Market announcement

Title

Unaudited consolidated interim accounts for the third quarter and first nine months of 2019

Message

Segments (EURm)           Q3/19   Q3/18      yoy   9m/19   9m/18      yoy
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  Supermarkets              117,6   111,5     5,5%   346,4   327,6     5,7%

  Department stores          23,8    22,8     4,7%    71,6    69,3     3,2%

  Cars                       34,9    28,1    23,8%    96,9    90,7     6,8%

  Footwear                    2,2     2,5   -12,1%     6,3     7,2   -13,2%

  Real Estate                 1,5     1,3     8,0%     4,3     4,0     6,4%
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  Total sales               179,9   166,2     8,3%   525,4   498,8     5,3%
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  Supermarkets                6,5     6,0     7,9%    12,5    12,9    -3,0%

  Department stores           0,7     0,3   192,2%     1,2     1,0    22,1%

  Cars                        1,6     1,2    35,3%     3,8     3,8     0,2%

  Footwear                   -0,3    -0,2    55,2%    -0,9    -0,4   125,5%

  Real Estate                 2,7     2,6     4,7%     8,1     8,0     2,2%

  IFRS 16                    -0,4     0,0        -    -1,1     0,0        -
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  Total profit before tax    10,9     9,9    10,4%    23,5    25,2    -6,5%
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In  the  third  quarter  of  2019, the  unaudited  consolidated sales revenue of
Tallinna  Kaubamaja Group was  179.9 million euros, exceeding  the result of the
previous  year by  8.3%. The sales  revenue generated  in nine months was 525.4
million  euros, showing a  growth of 5.3% compared  to the first  nine months of
2018, when  the sales revenue  was 498.8 million euros.  In the third quarter of
2019, the  Group's  unaudited  consolidated  net  profit was 10.9 million euros,
which  is 10.4% higher of the profit earned  in the comparable period last year.
The Group's net profit was 17.1 million euros in the first nine months of 2019,
showing  a 9.7% decrease year on year, which was influenced by a higher tax cost
and  calculated interest expense of IFRS 16. The pre-tax profit was 23.5 million
euros in the first nine months of 2019.

The  Group's car segment showed a record  high sales growth in the third quarter
of  2019 as a  result of  extensive fleet  sales. Although  fleet sales put some
pressure on the margin, the third quarter of 2019 became more profitable for the
Group's  car segment than the  year before. The sales  revenue and the growth of
profit  of other retail  segments important for  the Group, such as supermarkets
and  Kaubamaja department  stores, were  also satisfactory.  The growth in these
segments  was supported by  successful sales promotion  campaigns, the growth of
sales  revenue in e-commerce channels, and more efficient management of goods. A
decrease  in the sales revenue  earned in the Group's  footwear trade segment, a
market  with growing competition, slightly  decelerated compared to the previous
quarter.  The Group's  labour costs  have increased  9.2% in nine months and the
average  wage in the  Group has increased  by 9.4%. The activities undertaken by
the  Group with the  intent to automate  processes has enabled reducing slightly
the number of employees in the third quarter.

As  an important development of the  reporting period, the construction works of
the  Kulinaaria central kitchen production building  in Tallinn are in progress.
Plans  are in place  to complete the  new production plant  of Kulinaaria in the
first  half  of  2020. An  additional  plan  is to renovate the older production
building  after the  completion of  the new  building and the entire refurbished
production  complex should be finished by the end of 2020. With the extension of
the production area, new products in the ready-to-eat food category are expected
to  be  launched  under  the  Estonians'  beloved Selveri Köök trademark and new
interesting pastry products under the Van Kook trademark.

The  construction works of  the Shkoda car  centre and the  used cars showroom in
Riga  are also  underway. The  business software  of real estate management, the
footwear  segment, and the  central kitchen are  being renewed and  the focus is
still  on the improvement of user convenience of e-stores and speed of delivery.
Earlier  this year, rearrangement of all  the Group's food stores was undertaken
to  bring them  into compliance  with the  amendment of  law that restricted the
visibility of displayed alcohol in stores. More attention is paid to responsible
and sustainable behaviour and promotion thereof.

From  1 January 2019, the  Group applies  the new  mandatory financial reporting
standard  IFRS 16 (Leases) in  lease cost accounting.  Pursuant to the standard,
leased assets and liabilities are recognised in the balance sheet at the present
value  of lease payments and the depreciation on the leased assets and estimated
interest  costs on lease liabilities in the income statement. As at 30 September
2019, the  assets  leased  in  accordance  with  IFRS  16 were recognised in the
balance  sheet of the  Group in the  present value of  lease payments of 98,809
thousand  euros  and  corresponding  calculated  liabilities  of 99,936 thousand
euros. The impact of IFRS 16 on the income statement is as follows:

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 in thousands of euros                          3(rd) quarter 2019 9 month 2019
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 Decrease in other operating expenses                        4,243       12,740

 Increase in depreciation                                   -4,109      -12,344
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 Increase in operating profit                                  134          396
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 Calculated interest expense on lease
 liabilities                                                  -512       -1 523
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 Total decrease in the net profit                             -378       -1 127
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Selver supermarkets

The  consolidated sales revenue of the  supermarkets business segment was 346.4
million euros in the first nine months of 2019, increasing by 5.7% in comparison
with  the same  period last  year. The  consolidated sales  revenue of the third
quarter  was 117.6 million  euros, growing  by 5.5% in  comparison with the same
period  last year.  At Selver  stores, 30.3 million  purchases were  made in the
first  nine months  of 2019, exceeding  the year-on-year  result by 4.7%. In the
third  quarter of 2019, both  pre-tax profit and  net profit of the supermarkets
segment  were  6.5 million  euros,  exceeding  last  year's  result by 7.9%. The
consolidated  pre-tax profit of the  supermarkets segment was 12.5 million euros
in  the first nine months,  which is 0.4 million euros  lower than the result of
the  previous year.  The net  profit was  8.5 million euros, decreasing by 3.2%
compared  to the  previous year.  The difference  between net profit and pre-tax
profit is due to income tax paid on dividends, i.e. income tax paid on dividends
was 0.1 million euros lower in 2019 compared to the previous year.

The comparison basis of the third quarter is lower by two stores that were added
in  the second half of 2018 and higher  due to exceptionally good summer weather
last  year and a store closed for renovation in September. E-commerce shows good
results  - the sales revenue grew by 39% in the third quarter. Profit earning is
influenced  by  the  growth  of  sales  revenue and more efficient management of
goods. Investments have a positive impact, allowing cutting administrative costs
and  employees' working hours. To balance the decrease in the employees' working
hours, their wages were adjusted, which translated into a slight decrease in the
efficiency  regarding  labour  costs.  The  results  are  also influenced by the
amendment  of the Alcohol  Act, due to  which significant one-time expenses were
incurred during the rearrangement of sales floors.

It  is planned to renovate the Selver store in Jõhvi and Pelgulinna Selver store
in  Tallinn  in  the  fourth  quarter.  The  SelveEkspress  service will also be
introduced  to 52 Selver stores  by the end  of the year.  As at the  end of the
third  quarter of 2019, the SelveEkspress service  is available in 51 stores and
over   400,000 loyal  customers  have  used  the  service.  The  work  with  the
development  of e-commerce will continue to  improve the capacity to service the
rapidly growing number of customers.

Department stores

In  the first nine months of 2019, the department stores business segment earned
a  sales revenue of 71.6 million euros, which is 3.2% more than last year in the
same period. In the third quarter, the sales revenue of the Kaubamaja department
stores  was 23.8 million euros, which is  4.7% higher than the comparable result
achieved last year. The e-store of Kaubamaja grew 37% in nine months compared to
the  same  period  in  the  previous  year.  The pre-tax profit of the Kaubamaja
department  stores was  1.2 million euros  in the  first nine months, showing an
increase  of 22.1% year on year. The pre-tax profit of the department stores was
0.7 million  euros in the third quarter and the result was higher by 0.5 million
euros  of the comparable period.  The sales results of  the department stores in
the first nine months were influenced by successful sales campaigns organised in
all three quarters. The result of the third quarter of the department stores was
influenced  by  a  successful  autumn  sales  campaign  and the first day of the
autumnal  Osturalli sales campaign, which was launched in September. The Ilu Aeg
sales  campaign organised in the beginning  of September was the most successful
of  all time.  The profit  of the  department stores  was affected by the summer
discount  campaign with a higher  margin compared to the  same period last year,
when traffic in the city centre was disturbed.

This year, Kaubamaja pays special attention to sustainability and especially how
packages  are used in the sales houses. Starting from the beginning of 2019, all
plastic  bags have to  be paid for  in the department  stores and the goal is to
gradually   replace  all  packages  with  packages  manufactured  from  recycled
materials.  At the end of  June, in addition to  plastic bags made from recycled
materials and paper bags, reusable bags fully manufactured from recycled plastic
bottles were added.

In  the third quarter of  2019, the sales revenue of  OÜ TKM Beauty Eesti, which
operates  I.L.U. cosmetics  stores, was  1.1 million euros,  showing a growth of
8.1% compared to the same period in 2018. The loss was 0.02 million euros in the
third  quarter of 2019, which  was 48.7% lower than  in the comparable period of
2018. The sales revenue was 3.3 million euros in the first nine months of 2019,
which was 6.5% higher than the same period in 2018. The loss earned in the first
nine  months of  2019 was 0.2 million  euros, which  was 8.7% lower  than in the
comparable  period  of  2018. The  result  of  the  third quarter was positively
influenced  by  booming  e-store  sales  and  successful  changes  in  marketing
campaigns.

Car trade

The  sales revenue of the car trade  segment was 96.9 million euros in the first
nine  months of 2019. The sales revenue exceeded  the revenue earned in the same
period  last year  by 6.8%; the  sales revenue  of KIAs  grew by 6.9%. The sales
revenue of 34.9 million euros earned in the third quarter exceeded the result of
the  previous year  by 23.8%; the  sales revenue  of KIAs  grew by 31.8%. In the
first  nine months of the  year, a total of  4,351 new vehicles were sold in the
car  trade segment of the  Group, of which 1,578 vehicles  in the third quarter.
The pre-tax profit of the segment was 3.8 million euros in the first nine months
of  2019, which is 0.2% higher  than the profit  earned in the  same period last
year.  The pre-tax  profit earned  in the  third quarter of 2019 was 1.6 million
euros,  exceeding the profit earned in  the third quarter of 2018 by 0.4 million
euros, or 35.3%.

The  sales revenue  growth in  2019 was caused  by the  successful and increased
fleet sales of KIAs. In addition to KIAs, the sale of Peugeot vehicles and spare
parts  has  continued  to  give  good  results  at  the group's subsidiaries. In
October,  there is  a plan  in place  to open  a completely  new Shkoda sales and
service centre and a used cars showroom, unique in Latvia, on the Bikernieku lot
in Riga.

Footwear trade

The  sales revenue of  the footwear trade  segment was 6.3 million  euros in the
first  nine months of 2019. The sales revenue dropped by 13.2% in the first nine
months  of the year compared to the same  period last year. The sales revenue of
the segment was 2.2 million euros in the third quarter, decreasing by 12.1% year
on  year. The loss was  0.9 million euros in the  first nine months of 2019. The
year-on-year loss was 0.4 million euros. In the third quarter, the loss was 0.3
million  euros, which is  a weaker result  by 0.1 million euros  compared to the
same period last year.

The  sales revenue of the  third quarter was influenced  by tight competition on
the  footwear market and aggressive discount  campaigns of seasonal goods due to
the  planned  changes  in  the  assortment  to be effected in following seasons.
Moving  to new premises  disrupted business for  short periods at  SHU stores in
Tartu  Kaubamaja  and  Võru  Kagukeskus.  At  the  end  of September, the visual
identity  and  assortment  principle  were  refreshed  at  the SHU store in Võru
Kagukeskus,  which, if  successful, will  become the  standard to be followed in
other SHU stores in future.?

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 4.3
million  euros in the first nine months of 2019. The sales revenue grew by 6.4%
compared  to last year. The  sales revenue of the  segment outside the Group was
1.5 million euros. The sales revenue increased by 8.0% year on year. The pre-tax
profit of the real estate segment was 8.1 million euros in the first nine months
of 2019. The profit grew 2.2% compared to the same period last year. The pre-tax
profit of the segment earned in the third quarter of 2019 was 2.7 million euros,
which is 4.7% higher than the result achieved in the same period last year.

The  sales revenue  growth of  the segment  is still  driven by the Latvian real
estate  company that  leased commercial  space in  the Ogre  building to a party
outside  of the  group. Other  companies involved  in the  segment showed stable
growth  - the rental spaces in shopping centres are covered by rental agreements
and  despite  tight  competition,  the  daily  marketing  activity has helped to
maintain the number of visitors of the shopping centres. The completion of Kolde
Selver  at the end of last year, the  growth of the sales revenue outside of the
Group,  and cost cuts in the Latvian  real estate company all contributed to the
profit  growth. At the end of  the year, the Shkoda car  centre and the used cars
showroom will be completed as planned.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros?

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                                                 30.09.2019   31.12.2018
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  ASSETS
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  Current assets

  Cash and cash equivalents                          24,003       37,235

  Trade and other receivables                        14,887       16,093

  Inventories                                        74,380       78,212
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  Total current assets                              113,270      131,540
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  Non-current assets

  Long-term trade and other receivables                 113          113

  Investments in associates                           1,802        1,738

  Investment property                                59,930       59,866

  Property, plant and equipment                     313,966      212,687

  Intangible assets                                   4,799        5,133
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  Total non-current assets                          380,610      279,537
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  TOTAL ASSETS                                      493,880      411,077
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  LIABILITIES AND EQUITY
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  Current liabilities

  Borrowings                                         27,006       26,002

  Trade and other payables                           77,590       90,775
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  Total current liabilities                         104,596      116,777
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  Non-current liabilities

  Borrowings                                        175,142       68,313

  Provisions for other liabilities and charges          370          370
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  Total non-current liabilities                     175,512       68,683
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  TOTAL LIABILITIES                                 280,108      185,460
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  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                                94,019       95,587

  Currency translation differences                     -149         -149

  Retained earnings                                 101,007      111,284
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  TOTAL EQUITY                                      213,772      225,617
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  TOTAL LIABILITIES AND EQUITY                      493,880      411,077
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

-------------------------------------------------------------------------------
                       III quarter    III quarter
                           2019           2018      9 months 2019 9 months 2018
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 Revenue                     179,933        166,219       525,359       498,829

 Other operating
 income                          285            128           682         1,193



 Cost of sales              -134,054       -123,620      -393,788      -374,352

 Other operating
 expenses                     -9,657        -13,263       -30,482       -40,844

 Staff costs                 -17,120        -15,932       -52,665       -48,249

 Depreciation,
 amortisation and
 impairment losses            -7,728         -3,372       -23,058       -10,199

 Other expenses                  -71           -186          -482          -829
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 Operating profit             11,588          9,974        25,566        25,549
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 Finance income                    1              1             1             1

 Finance costs                  -749           -216        -2,215          -573

 Finance income on
 shares of associates             60            111           174           187
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 Profit before tax            10,900          9,870        23,526        25,164
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 Income tax expense                0             -1        -6,453        -6,250
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 NET PROFIT FOR THE
 FINANCIAL YEAR               10,900          9,869        17,073        18,914
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 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
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 TOTAL COMPREHENSIVE
 INCOME FOR THE
 FINANCIAL YEAR               10,900          9,869        17,073        18,914
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Raul Puusepp

Chairman of the Board

Phone +372 731 5000