Reported via Company News Service to the Copenhagen Stock Exchange on 16 April 2007: Today, the Supervisory Board of Keops has approved the acquisition of the remaining 40% of the share capital in M2 A/S, so that Keops now owns 100 % of the company. Simultaneously, the Supervisory Board has decided to launch a capital increase through non-cash contribution by issuing a total of 3,028,682 new shares of DKK 1 at a price of DKK 20.57 per share of DKK 1. At the same time, Keops Development is strengthening its office in the western part of Denmark in connection with the involvement in Light*house, a significant five-year development project on Aarhus Harbour worth a total of approximately DKK 2.5 billion, of which Keops accounts for approx. 40%. Finally, the expectations of profit before tax are adjusted by DKK 50 million from previously announced DKK 500-700 million to DKK 450-650 million. Acquisition of the remaining 40% of the share capital in M2 A/S Today, Keops has entered into an agreement with the other shareholders in the company M2 A/S (Danish Central Business Registration no. 27296386). According to the agreement as of today, Keops acquires the remaining 40% of the share capital of M2 A/S at a price of DKK 33.5 million. Furthermore, the parties have agreed that the previously paid amount of DKK 50 million for 60% of the company is the final consideration for the 60% ownership share. Accordingly, Keops' total acquisition price for 100% ownership of M2 A/S represents DKK 83.5 million, which is significantly below the originally expected acquisition price. As described in notice to the Stock Exchange no. 257 dated 4 July 2006, Keops originally expected to pay DKK 150-170 million for 60% of M2 A/S depending on estimated realised gross profit for the project portfolio (earn out). The remaining shareholders' subordinated loans in M2 A/S of a total of DKK 28.8 million are also redeemed as a part of the transaction. In order to strengthen the equity of M2 A/S, Keops has also decided to inject new equity in the amount of DKK 60 million, and thereby significantly strengthening the equity of M2 A/S. Confidence in M2 and establishing Keops Development in Aarhus Changed conditions due to a stagnating and slow residential market, increased marketing costs and new accounting policies resulting in recognition of income from projects in progress being postponed to when projects are finally handed over have resulted in M2 A/S not being able to meet the expectations of profit for the period since Keops' acquisition of 60% of the share capital. This situation has caused discussions among the owners regarding the future operation and structure of ownership. As Keops assesses that further expansion of M2 and a closer integration with Keops Development will strengthen the company's position, these discussions have led to Keops' acquisition of the remaining shares. The acquisition of the remaining 40% of the share capital very clearly marks that Keops has great confidence in M2 A/S' concept and the portfolio of well located building sites, and therefore the company expects to deliver satisfactory positive results in future. This is substantiated by the fact that there has been a positive development in the sale of M2 houses and sites in recent months, which combined with implementation of cost reduction initiatives have resulted in improved earnings and an expectation of positive operating results in the second half of the financial year 2006/07. A closer integration with Keops Development is to be used to further strengthen the position of M2 in order to enhance the positive development the company has seen during recent months. Simultaneously with the strengthening of M2, Keops Development is establishing a stronger branch in Aarhus in connection with the participation in the consortium, which has today been appointed by the Municipality of Aarhus to carry out the first stage of the development on the city harbour area. The winning project - Light*house - encompasses development of a total of 60,000 square metres of residential and commercial facilities over the next five years. The project total is estimated at DKK 2.5 billion and Keops Development's share of the consortium is approximately 40%. It is expected that significant advantages can be gained for M2 as well as Keops' other development activities by using the M2 A/S head office in Aarhus as base for establishment of the Development branch in Aarhus as the head office is located and functions ideally in relation to the project on Aarhus Harbour. Completion of issue of new shares through non cash-contribution relating to the acquisition of shares in M2 A/S and redemption of debt to the other shareholders The shareholders of M2 A/S are obliged to spend the cash proceeds from the agreement to subscribe for shares in Keops A/S. Consequently, the Supervisory Board has today decided partly to exercise the authorisation given at the Annual General Meeting in Keops on 26 January 2007 to issue new shares through a non-cash contribution relating to the acquisition of 40% of M2 A/S and redemption of the other shareholders' subordinated loans. Keops will attempt to list the shares as soon as possible according to effective rules and regulations. The new shares will be applied for listing as soon as possible after registration of the capital increase with the Danish Commerce and Companies Agency. Authorisation to increase equity The decision to increase the share capital is based upon the Supervisory Board partly exercising the authorisation included in article 5.1 in conjunction with article 5.2 of the Company's Articles of Association whereby the Supervisory Board until 31 December 2008 is authorised to increase the share capital by up to nominally DKK 50 million equalling 50 million shares of a nominal value of DKK 1 in one or several rounds. As such, the Supervisory Board has today decided to issue 3,028,682 shares of a nominal value of DKK 1 at a price of DKK 20.57 per share of DKK 1 against a contribution of DKK 62.3 million without pre-emption rights for the company's existing shareholders. The new shares will be subject to the same rules as the Company's exiting shares listed under the ISIN code DK0010250588 under which code the new shares will be issued. The shares shall be issued to bearer but may be registered by name and will be negotiable instruments and will, in terms of redemption and voting rights, be subject to the same rules as the existing shares. The shares will carry the right to full dividends for the entire financial year 2006/07 as well as to any other rights in the Company as from the time of registration of the capital increase with the Danish Commerce and Companies Agency. There are no restrictions in the negotiability of the shares. Keops' financial year runs from 1 October to 30 September. Keops' Central Business Registration no. is 36 85 00 19. After the issue of new shares through the non-cash contribution, the Supervisory Board is until 31 December 2008 authorised to increase the share capital by up to nominally DKK 46,971,318 million, equalling 46,971,318 shares of a nominal value of DKK 1 in one or several rounds according to article 5.1 in conjunction with article 5.2 of the Articles of Association. Lock-up agreements For the new shares, it has been agreed that 700,048 shares of DKK 1 will be in escrow until 5 July 2007 and that 668,449 shares of DKK 1 will be in escrow until 31 October 2007 so that these shares cannot be sold until after 5 July 2007 and 31 October 2007, respectively. Admission for listing An application will be made for listing of the new shares on the Copenhagen Stock Exchange A/S under the existing ISIN code DK0010250588 as soon as possible after registration of the capital increase with the Danish Commerce and Companies Agency and the Danish VP Securities Services. Subscription price The subscription price has been determined at DKK 20.57 per share. The price has been determined as the average quoted price for Keops A/S in the last three trading days before the date of the agreement, i.e. 11 to 13 April 2007. Changes in share capital and ownership structure After the capital increase, the total share capital of Keops will amount to nominally DKK 178,739,619 divided into 178,739,619 shares of DKK 1.00. The capital increase represents approx. 1.72% of the total share capital before the issue. Nominal share capital DKK Number of shares of DKK 1,00 Increase in per cent Share capital at 16 April 2007 175,710,937 175,710,937 Direct placement on 16 April 2007 3,028,682 3,028,682 1.72% Total 178,739,619 178,739,619 1.72% Strengthening of equity The capital increase will enhance the equity in Keops by DKK 62.3 million. In addition, the final payment of the minority shareholders in M2 A/S implies that recognised put options with a discounted value of DKK 47.5 million may be reversed in equity. Consequently, the total increase in Keops' equity is DKK 110 million. Keops expectations of the future As mentioned above, results in M2 A/S have been unsatisfactory and below the expectations as a result of the stagnating residential market and increased marketing costs. It is expected that operating results in M2 A/S will be positive in the second half of the financial year 2006/07, however, still at a lower level than originally expected as the initiated and planned improvement initiatives are not expected to materialise until in a few years, and therefore will not have significant influence until the next financial year. As a consequence of this, Management adjusts the most recently reported expectations of Keops Group's consolidated profit before tax by DKK 50 million. Accordingly, the expectations of profit before tax for 2006/07 now constitute DKK 450-650 million compared with previously announced DKK 500-700 million. The expectations of profit include value adjustments of properties and debt of a total of approx. DKK 170 million. Dividend tax Individuals and companies resident in Denmark Individuals Dividend payments to individuals are for tax purposes treated as share income. Total annual share income of up to DKK 45,500 (2007) is taxed at a rate of 28%. Share income exceeding this amount is subject to tax at a rate of 43%. For married couples the limit for applying the 28% tax rate is DKK 91,000 (2007). For dividend payments, Keops will withhold tax of 28% in advance. If the share income in the relevant year solely comprises dividends and does not exceed DKK 45,500/DKK 91,000 (2007), the tax withheld will correspond to the final dividend tax. Companies Companies holding less than 15% (2007) of the share capital in Keops are subject to income tax on the first 66% of the dividend amounts, i.e. at a rate of 28%. Dividends paid to a company are subject to withholding dividend tax at a rate of 18.48%, corresponding to the final dividend tax. Companies holding at least 15% or more of the share capital in Keops for a period of not less than 12 months after the dividend payment is affected are not subject to tax on dividends from Keops, and Keops will as a general rule not withhold any withholding tax on such amounts. Individuals and companies resident abroad Dividends distributed by Keops to a non-resident individual or company, etc. are as a general rule subject to dividend tax at a rate of 28%. If Denmark has entered into a double tax treaty with the country in which the shareholder is resident, the shareholder may apply the Danish tax authorities for a repayment of any dividend tax in excess of the dividend tax to which Denmark is entitled pursuant to the double tax treaty in question. Since 1 November 2005, it has been possible for the Danish VP Securities Services or the distributing company to make an arrangement with the tax authorities to the effect that tax withheld on dividend payments made by the company to the individual shareholder will only be at the rate set out in the double tax treaty. No such arrangement had been agreed at the time of the capital increase with respect to dividend payments made by Keops. Companies holding at least 15% or more of the share capital in Keops for a period of not less than 12 months after the dividend payment is affected are as a general rule not subject to tax on dividends from Keops, and Keops will as a general rule not withhold any withholding tax on such amounts. This tax exemption is, however, subject to tax on dividends being abandoned or reduced in accordance with the provisions of Directive 90/435/EC (the Parent/Subsidiaries Directive) or in accordance with a double tax treaty and to the requirements of s. 2(1)(c) of the Danish Corporation Tax Act being met. Please address questions relating to this Notice to Deputy CEO Karsten Poulsen, CFO Michael Rosenvold or Head of Communications Susanne Lindø on telephone +45 3341 0000. This Notice in the English language is a translation of the Danish original version. In the event of inconsistencies, the Danish version shall apply. Forward-looking Statements This Notice to the Stock Exchange may contain forward-looking statements within the meaning of US Private Securities Litigation Act of 1995 and similar laws and regulations in other countries regarding expectations of the future development. Forward-looking statements provide our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as anticipate, estimate, expect, project, intend, plan, believe and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions. This may cause actual results to differ materially from expectations and it may cause any or all of our forward-looking statements here or in other publications to be wrong. Factors that might affect such expectations include, but are not limited to, general economic and business conditions and interest rate and currency exchange rate fluctuations. As a result you should not rely on these forward-looking statements. Keops is under no duty to update any of the forward-looking statements or to confirm such statements to actual results, except to the extent required by law. Please also refer to the description of risk factors on pages 30 to 33 of Keops' Annual Report 2005/06, which is available from www.keops.dk.
Keops acquires the remaining shares of M2 A/S, increases the share capital in Keops A/S, wins significant development project on Aarhus Harbour and adjusts the expectations (outlook)
| Source: Keops A/S