Börsiteade

Pealkiri

Unaudited consolidated interim accounts for the second quarter and first six months of 2020

Teade

Segments (EURm)           Q2/20   Q2/19     yoy     6m/20   6m/19     yoy
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  Supermarkets              128.2   117.8    8.8%     246.5   228.7    7.7%

  Department stores          15.8    24.4   -35.0%     37.0    47.3   -21.7%

  Cars                       24.8    35.7   -30.5%     57.9    62.0    -6.7%

  Footwear                    1.3     2.2   -41.0%      2.9     4.1   -28.0%

  Real Estate                 0.9     1.4   -33.9%      2.3     2.8   -19.4%
------------------------------------------------------------------------------
  Total sales               171.0   181.5    -5.8%    346.5   344.9    0.5%
------------------------------------------------------------------------------


  Supermarkets                4.3     3.7    16.4%      7.6     6.0    26.7%

  Department stores           0.0     0.9   -102.9%    -1.0     0.4   -331.3%

  Cars                        0.5     1.6   -69.2%      0.8     2.2   -64.7%

  Footwear                   -0.2    -0.2    45.0%     -1.2    -0.6    84.2%

  Real Estate                 2.0     2.8   -28.8%      4.6     5.4   -14.3%

  IFRS 16                    -0.6    -0.4    66.1%     -1.0    -0.8    27.4%
------------------------------------------------------------------------------
  Total profit before tax     5.8     8.4   -30.5%      9.9    12.6   -21.7%
------------------------------------------------------------------------------

In  the  second  quarter  of  2020, the  consolidated unaudited sales revenue of
Tallinna  Kaubamaja Grupp was 171.0 million euros,  which was 5.8% less than the
sales  revenue of the  same period in  2019. The sales revenue  in the first six
months was 346.5 million euros, which was a 0.5% increase in comparison with the
result of the first six months of 2019, when the sales revenue was 344.9 million
euros.  The Group's consolidated  unaudited net profit  of the second quarter of
2020 was  5.8 million euros, which was about a third less than the profit of the
comparable  period in 2019. The  Group's net profit  of the first  six months of
2020 was 4.1 million euros, which was also about a third less than the result of
the previous comparable period. In the first six months, pre-tax profit was 9.9
million euros, which is 21.7% less than the year before. Net profit was affected
by  the  dividend  payment,  from  which  5.8 million  euros  of  income tax was
calculated  in the  first quarter  of 2020; 6.5 million  euros of income tax was
calculated a year before.

The  crisis months brought on  by the spread of  the new coronavirus left a deep
mark  on the economic results of the Group  in the first six months of the year.
Closing stores and movement restrictions caused the popularity of the Group's e-
stores  to increase explosively, but still, the sales revenue in the segments in
which  business operations were  limited was significantly  lower than the sales
revenue  in  2019. In  order  to  rapidly  increase  the capacity of e-commerce,
investments  were made in reprocessing logistics solutions, acquiring additional
vehicles   and  reorganising  work  processes.  The  negative  impact  was  less
pronounced  in the supermarket segment, as  food and convenience stores remained
open.  In the changed situation,  the whole cost base  of the Group was reviewed
critically.  Special agreements were achieved with  lessors to reduce the rental
costs  of closed sales areas.  Various measures have been  used to reduce labour
costs,  including the reduction of  wages and the use  of state aid measures, to
deal  with  the  surplus  of  labour  force  caused by the reduction of workload
related  to the slowdown in the economic  activities of the Group companies. The
Group  applied for remuneration compensation  on the terms set  by the state for
eight  Group companies whose economic  activities were extensively disrupted due
to  the crisis. The state  compensated for the remuneration  of the employees in
the  extent of  1.3 million euros,  thereby preserving  about 1,000 jobs  in the
Group.  In  the  second  quarter,  labour  force  costs  decreased  by  2.1%. In
connection  with the virus threat, the Group immediately took measures to ensure
the  safety of  both its  customers and  employees, which  led to an increase in
operating  expenses. To ensure the safety of customers, the Group's retail units
were  equipped with hand  disinfectants and instructions  for their use at store
entrances.  In addition,  signs and  warning lines  were used  to make sure that
people keep a two-metre distance from each other in the stores and the number of
people  in the store at one time was limited. Security staff and store employees
instructed  customers to  make safe  purchases. Corresponding  instructions were
also  distributed  via  speakers  and  on  the  digital  screens  in the stores.
Customers  were encouraged to  use self-service checkouts,  which also ensured a
safe  distance  between  customers.  To  protect  the health of store employees,
safety  glasses were installed at checkouts and protective visors and masks were
distributed to personnel who come in direct contact with customers.

By  acquiring shares of  ABC Supermarkets AS  on 29 May 2020, Tallinna Kaubamaja
Grupp  realised one of its long-term strategic goals of expanding its activities
in  the supermarkets  area. As  a result  of the  acquisition, a  company with a
strong   market   position  and  store  network  that  supplements  the  Group's
supermarket  segment in a suitable way is  joining the Group. The acquisition of
ABC  Supermarkets  AS  creates  a  synergy  of  two  domestic retail chains that
combines the most valuable experiences and successes of both companies. A larger
chain  with a  denser network  of stores  strengthens commerce based on Estonian
capital, values customer-focused service, and helps to provide to the customer a
good selection of goods at reasonable prices, offering a wide selection of high-
quality  goods made by local  Estonian producers. In the  near future, the focus
will be on realising synergies of both chains.

In  April, the new production  building of the central  kitchen of Kulinaaria OÜ
was  completed  in  Tallinn  and  production  began  there.  At  the  same time,
renovations  of the old factory building continued according to plan. The Selver
store  in Võru  was successfully  moved to  the new  location in  the Kagukeskus
shopping  mall in  March and  it was  the latest  Selver store  to introduce the
SelveEkspress  service. During the reporting  period, Selver fully renovated the
Suurejõe  Selver in Pärnu and extended the  sales area at the Rannarootsi Selver
in  Haapsalu. During the second half of the  year, it is planned to renovate two
Selver stores. On 9 July, Selver opened a new store at the WOW mall in Saaremaa,
which  is the 54th store in the Selver chain. The Group's attention continues to
be  focused on developing e-commerce and  increasing the shopping convenience of
customers.

At  the end of the reporting period, the number of loyal customers was more than
676,000, which   is   0.4% less  than  the  year  before  due  to  the  movement
restrictions  enacted during the corona crisis.  On 1 July, the Group launched a
new functionality of the Partnerkaart loyalty card called 'Kuukaart' or 'Monthly
Card',  which enables  the customers  to pay  for purchases  made in the Group's
retail stores within one month by a monthly invoice.

Selver supermarkets

The  consolidated sales revenue of the  supermarkets business segment was 246.5
million  euros in  the first  quarter of  2020, increasing by 7.7% in comparison
with  the same period  of last year.  The consolidated sales  revenue was 128.2
million  euros in  the first  quarter of  2020, increasing by 8.8% in comparison
with  the same period of  last year. During the  first six months of 2020, 18.3
million  purchases  were  made  from  the  stores,  which was 7.4% less than the
reference  year. The  decrease in  the number  of purchases  is impacted  by the
crisis  situation in the Republic of Estonia, during which the customers visited
the  stores  more  rarely,  but  in  turn,  the  average  total sum of purchases
increased. In the second quarter of 2020, both the pre-tax profit and net profit
were 4.3 million euros, growing by 0.6 million euros in comparison with the same
period  the year  before. The  consolidated pre-tax  profit of  the supermarkets
segment  in the first six  months of the year  was 7.6 million euros, growing by
1.6 million euros in comparison with the previous year. In the first six months,
the  net profit was 5.5 million euros, which is an increase of 2.1 million euros
in comparison with 2019. The difference between the net profit and profit before
income tax compared to the results from a year earlier is due to income tax paid
on dividends - income tax paid on dividends was 1.8 million euros lower in 2020
compared  to the year before. All supermarket profit is earned in Estonia. As of
1 June  2020, the supermarkets segment includes  the results of ABC Supermarkets
AS.

The  increase in sales revenue  of Selver in the  second quarter has been faster
than  the average  growth in  the market  segment. The  basis for  comparison is
higher  on  the  account  of  the  Suurejõe  Selver being temporarily closed for
renovations,  Sepapaja Selver being  closed due to  the emergency situation, and
the  Ilulaat campaign being cancelled due  to the emergency situation. The basis
for  comparison is lower  on the account  of the sales  revenue of stores of ABC
Supermarkets  AS  that  were  added  in  June.  The  restrictions related to the
emergency  situation  reduced  the  attendance  of  stores operating in shopping
malls,  but increased  the attendance  of separately  located stores. During the
emergency  situation, the demand for  e-Server services increased significantly.
In  the area of e-commerce, the sales  revenue doubled in the second quarter and
the  sales revenue of the first six months grew by more than 135%. The number of
purchases  in the  second quarter  decreased significantly  due to the emergency
situation  in the country,  due to which  the customers visited  the stores less
often and purchased more at once.

The  profit was  earned thanks  to the  increased sales revenue, the investments
made  in increasing  the efficiency  of daily  processes, and the warmer winter,
which  enabled saving on administrative expenses. The SelveEkspress service that
became  available at all Selver stores in  the first quarter enabled to maintain
the  previous year's level of  labour force efficiency in  the conditions of the
salary  pressure that remained  prevalent at the  beginning of the  year. In the
second  quarter, the economic  results were affected  by the crisis situation in
the  Republic caused  by COVID-19, when  expenses made  to protect the health of
customers and employees increased significantly. The one-off expenses related to
the purchase transaction of ABC Supermarkets also affected the results.

During the current year, Selver has fully renovated the Suurejõe Selver in Pärnu
and  extended the  sales area  at the  Rannarootsi Selver  in Haapsalu. In Võru,
Selver  moved to new premises at the Kagukeskus shopping mall. Due to the crisis
situation, Sepapaja Selver was temporarily closed. The SelveEkspress service has
been extended and is now available in all Selver stores. The assembly volumes of
e-Selver  have been grown  rapidly. By the  end of the  first six months, the e-
Selver  service area includes all of Harju  and Tartu County, Hiiu County, Saare
County,  a large part of Pärnu County, and a part of Lääne County. In the second
quarter,  Selver acquired  the shares  of ABC  Supermarkets AS. By acquiring the
shares,  Selver improves the availability of its  service via a wider network of
stores,  and thereby increases  its market share  by nearly 2 percentage points.
The  Comarket store chain mainly includes stores  with a small sales area, which
is  why Selver is beginning to operate  and develop the small stores format more
seriously.

In  the second  half of  2020, Selver plans  to renovate  two stores. On 9 July,
Selver  opened a new store at the WOW  mall in Saaremaa, which is the 54th store
in the Selver chain. Attention continues to be paid to developing the e-commerce
area.

Department stores

In  the six  months of  2020, the Kaubamaja  department stores  business segment
earned  a sales revenue of  37.0 million euros, which is  21.7% less than in the
same period of last year. The pre-tax loss of the Kaubamaja department stores in
the  first six  months of  2020 was 1.0 million  euros, weakened  of 1.4 million
euros  in the year-on-year comparison. The sales revenue of Kaubamaja department
stores  in the second  quarter of 2020 was  15.8 million euros, which was 35.0%
less  than during the same  period of 2019. The pre-tax  profit of the Kaubamaja
department  stores in the second quarter of 2020 was zero, which was 0.9 million
weaker  than in the second  quarter of last year.  After a relatively successful
start  to the year, the  sales result of the  Kaubamaja department stores in the
both first and second quarter was influenced by the emergency situation declared
by  the Government of the  Republic of Estonia due  to the COVID-19 virus, which
resulted  in a lower number of visitors  to the Kaubamaja department stores from
the  middle of  March. On  27 March, the  Government of  the Republic of Estonia
ordered  the closing of all shopping malls and Kaubamaja also closed all selling
spaces  of manufactured goods in Tallinn and  Tartu with only the grocery stores
remaining open. Kaubamaja department stores were reopened on 11 May. Closing the
spaces  of manufactured goods in  April was not compensated  by the turnovers of
the e-store being multiplied during the crisis.

In  the second quarter of 2020, the sales  revenue of OÜ TKM Beauty Eesti, which
operates  I.L.U. cosmetics  stores, was  0.9 million euros,  which is 16.0% less
than  in the second quarter  of 2019. In the second  quarter of 2020, profit was
0.04 million  euros, which was 0.1 million euros more than during the comparable
period  in 2019. The  sales revenue  of the  first six  months of  2020 was 1.9
million  euros, which is 7.9% less than during the same period of 2019. The loss
of  the first six months of 2020 was 0.01 million euros, which is an improvement
of 0.16 million euros compared to the loss of the same period in 2019. The sales
revenue  of the second  quarter was affected  by the emergency situation enacted
due to the COVID-19 virus spreading and shopping malls being closed. The results
of the company were supported by a sudden increase in the sales of the ilu.ee e-
store,   including   increasing  its  assortment  to  include  additional  goods
categories.  Successful negotiations with shopping malls to reduce rent payments
and using the Unemployment Fund's support measures to reduce salary expenses had
a significant impact on reducing costs.

Car trade

The  sales revenue of the car trade  segment was 57.9 million euros in the first
six  months of 2020. Sales revenue  was 6.7% less than the  sales revenue of the
same  period in 2019, whereas the sales revenue for KIAs decreased by 30.2%. The
sales revenue of 24.8 million euros of the second quarter of 2020 was 30.5% less
than the sales revenue of the same period in 2019, whereas the sales revenue for
KIAs  decreased  by  49.7%. During  the  first  six months, a total of 2,471 new
vehicles were sold, 1,033 vehicles of them in the second quarter. The net profit
of  the segment in the first six months of 2020 was 0.2 million euros, which was
1.4 million  euros less than  the profit of  the same period  a year before. The
pre-tax  profit of the segment  in the first six  months of 2020 was 0.8 million
euros,  showing a decrease of 1.4 million euros in comparison with the profit of
the  first six months of 2019. The pre-tax profit of the second quarter of 2020
was  0.5 million euros, which is  1.1 million euros less than  the profit of the
same period a year before.

In the second quarter, sales revenue and business profit decreased mainly due to
the   restrictions  on  movement  and  the  economic  situation  caused  by  the
coronavirus  crisis, due to which the purchases  of car rental companies did not
happen  and in  Lithuania, car  showroom was  closed. In addition, the launching
period  of the new Shkoda  car showroom in Riga,  which coincided with the corona
crisis,  reduced profitability. Major restructuring has  also taken place in the
Tallinn  Viking Motors  car showroom,  where, in  relation to establishing a new
bodyworks  building and  reconstructing the  Tammsaare tee 51 showroom, one-time
expenses  were higher.  These activities  did reduce  the business income of the
second quarter, but are aimed at the future and the good results in June confirm
their  profitability. Of  new models,  the new  Kia Sorento  will be launched in
September.

Footwear trade

The  sales revenue of  the footwear trade  segment was 2.9 million  euros in the
first  six months  of 2020. In  comparison with  2019, the sales  revenue in the
first six months decreased by 28.0%. In the second quarter, the sales revenue of
the  segment was  1.3 million euros,  which is  41.0% less than  during the same
period in 2019. The loss of the first six months was 1.2 million euros. The loss
of  the comparable period in 2019 was 0.6 million  euros. The loss of the second
quarter  was 0.2 million euros,  which is 0.08 million  euros weaker than during
the same period of 2019. The sales revenue of the second quarter was affected by
the emergency situation enacted due to the COVID-19 virus spreading and shopping
malls  being closed. Successful negotiations with  shopping malls to reduce rent
payments  and using  the Unemployment  Fund's support  measures to reduce salary
expenses had an impact on reducing costs. The discounts on stock made during the
last  month of the  quarter were higher  than usual, as  the emergency situation
completely eliminated sales options at the beginning of the spring season.

Real estate

The  sales revenue earned in the real  estate segment outside the Group was 2.3
million euros in the first six months of 2020. Sales revenue decreased by 19.4%
in  comparison with  the previous  year. The  sales revenue  earned in  the real
estate  segment outside the Group was 0.9 million euros in the second quarter of
2020. During  the reference period, sales  revenue decreased by 33.9%. The sales
revenue earned in the real estate segment was 4.6 million euros in the first six
months of 2020. During the reference period, profit decreased by 14.3%. The pre-
tax  profit of the segment in the second quarter was 2.0 million euros, which is
28.8% less than during the same period in 2019.

The  drop in the profits  and sales revenue in  the first six months of 2020 was
caused  by the emergency situation declared by the Government of the Republic on
12 March  2020 and the restriction of the freedom of movement implemented on 27
March  2020, as  well  as  the  prohibition  on  visiting  shopping  malls. As a
responsible  and caring lessor, we  agreed to reduce the  rent of lessees during
the emergency situation. The emergency situation, restriction on the movement of
persons,  and prohibition on being in  shopping mall caused a difficult economic
situation  for lessees. The  Tartu Kaubamaja department  store and Viimsi Keskus
shopping    mall   were   largely   closed   until   10 May.   Grocery   stores,
telecommunication  stores, and stores with a  separate entrance were open at the
malls.  Catering enterprises  were open  only for  take-away. The restriction on
movement  hit the Tartu Kaubamaja department  store the hardest - the attendance
of  the mall decreased  by more than  80% during the period  that shopping malls
were  closed.  During  the  same  period,  the  attendance  of the Viimsi Keskus
shopping  mall decreased by  nearly 40%. The recreational  area of Viimsi Keskus
shopping  mall was  completely opened  for visitors  only on  1 June. Within the
segment,  the Latvian real  estate company improved  its results. At  the end of
last year, the sales showroom for Shkodas and used cars was completed, and it was
also open during the crisis.

The aftermath of the coronavirus epidemic will continue to affect the results of
the  retail rental market for  the whole of 2020 due  to both a decrease in rent
income  and  vacancies  of  commercial  premises.  As the economic impact of the
epidemic  is not yet clear, the volume and schedule for future developments will
be reviewed.

Impact of the coronavirus

Baltic  States began to extensively implement  different measures to prevent the
spread  of COVID-19 starting from March 2020, which brought along sudden changes
in the former organisation of life and the economic environment and affected the
daily operations of the Group's companies.

In  order to limit  the spread of  the virus, the  Government of the Republic of
Estonia  declared an emergency situation on 12 March. On March 25, an additional
order  was issued to  close all shopping  malls from March  27. As a result, all
stores  of the Group's footwear trade  segment, the industrial goods departments
of  the Kaubamaja segment, and  I.L.U. shops were closed  for visitors from that
date. The Tartu Kaubamaja department store, Viimsi Keskus shopping mall, and the
historic Kaubamaja building, mainly used by the Kaubamaja segment and located in
the  centre of Tallinn -  all managed by the  Group's real estate segment - were
also closed. On 11 May, permission was granted to reopen stores in Estonia. From
March  16, the  Lithuanian  car  showroom  of  the Group's car trade segment was
closed for almost a month.

On  May 11, all of the  Group's sales premises were  reopened and by the time of
preparing  this  report,  business  operations  have  substantially  resumed. In
conclusion, our estimation is that the economic changes caused by the virus will
not affect the Group's sustainability.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros?

-------------------------------------------------------------------------
                                                 30.06.2020   31.12.2019
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                          21,425       40,629

  Trade and other receivables                        13,641       16,904

  Inventories                                        77,393       78,305
-------------------------------------------------------------------------
  Total current assets                              112,459      135,838
-------------------------------------------------------------------------
  Non-current assets

  Long-term trade and other receivables                 275          114

  Investments in associates                           1,835        1,721

  Investment property                                60,541       60,458

  Property, plant and equipment                     381,181      319,192

  Intangible assets                                  22,606        4,990
-------------------------------------------------------------------------
  Total non-current assets                          466,438      386,475
-------------------------------------------------------------------------
  TOTAL ASSETS                                      578,897      522,313
-------------------------------------------------------------------------

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

  Borrowings                                         36,446       46,448

  Trade and other payables                           87,891       89,831
-------------------------------------------------------------------------
  Total current liabilities                         124,337      136,279
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        252,018      157,876

  Provisions for other liabilities and charges          368          322
-------------------------------------------------------------------------
  Total non-current liabilities                     252,386      158,198
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 376,723      294,477
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                                92,450       93,496

  Currency translation differences                     -149         -149

  Retained earnings                                  90,978      115,594
-------------------------------------------------------------------------
  TOTAL EQUITY                                      202,174      227,836
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      578,897      522,313
-------------------------------------------------------------------------

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

-------------------------------------------------------------------------------
                                         II quarter    6 months
                        II quarter 2020     2019         2020     6 months 2019
-------------------------------------------------------------------------------


 Revenue                        171,008       181,731     346,504       345,426

 Other operating income             417           157         660           397



 Cost of sales                 -129,062      -136,408    -263,092      -259,734

 Other        operating
 expenses                        -9,612       -10,273     -20,146       -20,825

 Staff costs                    -17,913       -18,299     -36,146       -35,545

 Depreciation,
 amortisation       and
 impairment losses               -7,871        -7,693     -15,862       -15,330

 Other expenses                    -146          -160        -377          -411
-------------------------------------------------------------------------------
 Operating profit                 6,821         9,055      11,541        13,978
-------------------------------------------------------------------------------
 Finance costs                   -1,066          -752      -1,763        -1,466

 Finance    income   on
 shares of associates                59            58         114           114
-------------------------------------------------------------------------------
 Profit before tax                5,814         8,361       9,892        12,626
-------------------------------------------------------------------------------
 Income tax expense                  -1             0      -5,822        -6,453
-------------------------------------------------------------------------------
 NET PROFIT FOR THE
 FINANCIAL YEAR                   5,813         8,361       4,070         6,173
-------------------------------------------------------------------------------
 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                   5,813         8,361       4,070         6,173
-------------------------------------------------------------------------------


Raul Puusepp

Chairman of the Board

Phone +372 731 5000