Market announcement

Title

Unaudited consolidated interim accounts for the fourth quarter and twelve months of 2022

Message

Segments (EURm)              Q4/22 Q4/21   yoy   12m/22 12m/21   yoy
-----------------------------------------------------------------------
 Supermarkets                 161.8 151.4  6.8%   594.9  569.0   4.5%

 Department stores            33.7  32.7   3.1%   105.2   93.4   12.6%

 Cars                         34.4  29.6   16.2%  146.8  145.8   0.7%

 Security segment              2.9   2.3   22.5%   9.8    8.2    20.1%

 Real Estate                   1.6   1.5   10.2%   6.2    5.3    17.2%
-----------------------------------------------------------------------
 Total sales                  234.4 217.5  7.7%   862.8  821.6   5.0%
-----------------------------------------------------------------------


 Supermarkets                  4.9   6.3  -22.7%   12.9   20.5  -37.1%

 Department stores             2.0   0.3  585.1%   2.3    -0.7  -429.7%

 Cars                          2.2   1.6   36.5%   10.7   7.4    43.8%

 Security segment              0.0  -0.1  -106.0%  0.1    0.0   385.0%

 Real Estate                   3.2   4.1  -22.2%   11.3   12.1   -6.9%

 IFRS 16                      -0.6  -0.4   52.8%   -2.3   -2.9  -19.6%
-----------------------------------------------------------------------
 Total profit/loss before tax 11.6  11.9   -2.1%   34.9   36.5   -4.2%
-----------------------------------------------------------------------

In  the fourth quarter of 2022, the  consolidated unaudited sales revenue of the
Group was 234.4 million euros, which was 7.7% more than the sales revenue of the
same  period of  last year.  The sales  revenue of 2022 was 862.8 million euros,
showing  a growth of 5.0% compared to the result of 2021, when the sales revenue
was   821.6 million   euros.  In  the  fourth  quarter  of  2022, the  unaudited
consolidated  net profit  of the  Group was  10.6 million euros, which was 9.2%
lower  than the profit  of the comparable  period in the  previous year. The net
profit  of the Group  in 2022 was 29.5 million  euros, which was 7.9% lower than
the  result of the  previous year. The  pre-tax profit earned  in 2022 was 34.9
million euros, which was 4.2% less than the year before.

The  economic  results  of  the  Group  in  the fourth quarter showed a positive
development compared to the third quarter. The growth of sales revenue picked up
a bit, and the decline in profit slowed down. Compared to the previous year, the
sales  revenue of all segments increased in  the fourth quarter. The car segment
showed  the fastest growth in  the fourth quarter, where  the improvement in the
availability  of cars  revived the  entire market.  Regardless of the high price
pressure,  the Group was able  to maintain a strong  sales margin thanks to good
inventory  management  and  well-thought-out  sales  campaigns.  The increase in
energy  costs continued, which increased  comparable costs by 10.0 million euros
during  the year,  accounting for  the lion's  share of  the increase in service
costs.  The increase in energy costs was also the main reason in the slowdown of
the  profit of the segments, negatively affecting the profit of the supermarkets
segment  the  most.  In  the  real  estate  segment,  the  annual revaluation of
investment  properties took place  in the fourth  quarter, where the increase in
the  value of assets was 1.3 million euros lower than a year earlier, leading to
a  decrease in the quarterly profit of the  segment. The net profit of the Group
in  2022 decreased by  2.3 million euros  due to  the calculated loss from lease
contracts  based on the  application of IFRS  16 (in 2021, the respective figure
was  2.9 million euros). Due to high  inflation, expectations of wage growth for
employees have increased. The labour costs of the Group increased by 8.6% in the
fourth  quarter, while the number of employees  decreased by 0.8% as a result of
optimising   operations.  Although  the  Group's  2022 EBITDA  (earnings  before
financial  income and expenses and depreciation) decreased by only 1.5% compared
to   the  previous  year,  the  Group's  cash  flow  from  operations  decreased
significantly.  The  largest  financial  contribution  was made to normalize the
inventory  of the  car trade  segment, which  was depleted  by the  beginning of
2022. In  addition, the regulatory shortening of  payment terms in the groceries
and the reduction of related debts to suppliers had a significant impact.

In  October, a new Selver  store was opened in  Tabasalu near Tallinn, which was
long  awaited  by  the  local  community.  Tabasalu  Selver was one of the first
commercial  spaces  opened  in  the  new  A energy class Tabasalu Centre (13,000
square metres of service and office space). In the fourth quarter, Krooni Selver
underwent  a comprehensive renovation: the warehouse, sales hall, and office and
utility  rooms were renovated with the  most modern and environmentally friendly
technological  solutions in mind. The new  interior design concept of Selver was
introduced in the sales hall. Further developments continued on the Partnerkaart
application  completed in August, which was  one of the most anticipated digital
developments  among our customers. The Partnerkaart app has all the functions of
the  Partnerkaart card - it works as a scanner and a means of payment. The focus
is still on updating the platforms of the e-stores, for which demand is growing,
and  developing  services.  In  September,  the  party  snacks  of Selveri Köök,
previously ordered from a separate environment, were integrated into the eSelver
platform,  enabling customers to conveniently order  from both the grocery store
and  Selveri Köök with one order and  delivery to a significantly expanded area.
Construction  works for the creation  of a solar park  on the roof of the Pirita
Selver building, where electricity is used for own consumption, was completed. A
similar  park is under construction on the roof of the Viimsi Centre. One of the
major  renovation projects of the sales space  in the first half of 2022 was the
opening  of the renovated Naistemaailm in the  Kaubamaja in Tallinn in the first
quarter,  where both the  physical environment and  the selection of brands were
updated.  In June, the new Priisle Selver was opened in the Lasnamäe district in
Tallinn.  In  September,  the  completely  renovated  I.L.U. cosmetics store was
opened  with a new concept in the Pärnu  Keskus Centre. A renewed store was also
opened in Rocca al Mare in October. In accordance with the strategic decision to
stop  selling shoes in stand-alone shoe stores, all ABC King and SHU stores were
closed by the end of the second quarter.

Selver supermarkets

The  consolidated sales revenue of the supermarkets business segment in 2022 was
594.9 million  euros,  increasing  by  4.5% compared  to  the previous year. The
consolidated  sales  revenue  was  161.8 million  euros  in  the fourth quarter,
increasing  by 6.8% in comparison with the same period of last year. The average
monthly  sales revenue per square metre  of sales area in 2022 was 0.42 thousand
euros,  increasing by 3.7% compared to the same  period last year. In the fourth
quarter,  the respective indicator  was 0.45 thousand euros,  which is 4.7% more
than  in the  same period  last year.  In terms  of comparable stores, the sales
revenue  of goods per  square metre in  2022 was 0.43 thousand euros, growing by
3.7% compared  to  the  same  period  last  year.  In  the  fourth  quarter, the
respective  indicator was  0.46 thousand euros,  which is  4.3% more than in the
same  period  last  year.  In  2022, 43.7 million  purchases  were made from the
stores, which was 2.2% higher than in the reference year.

On  1 October, Selveri  Köök joined  the e-Selver  ordering environment.  In the
first months of the year, the production volume of Selveri Köök reached close to
the  pre-pandemic level,  but inflation  and a  significant decrease in consumer
confidence  led to a decrease in  the consumption volume, especially in desserts
and party snacks, at the beginning of autumn.

In  the fourth quarter of 2022, the  consolidated pre-tax profit was 4.9 million
euros   -  1.4 million  euros  lower  than  during  the  reference  period.  The
consolidated net profit was 5.9 million euros, improving by 2.8% compared to the
previous  year. The consolidated  pre-tax profit of  the supermarkets segment in
2022 was  12.9 million euros, decreasing by 7.6 million euros in comparison with
the  previous  year.  In  2022, the  net  profit  was  11.7 million euros, which
signifies  a decrease of 6.6 million euros in comparison with the previous year.
The  difference between the net profit and pre-tax profit arises from the income
tax paid from dividends.

The  economic results of 2022 were affected by the increased turnover of the new
Priisle  and Tabasalu Selver supermarkets opened in Tallinn, as well as the one-
time costs and investments made for the openings. The results were also affected
by  the closure  of Krooni  Selver in  Rakvere for  renovation and  the one-time
expenses   and   investments  related  to  this  project.  The  results  of  the
supermarkets  segment have been significantly affected by accelerated inflation,
the  war in Ukraine, and the effects of COVID-19 included in the reference base.
The 2022 reference base was lower by the costs associated with the rebranding of
Selver  ABC stores  and the  negative effects  of temporary  store closures. The
reference  base was higher due to one closed store and a significantly higher e-
commerce  and manufactured goods basis on the crest of the 2021 health crisis in
the  first half  of the  year. Due  to high  food inflation,  the decline in the
volume  sales  of  foodstuffs  worsened  in  the fourth quarter. The increase in
prices  was mostly caused by  price increases on the  part of food producers and
the  increase in  the price  of energy  carriers, which  increased the operating
costs  of  companies,  which  in  turn  are  transferred  to the final prices of
products  and services. The impact of inflation is mitigated by customers buying
campaign  products in larger quantities. The share of discounted products in the
shopping  basket increased to almost  half of the shopping  basket in the fourth
quarter.  In the last quarter of the year, e-commerce turnover grew at a similar
pace to retail turnover, but the results of the whole year remained 3% below the
level  of 2021 due to the big drop in  the second quarter. In order to fight the
price  pressure, Selver  has taken  actions to  increase efficiency.  During the
renovations,  the equipment has been replaced with more environmentally friendly
and   energy-efficient  alternatives.  During  the  year,  self-service  payment
terminals  have  been  introduced  in  all stores. The Partnerkaart application,
launched  in the third quarter, is very  popular among our customers. Various IT
solutions  have  been  developed,  that  have  had  a  positive impact on labour
efficiency  and the main process of handling  goods. The economic results of the
segment  are  strongly  affected  by  the  significant  increase in the price of
electricity  (increase  of  8.4 million  euros  in twelve months), significantly
increasing  the operating expenses of the  segment. The exceptionally high level
of  inflation has  also led  to strong  pressure on  the increase  in wages, the
growth rate of which has been faster than the growth of sales revenue.

With  the merger  decision of  9 August 2022, the  internal restructuring of TKM
Group  was carried out, during which Selver AS  and TKM King AS merged. TKM King
was  deleted from the commercial  register after the merger.  By the time of the
merger,  all retail  stores of  TKM King  AS had  been closed, and the wholesale
business of TKM King AS had been merged with Selver AS. The merger will not have
a significant impact on the economic results of Selver AS.

In  January 2023, renovation works will begin in Ringtee Selver in Tartu and the
store on Saaremaa will be closed due to worse than expected economic results.

Department stores

In 2022, the Kaubamaja department stores business segment earned a sales revenue
of  105.2 million  euros,  which  is  12.6% more  than  last year. In the fourth
quarter, the sales revenue of the Kaubamaja department store segment amounted to
33.7 million euros, which was 3.1% better than the result in the same period the
year  before. The pre-tax  profit of the  segment in 2022 was 2.3 million euros.
The  profit increased by 3.0 million euros over  the year. The pre-tax profit of
the  fourth quarter was  2.0 million euros, being  1.7 million euros higher than
the result of the same period of the year before.

The annual average sales revenue of Kaubamaja department stores per square metre
of  selling space was 0.3 thousand euros per  month, which is 18% higher than in
the  same period  last year.  One of  the biggest  news for the customers of the
Kaubamaja  department store  in the  first half  of 2022 was  the opening of the
renovated  Naistemaailm in Tallinn, where both  the physical environment and the
selection  of  brands  were  updated.  The  shopping  behaviour  of customers is
increasingly characterised by the keywords quality, sustainability, and planning
-  they visit stores less often, think  through their purchases, and make larger
purchases  at once. In  the last year,  the number of  visits to physical stores
grew  significantly, which indicates  the easing of  the fear of the coronavirus
and  the interest to enjoy  the shopping experience in  physical stores as well.
There  has been  noticeable activity  among foreign  tourists as well. Trade and
leisure  in the city  centre area have  also been stimulated  by the distinctive
concept  of the new Toidumaailm (Food department) in Tallinn, where high-quality
and  a unique assortment  of goods are  valued above all.  The campaigns of last
year  showed good sales results and a higher percentage of total sales of goods.
In  summer, Kaubamaja launched the sustainable product labelling project 'World.
One and only', which helps to make sustainable choices in the e-store. The label
has  been very popular among our customers. In December, Kaubamaja was the first
major  retail company to introduce recycled  packaging made from textile scraps,
which can be reused up to 20 times. The goal is to reduce packaging waste caused
by  e-commerce,  offering  customers  the  opportunity  to  recycle  the  boxes.
Kaubamaja  ended the year with  a successful Christmas season  and, as part of a
charity   project,  donated  to  the  non-profit  association  Laste  ja  Noorte
Kriisiprogramm  (Children and Youth Crisis  Programme) to organise grief support
camps for children in 2023.

In  the fourth quarter of 2022, the sales  revenue of OÜ TKM Beauty Eesti, which
operates the I.L.U. cosmetics stores, was 2.3 million euros, which is 13.2% more
than  in the fourth quarter  of 2021. In the fourth  quarter of 2022, the profit
was  0.1 million euros, which is 0.04 million  euros less than in the comparable
period  in 2021. The most important event of  the fourth quarter was the opening
of  the renewed  I.L.U. cosmetics  store in  Rocca al  Mare, during which 27 new
beauty  brands were added to  the store selection and  the area of skin care and
exclusive  perfumes  was  expanded.  The  sales  revenue of 2022 was 6.7 million
euros,  which is 20.7% more than in the same period of 2021. The profit in 2022
was  0.3 million euros, which was 0.03 million euros more than in the comparable
period  in 2021. The most important keywords of  the year are the development of
the  new concept  and brand  of IL.U.  cosmetics stores  and investments for the
modernisation of the stores in Pärnu and Rocca al Mare.

Car trade

The  sales revenue  of the  car trade  segment in  2022 was 146.8 million euros,
which was 0.7% higher than the result of the previous year. The sales revenue of
34.4 million  euros in the fourth quarter exceeded the sales revenue of the same
period  in the  previous year  by 16.2%. In  2022, a total of 5,134 new vehicles
were sold, 1,139 of them in the fourth quarter. The net profit of the segment in
2022 was  9.4 million euros,  exceeding the  profit of  the year  before by 2.4
million euros. The pre-tax profit of the segment in 2022 was 10.7 million euros,
which  is 3.3 million  euros more  than the  pre-tax profit in 2021. The pre-tax
profit of the fourth quarter of 2022 was 2.2 million euros, which is 0.6 million
euros more than the profit of the same period of the year before.

The  year 2022 ended successfully for the car  segment of the Group. The results
of  all companies in the car segment  exceeded the results of 2021 and in total,
the  year ended with a  new profit record. This  was contributed by new business
directions  such  as  the  full-service  vehicle  rental  service, which is very
popular  among our customers, the steadily growing Shkoda business in Latvia, and
the  sale and service  of KIAs in  Lithuania. The year  2022 as a whole was most
affected  by a supply shortages of new cars,  which at the same time provided an
opportunity to earn a higher profit margin. The delivery and availability of KIA
vehicles was somewhat better than in the case of other brands we represent, such
as Shkoda and Peugeot. At the same time, the share of electric and hybrid cars in
sales was still marginal due to their limited availability in our market.

Thanks  to KIA vehicles, the  segment has secured a  position among the top 4 of
the  Baltic car market. In Estonia, KIAs were  in third place in terms of sales.
The  best-selling models were the  KIA Sportage SUV and  the KIA Ceed series. In
2023, we  will add the KIA E-Niro electric car and the Peugeot 408 mid-class SUV
to our selection, as well as several Shkoda model updates.

Security segment

The  sales  revenue  of  the  security  segment  outside the Group in the fourth
quarter  of 2022 was 2.9 million  euros, increasing by  22.5% in comparison with
the  same period  of last  year. The  segment had  a zero  pre-tax profit in the
fourth  quarter, but the  result was 0.1 million  euros better than  in the same
period last year. The sales revenue of the security segment outside the Group in
2022 was  9.8 million  euros,  increasing  by  20.1% in comparison with the last
year.  The  pre-tax  profit  earned  in  2022 was 0.1 million euros. The pre-tax
profit increased by 0.1 million euros compared to previous year.

The  fourth quarter was successful in all business areas. The field of technical
projects  showed the fastest  growth, where several  large projects, delayed for
various reasons in the first half of the year, were finally realised. 2022 was a
successful  year as a whole - both the  turnover and profit of the company grew.
There  was a strong growth in the portfolio  of services and a slight decline in
the construction of security engineering projects. Increases in almost all input
prices  and labour shortages  presented major challenges,  which the company was
able to cope with by increasing volumes and streamlining operations.

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 6.2
million  euros in  2022. Sales revenue  increased by  17.2% compared to the same
period  last year. The sales revenue earned in the segment outside the Group was
1.6 million  euros  in  the  fourth  quarter.  Sales revenue increased by 10.2%
compared  to the previous year. The pre-tax profit of the real estate segment in
2022 was 11.3 million euros, the profit decreased by 6.9%. The pre-tax profit of
the  fourth quarter  of the  segment was  3.2 million euros.  The pre-tax profit
decreased by 22.2% in the reference period.

The opening of a reconstructed business centre in Salaspils (Latvia) last summer
and  the lease  contract signed  in the  Kuld?ga Centre  this year significantly
contributed  to the increase in sales revenue. The significant increase in sales
revenue was brought about by the temporary rent discounts during the coronavirus
restrictions applied in the comparison period. Last year, new tenants were added
to  the rental premises of Tallinna  Kaubamaja Gallery and Tartu Kaubamaja mall.
The  number  of  visitors  to  shopping  centres,  which had increased since the
beginning  of the year, began to approach  the pre-pandemic level in spring, but
slowed  down again  in the  second half  of the  year and  remained at a similar
level.

The  decrease in the  profit of the  last year of  the segment was caused by the
multiplied  energy prices and the increase in  the cost of borrowings due to the
increase in the interest rates of the euro area intended to tighten the monetary
policy  by  the  European  Central  Bank.  The  annual  fair value assessment of
investment properties had the biggest impact on the fourth quarter profit of the
segment.  The  increase  in  the  value  of  the properties of the previous year
exceeded  the growth of the  reporting year, as a  result of which the profit of
the  last quarter was 1.3 million euros smaller. In 2021, a registered immovable
located  in Saare County was sold, the sale profit of which is also reflected in
the profit of the comparison period.

The  Group's real estate companies have paid a lot of attention to improving the
energy   efficiency  of  buildings  and  started  implementing  the  sustainable
development  strategy of the  Group. An important  role in the implementation of
the  strategy is  the ongoing  collection of  various non-financial  data, which
allows  it to be analysed and linked to financial data. It is also necessary for
making  improvement decisions. The  companies have made  several investments for
the  more  accurate  measurement  and  management  of  the energy consumption of
technical  systems. An automatic ventilation control system has been implemented
in  several centres. Most of the lighting  in the centres has been replaced with
LED  lights.  Automatic  lighting  control  has  been  introduced  in  the Tartu
Kaubamaja  centre. Construction works  for the creation  of a solar  park on the
roof of the Pirita Selver building, where electricity produced is mainly used to
cover  on-site  consumption  of  the  building,  was  completed  in  the summer.
Development  work has started to build a solar park on the roof of Viimsi Centre
as  well. The  construction possibilities  of solar  power plants are also being
analysed  for  other  buildings  belonging  to  the  Group. In 2022, the segment
invested  0.5 million  euros  in  increasing  energy  efficiency  as part of the
sustainability strategy.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

-------------------------------------------------------------------------
                                                 31.12.2022   31.12.2021
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          22,436       29,981

  Trade and other receivables                        27,200       20,673

  Inventories                                        89,194       68,369
-------------------------------------------------------------------------
  Total current assets                              138,830      119,023
-------------------------------------------------------------------------
  Non-current assets

  Long-term receivables and prepayments                 299          304

  Investments in associates                           1,722        1,745

  Investment property                                63,623       62,690

  Property, plant and equipment                     420,600      431,263

  Intangible assets                                  21,723       20,284
-------------------------------------------------------------------------
  Total non-current assets                          507,967      516,286
-------------------------------------------------------------------------
  TOTAL ASSETS                                      646,797      635,309
-------------------------------------------------------------------------

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

  Borrowings                                         97,107       40,646

  Trade and other payables                          111,449      111,345
-------------------------------------------------------------------------
  Total current liabilities                         208,556      151,991
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        190,825      238,705

  Deferred tax liabilities                            5,299        4,476

  Provisions for other liabilities and charges          458          267
-------------------------------------------------------------------------
  Total non-current liabilities                     196,582      243,448
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 405,138      395,439
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                               106,981      109,543

  Retained earnings                                 115,783      111,432
-------------------------------------------------------------------------
  TOTAL EQUITY                                      241,659      239,870
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      646,797      635,309
-------------------------------------------------------------------------




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

-------------------------------------------------------------------------------
                                       IV quarter    12 months
                      IV quarter 2022     2021          2022     12 months 2021
-------------------------------------------------------------------------------


 Revenue                      234,387       217,545      862,763        821,648

 Other operating
 income                           993         2,339        2,199          4,332



 Cost of merchandise         -166,806      -156,096     -624,435       -607,239

 Service expenses             -17,235       -14,324      -63,268        -48,874

 Staff costs                  -28,184       -25,956      -97,458        -88,755

 Depreciation,
 amortisation and
 impairment losses             -9,873        -9,932      -39,072        -38,963

 Other expenses                  -157          -464         -786           -931
-------------------------------------------------------------------------------
 Operating profit              13,125        13,112       39,943         41,218
-------------------------------------------------------------------------------
 Finance income                     1             2            4              4

 Finance costs                 -1,551        -1,283       -5,197         -4,909

 Finance income on
 shares of associates
 accounted for using
 the equity method                 37            27          197            183
-------------------------------------------------------------------------------
 Profit before tax             11,612        11,858       34,947         36,496
-------------------------------------------------------------------------------
 Income tax expense              -982          -147       -5,462         -4,480
-------------------------------------------------------------------------------
 NET PROFIT FOR THE
 FINANCIAL YEAR                10,630        11,711       29,485         32,016
-------------------------------------------------------------------------------
 Other comprehensive
 income:

 Items that will not
 be subsequently
 reclassified to
 profit or loss

 Revaluation of land
 and buildings                      0         9,284            0          9,284
-------------------------------------------------------------------------------
 Other comprehensive
 income for the
 financial year                     0         9,284            0          9,284
-------------------------------------------------------------------------------
 TOTAL COMPREHENSIVE
 INCOME FOR THE
 FINANCIAL YEAR                10,630        20,995       29,485         41,300
-------------------------------------------------------------------------------
 Basic and diluted
 earnings per share
 (euros)                         0.26          0.29         0.72           0.79



Raul Puusepp
Chairman of the Board
Phone +372 731 5000