Unaudited consolidated interim accounts for the third

The consolidated unaudited sales revenue of the Tallinna Kaubamaja Group in the first nine months of 2013 was 360.5 million euros – an increase of 5.9% compared to the result of the first nine months of 2012, when the sales revenue was 340.4 million euros. In the 3^rd quarter, the sales revenue of the Group was 124.7 million euros, exceeding the sales revenue of the year before by 8.0%. The Group’s consolidated unaudited net profit of the first nine months of 2013 was 8.5 million euros, a third less than the profit of the same period of the year before, which was 12.7 million euros. The Group’s net profit for the third quarter was 6.2 million euros, 13.4% lower than the result of the comparable period of the previous year. The pre-tax profit for 9 months was 12.3 million euros, a decrease of 25.1% over last year.

The turnover growth increased in the 3^rd quarter. This was supported by end-of-the-season discount campaigns, as well as the stores added to the Group after the comparable period. At the same time, new stores and new retail spaces have been emerging fast in the entire retail sale market, which on the one hand increases price competition and decreases the traders’ costs on a square metre, and on the other hand gives more choice to customers. Sharp price pressure can be observed in the decrease of the gross margin of the Group, partly caused in the nine month perspective by the new system of bonus points awarded to customers (bonus points were not awarded before May 2012). Profit indicators met the expectations, but were not satisfying in terms of growth. Similarly to the general trends, the Group has experienced an increase in labour costs and other operating costs, which has been faster than turnover growth. In 2013, the Group gradually adopted a wage system depending on efficiency indicators, which has caused an increase in wages due to the situation on the labour market. EBITDA was also shaken by the increase of various operational costs, incl. the growth of rent expenses, but the largest leap was seen in heating and electricity costs – by 25.7% in the 3^rd quarter.

Selver supermarkets

The consolidated sales revenue of the supermarket segment in the first nine months of 2013 was 251.0 million euros, a growth of 3.2% compared to last year. The consolidated sales revenue of the 3^rd quarter was 87.0 million euros, 6.4% more than last year. The consolidated pre-tax profit of the supermarket segment for the first nine months of 2013 was 2.9 million euros. Post-tax, the nine months ended in a profit of 1.1 million. The consolidated pre-tax profit and net profit of the 3^rd quarter was 2.4 million euros. The profit of the 3^rd quarter was 1.4 million euros and the net profit of nine months was 4.5 million euros lower than the year before. The pre-tax profit and net profit generated in Estonia in the 3^rd quarter was 3.0 million euros. The pre-income tax profit of nine months was 4.6 million euros, the net profit 2.9 million euros. The difference of net profit and the profit before income tax was caused by the income tax paid on dividends. The pre-tax loss and net loss generated in Latvia in nine months was 1.8 million euros; of that, the share of the 3^rd quarter was 0.6 million euros. The loss remained at a level equal to the year before. Business activities in Latvia have been frozen. The growth of sales revenue in the 3^rd quarter has been the greatest of the current year – this has been supported by more successful marketing campaigns and the opening of new stores. Food products have indicated more positive sales results for the 3^rd quarter and nine months; the share of food products in the total turnover has increased. The increase of the sales revenue of industrial goods was the greatest of the current year in the 3^rd quarter. The turnover and economic results of Selver were greatly influenced by the competitive situation. Economic results were additionally influenced by the costs of opening and activating new stores and renovating existing ones. In 2013, the Läänemere Selver in Tallinn and the Aardla Selver in Tartu were opened and the Saare Selver in Saaremaa was expanded. The SelveEkspress self-service system has been introduced to seven stores this year. There are plans to open three new stores in Q4 2013: in the Baltic Station in Tallinn and Peetri small borough, and in downtown Viljandi.

Department stores

The sales revenue of the department store business segment for the first nine months of 2013 was 62.6 million euros, having grown by 3.9% compared to the same period of the previous year. Of that, the sales revenue of the 3^rd quarter was 21.2 million euros, 5.0% more than the revenue of the 3^rd quarter 2012. The pre-tax profit of department stores for the first nine months of 2013 was 1.6 million euros, 60.9% higher than the result of the year before. The pre-tax profit of the 3^rd quarter was 0.9 million euros, 84.7% more than the profit of 2012. The sales results of department stores in the 3^rd quarter were influenced by the renovation works done in the Tartu Home and Children Departments in July and August; as a result, the renewed Children’s Department opened in August was the largest in Southern Estonia. The operating profit of department stores for the first nine months of 2013 was 1.5 million euros, almost twice as good, i.e. 0.7 million euros higher than the result of a year before. During summer months, the sales results were influenced by the behaviour of tourists, which was different compared to last year. The tourists who visited the Capital of Culture 2012 spent a longer time in Tallinn and showed keener interest in local trade than cruise tourists. Sales results suffered negatively in September, which was warmer than usual and enabled customers to postpone purchasing clothes and footwear. The sales revenue of OÜ TKM Beauty Eesti, which operates the I.L.U. beauty stores, was 3.1 million euros in the first nine months of 2013, 15.0% higher than in the same period of the previous year. Of that, the sales revenue of the 3^rd quarter was 1.1 million euros, 11.4% more compared to the comparable period of 2012. The nine-month net loss of the I.L.U. chain was 0.4 million euros, 12.7% or 0.05 million euros smaller than last year. In the 3^rd quarter, the loss was 0.1 million euros – 0.04 million euros smaller than the loss of 2012. Compared to the first nine months of last year, the I.L.U. chain opened a sixth store in the Tasku Centre in Tartu in August 2012.

Car Trade

The sales revenue of the vehicle trade segment for the first nine months of 2013 without inter-segment transactions was 33.9 million euros. The sales revenue exceeded the revenue of the same period of the last year by 38.6%; the sales revenue of KIAs increased by 18.1%. The sales revenue of 11.9 million euros generated in the 3^rd quarter exceeded the sales revenue of the year before by 32.1%; the sales revenue of KIAs increased by 16.0%. The segment’s net profit for the nine months of 2013 reached 1.6 million euros and the net profit of the 3^rd quarter was 0.5 million euros. This was 1.4% higher than the result of the first nine months of the previous year, while the profit of the 3^rd quarter was 9.6% lower than the year before. One significant change worth noting is that in the beginning of the 3^rd quarter, Forum Auto SIA entered into a representation contract concerning Peugeot passenger cars and commercial vehicles in Latvia with KW Bruun Baltic, which is the importer of Peugeot vehicles in the Baltics. Thanks to that, the brand portfolio of the vehicle segment increased to four brands: in addition to KIA, Opel and Cadillac, it now represents the Peugeot brand as well. In addition, the construction of a new multi-brand vehicle centre began in Latvia. The reorganisation of the legal structure of the vehicle trade segment, initiated in the first half of 2013, was completed in the 3^rd quarter. As a result, the holdings of KIA Auto AS in the Latvian subsidiary Forum Auto SIA and the Lithuanian subsidiary UAB KIA Auto were consolidated directly under TKM Auto OÜ. In addition, as a result of that change, the Group’s sales activities in vehicle trade in Estonia have been consolidated under AS Viking Motors.

Footwear trade

The turnover of the footwear segment in the first nine months of 2013 was 10.6 million euros, having grown by 2.6% in a year. In the 3rd quarter, the turnover was 3.8 million euros, also showing an increase of 0.9% compared to the same period of 2012. The loss of the first nine months was 0.2 million euros, which was 16.6% better compared to the same period of the last year. In the 3rd quarter, the footwear segment broke even – similarly to the 3rd quarter 2012. There are plans to open a Shu store in Kohtla-Järve in December 2013. At the end of the 3rd quarter 2013, the footwear chain of the Group included 28 stores with a total area of 8.8 thousand square metres.

Real Estate

The sales revenue of the business segment of real estate outside the Group totalled to 2.3 million euros in the first nine months of 2013 (2.1 million euros in the first nine months of 2012), having increased 9.2% compared to the same period of the previous year. The extra-Group sales revenue of the 3^rd quarter was 0.8 million euros (0.7 million euros in 2012), having increased by 12.1% compared to the same period of the previous year. The increase in sales revenue mostly arose from the rental spaces added in 2012 and 2013.

The pre-tax profit of the real estate segment in the 3^rd quarter 2013 was 2.2 million euros (2.2 million euros in 2012), an increase of 1.5% compared to the same period of the last year. The pre-tax profit of the first nine months of 2013 generated in the real estate segment was 6.5 million euros, 0.7 million euros or 12.6% more than in the same period of the previous financial year (5.8 million euros in 2012). The net profit of the segment earned in the first nine months was 5.7 million euros, 0.8 million euros or 17.7% more than the sum earned in the same period of the previous year.

The Peetri Selver building in Rae Parish and the reconstructed car showroom on Ulmana Street, Riga will be completed in 2013.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 

In thousands of euros 

         Raul Puusepp          Chairman of the Board          Phone +372 731 5000