Aalborg, Denmark, 2012-04-26 08:47 CEST (GLOBE NEWSWIRE) --
Summary
- TK Development recorded a profit of DKK 27.0 million after tax, compared to DKK 73.6 million the year before. This performance meets recent expectations.
- Viewed in light of the Company’s beginning-of-year profit estimate of about DKK 100 million after tax for 2011/12, the profit realized is disappointing. However, given the property market situation and the turbulence on financial markets throughout the summer and autumn of 2011, Management considers the profit for the year acceptable.
- Consolidated equity totalled DKK 1,876.4 million at 31 January 2012, corresponding to a solvency ratio of 40.4 %.
- The Group has entered into an agreement for the sale of its retail park in Kristianstad, Sweden, to a Swedish investor. The total project comprises about 6,200 m², including the existing building of about 4,500 m², which was handed over to the investor in April 2011.
- In June 2011, the Group sold its stake in Euro Mall Centre Management to the US Group CB Richard Ellis.
- Construction on a 10,000 m² extension to the Group’s Czech investment property, the Futurum Hradec Králové shopping centre, is progressing as planned. The opening has been scheduled for 10 May 2012. The current occupancy rate of the extension is 97 %.
- In Poland, the construction of 5,600 m² of office space in the Tivoli Residential Park, Warsaw, was completed in August 2011. Following their sale to users and private investors, the project units were handed over to the buyers in autumn 2011.
- In addition, in autumn 2011 the Group sold a plot of land in Warsaw, Poland, and realized a satisfactory profit on this sale.
- Construction of the first phase of the Group’s project in Bielany, Poland, commenced in mid-2011. The total project area comprises about 56,200 m², primarily housing, consisting of 900-1,000 units, with 136 units being built in the first phase.
- The Group’s letting situation remains satisfactory, and its completed shopping centres continue to perform well with a satisfactory influx of customers.
- The Group’s total project portfolio amounted to DKK 3,498 million at 31 January 2012, of which DKK 2,027 million is attributable to projects that have been completed and thus generate cash flow. The annual net rent from the current leases amounts to DKK 140 million, equal to a return on cost of about 7 %. Based on full occupancy, the return on cost is expected to reach 7.8 %. Negotiations for the sale of several of these projects are ongoing.
- In total, the Group’s completed, cash-flow-generating projects and its investment properties amount to DKK 2,394 million. The Group’s net interest-bearing debt amounts to DKK 2,245 million.
- At 31 January 2012, the Group’s project portfolio comprised 776,000 m² (31 January 2011: 798,000 m²).
- The continued uncertainty on the international financial markets has led to consistently long decision-making processes among financing sources, tenants and investors alike. During the year, the Group therefore postponed the expected construction start dates for several projects. Moreover, the sales of one or more major completed projects have not yet been realized.
- Changed investor behaviour, with a requirement for lower project risk, has resulted in a sluggish decision-making process and thus a lower rate of project turnover. This weakened project flow – combined with current and expected market conditions – has caused Management to reassess the Group’s business model.
- The Group’s primary focus will continue to be real property development. As an alternative, the Group can choose to initiate projects with a view to construction and subsequent startup and maturing over a short span of years, with such projects typically being classified as investment properties.
- Management considers it of great importance for the Group to sell a number of major completed projects in the 2012/13 financial year. The sale of major completed projects will generate the cash resources required to underpin future operations and project flow, and thus long-term earnings. In light of the volatility of financial markets, the volume, timing and proceeds of major project sales are subject to uncertainty. Despite this uncertainty, Management expects to sell a number of projects in the near future and to generate positive pre-tax results for the 2012/13 financial year.
- In February 2012, a draft Bill to amend the Danish Corporation Tax Act and other tax legislation was introduced, proposing changes to the rules for tax loss carryforwards. For TK Development, an adoption of the draft Bill will lengthen the time horizon for utilizing tax losses considerably, and thus substantially increase the uncertainty attaching to utilization of the tax asset. An adoption of the draft Bill and the associated uncertainty relating to utilization of the tax asset will necessitate a significant impairment of the Group’s tax asset in 2012/13. This impairment is assessed to be in the DKK 110-150 million range.
Further information is available from Frede Clausen, President and CEO, on tel. +45 8896 1010.
The expectations mentioned in this announcement, including earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected results. Expectations may be affected by various factors, as mentioned in the section ”Risk issues”, which applies in particular to the valuation of the Group’s deferred tax asset.
