Market announcement

Title

Unaudited consolidated interim accounts for the fourth quarter and twelve months of 2018

Message

Segments (EURm)           Q4/18   Q4/17       yoy   12m/18   12m/17      yoy
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  Supermarkets              122,5   116,1      5,6%    450,1    433,1     3,9%

  Department stores          31,6    31,0      1,8%    100,9    102,4    -1,5%

  Cars                       24,2    23,6      2,8%    114,9     99,7    15,3%

  Footwear                    2,6     3,1    -14,7%      9,8     11,1   -11,2%

  Real Estate                 1,4     1,3      7,3%      5,4      5,0     8,1%
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  Total sales               182,4   175,0      4,2%    681,2    651,3     4,6%
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  Supermarkets                5,8     5,6      2,6%     18,6     16,8    10,7%

  Department stores           2,8     2,3     24,0%      3,8      4,3   -12,2%

  Cars                        0,6     0,6     16,5%      4,4      3,9    13,4%

  Footwear                    0,0    -2,0   -101,8%     -0,4     -3,1   -87,6%

  Real Estate                 2,3     5,8    -60,3%     10,2     14,5   -29,4%
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  Total profit before tax    11,6    12,2     -5,1%     36,7     36,5     0,7%
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In  the  fourth  quarter  of  2018, the  unaudited consolidated sales revenue of
Tallinna  Kaubamaja Group  was 182.4 million  euros, exceeding  the year-on-year
result  by  4.2%. The  sales  revenue  generated  in 12 months was 681.2 million
euros,  showing an  increase of  4.6% compared to  the result  of 2017, when the
sales  revenue  was  651.3 million  euros.  In  the  fourth quarter of 2018, the
unaudited  consolidated net profit of the Group was 11.5 million euros, which is
3.3% lower  than the  profit of  the same  period of  the previous year. The net
profit  of  the  group  was  30.4 million  euros  in  2018, which is 2.0% better
compared  to the previous  year. The pre-tax  profit of twelve  months was 36.7
million  euros, showing a growth of 0.7% 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  first quarter of 2018, whereas a year
earlier, income tax was accrued in the amount of 6.7 million euros.

In  the  fourth  quarter  of  2018, the  Group continued to produce strong sales
results.  The supermarkets segment showed the largest growth in sales, supported
by  two new Selver  stores opened in  Tallinn in November.  The successful sales
campaigns  of Kaubamaja and the  launch of the new  I.L.U. e-store increased the
sales  revenue and profit of the department  stores segment compared to the last
quarter of 2017. The car trade and supermarket segments had a very good year and
were  able  to  increase  the  sales  and  improve the profit numbers. The sales
results  of  the  Group's  e-stores  grew  strongly in 2018, showing a growth in
numbers  that still exceed  the sales statistics  of Estonian e-commerce sector.
The labour costs of the Group increased by 8.7% in a year and the average salary
of  the Group's employees grew by 6.1%. The  profit earned in the fourth quarter
was  influenced  by  the  re-evaluation  of  investment  property.  The value of
investment  property grew in  2018; however, the growth  was smaller compared to
the  growth in  2017, as a  result of  which positive  impact on earnings before
interest,  taxes, depreciation, and amortisation  (EBITDA) was 1.0 million euros
lower in 2018.

Selver supermarkets

The  annual consolidated sales revenue of  the supermarkets business segment was
450.1 million  euros  in  2018, showing  a  growth  of  3.9% in the year-on-year
comparison.  The consolidated  sales revenue  in the  fourth quarter  was 122.5
million  euros, increasing by 5.6% in comparison with the same period last year.
In 2018, 38.8 million purchases were made in Selver supermarkets, which exceeded
the result of last year by 3.1%. In 2018, the consolidated pre-tax profit of the
supermarkets  segment was  18.6 million euros,  increasing by  1.8 million euros
compared  to the previous  year. The net  profit earned in 2018 was 14.6 million
euros,  increasing  by  1.4 million  euros  compared  to  the previous year. The
difference  between the net profit and profit before income tax is due to income
tax  paid on  dividends -  the income  tax paid  on dividends was by 0.4 million
euros  higher in 2018 compared to  the year earlier. The  pre-tax profit and net
profit  was 5.8 million euros in the fourth quarter, exceeding the result of the
previous year of the comparable period by 0.1 million euros. In the second half-
year  of 2018, SIA Selver Latvia  was liquidated and as  at the end of the year,
the company has been deleted from the commercial register.

The  growth of the sales revenue in  Selver supermarkets continued in the fourth
quarter  at a higher pace than in the non-specialised stores market segment. The
growth  trend was visible in the number of purchases as well as the amount of an
average  purchase. The  growth of  sales revenue  of comparable  stores was more
rapid  in the  last quarter  of the  year. In  the fourth quarter, the growth of
sales  revenue in  e-commerce was  28.0%. The profit  earned in the supermarkets
segment was primarily influenced by the growth of the sales revenue. In terms of
operating costs, the cost efficiency level was improved compared to the previous
year.  The main reason behind  the growth of labour  costs in the second half of
the  year is  a strong  pressure on  wages and  recruitment new employees to new
opening  stores.  The  comparison  basis  of  2018 does  not  include  five  new
supermarkets opened in Tallinn last year and a mobile store in Hiiumaa; however,
the comparison basis is larger on account of a supermarket closed in Tallinn.

Department stores

In 2018, the department stores business segment earned a sales revenue of 100.9
million  euros, which is 1.5% less  than last year in  the same period. Of this,
the  sales revenue generated in the fourth quarter was 31.6 million euros, which
was 1.8% better than the revenue earned in the fourth quarter of 2017. In 2018,
the pre-tax profit of the department stores segment was 3.8 million euros, which
is  12.2% lower on  the year-on-year  basis. The  pre-tax profit was 2.8 million
euros  in the fourth quarter, which was better by 24.0% compared to the result a
year  earlier. The sales revenue of 12 months of the Kaubamaja department stores
segment  was  influenced  by  a  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 summer  sales, restricted  access to  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  the completely  renewed women's  shoe department  and men's department were
opened  at the beginning of  September. The sales revenue  of the fourth quarter
was greatly influenced by the best Osturalli campaign throughout the years and a
strong  Christmas campaign. Taking  into account the  location of the department
store  in downtown Tallinn, the structural changes  in the number of tourists in
2018, showing  a lower number  of Finnish tourists,  had a significant impact on
the  result  of  2018. The  changes  in  the  excise  policy have influenced the
purchase behaviour of Finnish tourists, resulting in not only in the decrease of
sales of alcoholic beverages, but also decreased sales in other groups of goods,
such as perfumery products, clothes, footwear, and children's goods.

In  the fourth quarter of 2018, the sales  revenue of OÜ TKM Beauty Eesti, which
operates the I.L.U. cosmetics stores, was 1.6 million euros, showing a growth of
3.8% compared  to  the  same  period  in  2017. The  profit earned in the fourth
quarter  was 0.1 million euros,  which was 0.1 million  euros better compared to
the  same  period  in  2017. The  sales  revenue was 4.6 million euros in 2018,
decreasing  by 0.7% compared to  the sales revenue  earned in 2017. The loss was
0.2 million euros in 2018, which was 0.1 million euros less than the loss earned
in  the comparable period in 2017. In February  of the reporting year, the store
in  Kvartal  shopping  centre  in  Tartu  was  closed  because of unsatisfactory
business results. During the year, attention was paid to the assortment analyses
by  stores for the purpose of offering customers new attractive goods as well as
ensuring  an optimal  balance of  inventories. In  September, completely renewed
I.L.U. e-store was opened, which was well accepted by the customers.

Car Trade

In 2018, the sales revenue of the car trade segment was 114.9 million euros. The
sales  revenue exceeded  the year-on-year  revenue by  15.3%, whereas the annual
increase  in the sales revenue of KIAs was 1.7%. The sales revenue earned in the
fourth  quarter, 24.2 million euros, exceeded  the year-on-year result by 2.8%.
The  sales revenue of KIAs  decreased by 11.1% compared to  the same time of the
previous  year. Peugeots made  a strong sales  result. In the  Group's car trade
segment,  a total of 5,050 new vehicles were sold in 2018, of which 949 vehicles
were  sold  in  the  fourth  quarter.  In  2018, the net profit of the car trade
segment  was 3.7 million euros, which is  11.9% higher than the profit earned in
the  previous year. The pre-tax  profit of the segment  was 4.4 million euros in
2018, exceeding  the profit of  2017 by 13.4%. The pre-tax  profit of the fourth
quarter  of 2018 was 0.6 million euros,  which exceeded the year-on-year pre-tax
profit by 16.5%.

The  success  of  the  car  trade  segment  in  2018 is  primarily due to a very
successful  year of  subsidiaries that  operate as  resellers. All  three retail
sellers  - Viking Motors AS in Tallinn, Forum Auto SIA in Riga, and KIA Auto UAB
in Vilnius - fulfilled the profit expectations. The economic results of KIA Auto
AS,  the company  that imports  KIAs, were  as expected,  although the very high
results  of the previous year were not exceeded. In summary, it can be said that
2018 was  a year  of records  for the  car trade  segment in  terms of turnover,
profit, and the number of new cars sold.

Footwear trade

The  sales revenue of the footwear trade segment was 9.8 million euros in 2018,
decreasing   by   11.2% on   the   year-on-year  basis.  The  pre-tax  loss  was
significantly lower in 2018 compared to 2017. Altogether, the result improved by
2.7 million  euros, of  which 2.2 million  euros accounted  for the  decrease in
goodwill in 2017. The sales revenue was 2.6 million euros in the fourth quarter,
which  is 14.7% less than  the year-on-year sales  revenue. The profit earned in
the  fourth quarter was 0.04 million euros.  In 2018, the footwear trade segment
launched  a new visual concept in ABC King  stores. Two new ABC King stores with
the  renewed concept, which has been well  accepted by customers, were opened in
Ülemiste  and Kristiine  Shopping Centres  in the  second half  of the reporting
year. Along with the changed concept, more attention was paid to the training of
personnel, which resulted in a lower turnover of employees and improved service.
New supply channels supported the improvement of the margin compared to 2017.

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 5.4
million  euros in  2018. The sales  revenue grew  by 8.1% compared  to 2017. The
sales  revenue of the segment earned outside  the Group was 1.4 million euros in
the  fourth quarter,  growing by  7.3% compared to  the same period in 2017. The
pre-tax  profit of the real estate segment was 10.2 million euros in 2018, which
is  29.4% lower than the result earned in the same period last year. The pre-tax
profit  of  the  segment  earned  in  the fourth quarter of 2018 was 2.3 million
euros,  which was 60% less than the year-on-year result. Tartu Kaubamaja Centre,
which is showing good results despite strong competition, 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. At the end of the  year, Ogre building in Latvia was partially
rented  to parties  outside of  the Group.  The decrease  in profit  of the real
estate  segment was affected  by previous contracts  concluded inside the Group,
related  to Latvian  real estate,  which have  ended by  now. The revaluation of
investment  property played a role  in the decrease of  the profit earned in the
fourth quarter, which remained below extent the revaluations in 2017.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

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                                                 31.12.2018   31.12.2017
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  ASSETS
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  Current assets

  Cash and cash equivalents                          37,235       33,662

  Trade and other receivables                        16,093       16,127

  Inventories                                        78,212       75,816
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  Total current assets                               131,54      125,605
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  Non-current assets

  Long-term trade and other receivables                 113          114

  Investments in associates                           1,738        1,724

  Investment property                                59,866       49,902

  Property, plant and equipment                     212,687      214,475

  Intangible assets                                   5,133        5,675
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  Total non-current assets                          279,537       271,89
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  TOTAL ASSETS                                      411,077      397,495
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  LIABILITIES AND EQUITY
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  Current liabilities

  Borrowings                                         26,002       54,818

  Trade and other payables                           90,775       85,569
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  Total current liabilities                         116,777      140,387
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  Non-current liabilities

  Borrowings                                         68,313       48,732

  Provisions for other liabilities and charges          370          360
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  Total non-current liabilities                      68,683       49,092
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  TOTAL LIABILITIES                                  185,46      189,479
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  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                                95,587       82,124

  Currency translation differences                     -149         -255

  Retained earnings                                 111,284      107,252
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  TOTAL EQUITY                                      225,617      208,016
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  TOTAL LIABILITIES AND EQUITY                      411,077      397,495
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

-------------------------------------------------------------------------------
                      IV quarter    IV quarter                    12 months
                      2018          2017           12 months 2018 2017
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 Revenue                    182,352        175,031        681,181       651,257

 Other operating
 income                         982          1,339          2,175         2,239



 Cost of sales              -132,83       -128,147       -507,182       -484,76

 Other operating
 expenses                   -15,189        -14,161        -56,033       -54,611

 Staff costs                -19,461        -18,035         -67,71       -62,289

 Depreciation,
 amortisation and
 impairment losses           -3,227         -3,409        -13,426       -13,356

 Other expenses                -844           -248         -1,673        -1,373
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 Operating profit            11,783          12,37         37,332        37,107
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 Finance income                   0              0              1             1

 Finance costs                 -237           -202           -810          -773

 Finance income on
 shares of associates            27             27            214           162
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 Profit before tax           11,573         12,195         36,737        36,497
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 Income tax expense             -49           -275         -6,299        -6,666
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 NET PROFIT FOR THE
 FINANCIAL YEAR              11,524          11,92         30,438        29,831
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 Other comprehensive
 income:

 Items that will not
 be subsequently
 reclassified to
 profit or loss

 Revaluation of land
 and buildings               15,266              0         15,266             0
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 Other comprehensive
 income for the
 financial year              15,266              0         15,266             0
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 TOTAL COMPREHENSIVE
 INCOME FOR THE
 FINANCIAL YEAR               26,79          11,92         45,704        29,831
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Raul Puusepp

Chairman of the Board

Phone +372 731 5000

Attachment

  * Börs_Kaubamaja_4Q2018_eng (https://ml-
    eu.globenewswire.com/Resource/Download/6b15331d-60ae-40b6-9ad6-7079df1fa362)