Agat Ejendomme — Interim / Quarterly Report 2017

Dec 15, 2016

Company announcement no. 15/2016

Aalborg, Denmark, 2016-12-15 08:46 CET (GLOBE NEWSWIRE) --

SUMMARY

RESULTS FOR THE FIRST NINE MONTHS OF 2016/17

The results before tax amounted to DKK 0.2 million against DKK -180.7 million
in the first nine months of 2015/16. The results after tax amounted to DKK -4.1
million against DKK -212.1 million in the same period of 2015/16.

The balance sheet total amounted to DKK 2,797.4 million against DKK 2,808.8
million at 31 January 2016. Consolidated equity totalled DKK 1,281.4 million,
and the solvency ratio stood at 45.8 %.

Breakdown by segment:

DKKm Property Asset Unallocate
development management d

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Profit/loss

Profit/loss before tax 18.3 -10.7 -7.4

Balance sheet

Development projects 839.9 - -

Completed properties under asset - 1,176.6 -
management

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Other asset management projects - 124.2 -

Other assets 301.5 278.8 76.4

Total assets 1,141.4 1,579.6 76.4

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Tied-up equity 653.8 566.3 61.3

OUTLOOK FOR 2016/17

Management still expects consolidated results before tax for 2016/17 to total
DKK 10-30 million.

This profit estimate is based on the expected execution of a few small and
medium-sized projects in Q4 2016/17 as well as the anticipated sale of a few
plots of land before the reporting date. TK Development is recording good
progress on the individual projects. The Group’s most significant development
projects are not expected to contribute to consolidated results until
subsequent financial years.

PROPERTY DEVELOPMENT

The results for this business area amounted to DKK 18.3 million before tax for
the first nine months of 2016/17. At 31 October 2016 the balance sheet total
came to DKK 1,141.4 million, and the equity tied up represented DKK 653.8
million.

During the first nine months of 2016/17, TK Development completed the sale of a
superstore of about 2,150 m² in Rødekro, a retail property of about 1,200 m² in
Holbæk, a small superstore in Dronninglund and a few plots of land, and also
generated fee income on several projects. In addition, TK Development handed
over a substantial number of the completed units comprised by the second phase
of the Bielany residential project in Warsaw, Poland, to the buyers.

Major development projects:

-- TK Development has conditionally sold a 5,300 m² youth housing project in
Frederiksberg, Copenhagen. Construction started in October 2016, and
handover to the buyer is scheduled for January 2018.

-- Construction of the new shopping centre, BROEN Shopping, in Esbjerg,
Denmark, is proceeding according to plan and scheduled for completion in
April 2017. The current occupancy rate is 80 % of the premises (Q2 2016/17:
75 %).

-- The construction project in Køge, Denmark, is moving ahead. Most of the
project is still expected to be completed in autumn 2017, while a minor
part is not scheduled for completion until 2018. The retail project, of
which 78 % has been let (Q2 2016/17: 74 %), has been sold conditionally to
the Finnish company Citycon together with the parking facilities. The sale
to Citycon is still expected to have a significant positive impact on
results in the 2017/18 financial year when the completed part of the
project is handed over to the investor.

-- Construction of the Amerika Have residential project in Copenhagen,
Denmark, is progressing as planned, and 88 of the 121 apartments have been
sold (Q2 2016/17: 65).

-- In June 2016 construction started on the third phase of the Bielany
residential project in Warsaw, Poland. The pre-completion sale is
progressing satisfactorily, and 30 % (Q2 2016/17: 19 %) of the residential
units have been sold.

-- After the reporting date TK Development has conditionally sold a
residential rental project of about 4,900 m² at Østre Havn in Aalborg,
Denmark, to a private investor. Construction is expected to start at the
beginning of 2017, with completion and handover to the buyer scheduled for
spring 2018.

The projects in the pipeline are moving ahead at a good pace due to robust
tenant and investor interest.

A number of major projects for handover in 2017/18 have been sold in whole or
in part, which underpins the strategic earnings goal in the property
development business area.

As from the 2017/18 financial year, the return on equity from the property
development business area is expected to amount to 15-20 % p.a. before tax.

ASSET MANAGEMENT

The results for this business area amounted to DKK -10.7 million before tax for
the first nine months of 2016/17. At 31 October 2016 the balance sheet total
came to DKK 1,579.6 million, and the equity tied up represented DKK 566.3
million.

The portfolio of completed properties in this business area consists of 156,200
m², amounting to DKK 1,592.4 million at 31 October 2016. 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 % (Q2 2016/17: 4.5 %). Based on full
occupancy, the return on the carrying amount is expected to reach 6.1 % (Q2
2016/17: 6.1 %).

Detailed development and operating plans have been drafted for each property,
and good progress is being made in their realization in a number of areas.

As previously announced, the aim is to sell the asset management activities
within a period of three to five years starting in December 2015, and the
tied-up equity thus released is planned to be distributed to TK Development’s
shareholders. The operation of the assets is to be matured and optimized prior
to their sale, and intensive efforts are being made to achieve this.

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. 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.

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