Börsiteade

Pealkiri

Unaudited consolidated interim accounts for the third quarter and first nine months of 2016

Teade

Segments (EURm)          Q3/16  Q3/15   yoy    9m/16  9m/15   yoy  
-------------------------------------------------------------------
Supermarkets              99.4   97.1   2.4%   291.1  279.3   4.2% 
Department stores         22.1   21.3   3.8%    68.1   66.6   2.3% 
Cars                      21.9   17.3   26.7%   63.3   45.6   38.8%
Footwear                   3.5    3.2   9.6%     9.3    8.5   9.3% 
Real Estate                1.2    1.0   28.3%    3.7    2.6   43.6%
Total sales              148.1  139.8   6.0%   435.5  402.6   8.2% 
-------------------------------------------------------------------
                                                                   
Supermarkets               4.4    3.3   34.9%   10.5    6.3   64.7%
Department stores          0.7    0.6   6.9%     1.7    1.6   8.0% 
Cars                       1.6    0.7  129.6%    3.0    1.8   68.3%
Footwear                  -0.3   -0.3   -5.2%   -0.8   -1.2  -34.0%
Real Estate                3.0    2.3   25.9%    8.6    6.7   27.4%
Total profit before tax    9.4    6.7   40.7%   23.0   15.3   50.3%
-------------------------------------------------------------------

Tallinna Kaubamaja Group’s consolidated unaudited sales revenue for the third
quarter amounted to 148.1 million euros, thereby surpassing the earlier sales
revenue of the year by 6.0%. The nine-month sales revenue amounted to 435.5
million euros, indicating a growth by 8.2% in comparison with the 402.6 million
euro nine-month sales revenue of the year before. The Group’s consolidated
unaudited net profit for the third quarter of 2016 was 9.4 million euros, which
is a 40.7% increase in comparison with the same period of the previous year.
The Group’s net profit for the first nine months of 2016 was 17.8 million
euros, which is a 55.6% improvement in comparison with the year before. The
profit before tax for the first nine months was 23.0 million euros, which is a
50.3% growth in comparison with the previous year. A dividend payment affected
the net profit, on which 5.2 million euros of income tax was paid during the
first quarter of 2016; the amount of income tax paid the year before was 3.9
million euros. 

The Group continued with a strong increase in sales revenue and profit during
the third quarter. All of the Group’s segments have increased their sales
revenue and achieved a bigger net profit in the year-on-year perspective for
several consecutive quarters. Similarly to the previous quarter, the vehicle
segment displayed the biggest growth in the third quarter with car sales
accelerating in Latvia and Lithuania in addition to Estonia. This was achieved
through the increase of retail sales as well as major sales deals. Selver and
Kaubamaja displayed a more moderate growth in sales revenue, but efficient
stock management in raiding the gross margin and an increase in employee
efficiency contributed to a great deal in the profit of either segment. The
footwear segment, which got a new manager in May, focused on the organisation
of stores and assortment, which manifested in an extensive growth in sales. The
activities aimed to curb losses in the segment shall continue with the
optimisation of store spaces and operational expenditure. The sales space,
which has increased in comparison with the year before, has slightly increased
the number of employees. The increase in average wages is in line with the
Estonian average, and includes an increase of the basic wages as well as
performance pay on the excellent economic results. 

Selver supermarkets

The consolidated sales revenue of the supermarket segment for the first 9
months of 2016 was 291.1 million euros, a year-on-year growth of 4.2%. The
consolidated sales revenue of the third quarter was 99.4 million euros,
amounting to a 2.4% increase in comparison with the same period of the year
before. 27.0 million purchases were made in Selver supermarkets during the
first 9 months of 2016, which is a 0.7% increase in comparison with the
previous year. The consolidated profit before tax of the supermarkets segment
for the first 9 months of 2016 was 10.5 million euros and the net profit 7.8
million euros, growing respectively by 4.1 million and 3.7 million euros in
comparison with the year before. Therewith, the profit before tax earned in
Estonia was 12.0 million euros and the net profit 9.4 million euros. The
difference between net profit and profit before tax results in the income tax
paid on dividends – the income tax paid on dividends in 2016 was 0.39 million
euros bigger than the year before. Profit before tax and net profit of the
third quarter were 4.4 million euros, which amounted to an increase by 1.1
million euros and of which 5.0 million euros was profit earned in Estonia. The
nine-month loss earned in Latvia was 1.5 million euros, 0.5 million euros of
which were earned during the third quarter. Loss earned in Latvia during the
first nine months decreased by 0.3 million euros in comparison with the
previous year. The increase in the revenue of the supermarkets segment during
the third quarter was supported by the increase in the average value of the
shopping cart resulting from the growth of real income. The opening of new
Selver supermarkets has also increased the number of purchases from Selver,
meaning that new customers have been won over. In comparison with 2015, new
supermarkets include Kärberi Server opened in April 2016, Viimsi Selver opened
in August 2015 and the e-Selver service launched in fall 2015. A negative
impact on the growth of turnover was provided by the higher reference base due
to the closing of Veeriku Selver in Tartu for six weeks of renovation works and
the closing of Kerese Selver in February 2016. The sales results of the third
quarter were influenced by a significantly cooler summer, resulting in the
sales of several seasonal product groups falling below the results of the
previous summer. A good crop year has reduced the percentage of fruit and
vegetables in the customers’ shopping carts during the third quarter. When
observed across supermarkets, the growth in sales revenue is led by the Selver
supermarkets opened or renovated during recent years. The profit earned in
Estonia has most of all been influenced by the increase of gross profit earned
on the sale of goods, which has been achieved by altering the principles of the
operations of the sale of goods and by optimising the buying-in process. With
respect to operational expenditure, the level of cost-efficiency has been
improved in comparison with the previous year. Pressure on the wage level is
also apparent in the supermarkets segment. The Tallinn Administrative Court
satisfied the claim for refund from the Tallinn City Enterprise Department for
sales tax collected on excised goods. The one-off payment was included in the
second quarter results. Loss earned in Latvia reduced due to the end of the
lease contract of one store. 

Department stores

The nine-month sales revenue of 2016 for the department stores business segment
was 68.1 million euros, amounting to a year-on-year growth by 2.3%. Of this
amount, the sales revenue of the third quarter amounted to 22.1 million euros,
which is a 3.8% increase in comparison with the results of the third quarter
2015. The nine-month profit before tax in 2016 for the department stores
segment was 1.7 million euros, which is an 8.0% improvement in comparison with
the previous year. The third quarter profit before tax was 0.7 million euros,
which indicates an improvement by 6.9% in comparison with the previous year.
The nine-month sales revenue of the department stores segment was affected by
different renovation projects which started already during the first quarter
with the beauty and women’s departments of the Tartu department store and ended
with the women’s footwear department and men’s department of the Tallinn
department store during the third quarter. The products listed in the Kaubamaja
e-shop launched in the beginning of March already reached 28,000 items by the
end of the third quarter. The sales revenue of OÜ TKM Beauty Eesti that
operates I.L.U. cosmetics stores was 1.1 million euros in the third quarter,
amounting to a 3.0% year-on-year decrease. The loss of the third quarter was
0.1 million euros, equalling the loss of the same period from 2015. The
nine-month sales revenue of 2016 was 3.4 million euros, amounting to
year-on-year decrease of 0.9%. The nine-month loss in 2016 was 0.3 million
euros, which is about equal to the loss of the same period of the previous
year. The slower-than-expected launch of the Kvartal’s I.L.U. store in Tartu
immediately before the summer season had a negative effect on sales and profit. 

Car Trade

The 2016 nine-month sales revenue of the car trade segment was 63.3 million
euros. The sales revenue topped the results of the same period from the
previous year by 38.8%, whereas the sales revenue of KIAs grew by 36.5%. The
sales revenue of 21.9 million euros earned in the third quarter exceeded the
year-on-year results by 26.7%, including the sales revenue from KIA sales by
31.1%. During the first nine months, altogether 3,012 new vehicles were sold in
the Group car trade segment, 1,003 vehicles were sold in the third quarter. The
segment’s net profit for the first nine months of the year 2016 was 2.6 million
euros, amounting to a 98.8% year-on-year growth. The segment’s profit before
tax for the first nine months of 2016 was 3.0 million euros, topping the last
year’s result from the same period by 68.3%. The net profit of the third
quarter of 2016 was 1.6 million euros, which is a 129.6% improvement in
comparison with the third quarter of 2015. All of the Group’s car trade
enterprises indicated strong sales results during the first nine months of the
year, whereas the strongest growth in sales was provided by the Latvian and
Lithuanian salons. The KIA importer has done an excellent job in introducing
the new models; the sale of the new KIA Sportage model has kicked off
especially well. KIA’s reliability in the eyes of the customers is on constant
increase. Intense work on corporate clients has also yielded great results. In
addition, the Forum Auto car salon built two years ago has launched well and
justified itself in every aspect. The new KIA models NIRO and Optima Wagon will
be on sale soon. In Latvia, the Peugeot selection will be supplemented with the
new Peugeot 3008 and Expert models. 

Footwear trade

The 2016 nine-month sales revenue of the footwear trade segment was 9.3 million
euros, which is a 9.3% year-on-year improvement. The third quarter sales
revenue was 3.5 million euros, increasing by 9.6% in comparison with the same
period of the previous year. The company’s third quarter net loss was 0.3
million euros, which amount to a 5.2% year-on-year decrease. An increased
proportion of children’s goods and mass brands have helped to grow sales
revenue. The reduction of end-of-season leftovers has improved the age
structure of stock, first and foremost in the ABC King store chain. To improve
the efficiency the company will continue to improve the efficiency of
merchandise processes in addition to store space optimisation and cutting
current expenditure. 

Real estate

The sales revenue of the real estate business earned outside the Group in the
first 9 months of 2016 was 3.7 million euros. The sales revenue increased by
43.6%, i.e. by 1.1 million euros in comparison with the previous year. The
Group’s external sales revenue for the third quarter was 1.2 million euros,
which is an increase of 28.3% or by 0.3 million euros in comparison with the
same period of the previous year. The profit before tax of the real estate
segment for the first nine months of 2016 was 8.6 million euros, which is a
year-on-year increase of 27.4% or 1.8 million euros. The third quarter profit
before tax was 3.0 million euros, amounting to a 25.9% year-on-year growth. The
growth of sales revenue and profit was supported by the shopping and recreation
centre opened in Viimsi in August 2015 and the rental of the Rézekne building
in Latvia to an external party. The renovation works at the Tartu Kaubamaja
Shopping Centre during which the whole shopping environment was modernised were
concluded in March 2016. 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

                                              30.09.2016  31.12.2015
--------------------------------------------------------------------
ASSETS                                                              
--------------------------------------------------------------------
Current assets                                                      
Cash and cash equivalents                         13,602      13,911
Trade and other receivables                       10,454      20,191
Inventories                                       66,815      61,110
Total current assets                              90,871      95,212
--------------------------------------------------------------------
Non-current assets                                                  
Long-term trade and other receivables                294         293
Investments in associates                          1,802       1,778
Investment property                               46,956      44,963
Property, plant and equipment                    195,159     196,691
Intangible assets                                  8,660       9,043
Total non-current assets                         252,871     252,768
--------------------------------------------------------------------
TOTAL ASSETS                                     343,742     347,980
--------------------------------------------------------------------
                                                                    
LIABILITIES AND EQUITY                                              
--------------------------------------------------------------------
Current liabilities                                                 
Borrowings                                        12,300      33,377
Trade and other payables                          70,021      77,066
Total current liabilities                         82,321     110,443
--------------------------------------------------------------------
Non-current liabilities                                             
Borrowings                                        84,704      57,426
Provisions for other liabilities and charges         502         502
--------------------------------------------------------------------
Total non-current liabilities                     85,206      57,928
TOTAL LIABILITIES                                167,527     168,371
--------------------------------------------------------------------
Equity                                                              
Share capital                                     16,292      16,292
Statutory reserve capital                          2,603       2,603
Revaluation reserve                               64,608      65,701
Currency translation differences                    -255        -255
Retained earnings                                 92,967      95,268
TOTAL EQUITY                                     176,215     179,609
--------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                     343,742     347,980
--------------------------------------------------------------------



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

                                           III         III    9 months  9 months
                                         quarter     quarter    2016      2015  
                                           2016       2015                      
--------------------------------------------------------------------------------
                                                              
Revenue                                    148,099   139,759   435,483   402,559
Other operating income                         308       213     1,259       604
                                                                                
Cost of sales                             -110,131  -105,414  -325,627  -303,062
Other operating expenses                   -12,512   -12,831   -38,078   -38,777
Staff costs                                -13,019   -11,768   -40,281   -36,221
Depreciation, amortisation and              -3,006    -2,919    -8,687    -8,620
 impairment losses                                                              
Other expenses                                -159      -127      -548      -457
--------------------------------------------------------------------------------
Operating profit                             9,580     6,913    23,521    16,026
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance income                                   1         1         3        11
Finance costs                                 -213      -283      -644      -864
Finance income on shares of associates          27        45       124       133
--------------------------------------------------------------------------------
Profit before tax                            9,395     6,676    23,004    15,306
--------------------------------------------------------------------------------
Income tax expense                               0         0    -5,219    -3,873
--------------------------------------------------------------------------------
NET PROFIT FOR THE FINANCIAL YEAR            9,395     6,676    17,785    11,433
--------------------------------------------------------------------------------
Other comprehensive income:                                                     
Items that may be subsequently                                                  
 reclassified to  profit or loss                                                
Currency translation differences                 0         0         0         0
--------------------------------------------------------------------------------
Other comprehensive income for the               0         0         0         0
 financial year                                                                 
--------------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME FOR THE           9,395     6,676    17,785    11,433
 FINANCIAL YEAR                                                                 
--------------------------------------------------------------------------------




         Raul Puusepp
         Chairman of the Board
         Phone +372 731 5000