Fashion Arena – the No. 1 outlet centre in Prague

Transcription

Interim Report, H1 2014/15
Illustration:
Jelenia Góra,
Shopping centre,
Jelenia Gora, Poland
Contents
1.
The Group’s results
•
Financial highlights and key ratios
•
H1 2014/15 at a glance
2.
Execution of announced strategy
•
Strategic targets – execution of announced strategy
3.
Market conditions
4.
Project portfolio
•
Property development
•
Asset management
5.
Financial issues
6.
New sales and expectations
•
New sales
•
Expectations for 2014/15
TK Development – Interim Report, H1 2014/15 – 12 September 2014
2
1. The Group’s results
Residential Park, phase II
Bielany, Warsaw
14,800 m²
3
Financial highlights and key ratios
2010/11
(DKKm)
Financial highlights:
Net revenue
Gross profit/loss
Operating profit/loss (EBIT)
Profit/loss before tax and writedowns, etc.
Profit/loss before tax
Profit/loss
Balance sheet total
Project portfolio
Equity
73.6
1,866.0
2011/12
27.0
1,876.4
2012/13
2013/14
H1
2013/14
H1
2014/15
-493.3
330.7
102.5
10.7
-36.6
-42.8
-49.0
182.0
40.7
-6.4
-25.1
-28.0
-30.1
194.3
48.8
9.0
9.4
4.8
7.0
1,389.7
3,347.1
2,334.6
1,553.7
3,429.3
2,357.9
1,355.7
3,204.7
2,246.9
1,553.9
0.4
1,435.1
0.8
1,690.8
4.3
1,335.0
-3.4 %
46.4 %
0.4
-4.4 %
39.5 %
0.3
0.9 %
48.5 %
0.6
Cash flows for the period
Net interest-bearing debt, end of period
Key ratios:
Return on equity (ROE)
Solvency ratio (based on equity)
Price / book value
4.3 %
1.4 %
-30.2 %
0.5
0.3
0.4
Results before tax,
excluding discontinuing
activities:
DKKm
Results before tax
Tax included in
results from joint
ventures
Results of
discontinuing
activities
Total
4.8
3.9
6.3
15.0
4
Results broken down by business segment
H1
2014/15
Property
development
194.3
76.9
32.7
84.7
-
Gross profit/loss
48.8
26.7
25.7
-3.6
-
Costs, excl. depreciation and amortization
39.4
-
-
1.3
38.1
9.0
26.7
25.7
-4.9
-38.5
25.9
1.0
28.8
-
-3.9
-30.4
-3.0
-20.8
-1.4
-5.2
4.8
24.9
33.8
-6.3
-47.6
Profit/loss
Revenue
Operating profit/loss
Income from investments in joint ventures
Financing, net
Profit/loss before tax
Asset
management Discontinuing Unallocated
5
- IFRS 11 changes the Group’s accounting policies
Previous policies
New policies
Pro-rata
consolidation
Equity method
Impact on the
Group’s balance
sheet total at
31 January 2014:
DKK -492.5 million
Effect from
1 February
2014
No impact on either
the results or the
equity of the Group
6
•
Results of DKK 15.0 million before tax, excl. discontinuing activities.
•
The Group’s balance sheet total amounted to DKK 3,205 million at 31 July 2014 which is
a decline of DKK 142 million compared to 31 january 2014. The decline is caused by a
combination of the following events:
• Sale of Fashion Arena Outlet Center, Prague
• Other sales and handover of projects in the first six months of 2014/15
• New investments in joint ventures and other projects.
•
Consolidated equity totals DKK 1,554 million at 31 July 2014 DKK, corresponding to a
solvency ratio of 48.5 %.
•
Net interest-bearing debt has been reduced by DKK 100 million compared to 31
January 2014 and amounts to DKK 1,335 million at 31 July 2014.
7
•
The sale of Fashion Arena Outlet Center, Prague, the Czech Republic, was
completed in Q1 2014/15.
•
The retail park DomusPro in Vilnius was conditionally sold to BPT, and the first
phase was handed over to the investor in Q1 2014/15.
•
Handover of a few superstores in Denmark to private investors in Q1 2014/15.
•
Sale of building rights for 7,200 m² at Østre Teglgade in Copenhagen to a private
investor. Earnings from the sale will be recognized in Q2 2014/15.
•
Fee income has been received in connection with the start-up of the Group’s
shopping centre project in Jelenia Góra, Poland.
•
Sale of a share of the Group’s plot in Bytom, Poland, to Decathlon in Q2 2014/15.
The plot was sold at a loss but Decathlon contributes to boosting interest and
development potential in the area.
•
New sales, please see item 6.
8
- Construction start-up on two projects in Poland
•
Residential Park, Bielany, Warsaw, Poland
• Comprises 297 residential units and service facilities.
• Pre-construction sale started in December 2013.
• Pre-reservations have been received for 34 % of
the units.
• Construction started in June 2014.
• The residential units are being sold as owner-occupied
apartments to private users.
•
Jelenia Góra, shopping centre, Poland
• 24,400 m² shopping centre.
• Being executed as a joint venture with Heitman.
• The Group’s ownership interest comprises 30 %.
• Lease agreements for half the premises have been
concluded.
• Construction started in May 2014.
• Opening is scheduled for autumn 2015.
• TK Development will receive fee income from the jointly
owned company for developing, letting and managing
construction of the centre.
Residential Park, Bielany
Shopping centre, Jelenia Góra,
9
- BROEN, shopping centre, Esbjerg, Denmark
•
TK Development is planning to construct a new shopping
centre of about 29,800 m² in Esbjerg.
•
A building permit has been granted for the project.
•
Before construction can start, the project must undergo a
validation and approval procedure to ensure safe railway
operations, etc.
•
The validation process is expected to be completed in autumn
2014, thus allowing construction to start up immediately
afterwards.
•
Discussions are being held with PFA regarding the sale of a
share of the project at its current stage.
BROEN, Esbjerg
10
(2.0)
(1.1)
1,554
20
NAV
(-15.0)
180
(32.6)
Other liabilities
(1.5)
3,205
1,471
ASSETS
Credit institutions
Balance sheet total
(31.1)
155
35
Tax assets/goodwill
3,050
(1.0)
Total assets
102
(4.0)
3.684
(2.1)
Other assets
205
30
Receivables
393
DKK per share
Investments in JVs
887
25
Land
(11.9)
192
15
In progress
103
0
Investment prop.
5
1,168
10
Completed
NAV per share
at 31 July 2014
LIABILITIES
NAV
(9.0)
(-1.8)
(15.8)
11
2. Execution of announced strategy
DomusPro Retail Park
Vilnius, Lithuania
11,100 m²
12
Strategic goals
March 2013: Revision of strategy and business model, including adjustment of market
focus.
The below strategic goals were set with the aim of executing the adjustments within
a period of two years from the time of making the resolution:
The activities will be limited to Denmark, Sweden, Poland and the Czech
Republic.
The portfolio of projects not initiated (plots of land) is to be reduced from
about DKK 1.1 billion in March 2013 to about DKK 500 million.
The balance sheet is to be adjusted, with a solvency ratio of about 40 %.
Overheads are to be reduced by around 20 % relative to 2012/13.
Financing costs are to be normalized as a result of the initiatives
implemented.
13
Activities in Germany, the Baltic States, Finland and Russia are to be phased out.
Market focus on
Denmark, Sweden,
Poland and the
Czech Republic
Germany
•
The branch office in Berlin has been closed down, and the employees have
left their positions.
•
The German activities have been reduced by selling investment properties,
most recently in August 2014.
•
The Group has one remaining investment property, two minor plots of land
and a share of a minor shopping centre.
Baltic States
•
Retail park, DomusPro, Vilnius, conditionally sold to BPT, and the first phase
was handed over to the buyer in Q1 2014/15.
•
Closedown of the office awaits clarification of the next steps in respect of
the Group’s two remaining plots of land.
Finland
•
The branch office in Helsinki has been closed down, and the employees
have left their positions.
•
The Group owns two minor plots of land.
Russia
•
The Group owns a minor project in Moscow, consisting of Scandinavianstyle dwellings that are used for rental.
•
Efforts will be made to sell this project once market conditions have
normalized.
Balance sheet total –
discontinuing activities:
31 January 2013
31 July 2014
Reduction
425.4
306.0
28.1 %
14
Reduction of
portfolio of
projects not
initiated
(plots of land)
The portfolio of projects not initiated (plots of land) is to be reduced from
about DKK 1.1 billion (March 2013) to about DKK 500 million over a twoyear period.
• Reduction through the sale of land and initiation of projects.
• Progressing satisfactorily and according to plan for many of the
projects.
• For a few projects the process is taking longer than expected.
• Management believes it will still be possible to implement the
adjustment within the planned two-year period.
Cost trimming
Overheads are to be reduced by around 20 % with half of the reduction
deriving from the discontinuation of activities in Germany, the Baltic States
and Finland.
• Cost-reducing measures have been implemented. Full impact is expected
to be achieved in the course of 2014/15.
Projects not initiated:
(DKKbn)
31 Jan. 2013
1.1
31 July 2014
1.0
Reduction
13.6 %
15
Solvency ratio of
about 40 %
Lower financing
costs
The balance sheet is to be adjusted, with a solvency ratio of about 40 %.
• The target has been met, as the solvency ratio amounted to 48.5 % at 31 July
2014.
Financing costs are to be normalized as a result of the initiatives implemented.
• In connection with the implementation of the capital increase in September
2013, the Group has reached agreements for a reduction of the interest payable
on several major credits.
• The Group is currently negotiating interest rate reductions for other credit
facilities – is expected to be accomplished by the end of 2014.
16
3. Market conditions
Development of
town centre
Køge, Denmark
26,500 m2
17
Market conditions
Macroeconomic expectations
Denmark
Sweden
Poland
Czech Rep.
2014e 2015e 2014e 2015e 2014e 2015e 2014e 2015e
Management’s general assessment of the
market conditions for the Group remains
unchanged compared to its assessment in
early April 2014
- Rising consumer confidence
- Expectations for subdued financial growth,
varying in strength from country to country.
- Increase in private consumption is still
anticipated.
Easing in restraints when
procuring financing of projects
- Depending on project type, location
and status of the properties concerned,
including letting and sales.
- Lenders continue to require relatively
high equity financing, but there also
appears to be some relaxation of these
requirements.
GDP growth
(% y/y)
Unemployment (%)
0.5
1.3
1.9
2.5
3.2
3.4
2.0
2.4
5.1
5.1
7.9
7.6
9.9
9.5
6.7
6.6
Source Denmark and Sweden: Nordea, September 2014.
Source Poland and Czech Rep.: The European Commission, European Economic
Forecast, Spring 2014.
Economic growth is subject to an
increased risk, for one thing due to
the geopolitical uncertainty in
Ukraine
- May result in more difficult market
conditions in Finland and Poland, in
particular.
Diminishing uncertainty in the
property markets
- But the decision-making process of
investors, tenants and financing
sources remains lengthy and carefully
considered.
- Historically low interest level has
contributed to increasing interest in
investments in real property.
18
4. Project portfolio
Office building, Alfa Laval
Aalborg, Denmark
6,000 m²
19
1
Business area: Property development
Development potential in m²
•
Comprises the following markets: Denmark,
Sweden, Poland and the Czech Republic.
•
Development potential of 388,000 m².
•
Total carrying amount of project portfolio
(incl. projects in joint ventures) is DKK 1,144
million.
Denmark
Sweden
Poland
Czech Rep.
20
1
Property development = DKK 1,144 million (carrying amount)
In progress (DKK 313 million)
Alfa Laval
Ahlgade
Jelenia Góra
Holbæk, Denmark
Vasevej,
Birkerød, Denmark
Barkarby Gate
Aalborg, Denmark
Stockholm, Sweden
Jelenia Góra, Poland
Warsaw, Poland
Offices
6,000 m2
Shopping-street
property/residential
3,100 m2
Commercial units/
residential
3,400 m2
Retail park
20,000 m2
Shopping centre
24,000 m2
Residential/services
14,800 m2
21
1
Property development = DKK 1,144 million (carrying amount)
Not initiated (selected) (DKK 828 million)
BROEN, shopping centre
Amerika Plads (lots A & C)
Esbjerg, Denmark
Copenhagen, Denmark Randers, Denmark
Marsvej,
Copenhagen, Denmark Gothenburg, Sweden
Warsaw, Poland
Shopping centre
29,800 m2
Offices/residential
24,800 m2
Offices/residential
25,500 m2
Residential/services
31,050 m2
Retail
4,700 m2
Østre Teglgade
Kulan Commercial District
Shopping centre/
services
45,000 m2
22
Business area: Asset management
2
•
Comprises the following markets:
Denmark, Sweden, Poland and the Czech Republic.
•
Total value of portfolio (incl. projects in joint ventures)
amounts to DKK 1,537 million.
•
Large spread in the returns on the individual centres,
as particularly local tenants are recording difficulties.
•
Current letting situation is affected by vacancies and
short-term rent discount agreements with tenants.
•
Sale of Fashion Arena Outlet Center, Prague, was
completed in Q1 2014/15.
•
Focus on maturing and subsequently selling the
individual properties.
Carrying amount, broken down by country
Denmark
Czech Rep.
Poland
23
2
Asset management = DKK 1,537 million (carrying amount)
Return on carrying
amount of 5.7 %
 Fully let
Large spread in
the returns on
individual
centres
Futurum Hradec Králové
Hradec Králové, Czech Rep. 100 %
 Satisfactory
operating profit
and customer
influx
 Increasing
revenue
Current letting situation is
affected by vacancies and
short-term rent discount
agreements with tenants
Based on full
occupancy, the
return is expected
to reach 7.2 %
Sillebroen
 Local tenants
are recording
difficulties
Frederikssund, Denmark
91 %
 Revenue slightly
declining
28,250 m²,
20 % ownership interest
 Cinema concept
25,000 m²,
24
2
Galeria Tarnovia
 Local tenants
are recording
difficulties
Ringsted Outlet
92 %
Tarnów, Poland
 Increased
footfall
69 %
 New stores
opened for
business
 Rental level
under pressure
 New
supermarket
operator
Ringsted, Denmark
 Increased
revenue
16,500 m²,
13,200 m²,
Galeria Sandecja
 New
competitor
Nowy Sącz, Poland
95 %
 Rental level
under pressure
 Declining
revenue and
footfall
17,300 m²,
25
2
Retail park,
Retail park,
Most, Czech Rep.
57 %
 Expiry of lease
agreements
Aabenraa, Denmark
Retail property
71 %
 Negotiations
concerning
sale
Brønderslev, Denmark
100 %
 Partially sold
26
5. Financial issues
Amerika Plads, lot C
Copenhagen, Denmark
12,500 m²
27
Financial issues
•
Sale of the Group’s 75 % stake in the Fashion Arena Outlet Center in Prague, the Czech
Republic, completed in Q1 2014/15.
• The sale has substantially strengthened the Group’s financial platform.
•
At 31 January 2014 project credit facilities of DKK 0.1 billion were due to expire prior to the
end of January 2015.
• The credits have been repaid in connection with the sale of projects, or refinanced.
•
TK Development has a general agreement with the Group’s main banker about operating
and project credits.
• When last reviewed, the agreement was extended until mid-2015.
28
6. New sales and expectations
Barkarby Gate, retail park
Stockholm, Sweden
20,000 m²
29
Sale of Fashion Arena
Outlet Center, the Czech Republic
•
In February 2014 a conditional
agreement concerning the sale of the
Group’s 75 % stake in the outlet centre
was concluded.
•
The outlet centre consists of 110 stores
covering a total floor space of about
25,000 m².
•
The whole centre has been sold to
Meyer Bergman at a selling price of EUR
71.5 million.
•
The sale was completed in Q1 2014/15.
•
The sale has generated a profit
compared to the carrying amount,
reduced the balance sheet total and
made a substantial contribution to the
Group’s free cash resources.
The sale has resulted in :
• Profit compared to
carrying amount.
• Reduction of the balance
sheet total.
• A substantial contribution
to the free cash resources.
Outlet centre, Prague, the Czech Republic
30
Sale of Alfa Laval, office building,
Aalborg, Denmark
Sold in advance
•
In Q1 2014/15 TK Development entered into a
conditional agreement for the sale of a 6,000 m²
office project in Aalborg.
•
The project has been let to the international Alfa
Laval Group.
•
The project has been sold to PensionDanmark at
a total price of DKK 126 million.
•
Construction started in March 2014, and the
project will be handed over to the investor in
June 2015.
Alfa Laval, office building, Aalborg, Denmark
31
Sale of Barkarby Gate, Stockholm,
Sweden
•
In Q2 2013/14 the 20,000 m² retail park
project Barkarby Gate (Stockholm,
Sweden) was sold based on forward
funding.
•
The buyer of the project is a fund
managed by Cordea Savills.
•
Construction started in August 2013
immediately after the option to
purchase the land for the project was
exercised.
•
The current occupancy rate is 94 %.
•
Opening is scheduled for autumn 2014.
Sold based on
forward funding
Retail park, Barkarby Gate, Stockholm, Sweden
32
Sale af DomusPro, Vilnius, Lithuania
Sold in advance
•
In Q3 2013/14 the about 11,100 m² retail park
project DomusPro in Vilnius, Lithuania, was
conditionally sold.
•
The buyer of the project is BPT Baltic
Opportunity Fund, which is managed by BPT
Asset Management.
•
The selling price is based on a return
requirement of 8.5 %.
•
The first phase of about 7,500 m² has been
handed over to the buyer in Q1 2014/15.
•
Construction of the second phase will start once
a satisfactory occupancy level has been reached.
Retail park, Vilnius, Lithuania
33
Partial sale, Østre Teglgade, Copenhagen,
Denmark
Sale of land
•
The total project area covers 32,700 m².
•
Building rights for 7,200 m² have been sold
and handed over to a private investor.
•
The profit on this sale was recognized in Q2
2014/15.
•
Efforts are being made to sell the remaining
area to a group of investors.
Østre Teglgade, Copenhagen, Denmark
34
Other new sales
•
A share of the Group’s completed property in Brønderslev, Denmark, was
sold to a private investor in Q2 2014/15 and handed over to the buyer after
the reporting date.
• The property has been revalued and a writedown of the property
value was recognized in Q2 2014/15.
After the reporting date:
• Sale and handover of one of the Group’s German investment properties to a
private investor.
• The selling price is equal to the carrying amount.
•
Conditional agreement regarding the sale of the SuperBest premises at
Vasevej, Birkerød, Denmark, to a private property company.
•
Conditional agreement regarding the sale of the jem & fix section of the
Group’s retail park project at Marsvej, Randers, Denmark, to a private
investor.
35
Outlook for 2014/15
• Management maintains the previously announced profit estimate for
2014/15. Thus, Management anticipates positive results of about DKK
40 million before tax, excluding discontinuing activities, for the
2014/15 financial year.
• The timing and phase-out of the discontinuing activities are 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 not been included in the outlook.
36
Disclaimer
The expectations mentioned in this Interim Report, including earnings
expectations, are naturally subject to risks and uncertainties, which may
result in deviations from the expected results.
Various factors may impact on expectations, as outlined in the section
"Risk issues" in the Group’s 2013/14 Annual Report, particularly the
valuation of the Group’s project portfolio, as described under “Business
risks” and “Risks related to the presentation of financial statements”.
37

Fashion Arena – the No. 1 outlet centre in Prague

Transcription

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