Agat Ejendomme

Annual / Quarterly Financial Statement • Apr 26, 2012

Company announcement no. 4/2012

Aalborg, Denmark, 2012-04-26 08:47 CEST (GLOBE NEWSWIRE) --

Summary

-- TK Development recorded a profit of DKK 27.0 million after tax, compared to
DKK 73.6 million the year before. This performance meets recent
expectations.
-- Viewed in light of the Company’s beginning-of-year profit estimate of about
DKK 100 million after tax for 2011/12, the profit realized is
disappointing. However, given the property market situation and the
turbulence on financial markets throughout the summer and autumn of 2011,
Management considers the profit for the year acceptable.
-- Consolidated equity totalled DKK 1,876.4 million at 31 January 2012,
corresponding to a solvency ratio of 40.4 %.
-- The Group has entered into an agreement for the sale of its retail park in
Kristianstad, Sweden, to a Swedish investor. The total project comprises
about 6,200 m², including the existing building of about 4,500 m², which
was handed over to the investor in April 2011.
-- In June 2011, the Group sold its stake in Euro Mall Centre Management to
the US Group CB Richard Ellis.
-- Construction on a 10,000 m² extension to the Group’s Czech investment
property, the Futurum Hradec Králové shopping centre, is progressing as
planned. The opening has been scheduled for 10 May 2012. The current
occupancy rate of the extension is 97 %.
-- In Poland, the construction of 5,600 m² of office space in the Tivoli
Residential Park, Warsaw, was completed in August 2011. Following their
sale to users and private investors, the project units were handed over to
the buyers in autumn 2011.
-- In addition, in autumn 2011 the Group sold a plot of land in Warsaw,
Poland, and realized a satisfactory profit on this sale.
-- Construction of the first phase of the Group’s project in Bielany, Poland,
commenced in mid-2011. The total project area comprises about 56,200 m²,
primarily housing, consisting of 900-1,000 units, with 136 units being
built in the first phase.
-- The Group’s letting situation remains satisfactory, and its completed
shopping centres continue to perform well with a satisfactory influx of
customers.
-- The Group’s total project portfolio amounted to DKK 3,498 million at 31
January 2012, of which DKK 2,027 million is attributable to projects that
have been completed and thus generate cash flow. The annual net rent from
the current leases amounts to DKK 140 million, equal to a return on cost of
about 7 %. Based on full occupancy, the return on cost is expected to reach
7.8 %. Negotiations for the sale of several of these projects are ongoing.
-- In total, the Group’s completed, cash-flow-generating projects and its
investment properties amount to DKK 2,394 million. The Group’s net
interest-bearing debt amounts to DKK 2,245 million.
-- At 31 January 2012, the Group’s project portfolio comprised 776,000 m² (31
January 2011: 798,000 m²).
-- The continued uncertainty on the international financial markets has led to
consistently long decision-making processes among financing sources,
tenants and investors alike. During the year, the Group therefore postponed
the expected construction start dates for several projects. Moreover, the
sales of one or more major completed projects have not yet been realized.
-- Changed investor behaviour, with a requirement for lower project risk, has
resulted in a sluggish decision-making process and thus a lower rate of
project turnover. This weakened project flow – combined with current and
expected market conditions – has caused Management to reassess the Group’s
business model.
-- The Group’s primary focus will continue to be real property development. As
an alternative, the Group can choose to initiate projects with a view to
construction and subsequent startup and maturing over a short span of
years, with such projects typically being classified as investment
properties.
-- Management considers it of great importance for the Group to sell a number
of major completed projects in the 2012/13 financial year. The sale of
major completed projects will generate the cash resources required to
underpin future operations and project flow, and thus long-term earnings.
In light of the volatility of financial markets, the volume, timing and
proceeds of major project sales are subject to uncertainty. Despite this
uncertainty, Management expects to sell a number of projects in the near
future and to generate positive pre-tax results for the 2012/13 financial
year.
-- In February 2012, a draft Bill to amend the Danish Corporation Tax Act and
other tax legislation was introduced, proposing changes to the rules for
tax loss carryforwards. For TK Development, an adoption of the draft Bill
will lengthen the time horizon for utilizing tax losses considerably, and
thus substantially increase the uncertainty attaching to utilization of the
tax asset. An adoption of the draft Bill and the associated uncertainty
relating to utilization of the tax asset will necessitate a significant
impairment of the Group’s tax asset in 2012/13. This impairment is assessed
to be in the DKK 110-150 million range.

Further information is available from Frede Clausen, President and CEO, on tel.
+45 8896 1010.

The expectations mentioned in this announcement, including earnings
expectations, are naturally subject to risks and uncertainties, which may
result in deviations from the expected results. Expectations may be affected by
various factors, as mentioned in the section ”Risk issues”, which applies in
particular to the valuation of the Group’s deferred tax asset.