News

08.11.2011

TKM: UNAUDITED CONSOLIDATED INTERIM ACCOUNTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS of 2011

The consolidated unaudited sales revenue of the Tallinna Kaubamaja Group for the first nine months of 2011 was 316.5 million euros. Compared to the sales revenue of the year before, i.e. 300.3 million euros, the growth was 5.4%. In the third quarter, the sales revenue of the group was 110.3 million euros, exceeding the sales revenue of 2010 by 7.1%. The reference base was affected by the sales tax which has been levied in Tallinn since June 2011. In the first nine months of 2011, the sales tax decreased the sales revenue of the group by 1.5 million euros (in the first nine months of 2010, by 0.6 million euros). As of 01.01.2011, the principles for calculating the sales revenue have been altered, and the reference data of 2010 have been adjusted to the new principles. As a result, in the first nine months of 2010, an additional 7.4 million euros have been recorded as the sales revenue. The consolidated unaudited net profit of the group in the first nine months of 2011 was 12.8 million euros, having increased by 38.8% compared to the 9.3 million euros profit of the same period of the year before. The net profit of the group in the third quarter amounted to 7.7 million euros, having exceeded the profit of the comparable period of the previous year by 64.3% when the respective indicator was 4.7 million euros. The net profit was influenced by the income tax of 3.0 million euros paid on dividends in the second quarter of 2011. In 2010, the income tax in the amount of 0.5 million euros was recorded in the third quarter. The pre-tax profit in the first nine months grew by 63.6%, totalling to 15.9 million euros. In the third quarter, the pre-tax profit increased by 49.8% compared to the same period of the previous year, amounting to 7.7 million euros.

The sales revenue has increased on the strength of several factors. The sales revenue of foodstuffs has grown as a result of inflation. The rise in consumer confidence and increase in the number of tourists, attracted to Tallinn as the Capital of Culture for this year, have increased the sales of fashion and non-food goods. The increased number of tourists has contributed, first and foremost, to the sales revenue of the stores in Tallinn. The improvement of the available range of goods by considering the price sensitivity and conservativeness of customers has helped prevent extensive discounts and, hence, the loss of margin. The significantly better profitability has been ensured by the ongoing cost cutting activities launched in the years of recession. The activities include the improvement of the work organisation and a quest for more flexible ways of cooperating with our partners.

In the nine months of 2011, the sales revenue of the department store business segment amounted to 55.2 million euros, exhibiting an increase of 6.3% compared to the same period of the previous year. Of that, the sales revenue of the third quarter was 18.9 million euros, which was by 10.4% higher than the income of the 3rd quarter of 2010. The profit of the department stores segment in the first nine months of 2011 was 0.5 million euros, which was 1.1 million euros better than the result in year ago. Of that, in the 3rd quarter the profit was 0.5 million euros, having improved by 0.7 million euros compared to the result of a year before. The successful selection of goods for the spring season and the summer sales campaigns with a higher margin than before had a positive influence on the profit of the 3rd quarter. In the first nine months of 2011, the sales revenue of OÜ TKM Beauty Eesti, which operates the I.L.U. cosmetic stores and is recorded within the department store segment, was 2.0 million euros - an increase of 41.8% compared to the same period of the previous year. Of that, the sales revenue earned in the 3rd quarter was 0.8 million euros, which was by 58.3% higher than in the corresponding period of 2010. The net loss of the I.L.U. chain in the first nine months was 0.5 million euros, which is 0.1 million euros higher than the loss of the nine months of 2010 due to the start-up costs of new stores. The loss in the 3rd quarter amounted to 0.1 million euro, having increased by 0.02 million euros.

The consolidated sales revenue of the supermarket business segment generated in the first nine months of 2011 was 234.9 million euros, having increased by 3.3% compared to the same period of the previous year. In the 3rd quarter, the consolidated sales revenue as well as the sales revenue in Estonia amounted to 81.6 million euros, having increased by 4.0% compared to the same period of the previous year. In the first nine months of 2011, 24.9 million purchases were made at Selver stores in Estonia, having decreased by 0.8% compared to the amount of purchases of previous years. As a result of closing the stores in Latvia, the sales revenue in Latvia for the first nine months was 1.3 thousand euros (26.2 thousand euros in the first nine months of 2010). There was no revenue from the sales of goods in Latvia in 2011. The percentage of Selver from the retail sales of the country's non-specialised stores mostly selling foodstuffs, drinks and tobacco products was 18.2% in the first nine months of 2011. The consolidated pre-tax profit of the supermarket segment in the first nine months of 2011 was 9.7 million euros, having increased by 3.7 million euros and 62.3% compared to the same period of 2010. The consolidated pre-tax profit of the 3rd quarter was 5.1 euros, having increased by 1.3 million euros and 34.2% compared to the same period of the previous year. The consolidated net profit in the first nine months of 2011 was 6.6 million euros, having increased by 1.1 million euros compared to the same period of 2010. The pre-tax profit earned in Estonia in the first nine months of 2011 was 11.4 million euros, of which 5.7 million euros was earned in the third quarter. The increase of profits compared to the same period of the year before was 38.6% and 26.3%, respectively. The net profit of supermarkets earned in Estonia in the first nine months of 2011 was 8.4 million euros. The net profit for the same period in 2010 was 7.8 million euros. The increase of net profit compared to the same period of the previous year was 7.7%. The considerable difference in the increases of pre-tax profit and net profit arises from the income tax paid on dividends which exceeded the amount of income tax paid the year before by 6.7 times. The pre-tax and net loss of SIA Selver Latvia in the first nine months of 2011 was 1.8 million euros, having decreased by 0.5 million euros compared to the same period of the previous year. The pre-tax and net loss of the 3rd quarter was 0.6 million euros, having decreased by 0.1 million euros compared to the same period of the year before. The economic activity in Latvia has been frozen. The increase of sales revenue of Selver in the first nine months of 2011 continuously stems from successful sales campaigns which meet the expectations of customers. The increase in the sales revenue of goods is influenced by the general price increase in Estonia which has brought about a decrease in sales volumes in Selver and in Estonia as a whole. Compared to the previous year, the increase of sales revenue has been negatively influenced by tight competition in the retail market and the sales tax levied in Tallinn. Also, the closing of Kadaka Selver for a month for carrying out repair works and the missing turnover of Soldino Selver, closed down in July, have had a negative impact on the sales revenue. The increase of the profit in Estonia stems, above all, from the review of the work processes of employees and the introduction of multi-functional work organisation which has increased the efficiency of work force and decreased labour costs in the first nine months of the year by 9%. Throughout the year, the company has focused on the operational cost effectiveness. Also, the decrease of the depreciation costs has had a significant effect on the profit.

The real estate segment's profit for the first three quarters of 2011 was 2.1 million euros, remaining approximately on the same level as in the same period of the year before. The sales revenue for the 3rd quarter of the accounting year was 0.7 million euros, showing slight increase of 4.7% compared to the 3rd quarter of 2010. The profit in the real estate business segment in the first three quarters of 2011 was 5.1 million euros. That was 3.1% better than the profit of the same period of 2010 which is mainly the result of lower interest rates of 2011. In the 3rd quarter, the segment earned a profit of 1.7 million euros exceeding the profit of the 3rd quarter of 2010 by 3.3%.

The sales revenue of the car trade segment in the first nine months of 2011 without the inter-segment transactions was 14.3 million euros, exceeding the revenue of the same period of the year before by 50.8%. The 3rd quarter revenue of 5.3 million euros exceeded the sales revenue of the same period of the previous year by 61.9%. The segment made a profit of 1.0 million euros in the first nine months of the year, 0.4 million of which was earned in the third quarter. The respective profits in 2010 were 0.2 million euros and 0.2 million euros.

The consolidated sales revenue of the footwear business segment in the first nine months of 2011 was 10.0 million euros having increased by 6.8% compared to the same period of 2010. The sales revenue in the third quarter of 2011 was 3.8 million euros. The sales revenue increased compared to the 3rd quarter of 2010 by 8.1%. The net loss for the first nine months was 0.4 million euros. The net loss for the first nine months of 2010 was 0.7 million euros, i.e. the loss decreased by 51.7%. In the 3rd quarter of 2011, the net loss of footwear stores was 0.004 million euros, i.e. the loss decreased by 0.2 million euros compared to the third quarter of 2010. The loss of the quarter has been brought about by the seasonality of the footwear business, since the clearance sales of ABC and SHU chains are held in the 1st and 3rd quarter when the gross margins are considerably lower than usual.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

In thousands of euros
30.09.2011 31.12.2010
ASSETS
Current assets
Cash and bank 8,574 15,734
Trade receivables 6,230 6,082
Other short-term receivables 3,432 5,549
Prepaid and refundable taxes 74 349
Other prepayments 630 748
Inventories 46,247 39,385
Total current assets 65,187 67,847
Fixed assets
Prepaid expenses 1,347 1,272
Investments in associates 1,558 1,504
Other long-term receivables 68 141
Investment property 3,566 3,566
Tangible fixed assets 171,886 175,638
Intangible fixed assets 3,208 3,533
Goodwill 6,710 6,710
Total fixed assets 188,343 192,364
TOTAL ASSETS 253,530 260,211

LIABILITIES AND EQUITY
Current liabilities
Borrowings 6,116 17,635
Prepayments received 85 573
Trade payables 45,851 40,377
Tax liabilities 3,748 4,677
Other current liabilities 3,373 4,079
Provisions 107 127
Total current liabilities 59,280 67,468
Long-term liabilities
Borrowings 63,860 63,844
Provisions 74 88
Total long-term liabilities 63,934 63,932
TOTAL LIABILITIES 123,214 131,400
Equity
Share capital 24,438 26,031
Statutory reserve capital 2,603 2,603
Revaluation reserve 52,474 53,308
Retained earnings 51,354 47,495
Currency translation differences -553 -626
TOTAL EQUITY 130,316 128,811
TOTAL LIABILITIES AND EQUITY 253,530 260,211

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros
9 months 2011 9 months 2010 3rd quarter 2011 3rd
quarter 2010
Revenue 316,544 300,349 110,320 103 035
Other operating income 282 544 162 180

Materials and consumables used -234,554 -223,115 -81,096 -75 739
Other operating expenses -32,858 -32,394 -10,850 -10 653
Staff costs -24,843 -26,064 -7,867 -8 574
Depreciation and amortisation -7,432 -8,018 -2,496 -2 624
Other expenses -220 -479 -54 -116
Operating profit 16,919 10,823 8,119 5 509
Financial income 181 220 50 70
Financial costs -1,366 -1,486 -514 -495
Financial income on shares of associates 133 143 32 46
Profit before income tax 15,867 9,700 7,687 5 130
Income tax -3,031 -450 0 -450
Net profit for the reporting period 12,836 9,250 7,687 4 680
Other comprehensive income/(loss)
Exchange differences 73 -60 -3 -24
Other comprehensive income/(loss) for
the reporting period 73 -60 -3 -24
TOTAL COMPREHENSIVE INCOME FOR
THE REPORTING PERIOD 12 909 9,190 7,684 4,656

Raul Puusepp
Chairman of the Board
Phone +372 731 5000