Aalborg, Denmark, 2013-06-21 08:42 CEST (GLOBE NEWSWIRE) --
Summary
Results for the first quarter of 2013/14
TK Development’s results for the first quarter of 2013/14 amounted to DKK -19.0 million before tax, compared to DKK -6.9 million in the same period the year before. The results after tax amounted to DKK -16.2 million against DKK -154.9 million in the same period the year before.
The balance sheet total amounted to DKK 3,957.9 million at 30 April 2013 against DKK 4,009.3 million at 31 January 2013. Consolidated equity totalled DKK 1,370.9 million, and the solvency ratio stood at 34.6 %.
Cash flows for the period amounted to DKK -4.5 million against DKK -12.9 million in the same period the year before. Net interest-bearing debt amounted to DKK 2,195.7 million at 30 April 2013 against DKK 2,206.1 million at 31 January 2013.
Property development
In the municipality of Danderyd near Stockholm, TK Development handed over the first 13,000 m² phase of a retail park to an investor in 2010/11. Construction of the second phase of about 1,800 m² was completed in March 2013, and the retail park was handed over to the investor in the first quarter of 2013/14. The total project has been sold to the German investment fund Commerz Real on the basis of forward funding.
In January 2013, construction of the first phase of 7,850 m², a total of 136 units, of TK Development’s residential project in Bielany, Warsaw, Poland, was completed. The first units were handed over to the buyers in February 2013 and 50 % of all units were handed over in the first quarter of 2013/14. In total, 76 % of the first-phase units have been sold.
After the reporting date, TK Development has sold a 20,000 m² retail park project in Barkarby, Stockholm, Sweden, to a fund managed by Cordea Savills. The sale is based on forward funding. 73 % of the project premises have been let. The option to purchase land for the project will be exercised simultaneously with construction startup, scheduled for August 2013. Earnings from the sale are expected to be recognized in the 2014/15 financial year.
The Group’s project portfolio in the property development area comprised 456,000 m² at 30 April 2013 (31 January 2013: 452,000 m²).
Asset management
The total portfolio of own properties under asset management, which thus generates cash flow, comprised 138,250 m² and amounted to DKK 1,938.7 million at 30 April 2013, of which investment properties accounted for DKK 314.0 million. The annual net rent from the current leases corresponds to a return on the carrying amount of 6.7 %. Based on full occupancy, the return on the carrying amount is expected to reach 7.9 %.
The operation of these properties is generally proceeding satisfactorily, and overall the footfall and revenue in the centres are developing positively.
Market conditions
In Management’s opinion, the market conditions have not changed appreciably during the past months.
The main challenge currently facing the property sector is the difficult access to financing. Uncertainty on the international financial markets continues to adversely affect the property sector, leading to consistently long decision-making processes among financing sources, tenants and investors alike.
The Group will make the startup of major new projects contingent on obtaining either full or partial financing for them and on freeing up cash resources from the sale of several major completed projects.
Financial issues
At the Company’s Annual General Meeting on 22 May 2013, the Board of Directors was authorized to carry out a capital increase with gross proceeds of about DKK 210-231 million. The capital increase will help generate the cash resources required to underpin future operations and project flow, and thus long-term earnings. The capital increase has been discussed with the Group’s major shareholders, who, together with a few major private and institutional investors, have given conditional subscription and underwriting commitments for the total capital increase.
The Board of Directors has appointed Nordea Bank Danmark A/S to be the Manager of the offering. The more specific terms and conditions governing the capital increase have not yet been determined. The prospectus currently being prepared will set out the detailed terms and conditions of the capital increase. TK Development expects to publish the prospectus in the first half of August 2013 and expects the capital increase to be completed in early September 2013.
A substantial portion of the proceeds from the capital increase will be used to reduce the debt to credit institutions, including project finance loans of DKK 68.5 million granted by a number of the Company’s major shareholders and members of Management.
TK Development has a general agreement with the Group’s main banker about both operating and projects credits. After the reporting date, the agreement has been extended for a two-year period, subject to the condition that the operating credit limit is reduced by DKK 73.5 million when the forthcoming capital increase has been implemented, at the latest.
During and after the period under review, TK Development has concluded agreements regarding the refinancing of project credits worth DKK 1.2 billion out of the DKK 1.5 billion due to mature in 2013/14 as of 31 January 2013. The most significant project credit of those refinanced after the reporting date has been extended by two years, subject to the condition that the credit is reduced by DKK 50 million when the forthcoming capital increase has been implemented, at the latest.
Now that the above-mentioned refinancing agreements are in place, credits of DKK 0.3 billion are due to mature in 2013/14. The Group is in ongoing dialogue with the relevant credit institutions, and Management anticipates being able to either prolong or otherwise refinance project credits that have not been prematurely repaid upon project sales.
Outlook for 2013/14
Management anticipates positive results before tax for the continuing activities for the 2013/14 financial year. The timing and progress of the phase-out of the discontinuing activities are subject to major uncertainty, and the results of these activities are therefore not included in the outlook for the 2013/14 financial year.
As mentioned previously, Management has revised the sales strategy for the Group’s projects and chosen to accept reduced prices for selected project sales. Thus, Management considers it important for the Group to sell some of its completed projects and plots of land in the 2013/14 financial year.
The expectations mentioned in this Interim Report, including earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected results. Various factors may impact on expectations, as outlined in the section "Risk issues" in the Group’s Annual Report for 2012/13, particularly the valuation of the Group’s project portfolio.
Contact details:
TK Development A/S
Frede Clausen, President and CEO
Tel. +45 8896 1010
