Börsiteade

Pealkiri

Unaudited consolidated interim accounts for the second quarter and first six months of 2017

Teade

Segments (EURm)          Q2/17  Q2/16    yoy    6m/17  6m/16   yoy 
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Supermarkets             109.0   99.0   10.1%   208.5  191.8   8.8%
Department stores         25.0   23.8   5.0%     48.1   46.0   4.5%
Cars                      26.6   23.2   15.0%    50.9   41.4  22.9%
Footwear                   2.8    3.4   -17.9%    5.4    5.8  -7.1%
Real Estate                1.2    1.2   2.7%      2.5    2.4   1.1%
Total sales              164.6  150.5   9.4%    315.3  287.4   9.7%
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Supermarkets               3.4    3.5   -2.6%     6.2    6.0   3.5%
Department stores          1.3    1.2   1.4%      1.3    1.1  19.9%
Cars                       1.0    1.0   7.2%      2.3    1.4  60.7%
Footwear                   0.0    0.0  -250.0%   -0.9   -0.5  69.6%
Real Estate                2.9    2.8   3.7%      5.8    5.6   4.0%
Total profit before tax    8.7    8.6   0.6%     14.8   13.6   8.5%
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The unaudited consolidated sales revenue of the 2nd quarter of 2017 of Tallinna
Kaubamaja Group was 164.6 million euros, indicating an increase of 9.4% in a
year-on-year basis. The sales revenue of the first six months was 315.3 million
euros, having increased by 9.7% compared to the results of the first six months
of 2016, when the sales revenue was 287.4 million euros. The unaudited
consolidated net profit of the Group in the 2nd quarter of 2017 was 8.6 million
euros, which is 0.4% higher on a year-on-year basis. The net profit of the
Group in the first six months of 2017 was 8.4 million euros, remaining at the
same level as in the year prior. The profit before taxes in the first six
months was 14.8 million euros, having increased by 8.5% compared to the year
prior. The net profit was impacted by a dividend payment, from which 6.4
million euros of income tax was paid in the 1st quarter of 2017; in the year
prior, 5.2 million euros of income tax was paid. 

The 9.4% increase in the sales revenue of the Group in the 2nd quarter was
supported by the confidence of the consumers and the increase in wages, as well
as the development activities of the Group, which is why the growth of the
sales revenue was able to exceed the overall trend of retail statistics in
Estonia. In the 2nd quarter, the car trade segment achieved the highest growth
in sales, with several large-scale procurements won. Selver also had an
important role in the increase of the sales revenue, with three new stores
opened in the 2nd quarter, but also with excellent growth at comparable stores.
The strong development of the Group in the sector of e-commerce was pleasing,
with the sales revenue of the sector doubling in a year-on-year basis. On the
other hand, the global growth of e-commerce has further increased the tough
competition in the market of footwear and beauty products. Furthermore, the
sales revenue of the footwear segment of the Group was placed under pressure by
the absence of weather appropriate to the season, as well as operating with a
composition, which includes 4 stores less compared to the year prior. The Group
managed to increase profit in the 2nd quarter, but the increase was lower than
the growth in the sales revenue in connection with the one-time expenditure on
opening new Selver stores. The volume of labour costs also increased, impacted
by both the increased number of employees due to the new stores as well as by
the adjustment of the wages based on the situation of the labour market. 

Selver supermarkets

The consolidated sales revenue of the supermarket segment in the first six
months of 2017 was 208.5 million euros, increasing by 8.8% in a year-on-year
basis. The consolidated sales revenue of the 2nd quarter was 109.0 million
euros, increasing by 10.1% in a year-on-year basis. The consolidated profit
before taxes of the supermarket segment in the first six months of 2017 was 6.2
million euros, having increased by 0.2 million euros compared to the year
prior. The net profit in the first six months amounted to 2.6 million euros,
decreasing by 0.8 million euros compared to the year prior. The domestic profit
before taxes was 7.3 million euros and the net profit 3.7 million euros. The
difference between the net profit and the profit before taxes arises from the
income tax paid on the dividends: in 2017, the income tax on the dividends was
1.0 million euros higher compared to the year prior. The profit before taxes
and the net profit in the 2nd quarter were 3.4 million euros, with the domestic
profit amounting to 4.0 million euros. The profit of the 2nd quarter remained
at the level of the year before. The loss earned in Latvia in the first six
months was 1.1 million euros, of which the share of the 2nd quarter amounted to
0.5 million euros. The loss remained at the level of the year prior. The sales
revenue of Selver remained above the average increase in turnover of the market
segment in the 2nd quarter as well. The growth in sales revenue was supported
by the new stores opened and the stores renovated in the last few years and
successful marketing campaigns. The reference base of the 2nd quarter of 2017
was lower by the two stores opened in Tallinn and Maardu in the last quarter of
2016 and the three stores opened in 2017 and by one store, which was
temporarily closed for renovation works for one month. The reference base is
higher by the store closed in Narva in the 1st quarter of 2016 and by the
additional day arising from the leap year. The segment of e-commerce remained
successful, with the sales revenue more than doubling in the 2nd quarter
compared to the year prior. The operations performed with the selection of
goods and the higher confidence of the consumers, which was supported by
continuing growth in income, has increased the cost of the average purchases of
the customers from the perspective of comparable stores. The amount of profit
earned in Estonia was, above all, influenced by the increase in gross profit
arising from the sale of goods. Optimisation of trade processes has also had a
positive impact. With respect to operational expenditure, the level of
cost-efficiency has improved compared to the year prior. As expected,
investments have had a positive impact, which enabled saving on administrative
costs and maintain labour efficiency at the level of the year prior in the
conditions of pressure for higher wages. The expenditure and investments of
2017 include the costs of opening three new stores; in the reference period,
the costs included the costs of opening one store and renovating one store. The
profit of the reference period was also influenced by a one-time income as a
result of a court judgment regarding a sales tax from the sale of excise goods.
This year, it is planned to open at least two more stores in Tallinn and expand
the SelveEkspress service in the stores to be opened as well as two existing
stores. We are developing the e-Selver service in order to increase our ability
to service the demand quicker and more conveniently. 

Department stores

The sales revenue of the business segment of department stores in the first 6
months of 2017 was 48.1 million euros, increasing by 4.5% in a year-on-year
basis. Thereof, the sales revenue in the 2nd quarter amounted to 25.0 million
euros, which is 5.0% higher compared to the revenues of the 2nd quarter of
2016. The profit before taxes of the department stores was 1.3 million euros in
the first six months of 2017, which was 19.9% higher than in the year prior.
The profit before taxes in the 2nd quarter was 1.3 million euros, which was
1.4% better compared to the result of 2016. The sales revenue of the department
stores in the first six months was influenced by successful sales campaigns,
with the discount campaigns of the season getting off to a good start in
January as well as in June. In the 2nd quarter, the profits were impacted by
the unusually cold spring, which hindered the sales of summer season goods. The
sales of the successfully launched online store reached the base of the year
prior from March, which also has a positive impact on the result of the first
six months. The sales revenue of OÜ TKM Beauty Eesti, operating the cosmetics
stores of I.L.U., in the 2nd quarter of 2017 was 1.1 million euros, indicating
a drop of 3.0% compared to the same period in 2016. In the 2nd quarter of 2017,
the loss was 0.1 million euros, which is 0.05 million euros lower than the
reference period’s loss in 2016. The sales revenue of the first six months of
2017 amounted to 2.1 million euros, decreasing by 6.7% compared to the same
period in the year prior. The loss of the first six months of 2017 amounted to
0.2 million euros, which is 0.04 million euros lower in a year-on-year basis.
The sales revenue of the 2nd quarter was negatively impacted by the weak
results of Tartu stores, incl. the reconstruction works at the store in
Lõunakeskus and the break in the business activities resulting from relocation
in the shopping centre. 

Car Trade

The sales revenue of the car trade segment in the first six months of 2017 was
50.9 million euros. The sales revenue exceeded the revenue of the same period
in the year prior by 22.9%, thereat, the sales revenue of KIAs increased by
33.9%. The sales revenue of 26.6 million euros of the 2nd quarter was 15.0%
higher in a year-on-year comparison, thereat, the sales revenue of KIAs grew by
18.2%. A total of 2,433 new vehicles were sold in the first six months, of
which 1,318 vehicles in the 2nd quarter. The net profit of the segment in the
first six months of 2017 amounted to 1.8 million euros, which is 84.9% higher
in a year-on-year comparison. The profit before taxes of the segment in the
first six months of 2017 was 2.3 million euros, exceeding the profit before
taxes of the first six months of 2016 by 60.7%. The profit before taxes of the
2nd quarter of 2017 amounted to 1.0 million euros, which is 7.2% higher in a
year-on-year comparison. All car dealers included in the Group fared well in
the first six months. Several large-scale public procurement procedures were
won in Estonia, Latvia, and Lithuania. The sales of Opels remain at the good
level achieved in 2016. 

Footwear trade

The sales revenue of the footwear trade segment was 5.4 million euros in the
first six months of 2017. The sales revenue dropped by 7.1% compared to the
first six months of the year prior. Four stores of the footwear trade segment
have been closed compared to the year prior, which has in turn decreased the
comparable sales volumes. In the 2nd quarter, the sales revenue of the segment
was 2.8 million euros, having decreased by 17.9% year-on-year. The modest
result was due to the later arrival of the summer season. The profit of the
first six months amounted to 0.9 million euros, having increased by 0.4 million
euros compared to the year prior. In the 2nd quarter, the business outcome of
the footwear trade segment remained at the level of the year prior. Improvement
of the sales margin of the segment may be deemed a positive factor. The segment
continues to work in the name of shaping a competitive selection of goods and
optimum designing of the sales premises in order to find a sustainable business
model in today’s competition situation. 

Real estate

The external sales revenue of the real estate segment was 2.5 million euros in
the first six months of 2017. The sales revenue increased by 1.1% compared to
the year prior. The external sales revenue in the 2nd quarter was 1.2 million
euros, which is 2.7% more in a year-on-year comparison. The profit before taxes
of the real estate segment in the first six months was 5.8 million euros, which
is 4.0% more in a year-on-year comparison. The profit before taxes in the 2nd
quarter was 2.9 million euros, which is 3.7% more in a year-on-year comparison.
The increase in the sales revenue and profit were supported by new lease
contracts concluded. Viimsi Center and Tartu Kaubamaja Center, managed by
Group’s real estate business segment, stayed covered by tenants and popular
among the visitors, in spite of the significant increase in competition.
Preparation of development projects will continue in 2017. In connection with
the plans to refurbish the commercial building of Tallinn department store, an
architectural competition was announced to find the best solution for new
buildings of the Kaubamaja Quarter in central Tallinn. The surface area of the
flagship department store in Tallinn will increase by up to 2.5 times compared
to the current surface area. 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

                                              30.06.2017  31.12.2016
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ASSETS                                                              
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Current assets                                                      
Cash and cash equivalents                          5,774      32,375
Trade and other receivables                       12,139      15,396
Inventories                                       69,579      70,186
Total current assets                              87,492     117,957
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Non-current assets                                                  
Long-term trade and other receivables                250         264
Investments in associates                          1,740       1,762
Investment property                               48,726      48,684
Property, plant and equipment                    212,583     211,511
Intangible assets                                  8,174       8,505
Total non-current assets                         271,473     270,726
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TOTAL ASSETS                                     358,965     388,683
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LIABILITIES AND EQUITY                                              
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Current liabilities                                                 
Borrowings                                        17,884      26,852
Trade and other payables                          76,315      83,812
Total current liabilities                         94,199     110,664
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Non-current liabilities                                             
Borrowings                                        77,799      73,772
Provisions for other liabilities and charges         403         403
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Total non-current liabilities                     78,202      74,175
TOTAL LIABILITIES                                172,401     184,839
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Equity                                                              
Share capital                                     16,292      16,292
Statutory reserve capital                          2,603       2,603
Revaluation reserve                               83,028      83,932
Currency translation differences                    -255        -255
Retained earnings                                 84,896     101,272
TOTAL EQUITY                                     186,564     203,844
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TOTAL LIABILITIES AND EQUITY                     358,965     388,683
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

                                       II quarter     II     6 months   6 months
                                          2017      quarter    2017       2016  
                                                     2016                       
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Revenue                                   164,645   150,534   315,333    287,384
Other operating income                        259       684       741        951
                                                                                
Cost of sales                            -123,213  -112,648  -236,879   -215,496
Other operating expenses                  -13,585   -12,807   -27,079    -25,566
Staff costs                               -15,747   -13,964   -29,902    -27,262
Depreciation, amortisation and             -3,306    -2,875    -6,587     -5,681
 impairment losses                                                              
Other expenses                               -228      -148      -557       -389
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Operating profit                            8,825     8,776    15,070     13,941
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Finance income                                  0         0         0          2
Finance costs                                -200      -223      -383       -431
Finance income on shares of                    27        51        78         97
 associates                                                                     
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Profit before tax                           8,652     8,604    14,765     13,609
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Income tax expense                            -15         0    -6,386     -5,219
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NET PROFIT FOR THE FINANCIAL YEAR           8,637     8,604     8,379      8,390
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Other comprehensive income:                                                     
Items that may be subsequently                                                  
 reclassified to  profit or loss                                                
Currency translation differences                0         0         0          0
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Other comprehensive income for the              0         0         0          0
 financial year                                                                 
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TOTAL COMPREHENSIVE INCOME FOR THE          8,637     8,604     8,379      8,390
 FINANCIAL YEAR                                                                 
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         Raul Puusepp
         Chairman of the Board
         Phone +372 731 5000