Segments (EURm) Q2/19 Q2/18 yoy 6m/19 6m/18 yoy
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Supermarkets 117.8 111.4 5.8% 228.7 216.1 5.9%
Department stores 24.6 23.8 3.6% 47.8 46.6 2.5%
Cars 35.7 34.9 2.1% 62.0 62.5 -0.8%
Footwear 2.2 2.5 -13.6% 4.1 4.7 -13.7%
Real Estate 1.4 1.4 4.0% 2.8 2.7 5.6%
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Total sales 181.7 174.0 4.5% 345.4 332.6 3.9%
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Supermarkets 3.7 3.7 -2.4% 6.0 6.9 -12.5%
Department stores 0.9 1.1 -23.4% 0.4 0.7 -39.8%
Cars 1.6 1.7 -6.8% 2.2 2.6 -15.9%
Footwear -0.2 0.1 -259.4% -0.6 -0.2 185.0%
Real Estate 2.8 2.5 11.3% 5.4 5.3 1.0%
IFRS 16 -0.4 0.0 -0.8 0.0
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Total profit before tax 8.4 9.2 -9.2% 12.6 15.3 -17.4%
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In the second quarter of 2019, the unaudited consolidated sales revenue of the
Tallinna Kaubamaja Group was 181.7 million euros, exceeding the results of the
previous year by 4.5%. The sales revenue of the first half-year was 345.4
million euros, showing a growth of 3.9% compared to the first half-year of
2018, when the comparable sales revenue was 332.6 million euros. In the second
quarter of 2019, the Group's unaudited consolidated net profit was 8.4 million
euros, which was 9.2% lower than the profit of the comparable period. The
Group's net profit was 6.2 million euros in the first six months of 2019, which
is nearly one third lower year-on-year. The pre-tax profit was 12.6 million
euros in the first half-year, showing a decrease of 17.4% compared to the
previous year. The net profit was influenced by a dividend payment, on which
income tax in the amount of 6.5 million euros was calculated in the first
quarter of 2019, compared to the income tax of 6.2 million euros calculated a
year earlier.
The sales revenue of the Group grew in all important retail sales segments in
the second quarter of 2019. The sales revenue growth of 2.1% in the car segment
is also satisfactory compared to the multi-digit growth numbers of the previous
year. Efficient work with the assortment of goods and the management of
mercantile processes has resulted in an improved sales margin, which balances
out the strong pressure on the labour costs growth. In a year, the labour costs
of the Group increased at the same rate as the respective average in Estonia,
i.e. by one tenth. However, the reasons why the profit was lower compared to the
result of the previous year are also the influences of the IFRS 16 and the
growth of other operating expenses, such as computer and communication costs,
that support more extensive process automation. In order to manage the wage
pressure, market participants are reviewing free services offered in retail
trade market to price them, which resulted in many market participants,
including Selver e-stores, increasing the threshold of free-of-charge delivery
of packages in the second half-year.
The most important development projects of the Group are improvement of the user
convenience and speed of delivery of e-stores, implementing of business software
in the central kitchen, real estate segment, and footwear segment, the
development of car showrooms in Latvia and Lithuania, and the new production
plant of Kulinaaria. The alcohol display limit, which entered into force in
June, obligated store chains to place alcohol apart from other goods and limit
its visibility, which required undertaking the labour-intensive and expensive
reconstruction of stores. In the supermarkets segment, there is a plan to
renovate two stores this year and expand the SelveEkspress service to 52 Selver
stores by the end of the year. More attention is paid to responsible and
sustainable behaviour and promotion thereof.
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 30.06.2019,
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 102,939
thousand euros and corresponding calculated liabilities of 103,690 thousand
euros. The impact of IFRS 16 on the income statement is as follows:
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in thousands of euros II quarter 2019 6 months 2019
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Decrease in other operating expenses 4 243 8 478
Increase in depreciation -4 109 -8 214
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Increase in operating profit 134 264
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Calculated interest expense on lease liabilities -512 -1015
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Decrease in the net profit -378 -751
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Selver supermarkets
The consolidated sales revenue of the supermarkets business segment was 228.7
million euros in the first half-year of 2019, increasing by 5.9% in comparison
with the same period last year. The consolidated sales revenue of the second
quarter was 117.8 million euros, growing by 5.8% in comparison with the same
period last year. At Selver stores, 19.8 million purchases were made in the
first half of 2019, exceeding the year-on-year result by 4.5%.
In the second quarter of 2019, both pre-tax profit and net profit were 3.7
million euros, remaining at the same level of the comparable period of last
year. The consolidated pre-tax profit of the supermarkets segment was 6.0
million euros in the first half-year, which is 0.9 million euros lower compared
to the result of the previous year. The net profit earned in the first half-year
was 2.1 million euros, decreasing by 0.8 million euros compared to last year.
The difference between the net profit and profit before income tax is 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
allow applying a lower tax rate on one third of the previous year's dividends.
The growth of the sales revenue of the second quarter in Selver supermarkets was
at the same pace as in the relevant market segment. The comparison basis of the
second quarter is lower by two stores that were added in the second half of
2018 and partly higher by the specific goods sales due to exceptionally good
summer weather last year. E-commerce shows good results, where the sales revenue
grew 39% in the second quarter. Profit earning is influenced by the growth of
sales revenue and more efficient management of goods. Investments have continued
to have a positive impact, allowing cutting administrative and management costs
as well as employees' working hours. To balance the decrease in the employees'
working hours, their wages were adjusted, which translated into a slight
decrease in the efficiency regarding labour costs. The results are also
influenced by the amendment of the Alcohol Act, due to which significant one-
time expenses were incurred during the rearrangement of sales floors.
This year, Selver plans to renovate up to two stores and introduce the
SelveEkspress service to 52 Selver stores by the end of the year. As at the end
of the second quarter of 2019, the SelveEkspress service is available in 49
stores and over 300,000 loyal customers have used the service. The work with the
development of e-commerce will continue to improve the capacity to service the
rapidly growing number of customers.
Department stores
In the first six months of 2019, the department stores business segment earned a
sales revenue of 47.8 million euros, which is 2.5% more than last year in the
same period. In the second quarter, the sales revenue of the department stores
was 24.6 million euros, which is 3.6% higher than the comparable result achieved
last year. Kaubamaja e-store grew by 38% in the first half-year of 2019 compared
to the same period last year. The pre-tax profit of the department stores was
0.4 million euros in the first six months of 2019, which was 39.8% lower year-
on-year. The pre-tax profit of the department stores was 0.9 million euros in
the second quarter, which was 23.4% lower than the comparable period. The sales
results of the department stores in the first half-year were influenced by very
successful campaigns organised in the first and second quarter. The 42nd
Osturalli sales campaign organised in spring was the most successful of all
time. Good weather in the beginning of spring was favourable for the sales of
seasonal goods. In the second quarter, the result of the department stores was
influenced by the reconstruction of the alcoholic beverages departments in both
sales houses, which disturbed the sales process in Toidumaailm (Food
Department). The labour costs that increased in the second quarter also
influenced the profit of the department stores.
This year, Kaubamaja pays special attention to sustainability and especially how
packages are used in the sales houses. Starting from the beginning of 2019, all
plastic bags have to be paid for in the department stores and the goal is to
gradually replace all packages with packages manufactured from recycled
materials. At the end of June, reusable bags fully manufactured from recycled
plastic bottles were added to plastic bags made from recycled materials and
paper bags.
In the second 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
8.4% compared to the same period in 2018. The loss was 0.1 million euros in the
second quarter of 2019, which remained at the same level as in the comparable
period of 2018. The sales revenue was 2.2 million euros in the first half-year
of 2019, growing by 5.7% year-on-year. The loss earned in the first six months
of 2019 was 0.2 million euros, which was at the same level as the loss earned in
the comparable period of 2018. The sales revenue of the second quarter was
positively influenced by the continued growth of popularity of the e-store and
successful marketing campaigns.
Car trade
The sales revenue of the car trade segment was 62.0 million euros in the first
half-year of 2019. The sales revenue decreased by 0.8% year-on-year. The sales
revenue of 35.7 million euros earned in the second quarter exceeded the result
of the previous year by 2.1%. In the first half-year, 2,773 new vehicles were
sold altogether, of which 1,630 vehicles in the second quarter. The net profit
of the segment earned in the first half-year of 2019 was 1.5 million euros,
which was 18.3% lower than the profit earned in the previous year. The pre-tax
profit of the segment was 2.2 million euros in the first half-year, which is
15.9% lower than the profit earned in the first half-year of 2018. The pre-tax
profit earned in the second quarter of 2019 was 1.6 million euros, which is
6.8% lower year-on-year. In the beginning of the second quarter, the KIA plant
had some issues with the delivery of cars. This caused most of the sales and
divestments to be effected in May and some in June. The majority of divested
cars were vehicles of short term lease companies. Due to the exchange of
importers and coordination of action strategy, the margins earned on Opel and
Peugeot vehicles were temporarily smaller than planned.
Footwear trade
The sales revenue of the footwear trade segment was 4.1 million euros in the
first half-year of 2019. The sales revenue dropped by 13.7% in the first half-
year compared to last year. The sales revenue of the segment was 2.2 million
euros in the second quarter, decreasing by 13.6% year-on-year. The loss was 0.6
million euros in the first half-year. The year-on-year loss was 0.2 million
euros. In the second quarter, the loss was 0.2 million euros, which is a weaker
result by 0.3 million euros compared to the same period last year. The sales
revenue earned in the second quarter was unfavourably influenced by the partial
delay in the spring season goods and the assortment of goods. From 1 May, TKM
Group merged the chain's commercial activities under joint management and Anne-
Liis Ostov, who took on the position of a member of board of TKM King, continues
also as manager of TKM Beauty Eesti.
Real estate
The sales revenue earned in the real estate segment outside the Group was 2.8
million euros in the first six months of 2019. The sales revenue grew by 5.6%
compared to last year. The sales revenue outside of the Group of the segment was
1.4 million euros in the second quarter. The sales revenue increased by 4.0%
year-on-year. The pre-tax profit of the real estate segment was 5.4 million
euros in the first half-year of 2019. The profit grew 1.0% compared to last
year. The pre-tax profit of the segment earned in the second quarter of 2019 was
2.8 million euros, which is 11.3% higher than the result earned in the same
period last year. The sales revenue grew in all real estate segment companies in
the first half-year. The Latvian real estate company that leased the commercial
space in the Ogre building to a party outside of the Group achieved the highest
sales growth in the segment. The growth of the sales revenue outside of the
Group as well as the completion of Kolde Selver at the end of last year
increased the profit of the segment in the reporting period. This year, the
development of the Latvian and Lithuanian car centres will continue.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
In thousands of euros?
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30.06.2019 31.12.2018
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ASSETS
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Current assets
Cash and cash equivalents 25,386 37,235
Trade and other receivables 14,201 16,093
Inventories 70,625 78,212
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Total current assets 110,212 131,540
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Non-current assets
Long-term trade and other receivables 113 113
Investments in associates 1,742 1,738
Investment property 59,873 59,866
Property, plant and equipment 315,976 212,687
Intangible assets 4,914 5,133
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Total non-current assets 382,618 279,537
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TOTAL ASSETS 492,830 411,077
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LIABILITIES AND EQUITY
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Current liabilities
Borrowings 32,845 26,002
Trade and other payables 81,601 90,775
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Total current liabilities 114,446 116,777
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Non-current liabilities
Borrowings 175,142 68,313
Provisions for other liabilities and charges 370 370
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Total non-current liabilities 175,512 68,683
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TOTAL LIABILITIES 289,958 185,460
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Equity
Share capital 16,292 16,292
Statutory reserve capital 2,603 2,603
Revaluation reserve 94,541 95,587
Currency translation differences -149 -149
Retained earnings 89,585 111,284
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TOTAL EQUITY 202,872 225,617
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TOTAL LIABILITIES AND EQUITY 492,830 411,077
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
In thousands of euros
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II quarter II quarter
2019 2018 6 months 2019 6 months 2018
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Revenue 181,731 173,977 345,426 332,610
Other operating
income 157 352 397 1,065
Cost of sales -136,408 -130,959 -259,734 -250,732
Other operating
expenses -10,273 -13,744 -20,825 -27,581
Staff costs -18,299 -16,529 -35,545 -32,317
Depreciation,
amortisation and
impairment losses -7,693 -3,390 -15,330 -6,827
Other expenses -160 -335 -411 -643
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Operating profit 9,055 9,372 13,978 15,575
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Finance costs -752 -187 -1,466 -357
Finance income on
shares of associates 58 24 114 76
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Profit before tax 8,361 9,209 12,626 15,294
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Income tax expense 0 0 -6,453 -6,249
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NET PROFIT FOR THE
FINANCIAL YEAR 8,361 9,209 6,173 9,045
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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 0 0
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TOTAL COMPREHENSIVE
INCOME FOR THE
FINANCIAL YEAR 8,361 9,209 6,173 9,045
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Raul Puusepp
Chairman of the Board
Phone +372 731 5000
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