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TK Development Interim Report for the six-mon nth period ending 31 July 2010 29 September 2010

TKD MISSION The mission of the TK Development Group is to create value through the development of real property.

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Content 1. First six months 2010/11 ƒ ƒ ƒ ƒ

Financial highlights and key ratios Project events Forward funding Net interest-bearing debt

2. Project portfolio ƒ ƒ ƒ

Result of consolidation Satisfactory letting Projects

3 New project opportunities 3. ƒ ƒ ƒ

Market situation Focus on new opportunities Capital increase

4. Outlook 2010/11

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TK’s TK s present position Fundamental price adjustments of the project parameters: Land, construction, rent levels and required rate of return

Pric ce adjustments completed Opportunity to generate a normal profit on new projects

Profit on existing projects under pressure

1 2008/09

2010/11 1

EXISTING PORTFOLIO

Focus on consolidation and progress

H1 EXISTING PORTFOLIO

2

Continued focus on progress

NEW PROJECT OPPORTUNITIES

3

3

Capitall increase of DKK19 98.3 million

Focus on exploiting project opportunities in present market


1. H1 2010/11 Sillebroen, Frederikssund, Denmark

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H1 2010/11 at a glance

ƒ ƒ ƒ ƒ

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Profit of DKK 6.2 million after tax ag gainst DKK 68.2 million in the first half of 2009/10. Consolidated equity totalled DKK 1,6 610.3 million against DKK 1,593.4 million at 31 January 2010. Total balance of DKK 4,586.9 million n against DKK 4,377.3 million at 31 January 2010. Solvency ratio of 35.1 %.


Financial highlights and key ratios

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(DKKm)

2007/08

2008/09

2009/10

H1 2010/11

Financial highlights: Net revenue Gross profit/loss Profit/loss from ordinary activities before financing Financing, etc. Profit/loss before tax Consolidated profit/loss Shareholders’ share of profit/loss for the period Shareholders

2,586.8 553.8 386.8 -41.7 345.4 271.9 249 5 249.5

1,052.4 375.0 201.7 -33.4 168.0 155.2 155 2 155.2

1,369.9 200.5 57.5 -17.9 39.4 25.4 25 4 25.4

206.9 106.0 40.4 -32.9 8.4 6.2 62 6.2

Balance sheet total Total project portfolio Equity excl. minority interests Equity

4,070.9 1,998.3 1,439.9 1 533 8 1,533.8

3,816.1 2,541.3 1,506.0 1 506 0 1,506.0

4,377.3 3,253.5 1,593.4 1 593 4 1,593.4

4,586.9 3,439.9 1,610.3 1 610 3 1,610.3

Cash flows from operating activities Net interest-bearing debt, end of period

142.6 1,094.9

-331.7 1,509.5

-582.8 2,178.9

-181.8 2,369.6

Key ratios: Returns of equity (ROE) Earnings before interest and tax (EBIT margin) Solvency ratio (based on equity) Price/book value

19.2 % 15.0 % 37.7 % 1.2

10.5 % 19.2 % 39.5 % 0.4

1.6 % 4.2 % 36.4 % 0.5

0.8 % 19.5 % 35.1 % 0.4


Project events H1 2010/11

Sillebroen opened • 25,000 25 000 m2 shopping centre • Situated in Frederikssund, Denmark • Occupancy rate 92 % • 1.8 million customers during six months

March

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Project events H1 2010/11

Sillebroen opened • 25,000 25 000 m2 shopping centre • Situated in Frederikssund, Denmark • Occupancy rate 92 % • 1.8 million customers during six months

March

Retail park opened • 10,900 m2 retail park • Situated in Uppsala, Sweden • Occupancy rate 100 % • Handed over to investor in April

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Project events H1 2010/11

Sillebroen opened m2

• 25,000 25 000 shopping centre • Situated in Frederikssund, Denmark • Occupancy rate 92 % • 1.8 million customers during six months

March

Retail park opened • 10,900 m2 retail park • Situated in Uppsala, Sweden • Occupancy rate 100 % • Handed over to investor in April

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Fashion Arena II I started • Phase II consists of 7,200 7 m2 • Outlet centre in Prague, Czech Republic • Occupancy rate 47 % • Total occupancy rate is 82 % • Phase II opens on 14 4 October 2010

April


Project events H1 2010/11

Sillebroen opened m2

• 25,000 25 000 shopping centre • Situated in Frederikssund, Denmark • Occupancy rate 92 % • 1.8 million customers during six months

March

Retail park opened m2

• 10,900 retail park • Situated in Uppsala, Sweden • Occupancy rate 100 % • Handed over to investor in April

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Fashion Arena II I started • Phase II consists of 7,200 7 200 m2 • Outlet centre in Prague, Czech Republic • Occupancy rate 47 % • Total occupancy rate is 82 % • Phase II opens on 14 4 October 2010

April

Office building started s • 3,500 m2 in Targówekk, Warsaw, Poland • Sold based on forwarrd funding • Scheduled S h d l d ffor comple letion ti in i mid-2011 id 2011


Project events H1 2010/11

Sillebroen opened

Fashion Arena II I started

• 25,000 25 000 m2 shopping h i centre t • Situated in Frederikssund, Denmark • Occupancy rate 92 % • 1.8 million customers during six months

• Phase II consists of 7,200 7 200 m2 • Outlet centre in Prague, Czech Republic • Occupancy rate 47 % • Total occupancy rate is 82 % • Phase II opens on 14 4 October 2010

March

April

August

Project takeover + sale of two retail parks

Retail park opened

Office building started s

• 10,900 m2 retail park • Situated in Uppsala, Sweden • Occupancy rate 100 % • Handed over to investor in April

• 3,500 m2 in Targówekk, Warsaw, Poland • Sold based on forwarrd funding • 5,400 m2 property project in Århus, Denmark • Scheduled S h d l d ffor comple letion ti in i mid-2011 id 2011 • To be carried out with Nordica Real Estate A/S /S • Nordica owns 80 % of the project company • TK owns 20 % of the project company • TK has sold two completed retail parks (3,900 m2) to the jointly owned project company

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Forward funding DKKm

Forward funding 4000

Net project portfolio

Primarily due d to investments in: • Sillebroen, Frederikssund, Denmark

Forward funding

• Galeria Sandecja, Nowy Sącz, Poland • Galeria Tarno ovia, Tarnów, Poland 3,440 3,250

3000 2,541

2000

2,224 1,945

1,449

1000

832 638

0 12

31.01.06

943

590

31.01.07

31.01.08

31.01.09

351

344

31.01.10

31.07.10


Forward funding DKKm

Forward funding 4000

Net project portfolio

Primarily due d to investments in: • Sillebroen, Frederikssund, Denmark

Forward funding

• Galeria Sandecja, Nowy Sącz, Poland • Galeria Tarno ovia, Tarnów, Poland 3,440 3,250

3000 2,541

2000

2,224 1,945

1,449

1000

832 638

0 13

31.01.06

943

590

31.01.07

31.01.08

31.01.09

351

344

31.01.10

31.07.10


Net interest-bearing interest bearing debtt

DKKm

Net interest-bearing deb bt

4000 3,603.7

3000 2,577.9 2,369.6 2,178.9

2000 1,509.5 5

1000

1,125.1

1,094.9

01.07

01.08

0 01.05

14

01.06

01.09 9

01.10

07.10


2. PORTFOLIO Fashion Arena, Prague, Czech Republic

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TK’s TK s present position Fundamental price adjustments of the project parameters: Land, construction, rent levels and required rate of return

Prrice adjustments completed

Profit on existing g projects p j under pressure

2008/09

pp y to generate g a normal p profit on Opportunity new projects

2010/11 1

EXISTING PORTFOLIO

Focus on consolidation and progress

H1 EXISTING PORTFOLIO

2

Continued focus on progress

NEW PROJECT OPPORTUNITIES

Focus on exploiting project opportunities in present market

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Capital increase of DKK198.3 million


Result of consolidation Projects not sold in the portfolio (bo ook value)

Not sold, 31.07.10 = DKKm 3,419

Not sold, 31.01.09 = DKKm 2,496

22 % 45 %

Not initiated

Completed

33 %

In progress

17

Not 34 initiated

%

60 % Completed


TK’s TK s project portfolio ((DKKm))

31.01. 3 0 08

31.01.09 3 0 09

31.01.10 3 0 0

31.07.10 3 0 0

Completed

0

0

0

0

p g In progress

29

4

2

10

Not initiated

52

41

12

11

Total

81

45

14

21

Completed

4 465

565

1,352

2,059

In progress

1 186

813

720

204

Not initiated

12 1,2 213

1 118 1,118

1 164 1,164

1 156 1,156

Total

1,8 864

2,496

3,236

3,419

Net project portfolio

1,9 945

2,541

3,250

3,440

8 832

943

351

344

2,7 777

3,484

3,601

3,784

1% 91.1

95.4 %

96.2 %

94.2 %

Sold

Remaining

Forward funding Gross project portfolio Forward funding in % of gross carrying amount of sold p projects j

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Satisfactory letting

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H1 09/10

09/10

Sillebroen, Frederikssund, Denmark

77 %

91 %

92 %

Premier Outlets Center, Ringsted, Denmark

65 %

67 %

60 %

Enebyängen, ebyä ge , Danderyd, a de yd, Sweden S ede

99 %

99 %

100 00 %

Galeria Sandecja, Nowy Sącz, Poland

98 %

100 %

100 %

Galeria Tarnovia, Tarnów, Poland

97 %

100 %

100 %

Fashion Arena I, Prague, Czech Republic

92 %

94 %

96 %

Fashion Arena II, Prague, Czech Republic

---

---

47 %

Futurum Hradec Králové, Králové Czech Republic

64 %

77 %

H1 10/11

77 %


Sold projects (31.07.10) Sold projects = DKK 21 million (forward funded = DKK 344 million)

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In progress

Not initiated

Enebyängen

Stocznia

Danderyd Sweden Danderyd,

Gdansk Poland Gdansk,

Retail park 14,500 m2

Mix 61,000 m2

Tivoli Residential Park

Jastrzębie

Warsaw Poland Warsaw,

Jastrzębie Poland Jastrzębie,

Office 3,500 m2

Shopping centre 43,300 m2


Projects not sold (31.07.1 10) Completed = DKK 2,059 millio on Northern Europe Sillebroen

Kristian nstad

Aabenraa

Frederikssund,, Denmark Ringsted, g , Denmark

Premier Outlets Center

Kristia anstad,, Sweden

Aabenraa,, Denmark

Shopping centre 28,000 m2

Retail park 4,500 m2

Retail park 4,200 m2

Galeria Sandecja

Fashion n Arena

Most Retail Park

Tarnów, Poland

Nowy Sącz, Poland

Prague, Czech Rep.

Most, Czech Rep.

Shopping centre 16,500 m2

Shopping centre 17,300 m2

Outlet centre 17,800 0 m2

Retail park 6,400 m2

Outlet centre 13,200 m2

C t l Europe Central E Galeria Tarnovia

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Projects not sold (31.07.1 10) In progress = DKK 204 million n Northern Europe Amerika Plads

Copenhagen , Denmark

Car park 32,000 m2

Central Europe Fashion Arena II

Prague, Czech Republic

Outlet centre 7 200 m2 7,200

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Projects not sold (31.07.1 10) Not initiated = DKK 1,156 milliion Selected projects in Northern Europ pe Esbjerg

Amerika Plads (lot A og C)

Stuhrs Brygge

Østre Teglgade

Esbjerg, Denmark

Copenhagen, Denmark

Aalborg, Denmark

Copenhagen, Denmark Gothenburg, Sweden

Shopping Sh i centre t 28,000 m2

Office/residential Offi / id ti l 24,800 m2

Mix 80,000 m2

Office/residential Offi / id ti l 24,000 m2

Handelskvarteret Kulan

DomusPro

Vilnius, Lithuania

Shopping Sh i centre t 45,000 m2

Retail R t il park k 13,600 m2

Teplice

Prešov

S l t d projects Selected j t in i Central C t l Europe E e

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Residential Park, Bielany

Bytom Retail Park

Futurum Hradec Králové

Frýdek Místek

Warsaw, Poland

Bytom, Poland

Hradec Králové, CZ Z

Frýdek Místek, CZ

Residential/service 57,300 m2

Retail park 25,800 m2

Shopping centre 9,950 m2

Shopping centre 14,800 m2

Teplice, Czech Rep.

Prešov, Slovakia

Retail park 7,600 m2

Retail park 9,300 m2


3. NEW 3 OPPORTUNITIES Shopping centre, Esbjerg, Denmark

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TK’s TK s present position Fundamental price adjustments of the project parameters: Land, construction, rent levels and required rate of return

Price adjustments completed Opportunity to generate a normal profit on new projects

Profit on existing projects under pressure

2008/09

2010/11 1

EXISTING PORTFOLIO

H1 EXISTING PORTFOLIO

Continued focus on progress

Focus on consolidation and progress

NEW PROJECT OPPORTUNITIES

3

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Capital increase of DKK198.3 million

Focus on exploiting project opportunities in present market


Macroeconomic forecastt 2009/2010e Finland Sweden · Private consumption -0.8 % / 3.0 % · GDP -5.1 % / 4.2 %

· Private consumption -1.9 % / 2.4 % · GDP -8.0 % / 3.5 %

Latvia · Private consumption -22.2 % / -3.6 % · GDP -18.0 % / -1.8 %

Denmark · Private consumption -4.6 % / 3.2 % · GDP -4 7 % / 1.4 -4.7 14%

Lithuania · Private consumption · GDP

-16.8 % / -3.5 % -14.9 % / 0.9 %

Czech Republic · Private consumption -0.1 % / 1.5 % · GDP -4.0 % / 2.2 %

Poland · Private consumption 2.3 % / 1.8 % · GDP 1.8 % / 3.4 %

Slovakia* · Private consumption -0.7 % / 1.5 % · GDP -4.7 % / 3.6 % Sources: Nordea Bank, Economic Outlook, September 2010 *) OECD, Economic Outlook NO. 87, May 2010

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Position in relation to customers and suppliers TK DEVELOPMENT ONG IN STRO POSITIO ON

2007 SU SUPPLIERS S IN STRONG POSITION (contractors and land owners)

TK DEVELOPMENT IN STRONG POSITION

Today

CUSTOM MERS IN STRONG POSITION P (investors s and tenentts)

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TKD’s TKD s project portfolio ((1,000 ,000 m2)

31.01.07 3 0 0

31.0 3 0 01. 08

31.01.09 3 0 09

31.01.10 3 0 0

31.07.10 3 0 0

Sold

351

264

183

146

135

R Remaining i i

810

948

777

811

8 1 851

1,161

1,212

960

957

Sold

135

83

62

32

22

Remaining

456

573

479

478

511

T t l Total

591

656

541

510

533

S ld Sold

216

181

121

114

113

Remaining

338

361

298

333

340

Total

554

542

419

447

453

Group

Total

*

*

986

TKD N Nordeuropa d

Euro Mall Holding

* Excluding TK Development, Parent Company.

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*


Potential in the portfolio Projects not sold (m2) Not sold, 31.01.09 = 777,000 m2

Not 82 % initiated

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Not sold, 31.07.10 = 851,000 m2

Not 82 % initiated


Potential in the portfolio Projects not sold (m2) Not sold, 31.07.10 = 851,000 m2

Not 82 % initiated

Not 82 % initiated

Projects not sold (book value) Not sold, 31.01.09

Not sold, 31.07.10

= DKKm 2,496

= DKKm 3,419

22 % 45 %

Not initiated

Completed

33 %

34 %

Not initiated

Completed

In progress

30

60 %

In progress


Today’s Today s market holds opportunities The present market conditions hold d project opportunities that will generate t a normall profit: fit ƒ Development of projects with a higher anticipated return than offered by most of the existing projects. ƒ The Group would like to secure the rights for a number of specific projects at the current price level.

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SUPPLIERS

CUSTOMERS

Prices in most of the Group’s markets are found to have reached the bottom.

Customers are showing interest in attractively located projects.

LAND AND CONSTRUCTION

TENANTS AND INVESTORS

• The economic downturn has caused land and construction prices to drop • Prices fluctuate depending on location and use

• Tenants are focusing increasingly on location • Rent levels in the retail segment are expected to be stable in the period ahead • The present investment climate is marked by cautious optimism and a higher propensity to invest


Capital increase completted Gross proceeds of DKK 210.3 millio on allow proactive use of earnings i potential t ti l offered ff d by b new w project j t opportunities: t iti ƒ ƒ ƒ ƒ

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The capital increase was carried outt in the form of a rights issue. For every 2 shares held, the shareho older was entitled to subscribe for 1 new share at a price of DKK 15 5. The capital increase was fully subsc cribed for and implemented in August 2010. Resulted in net proceeds of DKK 198 8.3 million.


4. OUTLOOK Galeria Tarnovia, Tarn贸w, Poland

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Outlook 2010/11

Based on Management’s market expectations in the current financial year, the sales already completed and the potential o of the existing project portfolio, portfolio with several completed projects being ready for sa ale, Management still expects to generate a profit after tax of about DKK 100 millio on.

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/H1_2010_11_UK  

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