERIOD 3,958 4,958 8,117 9,762 Attributable profit to shareholders 3,958 4,958 8,117 9,762 Earnings per share (in euros) 12 0.20 0.25 0.41 0.49
Page 23
23 CONSOLIDATED STATEMENT OF CASH FLOWS for the 9 months ended 30 September € thousand Note 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES Operating profit 15,110 15,571 Adjustment for depreciation/amortisation 9 7,679 7,191 Adjustment for revenues from connection fees 7 -583 -580 Other non-cash adjustments -38 26 Profit (-) / loss (+) from sale of property, plant and equipment, and intangible assets -28 -57 Change in current assets involved in operating activities -1,236 -258 Change in liabilities involved in operating activities 950 -66 TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 21,854 21,827 CASH FLOWS USED IN INVESTING ACTIVITIES Acquisition of property, plant, and equipment, and intangible assets -43,832 -38,702 Proceeds from targeted funding of property, plant, and equipment. 9,155 5,528 Compensations received for construction of pipelines, incl connection fees 1,963 1,523 Proceeds from sale of property, plant and equipment, and intangible assets 34 58 Interest received 97 89 TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES -32,583 -31,504 CASH FLOWS USED IN FINANCING ACTIVITIES Interest and loan financing costs paid -2,941 -2,505 Lease payments -608 -662 Loans received 25,000 30,000 Repayment of loans -2,619 -1,786 Dividends paid 12 -11,400 -10,600 Income tax paid on dividends 12 -3,215 -2,990 TOTAL CASH FLOWS USED IN FINANCING ACTIVITIES 4,217 11,457 CHANGE IN CASH AND CASH EQUIVALENTS -6,512 1,780 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 3 11,294 3,589 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 3 4,782 5,369
Page 24
24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY € thousand Share capital Share premium Statutory legal reserve Retained earnings Total equity as of 31 December 2024 12,000 24,734 1,278 82,141 120,153 Dividends 0 0 0 -10,600 -10,600 Comprehensive income for the period 0 0 0 9,762 9,762 as of 30 September 2025 12,000 24,734 1,278 81,303 119,315 as of 31 December 2025 12,000 24,734 1,278 85,783 123,795 Dividends 0 0 0 -11,400 -11,400 Comprehensive income for the period 0 0 0 8,117 8,117 as of 30 September 2026 12,000 24,734 1,278 82,500 120,512
Page 25
25 NOTES TO THE CONSOLIDATED UNAUDITED INTERIM FINANCIAL STATEMENTS NOTE 1. ACCOUNTING PRINCIPLES The condensed consolidated interim financial statements of the Group have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting as adopted by the European Union. The condensed interim financial state ments do not contain all the information presented in the annual financial statements and should be read in conjunction with the Group’s latest published annual financial statements as at and for the year ended 31 December 2025. Selected notes are included in interim financial statements to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements. NOTE 2. CRITICAL ACCOUNTING ESTIMATES The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of material misstatements to the carrying amounts of assets and liabilities were the same as described in the last annual financial statements as at and for the year ended 31 December 2025, except for estimates addressed below: • Management has developed estimates on the expected credit losses of trade receivables based on the best available information about past events, current conditions and forecasts of macroeconomic conditions. Trade receivables have been grouped based on shar ed credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales over a period of 12 months before 30 September 2026, respectively, and the corresponding historical credit losses experienced within th is period. The historical loss rates are adjusted to reflect current and forward -looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The Group has identified the GDP and the unemployment rate of Es tonia in which it sells its goods and services to be the most relevant factors and has accordingly adjusted the historical loss rates based on expected changes in these factors. As at 30 September 2026, Management of the Group has assessed the expected cre dit loss related to macroeconomic conditions to be €86 thousand. Estimated credit loss is being revised according to further developments. • Management has made an estimate with regards to possible third -party claims based on the maximum difference between revenues calculated with water prices established based on the Services Agreement and based on the Company's estimation, with the reservation to the possible fluctuation. According to the law, the prices established based on the Services Agreement were in force until the Competition Authority approved the new tariffs and the Company implemented these tariffs in line with the law. The Company has acted in good faith and in reliance to the applicable legal a cts. Thus, the Company does not consider itself liable to the customers for any claims related to the water price applied until the new prices approved by the Competition Authority were duly implemented. As of 30 September 2026, claims totalling €14.7 million have been filed within five applications. The Management Board of the Company has assessed the potential liability resulting from such claims, if successful, to be €6.0 million and has suspended the reduction of the provision pursuant to the principle of conservatism. The Company has always acted legitimately by applying fair tariffs imposed in accordance with the law in force, and the Company believes there are no gr ounds for submitting the claims. Therefore, the Company does not admit any lia bility and fully rejects it.
Page 26
26 NOTE 3. CASH AND CASH EQUIVALENTS € thousand as of 30 September 2026 as of 31 December 2025 Cash in hand and in bank 4,782 11,294 Total cash and cash equivalents 4,782 11,294 NOTE 4. PROPERTY, PLANT AND EQUIPMENT € thousand Land and buildings Facilities Machinery and equipment Right- of-use assets Construction in progress Total property, plant and equipment 31 December 2024 Acquisition cost 28,246 321,397 64,717 5,391 17,581 437,332 Accumulated depreciation -8,782 -89,614 -40,977 -1,695 0 -141,068 Net book value 19,464 231,783 23,740 3,696 17,581 296,264 Transactions in the period 1 January 2025 - 30 September 2025 Acquisitions 0 0 0 0 38,876 38,876 Targeted financing 0 -2,829 0 0 -2,699 -5,528 Reclassification 108 8,292 4,268 22 -12,690 0 Depreciation -476 -3,667 -2,303 -407 0 -6,853 30 September 2025 Acquisition cost 27,944 326,489 68,366 4,982 41,068 468,849 Accumulated depreciation -8,848 -92,912 -42,661 -1,671 0 -146,092 Net book value 19,096 233,577 25,705 3,311 41,068 322,757 31 December 2025 Acquisition cost 28,916 346,830 73,975 4,985 30,158 484,864 Accumulated depreciation -8,929 -93,792 -41,746 -1,743 0 -146,210 Net book value 19,987 253,038 32,229 3,242 30,158 338,654 Transactions in the period 1 January 2026 - 30 September 2026 Acquisitions 0 0 0 0 38,801 38,801 Targeted financing 0 -9,203 0 0 288 -8,915 Reclassification 100 23,108 5,199 9 -28,416 0 Write off and sale of property, plant, and equipment in residual value 0 0 -5 -17 0 -22 Depreciation -273 -3,971 -2,717 -375 0 -7,336 30 September 2026 Acquisition cost 28,974 360,462 78,885 4,648 40,831 513,800 Accumulated depreciation -9,160 -97,490 -44,179 -1,789 0 -152,618 Net book value 19,814 262,972 34,706 2,859 40,831 361,182
Page 27
27 Property, plant and equipment and intangible assets are written off, if the conditions of the asset do not enable its further usage for production purposes. By nature, the right -of-use assets comply with the asset class of machinery and equipment. The amount of acquisitions for the 9 months ended on 30 September 2026 are reduced by targeted financing of stormwater infrastructure developments in amount of €9,155 thousand. NOTE 5. INTANGIBLE ASSETS € thousand Acquired licenses and other intangible assets Unfinished intangible assets Total intangible assets 31 December 2024 Acquisition cost 6,856 98 6,954 Accumulated depreciation -4,892 0 -4,892 Net book value 1,964 98 2,062 Transactions in the period 1 January 2025 - 30 September 2025 Acquisition in book value 0 938 938 Targeted financing -131 0 -131 Reclassification 72 -72 0 Accumulated depreciation -338 0 -338 30 September 2025 Acquisition cost 3,434 964 4,398 Accumulated depreciation -1,867 0 -1,867 Net book value 1,567 964 2,531 31 December 2025 Acquisition cost 3,357 1,230 4,587 Accumulated depreciation -1,888 0 -1,888 Net book value 1,469 1,230 2,699 Transactions in the period 1 January 2026 - 30 September 2026 Acquisition in book value 0 1,997 1,997 Targeted financing -62 -125 -187 Reclassification 217 -217 0 Accumulated depreciation -343 0 -343 30 September 2026 Acquisition cost 3,512 2,885 6,397 Accumulated depreciation -2,231 0 -2,231 Net book value 1,281 2,885 4,166 NOTE 6. PROVISION FOR POSSIBLE THIRD-PARTY CLAIMS On 12 December 2017, the Supreme Court made a decision on AS Tallinna Vesi’s cassation in the tariff dispute with the Estonian Competition Authority. The court stated that the Competition Authority is not bound by the agreement on the water tariffs contain ed in the Services Agreement, which was executed upon privatization of the Company. From then on, the tariffs are regulated by the Competition Authority. According to the law the tariffs established based on the Services Agreement were in force until the Competition Authority approved the new tariffs and the Company implemented these tariffs in line with the law. The Company has acted in good faith and in r eliance to the applicable legal acts. Thus, the
Page 28
28 Company does not consider itself liable to the customers for any claims related to the tariffs applied until the new tariffs approved by the Competition Authority were duly implemented. On 18 October 2019, the Competition Authority approved the tariffs that the Company had applied for in September of that year. The new tariffs for water services came into force on 1 December 2019. In the Company’s main service area, the private customer tariffs decreased by 27% and commercial customer tariffs dropped by 15%, on average. As of 30 September 2026, claims totalling €14.7 million have been filed within five applications. The Management Board of the Company has assessed the potential liability resulting from such claims, if successful, to be €6 million and has suspended the reduction of the provision pursuant to the principle of conservatism. The Company has always acted legitimately by applying fair tariffs imposed in accordance with the law in force, and the Company believes there are no grou nds for submitting the claims. Therefore, the Company does not admit any liability and fully rejects it. NOTE 7. SEGMENT REPORTING The Group has defined the business segments based on the reports used regularly by the chief operating decision maker for the purposes of making strategic decisions. The chief operating decision maker monitors the Group’s operations by activities. Three se gments are distinguished: water services, construction and other services. Water services: water supply, storm -and wastewater disposal and treatment, fire hydrants service, overpollution charges and discharging. Construction services: construction services provided by Watercom OÜ. Construction services have been identified as a reportable segment because its revenues are more than 10% of the combined revenues of all segments. Other services: road maintenance, jet wash and transportation services, project management and owner's supervision and other activities. Other activities are of less importance to the Group's financial results and none of them constitutes a separate segmen t for reporting purposes. The Group's chief operating decision maker assesses the performance of each operating segment based on its revenue (external and inter-segment revenue) and gross profit. The inter-segment transactions are carried out on market terms. € thousand Water services Construction services Other services Inter- segment transactions Total segments 1 January 2026 - 30 September 2026 External revenue 48,410 5,092 1,414 0 54,916 Inter-segment revenue 1 4,637 4,822 -9,460 0 Total segment revenue 48,411 9,729 6,236 -9,460 54,916 Segment's gross profit 19,753 639 2,403 -824 21,971 Unallocated expenses: Marketing and Administrative expenses -6,486 Other income and expenses -375 Operating profit 15,110 1 January 2025 - 30 September 2025 External revenue 45,978 6,348 1,240 0 53,566 Inter-segment revenue 1 3,091 4,876 -7,968 0 Total segment revenue 45,979 9,439 6,116 -7,968 53,566 Segment's gross profit 19,251 603 2,404 -662 21,596 Unallocated expenses:
Page 29
29 Marketing and Administrative expenses -5,698 Other income and expenses -327 Operating profit 15,571 Revenue by activities for the 9 months Quarter 3 ended 30 September € thousand 2026 2025 2026 2025 Water services Water supply service 4,630 4,162 13,048 11,408 Wastewater disposal service 4,366 4,060 12,590 12,033 Total from private customers 8,996 8,222 25,638 23,441 Water supply service 1,506 1,770 5,022 5,554 Wastewater disposal service 2,095 2,372 6,908 6,958 Total from corporate customers 3,601 4,142 11,930 12,512 Water supply service 566 546 1,669 1,559 Wastewater disposal service 1,614 1,380 4,391 4,134 Stormwater disposal service 10 10 29 29 Total from outside service area customers 2,190 1,936 6,089 5,722 Stormwater treatment and disposal service and fire hydrants service 1,217 1,003 3,428 3,118 Overpollution charges and discharging 415 402 1,325 1184 Total revenue from water services 16,419 15,705 48,410 45,977 Other services Construction services 1,347 2,017 5,092 6,349 Revenue from single connections 197 187 584 580 Other services 354 258 830 660 Total revenue from other services 1,898 2,462 6,506 7589 Total revenue 18,317 18,167 54,916 53,566 100% of the Group´s revenue was generated within the Republic of Estonia. NOTE 8. STAFF COSTS for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025 Salaries and wages -3,023 -2,773 -9,580 -8,922 Social security and unemployment insurance tax -1,011 -925 -3,198 -2,978 Staff costs total -4,034 -3,698 -12,778 -11,900 Average number of employees during the reporting period 363 365 359 361 NOTE 9. COST OF GOODS AND SERVICES SOLD, MARKETING AND ADMINISTRATIVE EXPENSES for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025
Page 30
30 Cost of goods and services sold Water abstraction charges -308 -312 -945 -940 Chemicals -778 -709 -2,370 -2,242 Electricity -1,051 -1,012 -3,217 -3,256 Pollution tax -324 -254 -934 -902 Staff costs -2,779 -2,607 -8,892 -8,392 Depreciation and amortization -2,421 -2,407 -7,198 -6,694 Construction services -1,194 -1,740 -4,416 -5,419 Other costs -1,716 -1,266 -4,973 -4,125 Total cost of goods and services sold -10,571 -10,307 -32,945 -31,970 Marketing expenses Staff costs -203 -205 -682 -657 Depreciation and amortization 0 0 -1 -1 Other marketing expenses -24 -17 -90 -58 Total marketing expenses -227 -222 -773 -716 Administrative expenses Staff costs -1,052 -887 -3,204 -2,851 Depreciation and amortization -158 -165 -480 -496 Other general administration expenses -706 -544 -2,029 -1,635 Total administrative expenses -1,916 -1,596 -5,713 -4,982 NOTE 10. OTHER INCOME/EXPENSES for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025 Doubtful receivables expenses (-)/ expense reduction (+) -16 58 7 27 Other income and expenses -120 -153 -382 -354 Total other income and expenses -136 -95 -375 -327 NOTE 11. FINANCIAL INCOME AND EXPENSES for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025 Interest income 42 25 97 89 Interest expense, loan -1,405 -898 -3,804 -2,812 Other financial income and expenses -19 -30 -80 -86 Total financial income and expenses -1,382 -903 -3,787 -2,809 NOTE 12. DIVIDENDS for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025 Dividends declared during the period 0 0 11,400 10,600 Dividends paid during the period 0 0 11,400 10,600
Page 31
31 Income tax on dividends paid 0 0 3,215 2,990 Dividends declared per share 0.57 0.53 Income tax rate on dividends paid is 22/78 in 2026 (22/78 in 2025). NOTE 13. EARNINGS PER SHARE for the 9 months Quarter 3 ended on 30 September € thousand 2026 2025 2026 2025 Net profit for the period 3,958 4,958 8,117 9,762 Weighted average number of ordinary shares (in thousand pcs) 20,000 20,000 20,000 20,000 Earnings per share (in euros) 0.20 0.25 0.41 0.49 Diluted earnings per share for the periods ending 30 September 2026 and 30 September 2025 were equal to earnings per share figures stated above. NOTE 14. RELATED PARTIES Transactions with related parties are considered to be transactions with members of the Supervisory Council and Management Board, their relatives, and the companies in which they have control or significant influence and transactions with shareholder having significant influence. Dividend payments are indicated in the Statement of Changes in Equity. Shareholders having significant influence Balances recorded on the statement of financial position of the Group as of 30 September as of 31 December € thousand 2026 2025 Accounts receivable 1,026 823 Trade and other payables 11 62 Transactions recorded on the statement of comprehensive income for the 9 months Quarter 3 ended 30 September € thousand 2026 2025 2026 2025 Revenue 1,888 2,245 5,196 5,629 Purchase of thermal energy 15 53 258 262 Fees to the Group’s Management Board and Supervisory Council members (excluding social tax) for the 9 months Quarter 3 ended 30 September € thousand 2026 2025 2026 2025 Fees for Management Board 87 83 327 320 Supervisory Council fees 18 18 54 54
Page 32
32 The Group’s Management Board and Supervisory Council members are considered as key management personnel for whom the contractual salary payments have been accounted for as disclosed above. The Group’s Management Board members are elected for 5 (five) years and Supervisory Council members for 3 (three) years. Stock exchange announcement is published about the change in Management and Supervisory Council. The potential salary liability would be up to €189 thousand (excluding social tax) if the Supervisory Council were to replace all Management Board members. Company shares belonging to the Management Board and Supervisory Council members As of 30 September 2026, and 31 December 2025, the members of Management Board Aleksandr Timofejev, Taavi Gröön and Tarvi Thomberg owned the shares of AS Tallinna Vesi, 200, 600 and 1,000 shares accordingly. All securities transactions have been conducted in accordance with the applicable law as well as relevant rules, including AS Tallinna Vesi rules for handling inside information. As of 30 September 2026, and 31 December 2025, the members of Supervisory Council did not own any shares in the Company. NOTE 15. LIST OF SUPERVISORY COUNCIL MEMBERS Priit Koit Chairman of the Supervisory Council Robert Kitt Member of the Supervisory Council Gerli Kivisoo Member of the Supervisory Council Niall Patrick Mills Member of the Supervisory Council Priit Lello Vice Chairman of the Supervisory Council Priit Rohumaa Member of the Supervisory Council Silver Tamm Member of the Supervisory Council Urmas Reinsalu Member of the Supervisory Council Andrei Korobeinik Member of the Supervisory Council Introduction of Supervisory Council members is published on company’s web page: https://www.tallinnavesi.ee/en/about-us