Tallinna Vesi: our profitability rate complies with best practices
10.06.2010, 11:26Tallinna Vesi that has become a focal point of a judicial dispute due to growing water supply tariffs and high dividends paid to shareholders estimates that the company’s profitability is justified, according to newspaper reports.
The enterprise issued a press release to the stock exchange on Tuesday, noting that the Chancellor of Justice Indrek Teder who turned to the Supreme Court against the City of Tallinn over the water tariffs as well as the Competition Board that analysed Tallinna Vesi’s profitability are wrong.
“AS Tallinna Vesi has analysed its profitability and the enterprise believes that in terms of regulated public services it complies with international best practises in business regulations among comparable companies across the world,” the enterprise noted.
“By using in its calculations the same methodology that is used by Ofwat, the water supply regulator of England and Wales and that is often quoted by the Competition Board as well as by the Chancellor of Justice, the average invested capital return rate of AS Tallinna Vesi has been below 8% since the year 2001,” read the press release.
In the first three months of the year, Tallinna Vesi earned a profit of 81.9 million kroons while the generated turnover amounted to 191.4 million kroons – which means that the net profit margin is 42.8%. From the profits collected by the end of last year, shareholders were paid this year 500 010 000 kroons in dividends.
Tallinna Vesi reported that the Chancellor of Justice Indrek Teder has reached a false conclusion on the basis of non-comprehensive and misleading analysis carried out by the Competition Board – as if the City of Tallinn has guaranteed the public water supply enterprise an unjustifiably large profitability. The company asserted that the Competition Board itself estimated that its analysis was merely a simulation that handled the hypothetical situation where this particular business sector would be differently regulated.
Chancellor of Justice Indrek Teder turned to the Supreme Court on Monday, requesting that the highest court declare the Tallinn City Government’s regulation No 75 from September 30, 2009 that imposed the water supply and sewerage tariffs in Tallinn from January 1, 2010 invalid.