Announcement View
Company Tallinna Kaubamaja Grupp AS
Type Company Release
Category Other corporate action
Publicize date 12 Oct 2021 16:30:00 +0300
Attachments
Börs_Kaubamaja_3Q2021_eng.pdf
Börs_Kaubamaja_3Q2021_est.pdf
Languages
Kell English
Currency
Title Unaudited consolidated interim accounts for the third quarter and first nine months of 2021
Content
Segments (EURm)           Q3/21   Q3/20    yoy     9m/21   9m/20    yoy
----------------------------------------------------------------------------
  Supermarkets              142,5   134,5    5,9%    417,6   381,0    9,6%

  Department stores          21,9    22,0   -0,4%     60,7    59,4    2,1%

  Cars                       38,2    34,7   10,2%    116,2    92,5   25,6%

  Security segment            2,2     1,5   42,3%      5,8     4,0   45,9%

  Real Estate                 1,4     1,4   -2,9%      3,8     3,7    2,4%
----------------------------------------------------------------------------
  Total sales               206,2   194,2    6,2%    604,1   540,7   11,7%
----------------------------------------------------------------------------
  Supermarkets                7,8     4,4   77,4%     14,2    12,0   17,7%

  Department stores          -0,1    -0,2   -50,0%    -1,0    -2,3   -57,8%

  Cars                        2,4     1,0   136,5%     5,8     1,8   222,8%

  Security segment            0,1     0,0   140,6%     0,1     0,0   775,0%

  Real Estate                 3,1     2,9    7,2%      8,0     7,5    7,1%

  IFRS 16                    -0,8    -0,7    4,0%     -2,5    -1,7   46,8%
----------------------------------------------------------------------------
  Total profit before tax    12,6     7,4   69,1%     24,6    17,3   42,2%
----------------------------------------------------------------------------

In  the third quarter  of 2021, the consolidated  unaudited sales revenue of the
Group was 206.2 million euros, which was 6.2% more than the sales revenue of the
same  period in  2020. The sales  revenue in  the nine  months was 604.1 million
euros,  which was an 11.7% increase  in comparison with the  result of the first
nine  months of  2020, when the  sales revenue  was 540.7 million  euros. In the
third  quarter of 2021, the Group's unaudited  consolidated net profit was 12.6
million  euros, which was 69.1% higher than  the profit of the comparable period
in  the previous year. The Group's net profit  of the first nine months of 2021
was 20.3 million euros, which was 76.4% higher than the result of the comparable
period  in the previous year.  In the first nine  months, the pre-tax profit was
24.6 million  euros, increasing by 42.2% compared to the year before. Net profit
was affected by the dividend payment, from which 4.3 million euros of income tax
was calculated in the first quarter of 2021; 5.8 million euros of income tax was
calculated a year before.

The  sales result of the third quarter of 2021 was probably affected most by the
favourable  situation in  the Estonian  retail market.  Those consumers, who had
stayed away from stores during the coronavirus restrictions in spring, returned,
and  active  use  of  the  funds  from  the  second pension pillar, which became
available  due to the pension reform in  Estonia, increased the sales of durable
goods  explosively. The strong sales  results of the Selver  segment and the car
segment  in the third quarter  also accelerated the growth  of the Group's sales
revenue.  Fast-paced growth  of the  sales via  online channels continued in the
Selver  and Kaubamaja department  store segments even  after the restrictions on
movement  were lifted. The major strategic investments  made by the Group a year
earlier  in  the  growth  of  the  supermarket  segment's  store network and the
expansion of the central kitchen have paid off and enabled the successful growth
of  supermarket segment  sales and  gross revenue  and increased margins. In the
situation  of a car deficit, the Group's car segment also managed to improve its
sales  margin. Along with the growth of  the store network, maintenance and data
communication  costs increased at  a comparable pace.  Labour costs increased by
8.0% in the third quarter, while the number of employees increased by 3.1%.

The  economic  result  of  the  first  nine  months  of 2021 was affected by the
restrictions  established to prevent the spread of the coronavirus in the second
quarter.  Those mainly  affected the  stores of  the Kaubamaja  department store
segment,  with most  of those  stores closed  for seven  weeks. The  fashion and
industrial  goods  departments  of  the  Kaubamaja department store segment, all
I.L.U.  stores, as  well as  the ABC  King and  SHU shoe  stores were closed for
visitors. Even though, based on an application submitted by the Group, the state
covered   the   employees'   remuneration  and,  within  the  framework  of  the
entrepreneurship  support  package,  the  Group's  operating  expenditure in the
extent of 1.6 million euros in total (in the year before, the amount of national
aid  for  the  operations  reached  1.3 million euros), the Kaubamaja department
store segment is still earning a loss over the nine months in total.

In the third quarter of this year, Selver renovated the Jaamamõisa store. In the
Kaubamaja department store segment, the Beauty department and Food department of
the Tallinn department store were renovated, with the Food department in Tallinn
closed  fully for the renovation works on 25 June and reopened in renovated form
on  26 August. Both  of the  renovated sections  have been  accepted well by the
customers.  In September, the Group notified the stock exchange of the strategic
decision  to close the footwear business and to gradually close all ABC KING and
SHU stores over the following year.

One  of the most significant large-scale  developments of the Group was finished
in the first nine months of 2021 - the completion of the new production building
of  the central  kitchen of  Kulinaaria OÜ  with the  renovation of the previous
factory  and the connection of the  two production buildings. The most extensive
innovation  in the first quarter was the  transfer of stores operating under the
Comarket  brand to the Selver ABC brand  and the integration of Comarket, Delice
stores,  and the Solaris Food Store with the Selver supply chain and IT systems.
Updating the software platform of the Selver online stores also commenced in the
first  quarter and was fully completed by the end of the third quarter. As of 1
June  2021, the service area of the e-Selver  online store service covers all of
Estonia.  With this  expansion, Selver  became the  only online grocery store in
Estonia  which delivers goods to all counties  of mainland Estonia in the entire
extent.  Selver has  been very  actively contributing  to the  development of e-
commerce  in the past six  years to be a  pioneer in online shopping. One update
allows  the customers of e-Selver  to track the journeys  of their orders on the
map, which is updated at an interval of twenty seconds.

Selver supermarkets

The  consolidated sales revenue of the  supermarket business segment in the nine
months  of  2021 was  417.6 million  euros,  increasing  by 9.6% compared to the
previous  year. The  consolidated sales  revenue was  142.5 million euros in the
third  quarter of 2020, increasing by 5.9% in comparison with the same period of
last  year. The average monthly sales revenue  per square metre of sales area in
the  nine  months  of  2021 was  0.39 thousand  euros,  exceeding the respective
indicator  in  the  year  before  by  1.8%. In the third quarter, the respective
indicator  was 0.41 thousand euros,  which is 6.2% more  than in the same period
last  year.  The  average  sales  revenue  per  square metre of selling space of
comparable  stores was  0.40 thousand euros  in the  first nine months and 0.41
thousand  euros, on  average, in  the third  quarter, growing by 2.1% and 4.6%,
respectively,  compared to  the year  before. In  the nine months of 2021, 31.7
million  purchases were made from  the stores, which was  13.0% more than in the
reference year.

In  the third quarter of  2021, both the pre-tax profit  and the net profit were
7.8 million  euros, increasing by 3.4 million euros  in comparison with the same
period  the year  before. The  consolidated pre-tax  profit of  the supermarkets
segment  in the nine  months of 2021 was  14.2 million euros, increasing by 2.1
million  euros in comparison with the previous  year. The net profit of the nine
months  was 12.6 million  euros, which  is an  increase of  2.7 million euros in
comparison  with  the  previous  year.  As  of  1 June  2020, the results of the
supermarket segment include the results of ABC Supermarkets.

As Estonian economy as a whole, the supermarket segment was also impacted by the
changes  in the  purchase behaviour  and consumption  habits of the customers in
connection  with the coronavirus broke out  in March 2020, which has resulted in
challenges  in operating with the goods  and continuously increased the expenses
on the personal protective equipment for the customers and the employees.

Selver's result is affected by the acquisition of ABC Supermarkets in the second
quarter  of last year, which  increased the number of  Selver stores by nineteen
new  stores. In February  2021, the sales activities  of one of  the stores were
terminated  and at the end of the  half-year, the sales activities will continue
in  the eighteen added stores. The comparability of the results is also affected
by  the new Selver store opened in July 2020 and by the renovation of one of the
Selver  stores in the reference  period, the expansion of  the sales area of two
stores,  and the impact of the leap year.  Selver has renovated one store in the
third quarter this year. The store was closed for customers for six weeks due to
the renovation works.

Compared  to the  same period  the year  before, which  included the significant
increase  in e-commerce,  the number  of orders  received by e-Selver has almost
doubled  in the nine months.  The service area of  e-Selver has been expanded in
several  stages since the  beginning of the  year and since  June, it covers the
entire  mainland Estonia, as well as the largest islands. The service area of e-
Selver  is the  largest in  Estonia and  it was  declared the most user-friendly
online store in the category of groceries in 2021.

This  year, the transfer of the stores operating under the Comarket brand to the
Selver  ABC brand was completed and IT software upgrades were made in the Delice
store  and Solaris  Food Store.  In the  Delice and  Solaris stores,  the Delice
Express service is now offered to customers - previously, these stores had self-
service  checkouts, but now, customers can  make their purchases conveniently by
using barcode scanners. The process bringing the stores together under one brand
and  the process  of updating  the IT  software were  accompanied by closing the
stores  for  a  few  days  for  replacing  the equipment, as well as by one-time
expenses  and investments. The work with  the assortment of the stores operating
under the Selver ABC trademark, as well as increasing the efficiency of the work
processes  including  the  entire  Selver  chain,  has  continued.  In the third
quarter,  four  smaller  Selver  stores  were  rebranded  under  the  Selver ABC
trademark.  Investments have been made in the popular SelveEkspress service this
year.  Additional self-checkout  tills have  been added  to the stores where the
customers'  interest in the service has  significantly increased, and opening of
the  SelveEkspress service in the Selver ABC  stores has begun. Expansion of the
SelveEkspress  service to the Selver  ABC stores will also  continue in the last
quarter of the year.

The  profit has been  significantly affected by  the good revenue, especially in
the  summer period, when the weather was warm, as well as the faster increase in
labour  costs, and the costs of the acquisition of ABC Supermarkets and bringing
the stores under the Selver trademark. The lack of manpower in the labour market
has resulted in wage pressure. A temporary increase in the labour costs was also
caused  by the integration of  the processes of ABC  Supermarket stores into the
Selver  solution,  higher  labour  needs  in  the  e-commerce segment, where the
provision  of the  service is  more resource-intensive  compared to the physical
store,  and higher expenses to  cover the increased sick  days of employees. The
profit  has also  been affected  by the  energy prices,  which have occasionally
risen several times above the normal levels.

Selver  also plans  to renovate  another Selver  store this  year and to further
develop  the online store  service to meet  the persistently high demand. Active
preparations  continue in connection with the new  Selver stores to be opened in
2022.

Department stores

The  sales revenue of the Kaubamaja department stores segment in the nine months
of  2021 was 60.7 million  euros, which  was 2.1% better  than in the comparable
period  of the previous year.  The sales revenue of  the third quarter was 21.9
million  euros, which  remained 0.4% below  the level  of the previous year. The
pre-tax  loss of the Kaubamaja department store segment in the first nine months
of  2021 was  1.0 million  euros,  which  was  1.3 million euros better than the
result  of the previous year,  when the loss amounted  to 2.3 million euros. The
pre-tax  loss of  for the  third quarter  was 0.1 million  euros, which  is 0.1
million euros better than in the same period last year.

The average sales revenue of the Kaubamaja department stores per square metre of
selling  space was 0.24 thousand  euros per month  in the nine  months, which is
0.7% higher than in the same period last year. The sales result of the Kaubamaja
department stores for the nine months was affected by the strict restrictions in
spring, which resulted in the closure of all stores selling industrial goods. As
in  the previous year, the Kaubamaja department stores closed all departments of
industrial goods in Tallinn and Tartu for seven weeks (in 2020, they were closed
for  six  weeks).  Only  the  grocery  stores  remained open. The fact, that the
customers'  demand for  summer goods  was, compared  to the  previous year, much
higher after the reopening of the stores, was evident from the discount campaign
in  the  summer,  which  proved  very  successful.  The renovation of the Beauty
department  and Food department  of the Tallinn  department store had a negative
impact  on the operating profit of  the Kaubamaja department store segment, with
the  Food department in Tallinn closed fully for the renovation works on 25 June
and  reopened in renovated form on 26 August. The opening campaign of the autumn
season  and 'Ilu Aeg' (the Time of Beauty campaign) in early September were most
successful  for a number of years, which shows, that the customers have accepted
the renovated sections well.

In  the third quarter of  2021, the sales revenue of  OÜ TKM Beauty Eesti, which
operates  I.L.U. cosmetics  stores, was  1.5 million euros,  which is 17.4% more
than  in the same period of 2020. In  the third quarter of 2021, profit was 0.1
million  euros, which  was 0.05 million  euros more  than during  the comparable
period  in 2020. The  sales revenue  in the  first nine  months of 2021 was 3.5
million  euros, which is 7.4% more than in the same period of 2020. In the first
nine  months of 2021, profit was 0.1 million euros, which was 0.04 million euros
more  than in  the comparable  period in  2020. The sales  revenue in  the third
quarter  was increased by  successful marketing campaigns,  the expansion of the
sales  areas of several  stores at the  expense of former  hair studios, and the
consumers'   preparedness   to  visit  physical  stores  in  the  light  of  the
significantly  improved pandemic  situation. In  the last  month of the quarter,
thanks  to  the  funds  released  from  the  second pension pillar, there was an
increase in more expensive impulse purchases.

The  sales revenue of  the shoe stores  of TKM King  AS, which is being reported
under the Kaubamaja department store segment as of 1 April 2021, was 3.5 million
euros  in the  nine months  of 2021. In  comparison with  the previous year, the
sales  revenue decreased by 28.0% in the same  period. In the third quarter, the
sales  revenue of  the segment  was 1.8 million  euros, which  is 7.3% less than
during  the same period in the year before. The loss of the nine months of 2021
was  0.8 million euros, which is an improvement of 0.6 million euros compared to
the  loss of  the same  period in  2020. The loss  of the third quarter was 0.3
million euros, which is 0.1 million euros better than loss of the same period of
2020. In  September,  the  Group  notified  the  stock exchange of the strategic
decision  to close its  footwear business. The  Group intends to gradually close
all ABC KING and SHU stores within the next year. Two ABC KING stores (Kristiine
Centre,  Port Artur 2), two SHU stores  (Ülemiste Centre, Port Artur 2), and the
outlet  store in the Magistrali Centre were  closed in the second quarter, which
also had an impact on the sales revenue for the reporting period.

Car trade

The  sales revenue of the car trade segment was 116.2 million euros in the first
nine  months of 2021. The sales revenue  was 25.6% higher than the sales revenue
in  the same period the year before.  The 38.2-million-euro sales revenue of the
third  quarter was 10.2% higher than  the sales revenue in  the third quarter of
2020. In  the first  nine months,  a total  of 4,887 new  vehicles were sold, of
which 1,581 were sold in the third quarter. The net profit of the segment in the
first  nine months of  2021 was 5.5 million euros,  exceeding the profit for the
same  period of the year before by  4.4 million euros. The pre-tax profit of the
segment  for the first nine months  of 2021 was 5.8 million euros, exceeding the
profit  for the same period in 2020 by  4.0 million euros. The pre-tax profit of
the third quarter of 2021 was 2.4 million euros, which is 1.4 million euros more
than the profit of the same period of the year before.

The  improved market environment  in the third  quarter supported the customers'
increasing  interest in  purchasing vehicles.  The availability  of the cars has
turned  out to be the  key component of the  sales success, as the deficiency of
chips  and other car  components has been  causing more or  less severe delivery
difficulties  for car manufacturers for quite a while. The competent planning of
the  stocks in the car segment of the  Group has enabled to continue to increase
the sales figures. The volumes of the car maintenance services have been growing
increasingly  thanks to the increase in the  number of car brands represented by
the  Group's car segment. The increased demand  has allowed to improve the sales
margin and thereby also the profitability of the segment.

Security segment

The  sales revenue  earned in  the security  segment outside  the Group was 5.8
million  euros in the first  nine months of 2021. The  sales revenue of the nine
months  increased by 45.9% compared to the year before. The sales revenue in the
third quarter was 2.2 million euros, which is 42.3% more than in the same period
last  year. The pre-tax profit of the  security segment in the first nine months
of  2021 was  0.1 million  euros,  remaining  approximately  at  the  same level
compared  to the previous year.  The pre-tax profit of  the segment in the third
quarter was 0.1 million euros, which is 140.6% higher than in the same period in
2020.

All  business areas showed good growth  numbers. Profitability has also improved
as  a result of the investments and extensions in several areas of activity. The
area  of cash  transport and  fire safety  services grew  the fastest. Important
emphasis  will be  placed on  technological solutions  and digitalisation in the
following  quarters. The labour market situation, which has a negative impact on
both growth and margins, remains a major concern.

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 3.8
million  euros in the first nine months  of 2021. The sales revenue increased by
2.4% compared  to the  same period  last year.  The sales  revenue earned in the
segment outside the Group was 1.4 million euros in the third quarter. During the
reference  period, sales  revenue decreased  by 2.9%. The  pre-tax profit in the
real  estate segment outside the  Group was 8.0 million euros  in the first nine
months of 2021. Compared to the reference period, the profit increased by 7.1%.
The  pre-tax profit  earned in  the segment  was 3.1 million  euros in the third
quarter. The pre-tax profit increased by 7.2% in the reference period.

The  drop in the sales revenue of the segment in the third quarter reflects with
a  delay the impact of  the one-time lowering of  the rent, which was granted to
the tenants during the period of the restriction on visiting shopping centres in
spring.  The  restrictions  have  had  a  more  significant impact on the rental
premises  in central Tallinn.  The Tartu Kaubamaja  centre has recovered quickly
from  the  restrictions,  which  were  implemented  to prevent the spread of the
virus.  The same applies  to the Viimsi  Centre, which was  affected most by the
restrictions  imposed  on  leisure  centres  in  the  beginning of the year. The
increase  in the sales revenue and profit of the segment in the nine months were
supported  by renting  commercial premises  to an  external party by the Latvian
real estate company and by the sale of a registered immovable in Saare County.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

-------------------------------------------------------------------------
                                                 30.09.2021   31.12.2020
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          12,205       32,757

  Trade and other receivables                        16,613       15,894

  Inventories                                        73,378       77,334
-------------------------------------------------------------------------
  Total current assets                              102,196      125,985
-------------------------------------------------------------------------
  Non-current assets

  Long-term receivables and prepayments                 373          335

  Investments in associates                           1,868        1,712

  Investment property                                60,550       60,347

  Property, plant and equipment                     412,993      388,757

  Intangible assets                                  20,169       20,148
-------------------------------------------------------------------------
  Total non-current assets                          495,953      471,299
-------------------------------------------------------------------------
  TOTAL ASSETS                                      598,149      597,284
-------------------------------------------------------------------------

-------------------------------------------------------------------------
  LIABILITIES AND EQUITY                             ,
-------------------------------------------------------------------------
  Current liabilities

  Borrowings                                         23,324       49,402

  Trade and other payables                           92,663      102,841
-------------------------------------------------------------------------
  Total current liabilities                         115,987      152,243
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        258,601      217,349

  Deferred tax liabilities                            4,408        4,408

  Provisions for other liabilities and charges          278          277
-------------------------------------------------------------------------
  Total non-current liabilities                     263,287      222,034
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 379,274      374,277
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                               100,852      102,630

  Currency translation differences                     -149         -149

  Retained earnings                                  99,277      101,631
-------------------------------------------------------------------------
  TOTAL EQUITY                                      218,875      223,007
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      598,149      597,284
-------------------------------------------------------------------------




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

  -----------------------------------------------------------------------------
                         III quarter    III quarter                  9 months
                             2021           2020      9 months 2021    2020
  -----------------------------------------------------------------------------


   Revenue                     206,150        194,181       604,103     540,685

   Other      operating
   income                          637            316         1,993         976



   Cost of merchandise        -150,841       -146,012      -451,143    -409,104

   Service expenses            -11,687        -11,216       -34,550     -31,362

   Staff costs                 -20,662        -19,139       -62,799     -55,285

   Depreciation,
   amortisation     and
   impairment losses            -9,559         -9,387       -29,031     -25,249

   Other expenses                 -158           -157          -467        -534
  -----------------------------------------------------------------------------
   Operating profit             13,880          8,586        28,106      20,127
  -----------------------------------------------------------------------------
   Finance income                    0              1             2           1

   Finance costs                -1,361         -1,204        -3,626      -2,967

   Finance   income  on
   shares of associates
   accounted  for using
   the equity method                59             57           156         171
  -----------------------------------------------------------------------------
   Profit before tax            12,578          7,440        24,638      17,332
  -----------------------------------------------------------------------------
   Income tax expense                0             -1        -4,333      -5,823
  -----------------------------------------------------------------------------
   NET PROFIT FOR THE
   FINANCIAL YEAR               12,578          7,439        20,305      11,509
  -----------------------------------------------------------------------------
   Other  comprehensive
   income:

   Items  that will not
   be      subsequently
   reclassified      to
   profit or loss
  -----------------------------------------------------------------------------
   Other comprehensive
   income for the
   financial year                    0              0             0           0
  -----------------------------------------------------------------------------
   TOTAL COMPREHENSIVE
   INCOME FOR THE
   FINANCIAL YEAR               12,578          7,439        20,305      11,509
  -----------------------------------------------------------------------------
 Basic    and   diluted
 earnings   per   share
 (euros)                          0.31           0.18          0.50 0.28


Raul Puusepp

Chairman of the Board

Phone +372 731 5000