Segments (EURm) Q1/19 Q1/18 yoy
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Supermarkets 110.9 104.7 5.9%
Department stores 23.1 22.8 1.4%
Cars 26.4 27.6 -4.5%
Footwear 1.9 2.2 -13.8%
Real Estate 1.4 1.3 7.3%
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Total sales 163.7 158.6 3.2%
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Supermarkets 2.4 3.1 -24.6%
Department stores -0.5 -0.4 2.7%
Cars 0.6 0.9 -34.7%
Footwear -0.5 -0.3 43.5%
Real Estate 2.6 2.9 -7.8%
IFRS 16 -0.4 0.0
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Total profit before tax 4.3 6.1 -29.9%
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In the first quarter of 2019, the unaudited consolidated sales revenue of the
Tallinna Kaubamaja Group was 163.7 million euros. The growth was 3.2% compared
to the first quarter of 2018, when the comparable sales revenue was 158.6
million euros. The net loss of the reporting period was 2.2 million euros,
influenced by the income tax calculated on dividends (6.5 million euros). The
loss in the first quarter of 2018 was 0.2 million euros, including 6.2 million
euros of income tax. The pre-tax profit was 4.3 million euros - 1.8 million
euros lower than the result of the previous year, of which 0.4 million euros was
due to the negative impact on the pre-tax profit caused by the difference of
estimated interest and depreciation calculated in accordance with the new
financial reporting standard IFRS 16, which entered into force on 1 January
2019.
The year 2019 began with the continued growth of sales revenue for the Group.
The supermarkets segment achieved an accelerated sales revenue growth compared
to their market segment. The sales revenue generated by the department stores
segment also increased. The car trade segment was influenced by the market
situation, leading to a halt in the growth of the car market in the first
quarter, and a drop in the sales of new cars. In the car trade segment,
correction of revenue occurred due to a change on the market, but also the
strong base year, i.e. the level of revenue generated by public procurement won
by the Latvian automobile dealer in 2018 could not be repeated in the same
volume at the beginning of this year. Overall, the sales revenue of the car
trade segment in the first quarter was 4.5% lower than the previous year.
Although the gross margin was maintained at good level in the first quarter, the
pre-tax profit was expected to remain below the year before due to the launch
period of the sales units opened at the end of 2018. In addition, the comparison
basis of the profit was increased by the extraordinary income of 0.4 million
euros from the sale of Latvian real estate, included in the result of the first
quarter of 2018. Labour costs grew by 9.2% in the first quarter. The costs
increased because of the additional Selver store along with the growth of
average wage.
From 1 January 2019, the Group applies 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 of 31.03.2019,
the assets leased in accordance with IFRS 16 were recognised in the balance
sheet of the Group in the net present value of lease payments of 105,177
thousand euros. The impact of IFRS 16 on the income statement is as follows:
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in thousands of euros 3 months 2019
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Decrease in other operating expenses 4,235
Increase in depreciation -4,105
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Increase in operating profit 130
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Calculated interest expense on lease liabilities -503
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Decrease in the net profit -373
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There were no significant sales area additions in the first quarter of 2019. In
the footwear segment, business interruptions occurred due to renovation works at
ABC King and SHU stores of the Rocca al Mare Centre. Renovation works were
carried out in the SHU store at Ülemiste Centre and the SHU store in Kristiine
Centre was reopened. Designing of the extension of the Kulinaaria central
kitchen plant and the development works of the new car showrooms in Latvia and
Lithuania are ongoing.
Selver supermarkets
The consolidated sales revenue of the supermarkets business segment was 110.9
million euros in the first quarter of 2019, increasing by 5.9% in comparison
with the same period last year. 9.4 million purchases were made at Selver
supermarkets in the first quarter of 2019, showing a growth of 4.1% year-on-
year. In the first quarter of 2019, the consolidated pre-tax profit of the
supermarkets segment was 2.4 million euros, being 0.8 million euros lower
compared to the result of the previous year, influenced by the launch of new
sales units opened at the end of 2018. The consolidated net loss of the
supermarkets segment was 1.6 million euros, being 0.7 million euros lower
compared to the same period in the previous year. The difference between the net
profit and profit before income tax compared to year earlier results is partly
due to income tax paid on dividends - income tax paid on dividends was 0.1
million euros lower in 2019 compared to the year earlier. The lower tax load due
to dividends is caused by the changes in the taxation principles of dividends
that allows applying a lower tax rate on one third of the previous year's
dividends. The entire profit of 2019 was earned in Estonia. In 2018, SIA Selver
Latvia was liquidated and the company was deleted from the commercial register.
The growth of sales revenue in Selver continued in the first quarter at a higher
pace than the average of the market segment on account of new stores. Although
competition is tight, sales revenue has also grown in the comparable stores. The
comparison basis of the first quarter is lower by two stores that were added in
the second half of 2018 and higher by one store that was closed in April last
year. The basis is higher also because of Easter, which was in the first quarter
last year. E-commerce produced good results with the growth of sales revenue by
32%. The profit earned is influenced by the growth of sales revenue and the more
efficient inventory management. Investments have had a positive impact, allowing
cutting management costs and employee working hours. The employees' wages were
adjusted, which resulted in a slight decrease in labour cost efficiency.
This year, Selver plans to renovate at least two stores and introduce the
SelveEkspress service to all Selver stores. As at the end of the first quarter
of 2019, the SelveEkspress service is available at 49 stores and approximately
300,000 loyal customers have used the service. We continue the development of e-
commerce to improve our ability to service the growing numbers of customers.
There is a plan to open the first e-Selver food locker, which is an alternative
delivery method of goods that customers have ordered through e-Selver.
Department stores
In the first three months of 2019, the department stores business segment earned
a sales revenue of 23.1 million euros, which is 1.4% more than last year in the
same period. The pre-tax loss of department stores in the first quarter of 2019
was 0.5 million euros, which was lower by 2.7% in the year-on-year comparison.
The sales results of department stores were influenced by the well-managed image
campaigns in February and successful launch of the spring season in fashion
departments. In the first quarter of 2019, the sales revenue of OÜ TKM Beauty
Eesti, which operates I.L.U. cosmetics stores, was 1.1 million euros, showing a
growth of 3.2% compared to the same period in 2018. The loss in the first
quarter was 0.1 million euros, which was 16.6% lower than the loss in the
comparable period in 2018. In the first quarter, the focus was on improving the
e-store at www.ilu.ee and enhancing customer experience and changing the
assortment. The growth of sales revenue has been achieved thanks to successful
marketing campaigns and continued strong results produced by the e-store.
Car trade
The sales revenue of the car trade segment was 26.4 million euros in the first
quarter of 2019. The sales revenue decreased by 4.5% year-on-year, wherein the
sales revenue generated by the sales of KIAs dropped by 11.6%. In the first
three months of the year, 1,143 new vehicles were sold altogether. The sales
revenue generated by the car trade segment in the first quarter of 2018 included
revenue from public procurements that the Latvian company had won, which was not
achieved in the reporting period. In the first quarter of 2019, the car market
decreased in all Baltic States; according to the data of Statistics Estonia,
7.2% fewer new passenger cars were registered in Estonia in the first two months
of 2019. The pre-tax profit of the segment was 0.6 million euros in the first
quarter of 2019, which is 0.3 million euros lower than in the same period last
year. In addition to the decreased sales revenue, one of the reasons behind the
weaker profitability results in the first quarter of 2019 could be the slower
launch of the Peugeot business of the Estonian retail unit of the Group's car
trade segment. The result of the car trade was also influenced by the
manufacturers' problems with the production of certain models, which caused
delays in the availability of cars and their delivery to customers.
Footwear trade
The sales revenue of the footwear trade segment was 1.9 million euros in the
first quarter of 2019, decreasing by 13.8% on the year-on-year basis. The loss
of the first quarter increased by 0.2 million euros compared to the previous
year, remaining at 0.5 million euros. In the first quarter of 2019, there were
business interruptions due to renovation works at Rocca al Mare ABC King and SHU
stores, the SHU store at Kristiine Centre was reopened, and renovation works
were carried out at the SHU store in Ülemiste Centre. In order to reduce costs,
the central warehouse and office were moved in the first quarter. In accordance
with the strategic decision of the Group, the managements of the beauty and
footwear trade segments were merged to achieve synergy between support
functions. Anne-Liis Ostov, the manager of TKM Beauty OÜ, continues also as
member of the management board of the companies.
Real estate
The sales revenue earned in the real estate segment outside the Group was 1.4
million euros in the first quarter of 2019. The sales revenue grew by 7.3%
compared to last year. The pre-tax profit of the real estate segment in the
first quarter of 2019 was 2.6 million euros, which is 7.8% lower than the result
earned in the same period last year. The sales revenue grew in all real estate
segment companies in the reporting quarter. The driver of the sales revenue
growth was the Latvian real estate company, where the commercial space at the
Ogre building was leased to a party outside of the Group. Tartu Kaubamaja Centre
showed good results and contributed remarkably to the company's sales growth.
The decrease of the profit of the segment was caused by the sales profit earned
from the sales of real estate sold in Latvia in the first quarter of last year.
This year, the development of the Latvian and Lithuanian car centres will
continue.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In thousands of euros
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31.03.2019 31.12.2018
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ASSETS
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Current assets
Cash and cash equivalents 41,831 37,235
Trade and other receivables 13,732 16,093
Inventories 73,696 78,212
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Total current assets 129,259 131,54
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Non-current assets
Long-term receivables and prepayments 113 113
Investments in associates 1,794 1,738
Investment property 59,873 59,866
Property, plant and equipment 317,821 212,687
Intangible assets 4,957 5,133
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Total non-current assets 384,558 279,537
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TOTAL ASSETS 513,817 411,077
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LIABILITIES AND EQUITY
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Current liabilities
Borrowings 38,374 26,002
Trade and other payables 117,242 90,775
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Total current liabilities 155,616 116,777
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Non-current liabilities
Borrowings 163,32 68,313
Provisions for other liabilities and charges 370 370
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Total non-current liabilities 163,69 68,683
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TOTAL LIABILITIES 319,306 185,46
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Equity
Share capital 16,292 16,292
Statutory reserve capital 2,603 2,603
Revaluation reserve 95,064 95,587
Currency translation differences -149 -149
Retained earnings 80,701 111,284
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TOTAL EQUITY 194,511 225,617
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TOTAL LIABILITIES AND EQUITY 513,817 411,077
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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
In thousands of euros
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3 months 2019 3 months 2018
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Revenue 163,695 158,633
Other operating income 240 713
Cost of sales -123,326 -119,773
Other operating expenses -10,552 -13,837
Staff costs -17,246 -15,788
Depreciation, amortisation and impairment losses -7,637 -3,437
Other expenses -251 -308
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Operating profit 4,923 6,203
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Finance income 0 0
Finance costs -714 -170
Finance income on shares of associates 56 52
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Profit before tax 4,265 6,085
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Income tax expense -6,453 -6,249
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NET LOSS FOR THE FINANCIAL YEAR -2,188 -164
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Other comprehensive income:
Items that will not be subsequently reclassified
to profit or loss
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Other comprehensive income for the financial year 0 0
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TOTAL COMPREHENSIVE LOSS FOR THE FINANCIAL YEAR -2,188 -164
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Raul Puusepp
Chairman of the Board
Phone +372 731 5000
Attachment
* Börs_Kaubamaja_1Q2019_eng (https://ml-
eu.globenewswire.com/Resource/Download/95cce47b-1b48-4598-b504-a84c418bd69f)
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