Market announcement

Title

Unaudited consolidated interim accounts for the second quarter and first six months of 2024

Message

Segments (EURm)           Q2/24   Q2/23   Change   6m/24   6m/23   Change
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  Supermarkets              150.3   154.5   -2.7%    296.7   301.7    -1.6%

  Department stores         25.4    27.0    -5.9%    49.4    51.7     -4.5%

  Cars                      54.1    55.9    -3.1%    98.9    97.6     1.4%

  Security                   5.7     3.5    63.2%    10.3     6.4     61.1%

  Real Estate                1.8     1.6     8.6%     3.4     3.2     8.4%
-----------------------------------------------------------------------------
  Total sales               237.3   242.5   -2.1%    458.8   460.5    -0.4%
-----------------------------------------------------------------------------


  Supermarkets               5.2     4.6    11.3%     6.2     6.3     -2.2%

  Department stores          0.2     1.0    -82.7%   -1.0     0.2    -617.0%

  Cars                       3.3     4.7    -29.1%    5.6     7.7    -26.8%

  Security                   0.0     0.1    -25.0%   -0.1     0.1    -186.5%

  Real Estate                1.7     3.0    -42.1%    3.9     5.5    -28.1%

  IFRS 16                   -0.6    -0.5    11.8%    -1.0    -1.0     -6.4%
-----------------------------------------------------------------------------
  Total profit before tax    9.9    12.8    -23.2%   13.7    18.7    -27.1%
-----------------------------------------------------------------------------

The Group's unaudited consolidated sales revenue for the second quarter of 2024
was  237.3 million euros,  2.1% less than  the same  period last year. The sales
revenue  for the first half  of the year was  458.8 million euros, a decrease of
0.4% compared  to 460.5 million  euros in  the first  half of  2023. The Group's
unaudited consolidated net profit for the second quarter of 2024 was 9.9 million
euros,  which is 23.2% lower than the net  profit for the same period last year.
The net profit for the first six months of 2024 was 8.4 million euros, a decline
of  37.9% compared to the same period last year. Profit before tax for the first
half  of the  year was  13.7 million euros,  decreasing by 27.1% compared to the
previous year.

The   economic  results  of  the  Group  in  the  second  quarter  of  2024 were
significantly  influenced by the prolonged downturn  in the retail sector. Among
the Group's major retail segments, the car segment performed the best, achieving
a  1.4% increase in sales revenue despite a  9% decline in the Baltic car market
in  the first  half of  the year.  This growth  was driven  by a strategic brand
selection,  with  both  KIA  and  Shkoda  sales  volumes increasing in the Baltic
market.  The security  segment also  continued to  contribute the  highest sales
growth,  expanding  both  organically  and  through  the acquisition of security
companies   in   the   previous  year  (AS  Walde  in  February  2023, Skarabeus
Julgestusteenistus  OÜ  in  July,  and  Caesari  Turvateenistuse  AS in August).
Although   discount   campaigns  have  reduced  product  sales  margins  in  the
challenging  economic environment, the  Group has managed  to maintain its gross
profitability  at  last  year's  level  through  the sale of services. Thanks to
implemented  cost-efficiency measures,  operating expenses  have remained at the
previous   year's   level.  Continuous  process  optimization  has  allowed  for
controlled  labour  costs.  The  Group's  labour  costs increased by 2.0% in the
second  quarter of 2024, while the number of employees grew by 1.6%. The Group's
net  profit was negatively impacted by the gradual increase in interest rates on
the Group's loans.

To enhance customer convenience, the Group has been investing in the development
of  e-commerce for a long time. In the  first quarter of 2024, the new e-shop of
Kaubamaja,  built on a new platform, was launched. In the near future, there are
plans  to add an instalment payment option  for Partnerkaart holders. At the end
of  June, the Food  Department of Kaubamaja's  Tartu department store was closed
for  comprehensive  renovation.  The  updated  Food Department, featuring modern
innovative   solutions  and  technology,  is  scheduled  to  reopen  in  August.
Preparations  have begun to  transition I.L.U. in  Lõunakeskus to a new concept,
planned  for the last quarter  of the year. Selver  plans to open two new stores
this  year - in Rocca al  Mare Centre in Tallinn and  in Raadi, Tartu, with both
openings scheduled for the second half of the year. To streamline processes, the
Group  started developing a central logistics  centre in Maardu last year. Major
construction  works took  place in  the first  half of  the year.  The logistics
centre  is expected to be  completed in the autumn  of 2024. In the car segment,
plans  are  underway  to  start  constructing  a  KIA  start-up  showroom on the
Bikernieku  property in  Riga to  better support  KIA sales.  In Tallinn, Viking
Motors  AS has signed a lease agreement for the former Länsi Auto OPEL centre in
Rae  parish, Peetri village,  where a KIA  flagship store is  planned to open in
autumn  2024. In Lithuania, TKM Lietuva UAB  has announced a construction tender
for  a new KIA-Shkoda multi-brand dealership, with construction expected to start
later this year.

The  selected business  strategy and  investment decisions  are validated by new
records  in the number  of loyal customers  enrolled in the Group's Partnerkaart
loyalty  program.  At  the  end  of  the  reporting  period, the number of loyal
customers  exceeded 737,000, growing by  3.7% over the year.  The share of loyal
customers  in the Group's turnover was 86.3% in the first half of 2024 (85.3% in
the first half of 2023).

Selver supermarkets

The consolidated sales revenue of the supermarket business segment for the first
half  of  2024 was  296.7 million  euros,  a  decrease  of  1.6% compared to the
previous  year. The consolidated sales revenue for the second quarter was 150.3
million  euros, decreasing by  2,7% compared to the  same period of the previous
year.  The average monthly sales  revenue per square meter  of selling space for
goods  was 0.40 thousand in both the first half and the second quarter of 2024.
In 2023, the sales revenue per square meter was 0.43 thousand and 0.44 thousand,
respectively. In comparable stores, the sales revenue per square meter was 0.40
thousand  in the first half (a change  of -6.5%) and 0.41 thousand in the second
quarter  (a change  of -8.5%).  A total  of 21.7 million  purchases were made in
stores  in the  first half  of 2024, the  same level  as last  year. The pre-tax
profit  and  net  profit  for  the  second quarter of 2024 were both 5.2 million
euros,  0.5 million euros higher than in  the base period. The consolidated pre-
tax  profit of the supermarket  segment for the first  half of the year was 6.2
million  euros, remaining  relatively stable  compared to  the same  period last
year.  The net profit  for the first  half was 4.6 million  euros, a decrease of
0.6 million  euros compared  to the  previous year.  The difference  between net
profit and pre-tax profit is due to the income tax on dividends - this year, the
dividend tax was 0.5 million euros higher than last year.

The  baseline data is affected by the  closure of Järve Selver for renovation in
March  and the preceding clearance sale of the largest store, the closure of WOW
Selver  ABC in January,  and the closure  of Punane Selver  in May. The baseline
data do not include the figures for Kurna Selver, which opened in August 2023.

Selver's  sales results  have been  influenced by  the overall  situation in the
Estonian  retail  market,  where  volumes  continue  to  decline,  and  consumer
confidence  is weak.  Modest additions  to selling  space and increased discount
campaigns  have resulted in slower sales revenue growth than the market average.
To  stimulate customer purchasing  activity, Selver has  increased the number of
discounts  offered and  has not  passed on  the increase  in VAT to some product
prices.  In  January,  a  project  offering  permanently good regular prices was
launched,  providing  customers  with  around  650 products  at  very favourable
prices.  In  spring,  a  targeted  campaign,  Golden Wednesday, was launched for
customers  of retirement age,  which has been  very well received  by the target
group. The first half-year profit was primarily affected by the reduced turnover
of goods and the decreased gross profit from product sales. During the reporting
period,  the  prices  of  many  services  and  materials  increased.  Thanks  to
implemented  cost-saving measures,  operating expenses  remained at the previous
year's  level. Continuous  process optimization  has allowed  maintaining labour
efficiency at last year's level and ensuring moderate wage growth.

Selver  plans to  open two  new stores  this year  - in  Rocca al Mare Centre in
Tallinn  and in Raadi,  Tartu. Both stores  are scheduled to  open in the second
half  of the  year. The  focus remains  on the  assortment of  goods and process
optimization.  As a responsible company, Selver aims to adopt conscious resource
use  and  contribute  to  sustainable  development  in  all  its  activities.  A
sustainable  development strategy has been  developed to guide daily operations.
As  a  company  valuing  openness  and  transparency,  Selver  has published its
obligations  and goals on its website.  Selver's focus is on reducing greenhouse
gas  emissions, increasing waste  recycling, reducing food  waste, packaging and
packaging  use, short supply chains, and  fast and convenient digital solutions.
In  the culinary products field, active product development continues, aiming to
offer  customers many new flavours, with significant attention to reducing salt,
sugar,  and  fat  content.  Two  Selveri  Köök  products  were recognised at the
Estonian  Best  Food  Product  2024 competition: blueberry-yogurt cream meringue
cake and whole-grain oat porridge.

Department stores

The  department store segment's sales revenue for  the first six months of 2024
was 49.4 million euros, a decline of 4.5% compared to the same period last year.
Sales  revenue for the second quarter  was 25.4 million euros, down by 5.9% from
the  previous year. The  pre-tax loss for  the department store  segment for the
first  six months  of 2024 was  1.0 million euros,  which was  1.2 million euros
lower  than the result for the same period last year. The pre-tax profit for the
second  quarter  was  0.2 million  euros.  The  pre-tax profit decreased by 0.8
million euros.

The  average monthly  sales revenue  per square  meter of  selling space for the
Kaubamaja  department stores over the six  months was 0.30 thousand euros, 5.7%
lower  than the same period last year.  The economic slowdown that began towards
the end of the fourth quarter of last year continued into the first half of this
year,  resulting in a  more aggressive winter  discount campaign compared to the
previous  year, which impacted the  Kaubamaja department stores' performance. It
is  also important to note that the base  for the first quarter of last year was
very  strong, with double-digit  growth rates. The  performance of the Kaubamaja
Tallinn  department store was  negatively affected in  the second quarter by the
ongoing  construction of the Vanasadama tram line in Tallinn city centre and the
closure of the Viru Centre bus terminal, significantly reducing foot traffic. In
the  first quarter, Kaubamaja launched  a new e-commerce platform, significantly
enhancing customer usability and incorporating an AI-based recommendation engine
to  improve sales results. The new  platform integrates seamlessly with physical
stores,  featuring pre-shopping, fast  delivery, and the  option to order online
and pay in-store, or vice versa.

The sales revenue of OÜ TKM Beauty Eesti, which operates I.L.U. cosmetic stores,
was 1.9 million euros in the second quarter of 2024, a 2.0% increase compared to
the  same period in  2023. The profit for  the second quarter  of 2024 was 0.02
million  euros, 0.05 million euros less than  the comparable period in 2023. The
sales  revenue for the first half of  2024 was 3.9 million euros, an increase of
8.9% compared to the same period in 2023. The profit for the first half of 2024
was  0.04 million  euros,  0.06 million  euros  less  than  the  result  for the
comparable   period  in  2023. The  successful  marketing  campaigns  drove  the
quarter's  sales results,  but the  overall economic  situation led customers to
focus  on purchasing promotional products, which  put pressure on sales margins.
Preparations  began  to  transition  the  I.L.U.  store  in Lõunakeskus to a new
concept, scheduled for the last quarter of the year.

Car trade

The  car segment's  sales revenue  for the  first half  of 2024 was 98.9 million
euros,  a 1.4% increase compared to the same period last year. Sales revenue for
the  second  quarter  was  54.1 million  euros,  a 3.1% decrease compared to the
second  quarter of 2023. A  total of 3,171 new  vehicles were sold  in the first
half  of  the  year,  the  same  number  as  in the previous year. In the second
quarter, 1,822 new vehicles were sold. The pre-tax profit for the segment in the
first  half  of  2024 was  5.6 million  euros,  2.1 million euros lower than the
result for the previous year. The pre-tax profit for the second quarter of 2024
was 3.3 million euros, 1.4 million euros lower than the same period last year.

The Baltic car market as a whole is experiencing deeper volume declines compared
to  other retail  sectors. Preliminary  data indicates  a 9% decrease in new car
sales  volume in the Baltic region. The largest decline was seen in the Estonian
market  (-17%), while new car sales in Lithuania remained at the previous year's
level.  The  introduction  of  a  car  tax  in  Estonia  has  not  significantly
accelerated  purchasing decisions among customers. Discount campaigns, driven by
the  market downturn, have put pressure on sales margins, being a primary reason
for  the  decline  in  profit.  Additionally,  the start-up costs of the Group's
Lithuanian auto company, Motus Auto UAB's Shkoda dealership, which opened earlier
this  year, negatively impacted profits. The  car segment's profit was supported
by  growing sales of spare parts,  after-sales services, and bodywork, thanks to
an increasing car fleet.

Despite  the downturn in the  car market, the KIA  brand, imported by the Group,
shows  positive growth numbers. To further support KIA sales, the Group plans to
start constructing a KIA start-up showroom on the Bikernieku property in Riga to
ensure  presence in that district.  In Tallinn, Viking Motors  AS signed a lease
agreement  for the former Länsi Auto OPEL  centre in Rae parish, Peetri village,
with  plans  to  open  a  KIA  flagship  store in autumn 2024. In Lithuania, TKM
Lietuva  UAB announced  a construction  tender for  a new  KIA-Shkoda multi-brand
dealership, with construction expected to start later this year.

Security segment

The  outside the  Group sales  revenue of  the security  segment for  the second
quarter  of 2024 was 5.7 million euros,  reflecting a 63.2% increase compared to
the  same period last year. The segment's  pre-tax profit for the second quarter
was  0.04 million euros, 0.01 million  euros lower than  the result for the same
period  last year. The outside  the Group sales revenue  of the security segment
for  the first half of 2024 was 10.3 million euros, a 61.1% increase compared to
the  same period last year.  The proportion of outside  the Group sales in total
sales was 76% in the first half of the year. The pre-tax loss for the segment in
the  first half of 2024 was 0.1 million  euros, 0.2 million euros lower than the
result for the same period last year.

The  company's  performance  improved  in  the  second  quarter  compared to the
beginning  of the year,  achieving profitability. Sales  growth was supported by
both  the addition  of merged  companies' revenues  and continued strong organic
growth. Post-merger synergies have begun to emerge, although several changes are
still  in  progress.  The  negative  impact  of the economic environment remains
evident  in  increased  customer  insolvency  and  declining  margins.  The most
significant  negative impact was in the security technology sector, although the
outlook for the second half of the year shows a positive trend.

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 3.4
million  euros for the first half of 2024, an 8.4% increase compared to the same
period  last year. The sales  revenue earned in the  real estate segment outside
the  Group  was  1.8 million  euros  for  the  second  quarter, an 8.6% increase
compared to the previous year. The pre-tax profit for the real estate segment in
the  first half of 2024 was 3.9 million  euros, a decrease of 28.1%. The pre-tax
profit  for the second quarter was  1.7 million euros, a 42.1% decrease compared
to the same period last year.

The  growth in sales revenue for  the first half of the  year was supported by a
revitalised  commercial rental  market in  the centres.  The general uncertainty
associated  with the  crises of  recent years  has somewhat diminished, which is
reflected  in the stabilisation of visitor  numbers to the centres. However, the
visitor  traffic to  commercial spaces  in central  Tallinn has decreased due to
ongoing  street reconstruction work in the surrounding area. The segment's sales
revenue  was also boosted by a car wash, which was completed in May last year as
an  extension to  the petrol  station rented  to an  external party  near Peetri
Selver.  Several  solar  parks  were  completed  last year, covering part of the
electricity  needs of the rented business buildings, thereby contributing to the
sales revenue growth of the Group's real estate segment.

The  segment's profit continues to be  significantly impacted by the rising cost
of  borrowing due to the tightening of monetary policy. The increase in interest
rates  that  began  at  the  end  of  2022 has  gradually affected the segment's
interest  expenses. Most of  the Group's loan  portfolio is concentrated in this
segment,  which has grown during the reporting  period due to the development of
the  logistics  centre.  TKM  Kinnisvara  AS  became  the  first privately owned
Estonian  company to  sign a  16.1 million euros  loan agreement with the Nordic
Investment  Bank (NIB). The modern A-energy class logistics centre building will
be   constructed  in  accordance  with  BREEAM  certification  and  EU  taxonomy
requirements. The centre will have a total area of 17,200 square meters and will
cost  approximately  20 million  euros  to  build.  A  solar energy park will be
installed on the roof of the logistics centre, covering a significant portion of
the  building's electricity consumption. The logistics centre is scheduled to be
completed  in the autumn of  2024. The decrease in the  segment's profit for the
second  quarter of  2024 compared to  the previous  year was  due to  a one-time
compensation  reflected  in  the  second  quarter  of  2023 related to the early
termination of a lease agreement.

TKM   Kinnisvara   AS  has  started  cooperating  with  Kohila  Municipality  to
potentially  develop a commercial building on a property located in the Härjaoja
area  of Kohila.  The cooperation  agreement initially  involves identifying the
possibilities  for constructing  a store  building. The  project is in its early
stages, and more details will be clarified after the road network, planning, and
development plans for the area are approved. Renovation work began on the ground
floor  of the Tartu Kaubamaja centre, giving  a fresh look to the Kaubamaja Food
Department  and common  areas. Several  tenants in  the centre are also updating
their sales environments.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros?

-------------------------------------------------------------------------
                                                 30.06.2024   31.12.2023
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          24,771       42,064

  Trade and other receivables                        25,228       25,568

  Inventories                                        94,754       98,254
-------------------------------------------------------------------------
  Total current assets                              144,753      165,886
-------------------------------------------------------------------------
  Non-current assets

  Long-term receivables and prepayments                 245          243

  Investments in associates                           1,865        1,732

  Investment property                                65,033       64,971

  Property, plant and equipment                     437,142      433,306

  Intangible assets                                  25,370       25,370
-------------------------------------------------------------------------
  Total non-current assets                          529,655      525,622
-------------------------------------------------------------------------
  TOTAL ASSETS                                      674,408      691,508
-------------------------------------------------------------------------

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

  Borrowings                                         27,281       48,820

  Trade and other payables                          104,220      114,573
-------------------------------------------------------------------------
  Total current liabilities                         131,501      163,393
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        294,635      258,857

  Deferred tax liabilities                            5,356        5,356

  Provisions for other liabilities and charges          508          526
-------------------------------------------------------------------------
  Total non-current liabilities                     300,499      264,739
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 432,000      428,132
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                               113,521      116,521

  Retained earnings                                 109,992      127,960
-------------------------------------------------------------------------
  TOTAL EQUITY                                      242,408      263,376
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      674,408      691,508
-------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

  -----------------------------------------------------------------------------
                                              II quarter    6 months   6 months
                             II quarter 2024     2023         2024       2023
  -----------------------------------------------------------------------------


   Revenue                           237,323       242,465     458,826  460,548

   Other operating income                341           528         550      860



   Cost of merchandise              -171,511      -176,409    -333,601 -334,982

   Service expenses                  -14,956       -14,230     -30,218  -30,125

   Staff costs                       -27,398       -26,869     -54,692  -52,721

   Depreciation,
   amortisation and
   impairment losses                 -10,467       -10,212     -21,077  -20,278

   Other expenses                       -458          -190        -790     -583
  -----------------------------------------------------------------------------
   Operating profit                   12,874        15,083      18,998   22,719
  -----------------------------------------------------------------------------
   Finance income                         76            15         329       16

   Finance costs                      -3,142        -2,291      -5,790   -4,097

   Finance  income on shares
   of  associates  accounted
   for   using   the  equity
   method                                 61            41         133      110
  -----------------------------------------------------------------------------
   Profit before tax                   9,869        12,848      13,670   18,748
  -----------------------------------------------------------------------------
   Income tax expense                     -1            -1      -5,313   -5,301
  -----------------------------------------------------------------------------
   NET PROFIT FOR THE
   FINANCIAL YEAR                      9,868        12,847       8,357   13,447
  -----------------------------------------------------------------------------
   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                                9,868        12,847       8,357   13,447
  -----------------------------------------------------------------------------
 Basic  and diluted earnings
 per share (euros)                      0.24          0.32        0.21 0.33



Raul Puusepp

Chairman of the Board

Phone +372 731 5000