?
Segments (EURm) Q4/19 Q4/18 yoy 12m/19 12m/18 yoy
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Supermarkets 123,0 122,5 0,4% 469,4 450,1 4,3%
Department stores 32,0 31,6 1,4% 102,8 100,9 1,9%
Cars 33,5 24,2 38,2% 130,4 114,9 13,4%
Footwear 2,6 2,6 0,1% 8,9 9,8 -9,6%
Real Estate 1,5 1,4 3,8% 5,8 5,4 5,7%
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Total sales 192,6 182,4 5,6% 717,2 681,2 5,3%
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Supermarkets 5,6 5,8 -3,0% 18,1 18,6 -3,0%
Department stores 2,4 2,8 -17,2% 3,5 3,8 -7,3%
Cars 0,2 0,6 -65,0% 4,0 4,4 -9,2%
Footwear -0,2 0,0 -694,4% -1,2 -0,4 202,6%
Real Estate 6,6 2,3 186,3% 14,7 10,2 43,3%
IFRS 16 -0,4 0,0 - -1,5 0,0 -
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Total profit before tax 14,1 11,6 22,1% 37,7 36,7 2,5%
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In the fourth quarter of 2019, the unaudited consolidated sales revenue of
Tallinna Kaubamaja Group was 192.6 million euros, exceeding the results of the
previous year by 5.6%. The sales revenue of twelve months was 717.2 million
euros, showing a growth of 5.3% compared to the result of 2018, when the
comparable sales revenue was 681.2 million euros. In the fourth quarter of
2019, the Group's unaudited consolidated net profit was 14.1 million euros,
which was 22.0% higher than the profit of the comparable period in the previous
year. The Group's net profit was 31.1 million euros in 2019, which is 2.3%
higher than the previous year. The pre-tax profit earned in twelve months was
37.7 million euros, showing a 2.5% increase compared to last year. The net
profit was influenced by a dividend payment, on which income tax in the amount
of 6.3 million euros was calculated in the first quarter of 2019, compared to
the income tax of 6.7 million euros calculated a year earlier. Accounting for
leases in compliance with IFRS 16 (Leases) was first introduced in 2019, which
resulted in net profit reduction by 1.5 million euros.
The sales revenue growth slightly accelerated compared to the annual average in
the last quarter of 2019. In the fourth quarter, the Group's car segment greatly
contributed to the sales revenue (38.2%), driven by the sale of KIAs as well as
the successful sale of Peugeots. In November, Verte Auto, the Latvian company
belonging to the car trade segment, opened a completely new and fully functional
showroom in Riga and started to sell Shkodas, a suitable addition to the brand
selection of the Group's car segment. The continued strong growth of 40% of e-
stores compared to 2018 gives a reason to rejoice. In 2019, no new stores were
opened in the supermarkets segment; however, two Selver stores were refurbished
in the fourth quarter. Due to temporary closing of the stores for refurbishing,
the quarterly growth number of supermarkets was lower compared to the previous
quarters. One-off investments in developments intended to generate income in the
future - the refurbishing of Selver stores in the supermarkets segment, opening
a Shkoda showroom in the car segment, and the development of the cash collection
service in Viking Security in the department store segment - caused a slight
decrease of the pre-tax profit in these segments compared to the period a year
earlier. In 2019, the supermarkets and the Kaubamaja department stores improved
their gross profit margin, although redirecting the business model to more
extensive fleet sales in the car segment, which has a significant weight in the
Group's business, also influenced the margin on the Group's consolidated level.
The labour costs of the Group increased by 8.0% in the year, keeping up with the
growth of the average wage in Estonia.
In the fourth quarter, Pelgulinna and Jõhvi Selver underwent extensive
renovations. The SelveEkspress service was made available in 52 Selver stores.
The service area of e-Selver expanded twice in 2019 and by the end of 2019, the
service covered the entire city of Tallinn and Harju County, Rapla and part of
Rapla County, and the city of Pärnu and its close proximity. From the beginning
of 2020, the e-Selver service is offered in Tartu, which has turned e-Selver
into the e-store with the largest assortment of foodstuffs and the largest
service area in Estonia. In addition, the aforementioned new fully functional
Shkoda showroom in Riga was completed. As an important development of the
reporting period, the construction works of the Kulinaaria central kitchen
production building in Tallinn are in progress. The completion of the new
Kulinaaria production plant and the exchange of the business software of the
central kitchen is planned for the first half of 2020. An additional plan is to
renovate the older production building after the completion of the new building
and the entire refurbished production complex should be finished by the end of
2020. With the extension of the production area, new products in the ready-to-
eat food category are expected to be launched under the Estonians? beloved
Selveri Köök trademark and new interesting pastry products under the Van Kook
trademark. In 2019, the business software of real estate management and the
footwear segment were renewed and the focus was on the improvement of user
convenience of e-stores and speed of delivery. In the footwear segment, the SHU
stores in Kristiine Keskus, Võru Kagukeskus, and Tartu Kaubamaja were renovated.
In the first half of 2019, rearrangement of all the Group's food stores was
undertaken to bring them into compliance with the amendment of law that
restricted the visibility of displayed alcohol in stores.
More attention is paid to responsible and sustainable behaviour and promotion
thereof in the companies of the Group. Special attention was paid in 2019 to
reducing the use of packaging, especially plastic bags, in stores. During the
year, more than 1 million less plastic bags have been circulated from the
Group's stores than in 2018. In addition to reducing the amount of packaging, we
also consider it important that the packaging in circulation is environmentally
friendly, also preferably made from recycled materials. In 2020, Selver plans to
replace existing food boxes with new, greener ones made from recycled and
biodegradable materials in all 53 stores across Estonia.
From 1 January 2019, the Group has applied the new mandatory financial reporting
standard IFRS 16 (Leases) in lease cost accounting. Pursuant to the standard,
leased assets and liabilities are recognised in the balance sheet at the present
value of lease payments and the depreciation on the leased assets and estimated
interest costs on lease liabilities in the income statement. As at 31 December
2019, the assets leased in accordance with IFRS 16 were recognised in the
balance sheet of the Group in the present value of lease payments of 99,126
thousand euros and corresponding calculated liabilities of 100,630 thousand
euros. The impact of IFRS 16 on the income statement is as follows:
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in thousands of euros 4(th) quarter 2019 12 month 2019
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Decrease in other operating expenses 4,261 17,001
Increase in depreciation -4,130 -16,474
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Increase in operating profit 131 527
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Calculated interest expense on lease
liabilities -508 -2,031
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Total decrease in the net profit -377 -1,504
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Selver supermarkets
The consolidated sales revenue of the supermarkets segment was 469.4 million
euros, increasing by 4.3% in comparison with the same period last year. The
consolidated sales revenue of the fourth quarter was 123.0 million euros,
growing by 0.4% compared to the same period of the previous year. At Selver
stores, 40.3 million purchases were made in 2019, exceeding the year-on-year
result by 3.8%. In the fourth quarter of 2019, the pre-tax profit of the
supermarkets segment was 5.6 million euros, which is 3.0% lower than the result
of the previous year. The consolidated pre-tax profit of the supermarkets
segment was 18.1 million euros in 2019, which also marks a 3% decrease year on
year. The net profit was 14.1 million euros, which is 0.4 million euros lower
than the result of the previous year. The difference between net profit and pre-
tax profit is due to income tax paid as dividends, i.e. income tax paid on
dividends was 0.1 million euros lower in 2019 compared to the year earlier. The
lower tax load on dividends is due to the amendment regulating the taxation of
dividends, which allows applying a lower tax rate on one third of last year's
dividends.
The temporary closing of two stores, Jõhvi Selver and Pelgulinna Selver, for
refurbishing influenced the results of the fourth quarter and the year 2019. The
comparison basis of the fourth quarter is partly lower by two stores that were
added in the last quarter of 2018. The results of the sales of fresh foodstuffs
as well as the more efficient management of stocks had a positive impact on the
sales revenue. In the last quarter, the fear of consumers of catching a Listeria
infection from fish products influenced the sales of fish products, which
account for a large portion of consumers? basket of products, despite the fact
that Selver purchases products that meet health requirements and both Selver and
Kulinaaria constantly monitor the quality of goods on sale or moving through the
production. Profit earning is influenced by the growth of sales revenue and more
efficient management of goods. Investments have a positive impact, allowing
cutting administrative costs and employees? working hours. To balance the
decrease in the employees? working hours, their wages were adjusted. The results
of the annual report were also influenced by the amendment of the Alcohol Act,
due to which significant expenses were incurred during the rearrangement of
sales floors, and one-time expenses made in the renovation of two stores.
E-commerce shows good results - the sales revenue grew by 34.7% in a year. The
service area of e-Selver expanded twice in 2019. By the end of 2019, the service
covered the entire city of Tallinn and Harju County, Rapla and part of Rapla
County, and the city of Pärnu and its close proximity. In addition to the
assortment of goods offered in regular Selver stores, e-Selver offers larger
household appliances and other devices. From the beginning of 2020, the e-Selver
service was introduced to cover Tartu and its close proximity. e-Selver is the
e-store with the largest assortment of foods and the largest service area in
Estonia.
Department stores
The Kaubamaja business segment earned a sales revenue of 102.8 million euros in
2019, which is 1.9% more than last year in the same period. The e-store of
Kaubamaja grew by 41.5% in a year. The pre-tax profit of the department stores
was 3.5 million euros in 2019, which was 7.3% lower year on year. In the fourth
quarter, the pre-tax profit of the department stores was 2.4 million euros,
which result is 17.2% lower than the comparable period. In 2019, the sales
results of the department stores were influenced by very successful larger
campaigns. The Osturalli campaigns organised in spring and autumn were the most
successful of all time. The Ilu Aeg campaign carried out in the beginning of
September brought the best results ever. Although the beginning of the autumn
season in September was very positive, the expected winter weather did not
appear in the last quarter and the warmer-than-average winter had a negative
impact on the result of the fourth quarter of Kaubamaja. Still, the stores were
better at managing inventories and growing the margin in 2019, which resulted in
a positive effect on the total annual profit.
In the fourth quarter of 2019, the sales revenue of OÜ TKM Beauty Eesti, which
operates the I.L.U. cosmetics stores, was 1.6 million euros, showing a growth of
4.5% compared to the same period in 2018. The profit was 0.07 million euros in
the fourth quarter, which was 37.7% higher than the result earned in the
comparable period of 2018. The sales revenue was 4.9 million euros in 2019,
growing by 5.8% on the year-on-year basis. The loss earned was 0.13 million
euros in 2019, which was 0.04 million euros lower than the loss earned in the
comparable period of 2018. In 2019, the focus was on the launch of the e-store
and on digital marketing. The brand identity was refreshed in connection with
the 10(th) anniversary of I.L.U. stores.
Car trade
The sales revenue of the car trade segment was 130.4 million euros in 2019. The
sales revenue exceeded the revenue earned last year by 13.4%, wherein the sales
revenue generated by the sales of KIAs grew by 9.6% in a year. The sales revenue
of 33.5 million euros earned in the fourth quarter exceeded the result of the
previous year by 38.2%. The sales revenue of KIAs grew by 21.4% year on year and
the sales of Peugeot cars increased almost by one third. In November, Shkoda was
added to the product portfolio as a new car brand; 42 Shkoda cars were sold in
the last two months of the year. In 2019, the Group's car trade segment sold
5,704 new vehicles, of which 1,353 were sold in the fourth quarter. The pre-tax
profit of the car trade segment was 4.0 million euros in 2019, which is 9.2%
lower than the profit earned a year earlier. The pre-tax profit of the fourth
quarter of 2019 was 0.2 million euros, which was 0.4 million euros lower than
the pre-tax profit earned in the fourth quarter of 2018.
In summary, the share of companies offering full service and short-term lease
among the customers of new cars was clearly growing in 2019. This customer
segment is mostly responsible for the fleet and wholesale transactions. This, in
turn, translates into the growth of the number of vehicles sold, turnover, and
market share; however, these sales decrease profit margin, which is clear from
the results of the Group's car trade segment. Furthermore, the sales results of
new Opel vehicles by Viking Motors in Tallinn worsened, showing a clear downward
trend that has become obvious following the change in the importer of Opel
vehicles. The changed business policy and strategy of the new importer has
caused a continued decrease of the market share of Opel cars in the region and
forced the Group's car segment to cease the sales of Opel passenger and
commercial cars in future as an unprofitable business. The follow-up services
for Opel vehicles will be provided in future. The Group opened a completely new
and fully functional Shkoda showroom with another showroom specially built for
the sale of used cars, which is one of a kind in Latvia, by Verte Auto, the
Latvian subsidiary of the Group's car segment in the beginning of November
2019. The popularity of Shkoda's vehicles among the customers of Baltic regions
is well known and it is good to conclude that the Group's car segment
successfully replaced the Opel brand with the Shkoda brand, which shows a great
potential.
Footwear trade
The sales revenue of the footwear trade segment was 8.9 million euros in 2019,
showing a decrease of 9.6% compared to the previous year. The pre-tax loss of
the segment was 1.2 million euros in 2019, growing by 0.8 million euros year on
year. The sales revenue of the fourth quarter was 2.6 million euros, a growth of
0.1% compared to the sales revenue of the same period last year, which, for the
first time, has put a stop on the declining turnover of the past three years.
The pre-tax loss of the fourth quarter was 0.2 million euros, which is 0.2
million euros weaker compared with the result of the same period of the previous
year. The net loss of the fourth quarter was 0.2 million euros. The result of
the footwear trade segment in 2019 was affected by store repositioning plans and
related business decisions, as well as the introduction of renewed business
software and logistics service. In the beginning of 2019, a change was made in
the company - the central warehouse was closed and a new principle was applied
to the logistics service. During the year, the SHU stores in Kristiine Keskus,
Võru Kagukeskus, and Tartu Kaubamaja were renovated. The concepts of the
assortment and sales environments of ABC KING and SHU were refreshed and a new
visual identity of SHU was developed. In the second half of the year, a new
business software system was introduced and the cash register systems were
replaced in the stores. It is planned to continue with the renovation of stores
in 2020 and implement the changes in the assortment and sales environment at
stores developed in 2019.
Real estate
The sales revenue earned in the real estate segment outside the Group was 5.8
million euros in 2019. The sales revenue grew by 5.7% compared to last year. The
sales revenue of the segment outside of the Group was 1.5 million euros in the
fourth quarter, growing by 3.8% compared to the same period last year. The pre-
tax profit of the real estate segment was 14.7 million euros in 2019. The profit
grew by 43.3% year on year. The pre-tax profit of the segment was 6.6 million
euros in the fourth quarter, which exceeded the result of the same period last
year by 4.3 million euros. The Latvian real estate company that leased the
commercial space to a party outside of the Group influenced the sales growth of
the segment. Other companies of the Group's real estate segment also showed a
stable sales growth. The profit of the segment within the Group was increased by
the new Shkoda car showroom and the showroom intended for used cars completed and
taken into use in Latvia at the end of the year, the reduction of costs in the
Latvian real estate company, and the sales income from the sale of the
registered immovable intended for the development of residential property in
Tallinn. At the end of the year, the annual revaluation of investments in
property was conducted, which did not have any significant effect on the profit
of the segment. The development of the additional Latvian car showroom and the
store of Kaubamaja department store in Tallinn will continue in 2020.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In thousands of euros?
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31.12.2019 31.12.2018
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ASSETS
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Current assets
Cash and cash equivalents 40,629 37,235
Trade and other receivables 16,904 16,093
Inventories 78,305 78,212
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Total current assets 135,838 131,540
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Non-current assets
Long-term trade and other receivables 114 113
Investments in associates 1,721 1,738
Investment property 60,458 59,866
Property, plant and equipment 319,192 212,687
Intangible assets 4,990 5,133
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Total non-current assets 386,475 279,537
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TOTAL ASSETS 522,313 411,077
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LIABILITIES AND EQUITY
-------------------------------------------------------------------------
Current liabilities
Borrowings 46,448 26,002
Trade and other payables 89,831 90,775
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Total current liabilities 136,279 116,777
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Non-current liabilities
Borrowings 157,876 68,313
Provisions for other liabilities and charges 322 370
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Total non-current liabilities 158,198 68,683
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TOTAL LIABILITIES 294,477 185,460
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Equity
Share capital 16,292 16,292
Statutory reserve capital 2,603 2,603
Revaluation reserve 93,496 95,587
Currency translation differences -149 -149
Retained earnings 115,594 111,284
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TOTAL EQUITY 227,836 225,617
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TOTAL LIABILITIES AND EQUITY 522,313 411,077
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In thousands of euros
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IV quarter 12 months
IV quarter 2019 2018 2019 12 months 2018
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Revenue 192,614 182,352 717,223 681,181
Other operating
income 4,431 982 5,113 2,175
Cost of sales -142,372 -132,830 -535,410 -507,182
Other operating
expenses -11,435 -15,189 -41,917 -56,033
Staff costs -20,448 -19,461 -73,113 -67,710
Depreciation,
amortisation and
impairment losses -7,685 -3,227 -30,743 -13,426
Other expenses -233 -844 -715 -1,673
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Operating profit 14,872 11,783 40,438 37,332
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Finance income 0 0 1 1
Finance costs -767 -237 -2,982 -810
Finance income on
shares of associates 29 27 203 214
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Profit before tax 14,134 11,573 37,660 36,737
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Income tax expense -70 -49 -6,523 -6,299
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NET PROFIT FOR THE
FINANCIAL YEAR 14,064 11,524 31,137 30,438
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Other comprehensive
income:
Items that will not
be subsequently
reclassified to
profit or loss
Revaluation of land
and buildings 0 15,266 0 15,266
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Other comprehensive
income for the
financial year 0 15,266 0 15,266
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TOTAL COMPREHENSIVE
INCOME FOR THE
FINANCIAL YEAR 14,064 26,790 31,137 45,704
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Raul Puusepp
Chairman of the Board
Phone +372 731 5000
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