Annual Report 2016/17. Illustration: Amerika Have, residential units Copenhagen, Denmark

Transcription

1 Annual Report 2016/17 Illustration: Amerika Have, residential units Copenhagen, Denmark

2 Contents 1. Group results for 2016/17 Financial highlights and key ratios Segment results Handed-over projects High activity within property development Portfolio of land 2. Strategic focus and strategic goals 3. Market conditions 4. Asset management 5. Property development 6. Outlook 2

3 1. Group results for 2016/17 Strædet, Køge, Denmark 34,300 m 2 3

4 Financial highlights and key ratios (DKKm) 2012/ / / / /17 Financial highlights: Net revenue Gross profit/loss Income from investments in joint ventures Operating profit/loss (EBIT) Profit/loss before tax and writedowns, etc Profit/loss before tax Profit/loss Balance sheet total , , , ,852.9 Project portfolio , , , ,155.2 Equity , , , ,293.7 Cash flows for the year Net interest-bearing debt, end of year , , , ,196.2 Key ratios: Return on equity (ROE) % -3.4 % -2.5 % % 0.6 % Solvency ratio (based on equity) 39.6 % 46.4 % 53.1 % 45.8 % 45.3 % Price / book value (P/BV)

5 Results broken down by business segment Property development Strategic focus area of the Group DKKm Revenue Gross profit/loss 38.2 Income from investmentsin JV 75.8 Costs 44.2 Operating profit/loss 69.8 Income from inv. in assoc. 0.7 Financing, net 0.9 Profit/loss before tax 71.4 Total projects Balance sheet total 1,240.1 Tied-up equity Asset management The aim is to sell the assets within three to five years from December 2015 DKKm Revenue Gross profit/loss 44.9 Income from investmentsin JV Costs 25.1 Operating profit/loss -8.0 Income from inv. in assoc Financing, net Profit/loss before tax Total projects 1,280.7 Balance sheet total 1,535.9 Tied-up equity ROE of 10,6 % realized in 2016/17 5

6 Projects handed-over and other income - Property development Sale of a retail project of 2,150 m² in Rødekro to a private investor. The project has been let to Harald Nyborg. Sale of a retail property of 1,200 m² in Holbæk to a private investor. Sale of a minor retail project in Dronninglund to private investors. The project has been let to jem & fix m 2 retail project, Rødekro, Denmark Handover of almost 300 apartments, etc. in the second phase of a residential project in Bielany, Warsaw, Poland. Sale of a number of plots of land. Significant positive value adjustment of the Group s 35 % ownership interest in BROEN Shopping, which is classified in the joint venture as an investment property under construction m 2 retail property, Holbæk, Denmark 6

7 Projects handed-over and other income - Asset management Operation of completed properties; see subsequent description. Sale of plots of land in Germany and the Czech Republic. DKK 26 million writedown of TK Development s investment in the joint venture owning two shopping centres in operation in Poland. TK Development has a 30 % ownership interest. The net rent has developed at a slower pace than anticipated, resulting in a shift in the optimum timing for selling the properties, and consequently a substantially higher preferred return for the joint venture partner than previously expected. Galeria Tarnovia, Tarnów, Poland Galeria Nowy Rynek, Jelenia Góra, Poland 7

8 High activity within property development - a selection of projects in progress BROEN Shopping, Esbjerg, Denmark shopping centre 29,800 m² Strædet, Køge, Denmark mixed segments 34,300 m² Amerika Have, Copenhagen, Denmark residential units 12,500 m² Residential Park, Bielany, Warsaw, Poland, phase 3 15,650 m² Domus Vista, Frederiksberg, Denmark youth housing units 5,300 m² Østre Havn, Aalborg, Denmark rental housing 4,900 m² 8

9 Portfolio of land The carrying amount of the portfolio of land has been reduced by DKK 108 million in 2016/17 and amounts to DKK 453 million at 31 January The reduction is primarily a result of the startup of the third phase of the residential project in Bielany, Warsaw, Poland. The portfolio of land remains significant, especially in Poland, and will be reduced by a further DKK 98 million when the last phase of the residential project in Bielany is initiated. Focus on further reducing the portfolio of land. 1,200 1, Portfolio of land Development Asset management Portfolio of land broken down by country Denmark Poland Czech Rep. Baltic States Development costs Other 9

10 NAV per share at 31 January 2017 DKK per share Assets Liabilities NAV (4.4) (2.8) 277 (2.5) 243 (0.6) 50 (28.3) 2,778 (0.8) 75 (29.1) 2,853 (-14.6) 1, (6.0) (11.5) 1,129 (0.5) (-1.3) 126 (13.2) 1, Completed Investment prop. Under construction Plots of land Investments in JV Receivables Other assets Total assets Tax assets Balance sheet total Credit institutions Other liabilities NAV 10

11 Financial issues Credit facilities with main banker Renegotiated once a year. Extended until 30 April 2018 after the reporting date. Project credit facilities Project credit facilities of DKK 563 million are due to expire prior to the end of January Most of these facilities have either been prolonged after the reporting date or are expected to be repaid before maturity upon handover of the relevant projects to investors. 11

12 2. Strategic focus and strategic goals Arninge, Stockholm, Sweden 60,000 m 2 12

13 Strategic focus TK Development today 2020 goal Development Activities in Denmark, Sweden and Poland. Greatest potential in Denmark and Sweden. Focus on reducing the risk exposure in Poland. A return of % p.a. on equity is expected as from 2017/18. Asset management Phasing out the activities in the Czech Republic, Germany, the Baltic States and Russia. Maturing and optimizing the operation of completed properties with a view to selling them in the period until Undiversified developer company The equity freed up from the sale of asset management activities is to be distributed to the Company s shareholders. 13

14 Follow-up on strategic goals A return of % p.a. before tax on equity expected in the property development business area as from the 2017/18 financial year A solvency ratio of around 40 % TK Development expects results for 2017/18 of DKK million before tax. This amount includes results for the property development business area equivalent to a return on equity of about 15 %. The solvency ratio stood at 45.3 % at 31 January 2017, and thus the goal has been achieved. The solvency ratio is also expected to exceed 40 % in the years to come. Substantial reduction of the portfolio of land The portfolio of land has been reduced by DKK 232 million since the announcement in December 2015 and amounted to DKK 453 million at 31 January The focus remains on substantially reducing the portfolio of land. 14

15 Follow-up on strategic goals Phasing out the Group s activities in the Czech Republic, Germany, the Baltic States and Russia. Maturing and optimizing the operation of the asset management activities with a view to selling them in 2019/2020 Ongoing reduction of costs in step with realizing the defined, future strategic focus. Since December 2015 assets of almost DKK 60 million have been sold, and the phase-out continues. The carrying amount of projects totalled DKK million at 31 January Detailed development and operating plans have been drafted for each property, and the realization of these plans is progressing well in a number of areas. The goal is still for the asset management activities to be sold by at the latest. Overheads came to DKK 79.7 million in 2016/17 against DKK 82.0 million in 2015/16. Costs will be further reduced in step with the divestment of the asset management activities and the phase-out of the activities in the Czech Republic, Germany, the Baltic States and Russia. 15

16 3. Market conditions Owner-occupied dwellings, Beddingen 7A, Aalborg, Denmark 7,000 m 2 16

17 Market conditions Generally, property markets are characterized by optimism. Significant interest from investors. Relatively low return requirements for primelocation property is expected to continue. Climbing e-commerce intensify competition in the retail trade sector. Several new project opportunities in the retail and residential segments. Satisfactory profit on new projects. Good project finance possibilities. Project pipeline moving ahead at a good pace due to robust tenant and investor interest. Continued low interest level and surplus of liquidity in the market increase the investment interest in real property. Especially the residential segment is interesting in major towns and cities in Denmark and in Warsaw in Poland. 17

18 4. Asset management Ringsted Outlet, Denmark 13,200 m 2 18

19 Asset management Total value of the portfolio (incl. projects in joint ventures) amounts to DKK 1,699 million. Carrying amount broken down by country Focus on maturing and optimizing the individual properties. The aim is to sell the assets within a three to five-year period starting at the end of The equity freed up is to be distributed to the Company s shareholders. Denmark Germany Baltic States/Russia Poland Czech Rep. 19

20 Asset management Return on the carrying amount of 4.3 %. Spread in the returns on the individual centres. Current letting situation affected by vacancies and short-term rent discount agreements with tenants. Based on full occupancy, the return on the carrying amount is expected to reach 6.2 %. Operation and development plans are prepared for each property The timing of the sale of assets is assessed continuously to safeguard the best interests of the Company s shareholders. This assessment includes such elements as the risk and potential of the long-term maturing of an asset versus the time of dividend distribution, and the possibility of reducing overheads. 20

21 Asset management Galeria Tarnovia Tarnów, Poland 93 % 17,000 m², 30 % ownership share Galeria Nowy Rynek Jelenia Góra, Poland 93 % 24,800 m², 30 % ownership share Footfall Revenue Affected by strong competition in the city Tenant composition has been changed A cinema opened in December 2016 Occupancy rate increased to 93 % Efforts are made to change temporary leases to permanent leases with long periods of non-terminability Carry on additional marketing and image improvement campaigns after the opening of the cinema Opened in October 2015 Replacement of weak tenants Optimization of tenant mix Attract new concepts Massive marketing and image improvement campaigns to increase customer awareness of the centre Focus in increasing the occupancy rate 21

22 Asset management Galeria Sandecja Nowy Sącz, Poland 95 % 17,300 m², 100 % ownership share Sillebroen Frederikssund, Denmark 92 % 26,400 m², 100 % ownership share Footfall Footfall Revenue Revenue Strong competition Strong mix of tenants on the ground floor Improved mix of tenants on the first floor Revenue and footfall are increasing again Interest from potential tenants Upgrade the food court Temporary leases are being changed to permanent leases with long periods of nonterminability Increased footfall Slight decline in revenue due to the closing of Fona, among other things Improved mix of tentants New tenants such as Imerco, Normal and Søstrene Grene 4-screen Nordisk Film cinema opened in August 2016 Continue marketing and image improvement campaigns Expand with a fitness concept to make the centre more attractive 22

23 Asset management Ringsted Outlet Ringsted, Denmark 85 % 13,200 m², 50 % ownership share Footfall Revenue Another year of progress Continued increase in revenue and footfall New and larger BOSS outlet has opened The premises let to Calvin Klein have been expanded New tenants in 2016: Golfino, Villeroy & Boch, Gant and Guess New tenants, will open in spring 2017: Lindt og Schiesser Continue focus on increasing the occupancy rate Good amount of interest from potential tenants To make preparations for contemplated expansion of the centre with a second phase 23

24 Other asset management activities - carrying amount of DKK million at 31 January 2017 Comprise plots of land and development projects in the Czech Republic, Germany, the Baltic States and Russia. TK Development wishes to discontinue its activities on these markets. At 31 January 2017 the projects comprise the following: Czech Republic: One development project and one plot of land Germany: One plot of land Baltic States: One project in progress and two plots of land Russia: One rental project The phase-out of activities is expected to be carried out by developing and completing projects and by selling a few plots of land. 24

25 5. Property development Residential units, phase 3, Bielany, Warsaw, Poland 15,650 m² 25

26 Property development Activities in Denmark, Sweden and Poland. Property development potential in m² Property development potential of 382,000 m². Project pipeline is moving ahead at a good pace due to robust tenant and investor interest. Project pipeline underpins Management s expectation of generating a return on equity of % p.a. before tax in the property development business area. Several new project possibilities within both the retail and the residential segments. Total carrying amount of the project portfolio (incl. projects in joint ventures) amounts to DKK 1,217 million. Denmark Sweden Poland 26

27 Property development - Breakdown of the project portfolio DKKm (incl. joint ventures) Completed projects 31 6 Projects in progress Projects not initiated Project portfolio

28 Strædet, Køge, Denmark Comprises about 34,300 m² retail stores, public service facilities and residential premises as well as parking facilities of about 13,000 m². Sold in advance, excl. residential units The retail project of 19,000 m² has been conditionally sold to the Finnish company Citycon together with the parking facilities of 13,000 m². The retail project will be handed over to Citycon in three phases: First phase (cinema and restaurants) end-may Second phase (major part of the project) is expected to be handed over in autumn Third phase is expected to be handed over in The current occupancy rate is 86 % for the overall retail project. The parking facilities are fully let. The sale is still expected to have a significant positive impact on results in 2017/18 when the completed part of the project is handed over to Citycon. Pre-completion selling process of 3,000 m² owner-occupied dwellings has just started. Construction will be carried out together with the remainder of the project. 28

29 BROEN Shopping, Esbjerg, Denmark 65 % partner in development phase Development of a new shopping center of about 29,800 m². Lease agreements concluded for 88 % of the premises. Construction is progressing well. Opening is scheduled for 10 April The centre is to be expanded with a cinema. Lease agreement has been concluded with Nordisk Film regarding the establishment of an eight-screen cinema in connection with the centre. The work on the local plan required for this purpose has been initiated. 29

30 Amerika Have, Copenhagen, Denmark Development of about 12,500 m², primarily housing. Development in cooperation with a pension fund The project is developed in cooperation with AP Pension and Udviklingsselskabet By & Havn I/S. The residential premises will consist of 121 highquality apartments for sale to private owners. The process of developing, constructing and selling the project has progressed satisfactorily. 104 of 121 apartments have been sold. The profits on project completion and sale will be recognized when the apartments are handed over to the respective buyers. Handover to the buyers will start in May

31 MetroBielany, residential project, Warsaw, Poland Residential Park, Bielany, Warsaw, Poland phase 2 Comprises 297 residential units and service facilities. The residential units have been sold as owneroccupied apartments to private users. Construction has been completed. Almost all of the apartments have been handed over to the individual buyers. Phase 2 Residential Park, Bielany, Warsaw, Poland phase 3 Comprises 263 residential units and service facilities. The residential units will be sold as owner-occupied apartments to private users. The pre-completion sale is progressing satisfactorily, and 45 % of the units have been sold. Construction was initiated in June and is progressing satisfactorily. Completion and handover to the buyers are scheduled for spring Phase 3 31

32 Østre Havn, Aalborg, Denmark Area previously occupied by Aalborg Shipyard. Developed in a joint venture with Frederikshavn Maritime Erhvervspark. Work is proceeding on the development of about 7,000 m² of youth housing units, about 12,000 m² of rental dwellings, about 13,000 m² of owner-occupied dwellings and about 13,000 m² of offices. 7,400 m² owner-occupied dwellings The pre-construction sale of owner-occupied dwellings of 7,400 m² has begun. Construction is scheduled to start in mid-2017 with completion at end The rental housing is to be constructed in phases. The first phase - which has been conditionally sold to a private investor - comprises about 4,900 m², and construction started at the beginning of

33 Domus Vista, youth housing units, Frederiksberg, Denmark Comprises youth housing units of about 5,300 m 2. Conditionally sold to Koncenton. Sold in advance No letting risk. Construction started in October Completion and handover scheduled for January

34 Commercial district, Arninge, Stockholm, Sweden The municipality has chosen TK Development as its preferred partner. Development of a new commercial district in Arninge in Stockholm. The project comprises about 60,000 m 2, primarily retail stores, with a possibility for including office premises. Good amount of interest from tenants. Good amount of interest from investors. Work on the planning proceeds together with the municipality. 34

35 6. Outlook BROEN Shopping Shopping centre Esbjerg, Denmark 29,800 m² 35

36 Outlook for 2017/18 Management expects results for the 2017/18 financial year of DKK million before tax. This amount includes the expectation that the Group s property development activities will contribute with a return on equity of about 15 %. The results forecast is based on Management s expectations, including time estimates, for several specific projects. Several of the Group s major development projects have been sold in whole or in part and are expected to contribute to next year s results, including Strædet, Køge, Denmark, and the Amerika Have residential project, Copenhagen, Denmark. Good progress is recorded on the individual projects. 36

37 Disclaimer The expectations mentioned in this presentation, including earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected results. Expectations may be impacted by factors generally applicable to the sector as well as the factors referred to under Risk issues and note 2 to the consolidated financial statements, Accounting estimates and judgments, including the valuation of the Group s project portfolio. 37