1 - Euroinvestor

Transcription

1 - Euroinvestor

ILLUSTRATION:
ALFA LAVAL, OFFICE BUILDING, AALBORG
DENMARK
TK DEVELOPMENT A/S | CVR NO. 24256782
COMPANY ANNOUNCEMENT NO. 4/2014 | 2 APRIL 2014
PRELIMINARY ANNOUNCEMENT OF FINANCIAL STATEMENTS
2013/14
(1 Feb. 2013 - 31 Jan. 2014)
TA B L E O F C O N T E N T S
Page
3Summary
6
Consolidated financial highlights and key ratios
7
Results for 2013/14 and outlook for 2014/15
14
Market conditions
17
Business concept and knowledge resources
21
Property development
25
Asset management
30
Discontinuing activities
32
Financial targets
33
Risk issues
38Shareholders
41
Corporate Governance
44
Statutory Annual Corporate Social Responsibility Statement
45
The Board of Directors
48
The Executive Board
49
Statement by the Board of Directors and Executive Board on the Annual Report
50
Independent auditor’s report
51
Consolidated financial statements
56
Company information
2 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | Table of contents
SUMMARY
R E S U LT S FO R 2 0 1 3 / 1 4
Fashion Arena Outlet Center, Prague, Czech Republic
In the 2013/14 financial year TK Development recorded results of DKK 3.9 million before tax, excluding discontinuing
activities, against DKK -272.3 million for the 2012/13 financial year. The results for the year are in line with expectations.
The results after tax amounted to DKK -49.0 million for
2013/14 against DKK -493.3 million in 2012/13.
The balance sheet total amounted to DKK 3,839.6 million at
project and related services. The current occupancy rate is
31 January 2014 against DKK 4,009.3 million at 31 January
84 % (Q3 2013/14: 82 %). Construction started in autumn
2013. Consolidated equity totalled DKK 1,553.7 million ver-
2013, and the opening is scheduled for the end of 2014.
sus DKK 1,389.7 million at 31 January 2013, corresponding
to a solvency ratio of 40.5 % (31 January 2013: 34.7 %).
In Esbjerg TK Development owns a plot earmarked for the
construction of a new shopping centre, BROEN, of about
The cash flows for the year amounted to DKK 9.3 million
29,800 m². The process of obtaining permits for the pro-
against DKK -24.2 million the year before. Net interest-bear-
ject has been delayed because the project must undergo
ing debt amounted to DKK 1,890.9 million at 31 January
a validation and approval procedure to ensure safe railway
2014 against DKK 2,206.1 million at 31 January 2013.
operations, etc. The validation procedure is expected to
continue until after the end of the summer, and therefore
P RO P E RT Y D E V E LO PM E N T
construction startup is anticipated in autumn 2014. Discus-
In June 2013 TK Development sold a retail park project of
sions are being held with PFA regarding the sale of a share
about 20,000 m² in Barkarby, Stockholm in Sweden, to a
of the project at its current stage. Thus, if a final agreement
fund managed by Cordea Savills. The sale is based on for-
is reached, PFA will take part in the value generation at an
ward funding. 94 % of the project premises (Q3 2013/14: 82
early project development stage. This falls in line with the
%) have been let. Construction started in August 2013, and
Group’s business model, whose aims include entering into
the opening is scheduled for autumn 2014. Earnings from
partnerships regarding major development projects.
the sale will be recognized in the 2014/15 financial year
upon handover of the project to the investor.
In addition, agreements regarding the letting and sale of
several minor retail projects have been concluded. The earn-
In January 2013 construction of the first phase of 7,850 m²,
ings from these sales are expected to be recognized in the
a total of 136 units, of TK Development’s residential project
2014/15 financial year upon handover of the projects to the
in Bielany, Warsaw in Poland, was completed. Handover to
investors.
the buyers began in February 2013. In total 97 % of the firstphase units have been sold (Q3 2013/14: 93 %). The startup
In February 2014, after the reporting date, TK Development
of the next project phase is currently under preparation. A
conditionally sold a 6,000 m² office project in Aalborg, Den-
building permit for the second phase, consisting of about
mark. The project is being developed for the international
300 residential units and service facilities, has been granted.
Alfa Laval Group, which has entered into a long-term lease
The pre-construction sale, which started in December 2013,
for the property. The project has been sold to Pension
is progressing better than expected, with pre-reservations
Danmark at a total price of DKK 126.1 million. Construction
having been received for 29 % of the units. Construction is
began in March 2014, and the project will be handed over
expected to begin in late spring 2014, and handover to the
to the investor in June 2015. Earnings from the sale will be
buyers is slated for spring 2016. The residential units will be
recognized in 2015/16 upon handover of the project to the
sold as owner-occupied apartments to private users.
investor.
In the autumn of 2013 TK Development sold an 80 % stake
The Group’s project portfolio in the property development
in a planned shopping centre project of 14,800 m2 in the
area comprised 405,000 m² at 31 January 2014 (31 January
Czech town of Frýdek Místek to a business partner. Follow-
2013: 452,000 m²).
ing the sale, TK Development currently holds an ownership
interest in the project of 10 %. TK Development will receive
fee income for letting and managing the construction of the
ASSET MANAGEMENT
The total portfolio of own properties under asset manage-
S ummary | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 3 / 5 6
SUMMARY
ment, which thus generates cash flow, comprised 138,250
handed over to the buyer once the usual commercial con-
m² and amounted to DKK 1,934.2 million at 31 January
ditions have been met, including those relating to project
2014, of which investment properties accounted for DKK
construction and letting. The selling price is based on a re-
308.5 million. The annual net rent from the current leases
turn requirement of 8.5 %. The retail park will be built in two
corresponds to a return on the carrying amount of 6.7 %.
phases. Construction of the first phase of about 7,500 m²
Based on full occupancy, the return on the carrying amount
was completed in March 2014.
is expected to reach 7.9 %.
The timing and phase-out of the discontinuing activities are
The operation of these properties is generally proceeding
subject to major uncertainty. The phase-out is progressing,
satisfactorily. Chain stores are managing satisfactorily,
and the risk exists that these activities may be phased out
while local tenants are generally recording difficulties. Over-
at a value lower than their carrying amount.
all the footfall and centre revenue are developing positively.
In 2013 more than 16 million customers visited the Group’s
six shopping and outlet centres, which corresponds to an
index of 102 relative to 2012.
MARKET CONDITIONS
In Management’s opinion, the market conditions are improving for the Group, which expects to see financial growth and
rising consumer confidence in its markets, although levels
conditionally sold its 75 % stake in the Fashion Arena Outlet
will vary from country to country. Private consumption is expected to continue increasing.
Center in Prague, the Czech Republic. The outlet centre has
been sold to Meyer Bergman, and the selling price for the
In this phase of the business cycle, where economic growth
whole property amounts to EUR 71.5 million. The sale is con-
is on the rise, some uncertainty, although diminishing, per-
tingent on final financing, which is expected to fall into place
sists in the property markets, and the decision-making pro-
in April 2014. This sale generates a minor profit compared
cess of tenants, investors and financing sources remains
to the carrying amount, reduces the balance sheet total by
lengthy and carefully considered.
about DKK 400 million and makes a substantial contribution
to the Group’s free cash resources.
Access to project financing, which has remained difficult
for a prolonged period, poses the greatest challenge to the
DISCONTINUING ACTIVITIES
property sector. The Group is now experiencing an easing
The results before tax of the discontinuing activities
in project finance restraints. The options for procuring fi-
amounted to DKK -38.9 million in 2013/14 against DKK -53.7
nancing vary from project to project, depending on the type,
million in 2012/13, of which DKK -13.3 million derives from
location and status of the properties concerned, including
current operations, DKK -1.0 million from losses recognized
letting and sales. When granting project finance credits, the
on completed sales, and DKK -24.6 million from impairment
banks continue to require relatively high borrower equity,
losses and value adjustments of remaining assets.
but there also appears to be some relaxation of these requirements.
At 31 January 2014 the balance sheet total for the discontinuing activities amounted to DKK 367.7 million against
FINANCIAL ISSUES
DKK 425.4 million at 31 January 2013, a decline of 13.6 %.
At the Company’s Annual General Meeting on 22 May 2013,
DomusPro Retail Park in Vilnius, which has been sold in ad-
the Board of Directors was authorized to carry out a capital
vance, accounted for DKK 92.9 million of the balance sheet
increase with gross proceeds of about DKK 210-231 million.
total at 31 January 2014.
The capital increase was implemented in September 2013.
In 2013/14 TK Development sold two of the Group’s German
A substantial portion of the proceeds from the capital in-
investment properties: a minor investment property was
crease has been used to reduce the debt to credit institu-
sold in June 2013, and in September 2013 another German
tions and project finance loans granted by a number of the
investment property was sold at a price of DKK 43.8 million,
Company’s major shareholders and members of Manage-
corresponding to the carrying amount.
ment.
In August 2013 TK Development announced that a Group
TK Development has a general agreement with the Group’s
project, DomusPro Retail Park in Vilnius, Lithuania, had been
main banker about operating and project credits. The agree-
conditionally sold to BPT Baltic Opportunity Fund, which is
ment has been extended until mid-2015.
managed by BPT Asset Management. The project will be
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SUMMARY
Since 31 January 2013 TK Development has entered into
not been included in the outlook for 2014/15.
agreements on the refinancing of project credits totalling
DKK 1.2 billion. The main project credit that has been refi-
The expectations mentioned in this announcement, including
nanced has been prolonged until mid-2015. At 31 January
earnings expectations, are naturally subject to risks and un-
2014 credit facilities of DKK 0.1 billion only were due to ex-
certainties, which may result in deviations from the expected
pire prior to 31 January 2015. The credits are expected to be
results. Various factors may impact on expectations, as out-
refinanced prior to maturity or repaid in connection with the
lined in the section “Risk issues”, particularly the valuation
sale of projects.
of the Group’s project portfolio, as described under “Business risks” and “Risks related to the presentation of financial
The solvency ratio stood at 40.5 % at 31 January 2014, and
statements”.
thus the Group has fulfilled its strategic goal of achieving a
solvency ratio of about 40 %.
In the course of the year, the Group obtained interest margin
reductions on several major credits.
O U T L O O K FO R 2 0 1 4 / 1 5
Management anticipates positive results of about DKK 40
million before tax, excluding discontinuing activities, for the
2014/15 financial year.
subject to major uncertainty. The activities are in the process of being discontinued, and the Group risks incurring
further losses before the phase-out is complete. Therefore,
the results before tax of the discontinuing activities have
Alfa Laval, office building, Aalborg, Denmark
S ummary | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 5 / 5 6
C O N S O L I D AT E D F I N A N C I A L H I G H L I G H T S A N D K E Y R AT I O S
DKKm
2009/10
2010/11
2011/12
2012/13
2013/14
407.0
FINANCIAL HIGHLIGHTS
Net revenue
1,384.9
602.4
359.8
632.3
Value adjustment of investment properties, net
-10.9
30.0
36.7
-37.8
-14.9
Gross profit/loss
200.5
256.0
195.8
-139.5
163.9
57.5
127.2
65.5
-241.1
71.5
Operating profit/loss (EBIT)
Financing, etc.
-17.9
-53.2
-83.6
-87.4
-102.4
Profit/loss before tax and writedowns, etc.
53.8
48.2
-1.2
-0.3
-28.8
Profit/loss before tax
39.4
74.2
14.3
-326.0
-35.0
Profit/loss for the year
25.4
73.6
27.0
-493.3
-49.0
4,377.3
4,622.0
4,639.5
4,009.3
3,839.6
364.3
394.2
445.2
498.8
437.3
355.1
387.4
440.5
496.3
435.9
3,249.5
3,424.7
3,498.1
3,030.9
2,986.0
17.8
12.2
18.2
0.0
0.0
1,593.4
1,866.0
1,876.4
1,389.7
1,553.7
Balance sheet total
Property, plant and equipment
of which investment properties/investment properties under construction
Total project portfolio
Contract work in progress
Equity
Cash flows from operating activities
Net interest-bearing debt, end of year
-582.8
-182.7
-78.8
45.6
55.6
2,178.9
2,170.2
2,244.9
2,206.1
1,890.9
K E Y R AT I O S
Return on equity (ROE)
1.6 %
4.3 %
1.4 %
-30.2 %
-3.4 %
EBIT margin
4.2 %
21.1 %
18.2 %
-38.1 %
17.6 %
36.4 %
40.4 %
40.4 %
34.7 %
40.5 %
35.7
32.0
32.2
23.9
15.8
0.5
0.5
0.3
0.4
0.4
Number of shares, end of year
28,043,810
42,065,715
42,065,715
42,065,715
98,153,335
Average numbers of shares, adjusted
28,043,810
35,095,222
42,065,715
42,065,715
74,870,019
0.6
1.5
0.5
-8.5
-0.7
0
0
0
0
0
18
16
10
9
7
Solvency ratio (based on equity)
Equity value in DKK per share
Price/book value (P/BV)
Earnings per share (EPS) in DKK
Dividend in DKK per share
Listed price in DKK per share
K E Y R AT I O S A D J U S T E D FO R WA R R A N T S
Return on equity (ROE)
Solvency ratio (based on equity)
Equity value in DKK per share
Diluted earnings per share (EPS-D) in DKK
1.6 %
4.3 %
1.4 %
-30.2 %
-3.4 %
36.4 %
40.4 %
40.4 %
34.7 %
40.5 %
35.7
32.0
32.2
23.9
15.8
0.6
1.5
0.5
-8.5
-0.7
The calculation of key ratios was based on the 2010 guidelines issued by the Danish Society of Financial Analysts.
The comparative figures that include the number of shares have been corrected by an adjustment factor of 0.72 to show the effect of the capital increase
implemented.
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R E S U LT S F O R 2 0 1 3 / 1 4 A N D O U T L O O K F O R 2 0 1 4 / 1 5
In the 2013/14 financial year TK Development recorded results
The activities within each individual business segment are de-
of DKK 3.9 million before tax, excluding discontinuing activities,
scribed in more detail on pages page 21-31.
against DKK -272.3 million for the 2012/13 financial year.
The property development segment is described on pages
The results before tax, including discontinuing activities,
21-24. The description includes information about the
amounted to DKK -35.0 million against DKK -326.0 million in
development potential of TK Development’s project portfo-
2012/13.
lio, including an outline of the individual development projects.
The results after tax amounted to DKK -49.0 million against
DKK -493.3 million in 2012/13.
The asset management segment is described on pages
25-29. The description contains information about TK
The balance sheet total amounted to DKK 3,839.6 million at 31
Development’s own properties under asset management,
January 2014 against DKK 4,009.3 million at 31 January 2013.
including an outline of the operation and customer influx for
Consolidated equity totalled DKK 1,553.7 million versus DKK
the individual projects.
1,389.7 million at 31 January 2013, corresponding to a solvency ratio of 40.5 % (31 January 2013: 34.7 %).
The discontinuing activities are described on pages
30-31, which provides more details about TK Develop-
The results for 2013/14 and the balance sheet at 31 January
ment’s properties and projects in the countries where Man-
2014, broken down by business segment, appear from the ta-
agement has decided to phase out activities.
bles below.
R E S U LT S 2 0 1 3 / 1 4 ( D K K M )
Profit/loss
Revenue
Gross margin
Costs, excl. depreciation and amortization
Operating profit/loss
Financing, net
Tax on profit/loss for the year
2013/14
407.0
163.9
91.0
71.5
-102.4
-35.0
14.0
-49.0
Property
development
258.9
68.7
68.7
-21.8
49.6
-
Asset
management
137.7
112.6
112.6
-61.3
51.6
-
Discontinuing
10.4
-17.4
8.5
-25.9
-5.9
-38.9
-
B A L A N C E S H E E T S T R U C T U R E AT 3 1 J A N U A R Y 2 0 1 4 ( D K K M )
Balance sheet
Assets
Investment properties
Investment properties under construction
Other non-current assets
Projects in progress or completed
Receivables
Cash, cash equivalents, escrow accounts, etc.
Assets
Equity and liabilities
Equity
Credit institutions
Other liabilities
Equity and liabilities
Solvency ratio
Property
development
Asset
management
Discontinuing
411.7
24.2
164.8
2,986.0
162.8
90.1
3,839.6
24.2
3.8
1,110.9
61.3
34.8
1,235.0
308.5
3.4
1,625.7
84.7
16.5
2,038.8
103.2
249.4
15.1
367.7
1,553.7
1,989.6
296.3
3,839.6
40.5 %
689.1
442.6
103.3
1,235.0
55.8 %
746.6
1,179.1
113.1
2,038.8
36.6 %
217.1
113.7
36.9
367.7
59.0 %
31 Jan 2014
Unallocated
0.0
0.0
82.5
-83.9
-13.4
-97.3
14.0
-111.3
Unallocated
157.6
1.7
38.8
198.1
-99.1
254.2
43.0
198.1
-50.0 %
M anagement C ommentary | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 7 / 5 6
The financial review below contains a description of the results
about 1,800 m² was completed in March 2013 and handed over
and balance sheet total at group level only.
to the investor in the first quarter of 2013/14. The second
phase is fully let and tenanted by Plantagen (2012/13: 100 %).
ACCOUNTING POLICIES
The overall project has been sold to the German investment
The consolidated financial statements and parent financial
fund Commerz Real.
statements for 2013/14 for the Group and TK Development
A/S, respectively, have been presented in compliance with the
Residential park, Bielany, Warsaw, Poland
International Financial Reporting Standards, as adopted by the
Construction of the first phase of 7,850 m², a total of 136
EU, and in accordance with Danish disclosure requirements for
units, was completed in January 2013, and the first units were
listed companies.
handed over to the buyers in February 2013. Agreements for
the sale of 97 % of the units have now been concluded. The
The consolidated financial statements and parent financial
residential units have been sold as owner-occupied apartments
statements for 2013/14 have been presented in accordance
to private users.
with the financial reporting standards (IFRS/IAS) and IFRIC interpretations applicable for financial years beginning at 1 February
Shopping centre, Frýdek Místek, Czech Republic
2013.
In the autumn of 2013 TK Development sold an 80 % stake in
a planned shopping centre project of 14,800 m2 in the Czech
The implementation of new and amended financial reporting
town of Frýdek Místek to a business partner. Following the sale,
standards and interpretations that have entered into force as
TK Development currently holds an ownership interest in the
of the 2013/14 financial year has not impacted recognition and
project of 10 %. TK Development will receive fee income for let-
measurement in the consolidated financial statements and
ting and managing the construction of the project and related
thus has no effect on the earnings per share and the diluted
services.
earnings per share.
In addition, a few minor projects and a few plots of land have
The accounting policies have been consistently applied com-
been sold, mainly in Q4 2013/14.
pared to the 2012/13 financial year.
Gross margin
In March 2013 the Board of Directors decided to change the
The gross margin for the 2013/14 financial year amounted to
internal reporting procedure. In this connection, the segment
DKK 163.9 million against DKK -139.5 million in 2012/13. The
definition has been revised, and segments are now divided into
gross margin derives from the operation of the Group’s com-
property development, asset management and discontinuing
pleted projects, the operation and value adjustment of the
activities. The comparative figures have been restated accord-
Group’s investment properties and profits on handed-over pro-
ingly.
jects.
The consolidated financial statements and the parent financial
The value adjustment of the Group’s investment properties
statements are presented in DKK, which is the presentation
amounted to DKK -14.9 million net, with DKK -9.5 million relat-
currency for the Group’s activities and the functional currency
ing to the German investment properties and DKK -5.4 million
of the Parent Company.
relating to remaining investment properties. The value adjustment amounted to DKK -37.8 million in 2012/13.
I N C O M E S TAT E M E N T
Revenue
The gross margin includes impairment losses on projects of
The revenue for 2013/14 totalled DKK 407.0 million against
DKK 8.9 million and a reversed impairment loss of DKK 17.6 mil-
DKK 632.3 million in 2012/13.
lion on an individual project as a result of changes and improved
project progress.
The revenue stems from the sale of projects, rental and fee income, etc.
Staff costs and other external expenses
Staff costs and other external expenses amounted to DKK 91.0
Handed-over projects
million for 2013/14 against DKK 99.4 million in 2012/13, a re-
Retail park, Enebyängen, Danderyd, Sweden
duction of about 8.5 %.
In the municipality of Danderyd near Stockholm, TK Development handed over close to 13,000 m² – the first phase of a
Staff costs amounted to DKK 63.8 million against DKK 69.2 mil-
retail park – to an investor in 2010/11. The second phase of
lion the year before, a decline of about 7.8 %. The number of
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employees totalled 90 at 31 January 2014 (31 January 2013:
erty development and asset management activities in Poland
112), including employees working at operational shopping
and the Czech Republic. Based on the impairment test made,
centres.
Management has found no indications of impairment of goodwill.
Other external expenses amounted to DKK 27.2 million, a 9.9 %
reduction compared to 2012/13.
Investment properties and investment properties under
construction
Overheads are being reduced by around 20 % relative to
TK Development’s investment properties consist of:
2012/13, with half of the reduction deriving from the discontinuation of activities in Germany, Finland and the Baltic States.
Cost-reducing measures have been implemented and will
Futurum Hradec Králové, shopping centre, the Czech Republic (a 20 % interest)
achieve full impact in the course of 2014/15.
Galeria Tarnovia, shopping centre, Tarnów, Poland (a 30 %
interest)
Development in costs
German investment properties.
180
150
The total value of the Group’s investment properties amount-
120
ed to DKK 411.7 million against DKK 479.4 million at 31 Janu-
90
ary 2013. The decline relates mainly to the sale of two of the
60
Group’s German investment properties.
30
DKK 103.2 million of the value at 31 January 2014 is attribut-
0
2008/09
2009/10
2010/11
Costs, DKKm
2011/12
2012/13
2013/14
2014/15E
Trend (Costs, DKKm)
able to the Group’s German investment properties, which are
described in more detail in the section “Discontinuing activities”
below.
Financing
TK Development realized net financing expenses of DKK 102.4
The two remaining investment properties, totalling DKK 308.5
million against DKK 87.4 million in 2012/13. The increase is at-
million, fall under the asset management activities and are de-
tributable partly to higher financing costs on individual project
scribed in more detail under that heading. The valuation of the
credits and partly to the declining volume of projects on which
Czech investment property, the Futurum Hradec Králové shop-
interest is capitalized following the decision made by the Board
ping centre, made at 31 January 2013 was based on an ongoing
of Directors in March 2013 to sell some of the Group’s plots of
sales process. This valuation was upheld at 31 January 2014.
land.
TK Development’s 30 % ownership interest in Galeria Tarnovia
In connection with the capital increase implemented in Sep-
has been recognized at fair value, based on a discounted cash-
tember 2013, TK Development has obtained interest margin
flow model over a five-year period, with the terminal value be-
reductions on several major credits.
ing recognized in year five.
Corporate income tax
TK Development’s investment properties under construction
Tax on the results for the year amounts to DKK 14.0 million.
consist of the Group’s ownership interest in the Jelenia Góra
The tax amount has been negatively affected by a DKK 8.5 mil-
development project in Poland and amount to DKK 24.2 million.
lion impairment of the Group’s Danish tax asset following the
No value adjustment of this project was made at 31 January
adoption of new legislation to gradually reduce the corporate
2014, pending fulfilment of the conditions in the agreement
tax rate.
with the investor, and thus startup of the project.
BALANCE SHEET
Deferred tax assets
The Group’s balance sheet total amounted to DKK 3,839.6
Deferred tax assets were recorded at DKK 122.6 million in the
million, which is a decline of DKK 169.7 million compared to 31
balance sheet against DKK 127.0 million at 31 January 2013.
January 2013.
The valuation of the tax assets is based on existing budgets
Goodwill
and profit forecasts for a five-year period. For the first three
Goodwill amounted to DKK 33.3 million and is unchanged com-
years, budgets are based on an evaluation of specific projects
pared to 31 January 2013. Goodwill relates to the Group’s prop-
in the Group’s project portfolio. The valuation for the next two
M anagement C ommentary | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 9 / 5 6
years is based on specific projects in the project portfolio with
Cash and cash equivalents
a longer time horizon than three years as well as various project
Cash and cash equivalents amounted to DKK 38.7 million
opportunities.
against DKK 31.2 million at 31 January 2013. The Group’s total
cash resources came to DKK 90.8 million against DKK 70.1 mil-
Due to the substantial uncertainties attaching to these val-
lion at 31 January 2013.
uations, provisions have been made for the risk that projects
are postponed or not implemented and the risk that project
Equity
profits fall below expectations. A change in the conditions and
The Group’s equity came to DKK 1,553.7 million against
assumptions for budgets and profit forecasts, including time
DKK 1,389.7 million at 31 January 2013.
estimates, could result in the value of the tax assets being considerably lower than that computed at 31 January 2014, which
The Group’s equity includes the net proceeds of DKK 218.9 mil-
could have an adverse effect on the Group’s results of opera-
lion of the capital increase implemented in September 2013.
tions and financial position.
Moreover, since 31 January 2013 equity has partly been affected by the results for the year and negative market-value adjust-
Project portfolio
ments after tax of DKK 6.5 million related to foreign subsidiar-
The total project portfolio came to DKK 2,986.0 million against
ies and hedging instruments.
DKK 3,030.9 million at 31 January 2013. The decline is a combined result of an increase in the Group’s portfolio of ongoing
The solvency ratio amounts to 40.5 %. Thus, the Group has ful-
projects and a decrease due to the sale of projects.
filled its strategic goal of achieving a solvency ratio of about
40 %.
Total prepayments based on forward-funding agreements
The Group’s total portfolio of completed projects and invest-
1,000
ment properties amounted to DKK 2,066 million at 31 January
2014 (31 January 2013: DKK 2,132 million), and the Group’s net
interest-bearing debt amounted to DKK 1,891 million (31 January 2013: DKK 2,206 million).
500
0
31 Jan 2010
31 Jan 2011
31 Jan 2012
Equity, DKKm
40.5 %
1,500
34.7 %
tion of forward funding on new projects.
59 %
2,000
40.4 %
handover of projects to investors, combined with an accumula-
40.4 %
January 2013. The change is due to a decline resulting from the
Equity and solvency
36.4 %
amounted to DKK 59.1 million against DKK 369.6 million at 31
31 Jan 2013
31 Jan 2014
Solvency ratio
The ratio of cash-flow-generating properties to total net interest-bearing debt in the Group developed positively in the
Non-current liabilities
amount of DKK 249 million during the year under review.
The Group’s non-current liabilities represented DKK 143.0 million against DKK 141.0 million at 31 January 2013.
Cash-flow-generating properties and interest-bearing debt
Current liabilities
2,500
The Group’s current liabilities represented DKK 2,142.9 million
against DKK 2,478.6 million at 31 January 2013. The decline is
2,000
mainly attributable to the reduction of debt to credit institutions.
1,500
1,000
31 Jan 2010
31 Jan 2011
31 Jan 2012
31 Jan 2013
31 Jan 2014
Net interest-bearing debt, DKKm
Investment properties and completed projects, DKKm
C A S H F L O W S TAT E M E N T
The Group’s cash flows from operating activities were positive
in the amount of DKK 55.6 million (2012/13: positive in the
amount of DKK 45.6 million). This amount is mainly a combined
Receivables
result of the reduction in funds tied up in projects following pro-
Total receivables amounted to DKK 162.8 million, a decline of
ject sales/accumulation of forward funding, new project invest-
DKK 78.2 million from 31 January 2013 that relates mainly to
ments, interest and tax paid, as well as other operating items.
other receivables.
The Group’s cash flows from investing activities were positive
1 0 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | M anagement C ommentary
The Group owns two minor plots of land in Finland and
is working on the development of a retail park project
on one of these plots, while attempting to dispose of
the other plot through an outright sale.
in the amount of DKK 47.7 million (2012/13: positive in the
amount of DKK 6.4 million), due mainly to the realized sale of
two of the Group’s German investment properties.
Cash flows from financing activities were negative in the
amount of DKK 94.0 million (2012/13: negative in the amount
of DKK 76.2 million). The negative cash flows are a combined
The portfolio of projects not initiated (plots of land) is to be
reduced from about DKK 1.1 billion to about DKK 500 million.
•
result of the proceeds generated by the capital increase implemented in September 2013, the reduction in payables to credit
institutions and the financing raised for project investments.
Overall cash flows for the year are positive in the amount of
DKK 9.3 million against DKK -24.2 million in the year before.
E X E C U T I O N O F A N N O U N C E D S T R AT E G Y
As described in company announcement no. 6/2013 and the
Annual Report for 2012/13, in March 2013 Management re-
planned two-year period.
solved to revise the Group’s strategy and business model and
to adjust its market focus.
As announced previously, the goal is to execute these adjustments within a period of two years.
In Management’s opinion, the strategy execution is generally
progressing satisfactorily and as planned.
The portfolio of projects not initiated is to be reduced
through the sale of land and the initiation of projects.
This process is progressing satisfactorily and according
to plan for many of the projects. For a few, however,
the process is taking longer than expected. One such
project is the BROEN shopping centre in Esbjerg, Denmark, as described under the heading “Property development”. Based on the plans drawn up for each individual project, Management believes it will still be possible
to implement the balance sheet adjustment within the
The balance sheet is to be adjusted, with a solvency ratio
of about 40 %.
• After implementing the capital increase in September
2013, the Group has met this strategic goal. The solvency ratio stood at 40.5 % at 31 January 2014, and
solvency will be further strengthened through completion of the agreed sale of the Fashion Arena Outlet
Center in April 2014.
The initiatives adopted and their current status are outlined
below:
The remaining activities will be limited to Denmark, Sweden,
Poland and the Czech Republic.
•
TK Development’s activities in Germany, Finland and the
Baltic States are being discontinued, and the phase-out
is progressing satisfactorily.
◦◦ The German activities have been reduced through
the sale of a further two investment properties in
2013/14. Thus, the Group has two remaining investment properties, two minor plots of land and a share
of a minor shopping centre. The branch office in Berlin has been closed down, and the employees have
left their positions.
◦◦ In Lithuania, a conditional agreement has been concluded regarding the sale of the Group’s retail park
project DomusPro in Vilnius, which will be handed
over to the buyer upon completion of construction. In
addition, the Group owns two plots of land in Latvia.
No decision has yet been made regarding when to
close down the branch office in Vilnius, because the
Group is awaiting the completion of DomusPro Retail
Park and clarification of the next steps in respect of
the two remaining plots of land.
◦◦ In Helsinki, Finland, the branch office has been closed
down, and the employees have left their positions.
Overheads are to be reduced by around 20 % relative to
2012/13, with half of the reduction deriving from the discontinuation of activities in Germany, Finland and the Baltic
States.
•
Cost-reducing measures have been implemented and
will achieve full impact in the course of 2014/15.
Financing costs are to be normalized as a result of the initiatives implemented.
•
In connection with the implementation of the capital
increase, the Group has reached agreements for a reduction of the interest payable on several major credits,
and is currently negotiating interest rate reductions for
other credits.
FINANCIAL ISSUES
Capital increase
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 was implemented in September 2013.
For technical reasons, a capital reduction was implemented
before the capital increase, whereby the denomination of all
shares was written down from DKK 15 to DKK 1. The capital
M anagement C ommentary | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 1 1 / 5 6
reduction amounted to DKK 588.9 million, which was allocated
million against DKK -333.8 million the year before.
to a special fund under equity. Subsequently, this special fund
The results include income from investments in group enter-
can only be used following a resolution to this effect at a Gen-
prises in the amount of DKK -130.0 million against DKK -336.1
eral Meeting.
million the year before. In addition, earnings consist mainly of
net financing income from loans to subsidiaries. In 2013/14
The capital increase was implemented by issuing 56,087,620
TK Development made writedowns for impairment of invest-
new shares of nominally DKK 1 at a price of DKK 4.11, thus
ments in group enterprises in the amount of DKK 180.0 million
yielding gross proceeds of DKK 230.5 million. The net proceeds
(2012/13: DKK 410 million). Accumulated impairment relating
after costs totalled DKK 218.9 million.
to investments in group enterprises amounted to DKK 1,050.2
million at 31 January 2014 (31 January 2013: DKK 870.2 mil-
A substantial portion of the proceeds from the capital increase
lion).
has been used to reduce the debt to credit institutions, primarily in connection with the prolongation of credits, and to repay
At 31 January 2014, the balance sheet total amounted to DKK
project finance loans of DKK 68.5 million granted by a number
2,118.6 million, an increase of DKK 60.0 million over the year
of the Company’s major shareholders and members of Manage-
before. Equity totalled DKK 2,001.3 million at 31 January 2014,
ment.
an increase of DKK 132.7 million relative to 31 January 2013,
due in part to the capital increase implemented in September
Other financial issues
2013 and the negative results realized for the year.
In February 2014 TK Development conditionally sold its 75 %
stake in the Fashion Arena Outlet Center in Prague, the Czech
O U T L O O K FO R 2 0 1 4 / 1 5
Republic. The outlet centre has been sold to Meyer Bergman,
Management anticipates positive results of about DKK 40
and the selling price for the whole property amounts to EUR
million before tax, excluding discontinuing activities, for the
71.5 million. The final completion of the sale in April 2014 will
substantially strengthen the Group’s financial platform.
Planned projects are initiated once the commercial conditions
subject to major uncertainty. The activities are in the process
for starting construction have been met and partial or full fi-
of being discontinued, and the Group risks incurring further
nancing of the project has been procured, either from credit
losses before the phase-out is complete. Therefore, the results
institutions or from investors in the form of forward funding.
before tax of the discontinuing activities have not been includ-
Project startup is also contingent on the provision of any equity
ed in the outlook for 2014/15.
financing by means of TK Development’s own financial resources, with due consideration for the liquidity covenants adopted
The expectations mentioned in this announcement, including
by Management.
earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected
TK Development has a general agreement with the Group’s
results. Various factors may impact on expectations, as out-
main banker about operating and project credits. The agree-
lined in the section “Risk issues”, particularly the valuation
ment has been extended until mid-2015.
of the Group’s project portfolio, as described under “Business risks” and “Risks related to the presentation of financial
Since 31 January 2013 TK Development has entered into
statements”.
agreements on the refinancing of project credits totalling DKK
1.2 billion. The most important of the project credits refinanced
SUBSEQUENT EVENTS
has been prolonged until mid-2015.
In February 2014 TK Development conditionally sold its 75 %
stake in the Fashion Arena Outlet Center in Prague, the Czech
At 31 January 2014 credit facilities of DKK 0.1 billion only were
Republic. The outlet centre has been sold to Meyer Bergman,
due to expire prior to 31 January 2015. The credits are expect-
and the selling price for the whole property amounts to EUR
ed to be refinanced prior to maturity or to be repaid in connec-
71.5 million. The sale is contingent on final financing, which is
tion with the sale of projects.
expected to fall into place in April 2014. This sale generates
a minor profit compared to the carrying amount, reduces the
PA R E N T C O M PA N Y, T K D E V E L O P M E N T A / S
balance sheet total by about DKK 400 million and makes a sub-
In 2013/14, TK Development A/S, the Parent Company, realized
stantial contribution to the Group’s free cash resources.
results before tax of DKK -72.0 million against DKK -285.6 million in 2011/12. The results after tax amounted to DKK -86.8
In February 2014 TK Development also conditionally sold a
6,000 m² office project in Aalborg, Denmark. The project is be-
T R A N S A C T I O N S W I T H R E L AT E D PA R T I E S
ing developed for the international Alfa Laval Group, which has
In 2013/14 TK Development made interest payments on pro-
entered into a long-term lease for the property. The project
ject finance loans granted by a number of major shareholders,
has been sold to PensionDanmark at a total price of DKK 126.1
including members of Management. In September 2013 TK De-
million. Construction began in March 2014, and following com-
velopment repaid these project finance loans out of the pro-
pletion the project will be handed over to the investor in June
ceeds from the capital increase implemented. Apart from this,
2015.
no significant transactions were made with related parties; nor
did any unusual transactions with related parties occur during
Other than those mentioned in the Management Commentary,
the financial year.
no significant events of relevance to the Company have oc-
A D J U S T M E N T O F WA R R A N T S
curred after the reporting date.
As a consequence of the capital reduction and capital increase
T H E B OA R D O F D I R ECTO RS
implemented in 2013, the Board of Directors resolved, in ac-
The Board of Directors is currently composed of six members.
cordance with the Company’s Articles of Association, to adjust
After last year’s Annual General Meeting, a meeting was held
the number of warrants allocated to the Company’s Executive
for the purpose of electing officers, with Niels Roth being elect-
Board and other executive staff members as well as the sub-
ed as the Chairman, and Peter Thorsen being elected as the
scription price for exercising the warrants. The adjustment was
Deputy Chairman of the Board of Directors. At this year’s Annu-
made to ensure that the value of the warrants for the employ-
al General Meeting, the Board of Directors will propose that the
ees will be maintained after implementation of the above-men-
Board of Directors should remain composed of six members. All
tioned alterations to TK Development’s capital structure.
members of the Board of Directors are prepared to stand for
re-election.
The adjustment means that the employees will be allotted a
number of additional warrants, and that the subscription price
DIVIDENDS
upon exercise of the warrants will be reduced.
The Board of Directors recommends that the Annual General
Meeting resolve not to distribute dividends for the 2013/14 fi-
The full Annual Report is downloadable from TK Develop-
nancial year.
ment’s website, www.tk-development.com, as from 8 April
2014.
MARKET CONDITIONS
In Management’s opinion, the Group’s markets are showing
competitive returns going forward. Investor interest is currently
signs of recovery.
changing in two areas: investors are showing interest in projects
outside capital cities, and they are increasingly seeking to play
The Group’s markets are characterized by expectations for fi-
an active role in project development, thus assuming a higher
nancial growth and rising consumer confidence, although var-
risk against an anticipated higher return. These opportunities
ying in strength from country to country. The effect is not yet
fall in line with the Group’s business model, according to which
reflected in private consumption, which is also expected to rise
TK Development is interested in entering into partnerships re-
in the years to come.
garding development projects and completed properties in order to improve the allocation of the Company’s equity, diversify
In this phase of the business cycle, where economic growth is
risks and better utilize the Group’s development competencies.
on the rise, some uncertainty, although diminishing, persists
in the property markets, and the decision-making process of
Location is the paramount consideration for retail property in-
tenants, investors and financing sources remains lengthy and
vestors, and in case of shopping centres, good performance,
carefully considered.
customer influx and revenue will also be key to the investor’s
comfort with the investment risk. The required rates of return
TENANTS
for prime locations are relatively low compared to the period
In the retail property market, tenants continue to focus on loca-
before the onset of the economic and financial crisis. The re-
tion, and the rental level for prime-location projects is expected
turn requirement is somewhat higher for properties in more
to remain fairly stable in the period ahead. The retail sector is
secondary locations, although investors are currently moving
showing a good amount of interest in well-situated projects,
higher up on the risk curve in terms of the amount of risk they
which are particularly attractive to robust national and interna-
can and will assume on specific investments.
tional branded retailers wishing to expand. The interest shown
by tenants in secondary locations is slack, and the rental level
Prime-location office properties with stable tenants are at-
for such locations is also expected to remain under pressure in
tracting great investor interest, and here the return require-
the period to come. In relation to shopping centres, the over-
ment is at the same level as before the onset of the economic
all picture is that chain stores are managing satisfactorily and
and financial crisis. Return requirements are a great deal higher
that local tenants are generally recording difficulties.
for properties in more secondary locations, although investors
are also currently assessed to be willing to assume a slightly
The vacancy rate is increasing in the office property market,
higher risk than in the most recent period.
where the demand for primary and secondary locations also
differs vastly. In the years to come the vacancy rate is expect-
Residential properties are likewise attracting great investor in-
ed to remain at a relatively high level, but with reasonable de-
terest. This interest is focused on locations in capitals, major
mand for fairly new premises with a practical layout. The rental
towns and cities, where substantial population growth is pres-
level for primary locations is expected to remain relatively sta-
ently being recorded. Coupled with lower return requirements
ble, but the level for secondary locations will most likely contin-
for prime locations than before the economic and financial
ue to be under pressure. crisis, the higher rental level has rekindled the interest in developing residential projects, and the migration towards major
In the residential property sector there is a clear trend on all
towns and cities is expected to continue in future years as well.
markets: a vast number of people are moving to major towns
Population growth in major towns and cities combined with
and cities, thus pushing up demand for new dwellings. Depend-
confidence in the future development of the economy also
ing on local tradition in the individual market, this trend mani-
decisively impacts families’ interest in buying owner-occupied
fests itself as demand for either new owner-occupied dwellings
dwellings, and the price level has shown a respectable upward
or new rental dwellings or both. As far as rental housing is con-
trend in the past year. Thus, the market for developing housing
cerned, this has led to higher rental levels in the most recent
for sale to private owner-occupants has again become inter-
period, levels that are expected to be maintained in the period
esting.
to come.
FINANCING
I N V E STO RS
Access to project financing, which has remained difficult for a
Investors are showing growing optimism and a good amount of
prolonged period, poses the greatest challenge to the property
interest in investing in real property. Many institutional inves-
sector. The Group is now experiencing an easing in finance re-
tors wish to increase the share of property investments in their
straints. The options for procuring financing vary from project
portfolios, being confident that real property will deliver stable
to project, depending on the type, location and status of the
MARKET CONDITIONS
properties concerned, including letting and sales. Generally,
The residential market in Denmark has regained its appeal.
lenders continue to require relatively high equity financing for
There is demand for both rental dwellings and owner-occupied
new projects, but there also appears to be some relaxation of
dwellings in major towns and cities, which are recording sub-
these requirements.
stantial population growth. The rental level for rental housing
is currently relatively high and expected to remain stable in the
DENMARK
period ahead. Residential rental properties are also attracting
Economic growth is on the rise in Denmark. Consumer confi-
great investor interest, and the market for developing and sell-
dence is increasing, although consumers’ continuing caution
ing housing to private owner-occupants has become attractive
tends to dampen private consumption. There are expectations
once again. TK Development is currently working on several res-
for continued, albeit low, growth in the years ahead. In recent
idential projects and will continue to do so in the years to come.
years, the unemployment rate has been fairly stable and is expected to remain at an unchanged level in the years to come.
Denmark
The Danish market has been subject to uncertainty for a pro-
– startup in 1989
longed period, partly because of a weakened financial sector.
GDP (% yr./yr.)
The Group is now experiencing an easing in project finance re-
Private consumption
straints – also in the Danish market.
In Denmark TK Development focuses on the retail as well as the
office and residential segments.
2012
2013
2014e
2015e
-0.4
0.4
1.3
1.7
-0.1
0.0
1.3
2.0
6.1
5.8
5.6
5.5
(% yr./yr.)
Unemployment (%)
(Source: Nordea, March 2014)
SWEDEN
The Swedish market continues to benefit from the strong
Investors are showing a good amount of interest in the Group’s
Swedish economy and high purchasing power. The growth rate
retail, office and residential projects at attractive locations in
in 2013 surpassed the 2012 rate, and private consumption
major towns and cities. At the same time, investor interest in
is expected to continue expanding and rising in the years to
secondary towns is waning. Location and quality are the two
come. Unemployment is anticipated to remain at an unchanged
key determinants of investment decisions. The Group can ob-
level in the years ahead.
tain satisfactory selling prices for prime-location properties
where the risk of vacancies is relatively limited, while selling
As in previous years, TK Development will focus on the retail
prices for properties in secondary locations are under pressure.
segment in Sweden. Retail chains are interested in attractive
Foreign investors are showing mounting interest in investing in
rental premises, although tenants’ decision-making processes
properties in major towns and cities, with Copenhagen being
are also protracted in the Swedish market. Retail chains are still
the preferred location. Institutional investors and other profes-
expanding, and several new foreign chains have entered the
sional investors need options for placing their funds. This paves
Swedish market.
the way for setting up new project partnerships with these investors with a view to cooperation on project execution.
Project location continues to be the paramount consideration
for tenants, and the trend is clearly for retail chains to expand
Particularly in the retail letting market, tenants also focus on
in cities, particularly Stockholm and Gothenburg, but also in
the right location. Both supermarket chains and retail chains
other major towns in Sweden. Stockholm continues to record
are still willing to expand if the location is right, although their
high annual population growth. This results in a demand for new
decision-making processes are protracted. The rental level for
retail establishments and retail store extensions, as concerns
primary locations is expected to be fairly stable, whereas the
both retail parks and shopping centres.
rental level for secondary locations is under pressure.
Both local and international investors are showing mounting inActivity has revived in the office market, with projects in major
terest, particularly in prime locations, and the selling prices for
towns and cities attracting greater interest. Projects in prime
such projects are on the rise.
locations, such as those in the Group’s waterfront areas, appeal
to tenants and investors alike, and the Group expects to create
Sweden is considered to be the most transparent and inter-
interesting office projects in the years to come. Examples of
esting market in the Nordic region, and given the continued
such locations are the Group’s sites at Amerika Plads in Copen-
retail expansion, the Swedish market is highly interesting for
hagen and Stuhrs Brygge in Aalborg, where TK Development
TK Development. TK Development intends to focus on develop-
conditionally sold a 6,000 m² office building to PensionDanmark
ing prime-location superstores and shopping centres in major
in February 2014, with the premises being let to the interna-
towns and cities, with Stockholm and Gothenburg being the
tional Alfa Laval Group.
primary areas of interest.
MARKET CONDITIONS
Sweden
– startup in 1997
Poland
2012
2013
2014e
2015e
0.9
1.5
2.8
3.5
GDP (% yr./yr.)
Private consumption
- startup in 1995
GDP (% yr./yr.)
2012
2013
2014e
2015e
1.9
1.6
3.6
4.2
Private consumption
(% yr./yr.)
1.6
2.0
2.6
2.2
(% yr./yr.)
Unemployment (%)
8.0
8.0
7.9
7.6
Unemployment (%)
1.2
0.8
2.7
3.6
13.4
13.4
12.6
11.8
POLAND
CZECH REPUBLIC
The Polish economy developed positively in 2013, and this pos-
The economic situation in the Czech Republic was marked by
itive trend is expected to continue for the years to come. Thus,
negative growth and falling private consumption in 2013. Low
moderate growth is anticipated in the years ahead, along with
growth and a moderate increase in private consumption are ex-
rising private consumption and decreasing unemployment.
pected for the years to come. Unemployment is expected to
remain at an unchanged level in the years ahead.
In Poland TK Development focuses on both the retail segment
and the residential segment.
TK Development focuses on the retail segment in the Czech
Republic. In Management’s opinion, the next few years will see
Strong national and international retail chains still wish to ex-
a demand for outlet centres as well as for converting and revi-
pand, although at a more controlled pace than in the past, with
talizing existing centres. Supermarket chains are also expected
location being the key focus as in the Group’s other markets.
to continue expanding.
Generally, prime-location retail premises in major towns and cities are in high demand, while tenants want improvements to
Investors are showing renewed interest in real property invest-
the terms of secondary-location leases or even want to vacate
ments. International funds focus on major projects, while local
their premises in such locations.
investors are showing interest in minor projects.
As the market for shopping centres matures, new development
Czech Republic
options are expected to arise, also making projects to extend
– startup in 1997
and/or revitalize existing centres attractive.
GDP (% yr./yr.)
2012
2013
2014e
2015e
-1.0
-1.2
1.8
2.2
-2.1
-0.4
0.4
2.0
7.0
7.0
6.8
6.6
Private consumption
Investors focus chiefly on major towns and cities, primarily Warsaw, and continue to show reasonable interest in prime-location projects or in projects with development potential in the
(% yr./yr.)
Unemployment (%)
(Source: The European Commission, European Economic Forecasts, Winter 2014)
major towns and cities of Poland. International investors dominate the Polish market.
In the residential segment in Warsaw in Poland, there is good demand for housing, and during the year under review the Group
regularly concluded agreements for the sale of apartments in
its completed residential project in Bielany, with only four apartments remaining to be sold. The volume of projects initiated
dropped for a period, which has stabilized the supply of housing
for sale. The total volume of property sales currently exceeds
the supply of new housing, which has led to slightly increasing prices for attractive housing. In Management’s opinion, it is
once again attractive to develop residential projects in Poland,
primarily in the Warsaw area, and the pre-construction sale of
the second phase of the Group’s residential project in Bielany,
Warsaw, was initiated in December 2013 and is proceeding better than anticipated.
BUSINESS CONCEPT AND KNOWLEDGE RESOURCES
The Group’s mission
Architects
The overall mission of TK Development is to create added value by
Engineers
Option/purchase
of site
velopment and services environments, and specializes in being the
Finished project
Investors
developing real property. The Group operates in the property deTenant
requirements
Tenants
creative and result-oriented link between tenants and investors.
Investor
requirements
Project management
Letting
Sales
Fundamental values
TK Development bases its operations on a number of fundamental
Public authorities
Contractors
Subcontractors
values that are the Group’s hallmarks. They define the framework for
the actions of TK Development’s employees and the values that TK
Development wants to signal.
In collaboration with tenants and investors, TK Development
•
Good business sense
plans and arranges the construction of new buildings, and the
•
Being result oriented
•
Innovation and creativity
expansion and conversion of real property based on tenant
•
Being trustworthy
•
Keeping it simple
•
Commitment
needs and investor requirements. The Group develops the projects, which involves letting the premises, managing construction and concluding contracts with construction companies
and subcontractors for the execution of the building works.
Strategy for business area – Property development
Developing projects from the conceptual phase through to project
completion, based on one of several models:
•
Sold projects (forward funding/forward purchase).
•
Projects with partners.
•
On TK Development’s own books based on a high degree of
•
In terms of segments, the Group focuses on the development
of shopping centres, superstores, office buildings and corporate headquarters and related mixed and multifunctional projects as well as housing in Poland and Denmark.
confidence in the letting and sales potential.
In Denmark, TK Development’s focus in the years to come will
Services for third parties.
be on the retail segment as well as the office and residential
segments, based on the wish to better exploit the opportuni-
Strategy for business area – Asset management
Owning, operating, maturing and optimizing completed projects for a
medium-long operating period that matches the potential for adding
value.
ties for developing real property in segments other than the
retail segment. Particularly in its foreign markets, the Group will
continue basing its activities on the retail segment as the primary segment.
BUSINESS CONCEPT
The Group’s primary business area is the development of real
Shopping centres
property, termed property development, and the Group’s sec-
Stores/superstores
ondary business area is asset management.
Shopping-street properties
P RO P E RT Y D E V E LO PM E N T
The Group has a large, strong network forged on the basis of
long-standing, close business relationships with tenants and
DK
SE
PL
CZ
Offices
Mixed
Residential
investors, and regularly enters into contracts with these business partners. The Group is predominantly a knowledge-based
The Group’s primary focus is real property development, which
service provider and has specialized in being the productive and
may be based on several models:
creative liaison between tenants, investors, architects, construction companies and other business partners.
TK Development wants to be the preferred property development partner in the retail segment as well as an attractive business partner within the development of office and residential
property projects, with the interaction with customers, tenants
and investors being based on know-how and mutual respect.
For the Group’s own account, with or without advance project sales, where the Group can either finance the projects
on its own books or procure staged financing from the buyer
in step with project completion, also termed forward funding.
Together with business partners during the construction period.
companies.
Customer relations
The Group’s principal customers consist of tenants and investors. TK Development continuously strives to create new,
Project and risk management
improved services to make the Group an even more attractive
New projects are initiated based on a careful assessment of
business partner.
their earnings potential viewed in light of project complexity,
completion time, tied-up capital, including balance sheet and
Tenants
cash flow impact, and other use of resources. The assessment
Over the years, TK Development has built close partnership re-
includes deliberations about project location, regulatory mat-
lations with a large number of companies, including in particular
ters, pre-letting, construction matters and market conditions.
retail chains looking to set up new stores.
Limiting risks
The Group has gained in-depth knowledge of tenant needs and
A number of management tools contribute to ensuring a satis-
requirements. From this platform, TK Development can develop
factory project process. Construction is typically not initiated
retail solutions that meet tenants’ requirements for design and
until satisfactory pre-construction letting has been achieved
location. In addition, the numerous close relations with a wide
for at least 60 % of the project. If the project is sold, construc-
range of retail chains mean that the Group is always able to put
tion will not be initiated until the Group anticipates being able
together an attractive retail mix that boosts individual tenants’
to meet such investor requirements as would allow final com-
revenue.
pletion of the project sale. Meeting these requirements typically falls within the Group’s sphere of competencies.
Over the years TK Development has developed and executed
a number of office projects, primarily corporate headquarters.
Forward funding
Thus the Group has wide experience in developing attractive
TK Development aims to secure the sale of projects at an early
office projects that match the requirements of tenants and in-
stage, and the Group considers it important to expand investor
vestors alike.
commitment by having the investors fund the project during
the construction process (forward funding) where possible. For-
Investors
ward-funding agreements with investors are usually concluded
TK Development has also built close relations with a number of
before construction startup, thus ensuring that the funds tied
Danish and foreign property investors.
up in the Group’s projects are kept at an absolute minimum,
which also reduces the balance sheet total and minimizes the
The Group has in-depth knowledge of investor needs and re-
risk.
quirements. Among other things, TK Development offers standardized, international contracts and a smooth process from
Green building
initiation to delivery.
The Group is experiencing increasing demand for green buildings from both tenants and investors. TK Development offers
Over the years, the Group has sold projects to a range of Danish
to construct green buildings as and when requested by the
and foreign banks, investment funds, pension funds and private
Group’s customers. Several of the Group’s projects have been
Funds tied up (DKK)
The diagram below illustrates the Group’s funds tied up in projects, in scenarios both with and without forward funding.
Project implementation without forward funding
Project implementation based on forward funding
Construction period
Handing-over
Development phase
Construction start
Site purchase
Project progress
constructed as green buildings and certified according to the
co-investors that wish to participate in both the construction
BREEAM standards or equivalent.
and maturing phases. By entering into joint ventures, the Group
will achieve more effective placement of its equity financing
Environment
of projects under development, better risk spread, and more
TK Development is keenly aware that the public eye is sharply
efficient use of the Group’s staff resources and competencies.
focused on environmental optimization throughout the construction process. Public concerns include the reduction of CO2
The Group owns a few investment properties and a number of
emissions and the sustainability of building projects.
completed projects. These properties and projects fall into the
Group’s asset management segment.
When the Group acquires sites for its projects, the land is examined to determine any contamination. If a plot of land is con-
KNOWLEDGE RESOURCES
taminated, the Group will clean up the land for its intended use
TK Development develops projects of a high standard. Together
before starting construction or refrain from buying the relevant
with the employees’ knowledge and qualifications, the Group’s
plot.
close relations with tenants and investors play an essential role
in minimizing the risks of individual projects. This combination
When developing projects, the Group strives to achieve an op-
is the prerequisite for developing projects that generate satis-
timum balance between environmental and social concerns
faction for tenants and investors alike, as well as satisfactory
while also generating revenue for the Group. The choice of ma-
earnings for the Group on individual projects.
terials, design, energy consumption and environmental impact
all form part of such considerations.
Employees
The employees’ knowledge and competencies are essential to
The Group aims to complete projects without causing unneces-
TK Development’s value creation, and TK Development contin-
sary environmental impact. TK Development cooperates with
uously strives to secure the best match between employees’
tenants and investors to establish appropriate environmental
competencies and the specific job requirements of the proper-
solutions when developing and implementing new projects. For
ty development business. The Group’s employees work within
instance, the Group seeks to create finished projects with low
individual, specialized areas: project developers, letting manag-
energy consumption and a good indoor climate that will provide
ers, legal and financial project controllers, and engineers.
a comfortable working environment for future employees.
Education
ASSET MANAGEMENT
To raise the employees’ level of expertise to an even higher
Asset management is TK Development’s secondary business
level and thus reinforce TK Development’s value creation, the
area. This business area consists of owning, operating, running
Group has continuous focus on training and education. The aim
in, maturing and optimizing completed projects for a medi-
is to strengthen the Group in the development phases that are
um-long operating period whose length matches the potential
critical to maximizing the value of each individual project.
for being able to add value.
In addition to improving the Group’s knowledge resources, edIn relation to new projects, the Group can choose to initiate pro-
ucation helps cement TK Development’s position as an attrac-
jects with a view to construction and subsequent startup and
tive workplace for both existing and future employees.
maturing over a short span of years. Such projects will typically
be classified as investment properties.
Project organization
TK Development believes it is important to give employees an
This is a natural consequence of the current risk picture, includ-
inspiring workplace where individual projects afford them the
ing in particular investor behaviour, which means that the de-
opportunity to accumulate knowledge and experience that can
velopment process for some projects is not optimally finalized
be passed on throughout the organization and thus continu-
until they have been matured and run in. The portfolio of invest-
ously improve the Group’s collective know-how and skills.
ment properties generated by this element will ensure both a
positive operating margin and a positive cash flow, viewed in
In order to ensure a high degree of quality in all services provid-
isolation. After the maturing process, the project returns can
ed by the Group to tenants and investors - as well as efficient
be even better documented and higher prices obtained.
progress and quick decisions in the development of individual
projects - the Group’s staff is anchored in a matrix organization
Investment properties can be developed either for the Group’s
as follows:
own account or in project development joint ventures with
Project groups
Interdisciplinary
competencies
1
2
3
Breakdown of the Group’s employees
4
At 31 January 2014 the Group employed a total of 90 persons,
broken down as follows:
Sale and rental
Controlling
Other countries 2
Project management/
Construction management
Czech Republic 9
Finance and accounting
Poland 24
Group/services 10
The matrix organization means that all the Group’s peak com-
Shopping centre
management 14
petencies, covering the progress of a project from blueprint to
Denmark 17
Sweden 14
completion, exist in the project group that carries through the
individual project from A to Z.
Organization, management and employees
Group functions and related services include management, ac-
TK Development’s organization and management structure are
counting and finance, and other staff functions.
based on branch offices managed by divisional managers (senior vice presidents). The Group’s international management
team consists of the above-mentioned group of persons, as
well as functional managers in the individual countries.
The Group’s management structure (excluding discontinuing
activities) is shown below:
Frede Clausen
President and CEO
Robert Andersen
Executive Vice President
Accounting, Finances
and Controlling
Denmark
Sweden
Poland
Czech Republic
Erik
Godtfredsen
Dan
Fæster
Zygmunt
Chyla
Mogens
Pedersen
Organizational focus on segments
To underpin the segmentation chosen, the business activities are organized so as to best ensure management focus on
both property development and asset management activities.
The members of the Executive Board attempt as far as possible to focus primarily on their own individual business areas,
while taking into account that the Executive Board members
are jointly responsible for the day-to-day management of the
overall business activities. TK Development has several years’
experience in asset management and increasingly focuses on
this area, including utilization of the Group’s competencies and
employee know-how to ensure continued progress in maturing
the completed projects.
PROPERTY DEVELOPMENT
The Group’s primary business area is the development of real
m². The project portfolio had a total development potential of
property, termed property development. The Group’s primary
452,000 m² at 31 January 2013.
segments are the retail, office and residential segments, with
variations from country to country.
The development in the Group’s project portfolio is outlined
below:
Strategy for business area – Property development
Developing projects from the conceptual phase through to project
DKKm
31 Jan 2012
31 Jan 2013
31 Jan 2014
completion, based on one of several models:
•
Sold projects (forward funding/forward purchase)
Sold
•
Projects with partners
Completed
0
15
2
•
On TK Development’s own books based on a high degree of
In progress
17
17
10
confidence in the letting and sales potential
Not initiated
10
6
0
Total
27
38
12
•
Remaining
Property development
Countries:
Denmark, Sweden, Poland and the
Czech Republic
Revenue:
2013/14: DKK 258.9 million
(2012/13: DKK 183.4 million)
Gross profit/loss:
2013/14: DKK 68.7 million
(2012/13: DKK -81.8 million)
Balance sheet total:
31 Jan 2014: DKK 1,235.0 million
(31 Jan 2013): DKK 1,284.5 million)
Completed
0
38
6
In progress
286
198
206
Not initiated
938
901
887
Total
1,224
1,137
1,099
Net project portfolio
1,251
1,175
1,111
293
370
59
1,544
1,545
1,170
91.6 %
90.7 %
83.1 %
Forward funding
Gross project portfolio
Forward funding in % of
gross carrying amount
In its property development segment, TK Development focuses
of sold projects
on executing existing projects in the portfolio, as well as on se-
Table 1
curing robust pre-construction letting or sales. In addition, the
Group continuously works on new project opportunities.
By means of forward funding, the Group reduces the funds tied
up in the portfolio of sold projects. The change in forward fund-
ing since 31 January 2013 is due to a decline resulting from the
handover of projects to investors, combined with an accumula-
tion of forward funding on new projects.
The development potential of the Group’s project portfolio is
financing by means of TK Development’s own financial resourc-
shown below (in square metres):
es, with due consideration for the liquidity covenants adopted
by Management.
m² (‘000)
The gross margin for development activities amounted to DKK
Sold
68.7 million in 2013/14 against DKK -81.8 million in 2012/13.
The Group’s retail projects on which construction is already ongoing or about to start are still attracting a good amount of in-
31 Jan 2012
31 Jan 2013
31 Jan 2014
Completed
0
4
0
In progress
7
3
21
Not initiated
29
0
0
Total
36
7
21
terest from tenants. During the period under review, the Group
Remaining
also concluded lease agreements for several of these projects.
Completed
0
3
0
Moreover, agreements regarding the sale of several minor retail
In progress
39
20
21
projects were concluded in the course of the year. The earnings
from these sales are expected to be recognized in the 2014/15
financial year upon handover of the projects to the investors.
The development potential of the project portfolio represented 405,000 m² at 31 January 2014, of which sold projects
Not initiated
560
422
363
Total
599
445
384
Total project portfolio
635
452
405
50
37
36
Number of projects
Table 2
accounted for 21,000 m² and remaining projects for 384,000
Geographical segmentation of the development potential in square metres:
Denmark
Czech Republic
Poland
Sweden
PROJECT OUTLINE
The outline below lists the key projects in the portfolio in the property development segment.
TKD’s ownerProject
TKD’s
Construction start/
ship share of ownership
expected construc-
Opening/
tion start
expected opening
2004
Continuously
-
-
October 2013
Autumn 2014
August 2013
Autumn 2014
City/town
Country Segment
area (m2)
interest
Amerika Plads, underground car park
Copenhagen
DK
Car park
16,000
50 %
Vasevej
Birkerød
DK
Mixed
3,400
100 %
Ahlgade
Holbæk
DK
Mixed
1,550
50 %
Barkarby Gate, retail park
Stockholm
SE
Retail
20,000
100 %
Shopping centre, Frýdek Místek
Frýdek Místek
CZ
Retail
1,480
10 %
Autumn 2013
End-2014
BROEN, shopping centre
Esbjerg
DK
Retail
29,800
100 %
Autumn 2014
Autumn 2016
Østre Teglgade
Copenhagen
DK
Office/residential
32,700
100 %
Continuously
Continuously
Amerika Plads, lot C
Copenhagen
DK
Mixed
6,500
50 %
2014
2016
Amerika Plads, lot A
Copenhagen
DK
Office
5,900
50 %
2014
2016
Aarhus South, phase II
Aarhus
DK
Retail
2,800
100 %
2014
2015
Ejby Industrivej
Copenhagen
DK
Office
12,900
100 %
-
-
Østre Havn/Stuhrs Brygge
Aalborg
DK
Mixed
36,000
Continuously
Continuously
Retail park, Marsvej
Randers
DK
Retail
4,700
100 %
Mid-2014
2015
Development of town centre
Køge
DK
Mixed
26,500
100 %
2014
Continuously
The Kulan commercial district
Gothenburg
SE
Mixed
45,000
100 %
2014
2016
Retail park, Söderhamn
Söderhamn
SE
Retail
10,000
100 %
2014
2015
Retail park, Gävle, phase II
Gävle
SE
Retail
15,800
100 %
Continuously
Continuously
Shopping centre, Jelenia Góra
Jelenia Góra
PL
Retail
7,320
30 %
Spring 2014
End-2015
In progress
Not initiated
Residential park, Bielany,
1)
1)
50 %
Residential/
remaining phases
Warsaw
PL
services
48,350
100 %
Continuously
Continuously
Bytom Retail Park
Bytom
PL
Retail
25,800
100 %
Continuously
Continuously
Most Retail Park, phase II
Most
CZ
Retail
2,000
100 %
-
-
Property development, total floor space
1)
approx.
355,000
Share of profit on development amounts to 70 %.
PROJECTS IN PROGRESS
Intersport, H&M, NewYorker and Euronics. Construction started
Amerika Plads, underground car park, Copenhagen, Denmark
in autumn 2013, and the opening is scheduled for the end of
Kommanditaktieselskabet Danlink Udvikling (DLU), which is
2014.
owned 50/50 by Udviklingsselskabet By & Havn I/S and TK Development, owns three projects at Amerika Plads: lot A, lot C
P R O J E C T S N O T I N I T I AT E D
and an underground car park. Part of the underground car park
BROEN, shopping centre, Esbjerg, Denmark
in the Amerika Plads area has been built. The Group expects to
In Esbjerg TK Development owns a plot earmarked for a shop-
sell the total parking facility upon final completion. For a de-
ping centre project, BROEN, of about 29,800 m², to be built at
scription of Amerika Plads, lots A and C, please see the section
Esbjerg Station. The shopping centre is expected to comprise
“Projects not initiated” below.
about 70 stores. The process of obtaining permits for the project has been delayed because the project must undergo a
Vasevej, Birkerød, Denmark
validation and approval procedure to ensure safe railway oper-
TK Development owns a property of almost 3,000 m² at Va-
ations, etc. The validation procedure is expected to continue
sevej in Birkerød, rented by SuperBest. The project consists of
until after the end of the summer, and therefore construction
a refurbishment of the existing property and a minor extension
startup is anticipated in autumn 2014. Discussions are being
comprising a few stores and dwellings.
held with PFA regarding the sale of a share of the project at
its current stage. Thus, if a final agreement is reached, PFA will
Ahlgade, Holbæk, Denmark
take part in the value generation at an early project develop-
TK Development owns 50 % of the shares in a company that
ment stage. This falls in line with the Group’s business model,
is developing an approx. 3,100 m² residential and retail project
whose aims include entering into partnerships regarding major
in Holbæk. The residential section has a floor space of about
development projects.
1,900 m² and has been sold and handed over to a housing association. The commercial section has premises of about 1,200
Østre Teglgade, Copenhagen, Denmark
m². Following the conclusion of a lease for a large portion of this
TK Development owns an attractively located project area at
area in Q4 2013/14, all premises are now fully let. Construction
Teglholmen of about 32,700 m². Current plans involve estab-
started in October 2013, and the opening is scheduled for au-
lishing a church and possibly a residential care facility in part of
tumn 2014.
the project area. Discussions are also being held with an interested party regarding the construction of residential property
Barkarby Gate, retail park, Stockholm, Sweden
in the area.
In Barkarby in the northwestern part of Stockholm, TK Development is developing a 20,000 m² retail park expected to consist
Amerika Plads, lots A and C, Copenhagen, Denmark
of 12 to 14 units, of which 9 to 10 will be retail stores. The
Kommanditaktieselskabet Danlink Udvikling (DLU), which is
current occupancy rate is 94 % (Q3 2013/14: 82 %), and lease
owned 50/50 by Udviklingsselskabet By & Havn I/S and TK De-
agreements have been concluded with various major tenants,
velopment, owns three projects at Amerika Plads: lot A, lot C
including XXL (sports store), Clas Ohlson, Intersport, Lager
and an underground car park. A building complex with about
157, Grizzly, Kjell & Co., Burger King, Pizza Hut and the fitness
11,800 m² of office space is to be built on lot A, and a building
chain Nordic Wellness. In June 2013 the project was sold to a
complex with about 13,000 m² of commercial and residential
fund managed by Cordea Savills. The sale is based on forward
space on lot C. Construction will take place as space is let or
funding. Construction started in August 2013, and the open-
pre-sold.
ing is scheduled for autumn 2014. Earnings from the sale will
be recognized in 2014/15 upon handover of the project to the
Østre Havn/Stuhrs Brygge, Aalborg, Denmark
investor.
In the area previously occupied by Aalborg Shipyard at Stuhrs
Brygge, TK Development is developing a business and residen-
tial park of about 72,000 m² through a company jointly owned
In the autumn of 2013 TK Development sold an 80 % stake in
with Frederikshavn Maritime Erhvervspark on a 50/50 basis.
a planned shopping centre project in the Czech town of Frýdek
The area was acquired by the jointly owned company, with pay-
Místek to a business partner. Following the sale, TK Develop-
ment being effected for the development rights acquired in
ment currently holds an ownership interest in the project of 10
step with the development and execution of specific projects.
%. The shopping centre will consist of about 60 retail stores.
For one thing a project is currently being developed for the In-
TK Development will receive fee income for letting and man-
ternational Alfa Laval Group; see below. In addition, work on a
aging the construction of the project and related services. The
new local plan comprising about 31,000 m² of housing, offices
current occupancy rate is 84 % (Q3 2013/14: 82 %), and lease
and parking facilities has been launched.
agreements have been concluded with such tenants as Billa,
Alfa Laval, Østre Havn/Stuhrs Brygge, Aalborg, Denmark
housing. TK Development will be in charge of developing the
45,000 m² for a shopping centre, services and commercial fa-
conditionally sold a 6,000 m² office project in Aalborg. The pro-
cilities, while JM AB will have responsibility for the 30,000 m²
ject is being developed for the international Alfa Laval Group,
of housing. The local plan is currently being prepared. The pro-
which has entered into a long-term lease for the property. The
ject is being discussed with potential tenants, and a number of
project has been sold to PensionDanmark at a total price of
lease agreements have been concluded.
DKK 126.1 million. Construction began in March 2014, and following completion the project will be handed over to the inves-
Shopping centre, Jelenia Góra, Poland
tor in June 2015. Earnings from the sale will be recognized in
TK Development has bought a plot of land in Jelenia Góra and
2015/16 upon handover of the project to the investor.
has an option on additional land for the development of a
shopping centre of about 24,400 m². The project will comprise
Retail park, Marsvej, Randers, Denmark
a supermarket of about 2,200 m² and retail, restaurant and
In October 2010 the Group took over a plot of land on Marsvej in
service premises totalling about 22,200 m². A building permit
Randers, intended for a retail development project of 4,700 m².
has been granted for the project. Letting is ongoing, and lease
Letting has been initiated, and there is a satisfactory level of
agreements for about 51 % of the floor space have so far been
interest among potential tenants. A lease agreement has been
signed. The tenants include Intermarché, H&M, Stradivarius,
concluded with jem & fix, among others.
Reserved, Carry, CCC and Bershka. Construction is expected to
commence in spring 2014, and the opening is scheduled for the
Development of town centre, Køge, Denmark
end of 2015. In December 2012 70 % of the project was handed
TK Development is working on a potential project in Køge. In
over to Heitman, and in this connection the Group’s 30 % own-
February 2012 Køge Kyst and TK Development entered into a
ership interest was classified under “Investment properties un-
conditional agreement under which TK Development is to buy
der construction”. TK Development will receive fee income from
land for constructing a project of about 26,500 m². The project,
the jointly owned company established for developing, letting
to be built immediately next to Køge Station and the town cen-
and managing the construction of the project.
tre shopping area, comprises retail stores of about 11,500 m²,
public service facilities of about 8,800 m² including a town hall
Residential park, Bielany, Warsaw, Poland
and rehabilitation centre, residential premises of about 3,300
TK Development owns a tract of land in Warsaw allowing for
m² and office premises/fitness facilities of about 2,900 m² as
the construction of residential units of about 56,200 m² in all;
well as an underground car park of about 12,000 m². The local
see above under “Completed projects”. Construction of the first
plan was adopted in June 2013. TK Development expects to
phase of 7,850 m² has been completed. The plan is to initiate
enter into an agreement with Køge Municipality regarding the
construction of the remaining approx. 48,350 m² in three suc-
municipality’s takeover of both town hall and rehabilitation
cessive phases in continuation of the completion of the first
centre. Letting of the retail premises has started, and potential
phase and once pre-construction sales have reached a satis-
tenants are showing a good amount of interest in the project.
factory level. A building permit for the second project phase,
consisting of about 300 residential units and service facilities,
The plan is to build the project in phases. The first phase will
has been granted. The pre-construction sale, which started
comprise about 2,400 m² of retail premises, of which about
in December 2013, is progressing better than expected, with
2,000 m² has been let to a supermarket operator, an approx.
pre-reservations having been received for 29 % of the units.
5,500 m² rehabilitation centre to the municipality and about
Construction is expected to begin in late spring 2014, and
5,500 m² of the approx. 11,000 m² projected underground car
handover to the buyers is slated for spring 2016. The residen-
park to EuroPark. Construction is expected to start in 2014
tial units will be sold as owner-occupied apartments to private
once the ongoing tender procedure for the award of construc-
users.
tion contracts has been completed.
Bytom Retail Park, Bytom, Poland
The Kulan commercial district, shopping centre and service/
TK Development intends to develop a retail park with total leas-
commercial space, Gothenburg, Sweden
able space of about 25,800 m² on its site at the Plejada shop-
TK Development and the Swedish housing developer JM AB
ping centre in Bytom, which is centrally located in the Katowice
have entered into a cooperation agreement with SKF Sver-
region. Construction of the project will be phased in step with
ige AB to develop SKF’s former factory area in the old part of
letting. Letting efforts are ongoing, and construction will start
Gothenburg. The contemplated project comprises a total floor
as space is let.
space of about 75,000 m²: 30,000 m² for a shopping centre,
15,000 m² for services/commercial use and 30,000 m² for
ASSET MANAGEMENT
The Group’s secondary business area is asset management,
Although these properties have been classified under asset
which consists of owning, operating, running in, maturing and
management, TK Development is working towards selling them
optimizing completed projects for a medium-long operating pe-
in whole or in part. In February 2014 the Group entered into a
riod whose length matches the potential for adding value.
conditional agreement for the sale of its 75 % stake in the Fashion Arena Outlet Center in Prague, the Czech Republic. The sale
is expected to be completed in April 2014.
Strategy for business area – Asset management
Owning, operating, maturing and optimizing completed projects for a
medium-long operating period that matches the potential for adding
value.
The current focus is on maturing the individual properties to
the extent possible and selling them once the Group no lon-
Asset management
ger expects to be able to add further significant value to the
Countries:
Denmark, Sweden, Poland
and the Czech Republic
Revenue:
2013/14: DKK 137.7 million
(2012/13: DKK 434.5 million)
Gross profit/loss:
2013/14: DKK 112.6 million
projects.
The total portfolio of properties under asset management
amounted to DKK 1,934.2 million at 31 January 2014 (31 Janu-
(2012/13: DKK -21.0 million)
ary 2013: DKK 1,932.1 million), of which investment properties
31 Jan 2014: DKK 2,038.8 million
accounted for DKK 308.5 million (31 January 2013: DKK 312.1
(31 Jan 2013): DKK 2,100.7 million)
million). The operation of these properties, which largely con-
31 Jan 2014: 14
sist of shopping centres, is generally proceeding satisfactorily.
(31 Jan 2013: 12)
The annual net rent from the current leases corresponds to a
Number of employees
at centres:
return on the carrying amount of 6.7 % (2012/13: 6.7 %). Based
Breakdown of own properties under asset management by
on full occupancy, the return on the carrying amount is expect-
country (carrying amount):
ed to be 7.9 % (2012/13: 7.9 %).
Denmark
On balance, the Group’s shopping and outlet centres recorded
growth in footfall and revenue. In 2013 the Group’s six centres
had more than 16 million visitors.
Poland
Development in footfall (2011 = index 100):
110
Czezh Republic
105
The gross margin for asset management amounted to DKK
100
112.6 million in 2013/14 against DKK -21.0 million in 2012/13.
95
2011
2012
2013
The Group’s own properties under asset management comprised the following nine properties at 31 January 2014:
TKD’s ownership
Project
Country
Type
Futurum Hradec Králové
Czech Republic
Galeria Tarnovia, Tarnów
Poland
Sillebroen, Frederikssund
Fashion Arena Outlet Center, Prague
Current occupancy
interest
Project area m2
rate
Shopping centre
20 %
28,250
100 %
Shopping centre
30 %
16,500
93 %
Denmark
Shopping centre
100 %
25,000
92 %
Czech Republic
Outlet centre
75 %
25,000
96 %
Galeria Sandecja, Nowy Sącz
Poland
Shopping centre
100 %
17,300
96 %
Ringsted Outlet
Denmark
Outlet centre
50 %
13,200
63 %
Most Retail Park
Czech Republic
Retail park
100 %
6,400
91 %
Aabenraa
Denmark
Retail park
100 %
4,200
71 %
Brønderslev
Denmark
Shopping-street property
100 %
2,400
93 %
Other completed projects
Total
138,250
The development of the individual centres appears from pages 26-29.
ASSET MANAGEMENT
FUTURUM HRADEC KRÁLOVÉ, SHOPPING CENTRE, CZECH REPUBLIC
Opening
November 2000/May 2012
Leasable area
28,250 m²
Occupancy rate
100 % (Q3 2013/14: 100 %)
Footfall 2013
5.9 million
In 2012 an extension of almost 10,000 m² was added to the shopping
centre, and the existing centre was also modernized. The number of retail stores now totals 110.
The shopping centre is fully let and continues to record a satisfactory
operating profit and customer influx. Compared to 2012, the shopping
centre’s revenue increased by 16 % and its footfall by 4 % in 2013.
2011
2012
2013
(2011=index 100)
140
130
Major tenants: Cinestar, Tommy Hilfiger, H&M, New Yorker, Adidas, Reserved, Intersport, Takko Fashion, Foot Locker, Gant, C & A, Lindex, Datart.
120
110
100
90
80
70
60
Revenue
Footfall
G A L E R I A TA R N O V I A , S H O P P I N G C E N T R E , TA R N Ó W , P O L A N D
Opening
Leasable area
November 2009
16,500 m², including a supermarket
of about 2,000 m²
Occupancy rate
Footfall 2013
93 % (Q3 2013/14: 94 %)
1.8 million
TK Development owns 30 % of the centre. The shopping centre continues to have a satisfactory influx of customers and to perform well.
The shopping centre’s footfall in 2013 increased on the year before. The
revenue is on a par with the previous year.
2011
140
2012
2013
(2011=index 100)
130
Chain stores are managing satisfactorily, while local tenants are generally recording difficulties. TK Development’s focus is on enhancing the
centre’s attraction value, and current initiatives are aimed at bolstering
occupancy and customer influx, among other things.
Major tenants: H&M, New Yorker, Euro RTV AGD, Reserved, Deichmann,
Douglas, Rossmann, Stradivarius, Takko Fashion, Simply Market.
120
110
100
90
80
70
60
Revenue
Footfall
ASSET MANAGEMENT
SILLEBROEN, SHOPPING CENTRE, FREDERIKSSUND, DENMARK
Opening
Leasable area
Occupancy rate
March 2010
25,000 m², including about 5,000 m²
of supermarket units
92 % (Q3 2013/14: 91 %)
Footfall 2013
2.9 million
In the continuing difficult economic climate with subdued private consumption, the centre’s footfall and revenue showed a slightly declining
trend in 2013 compared to 2012. The footfall is at index 96 and the revenue at index 97. Revenue and footfall reflect the general weak development of Danish retail trade in 2013.
2011
140
2012
2013
(2011=index 100)
130
120
110
100
Major tenants: Kvickly, Fakta, H&M, Fona, Gina Tricot, Matas, Sport-Master, Frederikssund Isenkram, Deichmann, Vero Moda, Designersmarket,
Wagner, Frederikssund Apotek, Tøjeksperten, Skoringen, Companys, Bog
& Idé, Café Vivaldi.
90
80
70
60
Chain stores are managing satisfactorily, while local tenants are generally recording difficulties. Tenants are regularly replaced to optimize the
centre. New tenants have also been attracted to the centre, including
Gina Tricot, Signal, Sisters Point and Tippy, which all opened outlets in
2013. Negotiations with tenants for several of the remaining rental units
are ongoing. The centre is still being run in and matured, and continued
efforts are being made to position the centre on the market. TK Development’s focus is on strengthening the occupancy and revenue levels
for the centre.
Revenue
Footfall
FA S H I O N A R E N A O U T L E T C E N T E R , P R A G U E , C Z E C H R E P U B L I C
Opening
Leasable area
Occupancy rate
Footfall 2013
2011
140
2012
2013
(2011=index 100)
November 2007/October 2010
25,000 m²
96 % (Q3 2013/14: 96 %)
2.2 million
In recent years the Fashion Arena Outlet Center has truly distinguished
itself as one of the most successful outlet centres in Central Europe. TK
Development owns 75 % of this outlet centre. Since the opening of the
second phase in 2010, the outlet centre has recorded a highly positive
development in footfall and revenue. The outlet centre’s revenue rose
by 24 % in 2012 compared to 2011, and the positive trend continued in
2013. Compared to the year before, footfall declined slightly in the first
six months of 2013, but rose again from August 2013. Revenue in the
centre increased to index 104 from 2012 to 2013.
Major tenants: Tommy Hilfiger, Nike, Adidas, Benetton, Tom Tailor, Ecco,
Gant, Lacoste, Levi Strauss & Co., Esprit.
130
120
As previously mentioned, TK Development conditionally sold its 75 %
stake in the outlet centre to Meyer Bergman in February 2014, after the
reporting date. The selling price for the entire property amounts to EUR
71.5 million. The sale is contingent on the final financing arrangement,
which is expected to fall into place shortly. This sale generates a minor
profit compared to the carrying amount, reduces the balance sheet total by about DKK 400 million and makes a substantial contribution to the
Group’s free cash resources.
110
100
90
80
70
60
Revenue
Footfall
ASSET MANAGEMENT
GALERIA SANDECJA, SHOPPING CENTRE, NOWY SĄCZ, POLAND
Opening
Leasable area
October 2009
17,300 m², including a 5,000 m² hypermarket
Occupancy rate
Footfall 2013
96 % (Q3 2013/14: 96 %)
2.4 million
The operation of Galeria Sandecja has generally been satisfactory. Measured on the basis of figures for 2012, revenue in the centre was at index
99 and footfall at index 103 in 2013.
2011
2012
2013
(2011=index 100)
140
130
120
The opening of yet another shopping centre in the town at the end of
the year intensified competition in Nowy Sącz. Therefore, TK Development is focusing on initiatives to maintain and step up the current development of the centre and is attempting to attract tenants by letting
vacant premises under temporary leases. This helps boost the centre’s
activity level and dynamics and ensures full occupancy. Efforts are simultaneously being made to conclude usual long-term lease agreements for the premises.
Major tenants: Carrefour, H&M, New Yorker, Reserved, Deichmann, Douglas, Camaieu, Carry, Euro RTV AGD.
110
100
90
80
70
60
Revenue
Footfall
R I N G S T E D O U T L E T, R I N G S T E D , D E N M A R K
Opening
Leasable area
Occupancy rate
Footfall 2013
March 2008
13,200 m²
63 % (Q3 2013/14: 61 %)
1.2 million
Ringsted Outlet has been developed in a 50/50 joint venture with Miller Developments. After a long running-in period, Ringsted Outlet has
recorded pleasing progress in the past two years. Despite the difficult
letting situation and ever keener competition in the Danish retail trade
sector, Ringsted Outlet recorded renewed progress in 2013. Footfall increased about 10 % and revenue close to 14 % compared to the year
before.
2011
180
2012
2013
(2011=index 100)
160
Lease agreements were concluded with several new tenants during the
year, and a number of new stores opened for business in 2013, including
Superdry, Saint Tropez, Envii, Mio my Mio and Haglöfs. LEGO Wear opened
an outlet in the centre in March 2014.
140
Major tenants: Hugo Boss, Nike, Puma, Diesel, G-Star Raw, Redgreen,
Ticket to Heaven, McDonald’s, Superdry, Le Creuset, Levi’s, Sparkz,
Samsøe & Samsøe, Rosendahl, Noa Noa, Helly Hansen, Saint Tropez,
Asics, Envii, Signal.
120
100
80
60
40
20
Revenue
Footfall
ASSET MANAGEMENT
M O S T R E TA I L PA R K , C Z E C H R E P U B L I C
TK Development is developing a retail park of about 8,400 m² in the
Czech town of Most, to be built in phases. The first phase of about 6,400
m² opened in April 2009, and the current occupancy rate for this phase
is 91 % (Q3 2013/14: 91 %). One vacant rental unit remains, and efforts
are being made to let this unit. Management believes the vacant rental
unit should be let before the project can be sold.
R E TA I L P A R K , A A B E N R A A , D E N M A R K
TK Development built a retail park of approx. 4,200 m² in Aabenraa in
2009. The retail park’s occupancy rate declined from 100 % to 71 % in
mid-2013 after Biva went bankrupt and vacated its premises. The tenants in the retail park are jem & fix, Petworld, T. Hansen and Sport24.
Discussions with potential tenants for the vacant unit are ongoing.
S H O P P I N G - S T R E E T P R O P E R T Y, B R Ø N D E R S L E V, D E N M A R K
TK Development has developed retail stores of about 2,400 m2 in the
former Føtex property at Mejlstedgade in Brønderslev. The premises
have been let to Deichmann, Fitness World and Intersport. The current
occupancy rate is 93 % (Q3 2013/14: 93 %).
As described previously, Management has chosen a market
vestment property was sold in June 2013. In September 2013
focus that targets the countries expected to contribute to
another German investment property was sold at a price of
generating substantial value in future, and thus to the efficient
DKK 43.8 million, corresponding to the carrying amount.
utilization of capital resources. This means that the Group will
phase out its activities in Finland, Germany, the Baltic States
Following these sales, the Group now has two investment prop-
and Russia. The phase-out, with resulting office closures and
erties left in Germany. These properties consist of a combined
employee dismissals, is being carried out as quickly as possible,
commercial and residential rental property in Lüdenscheid in
while taking into account that all the countries in question have
western Germany and one residential rental property on the
projects that need to be handled so as to retain as much of the
outskirts of Berlin.
value of the existing portfolio as possible.
The value of these properties totalled DKK 103.2 million at 31
January 2014 against DKK 167.3 million at 31 January 2013.
Countries:
Germany, Finland, Lithuania,
Latvia and Russia
Revenue:
fected during the year; see above.
2013/14: DKK 10.4 million
(2012/13: DKK 14.4 million)
At 31 January 2014 the valuation of the property in Lüden
2013/14: DKK -17.4 million
scheid was based on a return requirement of 6.5 % p.a. calcu-
(2012/13: DKK -36.7 million)
lated on the basis of a discounted cash-flow model over a ten-
31 Jan 2014: DKK 367.7 million
year period and recognition of the terminal value in year ten.
(31 Jan 2013: DKK 425.4 million)
Part of the property has not been let, and work is proceeding on
31 Jan 2014: 2
a development plan aimed at optimizing and subsequently sell-
(31 Jan 2013: 11)
ing the whole property. Therefore, Management expects the
Gross profit/loss:
The decrease in value is primarily attributable to the sales ef-
Number of employees:
time horizon for disposing of this property to be slightly longer.
The results before tax of the discontinuing activities amounted to DKK -38.9 million in 2013/14 against DKK -53.7 million in
The valuation of the other property is based on initial sales ne-
2012/13, of which DKK -13.3 million derives from current oper-
gotiations currently being conducted with a potential investor.
ations, DKK -1.0 million from losses recognized on completed
These negotiations are based on the assumption that a cur-
sales, and DKK -24.6 million from impairment losses and value
rently vacant commercial rental unit will be relet. The Group
adjustment of remaining assets.
is negotiating with a potential tenant about the letting of this
unit, but at a rental level lower than expected and previous-
The value adjustments relate to the Group’s German invest-
ly obtained. Management considers it essential to continue
ment properties, amounting to DKK -9.5 million in 2013/14
downscaling the German activities and has therefore chosen to
against DKK -13.5 million the year before. The value adjust-
proceed with these negotiations.
ments in 2013/14 are primarily attributable to the reletting of
vacant premises at a lower rental level than expected, as well
In addition to these investment properties, the Group owns a
as initial sales negotiations in which Management considers it
share of a minor shopping centre and a few plots of land.
essential to continue downscaling the German activities.
The employees left their positions at the end of September
At 31 January 2014 the balance sheet total for the discontinu-
2013, and the branch office has closed down.
ing activities amounted to DKK 367.7 million against DKK 425.4
million at 31 January 2013, a decline of 13.6 %. DomusPro Retail
FINLAND
Park in Vilnius, which has been sold in advance, accounted for
The Group’s activities in Finland are fairly limited and, apart from
DKK 92.9 million of the balance sheet total at 31 January 2014.
a single project opportunity, comprise the projects listed below.
Floor space
subject to major uncertainty. The phase-out is progressing, and
Project
City/town
Segment
the risk exists that these activities may be phased out at a val-
Pirkkala Retail Park, phase II
Tammerfors Retail
5,400
ue lower than their carrying amount.
Kaarina Retail Park
Turku
6,600
Retail
(m²)
GERMANY
Efforts are still being made to phase out the activities as quick-
In the 2013/14 financial year, TK Development sold another
ly as possible. Management expects to wind up the remaining
two of the Group’s German investment properties. A minor in-
activities later in 2014 rather than in spring 2014, as previously
envisaged.
operator RIMI as the anchor tenant. Construction of the second
phase will start once a satisfactory occupancy level has been
The employees have left their positions, and the branch office
reached.
closed down on 31 October 2013.
Efforts are being made to phase out the remaining activities in
B A LT I C S TAT E S
the Baltic States as quickly as possible, with due consideration
The Group’s Baltic activities comprise the following projects:
paid to retaining the maximum possible value of the existing
portfolio. The phase-out of the activities will continue in the
Floor space
Project
City/town
Segment
DomusPro Retail Park
Vilnius (LT)
Retail
11,100
Milgravja Street
Riga (LV)
Residential
10,400
Ulmana Retail Park
Riga (LV)
Retail
12,500
(m²)
RUSSIA
The Group owns a minor project in Moscow, consisting of Scandinavian-style dwellings that are used for rental. Efforts will be
made to sell this project once market conditions have normal-
DomusPro Retail Park, Vilnius, Lithuania
ized.
TK Development owns a plot of land in Vilnius reserved for
building an 11,100 m² retail park. The project has been conditionally sold to BPT Baltic Opportunity Fund, which is managed
by BPT Asset Management. The project will be handed over
to the buyer once the usual commercial conditions have been
met, including those relating to project construction and letting. The selling price is based on a return requirement of 8.5 %.
The retail park will be built in two phases. Construction of the
first phase of about 7,500 m2 started in August 2013, and the
opening took place on 20 March 2014. TK Development is engaged in constructive dialogue with potential tenants, and 85
% of the first-phase premises have been let, with supermarket
DomusPro Retail Park, Vilnius, Lithuania
F I N A N C I A L TA R G E T S
To provide for sufficient future financial resources, liquidity
The covenant is expressed as follows:
targets have been formulated for the whole Group; see below.
Moreover, Management has adopted a target solvency ratio
L + K > E + O + R,
of about 40 % at group level, calculated as the ratio of equity
to total assets.
where
C O V E N A N T S R E L AT E D T O C R E D I T FA C I L I T I E S
L = The TK Development Group’s free cash resources in the
The Group has given its main banker an undertaking to com-
form of deposits with banks and the value of listed Dan-
ply with a solvency ratio covenant of minimum 30 % at group
ish government and mortgage bonds with a term to ma-
level, measured in connection with the presentation of interim
turity of less than five years.
and annual reports.
K = The TK Development Group’s amounts available on com-
LIQUIDITY COVENANT
E = The planned impact on cash resources from the projects
mitted operating credit facilities from time to time.
The Group has used covenants for quite some years. In short,
which the TK Development Group is obliged to complete
the liquidity covenant expresses that the Group’s cash re-
within six months, including the new/expanded project,
sources – to enable the Group to cover liabilities requiring sub-
taking into account committed project credit facilities
stantial liquidity - must at any time correspond to the fixed
from financial institutions and forward funding.
costs for the next six-month period, excluding funds received
O =The TK Development Group’s cash non-project-related
as proceeds from projects sold, but including project liabilities
capacity costs for the following six months less manage-
materializing within the next six months.
ment fees falling due within six months. In addition, preagreed project fees from final and binding agreements
The covenant represents a liquidity target for the whole Group
and a commitment to the Group’s main banker.
with project investors falling due within six months are to
be set off against the amount.
R = Interest accruing on the TK Development Group’s operat-
The covenant must be calculated and met before projects re-
ing credit facilities for the following six months.
quiring liquidity can be acquired and initiated.
The Group’s solvency and liquidity covenants were both met
during the year under review.
Residential Park, Bielany, Poland
3/13
4 | M anagement C ommentary
3 2 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 2
RISK ISSUES
RISK MANAGEMENT
considered.
In connection with determining TK Development’s strategy and
overall goals, the Board of Directors and Executive Board have
Economic and financial trends on the individual markets will
identified the most significant business risks and seek contin-
materially affect TK Development’s ability to realize its strat-
uously to ensure efficient risk management. In connection with
egy, and a worsening of these trends may have a material ad-
the strategy adjustment made in March 2013, the Group has
verse effect on the Group’s future development, results of op-
further strengthened its risk management by striving only to
erations, cash flows and financial position.
initiate projects based on a strict awareness that the expected
earnings will match the project’s complexity, completion time,
The most important risks for the Group, apart from general
tied-up capital and other use of resources.
risks, are described below.
The Group has a consistently strong focus on financial man-
FINANCIAL RISKS
agement, with particular emphasis on managing and optimizing
Financing and liquidity risks
loans and strengthening the financial platform. For one thing,
Having sufficient cash resources is essential for TK Develop-
the sale of TK Development’s 75% ownership interest in the
ment. Access to project financing, which has remained difficult
Fashion Arena Outlet Center in Prague, the Czech Republic, will,
for a prolonged period, poses the greatest challenge to the
when finally completed, substantially strengthen the Group’s
property sector. The Group is now experiencing an easing in
financial platform. The sale of completed projects secures fi-
project finance restraints. The options for procuring financing
nancial resources to regenerate momentum and thus realize
vary from project to project, depending on the type, location
the development potential inherent in several of the Group’s
and status of the properties concerned, including letting and
projects.
sales. When granting project finance credits, the banks continue to require relatively high borrower equity, but there also ap-
Another core element of the Group’s risk management is the
pears to be some relaxation of these requirements.
solvency and liquidity targets adopted for the Group. The Board of Directors regularly considers issues relating to
the project portfolio, properties, market conditions, financing,
IT and staffing as part of its broader assessment of potential
risks and scarcity factors.
Reports to the Board of Directors are submitted on an ongoing
financing by means of TK Development’s own financial resourc-
basis with respect to the Group’s risk issues, which also consti-
es, with due consideration for the liquidity covenants adopted
tute an important element in the decision-making basis for all
by Management.
major projects.
The Group’s short-term debt to credit institutions consists of
RISK ISSUES IN GENERAL
operating and project credits. TK Development has a general
Property market conditions in the countries in which the Group
agreement with the Group’s main banker about operating and
operates have in recent years been affected by the financial
project credits. The agreement has been extended until mid-
and economic crisis, which has resulted in lower prices on prop-
2015. In addition, the Group has entered into project-financing
erty and reduced access to financing. Particularly the Danish
agreements with various banks in Denmark and abroad. Project
market has been subject to uncertainty for a prolonged period,
credits are usually granted with different terms to maturity, de-
partly because of a weakened financial sector.
pending on the specific project.
In Management’s opinion, the market conditions are improving
Of the Group’s interest-bearing debt at 31 January 2014, credit
for the Group. The Group’s markets are characterized by expec-
facilities of DKK 0.1 billion only were due to expire prior to 31
tations for financial growth and rising consumer confidence,
January 2015. The credits are expected to be refinanced prior
although varying in strength from country to country. The ef-
to maturity or repaid in connection with the sale of projects.
fect is not yet reflected in private consumption, but growth is
anticipated in private consumption in the years to come. In this
A number of loan agreements contain provisions on cross de-
phase of the business cycle, where economic growth is on the
fault, which means that default on a loan under a loan agree-
rise, some uncertainty, although diminishing, persists in the
ment may be considered default of a number of other loan
property markets, and the decision-making process of tenants,
agreements.
investors and financing sources remains lengthy and carefully
RISK ISSUES
The Group has undertaken towards its main banker to comply
income and property prices, which could have an adverse ef-
with certain conditions (liquidity and solvency covenants). The
fect on the Group.
conditions may, among other things, restrict opportunities to
launch new business activities and in case the conditions are
Property prices and rental income
not complied with, the operating and project credit facilities
The Group is affected by price fluctuations in the various prop-
may be terminated.
erty markets in which it operates, as well as by general economic trends. Part of the Group’s project portfolio and some
Many of the Group’s loan agreements contain provisions giving
of its investment properties have thus been under earnings
the banks a discretionary option to terminate the agreement.
pressure during the financial and economic crisis. Rental levels
In such cases, maintaining financing depends on the bank’s
for part of the project portfolio have also been under pressure.
subjective assessment of the quality and profitability of the
Such fluctuations affect the value, including the selling price,
facility in question, as well as the value of the security provided
of the Group’s portfolio of land, ongoing and completed pro-
by the Group. If the Group fails to meet its commitments un-
jects, investment properties, and the potential for developing
der such agreements with its banks, the agreements risk being
new projects. Falling prices on land and property and falling
terminated. There is a risk that TK Development will not have
rental levels may have an adverse effect on the Group.
adequate capital resources to meet substantial repayment demands.
Investment properties and completed projects
The Group’s investment properties and completed projects are
If the Group is unable to obtain sufficient funding in future, or if
essentially subject to the same risks, primarily risks related to
such funding cannot be obtained on viable terms, it could have
rental conditions and property prices, and their value may de-
a material adverse effect on the Group’s future performance,
cline substantially relative to the carrying amount in the bal-
results of operations, cash flows and financial position.
ance sheet.
Interest-rate risks
Portfolio of land
The main part of the Group’s interest-bearing debt consists of
In March 2013 the Group adopted a strategy aimed at reducing
floating-rate loans. Accordingly, increasing interest rates will
the portfolio of projects not initiated (plots of land) over a two-
push up the Group’s interest expenses. An interest-rate fluc-
year period from a level of DKK 1.1 billion in March 2013 to a
tuation of 1 % will have a direct impact of about DKK 10 million
level of DKK 0.5 billion. The portfolio can be reduced by initiat-
on TK Development. In addition, rising interest rates would, all
ing development projects or selling plots of land. The risk exists
other things being equal, affect investor return requirements
that land will be sold at a value lower than its carrying amount.
and by extension real property prices.
If planned projects cannot be executed on acquired sites, it
may be necessary to make writedowns for impairment, which
Currency risks
could have a material adverse effect on the Group.
TK Development’s Danish subsidiaries operate almost exclusively in DKK, while the foreign subsidiaries generally operate
in their local currency or alternatively EUR. As far as possible,
In March 2013 the Group decided to phase out its activities in
the Group attempts to minimize the currency risk by conclud-
Finland, Germany, the Baltic States and Russia. The phase-out,
ing related agreements in the same currency. For instance, it
with resulting office closures and employee dismissals, is be-
aims to conclude purchase and sales agreements, construction
ing carried out as quickly as possible, while taking into account
contracts and financing agreements regarding a single project
that all the countries in question have projects that need to
in the same currency. Currency fluctuations may materially
be handled so as to retain as much of the value of the existing
affect the Group’s future development, results of operations,
portfolio as possible. The timing and phase-out of the discon-
cash flows and financial position. The most important currency
tinuing activities are subject to major uncertainty. The phase-
risks are assessed to relate mainly to foreign subsidiaries’ net
out is progressing, and the risk exists that these activities may
results, intercompany balances and foreign-exchange adjust-
be phased out at a value lower than their carrying amount.
ments of the Group’s investments in foreign subsidiaries.
Agreements with tenants
BUSINESS RISKS
Apart from the risk attaching to lease agreements, which pri-
Retail trade developments
marily comprises the ability of tenants to live up to the terms
Negative developments in the retail sector, for example due
and conditions of a lease agreement, including particularly the
to economic trends or increased Internet sales, may result in
obligation to pay, there is a letting risk attaching to those of the
lower demand for retail rental premises, and thus lower rental
Group’s leases that expire while the Group owns the underlying
RISK ISSUES
investment properties/completed projects. If the Group fails
garding a project has been concluded, a number of major risks
to renew these agreements, fails to enter into new leases, or
and conditions may still be attached to the project, which could
if the agreements can be entered into only on less favourable
lead to termination of a sales agreement on account of breach
terms and conditions, it could have a material adverse effect
by one of the parties.
on the Group.
In cases where a sales agreement is concluded before all lease
Part of the Group’s rental income from tenants includes a reve-
agreements in the project have been finalized, the Group under-
nue-based share. The Group’s total rental income under these
takes a calculated risk that the remaining premises cannot be
lease agreements depends partly on the tenant’s ability to
let on terms and conditions that ensure a satisfactory return.
maintain a certain amount of revenue in the relevant premis-
The Group also assumes a counterparty risk, including with re-
es. The share of such revenue-based rent may vary consider-
spect to, but not limited to, tenants and investors.
ably depending on the nature of the brand, the store and the
products. Failure by the tenant to generate sufficient revenue
For such sold projects, construction will not be initiated until
to trigger the revenue-based share of the overall rental income
the Group expects to be able to meet the requirements from
could have a material adverse effect on the Group.
the investor which finalize the project sale. Meeting these requirements typically falls within the Group’s sphere of compe-
Development activities
tencies. If the sale cannot be completed anyway, it could have
TK Development’s primary business area is property develop-
a material adverse effect on the Group’s future performance,
ment, and the Group functions as the creative liaison between
results of operations, cash flows and financial position.
tenants, investors, architects, construction companies and
other business partners when developing projects.
Regulatory approvals
The Group’s future earnings depend on the inflow of new pro-
Projects are only initiated after a careful assessment of their
jects and consequently on the future availability of new build-
earnings potential viewed in light of project complexity, com-
ing sites and authority approvals (planning legislation, local
pletion time, tied-up capital, and other use of resources.
development plans, planning permission, etc.) concerning the
location, size and use of a property. Changes in local plans or
Where agreements with investors and contractors, for exam-
other factors that make obtaining planning permission difficult
ple, have not been brought into alignment, the Group assumes
or restrict the supply of building sites may have a material ad-
an extra project development risk in that it may have to recti-
verse effect on the Group.
fy defects or other matters that the contractor is either not
obliged or not able to address.
Compliance with time schedules
The Group bases its individual projects on overall and detailed
Agreements with investors
time schedules. Time is a crucial factor in complying with agree-
The Group’s customers on the investment side are private indi-
ments concluded with tenants and investors and a significant
viduals, property companies and institutional investors. To the
factor in ensuring that the individual projects progress accord-
extent possible, the Group seeks to reduce its tied-up capital
ing to plan and, accordingly, that the Group generates the
and risks relating to ongoing projects by applying forward fund-
earnings expected. Postponing an individual project may, for
ing from investors, which means that one or more investors un-
instance, mean that lease agreements lapse, tenants become
dertake to provide funding as project construction progresses.
entitled to compensation and, ultimately, that an investor is no
longer under an obligation to buy the project.
When concluding forward-funding agreements, the investor
and the Group come to an agreement on a well-defined project
Environmental matters
before construction starts. Subsequently, the investor has a
Before buying plots of land or existing properties for its pro-
liquidity commitment throughout the construction period and
jects, the Group assesses the contamination risk. In case of
is consulted on major decisions. These principles ensure that
known or suspected contamination, the Group may, for ex-
the Group’s risks from construction startup are largely limited
ample, include a caveat to this effect in the contract, either
to the letting risk attaching to any remaining unlet premises
requiring guarantees from the seller or possibly requiring that
and the risk of construction budget overruns.
the seller clean up the land for its future purpose or defray the
costs of such clean-up. Alternatively, the Group may decide
In agreements with institutional investors, the overriding risk
not to acquire the land or property. If the land is insufficiently
relates to the Group’s ability to deliver on time and in accord-
cleaned up or an assessed need for clean-up proves wrong, this
ance with specifications. Even though a sales agreement re-
could have an adverse effect on the Group.
RISK ISSUES
Third-party agreements
specific projects in the project portfolio with a longer time ho-
A major portion of the Group’s business consists of conclud-
rizon than three years as well as various project opportunities.
ing agreements with development partners, investors, tenants
This includes making provision for the risk that projects are not
and contractors for property development projects.
implemented and the risk that project profits fall below expectations.
Several cooperation agreements with business partners contain provisions stipulating that the Group has an obligation to
A change in the terms and assumptions for budgets and profit
inject capital into jointly owned companies or otherwise con-
forecasts, including time estimates, could result in the value
tribute to their financing. If the Group fails to meet such obli-
of the tax asset being lower than that computed at 31 Janu-
gations, including due to a lack of liquidity, the Group may be
ary 2014, which could have a material adverse effect on the
bought out by the relevant company at a reduced price or the
Group’s results of operations and financial position.
Group’s ownership interest may be diluted.
Joint taxation
Insurance risks
The Group has been jointly taxed with its German subsidiaries
The Group reviews its overall insurance plan at least once a
for a number of years. The retaxation balance in respect of the
year, and Management believes the Group has necessary and
jointly taxed German companies amounted to DKK 389.4 million
adequate insurance against all relevant and usual risks. The
at 31 January 2014. Full retaxation would trigger a tax charge
Group is not insured against loss, damage or injury caused by
of DKK 97.4 million at 31 January 2014. Tax has not been pro-
natural disasters (including floods, earthquakes, etc.), wars,
vided on the retaxation balance, because Management does
terrorist attacks, etc.
not plan to make changes in the Group that would result in full
or partial retaxation. If Management takes a different view, this
R I S K S R E L AT E D T O T H E P R E S E N TAT I O N O F
F I N A N C I A L S TAT E M E N T S
could have a material adverse effect on the Group’s future per-
When applying the Group’s accounting policies in practice, Man-
tion.
formance, results of operations, cash flows and financial posi-
agement makes a number of significant accounting estimates
and judgments that materially affect the Annual Report, par-
LEGAL RISKS
ticularly as concerns the measurement of various assets. A sig-
TK Development constantly enters into agreements with a
nificant part of the Group’s balance sheet consists of ongoing
range of contracting parties, such as investors, contractors,
and completed projects on which any indications of impairment
tenants, etc. These agreements involve opportunities and risks
are determined based on a specific assessment of each indi-
that are assessed and identified prior to contract conclusion.
vidual project, including existing project budgets and the ex-
From time to time, the Group is involved in disputes and law-
pected future development potential. If the actual course of
suits. The Group is not a party to any lawsuits that, either in-
a project deviates from the expected development, this could
dividually or collectively, are expected to materially affect the
have an adverse effect on the Group.
Group’s earnings.
TA X M AT T E R S FO R T H E G R O U P
Senior Vice President indicted by the Polish police
Deferred tax assets
In June 2006 the Senior Vice President in charge of the Group’s
A deferred tax asset of DKK 122.6 million has been recognized
Polish branch office was charged by the Polish police with irreg-
in the balance sheet at 31 January 2014. The tax asset relates
ularities related to obtaining regulatory approval (zoning per-
mainly to tax loss carryforwards in the various subsidiaries. Val-
mission) for the Polish Galeria Biala shopping centre project in
uation is based on the existing rules for carrying forward losses
Bialystok. The Polish prosecution service subsequently indicted
and joint taxation or group contributions and the assumption
the Senior Vice President, and the case is currently being tried.
that each subsidiary is a going concern. A change in the conditions and assumptions for carrying forward losses and joint
During the entire process, Group Management has been unable
taxation/group contributions could result in the value of the
to find any irregularities in connection with the project, and still
tax asset being lower than that computed at 31 January 2014.
fails to comprehend that the Senior Vice President could be involved in the alleged practices.
Management has performed the valuation of the tax asset on
the basis of available budgets and profit forecasts for a five-
If, contrary to Management’s expectations, the Senior Vice
year period. For the first three years, budgets are based on an
President is convicted, this might damage the Group’s reputa-
evaluation of specific projects in the Group’s project portfolio.
tion and thus adversely affect its activities and earnings.
For the following two years, the profit forecasts are based on
RISK ISSUES
Litigation
TK Development is currently party to the following lawsuit/arbitration case that is of relevance due to its scope:
In the summer of 2002, De Samvirkende Købmænd, a trade association of grocery retailers, filed a complaint with the Nature
Protection Board of Appeal (Naturklagenævnet) in respect of
the City of Copenhagen’s approval of the layout of the Field’s
department store. In particular, the claim asserted that the
Field’s department store is not one department store, but that
it consists of several individual stores. The Nature Protection
Board of Appeal made its decision in the matter on 19 December 2003, after which the department store layout was approved. De Samvirkende Købmænd subsequently took out a
writ against the Nature Protection Board of Appeal before the
Danish High Court. At the beginning of 2011, the High Court
gave judgment in favour of De Samvirkende Købmænd. Neither
the owner of the centre nor any company in the TK Development Group is a direct party to the case, but the High Court’s
judgment may have the effect that the Field’s department
store will have to be redesigned following negotiations with the
relevant municipal authorities. As a result of the judgment, the
owner of Field’s may have to incur the financial burden of causing the necessary changes to the building layout, and in that
connection it cannot be ruled out that a claim may be made
against the Group. Regardless of the judgment, Management
still believes the risk of this case to be negligible.
SHAREHOLDERS
S H A R E I N FO R M AT I O N
Share price development
Stock exchange
NASDAQ OMX Copenhagen
On 31 January 2014 TK Development A/S’ shares were listed
SmallCap
at a price of DKK 6.7 per share with a nominal value of DKK 1,
Index
Share capital
DKK 98,153,335
Share denomination
DKK 1
Number of shares
98,153,335
Share classes
One
Number of votes per share
One
Bearer security
Yes
Voting right restrictions
No
Share transfer restrictions
No
ISIN code
DK0010258995
equal to a market value of DKK 658 million.
The price of TK Development A/S shares developed as follows
during the year under review:
15
40
35
30
10
25
20
15
5
10
capital at 31 January 2014 (31 January 2013: 91.62 %).
January 2014
December
November
October
July
June
May
September
The registered shareholders represented 91.11 % of the share
August
at the beginning of the year to 7,231 at the end of the year.
April
The number of registered shareholders decreased from 7,396
March
0
February 2013
5
Shareholders and their holdings
0
Share price development
Volume of trading, DKKm
The table below shows the ownership structure of TK Development A/S as of today, as reported to NASDAQ OMX Copen-
Volume of trading
hagen pursuant to section 29 of the Danish Securities Trading
During the year under review, the share was traded on 248
Act.
days, with a total trading volume of DKK 250 million against
Shareholders holding more than 5 %
Ownership and vo-
DKK 154 million the year before. 11,425 trades were completed
ting interest in %
(2012/13: 4,628 trades), covering a total of 34,743,730 shares
Storm Real Estate ASA, 100 New Bond Street,
London W1S 1SP, United Kingdom
10.49 %
Dava 1 ApS, c/o Kurt Daell, Lysagervej 25,
2920 Charlottenlund, Denmark
10.02 %
Strategic Capital ApS, Islands Brygge 79 C,
2300 Copenhagen S, Denmark
9.99 %
(2012/13: 11,382,365 shares).
C A P I TA L A N D S H A R E S T R U C T U R E
TK Development A/S’ shares are not divided into several share
classes, and no shares are subject to special rights or restrictions. Each share confers one vote on the holder. TK Develop-
Henrik Østenkjær Lind, Åkrogs Strandvej 32,
8240 Risskov, Denmark
5.20 %
ment’s Articles of Association contain no restrictions governing share ownership, the number of shares that a shareholder
The table below shows a breakdown of shares held by the
may hold or share transferability. As all shareholders thus have
Board of Directors and Executive Board.
equal rights, the Board of Directors believes that the share
Change for
structure chosen is the most appropriate one.
Ownership
the year in
Number of
and voting
number of
shares *)
interest in %
shares
Niels Roth
2,575,127
2.62 %
1,871,501
Peter Thorsen
4,192,220
4.27 %
3,431,840
Pedersen
652,186
0.66 %
372,678
loan capital and thus maximizing the return for the Company’s
Arne Gerlyng-Hansen
104,533
0.11 %
59,733
shareholders. In Management’s opinion, the present capital and
9,815,033
9.99 %
5,660,416
10,300,216
10.49 %
5,895,009
Board of Directors:
Per Søndergaard
Kim Mikkelsen
Morten E. Astrup
Frede Clausen
568,023
0.58 %
324,584
Robert Andersen
326,667
0.33 %
211,667
28,534,005
29.07 %
17,827,428
Executive Board:
Total
*) The holdings include all shares held by all members of the entire household as well
The Company’s Management reviews the Group’s capital structure on a regular basis, as well as the need for any adjustments.
Management’s overall aim is to provide a capital structure that
supports the Group’s earnings potential, while at the same
time ensuring the best possible relation between equity and
share structure fulfils this aim.
SHAREHOLDERS’ AGREEMENTS
Management is not aware of any shareholders’ agreements
that have been concluded between TK Development A/S’
shareholders.
as companies controlled by the above-named persons.
SHAREHOLDERS
R U L E S R E G A R D I N G A LT E R AT I O N S T O T H E
C O M PA N Y ’ S A R T I C L E S O F A S S O C I AT I O N
deduction for dividends, has been fixed at DKK 20.2 in the first
The Articles of Association of TK Development A/S can only be
in the third window.
exercise window, DKK 20.8 in the second window and DKK 21.8
altered following a resolution adopted at a General Meeting in
compliance with the Danish Companies Act. Requests for the
The main condition for exercising these warrants is that the
inclusion of a specific proposal in the agenda of the Annual
employee has not given notice to terminate his or her employ-
General Meeting shall be submitted in writing by shareholders
ment before having exercised the warrants allocated.
to the Board of Directors. If the request is submitted no later than six weeks before the date of the General Meeting, the
The Group’s total expenses for the incentive scheme amount to
shareholder is entitled to have the proposal included in the
DKK 2.0 million, being charged to the income statement over a
agenda. If the Board of Directors receives the request later
period of 35 months.
than six weeks before the Annual General Meeting, the Board
of Directors will determine whether the request has been made
Number of warrants
2011 scheme
sufficiently early to permit its inclusion in the agenda.
Board of Directors
At a General Meeting, resolutions can only be adopted in re-
0
Executive Board:
spect of business included in the agenda and any proposed
Frede Clausen
86,636
amendments. If proposals to alter the Articles of Association
Robert Andersen
86,636
are to be considered at a General Meeting, the essentials of
Other executive staff
442,189
such proposals must be stated in the convening notice. A pro-
Total
615,461
posed resolution to alter the Company’s Articles of Association
is subject to the proposal being adopted by at least two-thirds
DIVIDENDS AND DIVIDEND POLICY
of the votes cast as well as of the voting stock represented at
TK’ Development’s long-term policy is to distribute a portion
the General Meeting.
of the year’s profit as dividends or alternatively via a share repurchase programme. This will always be done with due regard
SHARE-BASED INCENTIVE SCHEMES
for the Group’s capital structure, solvency, cash resources and
2011 scheme
investment plans.
In June 2011 the Board of Directors granted 125,000 warrants
to the Executive Board and 375,000 warrants to other execu-
ANNUAL GENERAL MEETING
tive staff members, a total of 500,000 warrants. Following the
The General Meeting of shareholders is the supreme authority
capital reduction and capital increase implemented in Septem-
in all corporate matters of TK Development A/S, subject to the
ber 2013, the number of warrants allocated has been adjusted
limitations provided by Danish law and TK Development A/S’
by 171,461 warrants. The number of outstanding warrants to-
Articles of Association. The Annual General Meeting must be
talled 615,461 at the reporting date.
held in the municipality where TK Development A/S’ registered
office is located sufficiently early to permit compliance with
Under the four-year warrant scheme, warrants can be exercised
the Company’s applicable time limits for the holding of General
at the earliest three years after the grant date, and any shares
Meetings and the filing of Annual Reports. General Meetings are
subscribed for are subject to an additional lock-up period of up
convened by the Board of Directors. The Annual General Meet-
to two years. Warrants comprised by the incentive scheme may
ing will be held at 3 p.m. on 30 April 2014 at Aalborg Kongres &
be exercised during three six-week windows. These six-week
Kultur Center, Radiosalen, Aalborg.
windows are placed thus:
Extraordinary General Meetings are held following a resolution
following publication of the preliminary announcement of
financial statements for the 2013/14 financial year (from
around 1 April 2014);
by the shareholders in General Meeting or the Board of Direc-
following publication of the interim report for the six-month
period ending 31 July 2014 (from around 15 September
2014); and
less than 5 % of the total share capital.
following publication of the preliminary announcement of
financial statements for the 2014/15 financial year (from
around 1 April 2015).
The subscription price per share of nominally DKK 1, before any
tors or at the request of the auditors of TK Development A/S or
at the written request of shareholders collectively holding not
All business transacted at General Meetings, with the exception of alterations to the Articles of Association or a resolution to dissolve the Company, is decided by a simple majority
of votes unless otherwise provided by current legislation; see
Article 6 of the Company’s Articles of Association.
SHAREHOLDERS
REGISTERED SHARES
RULES ON INSIDER TRADING
All shares are registered in book-entry form in accounts main-
TK Development’s Management and employees are only al-
tained in the computer system of VP Securities A/S, Weide
lowed to trade in the Company’s shares during the six-week
kampsgade 14, PO Box 4040, 2300 Copenhagen S, Denmark,
period after the publication of annual and quarterly reports
and must be held and managed through a Danish bank or other
and any other comprehensive announcements of financial re-
institution authorized to be registered as the custodian of the
sults. If Management or employees are in possession of inside
shares. The shares must be issued to named holders and may
information that may influence the pricing of TK Development’s
not be transferred to bearer.
shares, they may not trade in the shares even during the sixweek period. The Company keeps a register of the shares held
T H E B OA R D O F D I R ECTO RS ’ P OW E RS
by insiders, including any changes in their portfolios, and dis-
Powers to issue new shares
closes this information in accordance with existing legislation.
The Board of Directors is authorized to increase the share capital by issuing new shares having a total nominal value of DKK
I N V E S T O R R E L AT I O N S
63,098,573 with a pre-emptive right for the Company’s existing
TK Development aims to keep its shareholders and investors
shareholders. In 2013 the Board of Directors exercised this au-
up-to-date on all relevant matters.
thorization in respect of DKK 56,087,620, with the remaining
authorization amounting to DKK 7,010,953. The increase of the
The Company’s website, www.tk-development.com, includes
share capital can be implemented against cash payment only.
all company announcements issued for the past five years,
updated share prices and information about the Group’s pro-
Moreover, the Board of Directors is authorized to increase the
jects in progress. When investor presentations are published
Company’s share capital by one or more issues during the pe-
in connection with the announcement of annual and half-year
riod ending on 30 June 2015 by up to nominally DKK 659,818,
financial results, they are also made available at the Company’s
without any pre-emptive rights for the Company’s existing
website.
shareholders. This authorization is to be used for implementing
the capital increases resulting from the exercise of warrants
Moreover, there is a direct link from TK Development A/S’
under the existing incentive scheme.
website to the NASDAQ OMX Copenhagen website (www.nasdaqomxnordic.com), which contains further information about
The authorization for the Board of Directors to subscribe for
the TK Development A/S share. Reference is also made to the
capital amounts to 7.8 % of the Company’s share capital.
description of corporate governance at the Company’s website,
www.tk-development.com.
Treasury shares
At the Annual General Meeting on 25 May 2010, the Board of
Financial calendar
Directors was authorized, on behalf of the Company, to acquire
Annual Report 2013/14
8 April 2014
treasury shares having a nominal value of not more than 10
Annual General Meeting
30 April 2014
% of the share capital in order to optimize the Group’s capital
Interim Report Q1 2014/15
13 June 2014
Interim Report H1 2014/15
12 September 2014
structure. The authorization is valid for a period of five years
from the adoption of the resolution at the Annual General
Meeting.
Interim Report Q1-Q3 2014/15
17 December 2014
Preliminary announcement of financial
statements 2014/15
27 March 2015
Annual Report 2014/15
7 April 2015
Annual General Meeting
28 April 2015
Shopping centre, Jelenia Góra, Poland
C O R P O R AT E G O V E R N A N C E
TK Development’s Board of Directors and Executive Board
pay elements, wholly or in part, is longer than one financial year.
continue to focus on the recommendations for corporate governance, and the Board of Directors reassesses its policies for
T H E B OA R D O F D I R ECTO RS
compliance with the recommendations at least once a year. In
Composition and rules regarding appointments and replace-
a few areas, the Company does not comply with the recommen-
ments
dations, but instead provides an explanation of its reasons for
According to the Articles of Association, the Board of Directors
not complying with a specific recommendation. The Board of
must be composed of not less than four nor more than seven
Directors is of the opinion that TK Development A/S lives up to
members. The Board of Directors is currently composed of six
the existing Recommendations on Corporate Governance.
members elected by the General Meeting. Management considers the composition of the Board of Directors to be appropriate
A detailed review of the Board of Directors’ policies for com-
relative to the Company’s current activities and requirements.
pliance with the recommendations issued by the Committee
In Management’s opinion, the current members of the Board of
on Corporate Governance is available at www.tk-development.
Directors have the financial, strategic and commercial exper-
com/cg_2013_14.
tise required by an international business such as TK Development. The members of the Board of Directors are elected at the
The Committee recommendations not followed are listed be-
General Meeting of shareholders to serve for a term of one year
low:
at a time. Retiring board members are eligible for re-election.
Corporate social responsibility
The Board of Directors’ competencies cover a wide spectrum,
In light of the Company’s size and activities and the Group’s
including strategic management, international relations, capi-
operating markets, the Board of Directors has decided not to
tal structure, the property sector, the retail trade, risk assess-
adopt policies for corporate social responsibility. The Board will
ment and control, investor relations, business development as
regularly assess the need for policies in this area.
well as accounting and financial expertise.
Audit committee
The professional qualifications of the members of the Board of
The Board of Directors believes that auditing is an issue that
Directors are listed individually under the heading “The Board
concerns all board members. For this reason, and given the
of Directors”.
complexity of the accounting procedures and the size of the
Board of Directors, it has been considered appropriate not to
The Board of Directors considers all its members, with one ex-
set up an actual audit committee, but to let all board members
ception, to be independent of the Company. Per Søndergaard
function jointly as the audit committee.
Pedersen is not considered independent because he was previously a member of the Company’s Executive Board and has held
a seat on the Board of Directors for more than 12 years.
Nomination committee
The Board of Directors has decided not to establish a nomination committee because, given its size, the Board of Direc-
Self-evaluation Once a year the Board of Directors systemati-
tors finds that these tasks are best handled by the Board as
cally evaluates its work and competencies with a view to con-
a whole.
tinuously improving and streamlining its work.
Content of remuneration policy
The Chairman is in charge of this internal evaluation of the
So far, the Board of Directors has decided not to set limits for
Board of Directors. To date, the Board of Directors has chosen
how high a portion of the total remuneration may be constitut-
to conduct a qualitative evaluation in the form of interviews
ed of variable components, as the amount of bonus will only be
and open, constructive dialogue with all members present at
paid if a minimum 8 % return on equity is achieved. Until further
the same time. The evaluation is based on a predetermined list
notice, the amount of bonus is expected to account for a minor
of subjects, including communication and collaboration, results
portion only relative to the fixed pay elements.
achieved compared to targets set, short- and long-term composition of the Board of Directors, and the competencies of its
As bonus is only paid if a minimum 8 % return on equity is
members as well as any need for knowledge and skills develop-
achieved for an individual financial year, the Board of Direc-
ment. Other relevant issues are considered on an ad-hoc basis.
tors assesses that the remuneration policy ensures constant
The mutual confidence of the members in each other automat-
alignment between the interests of the Executive Board and
ically leads to a free exchange of opinions, and each member is
the shareholders. It has therefore been found unnecessary to
encouraged to take an active part in discussions. If desired by
establish criteria ensuring that the vesting period for variable
any member or the Chairman, the members can be interviewed
individually on any specific subject.
The remuneration policy appears from the Company’s website,
www.tk-development.com.
The Board of Directors carried out a self-evaluation at the beginning of the financial year. The self-evaluation has promot-
Remuneration
ed the further development of the Group’s strategy, including
The remuneration of the Executive Board in 2013/14 was based
sharper focus on risk management and on improving communi-
on the guidelines adopted at the General Meeting in 2011. As
cation with the market. For instance this translated into a deci-
part of the cost cuts implemented by the Group in January
sion to change the Group’s internal and external reporting with
2012, the remuneration of the Executive Board was reduced
effect from the 2012/13 financial year.
by 20 % for a 24-month period starting on 1 February 2012.
Warrants were not granted to the Executive Board in 2013. The
Number of Board of Directors meetings
remuneration of each individual member of the Executive Board
The Board of Directors held nine board meetings in the 2013/14
appears from the Group’s Annual Report. The remuneration for
financial year.
2014/15 will also be based on the guidelines adopted at the
General Meeting in 2011, as no changes have been made to
R E M U N E R AT I O N O F T H E B O A R D O F D I R E C T O R S
these guidelines. However, a two-year agreement has been
The members of the Board of Directors are paid a fixed fee
made with the Executive Board, according to which a further
and are not covered by the Company’s bonus and incentive
20 % of the Executive Board’s annual fixed remuneration is not
schemes. No separate fee is paid for audit committee work as
paid during the term of the agreement, equal to a 36 % reduc-
all members of the Board of Directors sit on this committee.
tion compared to the remuneration paid in the 2011/12 finan-
The remuneration payable to members of the Board of Direc-
cial year. The agreement applies to the period from 1 May 2013
tors consists of a basic fee. The Chairman is paid three times
to 30 April 2015. During that period, the reduced fixed annual
the basic fee, while the Deputy Chairman is paid twice the ba-
salary will amount to DKK 2.7 million for Frede Clausen and DKK
sic fee. As part of the cost cuts previously implemented by the
2.0 million for Robert Andersen. Up to two-thirds of the remu-
Group, the basic fee for 2013/14 was reduced to DKK 160,000.
neration withheld during the two-year period will be paid when
Together with its proposal for adoption of the Annual Report for
the Group meets specific operational targets, fixed as part of
2013/14, the Board of Directors will recommend to the Annual
the previously described two-year transformation process that
General Meeting that the basic fee be maintained at the cur-
consists of realizing the initiatives adopted under the revised
rent level of DKK 160,000 for 2014/15.
strategy. Warrants will not be granted to the Executive Board
in 2014 either.
R E M U N E R AT I O N O F T H E E X E C U T I V E B O A R D
Remuneration policy
Retention and severance programmes
Every year the Board of Directors assesses and determines the
Under the Executive Board’s service agreements, the individual
remuneration payable to the Executive Board members, based
Executive Board member may give notice of termination no lat-
on the recommendation of the Chairman and Deputy Chairman.
er than three months after the occurrence of an extraordinary
The overall pay package and its composition are determined by
event (change of control), such termination to take effect 12
the results achieved, the Executive Board’s competencies and
months after notice has been given. The Executive Board mem-
the Board of Directors’ wish to ensure that the Company can
ber may demand to be released from his or her duties during
continue to attract, retain and motivate qualified executives.
the period of notice, with the usual remuneration being payable
In this connection, the Board of Directors takes the Company’s
during such period.
situation and general development into account. Every year,
the Board of Directors reviews the remuneration payable to the
The Executive Board members are not subject to any other spe-
Executive Board by comparing it to that payable to executive
cial severance terms. The term of notice for Executive Board
boards of other comparable companies with international ac-
members is 12 months on the part of the Company and six
tivities.
months on the part of the member.
The Executive Board’s remuneration consists of a fixed and a
It is company policy to ensure that Executive Board members
variable portion. The variable remuneration consists of a short-
have an incentive to work dedicatedly in the interests of the
term and a long-term incentive scheme. The overall pay pack-
Company and its shareholders in the event of a merger, take-
age consists of a fixed salary, bonus, defined-contribution pen-
over bid or other extraordinary situations. Against this back-
sion of 2 % of the basic salary and other benefits, including a
ground, the Board of Directors may decide, on the basis of a
company-provided car, telephone, IT solution and newspaper,
specific assessment, to pay a retention bonus whereby Exec-
as well as health insurance and warrants.
utive Board members receive a special consideration, however,
not exceeding 12 months’ fixed salary, for example in the event
that the Company merges with another company or if another
company takes over all the Company’s activities, subject to the
General Meeting’s approval.
To enhance the employees’ level of competencies, the Company is in regular dialogue (at least once a year) with the
individual employees. This dialogue forms the basis for the
employee’s further education and supplementary personal/
professional development as well as discussions about career options.
AUDIT COMMITTEE
The Board of Directors believes that auditing is an issue that
The policy aims were fulfilled in the 2013/14 financial year.
concerns all board members. For this reason, and given the
ered appropriate not to set up an actual audit committee, but
S TAT U T O R Y A N N U A L C O R P O R AT E G O V E R N A N C E S TAT E M E N T
to let all board members function jointly as the audit commit-
TK Development has chosen to present its Statutory Annual
tee. The terms of reference of the audit committee have been
Corporate Governance Statement on its website instead of in
laid down, and, basically, four meetings are held each year.
the Management Commentary.
The Company website contains information about the most
The Corporate Governance Statement is available at www.
important activities during the year, the number of audit com-
tk-development.com/cgs_13_14.
complexity of the accounting procedures, it has been consid-
mittee meetings held and the terms of reference of the audit
committee.
S TAT U T O R Y A N N U A L S TAT E M E N T O N D I V E R SITY
The Board of Directors has adopted a policy to ensure diversity.
For more details about the policy and the status on fulfilment
of the policy aims, please see below.
Top management level
At the beginning of the financial year, Management adopted a
goal of having about 20 % women on the Board of Directors by
2016, equal to at least one member. This goal has been set in
light of the acknowledgment that TK Development operates in
a male-dominated sector. At present there are no women on
the Board of Directors.
Other managerial levels in the Group
At the beginning of the financial year, Management also adopted a policy of increasing the share of women at other managerial levels in the Group. In drawing up this policy, Management
took into consideration that the limited size of the organization
and its division into units operating in different countries with
relatively few employees in each country mean that the Group
is largely compelled to focus on knowledge, competencies and
experience when recruiting and promoting employees.
The policy comprises the following key elements:
TK Development acknowledges the importance of the diversity of the Company’s staff.
The Company must provide equal opportunities to both genders when recruiting and promoting employees.
As far as possible, the Company should strive to fill vacant
positions internally before offering them externally.
When recruiting employees for executive or mid-management positions, the Company strives to consider at least
one female candidate.
S TAT U T O R Y A N N U A L C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y S TAT E M E N T
In addition to carrying on profitable business activities, TK Development intends to adhere to and expand the Group’s ethical,
social and environmental responsibilities as a business corporation.
TK Development fundamentally endorses the UN’s ten social
responsibility principles, but has not acceded to the UN Global
Compact.
In light of the Company’s size and activities and the Group’s
operating markets, the Board of Directors has decided not to
adopt policies for the voluntary integration of corporate social
responsibility or human rights and climate policies. The Board
will regularly assess the need for policies in this area.
THE BOARD OF DIRECTORS
Name
Took office
Re-election
Birthday
Independence 1)
Niels Roth (Chairman)
2007
April 2014
July 1957
Independent
Peter Thorsen (Deputy Chairman)
2012
April 2014
March 1966
Independent
Per Søndergaard Pedersen
2002
April 2014
March 1954
Not independent 2)
Arne Gerlyng-Hansen
2013
April 2014
March 1956
Independent
Kim Mikkelsen
2013
April 2014
October 1968
Independent
Morten E. Astrup
2013
April 2014
July 1975
Independent
1)
See section 3.2.1 in the Recommendations on Corporate Governance prepared by NASDAQ OMX Copenhagen.
2)
Has served on the Board of Directors for more than 12 years and was previously a member of the Company’s Executive Board.
N I E L S R O T H
PETER THORSEN
Chairman of the Board of Directors
Deputy Chairman
Born
Born
July 1957
March 1966
Joined the Board of Directors 2007
Term of office ends
Term of office ends
April 2014
Education
1983
Education
MSc (Economics).
1992
Employment
1989-2004 CEO of Carnegie Bank, and Group Head of Investment Banking in the Carnegie Group (2001-2002).
1997-2004 Member of the Danish Securities Council.
2001-2004 Chairman of the Danish Securities Dealers’ Association.
Special competencies
Financial markets, capital structure, investment, accounting, investor
relations.
MSc (Business Administration and Auditing).
Employment
1992-1994 Accountant, More Stevens.
1994-1997 Marketing Manager, Group CFO & International Controller,
KEW Industri A/S.
1997-1997 Finance Manager, Electrolux Hvidevarer A/S.
1997-1998 Finance Manager, Marwi International A/S (Incentive A/S).
1998-2000 CEO, Basta Group A/S.
2001-2005 CEO, Bison A/S.
2005-2008 CEO, Louis Poulsen Lighting A/S.
Executive Board member
Zira Invest II ApS; Zira Invest III ApS.
2007-2008 Group Chief Executive, Targetti Poulsen.
2008-
Fast Ejendom Danmark A/S; Friheden Invest A/S; Investeringsforeningen
SmallCap Danmark; Porteføljeselskab A/S; SmallCap Danmark A/S.
Member of the Board of Directors
Arvid Nilssons Fond; A/S Rådhusparken; A/S Sadolinparken; Realdania.
Board committees and other posts
None.
April 2014
CEO, Kirk & Thorsen Invest A/S.
Strategic management, accounting and finances, business development.
EBP Ejendomme A/S; EBP Holding A/S; Kirk & Thorsen A/S; Kirk & Thorsen Invest A/S; Modulex Holding ApS; SE BLUE RENEWABLES DK ApS; SE
BLUE RENEWABLES DK 2 ApS; SE BLUE RENEWABLES GP ApS.
Biblioteksmedier A/S; Modulex A/S; Ravn Arkitektur A/S; Starco Europe
A/S.
BoConcept A/S (Deputy Chairman); BoConcept Holding A/S (Deputy Chairman); Careitec A/S; EBP Holding A/S; Kirk & Thorsen A/S; Kirk
& Thorsen Invest A/S; Ny Droob ApS; Rotationen Nykøbing F. A/S; SE
BLUE RENEWABLES DK P/S; SE BLUE RENEWABLES DK 2 P/S; SE BLUE
RENEWABLES K/S.
Chairman of the Executive Committee, Sct. Maria Hospice.
PER SØNDERGAARD PEDERSEN
Born
March 1954
A R N E G E R LY N G - H A N S E N
Born
March 1956
Term of office ends
Term of office ends
April 2014
April 2014
Education
Education
Trained with Sparekassen Nordjylland (Spar Nord Bank).
1981 Law graduate from the University of Copenhagen.
1984 Attorney-at-law.
Employment
1983-1986 Head of the business department at Sparekassen Nordjylland headquarters, Østeraa branch.
1986-1989 Regional manager, Sparekassen Nordjylland, Hasseris
branch.
1989-2002
CEO, TK Development A/S.
Retail trade, property sector, financial markets, business development,
investor relations.
A.S.P. Ejendom ApS; JA Plastindustri Holding A/S; PSP Holding ApS;
PSPSH Holding ApS.
AG I A/S; Arne Andersen A/S; Athene Group A/S; Bjørk & Maigård Holding
ApS; Conscensia A/S; Conscensia Holding A/S; dansk boligstål a/s; EIPE
Holding A/S; GLC Management Invest ApS; Global Car Leasing A/S; Global
Car Splitleasing A/S; Ib Andersen A/S; Ib Andersen A/S Øst; Ib Andersen
Ventilation A/S; J.A. Plastindustri A/S; K/S Waren; Lindgaard A/S – Rådgivende Ingeniører F.R.I.; Nowaco A/S; P.J. Skovværktøj ApS; Restaurant
Fusion A/S.
Arkitekterne Bjørk & Maigård ApS; Discovery A/S; Ejendomsmægleraktieselskabet Thorkild Kristensen; Ejendomsmægleraktieselskabet Thorkild
Kristensen Bolig; Ejendomsmægleraktieselskabet Thorkild Kristensen,
Blokhus; Ejendomsmægleraktieselskabet Thorkild Kristensen Erhverv;
Ejendomsselskabet Albanigade 23 A/S; Ejendomsselskabet Dampmøllen A/S; Ejendomsselskabet Skøjtehallen A/S; Exclusive Travel Collection ApS; Homekit A/S; Investeringsforeningen SmallCap Danmark; JA
Plastindustri Holding A/S; K/S Danske Dagligvarebutikker; MBC Gruppen
A/S; Peacock A/S; PL Holding Aalborg A/S; P L Invest, Aalborg ApS; Porteføljeselskab A/S; Remergy A/S (Deputy Chairman); SmallCap Danmark
A/S; ST Holding Aalborg A/S; Systemteknik A/S (Deputy Chairman); Sømoseparken A/S; Tech2Tech ApS; Tom Anton Andersen Reklamebureau
A/S; Tom Anton Holding A/S; Ungbo Danmark A/S; Wahlberg VVS A/S.
None.
Employment
1981-1983 The law office of Advokaterne Amaliegade 4, Copenhagen
K.
1983-2004 The law office of Nielsen Nørager, Frederiksberggade 16,
Copenhagen K.
1985-1992 Tutor and associate professor in the law of obligations at
the University of Copenhagen.
2004- CEO of Harald Nyborg A/S.
Retail trade, law, management and business development.
Arpema ApS; Arpema Holding ApS; ApS KBUS 8 NR. 2454; Dacabo-HN
Komplementarselskab; Dava 1 ApS; Dava Holding ApS; Divan 6 A/S; Ejby
Industrivej 3-29 A/S; Harald 1 ApS; Harald Fix A/S; Harald Glostrup Komplementaranpartsselskab; Harald Nyborg A/S; Harald Slagelse Komplementaranpartsselskab; Harald-Gladsaxe Komplementaranpartsselskab;
HN Research Holding A/S; K/S Harald Skåne I; Komplementarselskabet
Skerrisvej, Brande; Lady & Kid A/S; Skerris Holding A/S.
Habro a/s; Habro Finans a/s; Habro Fondsmæglerselskab a/s; Habro
Fund Management a/s; Habro Holding ApS.
A/S Daells Bolighus; ApS KBUS 8 NR. 2454; Bernstorff Slot ApS (Deputy
Chairman); Company Water A/S; Company Water International A/S; Dacabo-HN Komplementarselskab; Danish Bottling Company A/S; Dava 1
ApS; Dava Holding ApS; Divan 6 A/S; Ejby Industrivej 3-29 A/S; Harald 1
ApS; Harald 2000 A/S; Harald Auto A/S; Harald Fix A/S; Harald Glostrup
Komplementaranpartsselskab; Harald Nyborg Byggeselskab ApS; Harald
Parat I Komplementarselskab; Harald Research A/S; Harald Skåne I ApS;
Harald Slagelse Komplementaranpartsselskab; Harald-Gladsaxe Komplementaranpartsselskab; HN Research Holding A/S; jem & fix A/S; K/S
Dacabo; K/S Fraugde; K/S Harald Gladsaxe; K/S Harald Glostrup; K/S Harald Parat I; K/S Harald Skåne I; K/S Harald Slagelse; K/S Lady & Kid; K/S
Skerrisvej, Brande; Kid-Holding ApS; Komplementarselskabet Skerrisvej,
Brande; Lady & Kid A/S; Skerris Holding A/S; W. Homann A/S.
Member of Sydbank’s Committee of Representatives and of Community
Council Funen.
KIM MIKKELSEN
Born
MO RT E N E . AST RU P
October 1968
Born
July 1975
Term of office ends
Term of office ends
April 2014
Education
April 2014
Education
1989 Savings bank school 1
1991 Savings bank school 2
1990-1992 GCSE examinations, Institute Le Rosey, Rolle-Gstaad, Switzerland.
1991-1994 Graduate Diploma studies (Financing)
1992-1994 International Baccalaureate, Berg Videregående Skole,
Norway.
1998 Employment
1994-1997 Swiss Bank Corp. – Head of Nordic Fixed Income Trading.
1997-1999 RBS Greenwich Capital - Director, Proprietary Trading.
1999-2002 SEB MERCHANT BANKING - Head of Mortgage Risk & Trading.
2003-2009 Nordic Asset Management A/S - CIO and majority owner.
Financial affairs, investment and management.
Employment
1997 Financial Director, InfoStream ASA, Oslo.
1997-2000 Financial Adviser, Ørn Rådgivning AS, Oslo.
1997-2006 Portfolio Manager, Ørn Norden AS, Oslo.
2006- Executive Board member
København Håndbold A/S; Nordic Sports Management ApS; Nordic Wine
Invest ApS; Proinvestor ApS; Strategic Capital ApS; Strategic Investments A/S; Strategic Venture Capital ApS.
Exchange programme at City University, London.
1995-1999 Norwegian School of Management, Sandvika, Norway. Specialized in shipping - worked full time from 1997 while completing studies.
Founding partner and CIO, Storm Capital Management Ltd.,
London.
Real estate investments, financing and business development.
None.
None.
FC Fredericia ApS; Genobiotix ApS; Innogie ApS; København Håndbold
A/S; NTR Holding A/S; Proinvestor ApS; Storm Real Estate ASA, Norway;
Strategic Investments A/S.
Member of the Committee of Representatives, Fynske Bank; member of
the audit committee, Storm Real Estate ASA, Norway.
Aconcagua Management Ltd., Bermuda; Neptune Properties AS, Norway;
Polar Boligutvikling AS, Norway; Storm Bond AS, Norway; Storm Bond
Fund SICAV, Luxembourg; Storm Nordic Fund SICAV, Luxembourg; SurfSide Holding AS, Norway; SurfSide Ventures Ltd., British Virgin Islands;
Svalbard Adventure Group AS, Norway.
Bjørgvin AS, Norway; Pactum AS, Norway; Storm Capital Management
Ltd., UK; Storm Real Estate ASA, Norway (Deputy Chairman); Ørn Norden
AS, Norway.
None.
THE EXECUTIVE BOARD
FREDE CLAUSEN
RO B E RT A N D E RS E N
President and CEO
Born on 30 July 1959
Member of the Executive Board of TK Development A/S since 1992
Born on 3 April 1965
Member of the Executive Board of TK Development A/S since 2002
Frede Clausen Holding ApS.
Ringsted Outlet Center P/S *; Ringsted Retail Company ApS *; Palma
Ejendomme A/S; PE Skagen ApS.
Ahlgade 34-36 A/S *; Ringsted Outlet Center P/S *; SPV Ringsted ApS *; Step Re CSP Invest I A/S *; Udviklingsselskabet Nordkranen A/S *.
Euro Mall Luxembourg JV S.à r.l. *; Euro Mall Ventures S.à r.l. *; Kommanditaktieselskabet Danlink-Udvikling *; Komplementarselskabet DLU ApS
*; K/S Købmagergade 59, st.; Palma Ejendomme A/S; PE Skagen ApS.
None.
None.
Ahlgade 34-36 A/S *; Kommanditaktieselskabet Danlink-Udvikling *;
Kommanditaktieselskabet Østre Havn *; Komplementarselskabet DLU
ApS *; Ringsted Outlet Center P/S *; SPV Ringsted ApS *; Udviklingsselskabet Nordkranen A/S *; Østre Havn Aalborg ApS *; Palma Ejendomme
A/S; PE Skagen ApS.
None.
*) The companies form part of the TK Development Group and are partly owned, directly or indirectly, by TK Development A/S.
S TAT E M E N T B Y T H E B O A R D O F D I R E C T O R S A N D E X E C U T I V E B O A R D O N T H E A N N U A L R E P O R T
The Board of Directors and Executive Board have today con-
Moreover, we consider the Management Commentary to
sidered and adopted the Annual Report of TK Development
give a fair presentation of the development in the Group’s
A/S for the financial year from 1 February 2013 to 31 Janu-
and Company’s activities and financial affairs, the results
ary 2014.
for the year and the Company’s and Group’s overall financial
position, as well as a true and fair description of the most
The Annual Report is presented in accordance with the In-
significant risks and elements of uncertainty faced by the
ternational Financial Reporting Standards (IFRS), as adopted
Company and the Group.
by the EU, and in accordance with Danish disclosure requirements for annual reports prepared by listed companies.
We recommend that the 2013/14 Annual Report be adopted
by the Annual General Meeting of shareholders.
In our opinion, the consolidated financial statements and
parent financial statements give a true and fair view of the
Group’s and Company’s financial position at 31 January 2014
and of the results of the Group’s and Company’s operations
and cash flows for the financial year from 1 February 2013
to 31 January 2014.
Aalborg, 2 April 2014
EXECUTIVE BOARD
Frede Clausen
Robert Andersen
President and CEO
B OA R D O F D I R ECTO RS
Niels Roth
Peter Thorsen
Chairman
Deputy Chairman
Per Søndergaard Pedersen
Arne Gerlyng-Hansen
Kim Mikkelsen
Morten E. Astrup
S tatement by t h e S upervisory and E xecutive B oards | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 4 9 / 5 6
INDEPENDENT AUDITOR’S REPORT
The Annual Report has been provided with the following Au-
and parent financial statements. The procedures selected depend on
ditors’ Report:
the auditor’s judgement, including the assessment of the risks of material misstatements of the consolidated financial statements and par-
”To the shareholders of TK Development A/S
Report on the consolidated financial statements and
parent financial statements
ent financial statements, whether due to fraud or error. In making those
We have audited the consolidated financial statements and parent finan-
nancial statements that give a true and fair view in order to design audit
cial statements of TK Development A/S for the financial year 1 February
procedures that are appropriate in the circumstances, but not for the
2013 - 31 January 2014, which comprise the income statement, state-
purpose of expressing an opinion on the effectiveness of the entity’s
ment of comprehensive income, balance sheet, statement of changes
internal control. An audit also includes evaluating the appropriateness
in equity, cash flow statement and notes, including the accounting pol-
of accounting policies used and the reasonableness of accounting esti-
icies, for the Group as well as for the Parent. The consolidated financial
mates made by Management, as well as the overall presentation of the
statements and parent financial statements are prepared in accordance
consolidated financial statements and parent financial statements.
risk assessments, the auditor considers internal control relevant to the
entity’s preparation of consolidated financial statements and parent fi-
with International Financial Reporting Standards as adopted by the EU
and Danish disclosure requirements for listed companies.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Management’s responsibility for the consolidated financial stateOur audit has not resulted in any qualification.
ments and parent financial statements
Management is responsible for the preparation of consolidated financial
statements and parent financial statements that give a true and fair
Opinion
view in accordance with International Financial Reporting Standards as
In our opinion, the consolidated financial statements and parent finan-
adopted by the EU and Danish disclosure requirements for listed com-
cial statements give a true and fair view of the Group’s and the Parent’s
panies and for such internal control as Management determines is nec-
financial position at 31 January 2014, and of the results of their opera-
essary to enable the preparation and fair presentation of consolidated
tions and cash flows for the financial year 1 February 2013 - 31 January
financial statements and parent financial statements that are free from
2014 in accordance with International Financial Reporting Standards as
material misstatement, whether due to fraud or error.
adopted by the EU and Danish disclosure requirements for listed companies.
Auditor’s responsibility
Our responsibility is to express an opinion on the consolidated financial
Statement on the management commentary
statements and parent financial statements based on our audit. We
Pursuant to the Danish Financial Statements Act, we have read the man-
conducted our audit in accordance with International Standards on Au-
agement commentary. We have not performed any further procedures in
diting and additional requirements under Danish audit regulation. This
addition to the audit of the consolidated financial statements and par-
requires that we comply with ethical requirements and plan and perform
ent financial statements.
the audit to obtain reasonable assurance about whether the consolidated financial statements and parent financial statements are free from
On this basis, it is our opinion that the information provided in the man-
material misstatement.
agement commentary is consistent with the consolidated financial
statements and parent financial statements.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated financial statements
Aalborg, 2 April 2014
Copenhagen, 2 April 2014
NIELSEN & CHRISTENSEN
DELOITTE
Statsautoriseret Revisionspartnerselskab
Statsautoriseret Revisionspartnerselskab
Johny Jensen
Marian Fruergaard
René H. Christensen
Jan Bo Hansen
State-authorized
State-authorized
State-authorized
State-authorized
public accountant
public accountant
public accountant
public accountant”
5 0 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | I ndependent auditor ’ s report
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
I N C O M E S TAT E M E N T
DKKm
2013/14
Net revenue
External direct project costs
2012/13
407.0
632.3
-228.2
-734.0
-14.9
-37.8
Gross profit/loss
163.9
-139.5
Other external expenses
27.2
30.2
Staff costs
63.8
69.2
Total
91.0
99.4
Profit/loss before financing and depreciation
72.9
-238.9
Depreciation and impairment of non-current assets
1.4
2.2
71.5
-241.1
Income from investments in associates
-4.1
2.5
Financial income
5.5
5.6
Financial expenses
-107.9
-93.0
Total
-106.5
-84.9
-35.0
-326.0
Tax on profit/loss for the year
14.0
167.3
-49.0
-493.3
Earnings per share (EPS)
-0.7
-8.5
Diluted earnings per share (EPS-D)
-0.7
-8.5
-49.0
-493.3
-11.2
6.1
-2.3
3.1
EARNINGS PER SHARE IN DKK
C O M P R E H E N S I V E I N C O M E S TAT E M E N T
Items that may be re-classified, to profit/loss:
Foreign-exchange adjustments, foreign operations
Value adjustments of hedging instruments
Tax on other comprehensive income
Other comprehensive income for the year
Comprehensive income statement for the year
7.0
-3.5
-6.5
5.7
-55.5
-487.6
C onsolidated financial statements | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | T K D E V E LO PM E N T A / S | 5 1 / 5 6
BALANCE SHEET
DKKm
31 Jan 2014
31 Jan 2013
Goodwill
33.3
33.3
Intangible assets
33.3
33.3
Other fixtures and fittings, tools and equipment
1.4
2.5
Property, plant and equipment
1.4
2.5
411.7
479.4
ASSETS
Non-current assets
Investment properties under construction
24.2
16.9
435.9
496.3
Investments in associates
2.6
1.7
Receivables from associates
4.6
4.6
Other securities and investments
0.3
0.8
Financial assets
7.5
7.1
Deferred tax assets
122.6
127.0
Other non-current assets
122.6
127.0
Non-current assets
600.7
666.2
2,986.0
3,030.9
Trade receivables
54.1
73.2
Receivables from associates
12.0
19.0
Current assets
Projects in progress or completed
Corporate income tax receivable
1.7
4.0
Other receivables
77.2
122.4
Prepayments
17.8
22.4
162.8
241.0
Receivables
Other securities and investments
4.0
4.3
Deposits in blocked and escrow accounts
47.4
35.7
Cash and cash equivalents
38.7
31.2
Current assets
3,238.9
3,343.1
ASSETS
3,839.6
4,009.3
5 2 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | C onsolidated financial statements
BALANCE SHEET
DKKm
31 Jan 2014
31 Jan 2013
98.2
631.0
EQUITY AND LIABILITIES
Equity
Share capital
Other reserves
587.7
5.3
Retained earnings
867.8
753.4
1,553.7
1,389.7
108.0
102.2
Equity
Liabilities
Credit institutions
Provisions
Deferred tax liabilities
Other debt
Non-current liabilities
Credit institutions
Trade payables
0.0
2.3
35.0
35.0
0.0
1.5
143.0
141.0
1,881.6
2,189.1
95.3
106.3
Corporate income tax
6.5
5.0
Provisions
9.6
13.1
139.0
150.2
Other debt
Deferred income
10.9
14.9
Current liabilities
2,142.9
2,478.6
Liabilities
2,285.9
2,619.6
EQUITY AND LIABILITIES
3,839.6
4,009.3
S TAT E M E N T O F C H A N G E S I N E Q U I T Y
Other
Retained
Share capital
reserves
earnings
Total equity
631.0
139.8
1,105.6
1,876.4
0.0
0.0
-493.3
-493.3
0.0
5.7
0.0
5.7
Total comprehensive income for the year
0.0
5.7
-493.3
-487.6
Special reserve transferred to distributable reserves
0.0
-140.2
140.2
0.0
Share-based payment
0.0
0.0
0.9
0.9
631.0
5.3
753.4
1,389.7
0.0
0.0
-49.0
-49.0
0.0
-6.5
0.0
-6.5
Total comprehensive income for the year
0.0
-6.5
-49.0
-55.5
-588.9
588.9
0.0
0.0
56.1
0.0
0.0
56.1
Premium on capital increase
0.0
174.4
0.0
174.4
Costs of share issue
0.0
-11.6
0.0
-11.6
Premium on capital increase transferred to distributable reserves
0.0
-162.8
162.8
0.0
Share-based payment
0.0
0.0
0.6
0.6
98.2
587.7
867.8
1,553.7
DKKm
Equity at 1 February 2012
Equity at 31 January 2013
Capital decrease
Capital increase
Equity at 31 January 2014
5 4 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | C onsolidated financial statements
C A S H F L O W S TAT E M E N T
DKKm
2013/14
2012/13
71.5
-241.1
Adjustments for non-cash items:
14.9
37.8
Depreciation and impairment
-7.5
290.1
Share-based payment
0.6
0.9
-5.6
0.4
-12.8
7.5
Increase/decrease in investments in projects, etc.
60.5
139.9
Increase/decrease in receivables
81.9
22.4
Provisions
Foreign-exchange adjustment
Changes in deposits on blocked and escrow accounts
-11.7
9.5
Increase/decrease in payables and other debt
-22.6
-61.1
Cash flows from operations
169.2
206.3
-119.8
-142.9
Interest paid, etc.
Interest received, etc.
5.3
4.3
Corporate income tax paid
0.9
-22.1
Cash flows from operating activities
55.6
45.6
Investments in equipment, fixtures and fittings
-0.2
-0.2
Sale of equipment, fixtures and fittings
0.0
0.4
Investments in investment properties
-9.1
-11.3
Sale of investment properties
54.3
17.3
Dividend from associates
Purchase of securities and investments
Sale of securities and investments
Cash flows from investing activities
2.0
0.0
-0.1
-0.7
0.8
0.9
47.7
6.4
Repayment, long-term financing
0.0
-0.7
Raising of long-term financing
0.0
13.0
Raising of project financing
29.5
149.5
-342.4
-238.0
Capital increase
230.5
0.0
Costs of share issue
-11.6
0.0
Cash flows from financing activities
-94.0
-76.2
9.3
-24.2
Cash and cash equivalents, beginning of year
31.2
55.1
Foreign-exchange adjustment of cash and cash equivalents
-1.8
0.3
Cash and cash equivalents at year-end
38.7
31.2
Reduction of project financing/repayments, credit institutions
Cash flows for the year
The figures in the cash flow statement cannot be inferred from the consolidated financial statements alone.
C O M PA N Y I N F O R M AT I O N
TK Development A/S
The Annual General Meeting will be held at 3 p.m. on 30 april
CVR no.:
2014 at Aalborg Kongres & Kultur Center, Radiosalen, Europa
24256782
Plads 4, DK-9000 Aalborg.
ISIN code:
DK0010258995 (TKDV)
Municipality of registered office:
Aalborg, Denmark
Website:
www.tk-development.com
e-mail:
[email protected]
Executive Board:
Frede Clausen and Robert Andersen
Board of Directors:
Niels Roth, Peter Thorsen, Per Søndergaard Pedersen, Arne Gerlyng-Hansen,
Kim Mikkelsen and Morten E. Astrup.
Aalborg
Stockholm
Vestre Havnepromenade 7
Gamla Brogatan 36-38
DK-9000 Aalborg
S-101 27 Stockholm
T: (+45) 8896 1010
T: (+46) 8 751 37 30
Copenhagen
Vilnius
Islands Brygge 43
Gynėjų str. 16
DK-2300 Copenhagen S
LT-01109 Vilnius
T: (+45) 3336 0170
T: (+370) 5231 2222
Warsaw
ul. Mszczonowska 2
PL-02-337 Warsaw
T: (+48) 22 572 2910
Prague
Karolinská 650/1
CZ-186 00 Prague 8
T: (+420) 2 8401 1010
5 6 / 5 6 | T K D E V E LO PM E N T A / S | F I N A N C I A L S TAT E M E N T S 2 0 1 3 / 1 4 | C ompany information

1 - Euroinvestor

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