Hello, ladies and gentlemen. Thank you for joining. I am Maria Tiidus, the Head of Communications in Tallinna Vesi, and I welcome you all today's Tallinna Vesi's webinar. This webinar will be hosted by Aleksandr Timofejev, Chief Executive Officer, and Taavi Gröön, Chief Financial Officer. Firstly, Aleksandr Timofejev and Taavi Gröön will introduce the highlights of the fourth quarter and 12- months of 2022. The presenter will also speak about Tallinna Vesi's operational and financial results of the fourth quarter and also of the whole year.
Aleksandr will give an overview about some of the investments made in the fourth quarter and in 12- months, 2022. Right after the presentation, you will have the opportunity to ask questions. It is also possible to type in your questions during presentation, but this 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. Now I will give over to Aleksandr and Taavi. Here you go. Thank you.
Good morning, everyone. I'm happy to welcome you today here in our webinar. Here are some of the highlights from 2022. The services agreement signed with the City of Tallinn upon the privatization of AS Tallinna Vesi expired at the end of 2022. The new administrative contract with the city was entered into the period of December 1st, 2022 till 30th November 2032.
The new administrative contract is aimed at ensuring high-quality water services for city residents and entrepreneurs. The preparation of a Tallinn public water supply and sewage development plan for next 12 years is also currently underway. The aim of that document is to set a direction for the development of a water sector in Tallinn, and it will also be the framework for the preparation of a development and investment plan of Tallinna Vesi.
In addition to investments in well-functioning water and wastewater treatment and water and sewage network, we have taken action to reduce company's environmental impact. Today, all the energy used at our facilities and in treatment process is already from the renewable sources. In 2022, we prepared a climate impact reduction plan for company and set ourself several ambitious targets.
We aim to grow investments in fixed assets to secure sustainable infrastructure and continuity of a service. In 2022, we invested EUR 25 million in our capital assets, increasing amongst our things the volume of a reconstructed water pipes and sewers to 19 km. In 2022, a number of ongoing projects continued, such as a reconstruction of effluent outlet tower with civil reconstruction works in the main pumping station at Paljassaare and the reconstruction of air tanks.
In addition, a new point of reception for sewage sludge from septic trucks was completed, and the new raw sludge thickeners were installed at Paljassaare. Tallinna Vesi delivered more sales and profit in 2022 than ever before. For the first time, the biggest contribution to external profit came from the road construction activity.
In 2022, the company successfully launched a new manhole repair service and at the end of the year, an Ice Pigging equipment was delivered, which allows to clean water pipes by applying the most innovative technology currently used in Northern Europe. Tallinna Vesi started with smart meters installation in third quarter of 2022. There have been difficulties with supply of meters because of a lack of chips. By the end of 2022, approximately 4% of our customers got new smart meter.
By the end of 2023, company plans to install smart meters to 40% of our customers. We continued cooperation with three Estonian universities and trade schools, under which 13 scholarships were awarded to support active students specialized in areas related to the company's core business. In 2022, AS Tallinna Vesi representatives took part at Expo 2020 in Dubai in Water Business Forum and opened to the public history about AS Tallinna Vesi's 30-year success.
In December 2022, company organized Water Day event for partners. Event took place at Ülemiste treatment plant. It was possible to watch event also online. Presentations and discussions were related to the climate improvement, challenges of water business, and customer expectations. I'll go to the investments now. We constantly put in effort to improve our vital services. In 2022, we carried out investments projects for EUR 25 million.
In 2022, a number of ongoing projects continued, such as a reconstruction of effluent outlet tower with civil reconstruction works in the main pumping station at Paljassaare and the reconstruction of air tanks. A new point of reception sewage sludge from septic trucks was completed, and the new raw sludge thickeners were installed.
We significantly increased investments to water and wastewater networks. We renovated over 19 km of pipes last year. This is more than in any of the our previous years over the past decade. The pipes were renovated on Järvevana Road, Siili Street, Linnamäe Road, Raba Street, residential driveways in Uus-Maarja, in Astangu, and in many other streets. The renovations made will help to secure a reliable water supply for a large number of Tallinnas.
2022 saw the reconstruction of Velodrome pumping station, installation of UV equipment in several pumping stations, and the reconstruction of pipelines, allowing additional chlorination of water in the water network. Our capital investments into the network ensure uninterrupted water and sewage service and reliability of water supply to consumers also in the future. A little bit about operation results.
The company operation results in 2022 were very good. The quality of drinking water in Tallinn was excellent, being 99.84% compliant with all requirements. We took a total of 3,086 water samples from our customer taps during 2022. Top-level tap water was ensured by an effective water treatment process, continuous preventive maintenance works in the water network, and investments made in recent years in water pumping stations.
In the fourth quarter, ice-breaking equipment was delivered to Tallinn, and maintenance of water pipeline started already in December. Wastewater treated at the Paljassaare Wastewater Treatment Plant also maintains a high level of quality, being again fully compliant with all the set requirements last year.
The significantly lower indicators of pollutants are the proof of excellent quality of effluent discharge to the sea and the good work of our teams. Our goal is to deliver high quality service to our customers, and within 12- months, our customer satisfaction was 4.3 points out of five, which is a very, very good result. The leakage rate in the last quarter of 2022 was 15.3%, which is lower rate to the same period last year. In 2022, the leakage rate in overall was 16%.
We always try to disturb our customers as little as possible, and we do everything to supply our customers with drinking water. The average water interruption per property lasted 3- hours and 12- minutes, which is shorter than in 2021. In terms of enhancing the re-reliability of, water supply service to our customers, within the last 12 months, we have reconstruct over 19 km of pipes. I will give over to Taavi who will go into details about the financial results. Thank you.
Thank you, Aleksandr. I will now give a short overview of the financial performance of Tallinna Vesi in the fourth quarter and for the 12 months of 2022. Let's start off with a quick comment on latest economic forecast. Estonian Central Bank forecast finds that the consumption will be reduced by a higher inflation and profitability of the companies will decline. The economy is expected to grow a little during this year, but mainly because of increased spending by the public sector. Inflation will continue to fall but will remain on the high side, dropping a little below 10% in 2023. These trends have and will continue to affect our operations and financial results.
Compared to the fourth quarter in 2021, the total sales revenues increased by 7%, amounting to EUR 60 million. In 12 months, the sales increased by 2%, to EUR 54.6 million. In both periods, the sales were mainly impacted by higher water service revenues, while construction revenues were decreasing. The gross profit for Q4 in 2022 was EUR 4.5 million, down by 6% or EUR 3.5 million compared to the same period in 2021. In 12 months, the gross profit decreased by 18% or EUR 3.7 million. The gross profit was mainly impacted by a higher cost of goods and services sold, which was close to fully balanced by higher water service revenues.
In Q4 in 2022, the operating profit was EUR 2.8 million or EUR 0.6 million lower than in the same period in 2021, being mainly impacted by changes in gross profit and higher administrative and marketing expenses. In 12 months, the operating profit was EUR 11.3 million or EUR 7.5 million lower, reflecting the same trends as in last quarter and accompanied by freezing the change of provision of third, possible third-party claims in Q4 2021.
In total, the reduction in the provision in 2021 amounted to EUR 3.6 million. Compared to the fourth quarter in 2021, the net profit of the company was EUR 2.4 million or EUR 0.8 million lower, being mainly impacted by changes mentioned, but also by increasing interest expenses due to changes in euro rate. In 12 months, the net profit was EUR 8.4 million or EUR 7.2 million lower compared to the same period last year. On the next slide, I will comment on the changes in revenues and expenses in more detail. Total sales revenues for the fourth quarter of 2021 increased by 7% amounting to EUR 16 million. In 12 months, the sales increased by 2% to EUR 54.6 million.
In the fourth quarter, the total revenues from water services were by 13% or EUR 1.6 million higher than in the fourth quarter of 2021, amounting to EUR 13.5 million in total, resulting mainly from tariff increase starting from 1st of October 2022. In 12 months, the sales of water services increased by 9% or EUR 3.8 million, driven by changes in tariffs, higher commercial customer consumption and stormwater revenues. In the fourth quarter, the private customer revenues in main service area increased compared to the same period in 2021 by 20% to EUR 6 million, being mainly driven by increase in tariffs. In 12 months, the private customer revenues increased by 3% to EUR 20.8 million.
In the fourth quarter, the commercial customer revenues in main service area increased compared to the same period in 2021 by 12% to EUR 4.3 million, driven by increase in consumption accompanied by tariff increase effective from October 1, 2022. The sales to commercial customers were impacted by higher consumption of hotels and spas, rental services and port. In 12 months, the commercial customer sales increased by 16% to EUR 6.7 million, being affected by the same factors as mentioned in relation to fourth quarter. Construction services showed in the fourth quarter a decrease of 15% or EUR 0.4 million, and amounted to EUR 2.4 million. Accordingly, were also down construction related construction services cost.
On annual basis, the construction services revenues were down by 34% or EUR 2.5 million totaling EUR 4.8 million for the period. The decrease was mainly related to lower pipe construction revenues won on the market, accompanied by lower volume in the first nine months in the road construction. The latter impacted by postponement of procurement from public sector due to uncertainty on the markets. Next, let's take a look at costs. The total costs of goods sold increased by 14% or EUR 1.4 million in Q4 amounting to EUR 11.5 million. In 12 months, the increase was 15% and amounted to EUR 37.7 million.
Total direct production costs increased in fourth quarter of 2022 by 29% or EUR 0.9 million, primarily due to higher electricity costs. In 12 months, the total direct production cost increased by 58% amounting to EUR 13.6 million and were impacted by the same factors, high electricity and other variable costs. Electricity costs increased close to 2x due to an average 62% higher electricity price. Chemical costs increased by 23%, driven primarily by price of methanol. In the fourth quarter of 2022, construction service cost decreased by 13% to EUR 1.9 million. In 12 months, the cost decreased by 37% to EUR 3.8 million, and were related to lower construction services revenues I mentioned earlier.
In the fourth quarter of 2022, salary costs increased by 14% to EUR 2.2 million. The cost increase also in 12 months was 14% amounting to EUR 8.2 million and were mainly affected by salary increases of every staff member according to the company's salary policies, and also filling of vacancies during the time period. Administrative and marketing expenses increased in Q4 of 2022 by 17% to EUR 1.4 million, and in 12 months by 4% to EUR 5.1 million. Driven primarily by higher salary cost in both periods. In Q4 of 2022, other net income and expenses amounted to net loss of EUR 0.3 million compared to EUR 0.2 million in comparative period.
In twelve months, the corresponding figure amounted to loss of EUR 0.5 million compared to net income of EUR 3.1 million in last year, this being mainly driven by freezing of the change of provision in the possible third party claims in fourth quarter 2021. Let's take a look at the cash flows. As of 31st of December 2022, the company's cash balance stood at EUR 12.7 million, forming 5% of total assets. Compared to the end of last quarter, the cash balance has decreased by EUR 4 million, mainly as a result of investments related cash flows. The biggest contribution to the cash flows comes from main operations.
During the 12 months of 2022, total operating cash flows amounted to EUR 50 million, which is EUR 7.4 million lower than the comparative period last year. The company's collection of receivables continues to be high, being 99.885% on average. The Net Cash Flows from investing activities during the 12 months of 2022 resulted in cash outflow of EUR 19 million, which is EUR 8.2 million more than in the same period last year. The company's financing cash flows during the 12 months of 2022 were EUR 19.9 million, being on the same level compared to the last year same period. I will conclude my overview with this, and thank you for your time.
Thank you both for the presentation. Now we will proceed with the questions, and we have some questions sent in already. We will also give you some minutes to submit your questions, and please feel free to type in any questions you might have. Thank you for the questions and we will proceed with these in the order they have been received. The first question is by Sander Daniel, and the question is: When and how much you expect to save in electricity costs in connection to the planned new CHP facility in Paljassaare? Aleks, can you give answer?
Yeah. Thank you very much for the question. The plan is that CHP engine will be installed by the end of 2023. We believe that the engine starts work at the end of fourth quarter. If we speak about the savings, our expectation is that, during 12 months, starting from the point when the CHP engine starts working, the company could save approximately 10,000 MW per hour energy.
The second question also by Sander Daniel is, please explain, 26% joy increase in other costs of goods sold to EUR 2 million in Q4. Aleks, can you give an answer?
Yeah. Thank you. The biggest impact on our costs are related to the heating and the gas purchase for the heating of our assets.
The third question also by Sander: Please specify the changes in water consumption volumes of private and corporate customers, respectively in Q4. Taavi, can you take this?
We have to keep in mind that the overall impacts on a annual level are quite small, but for in our perspective, still significant. In sales volumes in cubic meters, the commercial volume has increased by 3.7% on annual basis, and private volumes decreased by 1.5%. We can relate that to the changes in on the market regarding the COVID restrictions and also the activation of free time sector and hotel spots and, but also office buildings.
Okay. Thank you. The fourth question by Sander is, interest expenses for more than tripled QoQ in Q4. Are all new loan contract rates already adjusted to current Euribor or further increases ahead? Taavi, can you explain this as well?
Our adjustments occurred during September and November. Reflecting the Euribor level in the given months. As the Euribor level has continued to increase, there will be increases ahead also during this year.
Okay, thank you. Now we will give you one or two extra minutes to type in any questions if you have more, and here you go. Thank you, Sander, for the last question, and Taavi will answer this.
yes. This reflects, the annual, impact. Q4 specifically was, commercial, increased 7% and, private customers - 2.2%.
Thank you. Seems like we don't have now any more questions, and a recording of the presentation will be available in the Tallinna Vesi YouTube channel, webinar playlist shortly. Presentation materials and reports can be found on Tallinna Vesi's website as well. Taavi Gröön and Aleksandr Timofejev, thank you for the overview, and thank you all for joining. Have a good day.