Quarterly Report • Aug 15, 2007
Quarterly Report
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Nordicom A/S
CBR number 12 93 25 02
(For the period 01/01-06/30 2007)
| Quarterly statement…………………………………………………………………… | 3 |
|---|---|
| Management's review…………………………………….………………………… | 5 |
| Future expectations…………………………………………………………………. | 8 |
| Accounting Practise………………………………………………………………… | 8 |
| Auditors ………………………………………………………………………….…… | 8 |
| Management's statement…………………………………………………………… | 9 |
| Segment information - Nordicom Ejendom ………………………………………. | 10 |
| Segment information - Nordicom Udvikling ……………………………….………. | 16 |
| Segment information - Nordicom Finans …………………………………………. | 21 |
| Appendix 1 - Result and balance sheet for segments ………………………………… | 22 |
| 6 | 6 | ||||
|---|---|---|---|---|---|
| Q1 | Q2 | month | month | ||
| 2006 | Nordicom Group (DKK million) | 2007 | 2007 | 2007 | 2006 |
| 919.4 | Turnover | 92.4 | 103.6 | 196.0 | 135.1 |
| -620.9 | Operating and production expenses | -40.4 | -54.1 | -94.5 | -65.5 |
| 256.0 | Value creations and unrealised revaluations | 33.4 | 30.4 | 63.8 | 200.2 |
| 33.8 | Booked value of the properties upon sale | -0.6 | 0.1 | -0.5 | 29.7 |
| 588.3 | Gross result | 84.8 | 80.0 | 164.8 | 299.5 |
| -61.0 | Operating expenses | -14.1 | -13.2 | -27.3 | -33.5 |
| 527.3 | Operating profit | 70.7 | 66.8 | 137.5 | 266.0 |
| -75.3 | Financial expenses, net | -31.1 | -29.3 | -60.4 | -36.5 |
| 452.0 | The Nordicom Group, total before tax | 39.6 | 37.5 | 77.1 | 229.5 |
| -125.5 | Tax on the period's result | -11.1 | -13.9 | -25.0 | -64.3 |
| 326.5 | The Nordicom Group in total after tax | 28.5 | 23.6 | 52.1 | 165.3 |
| Allocation as follows: | |||||
| 326.5 | Shareholders in Nordicom | 28.5 | 23.6 | 52.1 | 165.3 |
| 0.0 | Minority shareholders | 0.0 | 0.0 | 0.0 | 0.0 |
326.5 The period's result 28.5 23.6 52.1 165.3
| 31/12 | 06/30 | 06/30 | |
|---|---|---|---|
| 2006 | Nordicom Group (DKK million) | 2007 | 2006 |
| Assets | |||
| 3,763.4 | Tangible and intangible fixed assets | 4,195.7 | 3,408.2 |
| 88.3 | Fixed interest-bearing asset investments | 57.4 | 89.8 |
| 30.1 | Other fixed asset investments | 41.5 | 38.4 |
| 1,071.3 | Residential projects and other current assets | 785.9 | 857.3 |
| 4,953.1 | Assets total | 5,080.5 | 4,393.7 |
| Liabilities | |||
| 1.197.9 | Owner's equity | 1,217.9 | 1,029.7 |
| 354.9 | Provision for deferred tax | 372.8 | 251.1 |
| 1,422.6 | Long-term interest-bearing liabilities | 1,765.7 | 1,135.6 |
| 23.8 | Other long-term liabilities | 26.3 | 7.0 |
| 1,732.5 | Short-term interest-bearing liabilities | 1,499.4 | 1,715.5 |
| 221.4 | Other short-term liabilities | 198.4 | 255.0 |
| 4,953.1 | Liabilities, total | 5,080.5 | 4,393.7 |
| Owner's equity as at 30. June | 1,217.9 | 1,029.7 |
|---|---|---|
| Minority shareholders | 0.0 | 0.0 |
| Shareholders in Nordicom | 1,217.9 | 1,029.7 |
| 30/6 | 30/6 | ||
|---|---|---|---|
| 2006 | Nordicom Group | 2007 | 2006 |
| 312,785 | Share capital (DKK thousands) | 312,785.0 | 312,785.0 |
| 43.1 | Return on owner's equity, before tax | 6.4 | 23.8 |
| 31.1 | Return on owner's equity , after tax | 4.3 | 17.1 |
| 24 | Solvency ration in % | 24.0 | 23.0 |
| 843 | Share price, ending | 850.0 | 1,040.0 |
| -75 | Increase in share price, 6 month (price points) | 7.0 | 122.0 |
| 391 | Net asset value per share, ending | 398.0 | 337.0 |
| 147 | Results per share, pre-tax | 25.2 | 73.0 |
| 107 | Results per share, after tax | 17.0 | 53.0 |
| 2.2 | Price/net asset value, ending before tax | 2.1 | 3.1 |
During the first half-year of 2007, Nordicom had a satisfactory level of activity and a result corresponding to the expectations.
On the investment front, Nordicom aims at increasing property investments to a level of DKK 5-6 billion before the end of 2008. However, the current market level on investment properties makes it difficult for Nordicom to achieve its investment criteria such as the requirement of a starting return of at least 6.5 % before financing. Therefore it is to our great satisfaction that, during the first half year of 2007, agreements concerning the acquisition of 10 new properties to the amount of DKK 361 million have been entered, increasing the portfolio value by DKK 550 million in 2007, including two properties acquired in 2006 which have been taken over in 2007. See further specification under segment information. Including the new properties, property investments come to DKK 3.5 billion as at 30 June 2007, whereas DKK 206 million will not enter the balance sheet before the second half-year. In the first half-year, one property has been sold to an amount of DKK 40 million, which will take accounting effect in the second half-year. The new investments and the work with letting and optimising the operating expenses of the property has as planned increased the income from letting during the first half-year. The income from letting comes to DKK 89.0 million and has increased by DKK 18.8 million compared to the first half year of 2006, corresponding to a progress of 26.8 %. At the same time the optimisation work has created significant new property values, contributing to the process of reaching the budgeted unrealised revaluations for the entire year.
In general, property project development is running well. At the end of the first half-year there were 29 on-going development projects with a total completion value of DKK 10.1 billion, primarily within the area of residence, retail and domicile. According to the plans, no residences have been completed in the first half-year of 2007 in the residential area. The current insecurity on the residential market means that project sales in general have been reduced to a very low level. In regards to Nordicom´s 2007 income the change in the market terms will not have any effect as the income is based on hand-overs from previously sold residences, which will also be the case for the second half-year of 2007. The residential slowdown means that Nordicom has not acquired new building rights for residential purposes in the first half-year. The prices on building rights are decreasing and since Nordicom is expecting this tendency to continue for a while longer, the company has had a reluctant purchase policy. The residential project portfolio hence remains unchanged with 198,300 m2. residential purpose, with a completion value of 6.2 billion. Within the area of retail and domicile 6 projects have been either sold or completed with a total area of 23,217 m2. in the first half-year to a total amount of DKK 213 million. Four of these projects sum up a total area of 13,370 m2. and has had an accounting effect in the first half-year and generates a contribution margin of DKK 22.6 million. The other two projects with a total area of 9,847 m2. will have an accounting effect in the second half-year of 2007. See further specifications under segment information. The business project portfolio comprises 232,189 m2 at the end of Q2 with an expected completion value of DKK 3.9 billion.
During the first half-year Nordicom saw its breakthrough on the parking area, working with urban ecological development through fully-automatic underground parking. The municipality of Copenhagen has made its decision regarding the systems supplier of fully-automatic parking facilities of up to 800 numbers of parking spaces, and Westfalia Car Park GmbH, Vienna, who in
Northern Europe is represented by Nordicom A/S was selected. In doing so the municipality of Copenhagen moved a step closer towards realising a parking strategy that will create visible enhancements to the parking facilities in the inner Copenhagen city area, a strategy leading to the establishment of a total of 4,000 new underground parking spaces before the end of 2014. In the municipality of Odense, Nordicom Parking has entered an agreement of establishing an underground automatic parking facility with approx. 200 parking spaces.
In the first half-year of 2007 the Nordicom group realised a gross result of DKK 164.8 million against DKK 299.5 million in the same period last year, corresponding to a decrease of DKK 134.7 million (-45.0 %). The decline is due to lower adjustments at market value which over the first half-year of 2007 came to DKK 55.0 million against 196.1 million in the first half-year of 2006. When disregarding the market values on investment properties a progress in the ordinary operation compared to the first half-year of 2006 of DKK 6.3 million can be determined even without having realised profit from sale of investment properties in the first half-year of 2007.
The Nordicom group's gross profit consists of the following components:
The turnover in the first half-year of 2007 comprises DKK 196.0 million compared with DKK 135.1 million in the same period last year. This corresponds to an increase of DKK 60.9 million (+45.1 %). The gross profit from the turnover deducted operating and production costs amounts to DKK 101.5 million compared with DKK 69.6 million last year. The gross profit increase of DKK 31.9 million compared to last year is derived from the following conditions:
• Adjusting the market value of investment properties has reduced the gross profit with DKK 141.1 million compared with last year.
Realised profit by sale of investment properties has in the first half-year been reduced by DKK 30.2 million compared to the same period last year. Nordicom has not realised profit from sale of properties in the first half-year of 2007. Realised profit comprises DKK -0.5 million and concerns adjustments to earlier completed sale. In the first half-year of 2006 profits amounting to DKK 29.7 million were realised.
The group's overhead costs comprise DKK 27.3 million, a reduction of DKK 6.2 million or 18.5%. This is partly due to focus on efficiency of which lower costs are direct results, and partly due to changed principles for activation of on-going projects. The financing expenses come to DKK 60.3 million against DKK 36.5 million in the first half-year of 2006. The increase in financing costs of DKK 23.8 million is due to the increase of the property portfolio, and a general increase in interests on short-term loans including expenses in connection to debt restructuring.
The group's pre-tax result for the first half-year of 2007 comes to DKK 77.1 million against DKK 229.5 million in the same period last year, corresponding to a decline of DKK 152.4 million. The decline is due to lower unrealised revaluations and a smaller sale of investment properties.
The Balance sheet total as at 06/30 2007 comprises DKK 5,080.5 million against DKK 4,953.1 million as at 12/31 2006.
Tangible and intangible assets come to DKK 4,195.7 million of the balance sheet total as at 06/30 2007 and has increased by DKK 432.3 million compared to the balance sheet as at 12/31 2006, primarily due to increased investments in rental properties and business projects.
Residential projects and additional current assets as at 06/30 2007 comprise DKK 785.9 million, a decline of DKK 285.4 million in comparison to the balance sheet as at 12/31 2006. The decline covers more conditions, whereas releasing cash deposit from sale of a large residential project in the second half-year of 2006 is the most significant, after which liabilities have been used to reduce short-term obligations to credit institutes. The decline in cash deposits partly corresponds to increased investments in project portfolios.
Owner's equity as at 06/30 2006 comprises DKK 1,217.9 million , which is an increase of DKK 20.0 million in comparison to 12/31 2006. Semi-annual owner's equity has been affected by the pay-out of dividends. As at 06/30 2007, long-term debts come to DKK 1,765.7 million, an increase of DKK 343.1 million compared to 12/31 2006, derived from an increase in property investments. Short-term loans have dropped by DKK 233.1 million to DKK 1,499.4 million, due to a total repayment of project credits connected to the release of bank deposits, cf. the above
We leave the budget for the 2007 accounting year of DKK 300 million before tax unchanged. For the coming half of 2007 we expect to see an increase in tenements of DKK 0.5 to 1.0 billion and a continued increase in tenement income. Positive results from the increased focus on lowering vacancies and optimising operational practice allow us to predict a level of unrealised revaluations for 2007 which lies above the current rate of inflation. In project development we expect to see a continuation of the positive tendencies from the first six months of 2007. In our residence segment, a change in on-market terms has no short-term effect. However, in longer terms, Nordicom will, to a larger extent, finish residence projects before they are let out or sold. Residence prices continue to lay in an attractive enough brackets for new residence project development, and we expect that falling prices in the housing market can be compensated by falling prices in new construction. Meanwhile, a change in residence demand is expected to bring on a sizeable reduction in the supply of new residences in future years. In total, these terms will result in more operating space and visibility for the long-term strategy residence developers, making the housing market a continued attractive market for Nordicom. Possibilities for new business project development continue to look good as the demand for well-located shopping- and office tenements is expected to continue. In longer terms, Nordicom´s breakthrough in Danish parking is expected to have a positive influence on foreign markets in which Nordicom for several years has been active, lobbying for sustainable inner-city development. The municipal authorities and private developers have to an increased extent focused on long-term effective city development plans, in which environment and culture headline the urban development. The concept behind this sustainable urban strategy contains possibilities of combining an effective infra-structure with room for cars with positive urban experiences for all of a city's user groups. In finance, the ample presence of cheap risk capital in latter years has meant that Nordicom has sought a relatively low activity level in this business segment. However, the on-going change in on-market terms is expected to result in an increase in Nordicom activities in this area of business.
The applicable accounting practice is unchanged compared to the 2006 annual report.
The auditors have not made a review or revised the report for the first half-year of 2007.
As of today the board and the management have approved the half-year report for the period 01/01 – 30/06 2007 for Nordicom A/S.
The report is made according to the principles of the international accounting standards (IFRS), approved by the EU, and Danish information standards for quarterly reporting for quoted companies. In our opinion, according to the international accounting standards, the report gives a true and fair view of the group's assets, liabilities and financial position as at 30 June 2007 including the group's assets in the period of 1 January – 30 June 2007.
Copenhagen, 15 August 2007
Board of management: Gunnar Chr. Kristensen
The board:
Torben Schøn, Chairman Peter Højland, Deputy Chairman
Aksel Bjødstrup Andreasen Michael Vad Petersen
Per Mellander
For questions or further comments please contact CEO Gunnar Kristensen on telephone +45 33 33 93 03 or e-mail [email protected].
Nordicom Ejendom invests in tenements in the Danish, Swedish and German markets.
Ill. 1: Property portfolio development
Nordicom has continued to increase our investments in properties during the first six months of 2007. By the end of the half-year, the book value of the real estate portfolio comes to DKK 3.2 billion compared with DKK 3.0 billion as at 31 March 2007 and DKK 2.5 billion after the first six months of 2006. The portfolio growth from 2002
until the first half-year of 2007 is presented in illustration I.
According to Nordicom's road map strategy,"Plan 2008"; our goal is to increase the property portfolio to a range of DKK 5-6 billion before the end of 2008. Due to the current real estate market, the first half-year has seen difficulties fulfilling Nordicom's requirements according to investment quality and yield when acquiring new property. This is also the reason for a slight stagnation in property acquisition. However, we still expect to reach our balance sheet goals for end-of-year 2008.
Disregarding the current difficulties identifying new, suitable investment properties, we still wish to conduct running portfolio adjustments by selling properties. It is important for Nordicom to realise profits currently by selling properties, and also to maintain rotation in the property portfolio.
Illustration 2 presents the annual portfolio growth divided into acquisitions, sale, improvements and current revaluations. The green bar shows the annual property sale, ranging between DKK 100 and 200 million since 2002. The main part of the investment property sale is traditionally placed during the second half of the year, and we expect the
2007 sale to be within the same range.
The Danish market is still Nordicom's main playing field in the portfolio, with properties of DKK 3.1 billion. After the first six months of 2007, property investments outside of Denmark comprise DKK 166.5 million, corresponding to 5.1% of the total portfolio (2.8% at the end of 2006).
segmentation of properties Although the process of identifying appropriate and attractive new property in Sweden and Germany has been a bit slow during the first half of 2007, the organisations are reaching such secure positions that we expect more investments in Sweden and Germany during the second half of the year. At the end of 2008 we expect the share of foreign properties in the total property portfolio to have increased to a level of 25 to 35%.
Total property investments comprise approximately DKK 2.5 billion invested in rental property, and approximately DKK 0.7 billion invested in project development properties. The project development is handled by Nordicom Udvikling, whereas ownership is kept in Nordicom Ejendom. This is due to the fact that a part of the properties will be included in Nordicom's portfolio upon completion as ordinary rental property.
When looking at investments in rental property, approximately DKK 1,105 million (33%) have been invested in retail property. Thus the retail segment continues to be the largest rental segment in Nordicom. However, the majority of the new rental property investments are currently placed beyond the retail segment which has decreased the share of this segment in the total portfolio. Following the second half of
2006, the retail segment share of the property portfolio comprises 38%. The second largest rental area is the city property-division, with investments of DKK 823 million corresponding to a share of 25% during the first half of 2007.
During the first six months, Nordicom closed escrow on ten new properties at a total of DKK 360.8 million. These properties are located as follows in the three markets in which Nordicom operates:
| Geographical region | Number | Area | Investment |
|---|---|---|---|
| Denmark | 4 | 19,221 m2. | DKK 192.0 mill. |
| Sweden | 5 | 24,353 m2 | DKK 158.8 mill. |
| Germany | 1 | 1,088 m2. | DKK 10.0 mill. |
| Total | 10 | 44,662 m2. | DKK 360.8 mill. |
The following seven properties, covering a total area of 27,980 m2 and comprising a total amount of DKK 259.3 million, have been acquired during Q2:
Adelgade 13, (Hotel Prindsen, Roskilde – purpose, leasing
The building situated in the city centre of Roskilde covers 5,700m2. The main tenant is Hotel Prindsen, a hotel with a long history on this address. In addition to the hotel, the building contains two high street leases for retail. The property is fully tenanted and further development of the property is expected in the longer term.
The building is developed for hotel purposes by Nordicom Udviking, and was commissioned during the second quarter. The construction of the building allows for it to be converted into flats at a comparatively small expense. The hotel is run by Zleep Hotel, having 3,400 m2 at their disposal.
The building is located in connection with the bypass road in Naestved. It holds possibilities for office and residence development. The property is indirectly included in the Naestved Harbour project as it offers the opportunity to relocate businesses positioned at the harbour.
The buildings, which are used for offices and warehousing, cover a total area of 4,503 m2, and are located close to our already existing investment in Lindköbing. The properties, considering the current use, are well-located and have ten different tenants.
The building covers a total area of 2,268 m2 and is located in an industrial estate in Lindköping. The property is used for offices and warehouses, and holds eight leases which are let at a comparatively low rent.
The buildings cover a total area of 9,300m2 and are located in an industrial area of Norrköping, which is the eighth largest city in Sweden with a population of 125,000. The property, which is leased to twelve different tenants, is used for offices, simple production and storage.
The building is situated in a well-established residential area in Hamburg, and covers a total area of 1,088m2 split into 15 flats.
Of the new properties comprising a total of DKK 360.8 million, DKK 168.2 million is included in the balance sheet as at 30 June 2007. The remaining properties will be included in the balance sheet during the second part of the year as they are taken over.
From 2002-2006, Nordicom Ejendom has sold properties for a total of DKK 827.3 million at a profit of DKK 179.6 million. This has produced an average contribution margin of 21.7%, of which DKK 37.8 million represents the realisation of previously booked, unrealised revaluations.
Illustration 5, below shows the selling prices of properties sold between 2002 and 2006, distributed by original purchase price, realised revaluations, and realised profits from sales. The latter was included in the profit and loss statement at the time of sale. The illustration also shows the distribution of realised sales prices for the first six months of 2007 compared with the same period of 2006.
Costs price Realised revaluations Profit from sale
During the first quarter, Nordicom made sale agreements on the property Lyngby Hovedgade, Lyngby, at a total sales price of DKK 40.0 million. The sale of the Lyngby Hovedgade property takes accounting effect in the third quarter of 2007. No agreements on property sales have been made during the second quarter of 2007.
Latter year's sizeable price gains in the real estate market are reflected in the increasing unrealized revaluations of the Nordicom books, especially in those of 2005 and 2006. We do not expect any unrealised revaluations consequential to a general price rise in the real estate market in 2007. The 2007 budgeted unrealised revaluations are connected to an optimisation of the operations of the group's properties, as well as the ordinary inflation based adjustment of the rental basis for the properties. During the first six months, these initiatives have led to unrealised revaluations on rental property of DKK 55.0 million. At the end of 2006, rental property was assessed on the basis of an average net return of 6.62%. Similarly, during 2007 we expect to use an average net return of more than 6.5% on the total portfolio.
Nordicom uses the yield-based valuation model when assessing the market value of rental property. The basis of the yield-based valuation model is the net rent for the following year, a rental value of vacancies, and utilities income. Operational expenses incorporate all actual operational costs, i.e. tax & charges, administration, insurance, maintenance, service charges, cleaning, supply charges, etc. The property net rent is made up by deducting operational expenses from the property income and deposits. Property market value is calculated by capitalizing the net rent with a yield percentage, determined individually from property to property.
The area available for letting (not including properties undergoing project development) comes to 271,000m2 and a total annual letting value of approximately DKK 177 million at the end of the half-year. Out of this total, lease and rental contracts covering a total annual rent of approximately DKK 153 million have been made at the end of the half-year, while there is a vacancy rate of 13.5% (Q1 2007: 15.1%), corresponding to a rental value of DKK 24 million.
As illustrated below, the rental income has been increasing steadily over the last four years and we expect to be able to continue the increase in future years. This prophecy is based on our declared goal of increasing our property portfolio.
During the first six months, realised rental income comes to DKK 90.3 million. Approximately DKK 84 million comes from the rental portfolio, and approximately DKK 6.3 million comes from project development property. Compared to the first six months of 2006, realised rental income has gone up DKK
The result of Nordicom Ejendom for the first six months of 2007 comes to a pre-tax revenue of DKK 58.9 million compared with DKK 145.6 million for the same period last year.
| 2006 | Nordicom Ejendom | Q1 2007 |
Q2 2007 |
First six months of 2007 |
First six months of 2006 |
|---|---|---|---|---|---|
| 137.6 | Turnover | 38.9 | 45.1 | 84.0 | 65.4 |
| 33.8 | Profit, property sales | -0.6 | 0.1 | -0.5 | 29.7 |
| 201.8 | Pre-tax result | 23.0 | 35.9 | 58.9 | 145.6 |
| 3,091.9 | Balance sheet total | 3,323.0 | 3,527.3 | 3,527.3 | 2,758.6 |
Result and balance are specified in appendix 1
The result decrease compared to 2006 can be attributed a lower unrealised revaluation margin on tenements, and the fact that no property with accounting effect has been sold in the first half of 2007. Illustration 7 shows the earnings distribution on main business areas.
Nordicom's Development department deals with project development of properties in Denmark, focusing on residential projects, retail projects, office projects and parking projects. At the end of the second quarter our project portfolio covered an estimated development area of 430,500 m2 and an estimated ready value of DKK 10.1 billion.
| Residential areas | 222,700 m2. | 51.6 % |
|---|---|---|
| Retail areas | 156,800 m2 | 34.6 % |
| Office areas | 35,300 m2. | 8.2 % |
| Parking areas | 0 m2. | 0 % |
| Other areas | 15,700 m2. | 3.6 % |
During the first six months we have realised gross earnings of DKK 37.5 million from project development. Expected gross earnings lie in the region of DKK 150 million for all of 2007.
Nordicom's residence development department develops residences for rental- and sales purposes.
The Residential department of Nordicom assigned one residence during the first six months of 2007. In addition to this, we have realised revenue from accrual relating to previously delivered projects. The profit of the first half-year comes to DKK 11.5 million. Further profit generated from assignment of residences relating to current projects is expected during the second part of 2007.
As at 30 June 2007, the Nordicom residential portfolio holds a development potential of approximately 2,100 residences with a total residence area of approximately 198,300 m2 and an estimated market value of DKK 6.2 billion.
We are currently in the process of developing 250 residences with a total market value of approximately DKK 763 million and a total residence area of 23,000 m2. Chart 2
| Projects under construction as at 30 June 2007 |
Expected assignment (m2) |
||||||
|---|---|---|---|---|---|---|---|
| Project | Area (m2) |
Number of residences |
Assigned residences (units) |
Sold, not yet assigned residences (units) |
2007 | 2008 | 2009 |
| Hammershave, Helsingoer | 4,978 | 55 | 0 | 55 | 4,978 | ||
| Fyrholm, Sluseholmen, Cph. | 18,365 | 196 | 195 | 1 | 90 | ||
| Lindholm, Sluseholmen, Cph. | 14,299 | 146 | 0 | 63 | 14,299 | ||
| Olgas Have, Ballerup | 11,446 | 128 | 80 | 42 | 3,720 | ||
| Total | 49,088 | 525 | 275 | 161 | 8,788 | 14,299 | 0 |
| Market value total – DKK | 1,416 | 650 | 442 |
Of the 250 unassigned residences under development, 161 have been sold. This results in a total of 89 unsold residences under development. The building projects in progress which have not been assigned are included in the balance sheet at an accounting cost of DKK 402.9 million as at 30 June 2007. Six of the residences which have not been sold are part of the project Olgas Have in Ballerup, and 83 flats are part of the project Lindholm in Sluseholmen, Copenhagen. We expect to sell the flats in Olgas Have as the project is gradually completed during the second part of 2007. We will resume sales of the units of project Sluseholmen during Q4, once the canals are opened and filled with water.
Nordicom Udvikling has a pipeline of 7 residence projects on which construction has not yet commenced as at 30 June 2007. These projects are expected to result in 1,874 new residences with a total market value of DKK 5.5 billion and a total residence area of 175,200 m2. During the second quarter, the district plan of the area Stigbordene in Copenhagen has been approved. This means that district plans have now been approved for four out of seven projects. The planning programmes of the remaining projects are in progress, including the final two large projects in Copenhagen. The book value of the seven projects under development where construction has not yet commenced comes to DKK 898.4 million, corresponding to an average book value of DKK 4,400 per expected square metre construction right. The land value of the three Copenhagen plots, Amager Strandvej, Ved Stigbordene and Enghave Brygge, is included as at 30 June 2007 at a book value of DKK 783.5 million, corresponding to an average price of DKK 4,700 per expected square metre building right. The remaining plots of land are booked at an average price of DKK 3,000 per square metre building right.
| Projects under development as at 30 June 2007 |
Expected building commencement (m2) |
||||||
|---|---|---|---|---|---|---|---|
| Project | Area (m2) |
Number residenc es (units) |
Final district plan |
Sold, not yet assigned residences (units) |
2007 | 2008 | 2009 |
| Skraaningshusene, Snekkersten | 1,292 | 10 | Approved | 0 | 1,292 | ||
| Hammershoej, wing h, Helsingoer |
4,433 | 68 | Approved | 0 | |||
| Amager Strandvej, Copenhagen | 47,447 | 420 | In 2008 | 0 | 10,000 | ||
| Ved Stigbordene, Copenhagen | 55,620 | 585 | Approved | 0 | 10,000 | 10,000 | |
| Enghave Brygge, Copenhagen | 59,700 | 630 | In 2009 | 0 | |||
| Laguneparken, Naestved | 6,700 | 71 | Approved | 0 | 3,500 | ||
| Randlevvej, Odder | 90 | In 2008 | 0 | ||||
| Total | 175,192 | 1,874 | 0 | 0 | 14,792 | 20,000 | |
| Total market value – DKK millions |
5,449 |
In comparison with Q1, expectations for the commencement of new building projects have changed. Because of the currently very high building costs, we do not expect to start house building during 2007. The building prices are still booming, and we consequently do not expect to commence any new residential building projects until 2008 when the building prices are likely to be lower.
The potential to pre-sell project flats has diminished significantly during the first six months of 2007. Nordicom will continue to develop new residences, but in the coming years we will concentrate on completing the flats before selling or letting them. To Nordicom, these changed conditions means a return to the market terms of the period 2001-2003, when the majority of new residences where completed prior to selling or letting. The project residence market as a whole is affected by the changed market conditions in that the number of project residence suppliers will decrease significantly, and there will be a considerable drop in the supply of new residences. Nordicom has not increased our level of activity within the residential area during the boom period (2004-2006) to any considerable extent, and the changed market conditions are therefore not expected to lead to any significantly reduced level of activity over the coming years.
In the business development division of Nordicom we focus on projects in retail, office buildings and miscellaneous urban usage including residential purposes.
During the first six months of 2007, we have assigned or sold six development projects covering a total area of 23,217 m2 and a total value of DKK 213 million. This leads to an inclusion of profits and unrealised revaluations of DKK 25.7 million in the books of the first half-year.
| Project | Area | Status |
|---|---|---|
| L.C.Worsoesvej 2, Holbaek | 2,000 m2. | Commissioned |
| Gladsaxevej 341-347, Gladsaxe | 5,000 m2. | Commissioned |
| Galoshe Alle 3-7, Koege | 2,940 m2. | Commissioned /sold/assigned |
| Herlev Hovedgade 199, Herlev | 3,430 m2. | Sold/assigned |
Regarding projects that have been commissioned but not sold, an unrealised value creation based on Nordicom's assessment of the property portfolio value has been included in the half-year books. We expect a further profit upon sale during the latter part of the year.
The profit from projects sold but not assigned is not included until the projects are assigned to the buyer during the last part of 2007.
| Project | Status | |
|---|---|---|
| Frederikssundsvej 11, Copenhagen 1,347 m2 | Sold | |
| Middelfartvej 1, Odense | 8,500 m2. | Sold |
As at 30 June 2007, the Nordicom Udvikling's business segment was developing 18 business projects with an expected total area of 232,189 m2 and an expected ready value of DKK 3.9 billion. The bulk of the projects still lie within retail with a total area of 156,800 m2, which makes up 68 %
of the total project portfolio (62 % at the end of 2006). Office space projects come to 35,300 m2; 15 % of the project portfolio (14 % at the end of 2006).
At the end of the half-year, five business projects covering a total area of 13,773 are still under construction. During the second quarter, the building of Gladsaxevej 341-347 has been completed, and the building of the projects Koebenhavnsvej 51 and Byageren 5-11 (both situated in Roskilde) has commenced. 5,061 m2 of the total project area have been let or leased, while 3,000m2 of the Ebeltoft project is up for sale. Byageren 5-11 in Roskilde covers a residential area of 1,817 m2 which are to be sold or let. The expected total ready value of the five projects comes to approximately DKK 310 million. The booked value of our business projects under construction comes to DKK 124 million as at 30 June 2007. To this should be added the project value of Hotel Hvide Hus in Ebeltoft; a joint venture through associated partnership.
| Chart 4 | ||||||
|---|---|---|---|---|---|---|
| Business projects under construction as at 30 June 2007 |
||||||
| Project | Retail area (m2) |
Office Area (m2) |
Other use (m2) |
Total area (m2) |
Leased area (m2) |
Expected assignment (year) |
| Remaining Zealand | ||||||
| Toldbuen, Naestved | 1,745 | 1,745 | 1,745 | 2007 | ||
| Byageren 5-11, Roskilde | 3,458 | 1,817 | 5,275 | 650 | 2007/08 | |
| Koebenhavnsvej 51, Roskilde | 1,463 | 1,463 | 1,463 | 2007 | ||
| Jutland and the islands | ||||||
| Torvet 1, Aakirkeby, Bornholm | 2,290 | 2,290 | 1,203 | 2008 | ||
| Hotel Hvide Hus, Ebeltoft | 3,000 | 3,000 | To be sold |
2008 | ||
| Total | 7,211 | 1,745 | 4,817 | 13,773 | 5,061 |
At the end of the half-year, we are developing 13 business projects not yet under construction. These cover a total area of 218,416 m2 and come to an expected total ready value of DKK 3.6 billion. The project plans for Amager Strandvej 20-22 have been abandoned during the second quarter; the intention was to extend the property with 2000 m2 shopping area to an existing tenant. Similarly, plans no longer exist to extend the Ringsted Centre. During the second quarter we took over another property for the project Naestved Havn (Naestved Harbour), which has increased the expected project area to approximately 7,000 m2 for office use.
| Chart 5 | |||||||
|---|---|---|---|---|---|---|---|
| Business development projects not under construction as at 30 June 2007 |
Expected assignment |
||||||
| Project | Retail area (m2) |
Office area (m2) |
Other use (m2) |
Total area (m2) |
Approved district plan |
2007 (m2) |
2008 or later (m2) |
| Greater Copenhagen |
| Herlev Hovedgade 17, Herlev | 44,098 | 44,098 | No | 44,098 | |||
|---|---|---|---|---|---|---|---|
| Hoeje Gladsaxe Center (expansion) |
6,220 | 1,500 | 7,720 | No | 7,720 | ||
| Taastrup Bycenter, Tåstrup | 7,234 | 3,650 | 10,884 | Yes | 10,884 | ||
| Englandsvej 51, Copenhagen | 1,000 | 2.818 | 3.818 | No | 3,818 | ||
| Remaining Zealand | |||||||
| Byageren et al. | 2,142 | 900 | 2,966 | 6,008 | Yes | 6,008 | |
| Schweizerarkaden, Slagelse | 3,862 | 1,303 | 4,158 | 9,323 | Yes | 9,323 | |
| Slagelse Storcenter, Slagelse | 46,700 | 46,700 | Yes | 46,700 | |||
| Naestved Havn, Naestved | 21,440 | 27,066 | 6,873 | 55,379 | Yes | 2,550 | 52,829 |
| Helsinge Stationscenter | 6,670 | 1,600 | 4,000 | 12,270 | No | 12,270 | |
| Jutland and the islands | |||||||
| Aakirkebyvej 50, Bornholm | 2,200 | 162 | 2,362 | Yes | 2,362 | ||
| Kongensgade 67, Odense | 900 | 3,974 | 4,874 | Yes | 4,874 | ||
| Svendborg Havn, Svendborg | 1,100 | 1,980 | 3,080 | No | 3,080 | ||
| Middelfartvej 1, Odense | 6,000 | 2,500 | 3,400 | 11,900 | Yes | 8,500 | 3,400 |
| Total | 149,566 | 33,531 | 35,319 | 218,416 | 11,050 | 207,366 |
The booked value of the above projects not under construction comes to approximately DKK 524 million, not including Taastrup Bycenter, a joint venture owned through an associated partnership. The expected total area of these projects comes to 218,416 m2, of which 22,400 m2 hold signed leases at a total annual rent of approximately DKK 25 million.
Our primary focus in parking is contributing to the renewal of narrow, old city centres through green city development. In the first half-year we have formed partnerships with two new suppliers of technical systems, so that Nordicom henceforth represents two suppliers of fully automated systems, Trevi and Westfalia. In addition to this, Nordicom represents the semi-automated system supplier Nussbaum.
Within the parking area we operate as supplier, developer, investor and consultant. Choosing the right parking strategy can further development of historic city centres through pedestrian zones, green city squares and a blossoming trade environment. Meanwhile, conditions are improved significantly for both cyclists and residents alike.
Within the parking area, Nordicom has achieved a breakthrough during the first six months of 2007 in working with green city development through fully automated underground parking. The City of Copenhagen has decided on Westfalia Car Park GmbH, Wien as their system supplier for the establishment of up to 800 fully automated underground parking spaces, and Nordicom A/S represents Westfalia in Northern Europe. The municipality of Odense and Nordicom have formed a cooperation agreement to establish an underground car park of 200 spaces at Brandts Klaedefabrik.
The pre-tax result of Nordicom Udvikling shows a pre-tax revenue of DKK 22.5 million in the first six months of 2007 (same period of 2006: DKK 85.6 million) The drop can be accredited a lower revaluation rate on land holdings.
| First six | First six | ||||
|---|---|---|---|---|---|
| Q1 | Q2 | months | months | ||
| 2006 | Nordicom Udvikling | 2007 | 2007 | of 2007 | of 2006 |
| 769.4 | Turnover | 52.8 | 58.1 | 110.9 | 62.5 |
| 250.2 | Pre-tax result | 18.8 | 3.7 | 22.5 | 85.4 |
| 2,080.3 | Balance sheet total | 1,905.4 | 1,945.4 | 1,945,4 | 1,597.9 |
Result and balance are specified in appendix 1
Nordicom Finans invests in mortgage deeds and enters into project development partnerships in which Nordicom Finans secures the capital basis of the enterprise.
In the first half-year of 2007, the mortgage deed holdings have been reduced by DKK 31 million, to DKK 57.7 million.
The segment EjendomsKaution offers to post a security for real estate investors or property developers to banks etc., covering the extreme 10-20 % of a real estate commitment. We also offer clients access to the extensive network Nordicom represents, with the possibility of project and/or investment sparring and counselling. The segment is well in tune with additional group business areas and offers a potential to optimise the use of our knowledge and network.
Over the past couple of years, Nordicom has not wished to expand the financial area due to the ample existence of venture capital in the real estate market. However, the financial market is currently undergoing changes which will leave room for an expansion of Ejendomskaution and mortgage deed investments in the nearest future.
| 2006 | Nordicom Finans | Q1 2007 |
Q2 2007 |
First six months of 2007 |
First six months of 2006 |
|---|---|---|---|---|---|
| 14.2 | Turnover | 1.3 | 1.1 | 2.4 | 7.9 |
| 12.5 | Pre-tax result | 1.0 | 0.9 | 1.9 | 6.9 |
| 101.6 | Balance sheet total | 73.0 | 62.2 | 62.2 | 109.1 |
Result and balance are further specified in appendix 1
The pre-tax result of Nordicom Finans shows a revenue of DKK 1.0 million in the first three months of 2007 (same period 2006: DKK 3.5 million) The drop can be accredited a reduction of the mortgage deed holdings and the termination of former securities.
| PROFIT AND LOSS ACCOUNT1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (DKK millions) | Q1 | Q2 | 2006 Q3 |
Q4 | Full | Q1 | Q2 | 2007 Q3 |
Q4 | Year |
| year | to date |
|||||||||
| Nordicom Ejendom | ||||||||||
| Net turnover | 32.3 | 33.1 | 33.6 | 38,6 | 137,6 | 38,9 | 45,1 | 84,0 | ||
| Operation- and production costs | -8.8 | -7.2 | -5.7 | -6,3 | -28,0 | -8,6 | -7,1 | -15,7 | ||
| Unrealised revaluations, investment properties | 53.2 | 53.1 | 24.6 | 15,5 | 146,4 | 25,0 | 30,0 | 55,0 | ||
| Realised profit from sale of investments properties | 16.2 | 13.4 | 2.2 | 2,0 | 33,8 | -0,6 | 0,1 | -0,5 | ||
| Gross result | 92.9 | 92.4 | 54.7 | 49,8 | 289,8 | 54,7 | 68,1 | 122,8 | ||
| Fixed costs | -4.9 | -6.9 | -5.8 | -7,7 | -25,3 | -6,7 | -6,9 | -13,6 | ||
| Result of primary activities | 88.0 | 85.5 | 48.9 | 42,1 | 264,5 | 48,0 | 61,2 | 109,2 | ||
| Financial costs, net | -14.2 | -13.7 | -16.9 | -17,9 | -62,7 | -25,0 | -25,3 | -50,3 | ||
| Result before tax | 73.8 | 71.8 | 32.0 | 24,2 | 201,8 | 23,0 | 35,9 | 58,9 | ||
| Tax of period result | -20.7 | -20.1 | -9.0 | -6,8 | -56,6 | -6,4 | -8,3 | -14,7 | ||
| Period result | 53.1 | 51.7 | 23.0 | 17,4 | 145,2 | 16,6 | 27,5 | 44,1 | ||
| Nordicom Udvikling | ||||||||||
| Net turnover | 7.0 | 55.5 | 196.5 | 510.4 | 769.4 | 52.8 | 58.1 | 110.9 | ||
| Operation- and production costs | -3.4 | -45.6 | -155.1 | -387.9 | -592.0 | -31.4 | -46.6 | -78.0 | ||
| Value creation and unrealised revaluations | 43.6 | 50.3 | 10.0 | 5.7 | 109.6 | 8.4 | 0.4 | 8.8 | ||
| Gross result | 47.2 | 60.2 | 51.4 | 128.2 | 287.0 | 29.8 | 11.9 | 41.7 | ||
| Fixed costs | -8.7 | -7.7 | -2.5 | -5.7 | -24.6 | -5.3 | -4.8 | -10.1 | ||
| Result of primary activities | 38.5 | 52.5 | 48.9 | 122.5 | 262.4 | 24.5 | 7.2 | 31.7 | ||
| Financial costs, net | -2.3 | -3.3 | -2.2 | -4.4 | -12.2 | -5.7 | -3.4 | -9.1 | ||
| Result before tax | 36.2 | 49.2 | 46.7 | 118.1 | 250.2 | 18.8 | 3.7 | 22.5 | ||
| Tax of period result | -10.1 | -13.8 | -13.1 | -33.1 | -70.1 | -5.3 | -0.3 | -5.6 | ||
| Period result | 26.1 | 35.4 | 33.6 | 85.0 | 180.1 | 13.5 | 3.4 | 16.9 | ||
| Nordicom Finans | ||||||||||
| Net turnover | 4.0 | 3.9 | 3.3 | 3.0 | 14.2 | 1.3 | 1.1 | 2.4 | ||
| Gross result | 4.0 | 3.9 | 3.3 | 3.0 | 14.2 | 1.3 | 1.1 | 2.4 | ||
| Fixed costs | -0.5 | -0.6 | -0.5 | -0.2 | -1.8 | -0.4 | -0.3 | -0.7 | ||
| Result of primary activities | 3.5 | 3.3 | 2.8 | 2.8 | 12.4 | 0.9 | 0.8 | 1.7 | ||
| Financial costs, net | 0.0 | 0.1 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.2 | ||
| Result before tax | 3.5 | 3.4 | 2.8 | 2.8 | 12.5 | 1.0 | 0.9 | 1.9 | ||
| Tax of period result | -1.0 | -1.0 | -0.8 | -0.8 | -3.6 | -0.3 | -0.2 | -0.5 | ||
| Period result | 2.5 | 2.4 | 2.0 | 2.0 | 8.9 | 0.7 | 0.7 | 1.4 |
1) The segment information is provided prior to inter-company eliminations, just as the group has result entries which are not allocated to the segments. The total of the segment result entries can therefore not be adjusted to the figures of the group.
| (DKK millions) | 31/3 2006 |
30/6 2006 |
30/9 2006 |
31/12 2006 |
31/3 2007 |
30/6 2007 |
|---|---|---|---|---|---|---|
| Nordicom Ejendom | ||||||
| Assets | ||||||
| Tangible and intangible assets | 2,320.5 | 2,537.4 | 2,686.8 | 2,837.1 | 2,957.0 | 3,240.0 |
| Other assets | 20.1 | 28.8 | 14.9 | 20.5 | 37.0 | 25.0 |
| Current assets | 276.4 | 192.4 | 220.6 | 234.3 | 329.3 | 262.3 |
| Total assets | 2,617.0 | 2,758.6 | 2,922.3 | 3,091.9 | 3,323.3 | 3,527.3 |
| Liabilities | ||||||
| Owners' equity | 647.3 | 649.5 | 672.5 | 689.9 | 706.5 | 727.4 |
| Long-term interest-bearing debt | 1,184.7 | 1,134.4 | 1,170.5 | 1,122.6 | 1,272.8 | 1,465.7 |
| Other long-term debt | 176.7 | 173.6 | 180.4 | 233.9 | 233.9 | 243.4 |
| Short-term interest-bearing debt | 483.9 | 489.7 | 633.0 | 742.6 | 573.5 | 661.9 |
| Other short-term debt | 124.4 | 311.4 | 265.9 | 302.9 | 536.3 | 428.9 |
| Total liabilities | 2,617.0 | 2,758.6 | 2,922.3 | 3,091.9 | 3,323.0 | 3,527.3 |
| Nordicom Udvikling | ||||||
| Assets | ||||||
| Tangible and intangible assets | 731.6 | 866.0 | 921.8 | 921.6 | 929.9 | 947.9 |
| Other assets | 10.0 | 10.0 | 10.0 | 10.0 | 10.0 | 16.9 |
| Current assets | 680.0 | 721.9 | 840.9 | 1,148.7 | 965.5 | 980.6 |
| Total assets | 1,421.6 | 1,597.9 | 1,772.7 | 2,080.3 | 1,905.4 | 1,945.4 |
| Liabilities | ||||||
| Owners' equity | 384.8 | 340.2 | 373.8 | 458.8 | 472.3 | 445.0 |
| Long-term interest-bearing debt | 83.2 | 76.4 | 56.3 | 300.0 | 300.0 | 300.0 |
| Other long-term debt | 84.2 | 84.2 | 83.1 | 155.7 | 155.7 | 164.1 |
| Short-term interest-bearing debt | 675.3 | 1,015.4 | 1,023.3 | 982.2 | 733.4 | 847.5 |
| Other short-term debt | 194.1 | 81.7 | 236.2 | 183.6 | 244.0 | 188.8 |
| Total liabilities | 1,421.6 | 1,597.9 | 1,772.7 | 2,080.3 | 1,905.4 | 1,945.4 |
| Nordicom Finans | ||||||
| Assets | ||||||
| Tangible and intangible assets | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other assets | 97.1 | 87.7 | 87.0 | 86.4 | 56.5 | 55.5 |
| Current assets | 11.0 | 21.4 | 13.9 | 15.2 | 17.0 | 6.7 |
| Total assets | 108.1 | 109.1 | 100.9 | 101.6 | 73.0 | 62.2 |
| Liabilities | ||||||
| Owners' equity | 67.6 | 50.0 | 52.0 | 54.0 | 54.7 | 50.5 |
| Long-term interest-bearing debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other long-term debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Short-term interest-bearing debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other short-term debt | 40.5 | 59.1 | 48.9 | 47.6 | 18.3 | 11.7 |
| Total liabilities | 108.1 | 109.1 | 100.9 | 101.6 | 73.0 | 62.2 |
1) The segment information is provided prior to inter-company eliminations, just as the group has result entries which are not allocated to the segments. The total of the segment result entries can therefore not be adjusted to the figures of the group.
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