Annual Report 2016/17
Source: Nasdaq GlobeNewswire / 29 Mar 2017 02:57:14 America/New_York
Aalborg, Denmark, 2017-03-29 08:57 CEST (GLOBE NEWSWIRE) --
Results for 2016/17
The results before tax amounted to DKK 13.8 million for 2016/17 against DKK -191.0 million in 2015/16. The results for the year are in line with expectations.
The results after tax amounted to DKK 7.1 million against DKK -222.3 million in 2015/16.
The balance sheet total amounted to DKK 2,852.9 million against DKK 2,808.8 million at 31 January 2016. Consolidated equity totalled DKK 1,293.7 million, and the solvency ratio stood at 45.3 %.
Breakdown by segment:
DKKm Property development Asset management Unallocated Profit/loss Profit/loss before tax 71.4 -47.6 -10.0 Balance sheet Development projects 927.6 - - Completed properties under asset management - 1,173.2 - Other asset management projects - 107.5 - Other assets 312.5 255.2 76.9 Total assets 1,240.1 1,535.9 76.9 Tied-up equity 704.0 529.5 60.2
Outlook for 2017/18
Management expects results for the 2017/18 financial year of DKK 100-120 million before tax, which includes the expectation that the Group’s property development activities will contribute with a return on equity of about 15 %.
The results forecast is based on Management’s expectations, including time estimates, for several specific projects. Several of the Group’s major development projects have been sold in whole or in part and are expected to contribute to next year’s results, including Strædet, Køge, Denmark, and the Amerika Have residential project, Copenhagen, Denmark. TK Development is recording good progress on the individual projects.
The results for this business area amounted to DKK 71.4 million before tax in 2016/17. At 31 January 2017 the balance sheet total came to DKK 1,240.1 million, and the equity tied up represented DKK 704.0 million. These results correspond to a return on equity of 10.6 %.
In the 2016/17 financial year, TK Development completed the sale of a superstore of about 2,150 m² in Rødekro, a 1,200 m² retail property in Holbæk, a small superstore in Dronninglund and several plots of land, and also generated fee income on several projects. Moreover, the results include a significant positive value adjustment of BROEN Shopping, Esbjerg, Denmark, as the joint venture project is classified as an investment property under construction.
In addition, TK Development has handed over almost all of the completed units comprised by the second phase of the Bielany residential project in Warsaw, Poland, to the buyers.
Major development projects:
- In Q4 2016/17 TK Development conditionally sold a residential rental project of about 4,900 m² at Østre Havn in Aalborg, Denmark, to a private investor. Construction started at the beginning of 2017, with handover to the buyer scheduled for spring 2018.
- TK Development has conditionally sold a 5,300 m² youth housing project in Frederiksberg, Copenhagen, Denmark. Construction started in October 2016, and handover to the buyer is scheduled for January 2018.
- Construction of BROEN Shopping, the new shopping centre in Esbjerg, Denmark, has reached the final stage, and the centre opening is scheduled for 10 April 2017. The current occupancy rate is 88 % of the premises (Q3 2016/17: 80 %).
- The construction project in Køge, Denmark, is moving ahead. The project will be handed over to the investor in three phases, of which the first phase – scheduled for handover at end-May 2017 – comprises a cinema and restaurants. Most of the project is still expected to be completed and handed over in autumn 2017, while a minor part is not scheduled for completion until 2018. The retail project, of which 86 % has been let (Q3 2016/17: 78 %), 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 104 of the 121 apartments have been sold (Q3 2016/17: 88).
- 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 45 % (Q3 2016/17: 30 %) of the residential units have been sold.
The projects in the pipeline are moving ahead at a good pace due to robust tenant and investor interest. The Group is working on a number of major projects, which underpins Management’s expectation to meet the strategic goal of generating a return on equity of 15-20 % p.a. before tax in the property development business area.
The results for this business area amounted to DKK -47.6 million before tax in 2016/17. At 31 January 2017 the balance sheet total came to DKK 1,535.9 million, and the equity tied up represented DKK 529.5 million.
The portfolio of completed properties in this business area consists of 156,500 m², amounting to DKK 1,591.5 million at 31 January 2017. 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 %) (Q3 2016/17: 4.3 %). Based on full occupancy, the return on the carrying amount is expected to reach 6.2 %) (Q3 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 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.
Management continuously assesses the timing of the sale of assets under asset management to safeguard the best interests of the Company’s shareholders. This assessment includes such elements as the risk and potential of the long-term maturing of an asset versus the time of dividend distribution, and the possibility of reducing overheads.
The expectations mentioned in this Annual 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 under Risk issues and note 2 to the consolidated financial statements, Accounting estimates and judgments, including the valuation of the Group’s project portfolio.
TK Development A/S
Frede Clausen, President & CEO
Tel. +45 8896 1010