Börsiteade

Pealkiri

Unaudited consolidated interim accounts for the third quarter and first nine months of 2022

Teade

Segments (EURm)           Q3/22   Q3/21    yoy     9m/22   9m/21    yoy
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  Supermarkets              149.8   142.5    5.1%    433.1   417.6    3.7%

  Department stores          22.9    21.9    4.7%     71.4    60.7   17.7%

  Cars                       39.8    38.2    4.1%    112.4   116.2   -3.3%

  Security segment            2.4     2.2   10.5%      6.9     5.8   19.1%

  Real Estate                 1.6     1.4   12.1%      4.6     3.8   19.9%
----------------------------------------------------------------------------
  Total sales               216.5   206.2    5.0%    628.4   604.1    4.0%
----------------------------------------------------------------------------
  Supermarkets                2.6     7.8   -66.8%     8.0    14.2   -43.6%

  Department stores          -0.2    -0.1   79.2%      0.3    -1.0     NA

  Cars                        3.2     2.4   32.9%      8.5     5.8   45.9%

  Security segment            0.1     0.1   -23.4%     0.1     0.1   34.3%

  Real Estate                 2.7     3.1   -12.4%     8.1     8.0    0.9%

  IFRS 16                    -0.7    -0.8   -12.1%    -1.7    -2.5   -31.6%
----------------------------------------------------------------------------
  Total profit before tax     7.8    12.6   -38.2%    23.3    24.6   -5.3%
----------------------------------------------------------------------------

In  the third quarter  of 2022, the consolidated  unaudited sales revenue of the
Group was 216.5 million euros, which was 5.0% more than the sales revenue of the
same  period in  2021. The sales  revenue in  the nine  months was 628.4 million
euros, which was a 4.0% increase in comparison with the result of the first nine
months  of 2021, when  the sales  revenue was  604.1 million euros. In the third
quarter  of 2022, the  unaudited consolidated  net profit  of the Group was 7.8
million euros, which was 38.2% lower than the profit of the comparable period in
the  previous year.  The net  profit of  the Group  for the first nine months of
2022 was  18.9 million  euros,  which  was  7.2% lower  than  the  result of the
comparable  period in the previous  year. In the first  nine months, the pre-tax
profit  was 23.3 million euros, decreasing by  5.3% compared to the year before.
Net profit was affected by the dividend payment, from which 4.5 million euros of
income  tax was  calculated in  the first  quarter of 2022; 4.3 million euros of
income tax was calculated a year before.

The  keywords for  the third  quarter of  2022 were inflation  and rising energy
costs.  Although the decrease in the purchasing  power of the population has not
kept  pace  with  inflation  due  to  rapid  wage  growth, consumers have become
cautious  in making other purchases in  anticipation of an explosive increase in
housing  costs during  the winter  period. Therefore,  the sales  revenue of the
retail  segments of the Group grew at  a moderate pace. The heat and electricity
costs of the Group increased almost threefold, making up the largest part of the
decrease in the profit of the third quarter compared to 2021. In the competitive
Estonian  business environment, it is neither possible nor reasonable to realise
such  a rapid  increase in  costs to  retail prices  at the same pace. To reduce
energy  costs,  existing  business  processes  are  reviewed  with  the  aim  of
significantly  optimising energy  use; for  all new  stores, the  use of energy-
efficient  solutions is  taken into  account. The  increase in  energy costs has
forced  number of goods suppliers of the  Group who are local small producers to
stop  their activities.  In addition,  caterers and  other small businesses that
provided synergy in terms of customer flow in shopping centres are closing their
doors.  This  has  an  indirect  and  long-term  negative impact on the economic
activities  of the Group. Labour costs  increased by 11.5% in the third quarter,
while  the  number  of  employees  decreased  by  3.1% as a result of optimising
operations.  Regardless of the high price pressure,  the Group was still able to
maintain  a strong sales margin in the department store and supermarket segment,
and  with the support  of the better  margin due to  the car shortage in the car
segment, overall increase the sales margin of the Group.

In  the third quarter,  preparations were made  for the opening  of a new Selver
store  with a  total area  of nearly  2,000 m(2) in  Tabasalu near  Tallinn. The
premises  of  the  store  are  planned  with the most modern and environmentally
friendly  technological  solutions  in  mind.  The  cold  storage  and  freezing
facilities  of the store operate on  a CO(2)-based cooling system, which ensures
energy  consumption savings of  up to a  fifth compared to  older analogues. The
residual  heat is used in the ventilation system to heat the building and water.
All  faucets in the store are equipped with aerators, which reduce the amount of
water  consumed. In addition, digital solutions are used to reduce paper waste -
electronic  price tags  in the  fruit and  vegetable department, digital screens
used  for ads, and Partnerkaart e-receipts.  In August, the Partnerkaart app was
launched,  which  is  one  of  the  most  awaited digital developments among our
customers.  The Partnerkaart app has all  the functions of the Partnerkaart card
and  it also works  as a scanner  and a payment  solution. The focus is still on
updating the platforms and developing services of the e-stores, for which demand
is  growing. In September, the party  snacks of Selveri Köök, previously ordered
from a separate environment, were integrated into the eSelver platform, enabling
customers  to conveniently  order from  both the  grocery store and Selveri Köök
with   one  order  and  delivery  to  a  significantly  expanded  service  area.
Construction work for the construction of a solar park on the roof of the Pirita
Selver building, where electricity is used for own consumption, was completed. A
similar park is planned to be built on the roof of the Viimsi Centre in the near
future.  One of the  major renovation projects  of the sales  space in the first
half  of 2022 was the opening of the renovated Naistemaailm (Women's department)
in  the  Kaubamaja  in  Tallinn  in  the  first quarter, where both the physical
environment  and the selection of brands were  updated. In June, the new Priisle
Selver  was opened in the  Lasnamäe district in Tallinn.  In accordance with the
strategic  decision to  stop selling  shoes in  stand-alone shoe stores, all ABC
King  and SHU stores were closed by the end of the second quarter. In September,
the  completely renovated I.L.U.  store opened with  a new concept  in the Pärnu
shopping  mall. A renewed store in Rocca al Mare mall was opened in October. The
Partnerkaart  app  launched  in  August,  which  has  all  the  functions of the
Partnerkaart  card, works as a scanner and a payment solution. When creating the
Partnerkaart  app, the goal was to bring to the market an innovative, intuitive,
and  functional application, which makes the shopping experience faster and more
convenient and increases customer loyalty. The software used in the Partnerkaart
app  makes it possible to read the barcode of the product with a smartphone much
faster  than with a scanner and allows to spread the workload of the scanners of
the  stores.  The  payment  platform  used  in  the  app  supports both Visa and
MasterCard  payments and enables the fast processing of digital payments. Almost
90,000 Estonians  had  downloaded  the  Partnerkaart  app  by  the  beginning of
October.

Selver supermarkets

The  consolidated sales revenue of the  supermarket business segment in the nine
months  of  2022 was  433.1 million  euros,  increasing  by 3.7% compared to the
previous  year. The  consolidated sales  revenue was  149.8 million euros in the
third  quarter of 2022, increasing by 5.1% in comparison with the same period of
last  year. The average monthly sales revenue  per square metre of sales area in
the  nine months of 2022 was 0.41 thousand euros, increasing by 3.3% compared to
the  same period last year.  In the third quarter,  the respective indicator was
0.42 thousand  euros, which is 3.6% more  than in the same  period last year. In
terms of comparable stores, the sales revenue of goods per square metre of sales
area  was  0.41 thousand  euros  in  the  nine  months of 2022, growing by 3.1%
compared  to the  same period  last year.  In the  third quarter, the respective
indicator  was 0.43 thousand euros,  which is 4.8% more  than in the same period
last  year. In the  first nine months  of 2022, 32.6 million purchases were made
from the stores, which was 1.9% more than in the reference year.

In  the third quarter of 2022, both the  pre-tax profit and net profit were 2.6
million euros, which is 5.2 million euros less than in the reference period. The
consolidated  pre-tax profit of  the supermarkets segment  in the nine months of
2021 was  8.0 million euros, decreasing by  6.2 million euros in comparison with
the  previous year.  In the  first nine  months, the  net profit was 5.8 million
euros,  which signifies a  decrease of 6.8 million  euros in comparison with the
previous  year. The difference  between the net  profit and profit before income
tax  is due to the income  tax paid on dividends -  this year, the income tax on
dividends  was  0.6 million  euros  higher  than  in the year before. The entire
revenue of the supermarket segment was earned in Estonia.

The  financial results of the first nine months of the year were affected by the
increased turnover of the new Priisle Selver store opened in Tallinn in June, as
well  as by the one-time costs and investments made for the opening. The results
of  the supermarket segment have been affected by accelerated inflation, the war
in  Ukraine, and the effects of COVID-19 included  in the reference base. The 9-
month  reference base is  lower by the  costs associated with  the rebranding of
Selver  ABC stores  and the  negative effects  of temporary  store closures. The
reference  base is higher due to one  closed store and a significantly higher e-
commerce  and  manufactured  goods  base  on  the  crest of the 2021 crisis. The
decrease  in  e-commerce  sales  revenue  in  the  second quarter turned into an
increase  of approximately 10% in the third quarter. The decline in volume sales
of  food products continued  in the third  quarter due to accelerated inflation.
The  increase in prices  is largely due  to the increase  in the price of energy
carriers,  which has significantly  increased the operating  costs of companies,
which, in turn, are transferred to the final prices of products and services. In
order  to alleviate the increase in  food prices for customers, Selver continues
with  a frozen price campaign for the  third year, within the framework of which
the prices of more than 400 products have been fixed. The impact of inflation is
mitigated  by customers buying campaign products in larger quantities. The share
of products with discount prices in the shopping cart rose over 42% in the third
quarter.  The Lidl store chain,  which entered the Estonian  market in the first
quarter  of this year, has not had a  significant impact on the sales results of
Selver  stores. In order to counter-balance the price pressure, Selver has taken
steps  to  increase  efficiency.  Investments  in self-checkout registers and IT
solutions  have had a positive impact on labour efficiency and the basic process
of  handling goods.  Economic results  are strongly  affected by the significant
increase  in energy prices, especially  electricity (increase of 5 million euros
in nine months), significantly increasing the operating expenses of the segment.

92% of  the production of the  Kulinaaria central kitchen, which  is part of the
supermarket  segment, is sold  to store chains  within the Group. The nine-month
non-group sales revenue of the kitchen increased by 20% in the reporting period.
The  turnover growth partly reflects the temporary decline in turnover caused by
the  coronavirus restrictions still in force in the reference period, but at the
same  time,  the  turnover  growth  has  also  been  supported by the successful
introduction  of new products to the market.  The non-group sales revenue of the
central  kitchen in the third quarter decreased by 11%. The decrease in turnover
is  due to the decrease in the sales volume of food products that can be ordered
in  advance in  the online  environ-ment. At  the beginning  of the school year,
Selveri Köök had the great pleasure of baking a total of 189 delicious cakes for
children  starting  school  on  the  order  of  the city of Tallinn. In the pan-
European  energy crisis, various ways to optimise energy costs have been sought:
the  product  portfolio  has  been  reduced,  energy-intensive semi-finished and
finished  products have been  removed, and production  has switched to a reduced
six-day work week from September. The factory expansion project started in 2019
has  now been  completed; the  last salad  packaging lines,  long-awaited due to
supply  chain issues,  were installed  in August.  Instructions for  sorting the
package have been added to the new packages. From 1 October, Selveri Köök joined
the e-Selver ordering environment. We hope to thereby significantly increase the
sales volume of pre-order Selveri Köök products.

Selver  opened its 75th store in Tabasalu town  at the beginning of October. One
more  store is  planned to  be renovated  this year.  The focus  is still on the
development of the e-store service, for which there is an increasing demand. The
self-checkout  solution, which is popular among customers, was introduced to all
stores during the year.

The  merger of AS TKM King with Selver AS, entered in the commercial register in
September,  will not have  a significant impact  on the economic  results of the
supermarket segment.

Department stores

The sales revenue of the Kaubamaja department stores in the first nine months of
2022 was 71.4 million euros, exceeding the sales of the same period last year by
17.7%. The  sales revenue of the third quarter was 22.9 million euros, which was
4.7% better  than last year. The pre-tax profit of the segment in the first nine
months  of 2022 was 0.3 million  euros. Pre-tax profit  increased by 1.3 million
euros  compared to the previous year. The  pre-tax loss of the third quarter was
0.2 million  euros, which increased  by 0.1 million compared  to the same period
last year.

The  nine-month average sales revenue of  Kaubamaja department stores per square
metre  of selling space was 0.3 thousand  euros per month, which is 23.5% higher
than  in the same period last year. One of the biggest news for the customers of
the  Kaubamaja department store in the first half of 2022 was the opening of the
renovated  Naistemaailm in  the Kaubamaja  in Tallinn,  where both  the physical
environment  and the selection of brands were updated. The shopping behaviour of
customers is increasingly characterised by the keywords quality, sustainability,
and  planning - they visit stores less often, think through their purchases, and
make  larger purchases at  once. The same  behaviour characterises and justifies
successful  campaigns -  major campaigns  such as  SAH, Ilu  Aeg, Osturalli, and
several  others that took place  during the first nine  months have exceeded the
results  of previous campaigns and  the volume of products  sold was higher than
ever.  In the  second half  of the  year, fear  of the coronavirus is easing and
customers  are once again  happy to visit  physical stores. In summer, Kaubamaja
launched  the sustainable product labelling project 'World. One and only', which
helps  to  make  sustainable  choices  in  the  e-store. The label has been very
popular among our customers.

In  the third quarter of  2022, the sales revenue of  OÜ TKM Beauty Eesti, which
operates  the I.L.U. cosmetics stores, was 1.5 million euros, which is 0.2% more
than  in the same period  of 2021. In the third  quarter of 2022, the profit was
0.1 million euros, which was 0.02 million euros more than during the com-parable
period  in 2021. The  sales revenue  in the  first nine  months of 2022 was 4.3
million euros, which is 25.1% more than in the same period of 2021. In the first
nine  months of 2022, the  profit was 0.1 million  euros, which was 0.07 million
euros  more than during the comparable period in 2021. The result of the quarter
was affected by a partial business interruption and reduced trading on the sales
floor  in the Pärnu shopping mall and the Rocca al Mare shopping mall due to the
planned innovations in the store's concept area. The most important event of the
third  quarter was the  opening of the  renewed I.L.U. cosmetics  store in Pärnu
Centre.  In the renewed store, the previous sales hall solution based on product
groups  is pre-served,  but all  the furniture  and interior  elements have been
modernised  and  digitised,  and  sustainable  solutions  have  been used in the
lighting and furniture. By the time the report was published at the beginning of
October,  a store with the renewed concept was  also opened in the Rocca al Mare
Centre. The renovation of the I.L.U. store in Ülemiste Centre is planned for the
beginning of 2023.

Car trade

The  sales revenue of the car trade segment was 112.4 million euros in the first
nine  months of 2022. The sales revenue was 3.3% lower than the sales revenue in
the  same period  the year  before. The  39.8-million-euro sales  revenue of the
third  quarter was 4.1% higher  than the sales  revenue in the  third quarter of
2021. In  the first  nine months,  a total  of 3,995 new  vehicles were sold, of
which 1,357 were sold in the third quarter. The net profit of the segment in the
first  nine months of  2022 was 8.1 million euros,  exceeding the profit for the
same  period of the year before by  2.5 million euros. The pre-tax profit of the
segment  for the first nine months  of 2022 was 8.5 million euros, exceeding the
profit  for the same period in 2021 by  2.7 million euros. The pre-tax profit of
the third quarter of 2022 was 3.2 million euros, which is 0.8 million euros more
than the profit of the same period of the year before.

The  automotive industry is gripped  by a deficit in  2022, and as a result, the
discount  pressure on  prices has  decreased significantly.  The sale of new and
used  cars is going well in all companies of the car trade segment of the Group.
In  Latvia, the results  are somewhat more  modest as the  launch of our new car
showrooms in Riga has been slower than expected due to the coronavirus. The most
popular  and best-selling models continue to be  the Kia Sportage lineup and the
Kia  Ceed model  range. There  are still  major difficulties  with the supply of
Korean products, due to which the availability of electric cars is very limited.
The  development plans of  the car trade  segment rather focus  on the market of
Latvia  and Lithuania. The  plan is to  build a new  multi-brand car showroom in
Vilnius next year. We also plan to build a second KIA showroom on the Bikernieku
property belonging to the Group.

Security segment

The  non-group sales  revenue of  the security  segment in  the third quarter of
2022 was 2.4 million euros, increasing by 10.5% compared to the same period last
year.  The pre-tax profit  of the segment  in the third  quarter was 0.1 million
euros,  which is the same level as last year. The non-group sales revenue of the
segment  in the first  nine months of  2022 was 6.9 million euros, increasing by
19.1% compared  to the same period last year.  The pre-tax profit of the segment
in  the first nine months was 0.1 million euros, which is also the same level as
last year.

The  third quarter showed  the same trends.  The areas of  services continued to
grow,  but the construction turnover of security technology projects remained at
a  lower level. A large-scale three-year  contract was concluded with State Real
Estate Ltd. The volume of the contract is approximately 1.5 million euros.

Real estate

The  non-group sales revenue of the real estate segment in the first nine months
of  2022 was 4.6 million euros. Sales revenue increased by 19.9% compared to the
same  period last  year. The  non-group sales  revenue of  the segment  was 1.6
million euros in the third quarter. Sales revenue increased by 12.1% compared to
the  previous year. The pre-tax  profit of the real  estate segment in the first
nine  months of the current year was  8.1 million euros, the profit increased by
0.9%. The  pre-tax profit  earned in  the segment  was 2.7 million  euros in the
third quarter. The pre-tax profit decreased by 12.4% in the reference period.

The  growth  of  the  sales  revenue  of  the  segment  has been affected by the
temporary  rent  discounts  applied  during  the  coronavirus  restrictions. The
opening of a reconstructed business centre in Salaspils (Latvia) last summer and
the  lease  contract  signed  with  the  Kuldiga  Centre this year significantly
contributed  to  the  increase  in  sales  revenue.  In  addition, the Kaubamaja
department  store in Tallinn has new lessees. The number of visitors of shopping
centres,  which has increased since the beginning of the year, began to approach
the  pre-pandemic level in  the last quarter,  but slowed down  in the reporting
quarter  and remained  at the  level of  the last  few months.  The caution that
characterises  the general economic  situation has also  affected the purchasing
behaviour  of visitors. The decrease  in the profit of  the third quarter of the
segment  was  caused  by  the  sharply  multiplied  energy prices resulting from
Russian  aggression  and  the  increase  in  the  cost  of loan money due to the
increase in the interest rates of the euro zone intended to tighten the monetary
policy  by the European Central Bank at the beginning of the summer. Real estate
companies  have paid a  lot of attention  to improving the  energy efficiency of
buildings  and  made  several  investments  to  reduce the energy consumption of
buildings.  Investments have  also been  made for  more accurate measurement and
management  of the energy consumption of  technical systems in buildings. In the
summer,  a solar park was  built on the roof  of the Pirita Selver building. The
electricity  produced is  mainly used  to cover  the on-site  consumption of the
building. In the spring of next year, it is planned to build a solar park on the
roof  of Viimsi Centre. The construction possibilities of solar power plants are
also being analysed for other buildings belonging to the Group.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

-------------------------------------------------------------------------
                                                 30.09.2022   31.12.2021
-------------------------------------------------------------------------
  ASSETS
-------------------------------------------------------------------------
  Current assets

  Cash and cash equivalents                           8,981       29,981

  Trade and other receivables                        22,184       20,673

  Inventories                                        81,607       68,369
-------------------------------------------------------------------------
  Total current assets                              112,772      119,023
-------------------------------------------------------------------------
  Non-current assets

  Long-term receivables and prepayments                 304          304

  Investments in associates                           1,805        1,745

  Investment property                                62,788       62,690

  Property, plant and equipment                     424,301      431,263

  Intangible assets                                  21,214       20,284
-------------------------------------------------------------------------
  Total non-current assets                          510,412      516,286
-------------------------------------------------------------------------
  TOTAL ASSETS                                      623,184      635,309
-------------------------------------------------------------------------

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

  Borrowings                                         26,798       40,646

  Trade and other payables                           94,677      111,345
-------------------------------------------------------------------------
  Total current liabilities                         121,475      151,991
-------------------------------------------------------------------------
  Non-current liabilities

  Borrowings                                        265,760      238,705

  Deferred tax liabilities                            4,476        4,476

  Provisions for other liabilities and charges          444          267
-------------------------------------------------------------------------
  Total non-current liabilities                     270,680      243,448
-------------------------------------------------------------------------
  TOTAL LIABILITIES                                 392,155      395,439
-------------------------------------------------------------------------
  Equity

  Share capital                                      16,292       16,292

  Statutory reserve capital                           2,603        2,603

  Revaluation reserve                               107,600      109,543

  Retained earnings                                 104,534      111,432
-------------------------------------------------------------------------
  TOTAL EQUITY                                      231,029      239,870
-------------------------------------------------------------------------
  TOTAL LIABILITIES AND EQUITY                      623,184      635,309
-------------------------------------------------------------------------




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

  -----------------------------------------------------------------------------
                           III quarter    III quarter    9 months    9 months
                              2022            2021         2022        2021
  -----------------------------------------------------------------------------


   Revenue                       216,457        206,150     628,376     604,103

   Other       operating
   income                            344            637       1,206       1,993



   Cost of merchandise          -157,845       -150,841    -457,629    -451,143

   Service expenses              -17,019        -11,687     -46,033     -34,550

   Staff costs                   -23,046        -20,662     -69,274     -62,799

   Depreciation,
   amortisation      and
   impairment losses              -9,778         -9,559     -29,199     -29,031

   Other expenses                   -142           -158        -629        -467
  -----------------------------------------------------------------------------
   Operating profit                8,971         13,880      26,818      28,106
  -----------------------------------------------------------------------------
   Finance income                      1              0           3           2

   Finance costs                  -1,255         -1,361      -3,646      -3,626

   Finance   income   on
   shares  of associates
   accounted  for  using
   the equity method                  58             59         160         156
  -----------------------------------------------------------------------------
   Profit before tax               7,775         12,578      23,335      24,638
  -----------------------------------------------------------------------------
   Income tax expense                  0              0      -4,480      -4,333
  -----------------------------------------------------------------------------
   NET PROFIT FOR THE
   FINANCIAL YEAR                  7,775         12,578      18,855      20,305
  -----------------------------------------------------------------------------
   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                  7,775         12,578      18,855      20,305
  -----------------------------------------------------------------------------
 Basic    and    diluted
 earnings    per   share
 (euros)                            0.19           0.31        0.46 0.50



Raul Puusepp

Chairman of the Board

Phone +372 731 5000