Interim Report, H1 2016/17. Illustration: Amerika Have, residential property Copenhagen, Denmark

Transcription

1 Interim Report, H1 2016/17 Illustration: Amerika Have, residential property Copenhagen, Denmark

2 Contents 1. The Group s results in H1 2016/17 Financial highlights and key ratios Segment results Handed-over projects Major projects under construction Portfolio of land 2. Strategic focus Market conditions 4. Asset management 5. Property development 6. Outlook 2

3 1. The Group s results in H1 2016/17 Strædet, Køge, Denmark 34,300 m 2 3

4 Financial highlights and key ratios (DKKm) 2011/ / / / /16 H1 2015/16 H1 2016/17 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 4, , , , , , ,925.6 Project portfolio 2, , , , , , ,021.2 Equity 1, , , , , , ,273.9 Cash flows for the year Net interest-bearing debt, end of period 1, , , , , ,113.9 Key ratios: Return on equity (ROE) 1.4 % % -3.4 % -2.5 % % -1.0 % -1.5 % Solvency ratio (based on equity) 44.9 % 39.6 % 46.4 % 53.1 % 45.8 % 53.3 % 43.5 % Price / book value (P/BV)

5 Results broken down by business area Results H1 2016/17 Property development Asset Management Unallocated Revenue Gross profit/loss Costs, incl. depreciation, amortization and impairment of non-current assets Operating profit/loss Income from investmentsin joint ventures Financing, net Profit/loss before tax Projects: Development projects Completed properties 1, , Otherplots of land and projects Total projects 2, , Balance sheet total 2, , , Tied-up equity 1,

6 Handed-over projects Sale of a retail project of 2,150 m² in Rødekro to a private investor. The project has been let to Harald Nyborg. The profit on the sale has been realized in Q1 2016/17. After the reporting date: Sale of a retail property of m² in Holbæk to a private investor. The profit on the sale has been realized in Q3 2016/17. 2,150 m² retail project, Rødekro, Denmark Sale of a small retail project in Dronninglund to private investors. The project has been let to jem & fix. The profit on the sale has been realized in Q3 2016/17. Agreements for the sale of a few plots of land. The profit on these sales is expected to be realized in Q3 2016/17. These sales underpin Management s profit estimate for the 2016/17 financial year. 1,200 m 2 retail property, Holbæk, Denmark 6

7 Major projects under construction 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 Bielany Residential Park, Warsaw, Poland, phase 3 Construction started in June 2016 Substantial reduction of the Group s portfolio of land in Q2 2016/17. 15,650 m² 7

8 Portfolio of land Ongoing construction projects covering more than 85,000 m². The carrying amount of portfolio of land has been reduced by a further 84 million in H1 2016/17 and currently amounts to DKK 477 million. The portfolio of land remains significant, particularly in Poland. Will be reduced by 96 million when the last phase of the Bielany Residential Park is initiated. Continued focus on substantially reducing the portfolio of land. 1,200 1, Portfolio of land Portfolio of land broken down by country Denmark Poland Czech Republic Baltic States Development costs Other Development Other asset management activities 8

9 NAV per share at 31 July 2016 DKK per share ASSETS LIABILITIES NAV (2.5) (2.9) 284 (2.5) 246 (29.0) 2,845 (0.8) 81 (29.8) 2,926 (-15.6) 1, (4.7) (11.7) 1,148 (0.5) 53 (4.2) 414 (-1.2) 119 (13.0) 1, Completed Investment prop. Under construction Plots of land Investments in joint v. Receivables Other assets Total assets Tax assets Balance sheet total Credit institutions Other liabilities NAV 9

10 Financial issues Agreement about credit facilities with main banker Renegotiated once a year. Most recently prolonged until 30 September Project credits Project credit facilities at 31 January 2016 that were due to expire prior to end-january 2017 have all been prolonged or refinanced. No project credits are thus due to expire prior to the end of January

11 2. Strategic focus 2018 Arninge, Stockholm, Sweden 60,000 m 2 11

12 Strategic focus Property development 2 Strategic focus for the Group. Market focus in Denmark, Sweden and Poland. The potential is greatest in Denmark and Sweden. Risk exposure is largest towards Poland focus on reducing this exposure. Asset management Operation of the Group s completed properties. Plots of land and development projects in the countries where the Group wishes to discontinue its activities in the longer term (the Czech Republic, Germany, the Baltic States and Russia). Maturing and optimizing the assets. Return on equity is expected to amount to % p.a. before tax as from 2017/18. The aim is to sell assets within a period of three to five years starting in December The plan is to distribute the freed-up equity to TK Development s shareholders. Undiversified development company that creates attractive shareholder value. 12

13 3. Market conditions Owner-occupied dwellings, Beddingen 1A, Aalborg, Denmark 7,000 m 2 13

14 Market conditions Generally, property markets are characterized by optimism. Good amount of interest from investors. Satisfactory profit on new projects. Reasonable opportunities for financing projects. Several new project opportunities in the retail and the residential segment. The projects in the pipeline is moving ahead at a good pace due to robust tenant and investor interest. The historically low interest level contributes to increasing interest in real property. Climbing Internet sales intensify competition in the retail trade sector. Particularly the residential market is interesting in the major towns and cities in Denmark and in Warsaw, Poland. 14

15 4. Asset management Ringsted Outlet, Denmark 13,200 m 2 15

16 2 Asset management Comprises the Group s completed properties, as well as plots of land and development projects in the countries where the Group wishes to discontinue its activities in the longer term. Carrying amount broken down by country Total value of the portfolio (incl. projects in joint ventures) amounts to DKK 1,717 million. Focus on maturing and optimizing the individual properties. Aim to sell the assets within a three- to fiveyear period starting end Plan to distribute the equity thus freed up to TK Development s shareholders. Denmark Czech Republic Germany Poland Baltic States/Russia 16

17 2 Asset management Return on the carrying amount of 4.5 % Large spread in the return 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 6.1 % Development and operating plans have been drafted for each property 17

18 2 Asset management Galeria Tarnovia Tarnów, Poland 89 % 16,700 m², 30 % ownership interest Galeria Nowy Rynek Jelenia Góra, Poland 95 % 24,800 m², 30 % ownership interest Footfall Revenue Strong competition Revenue and footfall stabilized in 2016 Change the tenant composition Conversion under way to house a cinema scheduled for opening in December 2016 Occupancy rate increased to 89 %. Proactively optimize the tenant mix after the cinema opening Opened in October % let Centre operations have met expectations Focus in 2016: Replace weak tenants Optimize tenant mix Launch a marketing campaign and strengthen the centre profile based on the the recent opening 18

19 2 Asset management Galeria Sandecja Nowy Sącz, Poland 97 % 17,300 m², 100 % ownership interest Sillebroen Frederikssund, Denmark 93 % 26,400 m², 100 % ownership interest Footfall Footfall Revenue Revenue Strong competition Revenue and footfall on the increase again Ground-floor premises almost fully let Optimize tenant composition Upgrade the first floor with discount stores Increase in footfall Stable revenue Improved tenant mix New tenants, such as Imerco, Normal and Søstrene Grene Upgrade the parking facilities Proactively optimizing the tenant mix following the opening of the cinema Replace weak tenants Four-screen cinema for Nordisk Film Cinemas opened in August

20 2 Asset management Ringsted Outlet Ringsted, Denmark 87 % 13,200 m², 50 % ownership interest Footfall Revenue Increase in footfall Increase in revenue New and extended BOSS outlet has opened The Calvin Klein unit has been extended New tenants: Golfino, Villeroy & Boch, Gant and GUESS Continued focus on boosting the occupancy rate Good amount of interest from potential tenants Make preparations for contemplated expansion of the centre with a second phase 20

21 Other asset management activities - carrying amount of DKK million at 31 July 2016 Comprise plots of land and projects in the Czech Republic, Germany, the Baltic States and Russia. TK Development wishes to discontinue its activities on these markets. At 31 July 2016 the projects comprise the following: Czech Republic: 1 development project and 2 plots of land Germany: 2 plots of land, of which one is sold conditionally Baltic States: 1 project in progress and 2 plots of land Russia: 1 rental project In December 2015 Management decided to phase out the Group s Czech activities. The phase-out is expected to take place through the sale of individual assets, and discussions are being held with potential investors for several of the projects. 21

22 5. Property development Residential units, phase 3, Bielany, Warsaw, Poland 15,650 m² 22

23 1 Property development Comprises the following markets: Denmark, Sweden and Poland. Development potential in m² Development potential of 341,000 m². The projects in the pipeline are moving ahead at a good pace due to robust tenant and investor interest predominantly projects scheduled for completion in 2017/18 and later. Several new project opportunities in both the retail and the residential segment. Total carrying amount of the project portfolio (including projects in joint ventures) amounts to DKK 961 million. Denmark Sweden Poland 23

24 1 Property development - Breakdown of the project portfolio DKKm (incl. joint ventures) Completed projects Projects in progress Not-initiated projects Project portfolio

25 Strædet, Køge, Denmark Comprises about 34,300 m² of retail stores, public functions and residential units as well as parking facilities of about 13,000 m². Sold in advance, excl. residential units The building rights for public functions have been sold to Køge Municipality. The retail project comprises 19,000 m² and has been sold conditionally to the Finnish company Citycon together with the parking facilities of about m². After delays, construction of the project is now making progress, and the retail project is still expected to be handed over to Citycon in autumn % of the retail stores have been let. 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 project is handed over to Citycon. 25

26 BROEN Shopping, Esbjerg, Denmark 65 % partner in the development phase Development of a new shopping centre of about 29,800 m². Lease agreements concluded for 75 % of the premises. Construction is progressing satisfactorily. Opening is scheduled for spring The centre is to be expanded with a cinema. A lease agreement has been concluded with Nordisk Film Cinemas regarding an eight-screen cinema in connection with the centre. The work on the local plan required for this purpose has been initiated. 26

27 Amerika Have, Copenhagen, Denmark Development of a project of about 12,500 m², primarily housing. Development in cooperation with pension fund The project will be executed in cooperation with AP Pension and Udviklingsselskabet By & Havn I/S. The housing will consist of 121 high-quality apartments for sale to private owners. Construction started in September 2015 and is progressing satisfactorily. The pre-completion sale is progressing satisfactorily, and 65 out of 121 units have been sold. The profits anticipated on the sale will be recognized upon handover of apartments to the respective buyers, expected to take place from spring

28 MetroBielany, residential project, Warsaw, Poland Residential Park, Bielany, Warsaw, Poland phase 2 Comprises 297 apartments and service facilities. The units are being sold as owner-occupied apartments to private users. 97 % of the units have been sold. Construction of the project has been completed, and handover of the apartments to the individual buyers is ongoing. Residential Park, Bielany, Warsaw, Poland phase 3 Comprises 263 apartments and service facilities. The units are being sold as owner-occupied apartments to private users. The pre-completion sale has started, and 19 % of the units have been sold. Construction was initiated in June The apartments are scheduled for completion and handover to the buyers in spring Phase 2 Phase 3 28

29 Østre Havn, Aalborg, Denmark Area previously occupied by Aalborg Shipyard. Development in a joint venture with Frederikshavn Maritime Erhvervspark. Total project area of about 50,000 m² includes about 7,000 m² of housing for young people, about 11,000 m² of rental housing, about 12,000 m² of owner-occupied dwellings and about 13,000 m² of offices. 7,000 m² of owner-occupied dwellings have recently been put up for sale. Construction is expected to be initiated in early 2017, with completion scheduled for mid The rental housing will be constructed in two phases. The first phase comprises 5,000 m², and attempts are being made to sell it before construction startup, scheduled for end Rental housing Owneroccupied dwellings Apartments for young people 29

30 Commercial district, Arninge, Stockholm, Sweden In Arninge 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 and possibly offices as well. Good amount of interest shown by tenants. Good amount of investor interest. TK Development is currently engaged in the planning process together with the municipality. 30

31 6. Outlook BROEN Shopping Shopping centre Esbjerg, Denmark 29,800 m² 31

32 Outlook Ongoing construction projects covering more than 85,000 m². A pipeline of projects in good progress due to robust tenant and investor interest predominantly projects scheduled for completion in 2017/18 and later. Several new project opportunities in the retail and the residential segment. Underpinning the Group s future earnings expectations. 32

33 Outlook for 2016/17 Management still expects consolidated results before tax for 2016/17 to total DKK million. This profit estimate is based on the expectation that a number of ongoing small and medium-sized projects will be executed before the end of the current financial year. TK Development is recording good progress on the individual projects. The majority of the projects are expected to be completed, handed over to the investor and thus recognized in income in Q4 2016/17. The Group s most significant development projects are not expected to contribute to consolidated results until subsequent financial years. 33

34 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 in the Group s 2015/16 Annual Report under Risk issues and note 2 to the consolidated financial statements, Accounting estimates and judgments, including the valuation of the Group s project portfolio. 34