Agat Ejendomme — Interim / Quarterly Report 2016

Dec 17, 2015

Company announcement no. 21/2015

Aalborg, Denmark, 2015-12-17 08:46 CET (GLOBE NEWSWIRE) --

SUMMARY

Results for the first nine months of 2015/16

The results before tax, excluding discontinuing activities, amounted to DKK
-96.0 million*) against DKK 8.6 million in the same period of 2014/15.

The results after tax amounted to DKK -212.1 million against DKK -39.3 million
in the first nine months of 2014/15.

The results include the impairment of projects, plots of land, goodwill and tax
assets in the amount of DKK 217.3 million; see below.

The balance sheet total amounts to DKK 2,811.2 million. The Group’s equity
stood at DKK 1,301.1 million, equal to a solvency ratio of 46.3 %.

Strategic focus 2018

TK Development’s Board of Directors has determined a number of strategic goals
and initiatives for the period until 2018. The aim is for TK Development to
become an undiversified developer company and to create attractive shareholder
value.

The Group’s future strategic focus will be property development in Denmark,
Sweden and Poland. The return on equity from this business area is expected to
amount to 15-20 % p.a. before tax as from the 2017/18 financial year.

The operation of the Group’s asset management activities is to be matured and
optimized, with a view to selling the activities within a three- to five-year
period, and the plan is to distribute the freed-up equity to TK Development’s
shareholders.

TK Development will continue its strong focus on substantially reducing the
portfolio of land.

The narrowed focus of the future strategy will mean continuous reductions of
the Group’s capacity costs in the period until 2018.

As part of the strategy, Management has decided:

To initiate a process to sell the Czech activities. The Czech plots of land
have been written down by DKK 35.0 million to cover the risks associated with
this sale.

To start the third of four phases of a major residential project in Poland.
Current budget estimates necessitate making a DKK 37.8 million writedown for
impairment on these plots of land, and their value will amount to DKK 189.1
million after the impairment. In step with the startup of the last two phases,
the plots will be transferred to projects in progress. In addition, another
Polish plot of land has been written down by DKK 7.5 million. Negotiations
about the partial sale of this plot are currently ongoing.

To discontinue reporting separately on the Group’s discontinuing activities,
with a DKK 78.0 million writedown for impairment having been made to cover the
special risks associated with these activities.

To include land and development projects in the countries where the Group
wishes to discontinue its activities in the longer term under asset management
in the Group’s future reporting.

To write down goodwill and tax assets by DKK 56.0 million.

Outlook for 2015/16 and 2016/17

The previous profit estimate for 2015/16 before tax, excluding discontinuing
activities, has been adjusted downwards by DKK 140 million to about DKK -100
million.

The results realized on the discontinuing activities for the period Q1-Q3
2015/16 amount to DKK -84.8 million. The reporting on this segment will cease
after that period.

Consolidated results for 2015/16 are expected to total about DKK -190 million
before tax.

Consolidated results for 2016/17 are expected to total DKK 10-30 million before
tax.

Financial issues

After the reporting date TK Development has entered into an agreement with PKA
regarding a DKK 500 million refinancing of Sillebroen in Frederikssund,
Denmark, over a five-year term.

In the third quarter of 2015/16, TK Development extended its agreement with the
Group’s main banker about operating and project credits until 30 September
2017.

Property development

The sales completed by TK Development in the first nine months of 2015/16
included the following, all in Denmark:

-- Sale of ownership interest in apartments for young people of about 1,500 m²
in Frederiksberg.
-- Sale of retail stores of about 3,700 m² in Randers.
-- Sale of a 6,000 m² office project in Aalborg.
-- Sale of a lot of about 13,000 m2 at Amerika Plads – of which TK
Development’s ownership interest amounted to 50 %.
-- Sale of building rights for almost 9,000 m² to Køge Municipality.

Major development projects in progress:

-- Construction of the new BROEN shopping centre in Esbjerg, Denmark, started
in May 2015. About 65 % of the premises have now been let. In May 2015 TK
Development sold 65 % of the project to CapMan Real Estate, which is
participating in completing its development.

-- The Group’s Strædet project in Køge, Denmark, comprises retail and
residential units as well as public service and parking facilities.
Construction started in March 2015. The retail project, of which 75 % has
been let, has been sold conditionally to the Finnish company Citycon
together with the parking facilities.

-- The second phase of the residential project in Bielany in Warsaw, Poland,
is progressing as planned. The second phase consists of 297 retail units
and service facilities, and 78 % of the units have been sold in advance at
the budgeted selling prices. The estimated net profit on the project on
handover to the buyers meets expectations.

-- Overall, TK Development has ongoing construction projects covering more
than 80,000 m², and is also recording good progress on a range of other
projects in the portfolio.

Asset management

The portfolio of completed properties in this business area consists of 155,600
m², amounting to DKK 1,568.9 million at 31 October 2015. This amount includes
joint venture projects.

The annual net rent from the current leases corresponds to a return on the
carrying amount of 4.3 %. Based on full occupancy, the return on the carrying
amount is expected to reach 6.2 %.

Discontinuing activities

TK Development has decided to develop and execute the third and last phase of
the DomusPro project in Vilnius, Lithuania. After the reporting date this part
of the project has been sold conditionally to BPT Baltic Opportunity Fund,
which has also bought the first two project phases.

TK Development has sold the Group’s plot of land in Finland after the reporting
date, and thus has no remaining activities in Finland, apart from a few
guarantees on projects previously sold.

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 Annual
Report 2014/15, particularly the valuation of the Group’s project portfolio, as
described under Business risks and Risks related to the presentation of
financial statements.

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

*) Adjusted for tax withheld from Income from investments in joint ventures.