Interim Report H1 2016/17
Aalborg, Denmark, 2016-09-15 08:46 CEST (GLOBE NEWSWIRE) --
SUMMARY
Results for the first half of 2016/17
The results before tax amounted to DKK -9.3 million in the first half of 2016/17 against DKK -3.2 million in the first half of 2015/16. The results after tax amounted to DKK -9.8 million against DKK -7.2 million in H1 2015/16.
The balance sheet total amounted to DKK 2,925.6 million against DKK 2,808.8 million at 31 January 2016. Consolidated equity totalled DKK 1,273.9 million, and the solvency ratio stood at 43.5 %.
Breakdown by segment:
| DKKm | Property development | Asset management | Unallocated |
| Profit/loss | |||
| Profit/loss before tax | 3.0 | -7.2 | -5.1 |
| Balance sheet | |||
| Development projects | 769.8 | - | - |
| Completed properties under asset management | - | 1,174.3 | - |
| Other asset management projects | - | 130.2 | - |
| Other assets | 474.3 | 295.1 | 81.9 |
| Total assets | 1,244.1 | 1,599.6 | 81.9 |
| Tied-up equity | 637.7 | 569.8 | 66.4 |
Outlook for 2016/17
Management still expects consolidated results before tax for 2016/17 to total DKK 10-30 million.
This profit estimate is based on the expectation that a number of ongoing small and medium-sized projects will be executed before the end of the current financial year. TK Development is recording good progress on the individual projects. The time horizon for the projects means that the majority of them are expected to be completed, handed over to the investor and thus recognized in income in Q4 2016/17. The Group's most significant development projects are not expected to contribute to consolidated results until subsequent financial years.
Property development
The results for this business area amounted to DKK 3.0 million before tax in H1 2016/17. At 31 July 2016 the balance sheet total came to DKK 1,244.1 million, and the equity tied up represented DKK 637.7 million.
In H1 2016/17 TK Development sold a superstore of about 2,150 m² in Rødekro and a plot of land, and also generated fee income on several projects.
Moreover, TK Development has entered into agreements for the sale of several projects that will impact results positively in Q3 2016/17. These sales underpin Management's profit estimate for the 2016/17 financial year.
Major development projects:
- Construction of the new shopping centre, BROEN Shopping, in Esbjerg, Denmark, is progressing according to plan, and the opening is scheduled for spring 2017. The current occupancy rate is 75 % of the premises.
- After problems caused by damage to a neighbouring property in connection with the startup of construction of the Strædet project in Køge, Denmark, which resulted in considerably delay, progress is now being made, and construction is still scheduled for completion in autumn 2017. The retail project, of which 74 % has been let, has been sold conditionally to the Finnish company Citycon together with the parking facilities. The sale to Citycon is still expected to have a significant positive impact on results in the 2017/18 financial year when the completed project is handed over to the investor.
- Construction of the Amerika Have residential project in Copenhagen, Denmark, is progressing as planned. The last apartments have recently been put up for sale, and in total 65 apartments out of 121 have been sold.
- The second phase of the residential project in Bielany in Warsaw, Poland, has been completed. 97 % of the units have been sold, and the handover of the individual units to the buyers is ongoing.
- In June 2016 construction started on the third phase of the Bielany residential project in Warsaw, Poland. The pre-completion sale is progressing satisfactorily, and 19 % of the residential units have been sold.
- In Arninge in Stockholm, Sweden, the municipality has chosen TK Development as its preferred partner for the development of a project of about 60,000 m², primarily retail stores and possibly offices as well.
The projects in the pipeline are moving ahead at a good pace due to robust tenant and investor interest. Specifically, negotiations about the sale of several projects are ongoing, underpinning the Group's future earnings expectations.
The Group's portfolio of land has been reduced by a further DKK 84 million since 31 January 2016, amounting to DKK 477 million at 31 July 2016.
As from the 2017/18 financial year, the return on equity from the property development business area is expected to amount to 15-20 % p.a. before tax.
Asset management
The results for this business area amounted to DKK -7.2 million before tax in H1 2016/17. At 31 July 2016 the balance sheet total came to DKK 1,599.6 million, and the equity tied up represented DKK 569.8 million.
The portfolio of completed properties in this business area consists of 156,200 m², amounting to DKK 1,586.9 million at 31 July 2016. This amount includes joint venture projects. The annual net rent from the current leases corresponds to a return on the carrying amount of 4.5 %. Based on full occupancy, the return on the carrying amount is expected to reach 6.1 %.
Detailed development and operating plans have been drafted for each property, and good progress is being made in their realization in a number of areas.
The expectations mentioned in this Interim Report, including earnings expectations, are naturally subject to risks and uncertainties, which may result in deviations from the expected results. Expectations may be impacted by factors generally applicable to the sector as well as the factors referred to in the Group's 2015/16 Annual Report under Risk issues and note 2 to the consolidated financial statements, Accounting estimates and judgments, including the valuation of the Group's project portfolio.
Further information is available from Frede Clausen, President and CEO, on tel. +45 8896 1010.
Vedhæftede filer: