Market announcement

Title

Unaudited consolidated interim accounts for the third quarter and first nine months of 2018

Message

Segments (EURm)           Q3/18   Q3/17      yoy   9m/18   9m/17      yoy

  Supermarkets              112.4   108.5     3.6%   330.3   317.1     4.2%

  Department stores          22.8    23.3    -2.3%    69.3    71.4    -2.9%

  Cars                       28.1    25.2    11.5%    90.7    76.1    19.2%

  Footwear                    2.5     2.6    -4.1%     7.2     8.0    -9.9%

  Real Estate                 1.3     1.2     8.0%     4.0     3.7     8.4%

  Total sales               167.1   160.9     3.9%   501.6   476.2     5.3%



  Supermarkets                6.0     5.0    20.1%    12.9    11.2    14.7%

  Department stores           0.3     0.7   -64.5%     1.0     2.0   -53.0%

  Cars                        1.2     1.1     9.3%     3.8     3.4    12.9%

  Footwear                   -0.2    -0.2     3.8%    -0.4    -1.1   -60.5%

  Real Estate                 2.6     2.9   -10.3%     8.0     8.7    -9.0%

  Total profit before tax     9.9     9.5     3.5%    25.2    24.3     3.5%

In  the  3(rd) quarter  of  2018, the  unaudited  consolidated  sales revenue of
Tallinna  Kaubamaja Group  was 167.1 million  euros, exceeding  the year-on-year
result  by 3.9%. The sales revenue generated in the first nine months was 501.6
million  euros, showing an increase of 5.3% compared  to the result of the first
nine  months of  2017, when the  sales revenue  was 476.2 million  euros. In the
3(rd) quarter  of 2018, the unaudited  consolidated net profit  of the Group was
9.9 million  euros, which is 3.5% higher  than the profit of  the same period of
the  previous year. The net profit of the  Group in the first nine months of the
year  was 18.9 million euros, which  was 5.6% higher than in  the same period of
the  previous year. The pre-tax profit in the  first nine months of the year was
25.2 million  euros, showing a growth of 3.5% compared to the previous year. The
size  of the net profit was influenced  by the dividend payment, on which income
tax  of 6.3 million euros was accrued in the 1st quarter of 2018, whereas a year
earlier, income tax was accrued in the amount of 6.4 million euros.

In  the 3(rd) quarter  of 2018, the  Group's car  trade and  supermarket segment
continued  to  produce  a  good  sales  growth.  The  total sales results of the
department  stores and  footwear segment  were slightly  lower than the previous
year.  In the footwear segment, the decrease  in the total sales revenue was due
to  closure  of  stores  that  did  not  meet expectations in 2017. However, the
comparable  footwear segment stores have shown improvement in both sales revenue
and  efficiency. The traffic  management that complicated  access to the Tallinn
store and the reduction of the number of visiting tourists had a negative impact
on  the sales revenue generated  by the Kaubamaja segment.  A stronger growth of
the  sales revenue has come  from the e-commerce channels  of the Group's retail
segments,  the development of which is still  among the priorities of the Group.
In  the 3(rd) quarter, the Group continued at  the same margin level compared to
the  previous  year,  although  there  were  fleet transactions at a more modest
margin  in the growing  car segment. In  the first nine  months of the year, the
labour  costs of the Group have grown by 9.0% and the average wages of the Group
have  increased  by  6.2%. A  lack  of  labour  force  in the service sector has
complicated  the  Group's  choices  when  recruiting  personnel. We are planning
several technological innovations to ensure our high service culture.

Selver supermarkets

In  the  first  nine  months  of  2018, the  consolidated  sales  revenue of the
supermarkets business segment was 330.3 million euros, showing a growth of 4.2%
in  the year-on-year  comparison. The  consolidated sales  revenue in the 3(rd)
quarter  was 112.4 million  euros, growing  by 3.6% in  comparison with the same
period  last year.  In Selver  stores, 28.9 million  purchases were  made in the
first  nine months of  2018, which exceeded the  result of the  previous year by
2.6%.

In  the  first  nine  months  of  2018, the  consolidated  pre-tax profit of the
supermarkets  segment was  12.9 million euros,  increasing by  1.6 million euros
compared  to the previous  year. The net  profit earned in  nine months was 8.8
million  euros, growing by 1.2 million euros  compared to last year. The pre-tax
profit  earned in  Estonia was  13.1 million euros  and the  net profit was 9.0
million  euros. The difference  between the net  profit and profit before income
tax  is due to  income tax paid  on dividends -  the income tax on dividends was
0.4 million  euros higher  in 2018 compared  to the  year earlier. In the 3(rd)
quarter,  the pre-tax profit and the net  profit was 6.0 million euros, of which
the  profit earned in Estonia accounted for 6.0 million euros. The profit earned
in  the 3(rd) quarter exceeded the year-on-year result by 1.0 million euros. The
loss earned in Latvia in nine months was 0.2 million euros and the result in the
3rd quarter  was zero. A decision was adopted to terminate the activities of SIA
Selver Latvia.

In  the 3(rd) quarter, the sales revenue growth of Selver stores retained a pace
of growth similar to the non-specialised stores market segment. The growth trend
was  visible in  the number  of purchases  as well  as the  size of  the average
purchase  in  the  3(rd) quarter.  The  results  were  positively  influenced by
extremely good summer weather and the opening of new stores. The growth of sales
of  seasonal  goods  reached  40% during  summer  months. The results of several
stores  that have a significant weight in  the chain were negatively impacted by
road  construction works  that worsened  the accessibility  of the  stores. In a
situation of strong competition, the sales revenue in comparable stores has also
increased.  In the 3(rd) quarter, the sales revenue in the e-commerce sector was
38%.

The  growth of  sales revenue  is the  primary reason  for the  profit earned in
Estonia.  In terms  of operating  costs, the  cost efficiency level has improved
compared to the previous year. The main reason behind the growth of labour costs
in  the 3(rd) quarter is a strong pressure on wages and recruiting new employees
to new opening stores.

The  comparison basis of 2018 does not include five new supermarkets that opened
in  Tallinn last year  or the mobile  store in Hiiumaa.  The comparison basis of
2018 is  larger because of a supermarket that  was closed in Tallinn. This year,
Selver  plans  to  open  at  least  two  new stores and extend the SelveEkspress
service. By the end of the 3(rd) quarter, the SelveEkspress service is available
at  44 Selver stores.  We plan  to continue  to develop  our e-commerce  area by
opening  an order picking centre of the  e-store in Tallinn this year to improve
our   capability   to  serve  the  growing  number  of  customers.  Compared  to
competitors,  e-Selver  covers  the  largest  home  delivery  area  and services
customers  in  Harju,  Rapla  and  Pärnu  counties.  Plans for this year include
extending  the service area even further  and installing the first e-Selver food
locker, where the orders of the e-store customers can be delivered.

Department stores

In  the first nine months of 2018, the department stores business segment earned
a  sales revenue  of 69.3 million  euros, which  is 2.9% less  than in  the same
period  last year. Of this, the sales revenue generated in the 3(rd) quarter was
22.8 million  euros, which was 2.3% lower than  the revenue earned in the 3(rd)
quarter  of 2017. The  pre-tax profit  of the  department stores  segment in the
first  nine months  of 2018 was  1.0 million euros,  which is 53.0% lower on the
year-on  year  basis.  The  pre-tax  profit  was 0.3 million euros in the 3(rd)
quarter,  which was  0.5 million euros  less than  the year-on-year  result. The
sales  revenue of the department stores segment in nine months was influenced by
the  longer and stronger  summer discount campaign,  because the long winter and
early  summer did not  help with the  sale of spring  goods. The repair works on
Gonsiori  Street  and  the  renovation  of  Tammsaare  Park, which disturbed the
traffic  and movement of  pedestrians in downtown  Tallinn, influenced the sales
revenue  of the 3(rd) quarter  and reduced the  number of customers that visited
the store in Tallinn. In addition, renovation works were undertaken on the first
floor  of the Tartu department store in July and August and a completely renewed
women's  shoe department  and men's  department were  opened at the beginning of
September.  Taking into account  the location of  department stores next to main
streets  in downtown, the structural changes in  the number of tourists in eight
months  of 2018 have had  a significant impact  on the result  of the first nine
months  of 2018. The number of foreign tourists has remained at the same record-
high level as in the previous year; however, the number of tourists from Finland
has  dropped.  The  changes  in  the  excise policy have influenced the purchase
behaviour  of Finnish  tourists, resulting  not only  in the  decreased sales of
alcoholic  beverages, but also decreased sales in other groups of goods, such as
perfumery  products,  clothes,  and  footwear.  The  number of Tax Free purchase
registrations has reduced, showing an average decline of 15%.

In  the 3(rd) quarter of 2018, the  sales revenue of OÜ  TKM Beauty Eesti, which
operates  the I.L.U. cosmetics stores, was 1.0 million euros, showing a decrease
of  3.0% compared to  the same  period in  2017. The loss  earned in  the 3(rd)
quarter  was 0.04 million euros, which was 0.02 million euros better compared to
last  year. The sales revenue was 3.1 million  euros in the first nine months of
2018, decreasing by 2.8% of the comparable period in 2017. The loss in the first
nine months of 2018 was 0.2 million euros, which was 0.1 million euros less than
the  loss earned in the comparable period  in 2017. In September, the new I.L.U.
web  store  was  opened,  which  launched  as  expected.  The  sales revenue was
negatively  influenced by  the decreased  number of  customers that  visited the
store  in Kristiine Centre  and the drop  in sales, which  were caused by large-
scale  reorganisation and renovation works at  the centre. The road construction
works  of the Rocca al  Mare traffic junction worsened  the accessibility of the
Rocca al Mare shopping centre and weakened the result of I.L.U. store.

Car Trade

In  the first nine months of 2018, the sales  revenue of the car trade was 90.7
million  euros. The sales revenue exceeded the year-on-year revenue by 19.2% and
the  sales revenue of  KIAs increased by  5.2%. The sales revenue  earned in the
3(rd) quarter, 28.1 million euros, exceeded the year-on-year result by 11.5% and
the sales revenue of KIAs increased by 0.9%. In the Group's car trade segment, a
total  of 4,101 new vehicles were sold in the  first nine months of the year, of
which  1,222 cars  were  sold  in  the  3(rd) quarter. The pre-tax profit of the
segment  in the first nine months of 2018 was 3.8 million euros, which is 12.9%
higher  than the profit earned in the same period in the previous year. The pre-
tax  profit of the  3(rd) quarter of 2018 was  1.2 million euros, which exceeded
the year-on-year profit by 0.1 million euros.

A  significant driver  of the  growth of  the sales  revenue of  the segment was
adding  the Peugeot  brand into  the product  selection of the subsidiary Viking
Motors AS from the beginning of 2018. This has significantly increased the sales
revenue  generated by  the sale  of cars  as well  as services  and spare parts.
Moreover,  cooperation with car  rental companies has  been promoted in 2018 and
the  share in  this sector  has been  increased. It  must also be noted that the
growth  in the trade volumes  of the segment is  supported by the general stable
growth  of approx.  13% of the  car market  in the  Baltics. The bestselling KIA
models  were the updated crossover  Sportage, which came on  sale in summer, and
the  family hatchback  Cee'd. In  addition, the  sale of  new Opel cars has been
successful,  primarily  the  sale  of  the  completely new large family car OPEL
Insignia,  which the customers have  received well. Based on  the results of the
first  nine months of the year, the  business efforts of the Group's car dealers
have been satisfactory.

In  the 4th quarter, it is planned to  start the construction works to establish
new  Shkoda and KIA car  centres in Latvia and  Lithuania to extend the car trade
segment. The centres are planned to be opened in the second half of 2019.

Footwear trade

The  sales revenue of  the footwear trade  segment was 7.2 million  euros in the
first  nine months of 2018, decreasing by 9.9% on the year-on-year basis. In the
3(rd) quarter,  the sales  revenue was  2.5 million euros,  which was 4.1% lower
than  in the same period in the previous year. The loss in the first nine months
of  2018 was 0.4 million euros, which, compared to the year-on-year results, has
improved  by 0.6 million  euros. The  loss in  the 3(rd) quarter remained at the
same  level as in the  previous year - 0.2 million  euros. The road construction
works  of the Rocca al  Mare traffic junction worsened  the accessibility of the
Rocca  al Mare shopping centre affecting negatively  the results of the ABC King
and  SHU stores located  there. The opening  of the ABC  King store in Kristiine
Centre  in accordance with  the new concept  fell in the 3(rd) quarter. Renewing
this  concept  is  one  of  the  key  factors  to  make the ABC King stores more
efficient.

Real estate

In  the first nine months  of 2018, the sales revenue  earned in the real estate
segment outside the Group was 4.0 million euros. The sales revenue grew by 8.4%
compared to last year. The sales revenue of the segment earned outside the Group
was 1.3 million euros in the 3(rd) quarter. The sales revenue increased by 8.0%
year-on-year.  The pre-tax profit of  the real estate segment  in the first nine
months of 2018 was 8.0 million euros, which is 9.0% lower than the result earned
in  the same period last  year. The pre-tax profit  of the segment in the 3(rd)
quarter  of 2018 was 2.6 million euros, which  is 10.3% lower than the result of
the same period last year.

Tartu  Kaubamaja  Centre,  which,  despite  strong  competition, is showing good
results  and is  still popular  among customers,  was the  primary driver of the
growth  of the  segment's sales  revenue. During  the year,  the gas station and
store  that opened in close proximity to  Peetri Selver has supported the growth
of  sales. The decrease  in profit was  affected by previous contracts concluded
inside the Group, related to Latvian real estate, which have ended by now.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

-------------------------------------------------------------------------
                                                 30.09.2018   31.12.2017
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          28,132       33,662

  Trade and other receivables                        13,230       16,127

  Inventories                                        71,477       75,816
-------------------------------------------------------------------------
  Total current assets                              112,839      125,605
-------------------------------------------------------------------------
  Non-current assets

  Long-term trade and other receivables                 115          114

  Investments in associates                           1,811        1,724

  Investment property                                50,510       49,902

  Property, plant and equipment                     204,395      214,475

  Intangible assets                                   5,262        5,675
-------------------------------------------------------------------------
  Total non-current assets                          262,093      271,890
-------------------------------------------------------------------------
  TOTAL ASSETS                                      374,932      397,495
-------------------------------------------------------------------------

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

  Borrowings                                         14,229       54,818

  Trade and other payables                           76,297       85,569
-------------------------------------------------------------------------
  Total current liabilities                          90,526      140,387
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                         85,158       48,732

  Provisions for other liabilities and charges          420          360
-------------------------------------------------------------------------
  Total non-current liabilities                      85,578       49,092
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 176,104      189,479
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                                80,767       82,124

  Currency translation differences                     -255         -255

  Retained earnings                                  99,421      107,252
-------------------------------------------------------------------------
  TOTAL EQUITY                                      198,828      208,016
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      374,932      397,495
-------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

-------------------------------------------------------------------------------
                       III quarter    III quarter
                           2018           2017      9 months 2018 9 months 2017
-------------------------------------------------------------------------------
 Revenue                     167,133        160,893       501,571       476,226

 Other operating
 income                          128            159         1,193           900



 Cost of sales              -124,534       -119,734      -377,094      -356,613

 Other operating
 expenses                    -13,263        -13,371       -40,844       -40,450

 Staff costs                 -15,932        -14,352       -48,249       -44,254

 Depreciation,
 amortisation and
 impairment losses            -3,372         -3,360       -10,199        -9,947

 Other expenses                 -186           -568          -829        -1,125
-------------------------------------------------------------------------------
 Operating profit              9,974          9,667        25,549        24,737
-------------------------------------------------------------------------------
 Finance income                    1              1             1             1

 Finance costs                  -216           -188          -573          -571

 Finance income on
 shares of associates            111             57           187           135
-------------------------------------------------------------------------------
 Profit before tax             9,870          9,537        25,164        24,302
-------------------------------------------------------------------------------
 Income tax expense               -1             -5        -6,250        -6,391
-------------------------------------------------------------------------------
 NET PROFIT FOR THE
 FINANCIAL YEAR                9,869          9,532        18,914        17,911
-------------------------------------------------------------------------------
 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                9,869          9,532        18,914        17,911
-------------------------------------------------------------------------------


Raul Puusepp

Chairman of the Board

Phone +372 731 5000

Attachment

  * Börs_Kaubamaja_3Q2018_eng (https://prlibrary-
    eu.nasdaq.com/Resource/Download/0527a063-70a1-44a1-a1fe-45a80b928bc1)