%c3%85rsregnskabsmeddelelse 13 14 uk

Preliminary announcement of financialstatements 2013/14

Illustration:Alfa Laval, office building, Aalborg, Denmark

TK Development – Preliminary announcement of financial statements 2013/14 – 2 April 2014

Contents

1. The Group’s results• Financial highlights and key ratios• 2013/14 at a glance

2. Execution of announced strategy• Strategic goals – execution of announced strategy

3. Market conditions

4. Project portfolio• Property development• Asset management

5. Financial issues

6. New sales and outlook• New sales• Outlook for 2014/15

2


Development of town centre Køge, Denmark27,500 m²

1. The Group’s results

3


Financial highlights and key ratios

4

(DKKm) 2009/10 2010/11 2011/12 2012/13 2013/14

Financial highlights:

Net revenue 1,384.9 602.4 359.8 632.3 407.0

Gross profit/loss 200.5 256.0 195.8 -139.5 163.9

Operating profit/loss (EBIT) 57.5 127.2 65.5 -241.1 71.5

Profit/loss before tax and writedowns, etc. 53.8 48.2 -1.2 -0.3 -28.8

Profit/loss before tax 39.4 74.2 14.3 -326.0 -35.0

Profit/loss 25.4 73.6 27.0 -493.3 -49.0

Balance sheet total 4,377.3 4,622.0 4,639.5 4,009.3 3,839.6

Project portfolio 3,249.5 3,424.7 3,498.1 3,030.9 2,986.0

Equity 1,593.4 1,866.0 1,876.4 1,389.7 1,553.7

Cash flows from operating activities -582.8 -182.7 -78.8 45.6 55.6

Net interest-bearing debt, end of year 2,178.9 2,170.2 2,244.9 2,206.1 1,890.9

Key ratios:

Return on equity (ROE) 1.6 % 4.3 % 1.4 % -30.2 % -3.4 %

Solvency ratio (based on equity) 36.4 % 40.4 % 40.4 % 34.7 % 40.5 %

Price / book value (P/BV) 0.5 0.5 0.3 0.4 0.4

Results before tax, excluding discontinuing activities:

Results before tax -35.0

Of which results of

discontinuing activ-ities amount to -38.9

Total 3.9


2013/14 at a glance

• Results before tax, excluding discontinuing activities, DKK 3.9 million, in line with expectations.

• Results before tax of discontinuing activities, DKK -38.9 million, consist of:• DKK -13.3 million from current operations• DKK -1.0 million from losses recognized on completed sales• DKK -24.6 million from impairment losses and value

adjustments of remaining assets.

• The Group’s balance sheet total has been reduced by DKK 170 million compared to the year before, and equity has increased by DKK 164 million • A capital increase with gross proceeds of DKK 230.5

million was completed in September 2013.

• Net interest-bearing debt has been reduced by DKK 315 million compared to the year before and amounts to DKK 1,891 million at 31 January 2014.

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36.4% 40.4% 40.4% 34.7% 40.5%

0%

20%

40%

60%

80%

100%

0

500

1000

1500

2000

31 Jan 10 31 Jan 11 31 Jan 12 31 Jan 13 31 Jan 14

Equity, DKKm Solvency ratio,%


2013/14 at a glance

• The portfolio of cash-flow-generating properties amounts to DKK 2,066 million at 31 January 2014.• The ratio of cash-flow-generating properties to total net

interest-bearing debt has developed positively in the amount of DKK 249 million during the year under review.

• Handover of second phase of retail park in Danderyd in Sweden to Commerz Real.

• Sale of 80 % of shopping centre project in Frýdek Místek, Czech Republic• Fee income for letting and construction management and

related services.

• Handover of first-phase apartments of the Group’s residential project in Bielany, Warsaw, Poland • 97 % of the units have been sold.

6

0

500

1000

1500

2000

2500

3000

31 Jan 10 31 Jan 11 31 Jan 12 31 Jan 13 31 Jan 14

Net interest-bearing debt, DKKm

Investment properties and completed projects, DKKm


2013/14 at a glance

• Start-up of second phase of the residential project in Bielany, is being is being prepared:• Will comprise about 300 residential units and service

facilities.• Building permit has been granted.• Pre-construction sale was started in December 2013

• Is progressing better than expected.• Pre-reservations received for 27 % of units.

• Construction expected to begin in spring 2014.

• Sale of two German investment properties.

• Overheads reduced by 8.5 % relative to 2012/13.• Cost-reducing measures have been implemented to reduce the overheads by

around 20 % relative to 2012/13, with half of the reduction deriving from the discontinuation of activities in Germany, Finland and the Baltic States.

• Full impact in the course of 2014/15.

• Agreements regarding new sales, please see section ”New sales”.

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2013/14 at a glance

8

BROEN, shopping centre, Esbjerg• TK Development is planning to construct a new shopping centre of about 29,800 m² in Esbjerg, Denmark.

• The process of obtaining permits for the project has been delayed because the project must undergo a validation and approval procedure to ensure safe railway operations.

• The timeline has been verbally agreed with Banedanmark.

• The validation process is expected to continue until after the end of the summer 2014.

• Construction startup is anticipated in autumn 2014.

• Discussions are being held with PFA regarding the sale of a share of the project at its current stage.


NAV per shareAt 31 January 2014

0

5

10

15

20

25

30

35

40

45

DKK per share NAVASSETS LIABILITIES

(39.1)(1.6)

(37.5)(1.0)(1.7)

(10.3)

(3.1)

(4.4)

(17.0)

(-20.3)

(-3.0)

(15.8)

1,6

62

43

6

30

9

1,0

15

16

7

95

3,6

84

15

6

3,8

40

1,9

90

29

6

1,5

54

9


SillebroenFrederikssund, Denmark25,000 m²

2. Execution of announced strategy

10


Strategic goals

The activities will be limited to Denmark, Sweden, Poland and the Czech Republic.

The portfolio of projects not initiated (plots of land) is to be reduced from about DKK 1.1 billion to about DKK 500 million.

The balance sheet total is to be adjusted, with a solvency ratio of about 40 %.

Overheads are to be reduced by around 20 % relative to 2012/13.

Financing costs are to be normalized as a result of the initiatives implemented.

11

March 2013: Revision of strategy and business model, including adjustment of market focus.

The below strategic goals were set with the aim of executing the adjustments within a period of two years:


Activities in Germany, the Baltic States, Finland and Russia are to be phased out.

• Germany• The German activities have been reduced through the sale of

investment properties.• The branch office in Berlin has been closed down, and the employees

have left their positions.• The Group owns two remaining investment properties, two minor

plots of land and a share of a minor shopping centre.• Baltic States

• Retail park, DomusPro, Vilnius, conditionally sold to BPT and to be handed over to the buyer after the reporting date.

• Closedown of the office awaits clarification of the next steps in respect of the Group’s two remaining plots of land.

• Finland• The branch office in Helsinki has been closed down, and the

employees have left their positions.• The Group owns two minor plots of land.

• Russia• The Group owns a minor project in Moscow, consisting of

Scandinavian-style dwellings that are used for rental. • Efforts will be made to sell this project once market conditions have

normalized.

Execution of announced strategy

12

Market focus on Denmark, Sweden,

Poland and the Czech Republic

Balance sheet total –discontinuing activities:

(DKKm)

31 Jan. 13 425.4

31 Jan. 14 367.7

Decline 13.6 %

DomusPro31.1.14 92.9



13

Reduction of portfolio of projects not

initiated (plots of land)

Cost trimming

Projects not initiated:

(DKKbn)

31.1.13 1.1

31.1.14 1.0

Reduction -0.1

• The portfolio of projects not initiated (plots of land) is to be reduced from about DKK 1.1 billion (March 2013) to about DKK 500 million over a two-year period.• Reduction through the sale of land and initiation of projects.• Progressing satisfactorily and according to plan for many of the

projects.• For a few projects the process is taking longer than expected.• Management believes it will still be possible to implement the

balance sheet adjustment within the planned two-year period.

• Overheads are to be reduced by around 20 % with half of the reduction deriving from the discontinuation of activities in Germany, the Baltic States and Finland.• Cost-reducing measures have been implemented. Full impact is

expected to be achieved in the course of 2014/15.


• The balance sheet total is to be adjusted, with a solvency ratio of about 40 %.• After implementation of the capital increase in September 2013, this strategic

goal has been met. The solvency ratio stood at 40.5 % at 31 January 2014. • The solvency will be further strengthened through completion of the agreed

sale of the Fashion Arena Outlet Center in Prague.


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Solvency ratio of about 40 %

Lower financingcosts

• Financing costs are to be normalized as a result of the initiatives implemented.• In connection with the implementation of the capital increase, the Group has

reached agreements for a reduction of the interest payable on several major credits.

• The Group is currently negotiating interest rate reductions for other credits.


Residential Park, Bielany, Warsaw, PolandPhase 2, 297 units

3. Market conditions

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• Some uncertainty, although diminishing, persists in the property markets • The decision-making process of tenants, investors and financing sources remains

lengthy and carefully considered.

• Easing in project financing restraints• Depending on type, location and status, including letting and sales.• Lenders continue to require relatively high equity financing, but there also

appears to be some relaxation of these requirements.

Market conditions

16

Macroeconomic expectations

Denmark Sweden Poland Czech Rep.

2014e 2015e 2014e 2015e 2014e 2015e 2014e 2015e

GDP growth (% y/y) 1.3 1.7 2.8 3.5 3.6 4.2 1.8 2.2Unemployment(%) 5.6 5.5 7.9 7.6 12.6 11.8 6.8 6.6

• The market conditions are improving for the Group• Rising consumer confidence • Expectations for financial growth,

although varying in strength from country to country.

• Effect is not yet reflected in private consumption, which is also expected to rise in the years to come.

Source Denmark, Sweden and Poland: Nordea, March 2014.Source Czech Republic: The European Commission, European Economic Forecasts, Winter 2014.


Market conditions

- Tenants

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• Focus on right location.• Rental level for well-situated projects is expected to remain fairly stable in the

period ahead.• Good amount of interest in well-situated projects.• Robust national and international branded retailers still wish to expand.• Local tenants are having a difficult time.

Retail

Offices

• A vast number of people are moving to major towns and cities.• Demand for new dwellings, either owner-occupied dwellings or rental

dwellings, depending on the individual market.• Increased demand for housing has led to increasing rental levels in the rental

housing market. • These higher rental levels are expected to be maintained in the period to come.

Residential property sector

• Vacancy rate generally increasing.• Major difference between primary and secondary locations.• Reasonable demand for fairly new premises with a practical layout.• Rental level for primary locations is expected to remain relatively stable.


Market conditions

- Investors

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• Focus on right location.• Relatively low rates of return for prime locations.• In Management’s opinion, investors are prepared to assume a slightly higher

risk than seen recently.

Retail

• Growing optimism.• Good amount of interest in investing in real property.• Institutional investors wish to increase the share of property investments in

their portfolios:• Confident that real property will deliver stable competitive returns

going forward.• Investor interest is currently changing in two areas:

• Also interest in projects outside the capital cities.• Investors seeking to play an active role in projects development, thus

assuming a higher risk against anticipated higher return.

In general


Market conditions

- Investors

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Offices

• Great investor interest, focused on locations in capitals and major towns and cities, where substantial population growth is presently being recorded.

• Vast migration towards major towns and cities has led to increased demand for residential properties.

• Increasing price level for owner-occupied dwellings and low return requirements from investors.

• The market for developing housing for sale to private owner-occupants has again become interesting.

Residential property sector

• Prime-location office properties with stable tenants are attracting great investor interest.

• Return requirement for prime-location offices is at the same level as before the economic and financial crisis.

• In Management’s opinion, investors are prepared to assume a slightly higher risk than seen recently.


BROEN, shopping centreEsbjerg, Denmark29,800 m²

4. Project portfolio

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Business area: Property development

21

1

• Comprises the following markets: Denmark, Sweden, Poland and the Czech Republic.

• Development potential of 405,000 m².

• Total carrying amount of project portfolio is DKK 1,111 million.

Development potential in m²

Denmark Sweden Poland Czech Rep.


Residential Park, Bielany

Warsaw, Poland

Residential/services48,350 m2

Jelenia Góra

Jelenia Góra, Poland

Shopping centre24,000 m2

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Barkarby Gate

Stockholm, Sweden

Retail park20,000 m2

Property development = DKK 1,111 million (carrying amount)Business area: Property development

DomusPro retail park

Vilnius, Lithuania

Retail park11,100 m2

In progress (DKK 216 million)

Amerika Plads

Copenhagen, Denmark

Underground car park 16,000 m2

1

BROEN, shopping centre

Esbjerg, Denmark

Kulan commercial district

Gothenburg, SwedenAmerika Plads (lots A & C)

Copenhagen, Denmark

Shopping centre29,800 m2

Shopping centre/services 45,000 m2

Offices/residential24,800 m2

Østre Teglgade

Copenhagen, Denmark

Offices/residential32,700 m2

Stuhrs Brygge

Aalborg, Denmark

Mixed72,000 m2

Not initiated, continued (selected) (DKK 887 million)

Not initiated

Alfa Laval

Aalborg, Denmark

Offices6,000 m2

Ahlgade

Holbæk, Denmark

Shopping-streetproperty/housing3,100 m2


• Comprises the following markets:Denmark, Sweden, Poland and the Czech Republic.

• Total value of portfolio amounts to DKK 1,934 million.

• Overall the footfall and centre revenue are developing positively, however weak development in Danish retail trade in 2013 and weak private consumption. Local tenants are having a difficult time.

• Conditional agreement on the sale of the Fashion Arena Outlet Center.

• Focus on maturing the individual properties and selling them.

Business area: Asset management

23

2

Carrying amount, broken down by country

Denmark Czech Rep. Poland


Futurum Hradec Králové Hradec KrálovéCzech Republic

Galeria TarnoviaTarnówPoland

24

28,250 m², 20 % ownership interest


SillebroenFrederikssundDenmark


Business area: Asset managementAsset management = DKK 1,934 million (carrying amount)

Asset management

2

Fashion ArenaPragueCzech Republic


Galeria SandecjaNowy SączPoland


Ringsted Outlet, Denmark

Retail Park,Most, Czech Rep.

Retail park,Aabenraa, Denmark

Shopping-street prop.Brønderslev, Denmark

The return on the carrying amount of the properties is 6.7 %. Based on full occupancy, the return on the carrying amount is expected to reach 7.9 %.


5. Financial issues

25

Shopping centre,Jelenia Góra, Poland24,400 m²


• The cash flows from operating activities amount to DKK 55.6 million for the year against DKK 45.6 million in 2012/13.

• Capital increase• Capital increase completed in September 2013.• Gross proceed of DKK 230.5 million.• A substantial portion of the proceeds has been used to reduce debt.

• Conditional sale of the Group’s 75 % stake in the Fashion Arena Outlet Center in Prague, the Czech Republic• The sale is expected to be completed in April 2014.• Will substantially strengthen the Group’s financial platform.

• Since 31 January 2013, agreements on the refinancing of project credits totalling DKK 1.2 billion have been entered into.

• Credit facilities of DKK 0.1 billion only are due to expire prior to 31 January 2015• These are expected to be refinanced prior to maturity or to be repaid in connection

with the sale of projects.

Financial issues

26


Fashion Arena Outlet Center, Prague, Czech Republic25,000 m²

6. New sales and outlook

27


28

Outlet centre, Prague, Czech Republic

The sale results in:

• Generation of a minor profit compared to the carrying amount.

• Reduction of balance sheet total by about DKK 400 million.

• A substantial contribution to the Group’s free cash resources.

Conditional sale of Fashion Arena Outlet Center, Czech Republic

• In February 2014, the Group entered into a conditional agreement for the sale of its 75 % stake in the outlet centre.

• The outlet centre has a total floor space of about 25,000 m2 and comprises 110 stores.

• The overall centre has been sold to Meyer Bergman at a price of EUR 71.5 million.

• The sale is expected to be completed in April 2014.

• The sale generates a minor profit compared to the carrying amount, reduces the balance sheet total by about DKK 400 million and makes a substantial contribution to the Group’s free cash resources.


Sale of Barkarby Gate, Stockholm, Sweden

29

Retail park, Barkaby Gate, Stockholm, Sweden

Sold based on forward funding• In June 2013 the 20.000 m² retail park

project Barkarby Gate (Stockholm, Sweden) was sold based on forward funding.

• The buyer of the project is a fund managed by Cordea Savills.

• Construction started in August 2013 immediately after the option to purchase the land for the project was exercised.

• The current occupancy rate is 94 %.

• Opening is scheduled for autumn 2014.


Sale af DomusPro, Vilnius, Lithuania

30

Retail park, Vilnius, Lithuania

• Sold in advance• BV 31.1.14:

DKK 92.9 million.• In August 2013 the about 11,100 m² retail

park project DomusPro (Vilnius, Lithuania) was conditionally sold.

• The buyer of the project is BPT Baltic Opportunity Fund, which is managed by BPT Asset Management.

• The first phase of about 7,500 m² has an occupancy rate of 85 %, with supermarket operator RIMI as the anchor tenant.

• Constructed started in August 2013, and the first phase opened in March 2014.

• Handover to the buyer will take place after the reporting date.


Sale of Alfa Laval, office building, Aalborg, Denmark

Alfa Laval, office building, Aalborg, Denmark

31

Sold in advance

• In February 2014 TK Development entered into a conditional agreement for the sale of a 6,000 m² office project in Aalborg.

• The project has been let to the international Alfa Laval Group.

• The project has been sold to PensionDanmark at a total price of DKK 126 million.

• Construction started in March 2014, and the project will be handed over to the investor in June 2015.


Other new sales

Shopping centre, Frýdek Místek, Czech Republic

32

• Sale of 80 % of the ownership interest of a shopping centre project in Frýdek Místek, Czech Republic, to a business partner.• TK will maintain a 10 % ownership interest.• 14,800 m².• Fee income for letting and construction

management, etc.• Construction started in autumn 2013. • Opening is scheduled for end-2014.

• Agreements regarding the letting and sale of several minor retail project have been concluded.


Outlook for 2014/15

33

• Management anticipates positive results of about DKK 40 million before tax, excluding discontinuing activities, for the 2014/15 financial year.

• The timing and phase-out of the discontinuing activities are subject to major uncertainty. The activities are in the process of being discontinued, and the Group risks incurring further losses before the phase-out is complete. Therefore, the results before tax of the discontinuing activities have not been included in the outlook for 2014/15.


Disclaimer

34

The expectations mentioned in this presentation, including earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected results.

Various factors may impact on expectations, as outlined in the section ”Risk issues” in the Group’s Preliminary announcement of financial statements 2013/14, particularly the valuation of the Group’s project portfolio.

%c3%85rsregnskabsmeddelelse 13 14 uk

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