Tallinna Kaubamaja Grupp As Consolidated Annual Report 2017
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Tallinna 202020 Kaubamaja Grupp AS Consolidated Annual Report 171717 (translation of the Estonian original) TALLINNA KAUBAMAJA GRUPP AS CONSOLIDATED ANNUAL REPORT 2017 The main areas of activity of Tallinna Kaubamaja Grupp AS (hereinafter referred to as the ‘Tallinna Kaubamaja Group’ or ‘the Group’) are retail and wholesale trade. At the year-end 2017, Tallinna Kaubamaja Grupp AS employed more than 4,100 employees. Legal address: Gonsiori 2 10143 Tallinn Republic of Estonia Commercial Register no.: 10223439 Telephone: 372 667 3200 Fax: 372 667 3205 E-mail: [email protected] Beginning of financial year: 1.01.2017 End of financial year: 31.12.2017 Auditor: PricewaterhouseCoopers AS This consolidated annual report consists of the management report, the consolidated financial statements, the independent auditor’s report and the profit allocation proposal. Tallinna Kaubamaja Grupp AS 2 Consolidated Annual Report 2017 (translation of the Estonian original) MANAGEMENT REPORT ......................................................................................... 4 CONSOLIDATED FINANCIAL STATEMENTS ........................................................... 34 MANAGEMENT BOARD’S CONFIRMATION OF THE CONSOLIDATED FINANCIAL STATEMENTS .......... 34 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ................................................................... 35 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ............. 36 CONSOLIDATED CASH FLOW STATEMENT ....................................................................................... 37 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY .................................................................... 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .................................. 39 Note 1 General information......................................................................................................... 39 Note 2 Accounting policies adopted in the preparation of the financial statements .............................. 39 Note 3 Critical accounting estimates and judgements .................................................................... 49 Note 4 Risk management and description of key risks ..................................................................... 49 Note 5 Cash and cash equivalents ............................................................................................... 54 Note 6 Trade and other receivables .............................................................................................. 54 Note 7 Trade receivables ........................................................................................................... 54 Note 8 Inventories..................................................................................................................... 54 Note 9 Subsidiaries ................................................................................................................... 55 Note 10 Investments in associates .............................................................................................. 56 Note 11 Long-term trade and other receivables ............................................................................. 56 Note 12 Investment property ...................................................................................................... 56 Note 13 Property, plant and equipment ........................................................................................ 58 Note 14 Intangible assets .......................................................................................................... 62 Note 15 Interest bearing borrowings ............................................................................................ 63 Note 16 Finance and operating lease ........................................................................................... 64 Note 17 Trade and other payables ............................................................................................... 65 Note 18 Taxes .......................................................................................................................... 66 Note 19 Share capital ................................................................................................................ 66 Note 20 Segment reporting ........................................................................................................ 66 Note 21 Other operating expenses .............................................................................................. 69 Note 22 Staff costs .................................................................................................................... 69 Note 23 Finance income and costs .............................................................................................. 70 Note 24 Earnings per share ........................................................................................................ 70 Note 25 Loan collateral and pledged assets .................................................................................. 70 Note 26 Related party transactions .............................................................................................. 71 Note 27 Interests of the members of the Management and Supervisory Board ..................................... 72 Note 28 Shareholders with more than 5% of the shares of Tallinna Kaubamaja AS............................... 72 Note 29 Contingent liabilities ..................................................................................................... 72 Note 30 Financial information of the Parent .................................................................................. 74 INDEPENDENT AUDITOR’S REPORT ................................................................................................ 78 PROFIT ALLOCATION PROPOSAL ..................................................................................................... 85 SIGNATURES OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD TO THE ANNUAL REPORT 2017 ............................................................................................................................................... 86 REVENUE ALLOCATION ACCORDING TO THE ESTONIAN CLASSIFICATION OF ECONOMIC ACTIVITIES (EMTAK) .......................................................................................................................................... 87 Tallinna Kaubamaja Grupp AS 3 Consolidated Annual Report 2017 (translation of the Estonian original) MANAGEMENT REPORT Overview of the Group’s activities Briefly about Tallinna Kaubamaja Group Tallinna Kaubamaja Group is the biggest retail company in Estonia. Our 4,100 employees serve customers in 89 stores, where 650,000 loyal customers make 44 million purchases a year. 651.3 29.8 Million euros Million euros Net profit Revenue (2016: 598.4 million euros) (2016: 25.7 million euros) 73 Cents 4,182 Net profit Yearly average number Employees per share (2016: 4,079) (2016: 63 cents) Revenue 2017 Net profit 2017 11% 12% 15% 16% -10% 1% 2% Department stores Footwear Trade 44% Supermarkets 44% Real Estate 67% Car Trade Tallinna Kaubamaja Grupp AS 4 Consolidated Annual Report 2017 (translation of the Estonian original) Group’s vision The objective of Tallinna Kaubamaja Grupp AS is to be the flagship of Estonian trade and one of the most successful listed companies in the Baltic region in every area of its business. Group’s mission Group’s mission is to be the first choice for its customers, valued employer to its employees and trustworthy investment option for its shareholders. Group’s core values Integrity We are open and sincere and do not distort the truth. Concern We are friendly and helpful and open to solutions. Reliability We keep our promises and follow applicable regulations. Innovation We are open to new and progressive ideas, so that we always try to be a step ahead. Environmental awareness We care about the surrounding environment and we use our resources sustainably. Morality and legality The underlying principle of the Group’s business activity is to ensure, that all lines of business comply with the code of ethics. The Group has established Code of Ethics, which summarizes and describes the most important principles that guide their activities. The Group bases its activities on laws and other legislation and practices, applicable to the respective field of activity. In case there is any distinctness between applicable legislations and other agreements, the more rigid requirements will prevail. Group supports ethical, fair-minded and professional way of conduct within all its activity. The Group supports free and fair competition, excluding limitation, restraining and damaging of the free competition. The Group follows the rules of competition and does not enter into illegal agreements or act in concert with anyone in a manner that would restrict competition. Confidentiality and handling of inside information . The Group’s employees and partners shall maintain confidential information in a secure and secret manner and abstain from misusing the inside information they have become aware of. The Group disapproves corruption in all of its forms. A Group employee may not make use of their official position for receiving personal gain on the account of the Group, its partners, customers, or other employees. Receiving personal gain also means any benefit obtained by the employee’s close relative or a legal person closely related to the employee. The Group, its employees, and partners do not offer