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| f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 / 6 5
Preliminary announcement of financial statements
tK DeveloPment a/s | cvr no. 24256782comPany announcement no. 9/2013 | 25 aPril 2013
pHoto:silleBroen, shoPPing centrefrederikssund, Denmark
2012/13
2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | Ta b l e o f co n T e n Ts
ta B l e o f c o n t e n t s
3 Summary
6 Consolidated financial highlights and key ratios
7 Adjusted strategy and market focus
9 Results for 2012/13 and outlook for 2013/14
19 Market conditions
22 Business concept and knowledge resources
26 Property development
31 Asset management
37 Discontinuing activities
38 Financial targets
39 Risk issues
45 Shareholders
49 Corporate governance
52 Statutory annual corporate social responsibility statement
53 The Supervisory Board
57 The Executive Board
58 Statement by the Supervisory and Executive Boards on the Annual Report
59 Independent auditor’s report
60 Consolidated financial statements
65 Company information
Page
s u m m a ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 3 / 6 5
s u m m a r y
r e s u lT s fo r 2 0 1 2 / 1 3
tk Development recorded results of Dkk -326.0 million be-
fore tax for the 2012/13 financial year, compared to Dkk
14.3 million for the year before. Results were negatively af-
fected by value adjustments of investment properties and
the impairment of projects, totalling Dkk 341.3 million. this
performance reflects the recent results estimate of about
Dkk -300 million.
the impairment itself does not impact the cash flow posi-
tion.
excluding value adjustments/impairment, the results before
tax amount to Dkk -0.3 million. Based exclusively on the ac-
tivities targeted by the Group’s future strategy and market
focus, the results before tax and value adjustments/impair-
ment amount to Dkk 9.2 million.
in the 2012/13 financial year, deferred tax assets were writ-
ten down by an amount of Dkk 200.5 million, a substantial
portion of which is attributable to the Group’s Danish tax
asset. in June 2012, a Bill proposing changes to the rules
for tax loss carryforwards was passed. for tk Development,
this has considerably lengthened the time horizon for utiliz-
ing tax losses, and thus significantly increased the uncer-
tainty relating to utilization of the tax asset. on the basis of
the changed rules, tk Development identified a need to im-
pair the Group’s Danish tax asset by Dkk 150.0 million, which
was already recognized in Q1 2012/13 and thus forms part
of the total writedown for impairment.
the results after tax amounted to Dkk -493.3 million,
against Dkk 27.0 million in 2011/12.
consolidated equity totalled Dkk 1,389.7 million at 31 Janu-
ary 2013, corresponding to a solvency ratio of 34.7 %.
management considers the results for the year to be highly
unsatisfactory.
r e v i e w o f s a l e s s T r aT egy
in December 2012, management decided to review the
Group’s sales strategy. tk Development had long expe-
rienced an unsatisfactory market response to its efforts
to sell completed projects and investment properties due
to sluggish demand. the lack of completed project sales
means a substantial portion of the Group’s financial re-
sources is tied up in completed projects. this in turn causes
difficulties in allocating the capital necessary for securing
progress in new projects to be executed on the land in the
Group’s portfolio. in order to harness the long-term, sub-
stantial development potential believed by management to
be inherent in several of the Group’s projects, it was decided
to revise the sales strategy with a view to realizing faster
sales. the changed sales strategy consists of the following
elements:
• completing the sale of selected, completed projects
and investment properties, even at reduced prices.
• Downsizing the portfolio of land by selling selected
plots that are not essential to tk Development’s future
strategy.
• making several writedowns for impairment of the
Group’s projects, distributed as shown below, which led
to substantially negative results in the 2012/13 finan-
cial year.
• freeing up cash resources through sales, enabling the
Group to strengthen its financial platform.
• procuring financial resources through sales to regene-
rate momentum and to realize the substantial develop-
ment potential inherent in several of the Group’s pro-
jects.
the changed sales strategy involves writedowns for the im-
pairment of projects, investment properties and the portfo-
lio of land totalling Dkk 341.3 million, distributed among the
following main groups:
• impairment of the project portfolio as a consequence
of the decision to realize project sales as described
above, a total of Dkk 123.0 million.
• impairment of the project portfolio, including the deci-
sion to sell land, due in part to the difficult market con-
ditions in the residential segment in poland, a total of
Dkk 151.3 million.
• other impairment based on market conditions and a
longer time horizon for developing and maturing indi-
vidual projects than previously anticipated, a total of
Dkk 67.0 million.
4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | s u m m a ry
s u m m a r y
Regardless of the difficult market conditions, management
finds it highly unsatisfactory having to make the writedowns
for impairment described above.
a dj u s T e d s T r aT egy a n d m a r k e T fo c u s
concurrently with the decision to change the sales strategy,
management initiated a review of the Group’s business are-
as for the purpose of assessing its future market platform,
including the countries in which the Group will continue to
operate, and the possibility of trimming costs further.
as described in company announcement no. 6/2013 of 11
march 2013, management has now completed this review
and adopted a changed strategy consisting of the following
elements:
• in addition to its primary business area, property Devel-
opment, tk Development will have a secondary busi-
ness area, asset management, to consist of owning,
operating, running in, maturing and optimizing complet-
ed projects for a medium-long operating period. asset
management will be performed on tk Development’s
own books or for third parties.
• tk Development has chosen a market focus that tar-
gets the countries expected to contribute with long-
term, profitable operations in future: Denmark, sweden,
poland and the czech Republic.
• tk Development will phase out its activities in finland,
Germany, the Baltic states and Russia.
• the Group’s portfolio of projects not initiated (plots of
land) will be reduced over a two-year period to about
Dkk 0.5 billion.
• over a two-year period, the balance sheet will be ad-
justed so as to ensure a solvency ratio of about 40 %.
• overheads will be reduced by around 20 %, with half of
the reduction deriving from the discontinuation of ac-
tivities in several countries.
• internal and external reporting will be changed to cre-
ate a better overview and highlight values and value
generation in the Group’s business areas.
it is management’s belief that once implemented, these
measures will enable the Group to generate satisfactory re-
turns for its shareholders in future.
P r o P e rT y d e v e lo Pm e n T
in the swedish town of Gävle, tk Development has devel-
oped a retail park of about 8,300 m². construction of the
retail park was completed in october 2012. in november
2012, the retail park was handed over to the swedish prop-
erty company nordika fastigheter aB for a price of sek 110
million.
in July 2012, tk Development entered into a conditional
agreement with Heitman regarding the sale of two polish
projects amounting to a total project value of eUR 95 mil-
lion. the sale comprises a 70 % stake in the Group’s Galeria
tarnovia shopping centre in tarnów and a new development
project in Jelenia Góra. tk Development realized a minor
profit on the completion of this sale and freed up cash re-
sources. in addition, future profits will be generated in the
form of fee income from the jointly owned company estab-
lished for developing, letting and managing the construction
of the development project. this sale was completed at the
end of 2012. the Group’s ownership interests in the projects
have been reclassified as “investment properties” and “in-
vestment properties under construction”, respectively.
the first phase of the Group’s project in Bielany, poland, has
been completed. the total project area comprises about
56,200 m², primarily housing consisting of 900-1,000 units,
with 136 being built in the first phase. the sluggishness of
the polish residential market has affected the sales process,
with sales agreements having been signed for about 69 % of
the units in the first phase.
the Group’s project portfolio in the property development
area comprised 452,000 m² at 31 January 2013 (31 January
2012: 635,000 m²).
a s s e T m a n a g e m e n T
the total portfolio of own properties under asset manage-
ment, which thus generates cash flow, comprised 138,250
m² and amounted to Dkk 1,932.1 million at 31 January 2013,
of which investment properties accounted for Dkk 312.1
million. the annual net rent from the current leases corre-
sponds to a return on the carrying amount of 6.7 %. Based
on full occupancy, the return on the carrying amount is ex-
pected to reach 7.9 %.
the operation of these properties is generally proceeding
satisfactorily, and overall the footfall and revenue in the
centres are developing positively.
m a r k e T c o n d i T i o n s
the main challenge currently facing the property sector is
the difficult access to financing. Uncertainty on the inter-
s u m m a ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 / 6 5
national financial markets continues to adversely affect the
property sector, leading to consistently long decision-mak-
ing processes among financing sources, tenants and inves-
tors alike.
the Group will make the startup of major new projects con-
tingent on obtaining either full or partial financing for them
and on freeing up cash resources from the sale of several
major completed projects.
f i n a n c i a l i s s u e s
at the forthcoming annual General meeting, the supervi-
sory Board will request authorization to carry out a capital
increase with gross proceeds of about Dkk 210-231 million.
the capital increase will help generate the cash resources
required to underpin future operations and project flow, and
thus long-term earnings. the capital increase has been dis-
cussed with the Group’s major shareholders, who, together
with a few major private and institutional investors, have giv-
en conditional subscription and underwriting commitments
for the total capital increase.
the Group’s main banker has indicated its preparedness to
prolong tk Development’s credit facilities subject to specific
conditions being met, which includes reducing the operating
credit limit by Dkk 50 million. the prolongation is expected
to be formally accepted immediately after publication of tk
Development’s annual Report 2012/13.
of the total project credits outstanding at 31 January
2013, credits worth Dkk 1.5 billion are due to mature in the
2013/14 financial year, including continuing repayment ob-
ligations on individual project credits of about Dkk 80 mil-
lion. after the reporting date, agreements regarding the re-
financing of Dkk 0.2 billion have been made. moreover, the
Group’s main banker and other credit institutions have indi-
cated their preparedness to prolong existing credit facilities.
When final commitments in this respect have been received,
credit facilities of Dkk 1.1 billion will have been prolonged,
and credit facilities of Dkk 0.3 billion will be due to mature in
2013/14. the Group depends on being able to continue ob-
taining either a prolongation or alternative financing of the
project credits not expected to be repaid upon project sales.
the Group is in ongoing dialogue with the relevant credit in-
stitutions, and management anticipates being able to either
prolong or refinance these project credits. some of the pro-
ceeds from the capital increase or the cash freed up on the
sale of major completed projects will help reduce the debt
to credit institutions, including project finance loans granted
by a number of the company’s major shareholders and mem-
bers of management.
o u T lo o k fo r 2 0 1 3 / 1 4
management anticipates positive results before tax for the
continuing activities for the 2013/14 financial year. the
timing and progress of the phase-out of the discontinuing
activities are subject to major uncertainty, and the results
of these activities are therefore not included in the outlook
for next year.
as mentioned above, management has revised the sales
strategy for the Group’s projects and chosen to accept re-
duced prices for selected project sales. thus, management
considers it important for the Group to sell some of its com-
pleted projects and plots of land in the 2013/14 financial
year.
the expectations mentioned in this announcement, including
earnings expectations, are naturally subject to risks and uncer-
tainties, which may result in deviations from the expected re-
sults. various factors may impact on expectations, as outlined
in the section “risk issues”, particularly the valuation of the
group’s project portfolio.
further information is available from frede clausen, President
and ceo, on tel. +45 8896 1010.
s u m m a r y
6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | co n s o l i daT e d f i n a n c i a l h i g h l i g h Ts a n d k e y r aT i os
c o n s o l i D at e D f i n a n c i a l h i g h l i g h t s a n D K e y r at i o s
Dkkm 2008/09 2009/10 2010/11 2011/12 2012/13
f i n a n c i a l h i g h l i g h T s :
net revenue 1,073.2 1,384.9 602.4 359.8 632.3
value adjustment of investment properties, net 57.7 -10.9 30.0 36.7 -37.8
Gross profit/loss 375.0 200.5 256.0 195.8 -139.5
operating profit/loss (eBit) 201.7 57.5 127.2 65.5 -241.1
financing, etc. -33.4 -17.9 -53.2 -83.6 -87.4
Profit/loss before tax and writedowns, etc. 98,7 53,8 48,2 -1,2 -0,3
profit/loss before tax 168.0 39.4 74.2 14.3 -326.0
Profit/loss for the year 155.2 25.4 73.6 27.0 -493.3
Balance sheet total 3,816.1 4,377.3 4,622.0 4,639.5 4,009.3
property, plant and equipment 380.8 364.3 394.2 445.2 498.8
of which investment properties/investment properties under construction 366.5 355.1 387.4 440.5 496.3
total project portfolio 2,541.3 3,249.5 3,424.7 3,498.1 3,030.9
contract work in progress 3.7 17.8 12.2 18.2 0.0
equity 1,506.0 1,593.4 1,866.0 1,876.4 1,389.7
cash flows from operating activities -331.7 -582.8 -182.7 -78.8 45.6
net interest-bearing debt, end of year 1,509.5 2,178.9 2,170.2 2,244.9 2,206.1
k e y r aT i o s :
Return on equity (Roe) 10.5 % 1.6 % 4.3 % 1.4 % -30.2 %
eBit margin 18.8 % 4.2 % 21.1 % 18.2 % -38.1 %
solvency ratio (based on equity) 39.5 % 36.4 % 40.4 % 40.4 % 34.7 %
equity value in Dkk per share 50.5 53.4 44.4 44.6 33.0
price/book value (p/Bv) 0.4 0.5 0.5 0.3 0.4
number of shares, end of year 28,043,810 28,043,810 42,065,715 42,065,715 45,065,715
average numbers of shares, adjusted 28,043,810 28,043,810 35,095,222 42,065,715 45,065,715
earnings per share (eps) in Dkk 5.2 0.9 2.1 0.6 -11.7
Dividend in Dkk per share 0 0 0 0 0
listed price in Dkk per share 21 27 23 14 13
k e y r aT i o s a dj u s T e d fo r wa r r a n T s :
Return on equity (Roe) 10.5 % 1.6 % 4.3 % 1.4 % -30.2 %
solvency ratio (based on equity) 39.5 % 36.4 % 40.4 % 40.4 % 34.7 %
equity value in Dkk per share 50.5 53.4 44.4 44.6 33.0
Diluted earnings per share (eps-D) in Dkk 5.2 0.9 2.1 0.6 -11.7
the calculation of key ratios was based on the 2010 guidelines issued by the Danish society of financial analysts.
6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | co n s o l i daT e d f i n a n c i a l h i g h l i g h Ts a n d k e y r aT i os
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 7 / 6 5
in connection with presenting its interim Report for Q1-Q3
2012/13 in December 2012, tk Development announced that
the company’s management would initiate a review of the
Group’s business areas for the purpose of assessing its future
market platform, including the countries in which the Group will
continue to operate, and the possibility of trimming costs fur-
ther.
as described in company announcement no. 6/2013 of 11
march 2013, this review has now been completed, and at a
board meeting on 11 march 2013, i.e. after the reporting date,
the supervisory Board adopted the revised strategy and busi-
ness model outlined below.
T h e g r o u P ’ s m i s s i o n w i l l b e T h e sa m e
a dj u s T e d s T r aT egy
in addition to its primary business area, property development,
the Group will have a constant portfolio of completed projects
that it will run in/mature to optimize the project value. at times,
this secondary business area may represent a vast balance
sheet total and significantly affect the Group’s results. the two
business areas comprise:
Property development
Developing projects from the conceptual phase through to pro-
ject completion, based on one of several models:
a) sold projects
• forward funding
• forward purchase
b) projects with partners
c) on tk Development’s own books based on a high degree of
confidence in the letting and sales potential
d) services for third parties.
asset management
owning, operating, maturing and optimizing completed projects
for a medium-long operating period whose length matches the
potential for generating sufficient added value. asset manage-
ment will be performed on tk Development’s own books and
also for third parties.
i n i T i aT i v e s To r e s To r e a v i a b l e b u s i n e s s
m o d e l
in management’s opinion, attractive earnings can be generat-
ed by implementing development projects when taking into
account the new levels of determining variables in property
development: land prices, construction costs, occupancy level
and investors’ return requirements.
management is also of the opinion that asset management ac-
tivities can yield attractive earnings in future, with the matur-
ing of own projects playing a particularly vital role for obtaining
optimum selling prices.
However, the current challenging market conditions, combined
with the Group’s own circumstances, require calibrating a num-
ber of factors with a view to enhancing the Group’s ability to
create value and thus to restore a viable business model as well
as an attractive investment case for the Group’s shareholders.
management has decided to implement the following adapta-
tions:
1. focusing on the countries that are expected to contribute
with long-term, profitable operations in future: Denmark,
sweden, poland and the czech Republic.
2. phasing out the activities in finland, Germany, the Baltic
states and Russia. the phase-out with the resulting clo-
sure of offices and dismissal of employees will be carried
out as soon as possible, but while taking into account that
all the countries in question have projects that need to be
handled optimally so as to avoid an unnecessary erosion
of values.
3. Reducing the portfolio of projects not initiated (plots of
land) over a two-year period from the current level of Dkk
1.1 billion to a level of Dkk 0.5 billion.
4. Reducing overheads by about 20 %, with half of the re-
duction deriving from the discontinuation of activities in
Germany, the Baltic states and finland.
the aim is to increase the solvency ratio to a level of about 40
%. as part of fulfilling this target, tk Development will strive
to secure cheaper financing for the Group. at the forthcoming
annual General meeting, the supervisory Board will request au-
thorization to carry out a capital increase with gross proceeds
of about Dkk 210-231 million.
the overall mission of tK Development is to create added value by developing real property. the group operates in the property development and services environments, and specializes in being the creative and result-oriented link between tenants and investors.
The group’s mission
a D j u s t e D s t r at e g y a n D m a r K e t f o c u s
8 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
c h a n g e s To i n T e r n a l a n d e x T e r n a l
r e P o rT i n g
management has decided to change the Group’s internal and
external reporting to create a better overview and highlight val-
ues and value generation in the Group’s business areas.
the business segments will be structured as follows:
• property development activities
• asset management activities
• Discontinuing activities.
the reporting will be based on property development and asset
management activities, which will be the two main future busi-
ness segments. the activities being phased out will be termed
discontinuing activities, and will be considered a separate seg-
ment for reporting purposes.
the management commentary in this announcement uses this
segmentation.
o r g a n i z aT i o n a l fo c u s o n s eg m e n T s a n d
r i s k s
to underpin the segmentation chosen, it has been decided to
organize the business activities so as to best ensure manage-
ment focus on both property development and asset manage-
ment activities.
the Group will strengthen its risk management by striving
only to initiate projects based on a strict awareness that the
expected earnings will match the project’s complexity, com-
pletion time, tied-up capital and other use of resources. the
portfolio composition and the size of individual projects relative
to the balance sheet total and the company’s equity are other
significant elements in the Group’s risk management system.
the transformation process to implement the resolved initiatives is expected to take two years, after which the group is assumed to be in the following position:
• the remaining activities will be limited to Denmark, sweden, poland and the czech Republic.
• the portfolio of projects not initiated (plots of land) will have been reduced from about Dkk 1.1 billion to about Dkk 500 million.
• the balance sheet will have been adjusted, with a solvency ratio of about 40 %.
• financing costs will have been normalized as a re-sult of the initiatives implemented.
• a platform for normalized earnings will have been established.
• the changes to reporting will have provided a bet-ter overview of the Group’s activities, values, value creation and expected development.
where will the group be in two years?
a D j u s t e D s t r at e g y a n D m a r K e t f o c u s
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 9 / 6 5
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
tk Development recorded results of Dkk -326.0 million before
tax, which reflects the recent results estimate of about Dkk
-300 million before tax. Results after tax amounted to Dkk
-493.3 million. in the 2011/12 financial year, tk Development
recorded a profit of Dkk 14.3 million before tax and Dkk 27.0
million after tax.
at the beginning of the financial year, tk Development anti-
cipated positive results before tax for 2012/13, and manage-
ment considers the realized results highly unsatisfactory.
Results were negatively affected by value adjustments of in-
vestment properties and the impairment of projects, totalling
Dkk 341.3 million. the value adjustments and impairment loss-
es themselves do not impact the cash flow position.
excluding value adjustments/impairment, the results before
tax amount to Dkk -0.3 million. Based exclusively on the ac-
tivities targeted by the Group’s future strategy and market fo-
cus, the results before tax and value adjustments/impairment
amount to Dkk 9.2 million.
the balance sheet total amounted to Dkk 4,009.3 million at 31
January 2013 against Dkk 4,639.5 million at 31 January 2012.
consolidated equity totalled Dkk 1,389.7 million, and the sol-
vency ratio stood at 34.7 %.
the results for 2012/13 and the balance sheet total at 31 Jan-
uary 2013 broken down by the new segments adopted by the
supervisory Board appear from the tables below.
the results and balance sheet total for each segment, includ-
ing a more detailed account of the elements of the individual
business areas/segments, are described on pages 26-37.
the property Development segment is described on pages
26-30. the description includes information about the
development potential of tk Development’s project portfo-
lio, including an outline of the individual development pro-
jects.
the asset management segment is described on pages
31-36. the description contains information about tk
Development’s own properties under asset management,
including an outline of the operation and customer influx for
the individual projects.
the Discontinuing activities are described on page 37,
which provide more details about tk Development’s prop-
erties and projects in the countries where management has
decided to phase out activities.
therefore, the financial review below contains a description of
the results and balance sheet total at group level only.
r e s u lT s 2 0 1 2 / 1 3 ( d k k m )
Profit/loss 2012/13Property
Developmentasset
managementDiscontinuing
activities unallocated
Revenue 632.3 183.4 434.5 14.4 -
Gross profit/loss -139.5 -81.8 -21.0 -36.7 -
costs 99.4 - - 9.6 89.8
operating profit/loss -241.1 -81.8 -21.0 -46.4 -91.9
financing, net -87.4 -2.8 -63.4 -8.2 -13.0
profit/loss before tax and writedowns, etc. -0,3 44,1 70,0 -9,5 -104,9
profit/loss before tax -326.0 -83.0 -84.4 -53.7 -104.9
tax on profit/loss for the year 167.3 167.3
Profit/loss for the year -493.3 -272.2
the balance sheet structure appears from the next page.
1 0 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
ac c o u n T i n g P o l i c i e s
the consolidated financial statements and parent financial
statements for 2012/13 for the Group and tk Development
a/s, respectively, are presented in compliance with the interna-
tional financial Reporting standards (ifRs), as adopted by the
eU, and in accordance with Danish disclosure requirements for
annual reports of listed companies.
the consolidated financial statements and parent financial
statements for 2012/13 have been presented in accordance
with the financial reporting standards (ifRs/ias) and ifRic inter-
pretations applicable for financial years beginning at 1 february
2012.
the implementation of amended financial reporting standards
and interpretations entering into force in 2012/13 has not im-
pacted recognition and measurement in the consolidated fi-
nancial statements and thus has no effect on the earnings per
share and the diluted earnings per share.
the accounting policies have been consistently applied com-
pared to the 2011/12 financial year.
the consolidated financial statements and parent financial
statements are presented in Dkk million, unless otherwise
stated. Dkk is the presentation currency for the Group’s activi-
ties and the functional currency of the parent company.
i n c o m e s TaT e m e n T
revenue
the revenue for 2012/13 totalled Dkk 632.3 million against
Dkk 359.8 million in 2011/12.
the revenue stems from the sale of projects, rental and fee in-
come, etc.
overview of handed-over projects
Q1 2012/13
• Handover of a minor project in aarhus, Denmark, which in-
cluded a supermarket for Rema1000.
Q2 2012/13
• Handover of the final and second phase of a retail park in
kristianstad, sweden. in addition to an existing building of
about 4,500 m², which was handed over to the investor
in april 2011, the total project comprises an extension of
about 1,700 m², sold to the same investor. the fully-let ex-
tension was completed and handed over to the investor
in may 2012.
• completion of a 9,950 m² extension to the futurum Hra-
dec králové shopping centre in the czech Republic, owned
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
b a l a n c e s h e e T s T r u c T u r e aT 3 1 ja n u a ry 2 0 1 3 ( d k k m )
Balance sheet 31 jan 2013Property
Developmentasset
managementDiscontinuing
activities unallocated
assets
investment properties 479.4 - 312.1 167.3 -
investment properties under construction 16.9 16.9 - - -
other non-current assets 169.9 3.2 3.2 0.1 163.4
projects in progress or completed 3,030.9 1,175.3 1,620.0 235.6 -
Receivables 241.0 70.6 144.4 22.0 4.0
Deposits in blocked and escrow accounts, etc. 40.0 18.5 21.0 0.4 0,1
cash and cash equivalents 31.2 - - - 31.2
assets 4,009.3 1,284.5 2,100.7 425.4 198.7
equity and liabilities
equity 1,389.7 566.5 712.6 234.3 -123.7
credit institutions 2,291.3 567.2 1,258.9 186.6 278.6
other liabilities 328.3 150.8 129.2 4.5 43.8
equity and liabilities 4,009.3 1,284.5 2,100.7 425.4 198.7
solvency ratio 34.7 % 44.1 % 33.9 % 55.1 % -62.3 %
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 1 / 6 5
by a joint venture between Ge capital, Heitman and tk De-
velopment in which tk Development has a 20 % ownership
interest. the newly built premises opened as scheduled on
10 may 2012. tk Development has received fees from the
jointly owned company for letting and construction man-
agement.
Q3 2012/13
• completion and handover of a minor retail project in viborg,
Denmark, tenanted by Harald nyborg. the project has been
sold to private investors.
Q4 2012/13
• sale and handover of an 8,300 m2 retail park in the swed-
ish town of Gävle. following completion of construction
in october 2012, the retail park was handed over in no-
vember 2012 to the swedish property company nordika
fastigheter aB for a price of sek 110 million. the current
occupancy rate is 94 % (Q1-Q3 2012/13: 94 %), and lease
agreements have been concluded with Rusta, Jysk, sta-
dium outlet and Ö&B. moreover, tk Development has an
option to buy a plot of land for developing additional retail
park premises of about 15,800 m².
• completion of conditional agreement with Heitman re-
garding the sale of two polish projects: the Group’s Galeria
tarnovia shopping centre in tarnów and a new develop-
ment project in Jelenia Góra. the agreement means that
Heitman has acquired a 70 % shareholding in the two pol-
ish projects. Reference is made to the following page for a
further description of the agreement.
gross margin
the gross margin for the 2012/13 financial year amounted to
Dkk -139.5 million against Dkk 195.8 million in 2011/12. the
gross margin derives from the operation of the Group’s com-
pleted projects, the operation and value adjustment of the
Group’s investment properties, profits on handed-over projects
and impairment of the project portfolio.
the gross margin was negatively affected by value adjust-
ments of investment properties and writedowns for the impair-
ment of projects totalling Dkk 341.3 million, of which Dkk 16.6
million relates to Q4 2012/13.
at the end of December 2012, as announced in tk Develop-
ment’s interim Report for Q1-Q3 2012/13, management decid-
ed to revise the Group’s sales strategy with a view to realizing
faster sales. the Group had long experienced an unsatisfactory
market response to its efforts to sell completed projects and
investment properties due to sluggish demand.
the lack of completed project sales means a substantial por-
tion of the Group’s financial resources is tied up in completed
projects. this in turn causes difficulties in allocating the capital
necessary for securing progress in new projects to be execut-
ed on the land in the Group’s portfolio. in order to harness the
long-term, substantial development potential believed by man-
agement to be inherent in several of the Group’s projects, it was
decided in December 2012 to revise the sales strategy with a
view to realizing faster sales. the changed sales strategy con-
sists of the following elements:
completing the sale of selected, completed projects and in-
vestment properties, even at reduced prices.
Downsizing the portfolio of land by selling selected plots
that are not essential to tk Development’s future strategy.
making several writedowns for impairment of the Group’s pro-
jects, distributed as shown below, which led to substantially
negative results in the 2012/13 financial year.
freeing up cash resources through sales, enabling the Group
to strengthen its financial platform.
procuring financial resources through sales to regenerate
momentum and to realize the substantial development po-
tential inherent in several of the Group’s projects.
the changed sales strategy involves writedowns for the impair-
ment of projects, investment properties and plots of land to-
talling Dkk 341.3 million, distributed among the following main
groups:
impairment of the project portfolio as a consequence of the
decision to realize project sales as described above, a total
of Dkk 123.0 million, of which Dkk 37.8 million is attributa-
ble to investment properties.
impairment of the project portfolio, including the decision to
sell land, due in part to the difficult market conditions in the
residential segment in poland, a total of Dkk 151.3 million.
other impairment based on market conditions and a longer
time horizon for developing and maturing individual projects
than previously anticipated, a total of Dkk 67.0 million.
impairment in Q4 2012/13 relates mainly to discontinuing activi-
ties, including the Group’s German investment properties.
impairment of the project portfolio as a consequence of the deci-
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
1 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
ag r e e m e n T w i T h h e i Tm a n r eg a r d i n g T h e
sa l e o f T w o P o l i s h P r oj ec T s
in July 2012, tk Development entered into a conditional agreement with
Heitman regarding the sale of two polish projects amounting to a total
project value of eUR 95 million. the sale comprises the Group’s Galeria
tarnovia shopping centre in tarnów and a new development project in
Jelenia Góra. the agreement was finally completed in December 2012.
the agreement means that Heitman has acquired a 70 % shareholding
in the two polish projects. tk Development realized a minor profit on
the completion of this sale and freed up cash resources. in addition, fu-
ture profits will be generated in the form of fee income from the jointly
owned company established for developing, letting and managing the
construction of the development project.
the selling price for the Galeria tarnovia shopping centre is in
the eUR 40 million range. the current debt financing of the pro-
ject will be maintained, and Heitman will make equity financing
available to the company in proportion to its ownership inter-
est. as a result of the sale, tk Development will generate a mi-
nor profit on the project and free up cash resources.
tk Development has bought a plot of land in Jelenia Góra and
has an option on additional land for the development of a shop-
ping centre of about 24,000 m². the project will comprise a su-
permarket of about 2,200 m² and retail, restaurant and service
premises totalling about 21,800 m². the local plan for the area
is in place and the letting of premises has started. construction
is expected to commence in 2013, and the shopping centre is
scheduled to open in 2015.
Heitman has taken over a 70% stake in the project at its current stage
of development, and in future the project, including construction, will
be developed in cooperation with Heitman. the total project value is ex-
pected to be in the eUR 55 million range. the partnership will allow more
efficient use of the Group’s resources and improve its equity allocation,
in that Heitman - upon the fulfilment of the conditions - will make equity
financing available in proportion to its ownership interest.
the agreement involves further maturing Galeria tarnovia as well as
running in and maturing the shopping centre in Jelenia Góra following its
opening, scheduled for 2015. the intention is to subsequently resell the
projects. according to the parties’ agreement, a resale may take place
after a three-year period following conclusion of the agreement.
the agreement will give Heitman a preferential return, while tk Devel-
opment will be entitled to a performance-based share of any additional
proceeds on the resale of the projects. in addition, tk Development will
generate fee income from the jointly owned company established for
developing, letting and managing the construction of the development
project.
the overall agreement with Heitman falls in line with the Group’s busi-
ness model, according to which tk Development wishes to enter into
partnerships regarding completed properties and new development
projects, and thus to improve the allocation of the company’s equity, di-
versify risks and better utilize the Group’s development competencies.
tk Development’s ownership interests in the projects will be reclassi-
fied as “investment properties” and “investment properties under con-
struction”, respectively.
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
g a l e r i a ta r n o v i a , s h o P P i n g c e n t r e , ta r n ó w , P o l a n D
s h o P P i n g c e n t r e , j e l e n i a g ó r a , P o l a n D
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 3 / 6 5
sion on project sales amounts to Dkk 123.0 million, of which Dkk
37.8 million is attributable to investment properties; see below.
the remaining portion of writedowns for impairment relates in
part to the Group’s czech fashion arena outlet center project
in prague. in order to secure future operations, project flow and
earnings, management has attached great importance to real-
izing projects and simultaneously freeing up cash resources to
strengthen the Group’s financial platform. management has
therefore revised the Group’s sales strategy with a view to re-
alizing faster sales and consequently accepting project sales at
reduced prices. the writedowns for impairment have been made
on this basis.
impairment of the project portfolio, including the decision to sell
land, due in part to the difficult market conditions in the residen-
tial segment in poland, amounts to Dkk 151.3 million. this im-
pairment is primarily a consequence of management’s decision
to attempt reducing the portfolio of land by means of selling se-
lected plots. management wishes to reduce the Group’s risk at-
taching to the polish residential project in Bielany, Warsaw, which
is expected to have an unsatisfactorily long time horizon in the
current challenging market. thus, management has decided to
attempt selling some of this land. it is assessed that the sale of
land without project execution will entail a loss relative to the
carrying amount, and this loss has been included in the valua-
tion of the impairment made. a minor part of the writedowns for
impairment relates to the lower selling prices of residential units
than anticipated in the first phase of the project and is a conse-
quence of the sluggish market as well as the price adjustments
resulting from the large supply of new housing for sale, among
other factors.
the scope of housing projects launched in Warsaw is now di-
minishing, and over time the supply of housing is expected to
stabilize. it remains difficult for individual buyers to obtain sat-
isfactory home purchase loans because the banks require high
borrower equity. therefore, buyers are showing a preference for
lower-priced areas to obtain more floor space. for this reason,
management has chosen to prioritize another of the Group’s res-
idential projects in a lower-priced area of Warsaw. the startup of
the remaining part of the Bielany project will be postponed until
market conditions have improved.
other impairment based on market conditions and a longer de-
velopment and maturing horizon for individual projects than pre-
viously anticipated amounts to Dkk 67 million and is partly attrib-
utable to the Group’s stake in Ringsted outlet. Despite steadily
increasing revenue and footfall at Ringsted outlet, management
has had to acknowledge that the continued difficult market
conditions – partly due to consistently long decision-making pro-
cesses among tenants – have delayed the running-in and matur-
ing of the outlet centre.
Regardless of the difficult market conditions, management finds
it highly unsatisfactory having to make the writedowns for im-
pairment described above.
concurrently with the decision to change the sales strategy,
management initiated a review of the Group’s business areas for
the purpose of assessing its future market platform, including
the countries in which the Group will continue to operate, and
the possibility of trimming costs further. management has now
completed this review, and at a board meeting on 11 march 2013,
i.e. after the reporting date, the supervisory Board adopted a re-
vised strategy and business model, which is outlined above.
it is management’s belief that once implemented, these meas-
ures will enable the Group to generate satisfactory returns for
its shareholders in future.
the value adjustment of the Group’s investment properties
amounted to Dkk -37.8 million against Dkk 36.7 million in
2011/12. Dkk -24.3 million of this value adjustment relates
to the czech investment property futurum Hradec králové, in-
cluding the extension of the same property completed in may
2012. futurum Hradec králové is owned in a joint venture with Ge
capital and Heitman. the joint venture has decided to attempt
selling the property. Based on the ongoing sales process, man-
agement has chosen to change the valuation of the property,
recognizing the negative value adjustment in the second quarter
of 2012/13.
the value adjustment of the German investment properties
amounts to Dkk -13.5 million, which relates mainly to ongoing
sales negotiations, as management considers it essential to
downscale the German activities with particular reference to the
adjusted strategy and market focus.
staff costs and other external expenses
staff costs and other external expenses amounted to Dkk 99.4
million for the year under review against Dkk 127.5 million in
2011/12, a reduction of about 22 %.
staff costs amounted to Dkk 69.2 million against Dkk 92.9 mil-
lion the year before, a decline of about 25 %. the number of em-
ployees totalled 112 at 31 January 2013, including employees
working at operational shopping centres.
other external expenses amounted to Dkk 30.2 million, a 13 %
reduction compared to 2011/12.
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
1 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
in connection with the adjustment of the Group’s strategy and
market focus, see above, management has trimmed costs so
as to reduce overheads by a further 20%, half of which will de-
rive from the discontinuation of the Group’s activities in Germa-
ny, finland and the Baltic states.
Development in costs:
Costs, DKKm Costs (2008/09 = Index 100)
0
30
60
90
120
150
180
2014/15(E)
2013/14(E)
2012/132011/122010/112009/102008/09
50
100
financing
tk Development realized net financing expenses of Dkk 87.4
million against Dkk 83.6 million in 2011/12.
Tax on profit/loss for the year
tax on the results for the year amounts to Dkk 167.3 million,
which includes impairment of the Group’s deferred tax assets
totalling Dkk 200.5 million. a substantial portion of this impair-
ment is attributable to the Group’s Danish tax asset as a result
of changed tax rules; see under ”Deferred tax assets” below.
development in results
Revevue, DKKm Operating profit/loss, DKKm
-500
0
500
1,000
1,500
2012/132011/122010/112009/102008/09
b a l a n c e s h e e T
the Group’s balance sheet total amounts to Dkk 4,009.3 mil-
lion, which is a decline of Dkk 630.2 million compared to 31 Jan-
uary 2012, equal to 13.6 %.
goodwill
Goodwill is unchanged compared to 31 January 2012, amount-
ing to Dkk 33.3 million at the reporting date. the goodwill re-
lates to the Group’s activities in poland and the czech Republic
in euro mall Holding a/s, a subgroup of tk Development. Based
on the impairment test made, management has found no indi-
cations of impairment of goodwill.
investment properties and investment properties under
construction
tK Development’s investment properties consist of:
• futurum Hradec králové, shopping centre, the czech
Republic (a 20 % interest).
• Galeria tarnovia, shopping centre, tarnów, poland (a 30 %
interest).
• German investment properties.
the total value of the Group’s investment properties amounted
to Dkk 479.4 million against Dkk 366.9 million at 31 January
2012. Dkk 167.3 million of the value at 31 January 2013 is at-
tributable to the Group’s German investment properties, which
are described in more detail in the section “Discontinuing activ-
ities” below. the two remaining investment properties belong
to the asset management segment and are described in more
detail under that heading.
the czech investment property, the futurum Hradec králové
shopping centre, is owned in a joint venture with Ge capital and
Heitman. tk Development has access to a performance-based
share of the value adjustments on the property, which has been
included in the carrying amount. the joint venture has decided
to attempt selling the property and has initiated the sales pro-
cess. as in the previous quarters, the valuation as at 31 January
2013 has been made on the basis of the ongoing sales process.
the valuation at 31 January 2013 resulted in a negative value
adjustment of Dkk 24.3 million, which was recognized in the
second quarter of 2012/13.
an extension of the futurum Hradec králové shopping centre,
comprising about 9,950 m², has been built. construction pro-
gressed according to plan, and the extension opened as sched-
uled on 10 may 2012. at the beginning of the financial year, the
extension was classified under “investment properties under
construction”, but was transferred to “investment properties”
in the second quarter of 2012/13 following the completion of
construction and the opening of the extension. thus, the ex-
tension is included in the above-mentioned carrying amount.
tk Development’s 30 % ownership interest in Galeria tarnovia
has been valued at fair value based on completion of the sale to
Heitman of 70 % of the property in December 2012; see above.
tk Development’s investment properties under construction
consist of the Group’s ownership interest in the Jelenia Góra
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 5 / 6 5
development project in poland.
tk Development has bought a plot of land in Jelenia Góra and
has an option on additional land for the development of a shop-
ping centre of about 24,000 m². the project will comprise a su-
permarket of about 2,200 m² and retail, restaurant and service
premises totalling about 21,800 m². the local plan for the area
is in place and the letting of premises has started. construc-
tion is expected to commence in 2013, and the shopping cen-
tre is scheduled to open in 2015. in December 2012, 70 % of
the project was handed over to Heitman, see above, and in this
connection the Group’s 30 % ownership interest was classified
as an “investment property under construction”. no value ad-
justment of the investment property was made at 31 January
2013, as the parties are awaiting final permits for the project
and further clarification of the building phase, including the tim-
ing of construction startup, construction period, etc.
deferred tax assets
Deferred tax assets were recorded at Dkk 127.0 million in the
balance sheet against Dkk 291.7 million at 31 January 2012. in
the 2012/13 financial year, deferred tax assets were written
down by Dkk 200.5 million. a substantial portion of this amount
is attributable to the reduction of the Group’s Danish tax asset
resulting from changed rules for tax loss carryforwards.
in June 2012, a Danish Bill proposing changes to the rules for
tax loss carryforwards was passed. this means that only 60 %
of losses from previous income tax years in excess of Dkk 7.5
million are deductible from the year’s taxable income. for tk
Development, this has considerably lengthened the time hori-
zon for utilizing tax losses and significantly increased the un-
certainty relating to utilization of the tax asset. on the basis of
the changed rules, tk Development identified a need to impair
the Group’s Danish tax asset by Dkk 150.0 million, which was
already recognized in Q1 2012/13 and thus forms part of the
total impairment of the Group’s deferred tax assets.
the valuation of the tax assets is based on existing budgets
and profit forecasts for a five-year period. for the first three
years, budgets are based on an evaluation of specific projects
in the Group’s project portfolio. the valuation for the next two
years is based on specific projects in the project portfolio with
a longer time horizon than three years as well as various project
opportunities.
Due to the substantial uncertainties attaching to these val-
uations, provisions have been made for the risk that projects
are postponed or not implemented and the risk that project
profits fall below expectations. a change in the conditions and
assumptions for budgets and profit forecasts, including time
estimates, could result in the value of the tax assets being low-
er than that computed at 31 January 2013, which could have
an adverse effect on the Group’s results of operations and fi-
nancial position.
Project portfolio
the total project portfolio came to Dkk 3,030.9 million against
Dkk 3,498.1 million at 31 January 2012. the decline amounts
to Dkk 467.2 million and derives from an increase in the project
portfolio related to the Group’s projects in progress and com-
pleted during the period coupled with a decline resulting from
the sale of projects and writedowns for impairment made; see
above.
total prepayments based on forward-funding agreements were
Dkk 369.6 million at 31 January 2013, compared to Dkk 293.3
million at 31 January 2012. forward funding increased mainly
due to the accumulated forward funding and prepayments on
projects in progress. at 31 January 2013, forward funding re-
presented 91.1 % of the gross carrying amount of sold projects.
the Group’s total portfolio of completed projects and invest-
ment properties amounted to Dkk 2,132 million at 31 January
2013 (31 January 2012: Dkk 2,394 million), and the Group’s net
interest-bearing debt amounted to Dkk 2,206 million (31 Janu-
ary 2012: Dkk 2,245 million).
Net interest-bearing debt, DKKm Debt relative to projects
0
625
1,250
1,875
2,500
31.1.1331.1.1231.1.1131.1.1031.1.09
Investment properties and completed projects, DKKm
162 %
128 %
88 % 94 % 103 %
receivables
total receivables amounted to Dkk 241.0 million, a decline of
Dkk 21.3 million from 31 January 2012 that relates mainly to
contract work in progress and other receivables.
cash and cash equivalents
cash and cash equivalents amounted to Dkk 31.2 million
against Dkk 55.1 million at 31 January 2012. the Group’s total
cash resources, see note 35 in the annual Report, came to Dkk
70,1 million against Dkk 134.8 million at 31 January 2012.
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
1 6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
equity
the Group’s equity came to Dkk 1,389.7 million against Dkk
1,876.4 million at 31 January 2012.
since 31 January 2012, equity has partly been affected by the
results for the period and positive market-value adjustments
after tax of Dkk 5.7 million related to foreign subsidiaries and
hedging instruments.
the solvency ratio amounts to 34.7 %.
equity and solvency ratio
Equity, DKKm Solvency ratio
0
500
1,000
1,500
2,000
31 Jan 1331 Jan 1231 Jan 1131 Jan 1031 Jan 09
59 %
39.5
%
36.4
% 40.4
%
40.4
%
34.7
%
non-current liabilities
the Group’s non-current liabilities represented Dkk 141.0 mil-
lion against Dkk 195.7 million at 31 January 2012. the decline
is primarily attributable to debt owing to credit institutions.
current liabilities
the Group’s current liabilities represented Dkk 2,478.6 million
against Dkk 2,567.4 million at 31 January 2012. the decline
is primarily attributable to payables to credit institutions and
trade payables.
ca s h f lo w s TaT e m e n T
the Group’s cash flows from operating activities were positive
in the amount of Dkk 45.6 million (2011/12: Dkk -78.8 million).
this amount is a combined result of a reduction of funds tied
up in projects due to project sales, new project investments,
interest and tax paid, as well as other operating items.
the Group’s cash flows from investing activities were positive in
the amount of Dkk 6.4 million (2011/12: Dkk 9.8 million), which
is primarily a combined result of additional investments in the
extension of the Group’s czech investment property complet-
ed in may 2012 and the sale of a minor investment property in
Germany.
the cash flows from financing activities for the year were neg-
ative in the amount of Dkk 76.2 million (2011/12: Dkk 32.3
million). the negative cash flows result from a reduction of pay-
ables to credit institutions coupled with the financing raised for
project investments.
f i n a n c i a l i s s u e s
at the forthcoming annual General meeting, the supervisory
Board will request authorization to carry out a capital increase
with gross proceeds of about Dkk 210-231 million. the capital
increase will help generate the cash resources required to un-
derpin future operations and project flow, and thus long-term
earnings. the capital increase has been discussed with the
Group’s major shareholders, who, together with a few major
private and institutional investors, have given conditional sub-
scription and underwriting commitments for the total capital
increase. the more specific terms and conditions governing the
capital increase have not yet been determined. the terms and
conditions will be described in detail in the prospectus to be
published in connection with the capital increase.
the Group’s short-term debt to credit institutions consists of
operating and project credits. tk Development has entered into
a general agreement with the Group’s main banker about both
types of credit. the agreement and the associated conditions
are renegotiated once a year, and management expects the
agreement to continue; see below.
the Group’s main banker has indicated its preparedness to
prolong tk Development’s credit facilities subject to specific
conditions being met, which includes reducing the operating
credit limit by Dkk 50 million. the prolongation is expected to
be formally accepted immediately after publication of tk De-
velopment’s annual Report 2012/13.
in addition, the Group has entered into project-financing agree-
ments with various banks in Denmark and abroad. project cred-
its are usually granted with different terms to maturity, de-
pending on the specific project.
During the year under review, the Group was in continuous di-
alogue with a few credit institutions regarding the postpone-
ment of repayment obligations on project credits until one or
more of the major completed projects have been sold, and
agreements regarding the postponement of such repayments
have now fallen into place.
of the total project credits outstanding at 31 January 2013,
credits worth Dkk 1.5 billion are due to mature in the 2013/14
financial year, including continuing repayment obligations on
individual project credits of about Dkk 80 million. after the re-
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 7 / 6 5
porting date, agreements regarding the refinancing of Dkk 0.2
billion have been made. moreover, the Group’s main banker and
other credit institutions have indicated their preparedness to
prolong existing credit facilities. When final commitments in this
respect have been received, credit facilities of Dkk 1.1 billion
will have been prolonged, and credit facilities of Dkk 0.3 billion
will be due to mature in 2013/14. the Group depends on being
able to continue obtaining either a prolongation or alternative
financing of the project credits not expected to be repaid upon
project sales. the Group is in ongoing dialogue with the relevant
credit institutions, and management anticipates being able to
either prolong or refinance these project credits. some of the
proceeds from the capital increase or the cash freed up on the
sale of major completed projects will help reduce the debt to
credit institutions, including project finance loans of Dkk 68.5
million granted by a number of the company’s major sharehold-
ers and members of management.
T r a n s ac T i o n s w i T h r e l aT e d Pa rT i e s
no major or unusual transactions were made with related par-
ties in the first six months of the 2012/13 financial year. in the
third quarter of 2012/13 related parties granted the Group a
loan of Dkk 10 million for project financing.
in the fourth quarter of 2012/13, tk Development entered into
an agreement regarding partial financing of the Group’s shop-
ping centre project in esbjerg, BRoen, via an overall financing
package to be provided by a number of major shareholders in
the company, including members of management and other re-
lated parties; see nasDaQ omX copenhagen a/s’ definition of
this term. for disclosures about transactions with related par-
ties according to ifRs, please see note 36 in the annual Report.
Pa r e n T c o m Pa n y, T k d e v e lo Pm e n T a / s
in 2012/13, tk Development a/s, the parent company, realized
results before tax of Dkk -285.6 million against Dkk 114.1 mil-
lion in 2011/12. the results after tax amounted to Dkk -333.8
million against Dkk 105.4 million the year before. tax on the
results for 2012/13 was materially affected by the impairment
of the company’s deferred tax assets due to the changed rules
for tax loss carryforwards adopted in June 2012.
the results include income from investments in group enter-
prises in the amount of Dkk -336.1 million against Dkk 73.9
million the year before. in addition, earnings consist mainly of
net financing income from loans to subsidiaries. in 2012/13,
tk Development made writedowns for impairment of invest-
ments in group enterprises in the amount of Dkk 410.0 million
(2011/12: Dkk 0.0 million). accumulated impairment relating to
investments in group enterprises amounted to Dkk 870.2 mil-
lion at 31 January 2013 (31 January 2012: Dkk 460.2 million).
at 31 January 2013, the balance sheet total amounted to Dkk
2,058.6 million, a decline of Dkk 332.6 million over the year be-
fore. equity totalled Dkk 1,868.6 million at 31 January 2013, a
decline of Dkk 332.9 million relative to 31 January 2012. this
decline is mainly attributable to the profit recorded for the year.
o u T lo o k fo r 2 0 1 3 / 1 4
management anticipates positive results before tax for the
continuing activities for the 2013/14 financial year. the timing
and progress of the discontinuation of activities are subject to
major uncertainty, and the results of the discontinuation are
therefore not included in the outlook for next year.
as mentioned above, management has revised the sales strat-
egy for the Group’s projects and chosen to accept reduced pric-
es for selected project sales. thus, management considers it
important for the Group to sell some of its completed projects
and plots of land in the 2013/14 financial year.
the expectations mentioned in this announcement, including
earnings expectations, are naturally subject to risks and uncer-
tainties, which may result in deviations from the expected re-
sults. various factors may impact on expectations, as outlined
in the section “risk issues”, particularly the valuation of the
group’s project portfolio.
s u b s eq u e n T e v e n T s
after the reporting date, tk Development has sold one of the
Group’s minor German investment properties to a German in-
vestor. other than those mentioned in the management com-
mentary, no major events of relevance to the company have
occurred after the reporting date.
T h e s u P e rv i s o ry b oa r d
the supervisory Board is currently composed of six members.
the supervisory Board members have elected niels Roth as
chairman and torsten erik Rasmussen as Deputy chairman. at
the annual General meeting, the supervisory Board will propose
that the supervisory Board should remain composed of six
members. torsten erik Rasmussen, Jens erik christensen and
Jesper Jarlbæk will not stand for re-election at the forthcom-
ing annual General meeting. the remaining supervisory Board
members are prepared to stand for re-election, and moreover
the supervisory Board proposes that arne Gerlyng-Hansen,
ceo of Harald nyborg a/s, morten astrup, founding partner
and cio of storm capital management ltd., london, and kim
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
1 8 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
mikkelsen, ceo of strategic capital aps, be elected to take the
vacant seats on the supervisory Board. the new members rec-
ommended for approval at the annual General meeting repre-
sent major shareholders of tk Development.
arne Gerlyng-Hansen is a member of the legal profession and
has been the ceo of Harald nyborg a/s since 2004. He is also
on the supervisory board of Dava 1 aps, a major shareholder of
tk Development. arne Gerlyng-Hansen has core competencies
in retail trade, legal affairs, management and business devel-
opment, qualifications considered particularly important by the
supervisory Board when nominating him as a candidate. arne
Gerlyng-Hansen will be considered an independent member of
the supervisory Board.
morten astrup is the founding partner and cio of storm cap-
ital management ltd. and deputy chairman of the superviso-
ry board of storm Real estate asa, a major shareholder of tk
Development. morten astrup has core competencies in real
estate investment, financing and business development, qual-
ifications considered particularly important by the superviso-
ry Board when nominating him as a candidate. morten astrup
will be considered an independent member of the supervisory
Board.
kim mikkelsen has a financial background and is the ceo of
strategic capital aps, a major shareholder of tk Development.
kim mikkelsen has core competencies in financial affairs, in-
vestment and management, qualifications considered particu-
larly important by the supervisory Board when nominating him
as a candidate. kim mikkelsen will be considered an independ-
ent member of the supervisory Board.
d i v i d e n d s
the supervisory Board recommends to the annual General
meeting that no dividends be distributed for the 2012/13 fi-
nancial year.
the full annual Report is downloadable from tk Development’s
website, www.tk-development.com, as from 30 april 2013.
r e s u lt s f o r 2 0 1 2 / 1 3 a n D o u t l o o K f o r 2 0 1 3 / 1 4
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 1 9 / 6 5
the Group has operated under difficult market conditions in re-
cent years, resulting in protracted decision-making processes
among financing sources, tenants and investors alike. the Dan-
ish market in particular has been affected by prolonged uncer-
tainty, and continues to be so, partly because of a weakened
financial sector. in management’s opinion, there are no indica-
tions of a significant improvement during the period to come.
the market conditions in tk Development’s markets and the
impact of the financial crisis on land prices, construction costs,
rental levels, prices for completed properties and access to fi-
nancing, have not changed significantly during the past months.
the above-mentioned variables have stabilized at a new price
level, and new projects are expected to be sold at the profits
realized before the crisis, thus generating a gross margin of 15-
20 % measured on the basis of project cost. However, a low
profit is expected to be realized on projects already completed.
the access to project financing remains difficult and is currently
the greatest challenge facing the property sector. the financial
sector is weakened and has sharpened its focus on credit risks,
and at the same time new rules have imposed stricter capital
requirements on banks. this means that credit institutions re-
main reluctant to provide loans to finance real property, with a
resulting negative effect for the property sector, and thus tk
Development as well. tk Development is dependent on its abil-
ity to continue obtaining either full or partial project financing,
either from credit institutions or from investors in the form of
forward funding, and on freeing up substantial cash resources
from the sale of several major completed projects.
the management of tk Development has long experienced an
unsatisfactory market response to the Group’s efforts to sell
completed projects and investment properties due to sluggish
demand. Despite this trend, 2012 saw cautious investor opti-
mism and increased interest in investing in selected segments
of retail projects, with quality and location being key factors
in the investment decision. However, the decision-making pro-
cesses continue to be lengthy, in part because of the inves-
tors’ requirement for lower project risk. institutional investors
need options for placing their funds, and this paves the way
for setting up partnerships with such investors for the purpose
of cooperating on the execution of new projects. these oppor-
tunities fall in line with the Group’s business model, according
to which tk Development wishes to enter into partnerships re-
garding completed properties and new development projects,
and thus to improve the allocation of the company’s equity,
diversify risks and better utilize the Group’s development com-
petencies.
in the letting market for retail property, tenants continue to fo-
cus on location. tk Development is experiencing a good amount
of interest in prime-location projects, and several strong na-
tional and international retail chains are expanding, although
decision-making processes are protracted in light of the unrest
on international financial markets.
the rental level is expected to remain fairly stable in the period
ahead. However, the rental level for secondary locations is ex-
pected to be under pressure.
in the residential segment in Warsaw, poland, demand is slug-
gish and prices have realigned due to the large supply of new
housing for sale, among other factors. the scope of housing
projects launched in Warsaw is now diminishing, and over time
the supply of housing is expected to stabilize. therefore, in the
opinion of management, housing development in poland will be-
come attractive again, particularly in the Warsaw area.
the macroeconomic indicators in the form of GDp, private con-
sumption and unemployment are showing moderate growth
expectations in all the Group’s markets.
the Group has a strong platform in its continuing markets and
focuses on exploiting the unrealized potential on all markets
through existing retailer and investor networks. With special
emphasis on the retail segment, the Group consistently strives
to strengthen the project portfolio in each of its markets and
to ensure satisfactory progress of its existing projects and new
project opportunities.
d e n m a r k
economic growth in Denmark remains low, and a high growth
rate is not foreseen in the near future. in recent years, the
unemployment rate has been fairly stable and is expected to
remain at an unchanged level in the years to come. the Dan-
ish market has been affected by prolonged uncertainty, and
continues to be so, partly because of the weakened financial
sector. thus, access to project financing remains difficult and is
the greatest challenge facing the property sector.
in Denmark, tk Development focuses on the retail segment,
which is also expected to remain the primary segment in the
years ahead. the main emphasis will be on establishing district
and shopping centres in cities and medium-sized towns, and tk
Development is working on several project opportunities within
this area. another interest area will be the office market in ma-
jor towns and cities.
m a r K e t c o n D i t i o n s
2 0 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
investors continue to show reasonable interest in the Group’s
retail, office and residential projects at attractive locations in
major towns and cities. at the same time, investor interest in
secondary towns is waning. location and quality are the two
key determinants of investment decisions. the Group can ob-
tain satisfactory selling prices for prime-location properties
where the risk of vacancies is relatively limited, while selling
prices for properties in secondary locations are under pressure.
institutional investors and other professional investors need
options for placing their funds. this paves the way for setting
up new project partnerships with these investors with a view to
cooperation on project execution.
in the retail letting market, tenants also focus on the right loca-
tion. Both supermarket chains and retail chains are still willing
to expand if the location is right, although their decision-mak-
ing processes are protracted. the rental level for primary loca-
tions is expected to be fairly stable, whereas the rental level for
secondary locations is under pressure.
denmark
– startup in 1989 2011 2012 2013e 2014e
GDp (% yr./yr.) 1.1 -0.6 0.5 1.5
private consumption (% yr./yr.) -0.5 0.5 0.4 1.8
Unemployment (%) 6.1 6.2 6.2 6.1
(source: nordea, march 2013)
after a period of low activity, the office market is picking up,
with projects in major towns and cities attracting greater in-
terest. projects in prime locations, such as those in the Group’s
waterfront areas, appeal to tenants and investors alike, and
the Group expects to create interesting projects in the years to
come. examples of such projects include the Group’s locations
at amerika plads in copenhagen and stuhrs Brygge in aalborg.
s w e d e n
the swedish market is characterized by the strong swedish
economy and high purchasing power, although the growth rate
in 2012 was lower than the year before. Real earnings have
risen sharply in the past few years, and increased growth and
higher private consumption are forecast for the years ahead.
as in previous years, tk Development will focus on the retail
segment in sweden. Retail chains are interested in attractive
rental premises, although tenants’ decision-making processes
are also protracted in the swedish market. new foreign retail
chains continue to expand. project location continues to be the
paramount consideration for tenants, and the trend is clearly
for retail chains to expand in cities, particularly stockholm and
Gothenburg, but also in other major towns in sweden. stock-
holm continues to record high annual population growth. this
results in a demand for new retail establishments and retail
store extensions, as concerns both retail parks and shopping
centres.
Both local and international investors are showing mounting in-
terest, particularly in prime locations, and the selling prices for
such projects are on the rise.
sweden is considered to be the most transparent and inter-
esting market in the nordic region, and given the continued
retail expansion, the swedish market is highly interesting for
tk Development. tk Development intends to focus on develop-
ing prime-location superstores and shopping centres in major
towns and cities, with stockholm and Gothenburg being the
primary areas of interest.
sweden
– startup in 1997 2011 2012 2013e 2014e
GDp (% yr./yr.) 3.7 0.8 1.3 2.6
private consumption (% yr./yr.) 2.1 1.5 2.2 2.4
Unemployment (%) 7.8 8.0 8.3 8.2
(source: nordea, march 2013)
P o l a n d
the Group has a well-developed network of contacts with many
local and international retail chains looking to expand into cen-
tral europe. in addition, the Group works closely with investors,
including international investment funds, looking to invest in
central european property projects.
the outlook for the polish market remains positive, even though
the macroeconomic indicators show a weaker growth trend
than in previous years. strong national and international retail
chains still wish to expand, with location being the key focus
as in the Group’s other markets. Generally, prime-location retail
premises in major towns and cities are in high demand, while
tenants want to vacate their secondary-location premises. al-
though it is still possible to pre-let planned shopping centres
in attractive locations, the letting process is longer due to ten-
ants’ protracted decision-making. as the market for shopping
centres matures, new development options are expected to
arise, also making projects to extend and/or revitalize existing
centres attractive.
m a r K e t c o n D i t i o n s
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 1 / 6 5
investors focus chiefly on major towns and cities in poland and
continue to show reasonable interest in prime-location projects
or in projects with development potential.
Poland
- startup 1995 2011 2012 2013e 2014e
GDp (% yr./yr.) 4.3 2.0 1.8 2.8
private consumption (% yr./yr.) 2.5 0.5 0.3 1.8
Unemployment (%) 12.5 13.4 13.8 13.4
(source: nordea, march 2013)
the Group’s business platform also includes the residential
market in poland.
there are still opportunities for developing and selling attrac-
tive housing, particularly in the Warsaw area. Warsaw continues
to develop and bolster its position as poland’s commercial hub,
resulting in a constant demand for more and newer dwellings.
numerous opportunities exist for executing projects in attrac-
tive locations. the market remains challenging as a large num-
ber of new residential buildings are still being constructed in
poland, including in Warsaw, and the supply of housing for sale,
whether already constructed or under construction, is high.
the price level has been declining slightly over a period, but is
expected to remain fairly stable for small residential units in
Warsaw in the time ahead, as the scope of residential projects
launched in Warsaw is now diminishing. thus, the supply of
housing is expected to stabilize over time. Buyers are showing
a preference for lower-priced areas to obtain more floor space.
c z e c h r e P u b l i c
the economic situation in the czech Republic is characterized
by low growth and declining private consumption. a slight re-
covery is foreseen in the near future, and investors are once
more showing interest in real property investments. interna-
tional funds focus on major projects, while local investors are
showing interest in minor projects. tk Development focuses on
the retail segment and still experiences reasonable demand for
leases in attractive projects. the continuing trend is for the es-
tablishment of retail projects in town centres or close to traffic
hubs. the expectation for the years to come is for more new
shopping centres to be established and for existing centres to
be revitalized/and or extended. supermarket chains are also
expected to continue expanding. tk Development will concen-
trate on projects in medium-sized towns and in cities.
czech republic
- startup 1997 2011 2012 2013e 2014e
GDp (% yr./yr.) 1.9 -1.1 0.0 1.9
private consumption (% yr./yr.) 0.7 -3.0 -0.5 1.5
Unemployment (%) 6.7 7.0 7.6 7.3
(source: the european commission, european economic forecasts,
Winter 2013)
m a r K e t c o n D i t i o n s
2 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
B u s i n e s s c o n c e P t a n D K n o w l e D g e r e s o u r c e s
b u s i n e s s c o n c e PT
the Group’s primary business area is the development of real
property, termed property development, and the Group’s sec-
ondary business area is asset management.
P r o P e rT y d e v e lo Pm e n T
the Group has strong networks forged on the basis of
long-standing, close business relationships with tenants and
investors, and regularly enters into contracts with these busi-
ness partners. the Group is predominantly a knowledge-based
service provider and has specialized in being the productive and
creative liaison between tenants, investors, architects, con-
struction companies and other business partners.
tk Development wants to be the preferred property develop-
ment partner in the retail segment, with the interaction with
customers, tenants and investors being based on know-how
and mutual confidence.
in collaboration with tenants and investors, tk Development
plans and arranges the construction of new buildings, and the
expansion and conversion of real property based on tenant
needs and investor requirements. the Group develops the pro-
jects, which involves letting the premises, managing construc-
tion and concluding contracts with construction companies and
subcontractors for the execution of the building works.
in terms of segments, the Group focuses on the development of
shopping centres, superstores and corporate headquarters and
related mixed and multifunctional projects as well as housing
in poland.
the retail segment will continue to be the Group’s most impor-
tant segment in the years ahead based on continued expansion
of its already extensive network of contacts.
DK se Pl cZ
Shopping centres
Stores/superstores
High-street properties
Offices
Mixed
Residential
owning, operating, maturing and optimizing completed pro-jects for a medium-long operating period that matches the potential for adding value both for the group and for third parties.
strategy for business unit - asset management
Developing projects from the conceptual phase through to project completion, based on one of several models: • sold projects (forward funding / forward purchase)• projects with partners• on tk Development’s own books based on a high degree
of confidence in the letting and sales potential• services for third parties.
strategy for business unit – Property development
the overall mission of tK Development is to create added value by developing real property. the group operates in the property development and services environments, and specializes in being the creative and result-oriented link be-tween tenants and investors.
The group’s mission
tK Development bases its operations on a number of funda-mental values that are the group’s hallmarks. they define the framework for the actions of tK Development’s employees and the values that tK Development wants to signal.• Good business sense• Being result-oriented• innovation and creativity• Being trustworthy• keeping it simple• commitment
fundamental values
Finished project
Subcontractors
InvestorsOption/purchase of site
Tenant requirements
Investor requirements
Public authorities
Contractors
Tenants
EngineersArchitects
Project managementLettingSales
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 3 / 6 5
the Group’s primary focus is real property development, which
may be based on several models:
• for the Group’s own account, with or without advance pro-
ject sales, where the Group can either finance the projects
on its own books or procure staged financing from the
buyer in step with project completion, also termed forward
funding.
• together with business partners during the construction
period.
• services for third parties.
customer relations
the Group’s principal customers consist of tenants and in-
vestors. tk Development continuously strives to create new,
improved services to make the Group an even more attractive
business partner.
tenants
over the years, tk Development has built close partnership re-
lations with a large number of companies, including in particular
retail chains looking to set up new stores.
the Group has gained in-depth knowledge of tenant needs and
requirements. from this platform, tk Development can develop
retail solutions that meet tenants’ requirements for design and
location. in addition, the numerous close relations with a wide
range of retail chains mean that the Group is always able to put
together an attractive retail mix that boosts individual tenants’
revenue.
investors
tk Development has also built close relations with a number of
Danish and foreign property investors.
the Group has in-depth knowledge of investor needs and re-
quirements. among other things, tk Development offers
standardized, international contracts and a problem-free pro-
cess from initiation to delivery.
over the years, the Group has sold projects to a range of Danish
and foreign banks, investment funds, pension funds and private
companies.
Project and risk management
new projects are initiated based on a careful assessment of
their earnings potential viewed in light of project complexity,
completion time, tied-up capital, including balance sheet and
cash flow impact, and other use of resources. the assessment
includes deliberations about project location, regulatory mat-
ters, pre-letting, construction matters and market conditions.
limiting risks
a number of management tools contribute to ensuring a satis-
factory project process. construction is typically not initiated
until satisfactory pre-construction letting has been achieved
for at least 60 % of the project. if the project is sold, construc-
tion will not be initiated until the Group anticipates being able
to meet such investor requirements as would allow final com-
pletion of the project sale. meeting these requirements typical-
ly falls within the Group’s sphere of competencies.
forward funding
tk Development aims to secure the sale of projects at an early
stage, and the Group considers it important to expand investor
commitment by having the investors fund the project during
B u s i n e s s c o n c e P t a n D K n o w l e D g e r e s o u r c e s
fund
s ti
ed u
p (D
kk
)
con
stru
ctio
n st
art
Han
ding
-ove
r
site
pur
chas
e
project progress
Development phase construction period
project implementation without
forward funding
project implementation based on
forward funding
the diagram below illustrates the Group’s funds tied up in projects, in scenarios both with and without forward funding.
2 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
the construction process (forward funding) where possible. for-
ward-funding agreements with investors are usually concluded
before construction startup, thus ensuring that the funds tied
up in the Group’s projects are kept at an absolute minimum,
which also reduces the balance sheet total and minimizes the
risk.
green building
the Group is experiencing increasing demand for green build-
ings from both tenants and investors. tk Development offers
to construct green buildings as and when requested by the
Group’s customers. several of the Group’s projects have been
constructed as green buildings and certified according to the
BReeam standards or equivalent.
a s s e T m a n ag e m e n T
asset management is tk Development’s secondary business
area. this business area consists of owning, operating, running
in, maturing and optimizing completed projects for a medi-
um-long operating period whose length matches the potential
for adding value for both the Group and third parties.
in relation to new projects, the Group can choose to initiate pro-
jects with a view to construction and subsequent startup and
maturing over a short span of years, with such projects typical-
ly being classified as investment properties.
this is a natural consequence of the changed risk picture, in-
cluding in particular the change in investor behaviour, which
means that the development process for some projects is not
optimally finalized until they have been matured and run in. the
portfolio of investment properties generated by this element
will ensure both a positive operating margin and a positive cash
flow, viewed in isolation. after the maturing process, the pro-
ject returns can be even better documented and higher prices
obtained.
investment properties can be developed either for the Group’s
own account or in project development joint ventures with
co-investors that wish to participate in both the construction
and maturing phases. By entering into joint ventures, the Group
will achieve more effective placement of its equity financing
of projects under development, better risk spread, and more
efficient use of the Group’s staff resources and competencies.
the Group owns a few investment properties and a number of
completed projects. these properties and projects fall into the
Group’s asset management segment.
k n o w l e d g e r e s o u r c e s
tk Development develops projects of a high standard. together
with the employees’ knowledge and qualifications, the Group’s
close relations with tenants and investors play an essential role
in minimizing the risks of individual projects. this combination
is the prerequisite for developing projects that generate satis-
faction for tenants and investors alike, as well as satisfactory
earnings for the Group on individual projects.
employees
the employees’ knowledge and competencies are essential to
tk Development’s value creation, and tk Development contin-
uously strives to secure the best match between employees’
competencies and the specific job requirements of the proper-
ty development business. the Group’s employees work within
individual, specialized areas: project developers, letting manag-
ers, legal and financial project controllers, and engineers.
education
to raise the employees’ level of expertise to an even higher
level and thus reinforce tk Development’s value creation, the
Group has continuous focus on training and education. the aim
is to strengthen the Group in the development phases that are
critical to maximizing the value of each individual project.
in addition to improving the Group’s knowledge resources, ed-
ucation helps cement tk Development’s position as an attrac-
tive workplace for both existing and future employees.
Project organization
tk Development believes it is important to give employees an
inspiring workplace where individual projects afford them the
opportunity to accumulate knowledge and experience that can
be passed on throughout the organization and thus continu-
ously improve the Group’s collective know-how and skills.
in order to ensure a high degree of quality in all services provid-
ed by the Group to tenants and investors - as well as efficient
progress and quick decisions in the development of individual
projects - the Group’s staff is anchored in a matrix organization
as follows:
2
Project management/Construction management
Project groups
Finance and accounting
Controlling
Sale and rental
41 3
Inte
rdis
cip
linar
yco
mp
eten
cies
f o r r e t n i n g s -K o n c e P t
B u s i n e s s c o n c e P t a n D K n o w l e D g e r e s o u r c e s
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 5 / 6 5
B u s i n e s s c o n c e P t a n D K n o w l e D g e r e s o u r c e s
frede clausenpresident and ceo
robert andersenexecutive vice president
accounting, finances and controlling
denmark
erik Godtfredsen
sweden
Dan fæster
Poland
Zygmuntchyla
czech republic
Rostislav novák
the matrix organization means that all the Group’s peak com-
petencies, covering the progress of a project from blueprint to
completion, exist in the project group that carries through the
individual project from a to Z.
organization, management and employees
tk Development’s organization and management structure are
based on branch offices managed by divisional managers (sen-
ior vice presidents).
the Group’s international management team consists of the
above-mentioned group of persons, as well as functional man-
agers in the individual countries.
the group’s management structure (excluding discontinuing
activities) is shown below:
organizational focus on segments
to underpin the segmentation chosen, it has been decided to
organize the business activities so as to best ensure manage-
ment focus on both property development and asset manage-
ment activities. the members of the executive Board attempt
as far as possible to focus primarily on their own individual
business areas, while taking into account that the executive
Board members are jointly responsible for the day-to-day man-
agement of the overall business activities. tk Development has
several years’ experience in asset management and performs
asset management services for third parties. the company will
increase its focus on asset management, including utilization
of the Group’s competencies and employee know-how to en-
sure continued progress in maturing the completed projects.
breakdown of the group’s employees
at 31 january 2013, the group employed a total of 112 per-
sons, broken down as follows:
Denmark 21
Poland 25
Shopping centremanagement 16
Group/services 10 Other countries 11
Czech Republic 14
Sweden 15
Group functions and related services include management, ac-
counting and finances, and other staff functions.
8,300 m2 retail park, gävle, swedenthe retail park was completed in october 2012 and was handed over to nordika fastigheter aB in november 2012. the selling price amounted to sek 110 million.
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 5 / 6 5
2 6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
the Group’s primary business area is the development of real
property, termed property development.
in its property development segment, tk Development focuses
on executing existing projects in the portfolio, as well as on se-
curing satisfactory pre-construction letting or sales. in addition,
the Group is continuing its work on new project opportunities.
the Group will make the startup of major new projects contingent
on obtaining either full or partial financing for them and on free-
ing up cash resources from the sale of one or more major complet-
ed projects.
in 2012/13, the gross margin for property development
amounted to Dkk -81.8 million, of which Dkk 127.1 million rep-
resents impairment losses on projects; see the description un-
der “Results for 2012/13 and outlook for 2013/14” above.
the Group’s retail projects on which construction is already on-
going or about to start are still attracting a good amount of in-
terest from tenants. During the period under review, the Group
also concluded lease agreements for several of these projects.
Uncertainty on the international financial markets continues to
affect the property sector negatively, leading to consistently
long decision-making processes among financing sources, ten-
ants and investors alike; see under “market conditions”. against
this background, the Group has postponed the expected con-
struction start dates for several projects relative to the most
recent estimates in the interim Report for Q1-Q3 2012/13, and
has decided against initiating certain projects.
the development potential of the project portfolio represented
452,000 m² at 31 January 2013, of which sold projects account-
ed for 7,000 m² and remaining projects for 445,000 m². the pro-
ject portfolio had a total development potential of 635,000 m²
at 31 January 2012.
the development in the group’s project portfolio is outlined
below:
(dkkm) 31 jan 2011 31 jan 2012 31 jan 2013
sold
completed 0 0 15
in progress 12 17 17
not initiated 14 10 6
total 26 27 38
remaining
completed 0 0 38
in progress 149 286 198
not initiated 915 938 901
total 1,064 1,224 1,137
net project portfolio 1,090 1,251 1,175
forward funding 284 293 370
Gross project portfolio 1,374 1,544 1,545
forward funding in % of gross carrying amount of sold projects 91.6 % 91.6 % 91.1 %
table 1
the Group uses forward funding to reduce the funds tied up in
the portfolio of sold projects. the rise in forward funding since
31 January 2012 results mainly from an accumulation of for-
ward funding and prepayments relating to projects in progress.
the decline in the carrying amount of remaining projects is pri-
marily attributable to the writedowns for impairment of the
Group’s project portfolio made during the period under review;
see above.
P r o P e r t y D e v e l o P m e n t
Developing projects from the conceptual phase through to project
completion, based on one of several models:
• sold projects (forward funding / forward purchase)
• projects with partners
• on tk Development’s own books based on a high degree of confi-
dence in the letting and sales potential
• services for third parties.
strategy for business unit – Property development
• countries: Dk, se, pl, cZ
• Revenue 2012/13: Dkk 183.4 million
• Gross profit/loss 2012/13: Dkk -81.8 million
• profit/loss before tax and impairment, etc.: Dkk 44.1 million
• Balance sheet total, 31 Jan 2013: Dkk 1,284.5 million
Property development
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 7 / 6 5
the development potential is shown below in square metres:
m² (’000) 31 jan 2011 31 jan 2012 31 jan 2013
sold
completed 0 0 4
in progress 4 7 3
not initiated 79 29 0
total 83 36 7
remaining
completed 0 0 3
in progress 22 39 20
not initiated 543 560 422
total 565 599 445
total project portfolio 648 635 452
number of projects 53 50 37
table 2
as appears from above, the development potential of the
Group’s project portfolio in square metres has declined
substantially since 31 January 2012. this decline should
be viewed in light of the Group’s market focus, including the
high priority attached to projects on the continuing markets.
in the 2012/13 financial year, management chose not to
launch a number of projects that it did not expect to generate
satisfactory earnings in relation to use of resources, capital
tied up, etc. moreover, as mentioned above, management
aims to reduce the portfolio of projects not initiated (plots of
land) over a two-year period. several of these projects will be
discontinued through land sales and will therefore no longer
be included in the development potential in terms of square
metres.
geographical segmentation of the development potential in
square metres:
Sweden
Denmark
Czech Republic
Poland
c o m P l e T e d P r oj ec T s
residential park, bielany, warsaw, Poland
tk Development owns a tract of land in Warsaw allowing for
the construction of about 56,200 m², distributed on 900-1,000
residential units. the plan is to build the project in four phases.
construction of the first phase, consisting of 136 units, started
in mid-2011 and was completed in January 2013. the pre-com-
pletion sale of the units started in spring 2011, but sluggish
demand in the polish residential market has affected the sales
process. so far, sales agreements for about 69 % of the units in
the first phase have been signed (Q1-Q3 2012/13: 52 %). the
residential units are being sold as owner-occupied apartments
to private users, and management expects the remaining units
to be sold in the course of the 2013/14 financial year. the mar-
ket remains challenging as a large number of new residential
buildings are still being constructed in poland, including in War-
saw, and the supply of housing for sale, whether already con-
structed or under construction, is high. the price level has been
declining slightly over a period, but is expected to remain fairly
stable for small residential units in Warsaw in the time ahead,
as the scope of residential projects launched in Warsaw is now
diminishing. thus, the supply of housing is expected to stabi-
lize over time. Buyers are showing a preference for lower-priced
areas to obtain more floor space. management has therefore
chosen to prioritize another of the Group’s residential projects
in a lower-priced area of Warsaw. management has decided to
attempt selling some of the land for the Bielany residential pro-
ject, and the startup of the remaining part of the project will be
postponed until market conditions have improved.
P r oj ec T s i n P r o g r e s s
amerika Plads, underground car park, copenhagen, denmark
kommanditaktieselskabet Danlink Udvikling (DlU), which is
owned 50/50 by Udviklingsselskabet By og Havn i/s and tk
Development, owns three projects at amerika plads: lot a, lot c
and an underground car park. part of the underground car park
in the amerika plads area has been built. the Group expects to
sell the total parking facility upon final completion.
vasevej, birkerød, denmark
tk Development owns a property of about 3,000 m² at vasevej
in Birkerød, rented by superBest. the project consists of a re-
furbishment of the existing property and a minor extension
comprising a few stores and dwellings. the combined project is
expected to comprise about 3,400 m².
retail park, enebyängen, danderyd, sweden
in the municipality of Danderyd near stockholm, tk Develop-
P r o P e r t y D e v e l o P m e n t
2 8 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
P r o P e r t y D e v e l o P m e n t
Project city/town country segment
Tkd’s share
of area (m2)
Tkd’s
ownership
interest
construction
start/expected
construction start
opening/
expected
opening
completed
Residential park, Bielany, phase i Warsaw pl Residential/services 7,850 100 % mid-2011 early 2013
in progress
amerika plads, underground car park copenhagen Dk car park 16,000 50 % 2004 continuously
vasevej Birkerød Dk mixed 3,400 100 % - -
Retail park, enebyängen, phase ii Danderyd se Retail 1,800 100 % autumn 2012 march 2013
not initiated
BRoen, shopping centre esbjerg Dk Retail 29,800 100 % mid-2013 2015
Østre teglgade copenhagen Dk office/residential 32,700 1) 100 % continuously continuously
amerika plads, lot c copenhagen Dk mixed 6,500 50 % 2014 2016
amerika plads, lot a copenhagen Dk office 5,900 50 % 2014 2016
aarhus south, phase ii aarhus Dk Retail 2,800 100 % 2013 2014
ejby industrivej copenhagen Dk office 12,900 100 % - -
Østre Havn/stuhrs Brygge aalborg Dk mixed 36,000 1) 50 % continuously continuously
Retail park, marsvej Randers Dk Retail 10,000 100 % 2013 2014
Development of town centre køge Dk mixed 27,500 100 % 2013 continuously
farum Bytorv, extension farum Dk Retail 8,000 100 % 2013 2015
the kulan commercial district Gothenburg se mixed 45,000 100 % 2013 2015
Retail park, Barkarby Gate stockholm se Retail 20,000 100 % end-2013 end-2014
Retail park, söderhamn söderhamn se Retail 10,000 100 % 2013 2014
Retail park, Gävle, phase ii Gävle se Retail 15,800 100 % continuously continuously
shopping centre, Jelenia Góra Jelenia Góra pl Retail 7,200 30 % 2013 2015
Residential park, Bielany,
remaining phases Warsaw pl Residential/services 31,000 100 % continuously continuously
Bytom Retail park Bytom pl Retail 25,800 100 % continuously continuously
shopping centre, frýdek místek frýdek místek cZ Retail 14,800 100 % 2013 2014
most Retail park, phase ii most cZ Retail 2,000 100 % - -
Property development,
total floor space approx. 373,000 1) share of profit on development amounts to 70 %.
Project outline
the outline below lists the key projects in the portfolio in the property development segment.
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 2 9 / 6 5
ment handed over the first 13,000 m² phase of the retail park
to an investor in 2010/11. construction of the second phase of
about 1,800 m², which is fully let (Q1-Q3 2012/13: 100 %) and
tenanted by plantagen, was completed in march 2013, and the
retail park was handed over to the investor after the reporting
date. the total project has been sold to the German investment
fund commerz Real on the basis of forward funding.
P r o j e c T s n oT i n i T i aT e d
broen, shopping centre, esbjerg, denmark
in esbjerg, Denmark, tk Development has bought a plot ear-
marked for a shopping centre project, BRoen, of about 29,800
m², to be built on the railway land at esbjerg station. the
shopping centre is expected to comprise about 70 stores.
the current occupancy rate is 75 % (Q1-Q3 2012/13: 75 %),
with tenants including H&m, kvickly, aldi, imerco, skoringen,
sport-master, Bahne, panduro Hobby, kong kaffe and Gina tri-
cot. the fitness facilities have been let to fitness World. the
startup of construction has been postponed and is now sched-
uled for mid-2013, rather than early 2013 as most recently an-
nounced. the opening is scheduled for 2015. tk Development
is currently working on the planning, design, startup and sale
of the project.
Østre Teglgade, copenhagen, denmark
tk Development owns an attractively located project area at
teglholmen of about 32,700 m². current plans involve estab-
lishing a church and possibly a residential care facility. Discus-
sions are also being held with several interested parties regard-
ing the construction of residential property in the project area.
amerika Plads, lots a and c, copenhagen, denmark
kommanditaktieselskabet Danlink Udvikling (DlU), which is
owned 50/50 by Udviklingsselskabet By og Havn i/s and tk
Development, owns three projects at amerika plads: lot a, lot
c and an underground car park. a building complex with about
11,800 m² of office space is to be built on lot a, and a building
complex with about 13,000 m² of commercial and residential
space on lot c. construction will take place as the space is let.
Østre havn/stuhrs brygge, aalborg, denmark
in the area previously occupied by aalborg shipyard at stuhrs
Brygge, tk Development is developing a business and residen-
tial park of about 72,000 m² through a company jointly owned
with frederikshavn maritime erhvervspark on a 50/50 basis.
the area was acquired by the jointly owned company, with pay-
ment being effected for the development rights acquired in
step with the development and execution of specific projects.
a new local plan comprising 31,000 m² of housing, offices and
parking facilities has been launched.
retail park, marsvej, randers, denmark
in october 2010, the Group took over a plot of land on marsvej
in Randers, intended for a retail development project of 10,000
m². letting has been initiated, and there is a satisfactory level
of interest among potential tenants.
development of town centre, køge, denmark
tk Development is working on a potential project in køge. in
february 2012, køge kyst and tk Development entered into a
conditional agreement under which tk Development is to buy
land for constructing a project of about 27,500 m². the project,
to be built immediately next to køge station and the town cen-
tre shopping area, comprises retail stores of about 12,000 m2,
public service facilities of about 8,500 m2 including a town hall
and rehabilitation centre, residential premises of about 3,600
m² and office/fitness facilities of about 3,400 m² as well as a
14,000 m² underground car park. the local plan for the area is
to be changed, and a new one expected to be finally adopted in
mid-2013. tk Development expects to enter into an agreement
with køge municipality regarding its takeover of both town hall
and rehabilitation centre. letting of the retail premises has
started, and potential tenants are showing a good amount of
interest in the project.
farum bytorv, extension, farum, denmark
in farum, tk Development has made a winning bid for an exten-
sion of farum Bytorv by about 20-30 stores, a total of about
8,000 m². furesø municipality and tk Development have en-
tered into a conditional purchase agreement about this exten-
sion. a new local plan for the area is to be drawn up. this pro-
cess is under way, and the local plan is expected to be adopted
in mid-2013.
The kulan commercial district, shopping centre and service/
commercial space, gothenburg, sweden
tk Development and the swedish housing developer Jm aB
have entered into a cooperation agreement with skf sverige
aB to develop skf’s former factory area in the old part of Goth-
enburg. the contemplated project comprises a total floor space
of about 75,000 m²: 30,000 m² for a shopping centre, 15,000
m² for services/commercial use and 30,000 m² for housing. tk
Development will be in charge of developing the 45,000 m² for
a shopping centre, services and commercial facilities, while Jm
aB will have responsibility for the 30,000 m² of housing. the
local plan is being drawn up and is expected to be approved
P r o P e r t y D e v e l o P m e n t
3 0 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
in 2013. the project is being discussed with potential tenants,
and several lease agreements have been concluded.
retail park, barkarby gate, stockholm, sweden
in Barkarby in the northwestern part of stockholm, tk Develop-
ment has an option on an area for the development of a 20,000
m² retail park. the retail park is expected to consist of 12-14
units, of which 9-10 units will be retail stores. the current occu-
pancy rate is 70 %, and lease agreements have been concluded
with major tenants such as XXl, clas ohlson, Blomsterlandet
and a fitness chain. the local plan is in place, and the project is
currently being discussed with potential investors. construction
is expected to start in late 2013, with the opening scheduled for
late 2014.
retail park, phase ii, gävle, sweden
in 2012/13, tk Development sold and handed over an 8,300 m²
retail park in the swedish town of Gävle to the swedish proper-
ty company nordika fastigheter aB. moreover, tk Development
has an option to buy a plot of land for developing additional
retail park premises of about 15,800 m².
shopping centre, jelenia góra, Poland
tk Development has bought a plot of land in Jelenia Góra and
has an option on additional land for the development of a shop-
ping centre of about 24,000 m². the project comprises a su-
permarket of about 2,200 m² and retail, restaurant and service
premises totalling about 21,800 m². the local plan for the area
is in place and the letting of premises has started. construction
is expected to commence in 2013, and the shopping centre is
scheduled to open in 2015. as mentioned above, an agreement
has been made with Heitman regarding its takeover of 70 % of
the project. the sale was finally completed in December 2012.
tk Development will receive fee income from the jointly owned
company established for developing, letting and managing the
construction of the project.
residential park, bielany, warsaw, Poland
Reference is made to “completed projects” above.
bytom retail Park, bytom, Poland
tk Development intends to develop a retail park with total leas-
able space of about 25,800 m² on its site at the plejada shop-
ping centre in Bytom, which is centrally located in the katowice
region. construction of the project will be phased in step with
letting. letting efforts are ongoing, and construction will be
started as space is let.
shopping centre, frýdek místek, czech republic
in the czech town of frýdek místek, tk Development has an
option to buy a plot of land for building a 14,800 m² shopping
centre, consisting of about 60 stores. the current occupancy
rate is 75 % (Q1-Q3 2012/13: 68 %). lease agreements have
been concluded with such tenants as Billa, intersport, H&m,
newYorker and euronics. construction is expected to start in
the course of 2013, with the opening scheduled for 2014.
P r o P e r t y D e v e l o P m e n t
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 3 1 / 6 5
the Group’s secondary business area is asset management,
which consists of owning, operating, running in, maturing and
optimizing completed projects for a medium-long operating pe-
riod whose length matches the potential for adding value both
for the Group and for third parties.
a s s e t m a n a g e m e n t
owning, operating, maturing and optimizing completed projects for a medium-long operating period that matches the poten-tial for adding value both for the group and for third parties.
strategy for business unit - asset management
• countries: Dk, se, pl, cZ• Revenue 2012/13: Dkk 434.5 million • Gross profit/loss 2012/13: Dkk -21.0 million• profit/loss before tax and impairment, etc.: Dkk 70.0 million• number of employees at centres, 31 Jan 2013: 12• Balance sheet total, 31 Jan 2013: Dkk 2,100.7 million
asset management
country Type
ownership
interest floor space m2
investment properties
futurum Hradec králové cZ shopping centre 20 % 28,250
Galeria tarnovia, tarnów pl shopping centre 30 % 16,500
other completed projects
sillebroen, frederikssund Dk shopping centre 100 % 25,000
fashion arena outlet center, prague cZ outlet centre 75 % 25,000
Galeria sandecja, nowy sącz pl shopping centre 100 % 17,300
Ringsted outlet Dk outlet centre 50 % 13,200
most Retail park cZ Retail park 100 % 6,400
aabenraa Dk Retail park 100 % 4,200
Brønderslev Dk shopping-street property 100 % 2,400
total 138,250
the group’s own properties under asset management comprise the following nine properties:
in 2012/13, the gross margin for asset management amounted
to Dkk -21.0 million, of which Dkk 154.4 million represents im-
pairment losses on projects; see the description under “Results
for 2012/13 and outlook for 2013/14” above.
although these properties have been classified under asset
management, tk Development will focus on selling them in
whole or in part, as their sale will substantially strengthen the
Group’s financial platform. therefore, the process of selling a
number of the Group’s completed projects continues. manage-
ment anticipates being able to conclude final sales agreements
for one or more of these properties within a short period of time.
the total portfolio of properties under asset management
amounted to Dkk 1,932.1 million at 31 January 2013, of which
investment properties accounted for Dkk 312.1 million. the op-
eration of these properties, which largely consist of shopping
centres, is generally proceeding satisfactorily. the annual net
rent from the current leases corresponds to a return on the car-
rying amount of 6.7 %. Based on full occupancy, the return on
the carrying amount is expected to reach 7.9 %.
Breakdown of own properties under asset management by
country (carrying amount):
Czech Republic
Denmark
Poland
3 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
a s s e t m a n a g e m e n t
40 % 50 % 60 % 70 % 80 % 90 % 100 %
Brønderslev, shopping-street property
Aabenraa, retail park
Most Retail Park
Ringsted Outlet
Galeria Sandecja, Nowy Sącz
Fashion Arena Outlet Center, Prague
Sillebroen, Frederikssund
Galeria Tarnovia, Tarnów
Futurum Hradec Králové
on balance, the Group’s shopping and outlet centres recorded
growth in footfall and revenue. in 2012, the Group’s six centres
had close to 16 million visitors.
the development of the individual centres appears from pages
33-36.
Generally, tk Development’s properties have a satisfactory let-
ting status, and the current occupancy rates are:
Fashion Arena Outlet Center, PragueSillebroen, Frederikssund
Galeria Tarnovia, TarnówFuturum Hradec Králové
40 %
60 %
80 %
100 %
Brønderslev, shopping- street property
Aabenraa, retail parkMost Retail ParkRingsted Outlet
April 2013Dec 2012July 2012April 2012Dec 2011
Development in occupancy rates:
90
95
100
105
110
115
201220112010
Development in footfall (2010=index 100):
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 3 3 / 6 5
the extension of the shopping centre, now comprising 110
stores, opened on 10 may 2012. the existing shopping centre
was modernized concurrently with the construction of the ex-
tension. the shopping centre is fully let and recorded a satis-
factory occupancy rate, operating profit and customer influx
throughout the year. the shopping centre had a footfall of
more than 5.6 million in 2012, and revenue increased by 24 %
a s s e t m a n a g e m e n t
f u t u r u m h r a D e c K r á l o v é , s h o P P i n g c e n t r e , c Z e c h r e P u B l i c
g a l e r i a ta r n o v i a , s h o P P i n g c e n t r e , ta r n ó w , P o l a n D
opening november 2000/may 2012
leasable area 28,250 m²
occupancy rate 100 % (Q1-Q3 2012/13: 100 %)
footfall 2012 5.6 million
opening november 2009
leasable area 16,500 m², including a 2,000 m² supermarket
occupancy rate 96 % (Q1-Q3 2012/13: 96 %)
footfall 2012 1.8 million
relative to 2011. this increase covers a period when modernization
of the existing centre caused revenue to drop, followed by a period
of increased revenue when the extension opened in may 2012.
major tenants: cinestar, tommy Hilfiger, H&m, new Yorker, adidas,
Reserved, intersport, takko fashion, foot locker, Gant, c & a, lin-
dex, Datart.
the shopping centre continues to have a satisfactory influx
of customers and to perform well. in December 2011, simply
market replaced the previous supermarket operator. this re-
placement has contributed to the progress recorded by the
shopping centre in the course of 2012. the number of visi-
tors slightly exceeded 1.8 million in 2012, compared to just
over 1.7 million in 2011. the revenue for the shopping centre
increased by 4 % relative to 2011.
after the conditional agreement with Heitman was signed in De-
cember 2012, the Group’s ownership interest of the shopping cen-
tre is 30 %.
major tenants: H&m, new Yorker, euro Rtv aGD, Reserved, Deich-
mann, Douglas, Rossman, stradivarius, takko fashion, simply mar-
ket.
40
60
80
100
120
140
FootfallRevenue
2010 20122011(2010=index 100)
40
60
80
100
120
140
FootfallRevenue
2010 20122011(2010=index 100)
3 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
in prague, the Group has developed a 25,000 m² factory
outlet centre in a joint venture with an international collab-
oration partner. the first phase opened in 2007, and the
second and last phase opened in october 2010. in recent
years, the fashion arena outlet center has truly distin-
guished itself as one of the outlet centres with the highest
attraction value in central europe. since the opening of the
a s s e t m a n a g e m e n t
s i l l e B r o e n , s h o P P i n g c e n t r e , f r e D e r i K s s u n D , D e n m a r K
fa s h i o n a r e n a o u t l e t c e n t e r , P r a g u e , c Z e c h r e P u B l i c
opening march 2010
leasable area 25,000 m², including 5,000 m² supermarket units
occupancy rate 91 % (Q1-Q3 2012/13: 90 %)
footfall 2012 3.0 million
opening november 2007/october 2010
leasable area 25,000 m²
occupancy rate 96 % (Q1-Q3 2012/13: 94 %)
footfall 2012 2.2 million
sillebroen continues to perform well with a satisfactory influx
of customers. in the continuing difficult economic climate with
subdued private consumption, in 2012 the shopping centre man-
aged to maintain both annual footfall and revenue on a par with
2011. more than 3 million customers visited the shopping cen-
tre in 2012. a number of tenants were replaced during the year. in
march 2013, Gina tricot opened an outlet in the shopping centre, and sig-
nal has signed a lease agreement for an outlet due to open in may 2013.
negotiations with tenants for several of the remaining rental units are on-
going. the centre is still being run in and matured, and continued efforts
are being made to position the centre on the market. tk Development’s
focus is on strengthening occupancy and boosting revenue in the centre.
major tenants: kvickly, fakta, H&m, fona, Gina tricot, matas, sport-
master, frederikssund isenkram, Deichmann, vero moda, vila,
Wagner.
second phase, the outlet centre has recorded a highly positive de-
velopment in footfall and revenue. the footfall slightly exceeded
2.2 million in 2012 compared to just over 1.9 million in 2011, and
the outlet centre’s revenue increased by 24 % relative to 2011.
major tenants: tommy Hilfiger, nike, adidas, Benetton, tom tailor,
ecco, Gant, lacoste, levi strauss & co., esprit.
40
60
80
100
120
140
FootfallRevenue
2010 20122011(2010=index 100)
80
100
120
140
160
180
FootfallRevenue
2010 20122011(2010=index 100)
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 3 5 / 6 5
the operation of Galeria sandecja is still proceeding satisfactorily. the
shopping centre had a footfall of almost 2.4 million in 2012, slightly
below last year’s figure. nevertheless, the shopping centre’s revenue
rose by about 14 % in 2012 compared to 2011. Generally, revenue has
improved month by month over the year compared to the year before.
the revenue generated by electronics and footwear has shown a par-
ticularly positive trend. moreover, the focus on marketing activities, in-
Ringsted outlet has been developed in a 50/50 joint venture with mill-
er Developments, a scottish factory outlet developer, and consists of
a factory outlet centre and restaurant facilities, with a total floor space
of 13,200 m² and about 1,000 parking spaces. Ringsted outlet is Den-
mark’s only genuine outlet village, true to the original outlet concept.
after a long running-in period, Ringsted outlet is now beginning to show
its real potential. Despite the difficult letting situation and intensified
competition in the Danish retail trade sector, in 2012 Ringsted outlet
a s s e t m a n a g e m e n t
g a l e r i a s a n D e c j a , s h o P P i n g c e n t r e , n o w y s ą c Z , P o l a n D
r i n g s t e D o u t l e t, r i n g s t e D , D e n m a r K
opening october 2009
leasable area 17,300 m², including a 5,000 m² hypermarket
occupancy rate 96 % (Q1-Q3 2012/13: 96 %)
footfall 2012 2.4 million
opening march 2008
leasable area 13,200 m²
occupancy rate 61 % (Q1-Q3 2012/13: 59 %)
footfall 2012 1.1 million
recorded the highest number of visitors and the highest revenue since its open-
ing – more than 1.1 million visitors and a 25 % growth in revenue. However, this
should be viewed in light of the centre’s relatively low revenue the year before.
several tenants were replaced during the year under review. mango and Reebok
made a strategic decision to discontinue their scandinavian outlet activities
and thus moved out of Ringsted outlet. at the same time, agreements have
been made with new tenants, and with four new retail stores opening in spring
2013 – sparkz, Jackpot, saint tropez and superdry – the shopping centre is
anticipated to continue its progress in 2013.
major tenants: Hugo Boss, nike, puma, Diesel, G-star Raw, Redgreen, ticket to
Heaven, mcDonald’s, superdry, le creuset, levi’s, sparkz, Jackpot.
cluding attractive bargains for customers, has also contributed to the increased
revenue.
tk Development continues its efforts to optimize the centre and is exploring
various initiatives to help improve operations, footfall and occupancy.
major tenants: carrefour, H&m, new Yorker, Reserved, Deichmann, Douglas,
camaieu, carry, euro Rtv aGD.
40
60
80
100
120
140
FootfallRevenue
2010 20122011(2010=index 100)
80
100
120
140
160
180
FootfallRevenue
2010 20122011(2010=index 100)
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tk Development is developing an 8,400 m² retail park in the czech town
of most, to be built in phases. the first phase of 6,400 m² opened in april
2009. occupancy in the retail park has improved, and the current occu-
pancy rate for the first phase has increased from 84 % at the beginning of
the year to the current figure of 91 % (Q1-Q3 2012/13: 91 %). one vacant
rental unit remains, and efforts are being made to let this unit. manage-
ment believes the vacant rental unit should be let before the project can
be sold.
tk Development has built a retail park of approx. 4,200 m² in aaben-
raa. the retail park opened in september 2009 and is fully let (Q1-Q3
2012/13: 100 %), and the tenants include jem & fix, Biva, t. Hansen and
sport24.
after handing over the føtex supermarket to Dansk super-
marked in the Group’s project at Østergade, Brønderslev, in a
previous financial year, the Group has taken over the previous
2,400 m² føtex property. following the conclusion of lease
agreements with Deichmann and intersport, these retailers
opened for business at the beginning of 2011. in addition, a
lease agreement for about 1,200 m² has been signed with fit-
ness World, which opened in november 2012. the current occu-
pancy rate is 93 % (Q1-Q3 2012/13: 93 %).
a s s e t m a n a g e m e n t
m o s t r e ta i l Pa r K , c Z e c h r e P u B l i c
r e ta i l Pa r K , a a B e n r a a , D e n m a r K
s h o P P i n g - s t r e e t P r o P e r t y, B r ø n D e r s l e v, D e n m a r K
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 3 7 / 6 5
as described above, management has chosen a market focus
that targets the countries expected to contribute with long-
term, profitable operations in future: Denmark, sweden, poland
and the czech Republic.
consequently, management has also decided to phase out the
Group’s activities in finland, Germany, the Baltic states and
Russia. the phase-out, which will result in office closures and
employee dismissals, will be carried out as soon as possible,
while taking into account that all the countries in question have
projects that need to be handled so as to retain as much of the
value of the existing portfolio as possible.
the results of the discontinuing activities before tax amounted
to Dkk -53.7 million in 2012/13 and have been impacted by val-
ue adjustments of Dkk -13.5 million on the German investment
properties, primarily related to ongoing sales negotiations
where management considers it essential to downscale the
German activities. moreover, the results have been affected by
the impairment of a few projects.
g e r m a n y
following the sale of an investment property in December
2012, the Group now has four investment properties left in Ger-
many, a combined commercial and residential rental property
in lüdenscheid in western Germany and three residential rental
properties on the outskirts of Berlin. after the reporting date,
yet another residential rental property has been sold, and the
Group is negotiating with investors about the sale of one of the
remaining properties.
the Group has generally recorded higher rent levels for the
German residential rental properties as tenants have been re-
placed.
the value of these properties totalled Dkk 167.3 million at 31
January 2013. the valuation of the properties is based on (i) a
return requirement of 6.5 % p.a. calculated on the basis of a
discounted cash-flow model over a ten-year period and (ii) rec-
ognition of the terminal value in year ten. in the cases where
sales negotiations are ongoing with potential investors, these
negotiations form the basis for the valuation.
in addition to these investment properties, the Group owns a
share of a minor shopping centre and a few plots of land.
f i n l a n d
the Group’s activities in finland are fairly limited and, apart from
a few project opportunities, comprise the projects listed below.
Project
city/
town segment area (m²)
pirkkala Retail park, phase ii tammerfors Retail 5,400
kaarina Retail park turku Retail 6,600
efforts will be made to phase out the activities in the course of
the current financial year, and the branch office is expected to
close in 2013/14.
b a lT i c s TaT e s
the Group’s Baltic activities comprise the following projects:
Project
city/
country segment area (m²)
Domuspro Retail park vilnius (lt) Retail 11,300
milgravja street Riga (lv) Residential 10,400
Ulmana Retail park Riga (lv) Retail 12,500
domusPro retail Park, vilnius, lithuania
tk Development owns a plot of land in vilnius reserved for
building an 11,300 m² retail park. constructive dialogue has
been established with potential tenants, and binding lease
agreements have been signed for about 53 % of the premises
(Q1-Q3 2012/13: about 50 %). tk Development intends to ex-
ecute this project to best harness its inherent values. startup
of the construction project, possibly in phases, is scheduled for
spring 2013. negotiations with potential investors for the pro-
ject are ongoing.
efforts will be made to phase out the remaining activities in the
course of the current financial year.
r u s s i a
the Group owns a minor project in moscow, consisting of scan-
dinavian-style dwellings that are used for rental, mainly to in-
ternational company employees stationed in moscow. efforts
will be made to sell the project as soon as possible.
D i s c o n t i n u i n g a c t i v i t i e s
• countries: De, fi, lt, lv, RUs
• Revenue 2012/13: Dkk 14.4 million
• Gross profit/loss 2012/13: Dkk -36.7 million
• profit/loss before tax and impairment, etc.: Dkk -9.5 million
• no. of employees, 31 Jan 2013: 11
• Balance sheet total, 31 Jan 2013: Dkk 425.4 million
discontinuing activities
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f i n a n c i a l ta r g e t s
to provide for sufficient future financial resources, manage-
ment has adopted a liquidity target for the whole Group; see
below. in addition, management has adopted a solvency target
for the whole Group corresponding to a solvency ratio of min-
imum 30 %, calculated as the ratio of equity to total assets.
c o v e n a n T s r e l aT e d To c r e d i T fac i l i T i e s
the Group has given its main banker an undertaking to comply
with a solvency ratio covenant of minimum 30 % at group level,
measured in connection with the presentation of interim and
annual reports.
l i q u i d i T y c o v e n a n T
the Group has used covenants for quite some years. in short,
the liquidity covenant expresses that the Group’s cash resourc-
es – to enable the Group to cover liabilities requiring substantial
liquidity - must at any time correspond to the fixed costs for the
next six-month period, excluding funds received as proceeds
from projects sold, but including project liabilities materializing
within the next six months.
the covenant represents a liquidity target for the whole Group
and a commitment to the Group’s main banker.
the covenant must be calculated and met before projects re-
quiring liquidity can be acquired and initiated.
The covenant is expressed as follows:
l + k > e + o + R,
where:
l = the tk Development Group’s free cash resources in the
form of deposits with banks and the value of listed Danish
government and mortgage bonds with a term to maturity
of less than five years.
k = the tk Development Group’s amounts available on com-
mitted operating credit facilities from time to time.
e = the planned impact on cash resources from the projects
which the tk Development Group is obliged to complete
within six months, including the new/expanded project,
taking into account committed project credit facilities
from financial institutions and forward funding.
o = the tk Development Group’s cash non-project-related
capacity costs for the following six months less manage-
ment fees falling due within six months. in addition, pre-
agreed project fees from final and binding agreements
with project investors falling due within six months are to
be set off against the amount.
R = interest accruing on the tk Development Group’s operat-
ing credit facilities for the following six months.
the Group’s solvency and liquidity covenants were both met
during the year under review.
residential Park, bielany, warsaw, Polandfirst phase consisting of 136 apartments was completed in January 2013. 94 of the apartments have been sold.
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r i s k m a n ag e m e n T
in connection with determining tk Development’s strategy
and overall goals, the supervisory and executive Boards have
identified the most significant business risks and seek con-
tinuously to ensure efficient risk management. in connection
with its strategy adjustment, see above, the Group has further
strengthened its risk management by striving only to initiate
projects based on a strict awareness that the expected earn-
ings will match the project’s complexity, completion time, tied-
up capital and other use of resources.
the situation on the financial markets means that the Group
has a consistently strong focus on financial management, with
particular emphasis on managing and optimizing loans and
strengthening the financial platform.
the fact that a number of completed projects have not been
sold means a substantial portion of the Group’s financial re-
sources is tied up in these projects. this has made it difficult to
allocate the necessary capital to securing the progress of new
projects. therefore, in December 2012 management decided to
revise the Group’s sales strategy with a view to realizing faster
sales. the sale of several completed projects will free up the
cash resources that are essential for strengthening the Group’s
financial platform. moreover, financial resources will be secured
to regenerate momentum and thus to realize the substantial
development potential inherent in several of the Group’s pro-
jects.
another core element of the Group’s risk management is the
solvency and liquidity targets adopted for the Group.
the supervisory Board regularly considers issues relating to
the project portfolio, properties, market conditions, financing,
it and staffing as part of its broader assessment of potential
risks and scarcity factors.
Reports to the supervisory Board are submitted on an ongoing
basis with respect to the Group’s risk issues, which also consti-
tute an important element in the decision-making basis for all
major projects.
r i s k i s s u e s i n g e n e r a l
property market conditions in the countries in which the Group
operates have in recent years been affected by the financial
and economic crisis, which has resulted in lower prices on prop-
erty and reduced access to financing. the Danish market in par-
ticular has been affected by prolonged uncertainty, and contin-
ues to be so, partly because of a weakened financial sector. in
management’s opinion, there are no indications of a significant
improvement during the period to come.
the financial and economic crisis has resulted in a prolonged
period of lower demand for real property and development pro-
jects. the prices of essential property development variables –
land prices, construction costs, occupancy level and investors’
return requirements – have stabilized at a new level, and man-
agement believes that attractive earnings can be generated
in future by implementing development projects, when taking
into account the new price levels.
economic and financial trends on the individual markets will
materially affect tk Development’s ability to realize its strat-
egy, and a worsening of these trends may have a material ad-
verse effect on the Group’s future development, results of op-
erations, cash flows and financial position.
the most important risks for the Group, apart from general
risks, are described below.
f i n a n c i a l r i s k s
financing and liquidity risks
the access to project financing remains difficult and is current-
ly the greatest challenge facing the property sector. the vola-
tility on the international financial markets and the weakened
financial sector still make credit institutions reluctant to pro-
vide loans to finance real property. this has a negative impact
on the property sector, and thus on tk Development.
tk Development is dependent on its ability to continue obtain-
ing either full or partial financing for existing and new projects,
either from credit institutions or from investors in the form of
forward funding, and on freeing up substantial cash resources
from the sale of a few major completed projects. Having suf-
ficient cash resources is essential for the Group. in order to
complete the development of its planned projects and there-
by achieve the expected results, the Group must have or must
be able to procure sufficient cash resources to cover the costs
and deposits required for the projects, the capacity costs and
other obligations.
at the forthcoming annual General meeting, the supervisory
Board will request authorization to carry out a capital increase
with gross proceeds of about Dkk 210-231 million. the capital
increase will help generate the cash resources required to un-
derpin future operations and project flow, and thus long-term
earnings. the capital increase has been discussed with the
Group’s major shareholders, who, together with a few major
r i s K i s s u e s
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r i s K i s s u e s
private and institutional investors, have given conditional sub-
scription and underwriting commitments for the total capital
increase. the more specific terms and conditions governing the
capital increase have not yet been determined. the terms and
conditions will be described in detail in the prospectus to be
published in connection with the capital increase.
the Group’s short-term debt to credit institutions consists of
operating and project credits. tk Development has entered into
a general agreement with the Group’s main banker about both
types of credit. the agreement and conditions are renegotiated
on an annual basis. tk Development depends on this coopera-
tion continuing, and management believes that the agreement
will fall into place.
the Group’s main banker has indicated its preparedness to
prolong tk Development’s credit facilities subject to specific
conditions being met, which includes reducing the operating
credit limit by Dkk 50 million. the prolongation is expected to
be formally accepted immediately after publication of tk De-
velopment’s annual Report 2012/13.
the Group has undertaken towards its main banker to comply
with certain conditions (liquidity and solvency covenants). the
conditions may, among other things, restrict opportunities to
launch new business activities and in case the conditions are
not complied with, the credit facilities may be terminated.
in addition, the Group has entered into project-financing agree-
ments with various banks in Denmark and abroad. project cred-
its are usually granted with different terms to maturity, de-
pending on the specific project.
During the year under review, the Group was in continuous di-
alogue with a few credit institutions regarding the postpone-
ment of repayment obligations on project credits until one or
more of the major completed projects have been sold, and
agreements regarding the postponement of such repayments
have now fallen into place. moreover, agreements to prolong
major project credits were concluded during the past year.
of the total project credits outstanding at 31 January 2013,
credits worth Dkk 1.5 billion are due to mature in the 2013/14
financial year, including continuing repayment obligations on
individual project credits of about Dkk 80 million. after the re-
porting date, agreements regarding the refinancing of Dkk 0.2
billion have been made. moreover, the Group’s main banker and
other credit institutions have indicated their preparedness to
prolong existing credit facilities. When final commitments in this
respect have been received, credit facilities of Dkk 1.1 billion
will have been prolonged, and credit facilities of Dkk 0.3 billion
will be due to mature in 2013/14. the Group depends on being
able to continue obtaining either a prolongation or alternative
financing of the project credits not expected to be repaid upon
project sales. the Group is in ongoing dialogue with the relevant
credit institutions, and management anticipates being able to
either prolong or refinance these project credits. some of the
proceeds from the capital increase or the cash freed up on the
sale of major completed projects will help reduce the debt to
credit institutions, including project finance loans of Dkk 68.5
million granted by a number of the company’s major sharehold-
ers and members of management.
a number of loan agreements contain provisions on cross de-
fault, which means that default on a loan under a loan agree-
ment may be considered default of a number of other loan
agreements.
ihitatatem fugit mo to ea nisquissero corem volupta
conest, aut qui audanda am eum ellab id.
sillebroen, shopping centre, frederikssund, denmarka number of tenants were replaced during the year. Here the opening of Gina tricot in march 2013.
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many of the Group’s loan agreements contain provisions giving
the banks a discretionary option to terminate the agreement. in
such cases, maintaining financing depends on the bank’s sub-
jective assessment of the quality and profitability of the facility
in question, as well as the value of the security provided by the
Group. if the Group fails to meet its commitments under such
agreements with its banks, the agreements risk being termi-
nated. in all probability, tk Development will not have adequate
capital resources to meet substantial repayment demands.
if the Group is unable to obtain sufficient funding in future, or if
such funding cannot be obtained on viable terms, it could have
a material adverse effect on the Group’s future performance,
results of operations, cash flows and financial position.
interest-rate risks
the main part of the Group’s interest-bearing debt consists of
floating-rate loans. accordingly, increasing interest rates will
push up the Group’s interest expenses. an interest-rate fluc-
tuation of 1 % will have a direct impact of about Dkk 15 million
on tk Development. in addition, rising interest rates would, all
other things being equal, affect investor return requirements
and by extension real property prices.
currency risks
tk Development’s Danish subsidiaries operate almost exclu-
sively in Dkk, while the foreign subsidiaries generally operate
in their local currency or alternatively eUR. as far as possible,
the Group attempts to minimize the currency risk by conclud-
ing related agreements in the same currency. for instance, it
aims to conclude purchase and sales agreements, construction
contracts and financing agreements regarding a single project
in the same currency. currency fluctuations may materially
affect the Group’s future development, results of operations,
cash flows and financial position. the most important currency
risks are assessed to relate mainly to foreign subsidiaries’ net
results, intercompany balances and foreign-exchange adjust-
ments of the Group’s investments in foreign subsidiaries.
credit risks
tk Development is primarily exposed to credit risks in relation
to the risk of losses on receivables from customers. tk De-
velopment aims to reduce credit risks as much as possible, in
part by obtaining security, primarily from tenants, and in part
by postponing the handover of projects to investors until they
have paid the purchase price. Generally, tk Development does
not experience losses on receivables related to the sale of pro-
jects.
b u s i n e s s r i s k s
Property prices and rental income
the Group is affected by price fluctuations in the various prop-
erty markets in which it operates, as well as by general eco-
nomic trends. part of the Group’s project portfolio and some
of its investment properties have thus been under earnings
pressure during the financial and economic crisis. Rent levels
for part of the project portfolio have also been under pressure.
such fluctuations particularly affect the value of the Group’s
portfolio of land, ongoing and completed projects, investment
properties, and the potential for developing new projects. fall-
ing prices on land and property and falling rent levels may have
an adverse effect on the Group.
investment properties and completed projects
the Group’s investment properties and completed projects are
essentially subject to the same risks, primarily risks related to
rental conditions and property prices, and their value may de-
cline substantially relative to the carrying amount in the bal-
ance sheet.
Portfolio of land
after the reporting date, the Group adopted a strategy aimed
at reducing the portfolio of projects not initiated (plots of land)
over a two-year period from the current level of Dkk 1.1 billion
to a level of Dkk 0.5 billion. the portfolio can be reduced by
initiating development projects or selling plots of land. the risk
exists that land will be sold at a value lower than its carrying
amount. if planned projects cannot be executed on acquired
sites, it may be necessary to make writedowns for impairment,
which could have a material adverse effect on the Group.
discontinuing activities
after the reporting date, the Group has decided to phase out
its activities in finland, Germany, the Baltic states and Russia.
the phase-out, with resulting office closures and employee dis-
missals, will be carried out as soon as possible and will take into
account that all the countries in question have projects that
need to be handled so as to retain as much of the value of the
existing portfolio as possible. the risk exists that these activ-
ities may be phased out at a value lower than their carrying
amount.
agreements with tenants
moreover, there is a letting risk attaching to those of the
Group’s leases that expire while the Group owns the underlying
investment properties/completed projects. if the Group fails
to renew these agreements, fails to enter into new leases, or
if the agreements can be entered into only on less favourable
r i s K i s s u e s
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r i s K i s s u e s
terms and conditions, it could have a material adverse effect
on the Group.
part of the Group’s rental income from tenants includes a reve-
nue-based share. the Group’s total rental income under these
lease agreements depends partly on the tenant’s ability to
maintain a certain amount of revenue in the relevant premis-
es. the share of such revenue-based rent may vary consider-
ably depending on the nature of the brand, the store and the
products. failure by the tenant to generate sufficient revenue
to trigger the revenue-based share of the overall rental income
could have a material adverse effect on the Group.
development activities
tk Development’s primary business area is property develop-
ment, and the Group functions as the creative liaison between
tenants, investors, architects, construction companies and
other business partners in connection with development of
property projects.
projects are only initiated after a careful assessment of their
earnings potential viewed in light of project complexity, com-
pletion time, tied-up capital, and other use of resources.
Where agreements with investors and contractors, for exam-
ple, have not been brought into alignment, the Group assumes
an extra project development risk in that that it may have to
rectify defects or other matters that the contractor is either
not obliged or not able to address.
several years back, tk Development adopted a strategy of ex-
ecuting a number of projects for its own account with a view to
changing the Group’s project portfolio from projects requiring
cash flow to projects generating cash flow. not all of these pro-
jects, now completed, have been sold. this means the Group
has a substantial portion of its financial resources tied up in
completed projects. the Group depends on selling several of
its major completed projects to free up the capital required to
secure progress in its new projects.
agreements with investors
the Group’s customers on the investment side are private indi-
viduals, property companies and institutional investors. to the
extent possible, the Group seeks to reduce its working capital
and risks relating to ongoing projects by applying forward fund-
ing from investors, which means that one or more investors un-
dertake to provide funding as project construction progresses.
Before construction starts, the investor and the Group come
to an agreement on a well-defined project. the investor has a
liquidity commitment throughout the construction period and
is consulted on major decisions. these principles ensure that
the Group’s risks from construction startup are largely limited
to the letting risk attaching to any remaining unlet premises
and the risk of construction budget overruns.
in agreements with institutional investors, the overriding risk re-
lates to the Group’s ability to deliver on time and in accordance
with specifications. even though a sales agreement regarding a
project has been concluded, a number of major risks may still
be attached to the project, which could lead to termination of
a sales agreement on account of breach by one of the parties.
in cases where a sales agreement is concluded before all lease
agreements in the project have been finalized, the Group under-
takes a calculated risk that the remaining premises cannot be
let on terms and conditions that ensure a satisfactory return.
the Group also assumes a counterparty risk, including with re-
spect to, but not limited to, tenants and investors.
for such sold projects, construction will not be initiated until
the Group expects to be able to meet the requirements from
the investor which finalize the project sale. meeting these re-
quirements typically falls within the Group’s sphere of compe-
tencies. if the sale nevertheless cannot be completed, it could
have a material adverse effect on the Group’s future perfor-
mance, results of operations, cash flows and financial position.
regulatory approvals
the Group’s future earnings depend on the inflow of new pro-
jects and consequently on the future availability of new build-
ing sites and authority approvals (planning legislation, local
development plans, planning permission, etc.) concerning the
location, size and use of a property. changes in local plans or
other factors that make obtaining planning permission difficult
or restrict the supply of building sites may have a material ad-
verse effect on the Group.
compliance with time schedules
the Group bases its individual projects on overall and detailed
time schedules. time is a crucial factor in complying with agree-
ments concluded with tenants and investors and a significant
factor in ensuring that the individual projects progress accord-
ing to plan and, accordingly, that the Group generates the
earnings expected. postponing an individual project may, for
instance, mean that lease agreements lapse, tenants become
entitled to compensation and, ultimately, that an investor is no
longer under an obligation to buy the project.
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 4 3 / 6 5
staff matters
the knowledge, experience and network of key employees
constitute some of the Group’s greatest competencies, and
are thus key prerequisites for the Group’s ability to carry on
a profitable business. accordingly, ensuring these employees’
long-term commitment is a vital parameter for the Group. tk
Development constantly aims to ensure the satisfaction of its
employees and wants to be an appealing employer that can re-
tain and attract new well-qualified staff.
environmental conditions
tk Development is keenly aware that the public eye is sharply
focused on environmental optimization throughout the con-
struction process. public concerns include the reduction of co2
emissions and the sustainability of building projects.
When the Group acquires sites for its projects, the land is ex-
amined to determine any contamination. if a plot of land is con-
taminated, the Group will clean up the land for its intended use
before starting construction or refrain from buying the relevant
plot.
When developing projects, the Group strives to achieve an op-
timum balance between environmental and social concerns
while also generating revenue for the Group. the choice of ma-
terials, design, energy consumption and environmental impact
all form part of such considerations.
the Group aims to complete projects without causing unneces-
sary environmental impact. tk Development cooperates with
tenants and investors to establish appropriate environmental
solutions when developing and implementing new projects. for
instance, the Group seeks to create finished projects with low
energy consumption and a good indoor climate that will provide
a comfortable working environment for future employees.
Third-party agreements
a major portion of the Group’s business consists of conclud-
ing agreements with development partners, investors, tenants
and contractors for property development projects.
in addition, several cooperation agreements with business
partners contain provisions stipulating that the Group has an
obligation to inject capital into jointly owned companies or oth-
erwise contribute to their financing. if the Group fails to meet
such obligations, including due to a lack of liquidity, the Group
may be bought out by the relevant company at a reduced price
or the Group’s ownership interest may be diluted.
insurance risks
the Group reviews its overall insurance plan at least once a
year, and management believes the Group has necessary and
adequate insurance against all relevant and usual risks. the
Group is not insured against loss, damage or injury caused by
natural disasters (including floods, earthquakes, etc.), wars,
terrorist attacks, etc.
Ta x m aT T e r s fo r T h e g r o u P
deferred tax assets
a deferred tax asset of Dkk 127.0 million is recognized in the
balance sheet at 31 January 2013. the tax asset relates mainly
to tax loss carryforwards in the various subsidiaries. valuation
is based on the existing rules for carrying forward losses and
joint taxation or group contributions and the assumption that
each subsidiary is a going concern. a change in the conditions
and assumptions for carrying forward losses and joint taxation/
group contributions could result in the value of the tax assets
being lower than that computed at 31 January 2013.
management has performed the valuation of the tax asset on
the basis of available budgets and profit forecasts for a five-
year period. for the first three years, budgets are based on an
evaluation of specific projects in the Group’s project portfolio.
for the following two years, the profit forecasts are based on
specific projects in the project portfolio with a longer time ho-
rizon than three years as well as various project opportunities.
this includes making provision for the risk that projects are not
implemented and the risk that project profits fall below expec-
tations.
a change in the conditions and assumptions for budgets and
profit forecasts, including time estimates, could result in the
value of the tax assets being lower than that computed at 31
January 2013, which could have a material adverse effect on
the Group’s results of operations and financial position.
joint taxation
the Group has been jointly taxed with its German subsidiaries
for a number of years. the retaxation balance in respect of the
jointly taxed German companies amounted to Dkk 389.4 million
at 31 January 2013. full retaxation would trigger a tax charge
of Dkk 97.4 million at 31 January 2013. tax has not been pro-
vided on the retaxation balance, because management does
not plan to make changes in the Group that would result in full
or partial retaxation. if management takes a different view, this
could have a significant adverse effect on the Group’s future
performance, results of operations, cash flows and financial
position.
r i s K i s s u e s
4 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
l e g a l r i s k s
tk Development constantly enters into agreements with a
range of contracting parties, such as investors, contractors,
tenants, etc. these agreements involve opportunities and risks
that are assessed and identified prior to contract conclusion.
from time to time, the Group is involved in disputes and law-
suits. the Group is not a party to any lawsuits that, either in-
dividually or collectively, are expected to materially affect the
Group’s earnings.
senior vice President indicted by the Polish police
in June 2006, the senior vice president in charge of the Group’s
polish branch office was detained, taken into custody and
charged by the polish police with irregularities related to ob-
taining regulatory approval (zoning permission) for the polish
Galeria Biala shopping centre project in Bialystok. in november
2006, the senior vice president was released on bail. the polish
prosecution service has indicted the senior vice president, and
the case is currently being tried.
During the entire process, Group management has been unable
to find any irregularities in connection with the project, and still
fails to comprehend that the senior vice president could be in-
volved in the alleged practices.
if, contrary to management’s expectations, the senior vice
president is convicted, this might damage the Group’s reputa-
tion and thus adversely affect its activities and earnings.
litigation
tk Development is currently party to the following lawsuit/ar-
bitration case that is of relevance due to its scope:
in the summer of 2002, De samvirkende købmænd, a trade as-
sociation of grocery retailers, filed a complaint with the nature
protection Board of appeal (naturklagenævnet) in respect of
the city of copenhagen’s approval of the layout of the field’s
department store. in particular, the claim asserted that the
field’s department store is not one department store, but that
it consists of several individual stores. the nature protection
Board of appeal made its decision in the matter on 19 Decem-
ber 2003, after which the department store layout was ap-
proved. De samvirkende købmænd subsequently took out a
writ against the nature protection Board of appeal before the
Danish High court. at the beginning of 2011, the High court
gave judgment in favour of De samvirkende købmænd. neither
the owner of the centre nor any company in the tk Develop-
ment Group is a direct party to the case, but the High court’s
judgment may have the effect that the field’s department
store will have to be redesigned following negotiations with
the relevant municipalities, and in that connection it cannot be
ruled out that a claim may be made against the Group. as a
result of the judgment, the owner of field’s may have to incur
the financial burden of causing the necessary changes to the
building layout. Regardless of the judgment, management still
believes the risk of this case to be negligible.
r i s K i s s u e s
futurum hradec králové, shopping centre, czech republic
in may 2013 the extension of the centre opened. the centre now
comprises 110 stores and is fully let.
4 4 / 6 5 | t k D e v e lo pm e n t a / s | Å Rs R eG n s k a B s m e D D e l e ls e 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 4 5 / 6 5
s h a r e i n fo r m aT i o n
stock exchange nasDaQ omX copenhagen
index smallcap
share capital Dkk 630,985,725
share denomination Dkk 15
number of shares 42,065,715
share classes one
number of votes per share one
Bearer security Yes
voting right restrictions no
share transfer restrictions no
isin code Dk0010258995
shareholders and their holdings
the number of registered shareholders decreased from 7,928
at the beginning of the year to 7,396 at the end of the year.
the registered shareholders represented 91.62 % of the share
capital at 31 January 2013 (31 January 2012: 92.36 %).
shareholder composition at 31 january 2013:
Other majorshareholders 26.68 %
Foreignshareholders 9.29 %
Other registeredshareholders 34.87 %
Supervisory and Executive Boards 4.61 %
Non-registered shareholders 8.38 %
Banks, insurance companies and unit trusts 7.17 %
Pension funds 9.00 %
the table below shows the ownership structure of tk Develop-
ment a/s as of today, as reported to nasDaQ omX copenha-
gen a/s pursuant to section 29 of the Danish securities trading
act.
shareholders holding more than 5 %
of the total share capital
ownership
and voting
interest in %
storm Real estate asa, 100 new Bond street,
london W1s 1sp, United kingdom 10.47 %
Dava 1 aps, c/o kurt Daell, lysagervej 25,
2920 charlottenlund, Denmark 10.01 %
strategic capital aps, islands Brygge 79 c,
2300 copenhagen s, Denmark 9.52 %
s h a r e h o l D e r s
the table below shows a breakdown of shares held by the su-
pervisory Board and executive Board.
direct and indirect ownership
number of
shares *)
ownership
and voting
interest in %
change for
the year in
number of
shares
supervisory Board:
niels Roth 703,626 1.67 % 0
torsten erik Rasmussen 89,140 0.21 % 0
per søndergaard pedersen 279,508 0.66 % 0
Jesper Jarlbæk 56,900 0.14 % 0
Jens erik christensen 37,448 0.09 % 0
peter thorsen 415,190 0.99 % 415,190
executive Board:
frede clausen 243,439 0.58 % 0
Robert andersen 115,000 0.27 % 0
total 1,940,251 4.61 % 415,190
*) the holdings include all shares held by all members of the entire
household as well as companies controlled by the above-named persons.
share price development
on 31 January 2013, tk Development a/s’ shares were listed
at a price of Dkk 12.5 per share with a nominal value of Dkk 15,
equal to a market value of Dkk 526 million.
the price of tk Development a/s shares developed as follows
during the year under review:
140120100
80604020
0
40353025201510
50
Febr
uary
201
2
Mar
ch
Apr
il
May
June July
Aug
ust
Sept
embe
r
Oct
ober
Nov
embe
r
Dec
embe
r
Janu
ary
2013
Share price development (1.2.2012 = Index 100)
Volume of trading, DKKm
volume of trading
During the year under review, the share was traded on 249
days, with a total trading volume of Dkk 154 million against
Dkk 181 million the year before. 4,628 trades were completed
(2011/12: 7,660 trades), covering a total of 11,382,365 shares
(2011/12: 10,343,972 shares).
4 6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
ca P i Ta l a n d s h a r e s T r u c T u r e
tk Development a/s’ shares are not divided into several share
classes, and no shares are subject to special rights or restric-
tions. each share confers one vote on the holder. tk Develop-
ment’s articles of association contain no restrictions govern-
ing share ownership, the number of shares that a shareholder
may hold or share transferability. as all shareholders thus have
equal rights, the supervisory Board believes that the share
structure chosen is the most appropriate one.
the company’s management reviews the Group’s capital struc-
ture on a regular basis, as well as the need for any adjustments.
management’s overall aim is to provide a capital structure that
supports the Group’s earnings potential, while at the same
time ensuring the best possible relation between equity and
loan capital and thus maximizing the return for the company’s
shareholders. in order to strengthen the Group’s financial plat-
form, the supervisory Board will request authorization at the
forthcoming annual General meeting to carry out a capital in-
crease with gross proceeds of about Dkk 210-231 million.
s h a r e h o l d e r s ’ ag r e e m e n T s
management is not aware of any shareholders’ agreements
that have been concluded between tk Development a/s’
shareholders.
r u l e s r e g a r d i n g a lT e r aT i o n s To T h e
c o m Pa n y ’ s a rT i c l e s o f a s s o c i aT i o n
the articles of association of tk Development a/s can only be
altered following a resolution adopted at a General meeting in
compliance with the Danish companies act. Requests for the
inclusion of a specific proposal in the agenda of the annual
General meeting shall be submitted in writing by shareholders
to the supervisory Board. if the request is submitted no later
than six weeks before the date of the General meeting, the
shareholder is entitled to have the proposal included in the
agenda. if the supervisory Board receives the request later
than six weeks before the annual General meeting, the supervi-
sory Board will determine whether the request has been made
sufficiently early to permit its inclusion in the agenda.
at a General meeting, resolutions can only be adopted in re-
spect of business included in the agenda and any proposed
amendments. if proposals to alter the articles of association
are to be considered at a General meeting, the essentials of
such proposals must be stated in the convening notice. a res-
olution to alter the company’s articles of association is sub-
ject to the proposal being adopted by at least two-thirds of the
votes cast as well as of the voting stock represented at the
General meeting.
s h a r e - b a s e d i n c e n T i v e s c h e m e s
2010 scheme
in June 2010, the supervisory Board granted 100,000 warrants
to the executive Board and 294,000 warrants to other exec-
utive staff members, a total of 394,000 warrants. as a con-
sequence of the capital reduction and capital increase imple-
mented in august 2010, where the subscription price for the
newly issued shares was lower than the market value of the
shares, the supervisory Board resolved to adjust the number
of warrants allocated and the subscription price for exercising
the warrants. there was a total of 446,315 active warrants at
the reporting date.
Under the three-year warrant scheme, warrants can be exer-
cised at the earliest two years after the grant date, and any
shares subscribed for are subject to an additional lock-up pe-
riod of up to two years. Warrants comprised by the incentive
scheme may be exercised within three six-week windows, of
which only one window remains, viz. the six weeks following
publication of the preliminary announcement of financial state-
ments for the 2012/13 financial year.
the subscription price per share of nominally Dkk 15, before
any deduction for dividends, has been fixed at Dkk 26.3 in the
last exercise window.
the Group’s total expenses for the incentive scheme amount to
Dkk 1.9 million, being charged to the income statement over a
period of 22 months.
2011 scheme
in June 2011, the supervisory Board granted 125,000 warrants
to the executive Board and 375,000 warrants to other execu-
tive staff members, a total of 500,000 warrants. there was a
total of 484,000 active warrants at the reporting date.
Under the four-year warrant scheme, warrants can be exercised
at the earliest three years after the grant date, and any shares
subscribed for are subject to an additional lock-up period of up
to two years. Warrants comprised by the incentive scheme may
be exercised during three six-week windows. these six-week
windows are placed thus:
• following publication of the preliminary announcement of
financial statements for the 2013/14 financial year (from
s h a r e h o l D e r s
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 4 7 / 6 5
around 30 april 2014);
• following publication of the interim report for the six-
month period ending 31 July 2014 (from around 30 sep-
tember 2014); and
• following publication of the preliminary announcement of
financial statements for the 2014/15 financial year (from
around 30 april 2015).
the subscription price per share of nominally Dkk 15, before
any deduction for dividends, has been fixed at Dkk 28.0 in the
first exercise window, Dkk 28.9 in the second window and Dkk
30.2 in the third window.
the Group’s total expenses for the incentive scheme amount to
Dkk 2.0 million, being charged to the income statement over a
period of 35 months.
number of
warrants
2010 scheme
number of
warrants
2011 scheme
supervisory Board 0 0
executive Board:
frede clausen 57,515 62,500
Robert andersen 57,515 62,500
other executive staff 331,285 359,000
total 446,315 484,000
d i v i d e n d s a n d d i v i d e n d P o l i cy
tk’ Development’s long-term policy is to distribute a portion
of the year’s profit as dividends or alternatively via a share re-
purchase programme. this will always be done with due regard
for the Group’s capital structure, solvency, cash resources and
investment plans.
a n n u a l g e n e r a l m e e T i n g
the General meeting of shareholders is the supreme authority
in all corporate matters of tk Development a/s, subject to the
limitations provided by Danish law and tk Development a/s’
articles of association. the annual General meeting must be
held in the municipality where tk Development a/s’ registered
office is located sufficiently early to permit compliance with
the company’s applicable time limits for the holding of General
meetings and the filing of annual Reports. General meetings are
convened by the supervisory Board. the annual General meet-
ing will be held at 3 p.m. on 22 may 2013 at aalborg kongres &
kultur center, Radiosalen, aalborg.
extraordinary General meetings are held following a resolution
by the shareholders in General meeting or the supervisory
Board or at the request of the auditors of tk Development a/s
or at the written request of shareholders holding not less than
5 % of the total share capital.
all business transacted at General meetings, with the excep-
tion of alterations to the articles of association or a resolu-
tion to dissolve the company, is decided by a simple majority
of votes unless otherwise provided by current legislation; see
article 6 of the company’s articles of association.
r eg i s T e r e d s h a r e s
all shares are registered in book-entry form in accounts main-
tained in the computer system of vp securities a/s, Weideka-
mpsgade 14, po Box 4040, 2300 copenhagen s, Denmark, and
must be held and managed through a Danish bank or other in-
stitution authorized to be registered as the custodian of the
shares. the shares must be issued to named holders and may
not be transferred to bearer.
T h e s u P e rv i s o ry b oa r d ’ s P o w e r s
Powers to issue new shares
the supervisory Board is authorized to increase the company’s
share capital by one or more issues during the period ending on
30 June 2014 by up to nominally Dkk 8,000,000, without any
pre-emptive rights for the company’s existing shareholders.
moreover, the supervisory Board is authorized to increase the
company’s share capital by one or more issues during the peri-
od ending on 30 June 2015 by up to nominally Dkk 7,500,000,
without any pre-emptive rights for the company’s existing
shareholders. this authorization is to be used for implementing
the capital increases resulting from the exercise of warrants
under the existing incentive schemes. accordingly, the overall
authorization for the supervisory Board to subscribe for capital
will amount to 2.4 % of the company’s share capital. the out-
standing warrants following the adjustment as a result of the
capital reduction and capital increase implemented in august
2010 amount to nominally Dkk 6,694,725 and nominally Dkk
7,260,000, respectively.
Treasury shares
at the annual General meeting on 25 may 2010, the superviso-
ry Board was authorized, on behalf of the company, to acquire
treasury shares having a nominal value of not more than 10
% of the share capital in order to optimize the Group’s capital
structure. the authorization is valid for a period of five years
from the adoption of the resolution at the annual General
meeting.
s h a r e h o l D e r s
4 8 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
r u l e s o n i n s i d e r T r a d i n g
tk Development’s management and employees are only al-
lowed to trade in the company’s shares during the six-week
period after the publication of annual and quarterly reports
and any other comprehensive announcements of financial re-
sults. if management or employees are in possession of inside
information that may influence the pricing of tk Development’s
shares, they may not trade in the shares even during the six-
week period. the company keeps a register of the shares held
by insiders, including any changes in their portfolios, and dis-
closes this information in accordance with existing legislation.
i n v e s To r r e l aT i o n s
tk Development aims to keep its shareholders and investors
up-to-date on all relevant matters.
the company’s website, www.tk-development.com, includes
all company announcements issued for the past five years,
updated share prices and information about the Group’s pro-
jects in progress. When investor presentations are published
in connection with the announcement of annual and half-year
financial results, they are also made available at the company’s
website.
moreover, there is a direct link from tk Development a/s’ web-
site to the nasDaQ omX copenhagen a/s website (www.nas-
daqomxnordic.com), which contains further information about
the tk Development a/s share. Reference is also made to the
description of “corporate Governance” at the company’s web-
site, www.tk-development.com
f i n a n c i a l c a l e n d a r
annual Report 2012/13 30 april 2013
annual General meeting 22 may 2013
interim Report Q1 2013/14 25 June 2013
interim Report Q1-Q2 2013/14 26 september 2013
interim Report Q1-Q3 2013/14 18 December 2013
preliminary announcement of financial statements 2013/14 24 april 2014
annual Report 2013/14 1 may 2014
annual General meeting 26 may 2014
no. date
3 2 feb 2012 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
4 26 apr 2012 preliminary announcement of financial statements 2011/12
5 1 may 2012 notice convening the annual General meeting of tk Development a/s
6 23 may 2012 proposal for tk Development’s supervisory Board to have seven members in future
7 24 may 2012 annual General meeting of tk Development a/s on 24 may 2012
8 1 Jun 2012 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
9 6 Jun 2012 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
10 6 Jun 2012 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
11 25 Jun 2012 interim Report Q1 2012/13
12 17 Jul 2012 tk development concludes a conditional agreement with Heitman concerning the sale of two polish projects at a total project value of eUR 95 million.
13 18 Jul 2012 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
14 23 Jul 2012 major shareholder announcement
15 25 sep 2012 interim Report Q1-Q2 2012/13
16 30 oct 2012 tk Development sells retail park in Gävle, sweden
17 19 Dec 2012 interim Report Q1-Q3 2012/13
1 8 Jan 2013 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
2 9 Jan 2013 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
3 21 Jan 2013 information about the leading employees’ and their closely related parties’ transactions with tk Development a/s shares and related securities
4 24 Jan 2013 financial calendar
s h a r e h o l D e r s
company announcements
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 4 9 / 6 5
c o r P o r at e g o v e r n a n c e
tk Development’s supervisory and executive Boards continue
to focus on the recommendations for corporate governance,
and the supervisory Board reassesses its policies for compli-
ance with the recommendations at least once a year. in a few
areas, the company does not comply with the recommenda-
tions, but instead provides an explanation of its reasons for not
complying with a specific recommendation. the supervisory
Board is of the opinion that tk Development a/s lives up to the
existing Recommendations on corporate Governance.
a detailed review of the supervisory Board’s policies for com-
pliance with the recommendations issued by the committee
on corporate Governance is available at www.tk-development.
com/cg_2012_13
the committee recommendations not followed are listed be-
low:
corporate social responsibility
in light of the company’s size and activities and the Group’s
operating markets, the supervisory Board has decided not to
adopt policies for corporate social responsibility. the Board will
regularly assess the need for policies in this area.
diversity
the limited size of the organization and its division into units
operating in different countries with relatively few employees
in each country mean that the Group is largely compelled to
focus on knowledge, competencies and experience when re-
cruiting and promoting employees. the supervisory Board ac-
knowledges the importance of the diversity of the company’s
management and staff and is naturally alert to providing equal
opportunities to both genders. for the reasons set out above,
tk Development has so far chosen not to establish specific
guidelines and objectives for diversity, but after the reporting
date the company has adopted a policy to ensure the diversity
of its management and staff, including a policy to increase the
share of women at other managerial levels in the Group.
age limit
setting an age limit for the members of the supervisory Board
has so far not been considered appropriate by tk Development,
as talents, expertise and experience are weighted higher than
an age criterion. However, to comply with the existing recom-
mendations, management has decided to recommend for adop-
tion at the annual General meeting on 22 may 2013 that the
company’s articles of association should introduce an age limit
of 70 for supervisory Board members.
audit committee
the supervisory Board believes that auditing is an issue that
concerns all board members. for this reason, and given the
complexity of the accounting procedures and the size of the
supervisory Board, it has been considered appropriate not to
set up an actual audit committee, but to let all board members
function jointly as the audit committee.
nomination committee
the supervisory Board has decided not to establish a nomina-
tion committee because, given its size, the supervisory Board
finds that these tasks are best handled by the Board as a whole.
content of remuneration policy
so far, the supervisory Board has decided not to set limits for
how high a portion of the total remuneration may be constitut-
ed of variable components, as the amount of bonus will only be
paid if a minimum 8 % return on equity is achieved. Until further
notice, the amount of bonus is expected to account for a minor
portion only relative to the fixed pay elements.
as bonus is only paid if a minimum 8 % return on equity is
achieved for an individual financial year, the supervisory board
assesses that the remuneration policy ensures constant align-
ment between the interests of the executive Board and the
shareholders. it has therefore been found unnecessary to es-
tablish criteria ensuring that the vesting period for variable pay
elements, wholly or in part, is longer than one financial year.
T h e s u P e rv i s o ry b oa r d
composition and rules regarding appointments and replace-
ments
according to the articles of association, the supervisory Board
must be composed of not less than four nor more than seven
members. the supervisory Board is currently composed of six
members elected by the General meeting. management consid-
ers the composition of the supervisory Board to be appropriate
relative to the company’s current activities and requirements.
in management’s opinion, the current supervisory Board mem-
bers have the financial, strategic and commercial expertise re-
quired by an international business such as tk Development.
the members of the supervisory Board are elected at the Gen-
eral meeting of shareholders to serve for a term of one year
at a time. Retiring supervisory Board members are eligible for
re-election.
the supervisory Board’s competencies cover a wide spectrum,
including strategic management, international relations, capi-
tal structure, the property sector, the retail trade, risk assess-
5 0 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
ment and control, investor relations, business development as
well as accounting and financial expertise.
the professional qualifications of the supervisory Board mem-
bers are listed individually under the heading “the supervisory
Board”.
the supervisory Board considers all its members, with two ex-
ceptions, to be independent of the company. torsten erik Ras-
mussen is not considered independent as he has held a seat on
the supervisory Board for more than 12 years, and per sønder-
gaard pedersen is not considered independent because he was
previously a member of the company’s executive Board.
self-evaluation
once a year the supervisory Board systematically evaluates its
work and competencies with a view to continuously improving
and streamlining its work.
the chairman is in charge of this internal evaluation of the su-
pervisory Board. to date, the supervisory Board has chosen to
conduct a qualitative evaluation in the form of interviews and
open, constructive dialogue with all members present at the
same time. the evaluation is based on a predetermined list of
subjects, including communication and collaboration, results
achieved compared to targets set, short- and long-term com-
position of the supervisory Board, and the competencies of its
members as well as any need for knowledge and skills develop-
ment. other relevant issues are considered on an ad-hoc basis.
the mutual confidence of the members in each other automat-
ically leads to a free exchange of opinions, and each member is
encouraged to take an active part in discussions. if desired by
any member or the chairman, the members can be interviewed
individually on any specific subject.
the self-evaluation has promoted the further development of
the Group’s strategy, including sharper focus on risk manage-
ment and on improving communication with the market. after
the reporting date, this has for instance translated into a deci-
sion to change the Group’s internal and external reporting.
number of supervisory board meetings
the supervisory Board held seven board meetings in the
2012/13 financial year.
r e m u n e r aT i o n o f T h e s u P e rv i s o ry b o a r d
the members of the supervisory Board are paid a fixed fee
and are not covered by the company’s bonus and incentive
schemes. no separate fee is paid for audit committee work
as all supervisory Board members sit on this committee. the
remuneration payable to supervisory Board members consists
of a basic fee. the chairman is paid three times the basic fee,
while the Deputy chairman is paid twice the basic fee. as part
of the cost cuts implemented by the Group in January 2012,
the supervisory Board accepted a 20 % fee reduction, with the
basic fee amounting to Dkk 200,000 in 2012/13. together with
its proposal for adoption of the annual Report for 2012/13, the
supervisory Board will recommend that the annual General
meeting adopt a further extraordinary 20 % reduction of the
basic fee, which will thus be fixed at Dkk 160,000 for 2013/14.
r e m u n e r aT i o n o f T h e e x ec u T i v e b oa r d
remuneration policy
every year the supervisory Board assesses and determines the
remuneration payable to the executive Board members, based
on the recommendation of the chairman and Deputy chairman.
the overall pay package and its composition are determined by
the results achieved, the executive Board’s competencies and
the supervisory Board’s wish to ensure that the company can
continue to attract, retain and motivate qualified executives.
in this connection, the supervisory Board takes the company’s
situation and general development into account. every year,
the supervisory Board reviews the remuneration payable to the
executive Board by comparing it to that payable to executive
boards of other comparable companies with international ac-
tivities.
the executive Board’s remuneration consists of a fixed and a
variable portion. the variable remuneration consists of a short-
term and a long-term incentive scheme. the overall pay pack-
age consists of a fixed salary, bonus, defined-contribution pen-
sion of 2 % of the basic salary and other benefits, including a
company-provided car, telephone, it solution and newspaper,
as well as health insurance and warrants.
the remuneration policy appears from the company’s website,
www.tk-development.com
remuneration
the remuneration of the executive Board in 2012/13 was based
on the guidelines adopted at the General meeting in 2011. as
part of the cost cuts implemented by the Group in January
2012, the remuneration of the executive Board was reduced
by 20 % for a 24-month period starting on 1 february 2012.
Warrants were not granted to the executive Board in 2012.
the remuneration of each individual member of the executive
Board appears from the Group’s annual Report. the remunera-
tion for 2013/14 will also be based on the guidelines adopted
c o r P o r at e g o v e r n a n c e
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 1 / 6 5
at the General meeting in 2011, as no changes have been made
to these guidelines. However, a new two-year agreement has
been made with the executive Board, according to which a fur-
ther 20 % of the executive Board’s fixed annual remuneration
will not be paid on an ongoing basis, which will equal a 36 %
reduction compared to the remuneration paid in the 2011/12
financial year, which will apply to the period from 1 may 2013
to 30 april 2015. During that period, the reduced fixed annual
salary will amount to Dkk 2.7 million for frede clausen and Dkk
2.1 million for Robert andersen. Up to two-thirds of the remu-
neration withheld during the two-year period will nevertheless
be paid when the Group meets specific operational targets,
fixed as part of the previously described two-year transforma-
tion process that consists of realizing the initiatives adopted
under the revised strategy. Warrants will not be granted to the
executive Board in 2013 either.
retention and severance programmes
Under the executive Board’s service agreements, the individual
executive Board member may give notice of termination no lat-
er than three months after the occurrence of an extraordinary
event (change of control), such termination to take effect 12
months after notice has been given. the executive Board mem-
ber may demand to be released from his or her duties during
the period of notice, with the usual remuneration being payable
during such period.
the executive Board members are not subject to any other spe-
cial severance terms. the term of notice for executive Board
members is 12 months on the part of the company and six
months on the part of the member.
it is company policy to ensure that executive Board members
have an incentive to work dedicatedly in the interests of the
company and its shareholders in the event of a merger, take-
over bid or other extraordinary situations. against this back-
ground, the supervisory Board may decide, on the basis of a
specific assessment, to pay a retention bonus whereby exec-
utive Board members receive a special consideration, however,
not exceeding 12 months’ fixed salary, for example in the event
that the company merges with another company or if another
company takes over all the company’s activities, subject to the
General meeting’s approval.
i n T e r n a l a u d i T
at least once a year, the supervisory Board takes a position
on the adequacy of internal control and risk management sys-
tems. Based on the company’s size, complexity and accounting
department organization, the supervisory Board has so far as-
sessed that internal audits have been unnecessary.
a u d i T c o m m i T T e e
the supervisory Board believes that auditing is an issue that
concerns all board members. for this reason, and given the
complexity of the accounting procedures, it has been consid-
ered appropriate not to set up an actual audit committee, but
to let all board members function jointly as the audit commit-
tee. the terms of reference of the audit committee have been
laid down, and, basically, four meetings are held each year.
the company website contains information about the most
important activities during the year, the number of audit com-
mittee meetings held and the terms of reference of the audit
committee.
s TaT u To ry a n n u a l c o r P o r aT e g ov e r n a n -
c e s TaT e m e n T
tk Development has chosen to present its statutory annual
corporate Governance statement on its website instead of in
the management commentary.
the corporate Governance statement is available at www.
tk-development.com/cgs_12_13
c o r P o r at e g o v e r n a n c e
5 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
in addition to carrying on profitable business activities, tk De-
velopment intends to adhere to and expand the Group’s ethical,
social and environmental responsibilities as a business corpo-
ration.
tk Development fundamentally endorses the Un’s ten social
responsibility principles, but has not acceded to the Un Global
compact. the Group only carries on activities in countries that
have already incorporated human rights, labour standards and
anti-corruption principles into their national legislation.
the supervisory Board has not introduced any policies that
integrate corporate social responsibility into the company’s
strategy and activities.
Reference is also made to www.tk-development.com/
csR_2012_13
s tat u t o r y a n n u a l c o r P o r at e s o c i a l r e s P o n s i B i l i t y s tat e m e n t
barkarby gate, stockholm, swedenDevelopment of a 20,000 m2 retail park. the current occupancy rate is 70 %. opening is scheduled for late 2014.
5 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 3 / 6 5
s tat u t o r y a n n u a l c o r P o r at e s o c i a l r e s P o n s i B i l i t y s tat e m e n t
n a m eTo o k o f f i c e
e n d o f T e r m b i rT h day i n d e P e n d e n c e 1 )
niels roth (chairman) 2007 may 2013 July 1957 independent
torsten erik rasmussen (Deputy chairman) 1998 may 2013 June 1944 not independent 2)
Per søndergaard Pedersen 2002 may 2013 march 1954 not independent 3)
jesper jarlbæk 2006 may 2013 march 1956 independent
jens erik christensen 2010 may 2013 february 1950 independent
Peter thorsen 2012 may 2013 march 1966 independent
1) see section 5.4.1 in the ”Recommendations on corporate Governance” prepared by nasDaQ omX copenhagen a/s.2) Has held a seat on the supervisory Board for more than 12 years.3) Was previously a member of the company’s executive Board.
t h e s u P e r v i s o r y B o a r D
5 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
Born July 1957Joined the supervisory board 2007End of term May 2013
education1983 MSc (Economics).
employment1989-2004 CEO of Carnegie Bank, and Group Head of Invest-
ment Banking in the Carnegie Group (2001-2002).1997-2004 Member of the Danish Securities Council.2001-2004 Chairman of the Danish Securities Dealers’ Associati-
on.
special competenciesFinancial markets, capital structure, investment, accounting, investor relations.
executive board memberZira Invest II ApS; Zira Invest III ApS.
supervisory board chairmanFast Ejendom Holding A/S; Foreningen Fast Ejendom Dansk Ejen-domsportefølje f.m.b.a.; Friheden Invest A/S; NPC A/S.
supervisory board memberA/S Rådhusparken; A/S Sadolinparken; Arvid Nilssons Fond; FFH Invest A/S; Investeringsforeningen SmallCap Danmark (Deputy Chairman); Porteføljeselskab A/S (Deputy Chairman); Realdania;SmallCap Danmark A/S (Deputy Chairman).
board committees and other postsNone.
Born June 1944Joined the supervisory board 1998End of term May 2013
education1961-1964 Commercial education, Dalhoff Larsen & Horneman
A/S, Denmark.1964-1966 National service with the Royal Life Guards, dischar-
ged from military service as first lieutenant (R) in 1967.
1972 MBA, IMEDE, Lausanne, Switzerland.1985 International Senior Managers’ Program, Harvard
Business School, USA.
employment 1967-1971 Head of department and later director of Northern
Soft- & Hardwood Co. Ltd., Congo.1973 Executive secretary, LEGO System A/S, Denmark.1973-1975 Finance manager, LEGOLAND A/S, Denmark.1975-1977 Logistics manager, LEGO System A/S, Denmark.1977-1978 Assistant manager (logistics), LEGO System A/S,
Denmark.1978-1980 President and CEO, LEGO Overseas A/S, Denmark.1981-1997 Manager and member of Group Management, LEGO
A/S, Denmark.
special competenciesStrategic management, international relations, accounting and finances.
executive board memberMorgan Management ApS.
supervisory board chairmanAcadia Pharmaceuticals A/S; Ball ApS; Ball Holding ApS; Ball Invest ApS; CPD Invest ApS; Oase Outdoors ApS.
supervisory board memberAcadia Pharmaceuticals Inc., USA; Morgan Invest ApS; Schur International Holding A/S; Vola A/S; Vola Ejendomme ApS; Vola Holding A/S.
board committees and other postsChairman of the Acadia Pharmaceuticals Inc.’s Corporate Gover-nance Committee, USA; Member of the Acadia Pharmaceuticals Inc.’s Compensation Committee, USA.
n i e l s r oT h
chairman of the supervisory Board
T o r s T e n e r i k r a s m u s s e n
Deputy chairman
t h e s u P e r v i s o r y B o a r D
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 5 / 6 5
Born March 1954Joined the supervisory board 2002End of term May 2013
educationTrained with Sparekassen Nordjylland (Spar Nord Bank).
employment1983-1986 Head of the business department at Sparekassen
Nordjylland headquarters, Østeraa branch.1986-1989 Regional manager, Sparekassen Nordjylland, Hasseris
branch.1989-2002 CEO, TK Development A/S.
special competenciesRetail trade, property sector, financial markets, business develop-ment, investor relations.
executive board memberA.S.P. Ejendom ApS; J.A. Plastindustri Holding A/S; PSP Holding ApS; PSPSH Holding ApS; Radioanalyzer ApS.
supervisory board chairmanAG I A/S; Arne Andersen A/S; Athene Group A/S; Bjørk & Maigård Holding ApS; Business Institute A/S; Conscensia A/S; Conscensia Holding A/S; dansk boligstål a/s; EIPE Holding A/S; Exportaka-demiet Holding ApS; GLC Management Invest ApS; Global Car Leasing A/S; Ib Andersen A/S; Ib Andersen A/S Øst; Ib Andersen Ventilation A/S; J.A. Plastindustri A/S; JMI Ejendomme A/S; JMI Gruppen A/S; K/S Asschenfeldt, Dietrich-Bonhoeffer-Strasse, Waren; Lindgaard A/S – Rådgivende Ingeniører F.R.I.; Nowaco A/S; Nybolig Jan Milvertz A/S; Restaurant Fusion A/S.
supervisory board memberArkitekterne Bjørk & Maigård ApS; Ejendomsmægleraktiesel-skabet Thorkild Kristensen; Ejendomsmægleraktieselskabet Thorkild Kristensen Bolig; Ejendomsmægleraktieselskabet Thorkild Kristensen, Blokhus; Ejendomsmægleraktieselskabet Thorkild Kristensen Erhverv; Emidan A/S; Fan Milk International A/S; Fonden Musikkens Hus i Nordjylland; Investeringsforeningen SmallCap Danmark; J.A. Plastindustri Holding A/S; JMI Investering A/S; JMI Projekt A/S; K/S Danske Dagligvarebutikker; Ladegaard A/S; Marius A/S; PL Holding Aalborg A/S; P L Invest, Aalborg ApS; Porteføljeselskab A/S; Sjællandske Ejendomme A/S; Skandia Kalk International Trading A/S; SmallCap Danmark A/S; Wahlberg VVS A/S.
board committees and other postsNone.
Born March 1956Joined the supervisory board 2006End of term May 2013
education1981 Trained as a state-authorized public accountant.2006 Licence placed in inactive status.
employment 1974-2002 Served with Arthur Andersen (most recently as
managing partner). 2002-2006 Deloitte (executive vice president).
special competenciesInternational management, risk assessment and control, accoun-ting and finance.
executive board memberEarlbrook Holdings Ltd. A/S; SCSK 2272 ApS; Timpco ApS.
supervisory board chairmanAdvis A/S; Altius Invest A/S; Basico Consulting A/S; Basico Con-sulting International ApS; Catacap Management ApS; Groupcare A/S; Groupcare Holding A/S; Jaws A/S; Julie Sandlau China ApS; Sanderman Pte. Ltd., Singapore; Spoing A/S; Valuemaker A/S .
supervisory board membera-solutions a/s; Bang & Olufsen a/s; Earlbrook Holdings Ltd. A/S;Københavns Privathospital A/S; Polaris III Invest Fonden; ShowMe A/S; Økonomiforum ApS.
board committees and other postsBusiness Angels Copenhagen (Chairman); DVCA, Danish Venture Capital and Private Equity Association (Deputy Chairman); Sailing Denmark (member); Chairman of the audit committee, Bang & Olufsen a/s.
P e r s Ø n d e r g a a r d P e d e r s e n j e s P e r j a r l b æ k
t h e s u P e r v i s o r y B o a r D
5 6 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | m a n ag e m e n T com m e n Ta ry
Born Febuary 1950Joined the supervisory board 2010End of term May 2013
education1975 MSc (Actuarial Science).
employment1978-1989 Baltica Forsikring.1990-1993 Chief Operating Officer of Danica Liv & Pension.1992-1998 CEO of Codan Forsikring A/S.1998-2003 Managing Director of EMEA, the RS&A Group.1999-2006 CEO of Codan.
special competenciesProperty sector, financial markets, international relations, busi-ness development.
executive board memberSapere Aude ApS.
supervisory board chairmanAlpha Holding A/S; ApS Harbro Komplementar-48; Behandlings-vejviseren A/S; Core Strategy Consultants A/S; Dansk Merchant Capital A/S; Ecsact A/S; K/S Habro-Reading, Travelodge; Me-diaxes A/S; Scandinavian Private Equity A/S; Skandia A/S; Skandia Link Livsforsikring A/S; Skandia Liv A/S; Skandia Liv A A/S; TA Management A/S; Vördur tryggingar hf.
supervisory board memberAlpha Insurance A/S; Andersen & Martini A/S; BankNordik A/S (Deputy Chairman); Hugin Expert A/S (Deputy Chairman); Mbox A/S; Nemi Forsikring AS; Nordic Corporate Investments A/S; P/F Trygd; Skandia Asset Management Fondsmæglerselskab A/S; Your Pension Management A/S.
board committees and other postsChairman of Dansk Vejforening (Danish Road Association); Chair-man of the audit committee, Andersen & Martini A/S; Member of the audit committee, Skandia Liv A/S; Member of the Danish Government’s infrastructure commission.
Born March 1966Joined the supervisory board 2012End of term May 2013
education1992 MSc (Business Administration and Auditing).
employment1992-1994 Accountant, More Stevens.1994-1997 Marketing Manager, Group CFO & International Con-
troller, KEW Industri A/S.1997-1997 Finance Manager, Electrolux Hvidevarer A/S.1997-1998 Finance Manager, Marwi International A/S (Incentive
A/S).1998-2000 CEO, Basta Group A/S.2001-2005 CEO, Bison A/S.2005-2008 CEO, Louis Poulsen Lighting A/S.2007-2008 Group Chief Executive, Targetti Poulsen.2008- CEO, EBP Ejendomme A/S, EBP Holding A/S, Kirk &
Thorsen A/S, Kirk & Thorsen Invest A/S and Modulex Holding ApS.
special competenciesStrategic management, accounting and finances, business development.
executive board memberEBP Holding A/S; EBP Ejendomme A/S; Kirk & Thorsen A/S; Kirk & Thorsen Invest A/S; Modulex Holding ApS.
supervisory board chairmanBiblioteksmedier A/S; Ejendomsselskabet Smedetoften 12 A/S;Invest Marts A/S; Megatherm Energi Invest A/S; Modulex A/S;PFP A/S; Procom A/S; Ravn Arkitektur A/S; Scan Auto & Dybbroe Group A/S; SD Group A/S; VT1 Holding A/S.
supervisory board memberCareitec A/S; Careitec Holding A/S; Claus Heede Holding A/S; EBP Holding A/S; Kirk & Thorsen A/S; Kirk & Thorsen Invest A/S; Ny Droob ApS; Rotation A/S; Starco Europe A/S; Viborg Storcenter A/S.
board committees and other postsMember of the Executive Committee, Sct. Maria Hospice.
j e n s e r i k c h r i s T e n s e n P e T e r T h o r s e n
t h e s u P e r v i s o r y B o a r D
m a n ag e m e n T com m e n Ta ry | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 7 / 6 5
t h e e x e c u t i v e B o a r D
*) the companies form part of the tk Development Group and are partly owned, directly or indirectly, by tk Development a/s.
f r e d e c l a u s e n
President and ceo
r o b e rT a n d e r s e n
executive vice President
Born July 1959Member of the Executive Board since 1992
executive board memberFrede Clausen Holding ApS.
supervisory board chairmanAhlgade 34-36 A/S*; Ringsted Outlet Center P/S*; SPV Ringsted ApS*; Udviklingsselskabet Nordkranen A/S*
supervisory board memberEuro Mall Luxembourg JV s.à.r.l.*; Euro Mall Ventures s.à r.l.*; Kom-manditaktieselskabet Danlink-Udvikling*; Komplementarselskabet DLU ApS*; K/S Købmagergade 59, st.; Palma Ejendomme A/S; Hotel den Gamle Skibssmedie ApS.
board committees and other postsNone.
Born April 1965Member of the Executive Board since 2002
executive board memberRingsted Outlet Center P/S*; Palma Ejendomme A/S; Hotel den Gamle Skibssmedie ApS.
supervisory board chairmanNone.
supervisory board memberAhlgade 34-36 A/S*; Kommanditaktieselskabet Danlink-Udvik-ling*; Kommanditaktieselskabet Østre Havn*; Komplementar-selskabet DLU ApS*; Ringsted Outlet Center P/S*; SPV Ringsted ApS*; Udviklingsselskabet Nordkranen A/S*; Østre Havn Aalborg ApS*; Palma Ejendomme A/S; Hotel den Gamle Skibssmedie ApS.
board committees and other postsNone.
5 8 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | sTaT e m e n T by T h e s u P e rv i s o ry a n d e x ec u T i v e b oa r d s
s tat e m e n t B y t h e s u P e r v i s o r y a n D e x e c u t i v e B o a r D s o n t h e a n n u a l r e P o r t
the supervisory and executive Boards have today considered
and adopted the 2012/13 annual Report of tk Development
a/s.
the annual Report is presented in accordance with the interna-
tional financial Reporting standards (ifRs), as adopted by the
eU, and in accordance with Danish disclosure requirements for
annual reports prepared by listed companies.
in our opinion, the consolidated financial statements and
parent financial statements give a true and fair view of the
Group’s and company’s financial position at 31 January 2013
and of the results of the Group’s and company’s operations and
cash flows for the financial year from 1 february 2012 to 31
January 2013.
moreover, we consider the management commentary to give a
fair presentation of the development in the Group’s and compa-
ny’s activities and financial affairs, the results for the year and
the Group’s and company’s financial position, as well as a true
and fair description of the most significant risks and elements
of uncertainty faced by the Group and the company.
We recommend that the 2012/13 annual Report be adopted by
the annual General meeting of shareholders.
aalborg, 25 april 2013
e x ec u T i v e b o a r d
s u P e rv i s o ry b o a r d
frede clausen
president and ceo
robert andersen
excecutive vice president
torsten erik rasmussen
Deputy chairman
Per søndergaard Pedersen jesper jarlbæk
niels roth
chairman
jens erik christensen Peter thorsen
i n d e P e n d e n T au d i To r ’ s r e P o rT | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 5 9 / 6 5
i n D e P e n D e n t a u D i t o r ’ s r e P o r t
the annual report has been provided with the following audi-
tors’ report:
”to the shareholders of tK Development a/sreport on the consolidated financial statements and parent financial statementsWe have audited the consolidated financial statements and parent finan-
cial statements of tk Development a/s for the financial year 1 february
2012 - 31 January 2013, which comprise the income statement, state-
ment of comprehensive income, balance sheet, statement of changes
in equity, cash flow statement and notes, including the accounting pol-
icies, for the Group as well as for the parent. the consolidated financial
statements and parent financial statements are prepared in accordance
with international financial Reporting standards as adopted by the eU
and Danish disclosure requirements for listed companies.
management’s responsibility for the consolidated financial statements
and parent financial statements
management is responsible for the preparation of consolidated financial
statements and parent financial statements that give a true and fair
view in accordance with international financial Reporting standards as
adopted by the eU and Danish disclosure requirements for listed com-
panies and for such internal control as management determines is nec-
essary to enable the preparation and fair presentation of consolidated
financial statements and parent financial statements that are free from
material misstatement, whether due to fraud or error.
auditor’s responsibility
our responsibility is to express an opinion on the consolidated financial
statements and parent financial statements based on our audit. We
conducted our audit in accordance with international standards on au-
diting and additional requirements under Danish audit regulation. this
requires that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidat-
ed financial statements and parent financial statements are free from
material misstatement.
an audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the consolidated financial statements
and parent financial statements. the procedures selected depend on
the auditor’s judgement, including the assessment of the risks of ma-
terial misstatements of the consolidated financial statements and par-
ent financial statements, whether due to fraud or error. in making those
risk assessments, the auditor considers internal control relevant to the
entity’s preparation of consolidated financial statements and parent fi-
nancial statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s
internal control. an audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting esti-
mates made by management, as well as the overall presentation of the
consolidated financial statements and parent financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
our audit has not resulted in any qualification.
opinionin our opinion, the consolidated financial statements and parent finan-
cial statements give a true and fair view of the Group’s and the parent’s
financial position at 31 January 2013, and of the results of their opera-
tions and cash flows for the financial year 1 february 2012 - 31 January
2013 in accordance with international financial Reporting standards as
adopted by the eU and Danish disclosure requirements for listed com-
panies.
statement on the management commentarypursuant to the Danish financial statements act, we have read the man-
agement commentary. We have not performed any further procedures in
addition to the audit of the consolidated financial statements and par-
ent financial statements.
on this basis, it is our opinion that the information provided in the man-
agement commentary is consistent with the consolidated financial
statements and parent financial statements.
aalborg, 25 april 2013
nielsen & christensen
statsautoriseret Revisionspartnerselskab
johny jensen
state-authorized
public accountant
Jørgen Jensen
state-authorized
public accountant
copenhagen, 25 april 2013
Deloitte
statsautoriseret Revisionspartnerselskab
lars andersen
state-authorized
public accountant
jan Bo hansen
state-authorized
public accountant”
6 0 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | co n s o l i daT e d f i n a n c i a l sTaT e m e n Ts
i n c o m e s TaT e m e n T
Dkkm 2012/13 2011/12
net revenue 632.3 359.8
external direct project costs -734.0 -200.7
value adjustment of investment properties, net -37.8 36.7
gross profit/loss -139.5 195.8
other external expenses 30.2 34.6
staff costs 69.2 92.9
total 99.4 127.5
Profit/loss before financing and depreciation -238.9 68.3
Depreciation and impairment of non-current assets 2.2 2.8
operating profit/loss -241.1 65.5
income from investments in associates 2.5 32.4
financial income 5.6 9.2
financial expenses -93.0 -92.8
total -84.9 -51.2
Profit/loss before tax -326.0 14.3
tax on profit/loss for the year 167.3 -12.7
Profit/loss for the year -493.3 27.0
e a r n i n g s P e r s h a r e i n d k k
earnings per share (eps) of nom. Dkk 15 -11.7 0.6
Diluted earnings per share (eps-D) of nom. Dkk 15 -11.7 0.6
c o m P r e h e n s i v e i n c o m e s TaT e m e n T
profit/loss for the year -493.3 27.0
foreign-exchange adjustments, foreign operations 6.1 -30.0
tax on foreign-exchange adjustments, foreign operations -2.9 11.0
value adjustments of hedging instruments 3.1 -1.6
tax on value adjustments of hedging instruments -0.6 0.3
other comprehensive income for the year 5.7 -20.3
comprehensive income statement for the year -487.6 6.7
c o n s o l i D at e D f i n a n c i a l s tat e m e n t s
co n s o l i daT e d f i n a n c i a l sTaT e m e n Ts | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 6 1 / 6 5
c o n s o l i D at e D f i n a n c i a l s tat e m e n t s
b a l a n c e s h e e T
Dkkm 31 jan 2013 31 Jan 2012
asseTs
non-current assets
Goodwill 33.3 33.3
intangible assets 33.3 33.3
investment properties 479.4 366.9
investment properties under construction 16.9 73.6
other fixtures and fittings, tools and equipment 2.5 4.7
Property, plant and equipment 498.8 445.2
investments in associates 1.7 0.2
Receivables from associates 4.6 2.5
other securities and investments 0.8 1.9
Deferred tax assets 127.0 291.7
other non-current assets 134.1 296.3
total non-current assets 666.2 774.8
current assets
Projects in progress or completed 3,030.9 3,498.1
trade receivables 73.2 68.4
Receivables from associates 19.0 17.9
contract work in progress 0.0 18.2
corporate income tax receivable 4.0 3.1
other receivables 122.4 131.4
prepayments 22.4 23.3
total receivables 241.0 262.3
securities 4.3 4.0
Deposits in blocked and escrow accounts 35.7 45.2
cash and cash equivalents 31.2 55.1
total current assets 3,343.1 3,864.7
assets 4,009.3 4,639.5
6 2 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | co n s o l i daT e d f i n a n c i a l sTaT e m e n Ts
c o n s o l i D at e D f i n a n c i a l s tat e m e n t s
b a l a n c e s h e e T
Dkkm 31 jan 2013 31 Jan 2012
equiTy and liabiliTies
equity
share capital 631.0 631.0
other reserves 5.3 139.8
Retained earnings 753.4 1,105.6
total equity 1,389.7 1,876.4
liabilities
credit institutions 102.2 156.9
provisions 2.3 3.0
Deferred tax liabilities 35.0 32.0
other debt 1.5 3.8
total non-current liabilities 141.0 195.7
credit institutions 2,189.1 2,204.3
trade payables 106.3 159.8
corporate income tax 5.0 22.4
provisions 13.1 11.6
other debt 150.2 153.4
Deferred income 14.9 15.9
total current liabilities 2,478.6 2,567.4
total liabilities 2,619.6 2,763.1
total eQuity anD liaBilities 4,009.3 4,639.5
co n s o l i daT e d f i n a n c i a l sTaT e m e n Ts | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 6 3 / 6 5
c o n s o l i D at e D f i n a n c i a l s tat e m e n t s
s TaT e m e n T o f c h a n g e s i n eq u i T y
Dkkm share capital other reserves Retained earnings total equity
equity at 1 february 2011 631.0 160.1 1,074.9 1,866.0
profit/loss for the year 0.0 0.0 27.0 27.0
other comprehensive income for the year 0.0 -20.3 0.0 -20.3
total comprehensive income for the year 0.0 -20.3 27.0 6.7
share-based payment 0.0 0.0 3.7 3.7
equity at 31 january 2012 631.0 139.8 1,105.6 1,876.4
profit/loss for the year 0.0 0.0 -493.3 -493.3
other comprehensive income for the year 0.0 5.7 0.0 5.7
total comprehensive income for the year 0.0 5.7 -493.3 -487.6
special reserve transferred to distributable reserves 0.0 -140.2 140.2 0.0
share-based payment 0.0 0.0 0.9 0.9
equity at 31 january 2013 631.0 5.3 753.4 1,389.7
6 4 / 6 5 | t k D e v e lo pm e n t a / s | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | co n s o l i daT e d f i n a n c i a l sTaT e m e n Ts
c o n s o l i D at e D f i n a n c i a l s tat e m e n t s
ca s h f lo w s TaT e m e n T
Dkkm 2012/13 2011/12
operating profit/loss -241.1 65.5
adjustments for non-cash items:
value adjustment of investment properties, net 37.8 -36.7
Depreciation and impairment 290.1 2.6
share-based payment 0.9 3.7
provisions 0.4 -2.5
foreign-exchange adjustment 7.5 1.9
increase/decrease in investments in projects, etc. 139.9 -70.9
increase/decrease in receivables 22.4 57.2
changes in deposits on blocked and escrow accounts 9.5 18.5
increase/decrease in payables and other debt -61.1 21.0
cash flows from operating activities before net financials and tax 206.3 60.3
interest paid, etc. -142.9 -139.1
interest received, etc. 4.3 6.4
corporate income tax paid -22.1 -6.4
cash flows from operating activities 45.6 -78.8
investments in equipment, fixtures and fittings -0.2 -0.6
sale of equipment, fixtures and fittings 0.4 0.1
investments in investment properties -11.3 -17.4
sale of investment properties 17.3 0.0
purchase of securities and investments -0.7 0.0
sale of securities and investments 0.9 27.7
cash flows from investing activities 6.4 9.8
Repayment, long-term financing -0.7 -24.8
Raising of long-term financing 13.0 35.7
Raising of project financing 149.5 76.4
Reduction of project financing/repayments, credit institutions -238.0 -55.0
cash flows from financing activities -76.2 32.3
cash flows for the year -24.2 -36.7
cash and cash equivalents, beginning of year 55.1 96.3
foreign-exchange adjustment of cash and cash equivalents 0.3 -4.5
cash and cash equivalents at year-end 31.2 55.1
the figures in the cash flow statement cannot be inferred from the consolidated financial statements alone.
com Pa n y i n fo r m aT i o n | f i n a n c i a l stat e m e n ts 2 0 1 2 / 1 3 | t k D e v e lo pm e n t a / s | 6 5 / 6 5
aalborg
vestre Havnepromenade 7
Dk-9000 aalborg
t: (+45) 8896 1010
berlin
ahornstraße 16
D-14163 Berlin
t: (+49) 30 802 10 21
helsinki
Uudenmaankatu 7, 4.
fin-00 120 Helsinki
t: (+358) 103 213 110
vilnius
Gynėjų str. 16
lt-01109 vilnius
t: (+370) 5231 2222
warsaw
ul. mszczonowska 2
pl-02-337 Warsaw
t: (+48) 22 572 2910
Prague
karolinská 650/1
cZ-186 00 prague 8
t: (+420) 2 8401 1010
stockholm
Gamla Brogatan 36-38
s-101 27 stockholm
t: (+46) 8 751 37 30
copenhagen
islands Brygge 43
Dk-2300 copenhagen s
t: (+45) 3336 0170
c o m Pa n y i n f o r m at i o n
tk Development a/s
cvr no.:
24256782
isin code:
Dk0010258995 (tkDv)
municipality of registered office:
aalborg, Danmark
website:
www.tk-development.com
e-mail:
executive board:
frede clausen og Robert andersen
supervisory board:
niels Roth, torsten erik Rasmussen,
per søndergaard pedersen, Jesper Jarlbæk,
Jens erik christensen and peter thorsen.
the annual general meeting will be held at 3 p.m. on 22 may
2013 at aalborg Kongres & Kultur center, radiosalen, europa
Plads 4, DK-9000 aalborg.