Market announcement

Title

Unaudited consolidated interim accounts for the fourth quarter and 12 months of 2015

Message

Segments (EURm)       Q4/15  Q4/14     yoy    12m/15  12m/14   yoy  
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Supermarkets          104,1   99,2    4,9%     383,4   368,2   4,2% 
Department stores      29,0   28,4    2,3%      95,6    92,5   3,3% 
Cars                   15,2   13,9    9,0%      60,8    57,7   5,3% 
Footwear                3,4    3,2    7,7%      11,9    13,4  -10,7%
Real Estate             1,2    0,8   38,5%       3,7     3,3   12,6%
Total sales           152,9  145,5    5,1%     555,4   535,0   3,8% 
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Supermarkets            4,4    4,4    0,6%      10,8     8,1   33,1%
Department stores       2,8    2,9   -2,1%       4,4     4,8   -8,0%
Cars                    0,2    0,4   -48,2%      2,0     2,0   -1,8%
Footwear               -1,5    0,0  -3511,6%    -2,6    -1,3  106,7%
Real Estate             4,7    2,1   123,1%     11,4     8,8   29,1%
Total pre-tax profit   10,6    9,8    8,6%      26,0    22,5   15,4%
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The consolidated non-audited sales revenue of Tallinna Kaubamaja Group was
555.4 million euros in 2015, a growth of 3.8% compared to the results of 2014
when the sales revenue was 535.0 million euros. In the fourth quarter, the
sales revenue of the group was 152.9 million euros, exceeding the sales results
of the previous year by 5.1%. The Group`s consolidated non-audited net profit
for the fourth quarter of 2015 was 10.6 million euros, which is 6.9% higher
year-on-year. The net profit of the group was 22.1 million euros in 2015, which
was better by 8.8% of the profit earned in the previous year. The year`s
pre-tax profit was 26.0 million euros, showing a year-on-year growth of 15.4%.
The net profit was influenced by the dividend payment, on which an income tax
of 3.9 million euros was paid in 2015, whereas the year earlier, 2.2 million
euros was paid as income tax. 

The year 2015 that offered stability and a strong growth in retail business was
not equally generous to all retailing segments, leaving the fashion and
foodstuff sellers with a lower growth than average. Compared to Estonian
statistics, we can still be satisfied with the Group`s sales revenue growth. We
experienced a seasonal shift in the fourth quarter, a usual occurrence in
recent years, resulting in a long warm autumn that lasted by the end of
December. The latter reduced the expected revenue from the sale of fashion
goods. The supermarket segment showed a continued strong sales growth with the
help of the new Viimsi store and e-shop. The footwear segment that faces fierce
competition achieved a significant sales growth despite unfavourable weather
conditions. The car trade segment achieved a superb sales result in the fourth
quarter, primarily with the help of sales campaigns; however, they resulted in
a slight decrease in the margin compared to the reference base. The Group`s
profit earned in the fourth quarter increased by 2.3 million euros on account
of revaluation of the assets of the real estate segment. The growth of average
wage costs was mainly due to the seasonal calculation of incentive
compensation. 

Selver supermarkets

The initial consolidated sales revenue of 2015 of the supermarkets business
segment was 383.4 million euros, growing 4.2% compared to 2014. The
consolidated sales revenue of the fourth quarter was 104.1 million euros,
showing a year-on-year growth of 4.9%. The monthly average sales revenue of
goods per one square metre of sales space was 0.36 thousand euros in 2015,
exceeding the previous year`s result by 1.6%. In the fourth quarter, the sales
revenue of goods per one square metre of sales space was on an average 0.38
thousand euros in a month, exceeding the result of the year before by 1.3%. The
sales revenue of goods per a square metre of comparable stores was 0.37
thousand euros as an average of 12 months and 0.39 thousand euros in the fourth
quarter, showing a respective growth of 2.2% and 1.4%. The turnover of Selver
subsidiary Kulinaaria OÜ outside the Group, especially that of catering
service, which does not account for a significant portion of the total turnover
of the segment, has grown 35.9% in a year. In 2015, 36.1 million purchases were
made in Selver stores and this result exceeds the number of purchases 1.4%
year-on-year. The consolidated pre-tax profit of the supermarket segment was
10.8 million euros in 2015 and the net profit was 8.5 million euros, showing a
respective growth of 2.7 million euros and 0.8 million euros compared to the
previous year. The pre-tax profit earned in Estonia was 13.1 million euros and
the net profit was 10.9 million euros. The pre-tax profit and net profit in the
fourth quarter was 4.4 million euros, remaining at the same level of the
previous year. Of this, the profit earned in Estonia was 4.9 million euros. The
difference in the net profit and the profit before income tax is due to the
income tax paid on dividends: in 2015, the income tax on dividends was 2.22
million euros; in 2014, 0.37 million euros. The pre-tax loss and net loss
earned in Latvia were 2.4 million euros, of which 0.5 million euros in the
fourth quarter. The loss decreased in the last quarter by 0.1 million euros. 

The fourth quarter of 2015 was influenced by Viimsi Selver, the seventh
hypermarket opened in August. The added store not only strengthens competition
outside the chain, but also within the chain. However, the number of purchases
on year-on-year basis has increased. The average consumer basket has grown in
the fourth quarter as well as annually. Successful marketing campaigns and very
good year-end sales during the holiday season have supported the growth of
turnover in the fourth quarter of 2015. The profit earned in Estonia has been
primarily influenced by the greater efficiency achieved in the main process,
i.e. selling goods. Stocks have been managed more efficiently, which has
resulted in fewer discounts and smaller writing-off costs. The cost efficiency
has been improved compared to the previous year in terms of operational costs.
Regardless of the fact, that the base year includes the opening costs of one
store and this year`s operational costs include the opening costs of one store
and renovation costs of one store. 

Department stores

The sales revenue of 2015 of the department stores’ business segment was 95.6
million euros, growing 3.3% in a year. Of this result, the sales revenue in the
fourth quarter was 29.0 million euros, which was 2.3% higher of the revenue
earned in the fourth quarter of 2014. The pre-tax profit of department stores
was 4.4 million euros in 2015, showing a decrease of 8.0% compared to the
previous year. The pre-tax profit in the fourth quarter was 2.8 million euros,
which was lower compared to the profit of 2014 by 2.2%. The average sales
revenue per a square metre of sales space of department stores was 0.3 thousand
euros in a month in 2015, remaining at the same level as the previous year.
However, the sales space of department stores has grown 1.1% from the last
summer on account of the gourmet department at Tallinn sales premises. In the
fourth quarter, warmer autumn months that enabled customers to postpone
outerwear purchase decisions had an effect on the sales result of Kaubamaja.
The total sales in 2015 was influenced by the renovation of Viru bus terminal
during summer months and the renovation of Tartu sales premises in the fourth
quarter. Although the department stores are in the centre of the city at
locations attractive to tourists, the low number of tourists throughout the
year had a negative impact on the sales revenue in 2015. At the same time, the
warmer autumn months had a positive effect on the profit earned by the
department stores due to lower administrative expenditure. The sales revenue of
the fourth quarter of 2015 of OÜ TKM Beauty Eesti that operates I.L.U.
cosmetics stores was 1.7 million euros, growing 6.4% year-on-year. The profit
was 0.04 million euros in the fourth quarter, which was 0.03 million euros
better than the result of the comparable period in 2014. The sales revenue was
5.1 million euros in 2015, growing 9.1% compared to 2014. The loss of 2015 was
0.2 million euros, showing a year-on-year decrease of 0.1 million euros. 

Car Trade

The sales revenue of 2015 of the car trade segment was 60.8 million euros. The
sales revenue exceeded the revenue earned in the previous year by 5.3%, whereas
the sales revenue of KIAs grew 7.1%. The fourth quarter sales revenue in the
amount of 15.2 million euros grew compared to the previous year 9.0%, whereas
the sales revenue of KIAs grew 3.4%. In 2015, altogether 3,011 new vehicles
were sold, of which 745 vehicles in the fourth quarter. The net profit of the
segment of 2015 was 1.5 million euros, showing a smaller profit by 9.6%
compared to the year before. The pre-tax profit of the segment in 2015 was 2.0
million euros, remaining at the same level as the previous year`s result. The
net profit of the fourth quarter was 0.2 million euros, which is lower by 0.4
million euros of the year before. The result of the fourth quarter was
influenced by the sales campaign of Opel cars in stock and there were also
several successful public procurements for cars that increased the sales. The
stable car trade of the group in Lithuania and achieving profitability in 2015
are also worth mentioning. The profit was negatively influenced in the fourth
quarter by the devaluation of Ülemiste car showroom by 0.2 million euro. 

Footwear trade

The sales revenue of the footwear trade segment in 2015 was 11.9 million euros,
which decreased 10.7% in a year. The turnover in the fourth quarter was 3.4
million euros, a growth of 7.7% year-on-year. Whereas in the third quarter the
decrease in the sales deaccelerated, in the fourth quarter, despite especially
unfavourable weather conditions, a growth of sales revenue was achieved.
December became the most complicated of months because it was exceptionally
warm. The loss of the year was 2.6 million euros. The loss grew compared to the
previous year by 1.4 million, by which amount the goodwill of the footwear
trade segment was reduced to 2.1 million euro. The same reduction influenced
the result of the fourth quarter. The more successful year end allows to
believe that the strategic changes introduced in the Group`s footwear segment,
such as normalised level of stock, changes in brand portfolio and sales
management with the focus on the results, will bear fruit regardless of the
continued severe competition situation. 

Real estate

The outside Group sales revenue of the real estate business segment was 3.7
million euros in 2015. The year-on-year sales revenue increased 12.6%. The
outside Group sales revenue was 1.2 million euros in the fourth quarter, a
growth of 38.4% compared to the same period of the previous year. The pre-tax
profit of the real estate segment was 11.4 million euros in 2015, which is 2.6
million or 29.1% better than in the previous financial year. The pre-tax profit
of the fourth quarter was 4.7 million euros, growing by 2.6 million euros or
123.1% compared to the same period of the previous financial year. The growth
of the sales revenue in the fourth quarter was supported by the successful
opening of Viimsi centre in August 2015 and renting out of Rezekne building to
a party outside of the Group in Latvia. The profit of the real estate segment
was influenced by the revaluation of the assets of the segment, which increased
the profit of the quarter by 2.3 million euros. An important development
project in the fourth quarter was the renovation of Tartu Kaubamaja centre,
which is intended to be completed in the first quarter of 2016. 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

                                              31.12.2015  31.12.2014
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ASSETS                                                              
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Current assets                                                      
Cash and cash equivalents                         13,911      24,626
Trade and other receivables                       20,191      17,938
Inventories                                       61,110      56,876
Total current assets                              95,212      99,440
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Non-current assets                                                  
Long-term trade and other receivables                293         338
Investments in associates                          1,778       1,778
Investment property                               44,963       3,035
Property, plant and equipment                    196,691     227,914
Intangible assets                                  9,043      10,402
Total non-current assets                         252,768     243,467
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TOTAL ASSETS                                     347,980     342,907
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LIABILITIES AND EQUITY                                              
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Current liabilities                                                 
Borrowings                                        33,377      20,405
Trade and other payables                          77,066      70,317
Total current liabilities                        110,443      90,722
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Non-current liabilities                                             
Borrowings                                        57,426      77,663
Provisions for other liabilities and charges         502         692
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Total non-current liabilities                     57,928      78,355
TOTAL LIABILITIES                                168,371     169,077
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Equity                                                              
Share capital                                     16,292      16,292
Statutory reserve capital                          2,603       2,603
Revaluation reserve                               65,701      67,159
Currency translation differences                    -255        -255
Retained earnings                                 95,268      88,031
TOTAL EQUITY                                     179,609     173,830
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TOTAL LIABILITIES AND EQUITY                     347,980     342,907
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

                                       IV quarter     IV        12     12 months
                                          2015      quarter   months      2014  
                                                     2014      2015             
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Revenue                                   152,888   145,512   555,447    535,045
Other operating income                      4,536       195     5,140        715
                                                                                
Cost of sales                            -113,072  -107,875  -416,134   -403,716
Other operating expenses                  -11,999   -12,064   -50,776    -50,027
Staff costs                               -14,669   -12,599   -50,890    -46,493
Depreciation, amortisation and             -6,614    -2,844   -15,234    -10,970
 impairment losses                                                              
Other expenses                               -152      -180      -609       -767
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Operating profit                           10 918    10,145    26,944     23,787
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Finance income                                  1         5        12         24
Finance costs                                -280      -367    -1,144     -1,494
Finance income on shares of                     9        24       142        172
 associates                                                                     
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Profit before tax                          10,648     9,807    25,954     22,489
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Income tax expense                            -10       144    -3,883     -2,194
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NET PROFIT FOR THE FINANCIAL YEAR          10,638     9,951    22,071     20,295
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Other comprehensive income:                                                     
Items that may be subsequently                                                  
 reclassified to  profit or loss                                                
Currency translation differences                0         0         0          2
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Other comprehensive income for the              0         0         0          2
 financial year                                                                 
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TOTAL COMPREHENSIVE INCOME FOR THE         10,638     9,951    22,071     20,297
 FINANCIAL YEAR                                                                 
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         Raul Puusepp
         Chairman of the Management Board
         Phone +372 731 5000