Preliminary announcement of 2006/07 annual financial results - TK Development A/S


Summary
At a Supervisory Board meeting today, Wednesday, 25 April 2007, TK Development
A/S considered and adopted the 2006/07 Annual Report. 

In the 2006/07 financial year, the TK Development Group recorded a profit of
DKK 249.4 million after tax and minority interests, compared to DKK 28.3
million the year before. 
Management considers the profit for the year to be satisfactory. 
Consolidated equity totalled DKK 1,290.9 million at 31 January 2007,
corresponding to a solvency ratio of 35.0 %. The balance sheet total was
reduced by more than DKK 1.0 billion during the financial year, amounting to
DKK 3,685.8 million at 31 January 2007. 
During the year under review, the Group sold completed properties for a total
amount of about DKK 1.0 billion, thus strengthening focus on the Group's core
business concept, development of real property. 
The Group's project portfolio grew to 1,161,000 m² and represents an increasing
earnings potential. 
The Group has opened an office in Sofia to investigate the potential for
developing shopping centres and retail parks in Bulgaria. 
The Group has launched its first housing project in Poland and is working on
several other project opportunities in the Polish residential segment. 
A profit of at least DKK 240 million after tax and minority interests is
anticipated for the 2007/08 financial year. 

After the capital increase effected and as part of the capital restructuring,
the Group has concentrated on various aspects of its business, for instance
optimizing, maturing and selling completed projects, adapting the Group's
business model so as to minimize risks (with special focus on the use of
forward funding) and, finally, developing the Group's pipeline of projects. 
Project portfolio
The earnings potential of the Group's project portfolio continues to grow. The
main portfolio elements are set out below: 

                               	
Gross project portfolio (DKKm)
31.01.05	2,843
31.01.06	2,862
31.01.07	2,039

Of which, forward funding (DKKm)
31.01.05	191
31.01.06	638
31.01.07	590

Carrying amount of project portfolio (DKKm)
31.01.05	2,652
31.01.06	2,224
31.01.07	1,449

			
Development potential in '000 m²:
			
Sold projects ('000 m²)
31.01.05	242
31.01.06	289
31.01.07	351

Other projects ('000 m²)
31.01.05	778
31.01.06	720
31.01.07	810

Total project portfolio ('000 m²)
31.01.05	1,020
31.01.06	1,009
31.01.07	1,161

Number of projects
31.01.05	90
31.01.06	90
31.01.07	94


TK Development, the Parent Company
This part of the Group recorded a loss of DKK -49.8 million after tax, which
Management considers unsatisfactory. 

During the year under review, the Group sold its project in St. Petersburg,
Russia, and the Słoneczne Centrum Handlowe shopping centre, Szczecin, in
Poland, as well as the remaining 18 holiday units on the island of Usedom in
Germany. In addition a property in Næstved, Denmark, was handed over to the
investor. 
Writedown of receivable from the Field's project
Management has reassessed the outstanding selling price receivable from the
Field's project, which has resulted in a DKK 152.5 million writedown before tax
in the 2006/07 financial year. The valuation is based on an overall settlement
reached between the buyer and seller after the balance sheet date. 
Value adjustment of the Group's German investment properties
In the year under review, the Group adjusted its German investment properties
upwards by DKK 1.3 million before tax and minority interests. 
TKD Nordeuropa
- continued strengthening of project portfolio
In the 2006/07 financial year, TKD Nordeuropa realized a profit after tax of
DKK 104.3 million against DKK 6.0 million the year before. 
 
Management considers the profit for the year to be satisfactory. 

In the year under review, the Group placed heavy focus on improving the quality
of its project portfolio. At the same time, several projects developed and
completed in previous financial years were sold, the most important being the
Kennedy Arcade, Aalborg, with a selling price of DKK 465 million. Moreover, the
Group developed, sold and handed over a number of small and medium-sized
projects during the financial year. 
Project developments
The Entré multifunctional centre, Malmö, Sweden
The project was sold to CGI - Commerz Grundbesitz Investmentgesellschaft mbH in
the year under review. The sale was based on forward funding and a return
requirement of 6 %. The total price is expected to amount to about SEK 1.5
billion. Construction has started, and the current occupancy rate is 55 %. 
Galerija Azur, Riga, Latvia
The construction of the Group's first shopping centre project in the Baltic
States has been completed, and the centre opened on 24 August 2006. The centre
has been sold to Meinl European Land Ltd. and is fully let. 
In addition, the financial year saw the startup of a number of new projects,
including a shopping centre in Frederikssund and a retail park in Albertslund,
Denmark, several retail parks in Sweden and a combined retail and office
project in Vilnius, Lithuania. 
Euro Mall Holding
- highly satisfactory year
Euro Mall Holding continued the positive development of the preceding year. The
profit after tax amounted to DKK 243.9 million, against DKK 247.5 million the
year before. 

Management considers the profit for the year to be highly satisfactory.

The project contributing most to the profit for the year is Šestka Shopping
Centre in Prague, the Czech Republic, which opened in November 2006 and was
sold to Europolis. Moreover, Euro Mall Holding initiated and sold a number of
projects in the past financial year that will generate earnings in subsequent
financial years, and also completed the sale of land. 

In addition, Euro Mall Holding's investment properties were adjusted upwards by
DKK 109.7 million before tax and minority interests owing to the sale of
Plejada Shopping Centre, Sosnowiec, Poland, as well as continued price
increases in Central Europe. 

The Euro Mall Holding subgroup recorded satisfactory development in its project
portfolio in the year under review. 
Project developments
Galeria Biala, Bialystok, Poland
This project is being developed in a joint venture with Meinl European Land
Ltd., which will also hold a long-term investment in the project. Construction
has started, and the centre is scheduled for completion in autumn 2007. The
current occupancy rate is 98 %. 
Plejada Shopping Centre, Sosnowiec, Poland
In the year under review, this project was sold and handed over to a company
owned by the UK property investment company, St. Martins Property Corporation
Limited. The sale was based on a 6.75 % rate of return for the investor.
Moreover, TK Development is developing an extension of the centre, also sold to
an investor on the basis of a 6.75 % rate of return, based on forward funding.
Construction has started and is scheduled for completion in autumn 2007. 
Targówek retail park, Warsaw, Poland
Construction of this 24,400 m² retail park started in autumn 2006 and is
expected to be completed in autumn 2007. In the year under review, the project
was sold to Credit Suisse Asset Management Immobilien Kapitalanlagegesellschaft
mbH at a 7 % rate of return, based on forward funding. The current occupancy
rate is 84 %. 
Multifunctional centre, Gdansk “Young City”, Poland
Together with Meinl European Land Ltd., Euro Mall Holding has entered into an
agreement with the Baltic Property Trust Group regarding the acquisition of a
plot of land for the construction of an 84,000 m² multifunctional centre,
comprising retail, restaurant and leisure facilities, as well as office and
residential space. Construction is scheduled to start at the end of 2007, with
the centre opening planned for the end of 2009. In addition, the parties have
signed a letter of intent regarding the development of a further 100,000 m² in
the area. 

The financial year also saw the startup of a range of new projects, including
shopping centres in Tarnow and Nowy Sacz in Poland, a retail park in Liberec,
the Czech Republic, and a shopping centre in Kolin, the Czech Republic. 
Bulgaria
The Group has opened an office in Sofia to investigate the potential for
developing shopping centres and retail parks in Bulgaria. At present, the Group
is establishing new contacts among potential tenants and investigating possible
locations in major towns and cities. 
Charges brought by the public prosecutor for serious economic crime
In the autumn of 2005, TK Development A/S and six individuals were charged by
the public prosecutor for serious economic crime with fraudulent income
recognition and price manipulation concerning periods covering the 2000/01,
2001/02, 2002/03 and 2003/04 financial years. The charge relates to a total of
29 projects. Management still believes that the charges brought are based on
misconceptions concerning the Group's accounting policies. 

In addition, charges have now been brought against two of the Company's former
auditors because, according to the public prosecutor for serious economic
crime, the conditions for the Group's use of the percentage of completion
method for the relevant financial years had not been met. 

The matters covered by the charges have no impact on the Company's current
financial position. 
Change to composition of the Supervisory Board
The Supervisory Board recommends to the Annual General Meeting that Niels Roth,
who is also the Deputy Chairman of the Supervisory Board of TK Development's
subsidiary, TKD Nordeuropa A/S, become a member of the Supervisory Board. 
Outlook
A profit after tax and minority interests of at least DKK 240 million is
anticipated for the 2007/08 financial year. This profit estimate is based on
the following assumptions: 

A sustained favourable market outlook for the Northern and Central European
markets, where the Group's most important segment, the retail segment, is
enjoying growth generated by the retail chains' ongoing expansive drive,
coupled with strong investor demand for new projects. 
A good pipeline of projects, to be kept at a level of 1,100,000 m², which
corresponds to three to four years' activity at the current level. 

This announcement of annual financial results is available at the TK
Development Group's website: 
www.tk-development.dk

Any questions relating to this preliminary announcement of 2006/07 annual
financial results may be directed to Frede Clausen, President and CEO, on
telephone no. 88 96 10 10.

Attachments

no_2_uk_tkd_annual_statement_2006_07.pdf