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TK Development – interim report Q1-Q2 2011/12

Tivoli Residential Park Warsaw

Content

• Q1-Q2 2011/12 • Numbers • Project news

• Market conditions • Renewed unrest • Uncertainty about timing

• Project portfolio • Book value • Completed • In progress • Not initiated

• Outlook

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TK Development – interim report Q1-Q2 2011/12 . 29 September 2011

Q1-Q2 2011/12

First six months at a glance

• Profit after tax: DKK 16.9 million (DKK 6.2 million in the same period 2010/11). • Equity: DKK 1,881.9 million (DKK 1,866.0 million at 31 January). • Solvency ratio: 41.6 % (40.4 % at 31 January). • Balance sheet total: DKK 4,521.6 million (DKK 4,622.0 million at 31 January).

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Q1-Q2 2011/12

Financial highlights and key ratios (DKKm)

Full year

2010/11

Q1-Q2

2010/11

Q1-Q2

2011/12

Financial highlights:

Net revenue 576.9 206.9 159.6

Gross profit/loss 256.0 106.0 85.0

Profit/loss before financing 127.2 40.4 20.6

Financing, etc. -53.2 -32.9 -44.4

Profit/loss before tax 74.2 8.4 8.1

Shareholders’ share of profit/loss 73.6 6.2 16.9

Balance sheet total 4,622.0 4,586.9 4,521.6

Total project portfolio 3,424.7 3,439.9 3,407.2

Equity 1,866.0 1,610.3 1,881.9

Cash flows from operating activities -182.7 -181.8 -6.6

Net interest-bearing debt, end of period 2,170.2 2,373.5 2,186.3

Key ratios:

Return on equity (ROE) 4.3 % 0.8 % 1.8 %

Earnings before interest and tax (EBIT) 22.1 % 19.5 % 12.9 %

Solvency ratio (based on equity) 40.4 % 35.1 % 41.6 %

Listed price in DKK per share 23 23 22

Price/Book Value 0.51 0.40 0.49

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April April

Q1-Q2 2011/12

Project news

5

June July August September


April April

6

June July August September

Q1-Q2 2011/12

Project news

Sale of Euro Mall Centre Management

• Originally a necessary service offered to investors on the East and Central European markets. • Several service operators are being established, and EMCM is no longer vital to the development activities of TK Development. • EMCM was sold to the US Group CB Richard Ellis. • The sale was recognized in Q2 2011/12.


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Q1-Q2 2011/12

Project news Construction of first phase in Bielany, Poland, started

• Building permit for the Group’s project in Bielany, Poland, has been obtained. • The total project comprises about 56,200 m2, primarily housing (in total 900-1,000 units). • Construction of the first phase of 7,850 m2 (140 units) was started in mid-2011. • The residential units are expected to be sold as owner-occupied apartments to private users.

April April June July August September


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Q1-Q2 2011/12

Project news Construction of office space in the Tivoli Residential Park completed

• Construction of 5,600 m2 office space was completed in August. • A total of 5,450 m2 has been sold and will be handed over to the buyers in the course of Q3 – the number one buyer is the medical company Swissmed. • The Group has previously constructed, sold and handed over a total of 280 residential units in the Tivoli Residential Park. • In total, the Group has built more than 24,000 m2 in connection with the Tivoli project.

April April June July August September


Sweden ∙ Private consumption 1.7 % / 1.0 % ∙ GDP 4.2 % / 0.8 %

Denmark ∙ Private consumption 0.4 % / 2.0 % ∙ GDP 1.0 % / 1.3 %

Czech Republic*) ∙ Private consumption 0.0 % / 2.0 % ∙ GDP 2.1 % / 2.2 %

Slovakia**) ∙ Private consumption 1.4 % / 3.8 % ∙ GDP 3.6 % / 4.7 %

Poland ∙ Private consumption 2.9 % / 1.8 % ∙ GDP 3.3 % / 3.4 %

Lithuania ∙ Private consumption 6.0 % / 4.3 % ∙ GDP 6.0 % / 3.7 %

Latvia ∙ Private consumption 4.0 % / 3.9 % ∙ GDP 4.6 % / 3.6 %

Finland ∙ Private consumption 2.8 % / 2.0 % ∙ GDP 3.5 % / 1.6 %

Source: Nordea Bank, Economic Outlook, August 2011 *) Czech National Bank, Inflation Report 2011, III **) Slovak National Bank, Medium Term Forecast 2011, Q2

Market conditions

2011e/2012e – moderate growth

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Market conditions

Renewed unrest on the market

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TENANT Good amount of interest in

prime-location projects, although decision-making

processes have again become more

protracted

Market conditions


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INVESTOR Reluctant to invest in real

property – sales negotiations are

taking longer than previously expected




protracted

12

BANKS Credit institutions are

reluctant to provide loans for financing real property




Market conditions





protracted

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TK The previously announced profit forecast, including the timing of

projects, is too uncertain to uphold the expectations for a different,

higher earnings level for the following years

Market conditions





BANKS Credit institutions are

reluctant to provide loans for financing real property




protracted

0

500

1000

1500

2000

2500

Net interest-bearing debt DKK million Cashflow-generating projects

An annual net rent of DKK 144 million is equal to

a return on cost of about 7 %

Project portfolio

Net interest-bearing debt

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1,509.5

2,178.9 2,170.2 2,071

2,186.3

31.07.11 31.01.10 31.01.09 31.01.11 31.07.11


0

500

1000

1500

2000

2500

31.07.11 31.01.10 31.01.09 31.01.11 31.07.11

1,509.5

2,178.9 2,170.2

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2,186.3

362

Investment properties • German = DKK 197.4 million (6.5 %) • Czech = DKK 164.9 million (7.0 %) • Total = DKK 362.3 million

DKK million Net interest-bearing debt Cashflow-generating projects

An annual net rent of DKK 144 million is equal to

a return on cost of about 7 %

Project portfolio

Net interest-bearing debt


2,071

0

500

1000

1500

2000

2500

3000

3500

4000

31.07.11 31.01.09 31.01.11 31.01.10

Portfolio, book value Forward funding DKK million

2,541

3,250 3,425

943

351 284

16

319

3,407

Project portfolio

Book value and forward funding


0

500

1000

1500

2000

2500

3000

3500

4000

31.07.11 31.01.09 31.01.11 31.01.10

Portfolio, book value DKK million

Project portfolio

Book value

2,541

3,250 3,425

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2,071

1,126

210

Completed

In progress

Not initiated


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Galeria Sandecja Nowy Sącz, Poland

Fashion Arena Prague, Czech Rep.

Shopping centre 16,500 m2


Outlet centre 25,000 m2

Sillebroen Frederikssund, Denmark


(DKK million)

Total cost 2,071

Annual net rent 144

Return on cost (current leases)

7.0 %

Return on cost (full occupancy)

7.7 %

Galeria Tarnovia Tarnów, Poland

Premier Outlets Center Ringsted, Denmark

Most Retail Park Most, Czech Rep.

Aabenraa Aabenraa, Denmark

Outlet center 13,200 m2

Retail park 4,200 m2


Project portfolio (not sold)

Completed (31/7) = DKK 2,071 million


0

500

1000

1500

2000

2500

3000

3500

4000

31.07.11 31.01.09 31.01.11 31.01.10


2,541

3,250 3,425

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Project portfolio

Book value

Not initiated

In progress

Completed


2,071

1,126

210

Amerika Plads

Copenhagen, Denmark

Underground car park 32,000 m2

Extension, Futurum Hradec Králové

Hradec Králové, Czech Rep.


(Investment property)

Shopping-street property, Mejlstedgade

Brønderslev, Denmark

Shopping-street property 2,400 m2

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Mixed 5,400 m2

Trøjborgvej

Aarhus, Denmark

Residential Park, Bielany, phase I

Warsaw, Poland Tivoli Residential Park

Warsaw, Poland

Services/office 5,600 m2

Residential 7,850 m2

Project portfolio

In progress (31/7) = DKK 210 million


0

500

1000

1500

2000

2500

3000

3500

4000

31.07.11 31.01.09 31.01.11 31.01.10


2,541

3,250 3,425

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Project portfolio

Book value

Not initiated

In progress

Completed


2,071

1,126

210

Esbjerg

Esbjerg, Denmark

Residential Park, Bielany

Warsaw, Poland Bytom Retail Park

Bytom, Poland

The Kulan commercial district

Gothenburg, Sweden Amerika Plads (lot A and C)

Copenhagen, Denmark


Shopping centre/services 45,000 m2

Office/residential 24,800 m2

Residential/services 48,350 m2


Selected Northern Europe

Selected Central Europe

Østre Teglgade

Copenhagen, Denmark

Office/residential 32,700 m2

Stuhrs Brygge

Aalborg, Denmark

Mixed 72,000 m2

Prešov

Prešov, Slovakia


Frýdek Místek

Frýdek Místek, Czech Rep.


Teplice

Teplice, Czech Rep.


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Project portfolio

Not initiated (31/7) = DKK 1,126 million


Project portfolio

The Group has a strong portfolio

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1. High and stable occupancy rate for the completed projects. 2. Positive progress in the planning stage with public authority approvals in place. 3. A number of projects have been further matured and are ready for execution.

Positive progress and optimization of individual projects have resulted in a strong project portfolio which enables the Group to meet the challenges posed by the current market conditions.


Outlook

The financial year 2011/12

Management’s expectations for 2011/12 are based on the Group’s existing projects and the expectation that ongoing sales negotiations for several projects will be completed in 2011/12. The profit after tax for 2011/12 is still expected to amount to about DKK 100 million, corresponding to the previously announced profit estimate. However, renewed unrest on the international financial markets, which has lengthened the sales process for the Group’s completed projects, makes this profit estimate subject to some uncertainty.

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The expectations for future developments presented in this announcement, including earnings expectations, are naturally subject to risks and uncertainties and may be affected by various factors, such as global economic conditions and other significant issues, including credit-market, interest-rate and foreign-exchange developments. Reference is also made to the section ”Risk issues” in the Group’s 2010/11 Annual Report.

Disclaimer

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Documents

total project portfolio

groups project

residential units

balance sheet total

m2 office space

gross profitloss

equity roe

financial highlights