Annual Report 2016/17 Illustration: Amerika Have, residential - PowerPoint PPT Presentation

Annual Report 2016/17 Illustration: Amerika Have, residential units Copenhagen, Denmark

Contents 1. Group results for 2016/17 • Financial highlights and key ratios • Segment results • Handed-over projects • High activity within property development • Portfolio of land 2. Strategic focus and strategic goals 3. Market conditions 4. Asset management 5. Property development 6. Outlook TK Development – Annual Report 2016/17 – 29 March 2017 2

1. Group results for 2016/17 Strædet, Køge, Denmark 34,300 m 2 TK Development – Annual Report 2016/17 – 29 March 2017 3

Financial highlights and key ratios (DKKm) 2012/13 2013/14 2014/15 2015/16 2016/17 Financial highlights: Net revenue 567.6 330.7 854.7 327.8 401.5 Gross profit/loss -129.7 102.5 93.3 -67.3 83.1 Income from investments in joint ventures -32.5 37.5 30.1 30.4 48.8 Operating profit/loss (EBIT) -263.1 48.2 42.4 -152.6 51.8 Profit/loss before tax and writedowns, etc. -6.8 -36.6 42.1 3.6 25.5 Profit/loss before tax -332.5 -42.8 -25.2 -191.0 13.8 Profit/loss -493.3 -49.0 -37.7 -222.3 7.1 Balance sheet total 3.509.3 3,347.1 2,845.2 2,808.8 2,852.9 Project portfolio 2.394.7 2,334.6 2,121.7 2,013.6 2,155.2 Equity 1.389.7 1,553.7 1,509.4 1,285.7 1,293.7 Cash flows for the year -29.7 0.4 17.4 -17.1 4.8 Net interest-bearing debt, end of year 1.659.7 1,435.1 1,000.4 1,099.4 1,196.2 Key ratios: Return on equity (ROE) -30.2 % -3.4 % -2.5 % -15.9 % 0.6 % Solvency ratio (based on equity) 39.6 % 46.4 % 53.1 % 45.8 % 45.3 % Price / book value (P/BV) 0.4 0.4 0.6 0.5 0.7 TK Development – Annual Report 2016/17 – 29 March 2017 4

Results broken down by business segment Property development Asset management Strategic focus area of the Group The aim is to sell the assets within three to five years from December 2015 DKKm DKKm Revenue 298.4 Revenue 103.1 Gross profit/loss 38.2 Gross profit/loss 44.9 Income from investments in JV 75.8 Income from investments in JV -27.8 Costs 44.2 Costs 25.1 Operating profit/loss 69.8 Operating profit/loss -8.0 Income from inv. in assoc. 0.7 Income from inv. in assoc. -0.2 Financing, net 0.9 Financing, net -39.4 Profit/loss before tax 71.4 Profit/loss before tax -47.6 Total projects 927.6 Total projects 1,280.7 Balance sheet total 1,240.1 Balance sheet total 1,535.9 Tied-up equity 704.0 Tied-up equity 529.5 ROE of 10,6 % realized in 2016/17 TK Development – Annual Report 2016/17 – 29 March 2017 5

Projects handed-over and other income - Property development Sale of a retail project of 2,150 m² in Rødekro to a private investor. The project has been let to Harald Nyborg. Sale of a retail property of 1,200 m² in Holbæk to a private investor. Sale of a minor retail project in Dronninglund to private 2.150 m 2 retail project, Rødekro, Denmark investors. The project has been let to jem & fix. Handover of almost 300 apartments, etc. in the second phase of a residential project in Bielany, Warsaw, Poland. Sale of a number of plots of land. Significant positive value adjustment of the Group’s 35 % ownership interest in BROEN Shopping, which is classified in the joint venture as an investment property 1.200 m 2 retail property, Holbæk, Denmark under construction. TK Development – Annual Report 2016/17 – 29 March 2017 6

Projects handed-over and other income - Asset management Operation of completed properties; see subsequent description. Sale of plots of land in Germany and the Czech Republic. DKK 26 million writedown of TK Development’s investment in the joint venture owning two shopping centres in operation in Poland. Galeria Tarnovia, Tarnów, Poland  TK Development has a 30 % ownership interest.  The net rent has developed at a slower pace than anticipated, resulting in a shift in the optimum timing for selling the properties, and consequently a substantially higher preferred return for the joint venture partner than previously expected. Galeria Nowy Rynek, Jelenia Góra, Poland TK Development – Annual Report 2016/17 – 29 March 2017 7

High activity within property development - a selection of projects in progress BROEN Shopping, Esbjerg, Denmark – shopping centre 29,800 m² Strædet, Køge, Denmark – mixed segments 34,300 m² Amerika Have, Copenhagen, Denmark – residential units 12,500 m² Residential Park, Bielany, Warsaw, Poland, phase 3 15,650 m² Domus Vista, Frederiksberg, Denmark – youth housing units 5,300 m² Østre Havn, Aalborg, Denmark – rental housing 4,900 m² TK Development – Annual Report 2016/17 – 29 March 2017 8

Portfolio of land The carrying amount of the portfolio of land has been reduced by DKK 108 million in 2016/17 and amounts to DKK 453 million at 31 January 2017. • The reduction is primarily a result of the startup of the third phase of the residential project in Bielany, Warsaw, Poland. The portfolio of land remains significant, especially in Poland, and will be reduced by a further DKK 98 million when the last phase of the residential project in Bielany is initiated. Focus on further reducing the portfolio of land. Portfolio of land Portfolio of land broken down by country 1,200 Denmark 1,000 800 Poland 600 Czech Rep. 400 Baltic States 200 0 Development costs 31.1.13 31.1.14 31.1.15 31.1.16 31.1.17 Other Development Asset management TK Development – Annual Report 2016/17 – 29 March 2017 9

NAV per share at 31 January 2017 DKK per share Assets Liabilities NAV 35.0 (0.8) (29.1) (-14.6) 30.0 (28.3) (0.6) (2.5) 1,433 2,853 75 2,778 243 50 (2.8) 25.0 277 (4.4) 433 20.0 (6.0) 593 (-1.3) 15.0 (13.2) (0.5) (11.5) 126 1,294 53 1,129 10.0 5.0 - Other liabilities Investment prop. Investments in JV Other assets Total assets Tax assets Completed Under construction Receivables Balance sheet total Credit institutions NAV Plots of land TK Development – Annual Report 2016/17 – 29 March 2017 10

Financial issues Credit facilities with main banker • Renegotiated once a year. • Extended until 30 April 2018 after the reporting date. Project credit facilities • Project credit facilities of DKK 563 million are due to expire prior to the end of January 2018. • Most of these facilities have either been prolonged after the reporting date or are expected to be repaid before maturity upon handover of the relevant projects to investors. TK Development – Annual Report 2016/17 – 29 March 2017 11

2. Strategic focus and strategic goals Arninge, Stockholm, Sweden 60,000 m 2 TK Development – Annual Report 2016/17 – 29 March 2017 12

Strategic focus 2020 goal TK Development today  Activities in Denmark, Sweden and Poland.  Greatest potential in Denmark and Sweden.  Focus on reducing the risk exposure in Poland. Development  A return of 15-20 % p.a. on equity is expected as from 2017/18. Undiversified developer  Phasing out the activities in the Czech Republic, company Germany, the Baltic States and Russia. Asset  Maturing and optimizing the operation of management completed properties with a view to selling them in the period until 2019-2020. The equity freed up from the sale of asset management activities is to be distributed to the Company’s shareholders. TK Development – Annual Report 2016/17 – 29 March 2017 13 13

Follow-up on strategic goals • TK Development expects results for 2017/18 of DKK 100-120 million before A return of 15-20 % p.a. tax. This amount includes results for the property development business before tax on equity area equivalent to a return on equity of about 15 %. expected in the property development business area as from the 2017/18 financial year • The solvency ratio stood at 45.3 % at 31 January 2017, and thus the goal A solvency ratio of has been achieved. The solvency ratio is also expected to exceed 40 % in around 40 % the years to come. • The portfolio of land has been reduced by DKK 232 million since the Substantial reduction of announcement in December 2015 and amounted to DKK 453 million at 31 the portfolio of land January 2017. The focus remains on substantially reducing the portfolio of land. TK Development – Annual Report 2016/17 – 29 March 2017 14

Follow-up on strategic goals • Since December 2015 assets of almost DKK 60 million have been sold, and Phasing out the Group’s the phase-out continues. The carrying amount of projects totalled DKK activities in the Czech 192.6 million at 31 January 2017. Republic, Germany, the Baltic States and Russia. Maturing and optimizing • Detailed development and operating plans have been drafted for each the operation of the property, and the realization of these plans is progressing well in a number of areas. The goal is still for the asset management activities to be sold by asset management 2019-2020 at the latest. activities with a view to selling them in 2019/2020 • Overheads came to DKK 79.7 million in 2016/17 against DKK 82.0 million in 2015/16. Costs will be further reduced in step with the divestment of the Ongoing reduction of asset management activities and the phase-out of the activities in the Czech costs in step with Republic, Germany, the Baltic States and Russia. realizing the defined, future strategic focus. TK Development – Annual Report 2016/17 – 29 March 2017 15

3. Market conditions Owner-occupied dwellings, Beddingen 7A, Aalborg, Denmark 7,000 m 2 TK Development – Annual Report 2016/17 – 29 March 2017 16