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Interim Report Q1-Q3 2011/12 Company announcement no. 19/2011, 22 December 2011, TK Development A/S, CVR no. 24256782

Galeria Sandecja, Nowy SÄ…cz, Poland


TABLE OF CONTENTS

Summary

3

Consolidated financial highlights and key ratios

4

TK Development in outline

5

Financial review

5

Handed-over projects

7

Sale of Euro Mall Centre Management

7

Progress in the Group’s projects

7

Incentive schemes

8

Post-balance sheet events

8

Market conditions

8

Outlook

9

The Group’s project portfolio Project portfolio status

TKD Nordeuropa

10 10 11

Project portfolio

11

Project outline

12

Euro Mall Holding

14

Project portfolio

14

Project outline

15

TK Development, remaining group activities

17

Investment properties

18

Other matters

19

Statement by the Supervisory and Executive Boards on the Interim Report 20 Consolidated financial statements

21

Company information

30

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SUMMARY

During the first nine months of the 2011/12 financial year, TK Development recorded a profit after tax of DKK 44.3 million against DKK 10.2 million in the same period the year before.

In total, the Group’s completed, cash-flow-generating projects and its investment properties amount to DKK 2,440 million. The Group’s net interest-bearing debt amounts to DKK 2,154 million.

Consolidated equity totalled DKK 1,884.9 million at 31 October 2011, corresponding to a solvency ratio of 41.7 %.

At 31 October 2011, the Group’s project portfolio comprised 974,000 m² (31 January 2011: 933,000 m²).

In the first quarter of 2011/12, the Group entered into an agreement for the sale of its retail park in Kristianstad, Sweden, to a Swedish investor. The total project comprises about 6,200 m², including the existing building of about 4,500 m², which was handed over to the investor in April 2011.

The continued uncertainty on the international financial markets has led to consistently long decision-making processes among financing sources, tenants and investors alike. Against this background, the Group has postponed the expected construction start dates for several projects.

In the second quarter of 2011/12, the Group sold its stake in Euro Mall Centre Management to the US Group CB Richard Ellis.

Construction started on a 10,000 m² extension to the Group’s Czech investment property, the Futurum Hradec Králové shopping centre, in January 2011 and is progressing as planned. The opening is scheduled for spring 2012. The extension has an occupancy rate of currently 96 %.

The profit after tax for 2011/12 is still expected to amount to about DKK 100 million, corresponding to the previously announced profit estimate. Continued unrest on the international financial markets, which is lengthening the sales process for the Group’s completed projects, makes this profit estimate subject to increased uncertainty.

In Poland, the construction of 5,600 m² of office space in the Tivoli Residential Park, Warsaw, was completed in August 2011. About 3,500 m² of the total office premises has been sold to a user, and sales agreements have been concluded for 93 % of the remaining 2,100 m². The units were handed over to the buyers in Q3 2011/12.

Construction of the first phase of the Group’s project in Bielany, Poland, commenced in mid-2011. The total project area comprises about 56,200 m², primarily housing, consisting of 900-1,000 units, with 136 units to be built in the first phase.

The Group’s letting situation remains satisfactory, and its completed shopping centres continue to perform well with a satisfactory influx of customers.

The Group’s total project portfolio amounted to DKK 3,387 million at 31 October 2011, of which DKK 2,075 million is attributable to projects that have been completed and thus generate cash flow. The annual net rent from the current leases amounts to DKK 144 million, equal to a return on cost of about 7 %. Based on full occupancy, the return on cost is expected to reach about 7.7 %. Negotiations for the sale of several of these projects are ongoing.

Further information is available from Frede Clausen, President and CEO, on tel. +45 8896 1010. The expectations for future developments presented in this announcement, including earnings expectations, are naturally subject to risks and uncertainties and may be affected by various factors, such as global economic conditions and other significant issues, including credit-market, interestrate and foreign-exchange developments. Reference is also made to the section “Risk issues” in the Group’s 2010/11 Annual Report.

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CONSOLIDATED FINANCIAL HIGHLIGHTS AND KEY RATIOS

Q1-Q3 2011/12

Q1-Q3 2010/11

Full year 2010/11

Financial highlights Net revenue Value adjustment, investment properties, net Gross profit/loss Profit/loss before financing (EBIT) Financing, etc. Profit/loss before tax Profit/loss for the period Shareholders’ share of profit/loss for the period

272.6 26.0 169.0 74.4 -67.0 38.8 44.3 44.3

326.8 1.1 162.7 65.6 -50.4 16.6 10.2 10.2

576.9 30.0 256.0 127.2 -53.2 74.2 73.6 73.6

Balance sheet total Property, plant and equipment of which investment properties Total project portfolio of which projects in progress or completed of which prepayments received from customers Contract work in progress Equity

4,521.0 429.9 364.7 3,386.6 3,386.6 0.0 0.0 1,884.9

4,503.3 364.4 356.9 3,396.6 3,396.6 0.0 9.7 1,818.7

4,622.0 394.2 358.6 3,424.7 3,424.7 0.0 12.2 1,866.0

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

19.1 2,154.4

-138.1 2,138.2

-182.7 2,170.2

Key ratios Return on equity (ROE) *) EBIT margin Solvency ratio (based on equity) Equity value in DKK per share Price/Book Value (P/BV)

3.1 % 27.3 % 41.7 % 44.8 0.3

0.8 % 20.1 % 40.4 % 43.2 0.6

4.3 % 22.1 % 40.4 % 44.4 0.5

Number of shares, end of period

42,065,715

42,065,715

42,065,715

Average number of shares, adjusted Earnings per share (EPS) in DKK Dividend in DKK per share Listed price in DKK per share

42,065,715 1.1 0.0 15

32,746,192 0.3 0.0 25

35,095,222 2.1 0.0 23

3.1 % 41.7 % 44.8 1.1

0.8 % 40.4 % 43.2 0.3

4.3 % 40.4 % 44.4 2.1

DKKm

Key ratios adjusted for warrants Return on equity (ROE) *) Solvency ratio (based on equity) Equity value in DKK per share Diluted earnings per share (EPS-D) in DKK

The calculation of key ratios is based on the 2010 guidelines issued by the Danish Society of Financial Analysts. The solvency ratio has been calculated on the basis of equity at end of period/total assets. *) Annualized.

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TK DEVELOPMENT IN OUTLINE

Financial review Accounting policies The Interim Report is presented in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Danish disclosure requirements for interim reports prepared by listed companies. The Interim Report has been presented in accordance with the financial reporting standards (IFRS/IAS) and IFRIC interpretations applicable for financial years beginning at 1 February 2011. The implementation of new and amended financial reporting standards and interpretations has not impacted recognition and measurement. Thus, the new standards and interpretations have no effect on the earnings per share and the diluted earnings per share. With the exception of the changes mentioned above, the accounting policies have been applied consistently with those presented in the Annual Report for 2010/11. Reference is made to the Group’s Annual Report for 2010/11 for a complete description of the Group’s accounting policies. No interim financial statements have been prepared for the Parent Company. The Interim Report is presented in DKK, which is the Parent Company’s functional currency. The Interim Report has not been audited or reviewed by the Company’s auditors.

Accounting estimates and assessments The most significant accounting estimates and assessments made by Management in applying the Group’s accounting policies, and the associated, estimated material uncertainty, are the same as those made in the preparation of the Annual Report for 2010/11. For a more detailed description, reference is therefore made to the Group’s 2010/11 Annual Report.

Income statement Revenue The revenue for the first nine months of 2011/12 totalled DKK 272.6 million against DKK 326.8 million in the corresponding period the year before. Gross margin The gross margin amounted to DKK 169.0 million against DKK 162.7 million in the first nine months of 2010/11. The gross margin consists mainly of profits on handed-over

projects, the operation of the Group’s completed projects and the operation and value adjustment of the Group’s investment properties. The value adjustment of the Group’s investment properties amounts to DKK 26.0 million, of which DKK 6.6 million relates to the Czech investment property, Futurum Hradec Králové, and DKK 19.4 million relates to the ongoing extension of the same property. The total value adjustment for the first nine months of 2010/11 amounted to DKK 1.1 million. Staff costs and other external expenses Staff costs and other external expenses amounted to DKK 92.5 million, compared to DKK 94.7 million in the same period of 2010/11. Staff costs amounted to DKK 66.7 million, against DKK 67.7 million in the same period the year before. The number of employees in the Group totalled 126 at 31 October 2011. Other external expenses totalled DKK 25.8 million against DKK 27.0 million in the same period the year before. Income from investments in associates Income from investments in associates amounted to DKK 31.4 million in the first nine months of 2011/12 against DKK 1.4 million in the same period of 2010/11. The bulk of this income derives from the gain on the Group’s sale of its stake in Euro Mall Centre Management; see below. Financing In the period under review, TK Development recorded net financing expenses of DKK 67.0 million, up DKK 16.6 million in the same period of 2010/11. This increase in financing expenses is a natural consequence of the Group opening the Sillebroen shopping centre, Frederikssund, Denmark, in March 2010, as this centre, besides yielding rental income that is recognized in gross profit, also involves financing expenses.

Balance sheet The Group’s balance sheet total amounted to DKK 4,521.0 million, a decline of DKK 101.0 million, or 2.2 %, compared to 31 January 2011. Goodwill Goodwill is unchanged compared to 31 January 2011, amounting to DKK 33.3 million at 31 October 2011. Goodwill relates to the business unit Euro Mall Holding. There are no indications of any need to impair the value of goodwill.

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Investment properties and investment properties under construction

result of the handover of and investment in projects.

The valuation of the Group’s investment properties and investment properties under construction is made on the basis of a discounted cash-flow model, where future cash flows are discounted to net present value on the basis of a given return. The valuation at 31 October 2011 is based on an unchanged required rate of return compared to 31 January 2011, amounting to 6.5 % for the German investment properties and 7.0 % for the Czech investment property, including the extension in progress.

Total prepayments based on forward-funding agreements amounted to DKK 272.6 million against DKK 284.1 million at 31 January 2011. Forward funding has been reduced since 31 January 2011 as a consequence of the handover of projects based on sales agreements with forward funding. At 31 October 2011, forward funding represented 91.0 % of the gross carrying amount of sold projects.

The valuation of the Group’s investment property under construction has also been based on a specific assessment of project progress at the reporting date, including the risks attaching to project completion. The total value of the Group’s investment properties amounted to DKK 364.7 million against DKK 358.6 million at 31 January 2011. Of the value at 31 October 2011, DKK 197.2 million relates to the Group’s German investment properties and DKK 167.5 million relates to the Group’s Czech investment property. The total value of the Group’s investment properties under construction amounted to DKK 60.0 million against DKK 28.8 million at 31 January 2011. Deferred tax assets Deferred tax assets were recorded at DKK 298.0 million in the balance sheet against DKK 287.2 million at 31 January 2011. 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 has been based on specific projects in the project portfolio with a longer time horizon than three years as well as various project opportunities. These valuations are subject to some uncertainty, for which reason a provision has 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 terms 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 October 2011, which could have a material adverse effect on the Group’s results of operations and financial position. Project portfolio The total project portfolio was reduced by DKK 38.1 million compared to 31 January 2011, amounting to DKK 3,386.6 million at 31 October 2011. The reduction is a combined

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Receivables Total receivables amounted to DKK 259.2 million, a decrease of DKK 51.5 million from 31 January 2011, which is primarily attributable to trade receivables. Cash resources The Group’s total cash resources came to DKK 200.4 million against DKK 231.0 million at 31 January 2011. Equity The Group’s equity came to DKK 1,884.9 million against DKK 1,866.0 million at 31 January 2011. Since 31 January 2011, equity has been affected by the profit recorded for the period and negative market-value adjustments after tax of DKK 27.9 million related to foreign subsidiaries. The solvency ratio amounts to 41.7 % against 40.4 % at 31 January 2011. Non-current liabilities The Group’s non-current liabilities represented DKK 208.2 million against DKK 212.6 million at 31 January 2011. Current liabilities The Group’s current liabilities represented DKK 2,427.9 million against DKK 2,543.4 million at 31 January 2011. The reduction amounts to DKK 115.5 million, of which DKK 76.2 million relates to payables to credit institutions. Financial liabilities are offset in the usual manner against trade receivables and tied-up cash and cash equivalents, to the extent that the Company has a right of setoff and also intends or is contractually obliged to realize assets and liabilities at the same time. At 31 October 2011, no setoffs were made against receivables or tied-up cash. The Group has entered into project-financing agreements with various banks in Denmark and abroad. Project credits are usually granted with different terms to maturity, depending on the specific project. Of the total project credits outstanding at 31 January 2011, credits worth DKK 343.7


million are due to mature in the 2011/12 financial year. In the period since 31 January 2011, the majority of these credits have been prolonged, and only project credits of DKK 48.1 million are awaiting prolongation. Management expects these project credits to be prolonged.

Cash flow statement The Group’s cash flows from operating activities were positive in the amount of DKK 19.1 million (first nine months of 2010/11: DKK -138.1 million), due in part to a net reduction of funds tied up in projects, receivables, security deposits and payables. Cash flows from investing activities were positive in the amount of DKK 15.3 million (first nine months of 2010/11: DKK -1.2 million), a combined result of further investment in the ongoing extension of the Group’s Czech investment property and the sale of its stake in Euro Mall Centre Management to the US group CB Richard Ellis in June 2011. The cash flows from financing activities for the period were negative in the amount of DKK 51.3 million (first nine months of 2010/11: DKK 128.9 million), in part due to the repayment of debt in connection with project sales.

Handed-over projects In the first nine months of 2011/12, the Group handed over projects of about 20,600 m², of which 9,500 m² was handed over in Q3 2011/12. The following projects were handed over: Kofoten, Kristianstad, Sweden This project consists of a 6,200 m² retail park, including the existing building of 4,500 m², which has been fully let. The extension, which has also been fully let, comprises about 1,700 m², and construction started in autumn 2011. In the first quarter of 2011/12, the Group entered into an agreement with a Swedish investor regarding the sale of the entire project, and the existing building was handed over to the investor in April 2011. Sale of land, Hadsundvej, Aalborg, Denmark In Q1 2011/12, the Group transferred residential development rights for about 6,600 m² of land at Hadsundvej, Aalborg, Denmark, to a private investor. Tivoli Residential Park, service/office space, Targówek, Warsaw, Poland In Poland, the construction of 5,600 m² of office space in the Tivoli Residential Park, Warsaw, was completed in August 2011. Of the total project premises, about 3,500 m² has been sold to a user based on forward funding, and 93 % of the remaining premises of about 2,100 m² has also

been sold. The units were handed over to the buyers in Q3 2011/12. In addition, a plot of land was sold in Poland in Q3 2011/12. The sale generated a satisfactory profit, which has been recognized in Q3 2011/12.

Sale of Euro Mall Centre Management In the second quarter of 2011/12, the Group sold its stake in Euro Mall Centre Management to the US Group CB Richard Ellis. The selling price has been fixed at an amount payable up front, with a four-year earn-out period based on the earnings made by the company in the preceding three years.

Progress in the Group’s projects TK Development focuses on selling its completed projects and executing the remaining projects in its portfolio, as well as on securing satisfactory pre-construction letting or sales. The Group also focuses on new project opportunities. This ensures continuous positive progress as well as further optimization of individual projects. The resulting strong project portfolio enables the Group to meet the challenges posed by the current market conditions. The Group’s total project portfolio amounted to DKK 3,387 million (31 January 2011: DKK 3,425 million) at 31 October 2011, of which DKK 2,075 million (31 January 2011: DKK 2,107 million) is attributable to projects that have been completed and thus generate cash flow. The operation of these completed projects, which largely consist of shopping centres, is generally proceeding satisfactorily. The annual net rent from the current leases amounts to DKK 144 million (31 January 2011: DKK 146 million), equal to a return on cost of about 7 %. Based on full occupancy, the return on cost is expected to reach 7.7 %. Negotiations for the sale of several of these projects are ongoing. In total, the Group’s completed, cash-flow-generating projects and its investment properties amount to DKK 2,440 million (31 January 2011: DKK 2,466 million). The Group’s net interest-bearing debt amounts to DKK 2,154 million (31 January 2011: DKK 2,170 million). Completed projects The Group’s Sillebroen shopping centre in Frederikssund, Denmark, which opened on 25 March 2010, has a current occupancy rate of 93 %, and negotiations with tenants for the remaining premises are ongoing. The shopping centre has a satisfactory influx of customers that meets expectations and is also performing satisfactorily.

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 7/30


The Group’s Galeria Sandecja shopping centre in Nowy Sącz, Poland, which opened in October 2009, continues to perform well with a satisfactory influx of customers. The centre has a current occupancy rate of 97 %. The Group’s Galeria Tarnovia shopping centre in Tarnów, Poland, which opened in November 2009, has a current occupancy rate of 96 %. The shopping centre is still performing well and has a satisfactory influx of customers. The Group’s Fashion Arena Outlet Center, Prague, the Czech Republic, of about 25,000 m² continues to record satisfactory performance and customer influx. The current occupancy rate is 90 % for the overall project. At present, negotiations with several local and international tenants for the remaining vacant premises are ongoing. Projects in progress/projects not initiated In Esbjerg, Denmark, TK Development has an option for a plot earmarked for a shopping centre project, BROEN, of about 28,000 m², to be built on the railway land at Esbjerg station. The centre is expected to comprise about 70 retail stores, and lease agreements have recently been concluded with Bahne, Panduro Hobby and Kong Kaffe. In addition, premises have been let to such tenants as H&M, Kvickly, Imerco, Skoringen and Gina Tricot, and the current occupancy rate is 66 %. Management has decided to postpone construction startup from autumn 2011 to spring 2012, with the opening now scheduled for spring 2014. The postponement is based in part on Management’s wish to achieve a higher occupancy rate before initiating construction due to the continued unrest on international, financial markets. In the Swedish town of Gävle, TK Development has an option to buy a plot of land for developing a retail park of about 24,000 m². The planned project can be accommodated within the existing local plan. It is possible to develop the contemplated project in phases, and the first phase comprises about 8,400 m². The current occupancy rate for the first phase is 93 %, and lease agreements have been concluded with Rusta, Jysk and Ö&B, among others. After the end of Q3 2011/12, TK Development exercised its option on the land and initiated the first phase of the project in December 2011. The opening is scheduled for autumn 2012. A building permit has been obtained for the first phase of the Group’s project in Bielany, Poland. The total project area comprises about 56,200 m², primarily housing, consisting of 900-1,000 units. The first phase consists of 136 units on which construction started in mid-2011, with completion scheduled for end-2012. The pre-completion

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sale of the units started in spring 2011. The residential units are expected to be sold as owner-occupied apartments to private users. In Moravia in the eastern part of the Czech Republic, TK Development has a long-term option to buy a plot of land for the purpose of building a Designer Outlet Village (factory outlet centre) of about 21,500 m². The project will be executed in phases, with the first to comprise about 11,700 m². The project is being discussed with potential tenants, who have shown a good amount of interest in the project, and the first lease agreements have been signed. Construction of the first phase is expected to start in autumn 2012, with the opening scheduled for autumn 2013. The Group’s retail projects on which construction is already ongoing or about to start are still attracting a good amount of interest from tenants. During the period under review, the Group also concluded lease agreements for several of these projects. The continued uncertainty on the international financial markets has led to consistently long decision-making processes among financing sources, tenants and investors alike; see under “Market conditions”. Against this background, the Group has postponed the expected construction start dates for several projects relative to the original estimates in the Interim Report for the first six months of 2011/12.

Incentive schemes At the Annual General Meeting on 24 May 2011, the Supervisory Board of TK Development was authorized to issue warrants for a total of up to nominally DKK 7,500,000 (500,000 shares of DKK 15 each) to the Executive Board and other executive staff members. On the same day, the Supervisory Board decided to exercise this authorization, and therefore 125,000 warrants have been granted to the Executive Board and 375,000 warrants to 27 executive staff members, a total of 500,000 warrants. The aim of allocating warrants is to forge a link between the individual staff member’s efforts and long-term value creation in the Group.

Post-balance sheet events No major events affecting the Company other than those mentioned in the Management’s review have occurred after the reporting date.


Market conditions In the letting market for retail property, tenants continue to focus on location. TK Development is experiencing a good amount of interest in prime-location projects, and several strong national and international retail chains are expanding, although decision-making processes are protracted in light of the current unrest on the international financial markets. The rental level is expected to remain fairly stable in the period ahead. However, the rental level for secondary locations is expected to be under pressure. It appears from TK’s Interim Report published in September 2011 that the renewed unrest on the international financial markets has generated mounting uncertainty for the property market, negatively impacting TK Development. The volatility on the international financial markets continues, and credit institutions are reluctant to provide loans to finance real property, with a resulting negative effect for TK Development. Investors continue to be reluctant to invest in real property. For TK Development, the combination of these factors means that negotiations to sell the Group’s projects are taking longer than previously expected.

Outlook The profit after tax for 2011/12 is still expected to amount to about DKK 100 million, corresponding to the previously announced profit estimate. Expectations for 2011/12 are based on the Group’s existing projects and the expectation that ongoing sales negotiations for several projects will be completed in 2011/12. The unrest on the international financial markets, which is lengthening the sales process for the Group’s completed projects, makes this profit estimate subject to increased uncertainty. The expectations for future developments presented in this announcement, including earnings expectations, are naturally subject to risks and uncertainties and may be affected by various factors, such as global economic conditions and other significant issues, including credit-market, interestrate and foreign-exchange developments. Reference is also made to the section “Risk issues” in the Group’s 2010/11 Annual Report.

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THE GROUP’S PROJECT PORTFOLIO

Project portfolio status The Group’s project portfolio comprised 974,000 m² at 31 October 2011. The project portfolio consists of sold projects of 112,000 m² and of remaining projects of 862,000 m². At 31 January 2011, the Group’s project portfolio comprised 933,000 m². The development in the Group’s project portfolio is outlined below: DKKm

31.01.10

31.01.11

31.10.11

0 2 12 14

0 12 14 26

0 8 19 27

Completed In progress Not initiated Total

1,352 720 1,164 3,236

2,107 149 1,143 3,399

2,075 199 1,086 3,360

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

3,250 351 3,601

3,425 284 3,709

3,387 273 3,660

The table below shows the distribution of the carrying amounts of projects in the portfolio at 31 October 2011 for the two business units. Projects at 31 October 2011 DKKm Sold Completed In progress Not initiated Total

TKD Euro NordMall europa Holding

Group total*) Per cent of total

  0 5 13 18

0 3 6 9

  0 8 19 27

0.0 % 0.2 % 0.6 % 0.8 %

959 151 430 1,540

1,081 48 620 1,749

2,040 199 1,050 3,289

61.5 % 6.0 % 31.7 % 99.2 %

Sold Completed In progress Not initiated Total Remaining

96.2 %

91.6 %

91.0 %

Table 1

Remaining Completed In progress Not initiated Total

Project portfolio 1,558 1,758 3,316 100.0 % *) excl. TK Development, remaining group activities, a total of DKK 71m. Table 3

The table below shows the number of square metres in the project portfolio, distributed on the two business units. The remaining part of the Group has no development projects. Projects at 31 October 2011 (’000) m2

The Group uses forward funding to reduce the funds tied up in the portfolio of sold projects. Forward funding has been reduced since 31 January 2011 as a natural consequence of the handover of projects sold on the basis of forward-funding agreements.

Sold

The development of the Group’s project portfolio is shown below (in square metres):

Remaining

(’000) m²

31.01.10

31.01.11

31.10.11

0 25 121 146

0 4 112 116

0 3 109 112

Completed In progress Not initiated Total

87 60 664 811

115 50 652 817

110 57 695 862

Total project portfolio Number of projects Table 2

957 66

933 67

974 67

Sold Completed In progress Not initiated Total Remaining

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Completed In progress Not initiated Total

Completed In progress Not initiated Total

Group total *)

TKD Nordeuropa

Euro Mall Holding

  0 2 5 7

  0 1 104 105

  0 3 109 112

  0.0 % 0.1 % 11.1 % 11.2 %

45 40 413 498

65 17 282 364

110 57 695 862

  11.3 % 5.9 % 71.6 % 88.8 %

Per cent of total

Project portfolio 505 469 974 100.0 % *) excl. TK Development, remaining group activities. Table 4

A more detailed description of all major projects appears from the section concerning the project portfolio under the individual business units.


TKD NORDEUROPA

The Group’s activities in Northern Europe are placed in the wholly-owned subgroup TKD Nordeuropa. TKD Nordeuropa primarily operates in the retail property segment (shopping centres and retail parks), the office segment and the mixed segment.

Project portfolio The development potential of the project portfolio represented 505,000 m² at 31 October 2011, of which sold projects accounted for 7,000 m² and remaining projects for 498,000 m². The project portfolio had a total development potential of 480,000 m² at 31 January 2011. Completed projects Sillebroen, shopping centre, Frederikssund, Denmark In Frederikssund, TKD Nordeuropa has constructed a shopping centre with a total floor space of about 25,000 m². The shopping centre comprises supermarket units of about 5,000 m² and speciality stores and restaurants of about 20,000 m². The current occupancy rate is 93 %, and the tenants include Kvickly, Fakta, Hennes & Mauritz, Synoptik, Matas, Skoringen, Deichmann and Vero Moda. The centre opened in March 2010. A multi-storey car park with about 800 parking spaces has been established at the centre. During the first year after its opening, the shopping centre had more than 3.2 million visitors and continues to perform well with a satisfactory influx of customers. Premier Outlets Center, Ringsted, Denmark This project has been developed in a 50/50 joint venture with Miller Developments, a Scottish subsidiary of the Miller Group. The project consists of a factory outlet centre and restaurant facilities, with a total floor space of 13,200 m² and about 1,000 parking spaces. The centre opened in March 2008. Several tenants have been replaced, and the latest newcomers to Premier Outlets Center are Ticket to Heaven, Signal and Asics. In addition, McDonald’s has signed a lease agreement and opened its outlet in the centre in December 2011. The current occupancy rate is 59%. Negotiations with several potential Danish and international tenants are ongoing. Retail park, Aabenraa, Denmark TKD Nordeuropa has built a retail park of approx. 4,200 m² in Aabenraa, Denmark. The retail park is now fully let, with premises let to jem & fix and T. Hansen, among others. Vasevej, Birkerød, Denmark TKD Nordeuropa owns a property of about 3,000 m² at Vasevej in Birkerød, rented by SuperBest. Plans are in progress to build an extension of about 1,400 m².

Projects in progress Amerika Plads, underground car park, Copenhagen, Denmark Kommanditaktieselskabet Danlink Udvikling (DLU), which is owned 50/50 by Udviklingsselskabet By og Havn I/S and TKD Nordeuropa, 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. Shopping-street property, Mejlstedgade, Brønderslev, Denmark After handing over the Føtex supermarket to Dansk Supermarked in the Group’s retail park at Østergade, Brønderslev, the Group has taken over the previous 2,400 m² Føtex property, which is to be developed for retailers. Following the conclusion of lease agreements with Deichmann and Intersport, these retailers opened for business at the beginning of 2011. Negotiations with potential tenants for the remaining premises of about 1,300 m² are ongoing. Trøjborgvej, Aarhus, Denmark TKD Nordeuropa has taken over the development of a 5,400 m² property project on Trøjborgvej in Aarhus. The project premises consist of a 1,200 m² supermarket unit let to REMA 1000, a business lease of about 500 m² and rental housing of about 3,700 m². The project was completed at the end of 2011 and was carried out in cooperation with Nordica Real Estate A/S via a jointly owned project company in which TKD Nordeuropa has a 20 % stake. TKD Nordeuropa is paid on a fee basis for the services provided by the Group to the jointly owned project company. Kofoten, Kristianstad, Sweden This project comprises a 6,200 m² retail park, consisting of the existing building of about 4,500 m² and an extension of about 1,700 m². In the first quarter of 2011/12, the Group entered into an agreement with a Swedish investor regarding the sale of the entire project, and the existing building was handed over to the investor in April 2011. The extension has been fully let and construction started in autumn 2011, with the opening scheduled for spring 2012. Projects not initiated Østre Teglgade, Copenhagen, Denmark TKD Nordeuropa owns an attractively located project area at Teglholmen. Following the adoption of a new local plan, the project area covers about 32,700 m². The area is wellsuited for a combined housing and office project. The project may be built in phases in step with letting and/or sale.

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 11/30


Project outline The outline below lists the key projects of TKD Nordeuropa’s project portfolio. The carrying amounts of the projects listed below accounted for more than 95 % of the total carrying amount of the project portfolio at 31 October 2011.

Project name

City/town

Country Segment

Floor space (m²)

TKD’s ownership interest

Construction start/ expected construction start

Opening/ expected opening

Completed Sillebroen, shopping centre

Frederikssund DK

Retail/ residential

25,000

100 %

Mid-2008

March 2010

Premier Outlets Center

Ringsted

DK

Retail

13,200

50 %

Autumn 2006

March 2008

Retail park, Aabenraa

Aabenraa

DK

Retail

4,200

100 %

Autumn 2008

Mid-2009/ early 2010

Vasevej

Birkerød

DK

Mixed

4,400

100 %

-

-

Amerika Plads, underground car park

Copenhagen

DK

Underground car park

32,000

50 %

2004

Continuously

Shopping-street property, Mejlstedgade

Brønderslev

DK

Retail

2,400

100 %

-

-

Trøjborgvej

Aarhus

DK

Mixed

5,400

Retail park, Kofoten

Kristianstad

SE

Retail

1,700

Østre Teglgade

Copenhagen

DK

Office/ residential

32,700

Amerika Plads, lot C

Copenhagen

DK

Mixed

13,000

50 %

Amerika Plads, lot A

Copenhagen

DK

Office

11,800

50 %

BROEN, shopping centre

Esbjerg

DK

Retail

28,000

Aarhus South, phase II

Aarhus

DK

Retail

Ejby Industrivej

Copenhagen

DK

Østre Havn/Stuhrs Brygge

Aalborg

Retail park, Marsvej

Randers

Retail park, Enebyängen, phase II

In progress

End-2010

End-2011

100 %

Autumn 2011

Spring 2012

100 %

Continuously

Continuously

2012

2014

2012

2013

100 %

Spring 2012

Spring 2014

2,800

100 %

2013

2013

Office

12,900

100 %

2012

2012

DK

Mixed

72,000

Continuously

Continuously

DK

Retail

10,500

100 %

2012

2013

Danderyd

SE

Retail

1,800

100 %

Mid-2012

Spring 2013

The Kulan commercial district

Gothenburg

SE

Mixed

45,000

100 %

2013

2015

Retail park, Karlstad

Karlstad

SE

Retail

15,000

100 %

2015

2016

Retail park, Söderhamn

Söderhamn

SE

Retail

10,000

100 %

Spring 2013

End-2013

Retail park, Gävle

Gävle

SE

Retail

24,000

100 %

Continuously

Continuously

Pirkkala Retail Park, phase II

Tammerfors

FI

Retail

5,400

100 %

2012

2013

Kaarina Retail Park

Turku

FI

Retail

6,600

100 %

2012

2013

DomusPro Retail Park

Vilnius

LT

Retail

11,300

100 %

2012

2012

Milgravja Street

Riga

LV

Residential

10,400

100 %

-

-

Ulmana Retail Park

Riga

LV

Retail

12,500

100 %

-

-

2)

20 %

Not initiated

TKD Nordeuropa, total floor space

approx. 414,000

 TKD Nordeuropa’s share of profit on development amounts to 70 %. 2) Based on fee income. 1)

12/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Management's review

1)

1)

50 %


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 TKD Nordeuropa, 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. The shopping centre BROEN, Esbjerg, Denmark TKD Nordeuropa has an option for a plot in Esbjerg earmarked for a shopping centre project of about 28,000 m², to be built on the railway land at Esbjerg station. The project has been developed in cooperation with DSB Ejendomsudvikling A/S. The shopping centre is planned to have about 70 retail stores, and lease agreements have been concluded with such tenants as Bahne, H&M, Kvickly, Imerco, Skoringen, Panduro Hobby and Gina Tricot for about 66 % of the premises. Construction is now expected to start in spring 2012, and the opening is scheduled for 2014. Østre Havn/Stuhrs Brygge, Aalborg, Denmark In the area previously occupied by Aalborg Shipyard at Stuhrs Brygge, TKD Nordeuropa is developing a business and residential 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 payment being effected for the development rights acquired in step with the development and execution of specific projects. The preparations for a new local plan comprising 30,000 m² of housing, offices and parking facilities have now started. Retail park, Marsvej, Randers, Denmark In October 2010, the Group took over a plot of land on Marsvej in Randers, Denmark, intended for a retail development project of 10,500 m². Letting has been initiated, and there is a satisfactory level of interest among potential tenants.

AB have entered into a cooperation agreement with SKF Sverige AB to develop SKF’s former factory area in the old part of Gothenburg. 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. TKD Nordeuropa 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 acquisition of land for the project will be completed following the adoption of a local plan, now expected in 2013. Retail park, Gävle, Sweden In the Swedish town of Gävle, TKD Nordeuropa has an option to buy a plot of land for developing a retail park of about 24,000 m². The planned project can be accommodated within the existing local plan. It is possible to develop the contemplated project in phases, and the first phase comprises about 8,400 m². The current occupancy rate for the first phase is 93 %, and lease agreements have been concluded with Rusta, Jysk and Ö&B, among others. After the end of Q3 2011/12, TKD Nordeuropa exercised its option on the land and initiated the first phase of the project in December 2011. The opening is scheduled for autumn 2012. Kaarina Retail Park, Turku, Finland In the Finnish town of Turku, TKD Nordeuropa owns a plot of land allowing for the construction of a 6,600 m² retail park. Negotiations with tenants are ongoing. There is a possibility for dividing construction of the retail park into phases. DomusPro Retail Park, Vilnius, Lithuania TKD Nordeuropa 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 almost half the premises. Construction is expected to start in 2012.

Retail park, Enebyängen, Danderyd, Sweden In the municipality of Danderyd near Stockholm, TKD Nordeuropa 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, to be tenanted by Plantagen, is scheduled to start in mid-2012 and be completed in spring 2013. The total project has been sold to the German investment fund Commerz Real on the basis of forward funding. The Kulan commercial district, shopping centre and service/commercial space, Gothenburg, Sweden TKD Nordeuropa and the Swedish housing developer JM

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 13/30


EURO MALL HOLDING

TK Development carries on its activities in Central Europe primarily through Euro Mall Holding, with the main focus on the retail property segment (shopping centres and retail parks) and the mixed segment and in Poland, also the residential segment.

Project portfolio The development potential of the project portfolio represented 469,000 m² at 31 October 2011, of which sold projects accounted for 105,000 m² and remaining projects for 364,000 m². The project portfolio had a total development potential of 453,000 m² at 31 January 2011. Completed projects Galeria Tarnovia, shopping centre, Tarnów, Poland In the Polish town of Tarnów, Euro Mall Holding has constructed a 16,500 m² shopping centre, comprising a supermarket of about 2,000 m² and specialty stores of about 14,500 m². The shopping centre has a current occupancy rate of 96 % and continues to perform well with a satisfactory influx of customers. Galeria Sandecja, shopping centre, Nowy Sącz, Poland In the Polish town of Nowy Sącz, Euro Mall Holding has constructed a 17,300 m² shopping centre, consisting of a 5,000 m² hypermarket and specialty stores of about 12,300 m². The shopping centre has a current occupancy rate of 97 % and continues to perform well with a satisfactory influx of customers. Fashion Arena Outlet Center, Prague, Czech Republic In Prague, the Group has developed a 25,000 m² factory outlet centre in a joint venture with an international collaboration partner. The second phase of about 7,000 m² opened in October 2010. The current occupancy rate is 90 % for the combined project. At present, negotiations with several potential Czech and international tenants for the remaining premises are ongoing. The shopping centre is still performing well and has a satisfactory influx of customers. Most Retail Park, Czech Republic Euro Mall Holding 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, and the current occupancy rate for this phase is 84 %. Projects in progress Residential park, Bielany, Warsaw, Poland Euro Mall Holding 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

14/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Management's review

in four phases. The first phase consists of 136 units on which construction started in mid-2011, with completion scheduled for end-2012. The pre-completion sale of the units started in spring 2011. Following completion of the first phase, the remaining phases are expected to be completed successively. The residential units are expected to be sold as owner-occupied apartments to private users. Futurum Hradec Králové, extension, Czech Republic It has been decided to build a 9,950 m² extension to the Futurum Hradec Králové shopping centre, owned by a joint venture between GE Capital, Heitman and TK Development in which TK Development has a 20 % ownership interest. The current occupancy rate is 96 %. Construction started in January 2011 and is progressing as planned. The opening is scheduled for spring 2012. Euro Mall Holding receives fees from the jointly owned company for letting and construction management services. Projects not initiated Stocznia, multifunctional centre, Young City, Gdansk, Poland Based on current plans, this multifunctional centre in Gdansk will have total premises of about 61,000 m², to be developed in a joint venture with Atrium European Real Estate. The centre will comprise retail, restaurant and leisure facilities. Atrium European Real Estate has undertaken the overall project financing and will retain a long-term investment in the retail, restaurant and leisure premises. Negotiations are being held with several tenants, all indicating keen interest in renting premises in the centre. During the project development period, TK Development will generate earnings through fee income. Residential park, Bielany, Warsaw, Poland Reference is made to “Projects in progress” above. Shopping centre, Jastrzębie, Poland This project, consisting of a 43,300 m² shopping centre, will be executed by Atrium European Real Estate, with Euro Mall Holding as the project developer. Euro Mall Holding has entered into an agreement with Atrium European Real Estate regarding Euro Mall Holding’s assistance for development, letting and construction management of the project on a fee basis. The next project steps and construction start date have not yet been determined. Bytom Retail Park, Bytom, Poland Euro Mall Holding intends to develop a retail park with total leasable space of about 25,800 m² on its site at the Plejada shopping 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 start as space is let.


Project outline The outline below lists the key projects of Euro Mall Holding’s project portfolio. The carrying amounts of the projects listed below accounted for more than 95 % of the total carrying amount of the project portfolio at 31 October 2011.

Project name

Floor space (m²)

TKD’s ownership interest

Construction start/ expected construction start

Opening/ expected opening

City/town

Country Segment

Galeria Tarnovia, shopping centre

Tarnów

PL

Retail

16,500

100 %

Autumn 2008

November 2009

Galeria Sandecja, shopping centre

Nowy Sącz

PL

Retail

17,300

100 %

Mid-2008

Fashion Arena Outlet Center

Prague

CZ

Retail

25,000

75 %

Spring 2007

October 2009 Phase I: November 2007 Phase II: October 2010

Most Retail Park, phase I

Most

CZ

Retail

6,400

100 %

Autumn 2008

April 2009

Warsaw

PL

Residential/ services

7,850

100 %

Mid-2011

End-2012

Futurum Hradec Králové, extension Hradec Králové

CZ

Retail

9,950

1)

20 %

Early 2011

Spring 2012

Not initiated Stocznia, multifunctional centre, Young City

Gdansk

PL

Mixed

61,000

1)

76 %

2013

2016

Residential park, Bielany

Warsaw

PL

Residential/ services

48,350

100 %

Continuously

Continuously

Poznan Warta

Poznan

PL

Residential

50,000

100 %

-

-

Shopping centre, Jastrzębie

Jastrzębie

PL

Retail

43,300

-

-

-

Bytom Retail Park

Bytom

PL

Retail

25,800

100 %

Continuously

Continuously

Prague Airport Ruzyne II

Prague

CZ

Mixed

6,900

100 %

2013

2013

Sterboholy Retail Park

Prague

CZ

Retail

6,000

100 %

2013

2013

Retail park, Teplice

Teplice

CZ

Retail

7,600

100 %

Spring 2013

Autumn 2013

Shopping centre, Frýdek Místek

Frýdek Místek

CZ

Retail

14,800

100 %

Autumn 2012

Autumn 2013

Most Retail Park, phase II

Most

CZ

Retail

2,000

100 %

Designer Outlet Village Moravia

Moravia

CZ

Retail

21,500

100 %

Spring 2013 Phase I: Autumn 2012

Autumn 2013 Phase I: Autumn 2013

Retail park, Prešov

Prešov

SK

Retail

9,300

100 %

Spring 2013

Autumn 2013

Completed

In progress Residential Park, Bielany, phase I

Euro Mall Holding, total floor space 1)

1)

approx. 380,000

  Based on fee income.

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 15/30


Retail park, Teplice, Czech Republic Euro Mall Holding owns plots of land in Teplice with a view to constructing a retail park of about 7,600 m². A building permit has been granted for the project. The letting process has commenced, but is taking longer than expected. Construction is now expected to start in spring 2013, with the opening scheduled for autumn 2013. Shopping centre, Frýdek Místek, Czech Republic In the Czech town of Frýdek Místek, Euro Mall Holding has a long-term option to buy a plot of land for the purpose of building a 14,800 m² shopping centre. Construction is expected to start in autumn 2012, with the opening scheduled for autumn 2013. The letting of premises has started, and binding lease agreements have been concluded with a number of tenants. Designer Outlet Village Moravia, Czech Republic In Moravia in the eastern part of the Czech Republic, Euro Mall Holding has a long-term option to buy a plot of land for the purpose of building a Designer Outlet Village (factory outlet centre) of about 21,500 m². The project will be executed in phases, with the first to comprise about 11,700 m². The project is being discussed with potential tenants, who have shown a good amount of interest in the project, and the first lease agreements have been signed. Construction of the first phase is expected to start in autumn 2012, with the opening scheduled for autumn 2013. Retail park, Prešov, Slovakia Euro Mall Holding owns plots of land in Prešov with a view to constructing a retail park of about 9,300 m². A building permit has been granted for the project. The letting process has commenced, but is taking longer than expected. Construction is now expected to start in spring 2013, with the opening scheduled for autumn 2013.

16/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Management's review


TK DEVELOPMENT, REMAINING GROUP ACTIVITIES

Remaining group activities TK Development, remaining group activities, includes the company TK Development A/S, which is the ultimate parent company in the Group, and thus the parent of TKD Nordeuropa A/S and Euro Mall Holding A/S. Moreover, this part of the Group owns the projects in Germany and Russia and a few other activities.

Premier Outlets Center, Ringsted, Denmark

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 17/30


INVESTMENT PROPERTIES

The Group’s investment properties Floor space*) Ownership (m²) interest 18,300 20 %

Project name

City/town

Segment

Futurum Hradec Králové, Czech Republic Futurum Hradec Králové, Czech Republic - extension Germany

Hradec Králové

Retail

Hradec Králové Lüdenscheid / Berlin

Retail Residential/mixed

Total investment properties, including extension in progress *)

9,950 26,000

20 % 100 %

Opening November 2000 Scheduled for spring 2012 1994-1998

54,250

incl. common areas

The Group’s investment properties are included in the balance sheet under property, plant and equipment. The value of these properties is measured at fair value and amounted to DKK 364.7 million at 31 October 2011 against DKK 358.6 million at 31 January 2011.

Central Europe Euro Mall Holding’s investment property, the Futurum Hradec Králové shopping centre, had a carrying amount of DKK 167.5 million at 31 October 2011, based on a required rate of return of 7.0 % p.a., calculated on the basis of a discounted cash-flow model over a five-year period. The assessed return requirement is unchanged compared to 31 January 2011. The investment property is owned through 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 shopping centre is fully let, and the letting status remained satisfactory throughout the period under review. An extension of the Futurum Hradec Králové shopping centre, comprising about 9,950 m², is being built. Construction started in January 2011, and the opening is scheduled for spring 2012. This extension has been classified under “Investment properties under construction”. The current oc-

Futurum Hradec Králové, Czech Republic - extension

18/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Management's review

cupancy rate is 96 %. The valuation is made on the basis of a discounted cash-flow model, where expected future cash flows are discounted to net present value on the basis of a given return requirement. As was the case at 31 January 2011, the valuation has been based on a return requirement of 7.0 %. In addition, the valuation has been made on the basis of a specific assessment of project progress at the reporting date, including the risks attaching to project completion. The total value of this property under construction amounted to DKK 60.0 million at 31 October 2011.

Germany The Group has five investment properties in Germany, of which a combined commercial and residential property is located in Lüdenscheid in the western part of the country, whereas the four remaining properties are residential rental properties on the outskirts of Berlin. The Group has generally recorded higher rent levels for the German residential rental properties as tenants have been replaced. At 31 October 2011, the value of these properties was DKK 197.2 million based on a required rate of return of 6.5 % p.a. calculated on the basis of a discounted cashflow model over a ten-year period. The assessed return requirement is unchanged compared to 31 January 2011.


OTHER MATTERS

The Supervisory Board Kurt Daell was not prepared to stand for re-election at the Company’s Annual General Meeting on 24 May 2011. The remaining Supervisory Board members were re-elected, and the Supervisory Board is currently composed of five members. After the Annual General Meeting, a meeting was held for the purpose of electing officers, with Niels Roth being elected as the Chairman, and Torsten Erik Rasmussen being elected as the Deputy Chairman of the Supervisory Board.

Transactions with related parties No major or unusual transactions were made with related parties in the first nine months of the 2011/12 financial year.

Financial targets To provide for sufficient future financial resources, Management has adopted a liquidity target for the whole Group. In addition, Management has adopted a solvency target for the whole Group corresponding to a solvency ratio of minimum 30 %, calculated as the ratio of equity to total assets. The Group has undertaken a commitment towards its main banker to meet a liquidity target and a solvency target. Both targets were met during the period under review.

Other matters For a more detailed review of other matters relating to the Group, including risk issues, reference is made to the Group’s Annual Report for 2010/11, which is available at the Group’s website www.tk-development.dk

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 19/30


STATEMENT BY THE SUPERVISORY AND EXECUTIVE BOARDS ON THE INTERIM REPORT The Supervisory and Executive Boards have today considered and adopted the Interim Report of TK Development A/S for the period from 1 February to 31 October 2011. The Interim Report, which has not been audited or reviewed by the Company’s auditors, is presented in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Danish disclosure requirements for interim reports prepared by listed companies.

the results of the Group’s operations and cash flows for the period from 1 February 2011 to 31 October 2011. Moreover, we consider the Management’s review to give a fair presentation of the development in the Group’s activities and financial affairs, the results for the period and the Group’s overall financial position, as well as a true and fair description of the most significant risks and elements of uncertainty faced by the Group.

In our opinion, the Interim Report gives a true and fair view of the Group’s financial position at 31 October 2011 and of

Aalborg, 22 December 2011

EXECUTIVE BOARD

Frede Clausen President and CEO

Robert Andersen Executive Vice President

SUPERVISORY BOARD

Niels Roth Chairman

Torsten Erik Rasmussen Deputy Chairman

Jesper Jarlbæk

Per Søndergaard Pedersen

Jens Erik Christensen

20/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Statement by the Supervisory and Executive Boards on the Interim Report


CONSOLIDATED FINANCIAL STATEMENTS

Income statement DKKm

Note

Net revenue

Q1-Q3 2011/12

Q1-Q3 2010/11

Q3 2011/12

Q3 2010/11

Full year 2010/11

272.6

326.8

113.0

119.9

576.9

-129.6 26.0 169.0

-165.2 1.1 162.7

-38.2 9.2 84.0

-63.2 0.0 56.7

-350.9 30.0 256.0

Other external expenses Staff costs Total

25.8 66.7 92.5

27.0 67.7 94.7

8.1 21.5 29.6

8.6 22.1 30.7

36.6 89.2 125.8

Profit/loss before financing and depreciation Depreciation and impairment of non-current assets Profit/loss before financing

76.5 2.1 74.4

68.0 2.4 65.6

54.4 0.6 53.8

26.0 0.8 25.2

130.2 3.0 127.2

31.4 4.6 -71.6 -35.6

1.4 12.7 -63.1 -49.0

-0.5 1.4 -24.0 -23.1

0.5 4.1 -21.6 -17.0

0.2 28.2 -81.4 -53.0

38.8 -5.5 44.3

16.6 6.4 10.2

30.7 3.3 27.4

8.2 4.2 4.0

74.2 0.6 73.6

1.1 1.1

0.3 0.3

0.7 0.7

0.1 0.1

2.1 2.1

44.3 -34.2 6.3 -0.9 0.1 15.6

10.2 15.0 3.0 -4.2 0.9 24.9

27.4 -30.9 6.4 -1.0 0.1 2.0

4.0 2.5 1.9 1.7 -0.3 9.8

73.6 4.2 -4.2 -2.3 0.4 71.7

External direct project costs Value adjustment of investment properties, net Gross profit/loss

Income from investments in associates Financial income Financial expenses Total Profit/loss before tax Tax on profit/loss for the period Profit/loss for the period

2

4

Earnings per share in DKK Earnings per share (EPS) of nom. DKK 15 Diluted earnings per share (EPS-D) of nom. DKK 15

Comprehensive income statement Profit/loss for the period Foreign-exchange adjustment, foreign operations Tax on foreign-exchange adjustment, foreign operations Value adjustment of hedging instruments Tax on value adjustment of hedging instruments Comprehensive income statement for the period

Consolidated financial statements | TK Development A/S | Interim report Q1-Q3 2011/12 21/30


Balance sheet DKKm

Note

31.10.2011 31.01.2011 31.10.2010

ASSETS Non-current assets Goodwill

33.3

33.3

33.3

Intangible assets

33.3

33.3

33.3

364.7

358.6

356.9

60.0

28.8

0.0

5.2

6.8

7.5

429.9

394.2

364.4

Investments in associates

0.4

3.6

27.0

Receivables from associates

2.5

2.5

2.5

Other securities and investments

2.0

1.9

1.2

Deferred tax assets

298.0

287.2

292.0

Other non-current assets

302.9

295.2

322.7

Total non-current assets

766.1

722.7

720.4

3,386.6

3,424.7

3,396.6

106.9

155.0

129.5

16.8

17.8

1.9

Contract work in progress

0.0

12.2

9.7

Corporate income tax receivable

2.4

0.0

0.0

112.2

106.6

98.3

Investment properties Investment properties under construction Other fixtures and fittings, tools and equipment Property, plant and equipment

Current assets Projects in progress or completed Trade receivables Receivables from associates

Other receivables Prepayments Total receivables Securities

20.9

19.1

13.0

259.2

310.7

252.4

4.0

4.0

4.0

31.3 73.8

63.6 96.3

58.9 71.0

Total current assets

3,754.9

3,899.3

3,782.9

ASSETS

4,521.0

4,622.0

4,503.3

Deposits in blocked and escrow accounts Cash and cash equivalents

22/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Consolidated financial statements

5 5


Balance sheet DKKm

Note

31.10.2011 31.01.2011

31.10.2010

EQUITY AND LIABILITIES Equity Share capital Other reserves Retained earnings Total equity

631.0 131.4 1,122.5 1,884.9

631.0 160.1 1,074.9 1,866.0

631.0 176.7 1,011.0 1,818.7

150.9 3.9 49.5 3.9 208.2

146.4 7.2 55.1 3.9 212.6

146.6 12.7 64.4 3.9 227.6

Credit institutions Trade payables Prepayments received from customers Corporate income tax Provisions Other debt Deferred income Total current liabilities

2,123.3 82.3 0.0 15.1 11.1 183.7 12.4 2,427.9

2,199.5 104.8 0.0 21.6 10.1 188.3 19.1 2,543.4

2,120.7 109.0 0.0 13.7 11.7 187.3 14.6 2,457.0

Total liabilities

2,636.1

2,756.0

2,684.6

TOTAL EQUITY AND LIABILITIES

4,521.0

4,622.0

4,503.3

6

Liabilities Credit institutions Provisions Deferred tax liabilities Other debt Total non-current liabilities

Consolidated financial statements | TK Development A/S | Interim report Q1-Q3 2011/12 23/30


Statement of changes in equity The share capital of TK Development A/S is not divided into classes of shares and consists of 42,065,715 shares each with a nom. value of DKK 15 (nom. DKK 630,985,725). The Company still does not hold treasury shares.

DKKm Equity at 1 February 2010

Share capital

Other reserves

Retained earnings

Total equity

560.9

21.8

1,010.7

1,593.4

Profit/loss for the period Other comprehensive income for the period Total comprehensive income for the period Capital decrease Capital increase Cost on capital increase Share-based payment Equity at 31 October 2010

0.0 0.0 0.0 -140.2 210.3 0.0 0.0 631.0

0.0 14.7 14.7 140.2 0.0 0.0 0.0 176.7

10.2 0.0 10.2 0.0 0.0 -12.7 2.8 1,011.0

10.2 14.7 24.9 0.0 210.3 -12.7 2.8 1,818.7

Equity at 1 February 2011 Profit/loss for the period Other comprehensive income for the period

631.0 0.0 0.0

160.1 -28.7 0.0

1,074.9 44.3 0.0

1,866.0 15.6 0.0

Total comprehensive income for the period

0.0

-28.7

44.3

15.6

Share-based payment Equity at 31 October 2011

0.0

0.0

3.3

3.3

631.0

131.4

1,122.5

1,884.9

24/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Consolidated financial statements


Cash flow statement DKKm

Q1-Q3 2011/12

Q1-Q3 2010/11

Full year 2010/11

Profit/loss before financing

74.4

65.6

127.2

Adjustments for non-cash items: Value adjustment, investment properties, net Depreciation Share-based payment Provisions Foreign-exchange adjustment Increase/decrease in investments in projects, etc. Increase/decrease in receivables Changes in deposits on blocked and escrow accounts Increase/decrease in payables and other debt Cash flows from operating activities before net financials and tax

-26.0 1.9 3.3 -1.9 2.2 13.4 57.8 32.4 -28.1 129.4

-1.1 2.3 2.8 -4.5 -4.3 -75.2 18.2 4.5 -39.3 -31.0

-30.0 3.1 3.9 -5.1 1.1 -84.5 -22.0 -0.3 -42.4 -49.0

Interest paid, etc. Interest received, etc. Corporate income tax paid Cash flows from operating activities

-98.2 1.0 -13.1 19.1

-91.6 3.8 -19.3 -138.1

-124.6 6.1 -15.2 -182.7

Investments in equipment, fixtures and fittings

-0.5

-0.6

-0.6

Sale of equipment, fixtures and fittings Investments in investment properties Purchase of securities and investments Sale of securities and investments Cash flows from investing activities

0.1 -12.0 0.0 27.7 15.3

0.3 -0.1 -0.8 0.0 -1.2

0.5 -1.8 -2.3 0.0 -4.2

Repayment, long-term financing Raising of long-term financing Raising of project financing Reduction of project financing/repayments, credit institutions Capital increase Cost of share issue Cash flows from financing activities

-24.8 29.4 19.0 -74.9 0.0 0.0 -51.3

-0.8 121.4 254.5 -443.8 210.3 -12.7 128.9

-1.2 121.6 317.4 -435.3 210.3 -13.3 199.5

Cash flows for the period

-16.9

-10.4

12.6

Cash and cash equivalents, beginning of period Foreign-exchange adjustment of cash and cash equivalents

96.3 -5.6

77.5 3.9

77.5 6.2

Cash and cash equivalents, end of period

73.8

71.0

96.3

The figures in the cash flow statement cannot be inferred from the Consolidated Financial Statements alone.

Consolidated financial statements | TK Development A/S | Interim report Q1-Q3 2011/12 25/30


Notes

Page

26 26 27 27 28 28 29 29

Note 1. Segment information Note 2. External direct project costs Note 3. Share-based payment Note 4. Income from investments in associates  Note 5. Liquidity reserves Note 6. Other reserves Note 7. Changes in contingent assets and contingent liabilities Note 8. Transactions with related parties

Note 1. Segment information For the purposes of TK Development’s internal reporting, the Group is split into two business units, viz. TKD Nordeuropa and Euro Mall Holding, and the remaining business activities in TK Development, referred to as TKD. The segment information has been stated accordingly. DKKm 31.10.2011 Net revenue, external customers Profit/loss after tax Segment assets Segment liabilities

DKKm 31.10.2010 Net revenue, external customers Profit/loss after tax Segment assets Segment liabilities

TKD Nordeuropa

Euro Mall Holding

TKD

Elimination

Total

94.4 -50.3 1,749.0 1,517.8

170.9 97.4 2,149.0 1,251.8

7.3 -2.8 2,062.1 177.2

0.0 0.0 -1,439.1 -310.7

272.6 44.3 4,521.0 2,636.1

TKD Nordeuropa

Euro Mall Holding

TKD

Elimination

Total

232.1 0.7 1,784.5 1,460.8

87.5 8.5 2,074.2 1,252.7

7.2 1.0 2,088.7 270.0

0.0 0.0 -1,444.1 -298.9

326.8 10.2 4,503.3 2,684.6

Q1-Q3 2011/12 125.0 4.6

Q1-Q3 2010/11 165.0 0.2

Full year 2010/11 346.9 4.0

129.6

165.2

350.9

Note 2. External direct project costs

Project costs Impairment losses on projects in progress and completed projects External direct project costs, total

26/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Consolidated financial statements


Note 3. Share-based payment In 2008 and 2010, TK Development allocated warrants to the Executive Board and other executive staff. For a more detailed description, please see the Group’s Annual Report for 2010/11. In June 2011, the Supervisory Board allocated another 500,000 warrants to the Executive Board and other executive staff, broken down by 62,500 warrants to each Executive Board member and a total of 375,000 warrants to other executive staff members. The above-mentioned 500,000 warrants correspond to 1.2 % of the share capital and can be exercised in three six-week windows, as follows: • • •

following publication of the preliminary announcement of financial statements for 2013/14 (from around 30 April 2014); following publication of the interim report for the six-month period ending 31 July 2014 (from around 30 September 2014); and following publication of the preliminary announcement of financial statements for 2014/15 (from around 30 April 2015).

The fair value of the warrants allocated has been calculated using the Black-Scholes pricing formula and amounts to DKK 2.1 million, which will be expensed over the term of the incentive scheme. The valuation is based on the following assumptions: Weighted average share price (DKK per share) Expected volatility (%) Risk-free interest rate (%) Expected dividend rate (%) Term to expiry (months)

28.9 35 % 2.5 % 0% 40

Volatility has been determined on the basis of historical volatility of the price of the Parent Company’s shares over the past 12 months and the expected future volatility. The term to expiry has been determined on the assumption that the warrants are exercised in the intermediate exercise period. The development in outstanding warrants is shown below: 31.10.2011 1,207,812 500,000 0 0 1,707,812

Number of warrants Outstanding warrants, beginning of the period Allocated during the period Lapsed due to termination of employment Expired in the period Outstanding warrants, end of period Number of warrants exercisable at the reporting date

31.01.2011 1,350,000 554,516 -20,704 -676,000 1,207,812

31.10.2010 1,350,000 554,516 -20,704 -676,000 1,207,812

761,497

0

0

3.3

3.9

2.8

Share-based payment recognized in the profit or loss (DKK million)

Note 4. Income from investments in associates In June 2011, the Group sold its stake in Euro Mall Centre Management to the US Group CB Richard Ellis. The selling price has been fixed at an amount payable up front, with a four-year earn-out period based on the earnings made by the company in the preceding three years. This sale was recognized in Q2 2011/12. This includes a valuation of the earn-out, based on existing budget projections for the relevant years and discounted to net present value. The earn-out is neither subject to a minimum nor a maximum. Income from investments in associates is shown below:

Profit on sale Other income from associates Total income from investments in associates

Q1-Q3 2011/12 30.9 0.5

Q1-Q3 2010/11 0.0 1.4

Full year 2010/11 0.0 0.2

31.4

1.4

0.2

The above profit on sale is included in note 1, segment information regarding Euro Mall Holding.

Consolidated financial statements | TK Development A/S | Interim report Q1-Q3 2011/12 27/30


Note 5. Liquidity reserves The liquidity reserves break down as follows: 31.10.2011

31.01.2011

31.10.2010

73.8 95.3 169.1 31.3 200.4

96.3 71.1 167.4 63.6 231.0

71.0 210.7 281.7 58.9 340.6

Cash and cash equivalents Unutilized credit facilities Total Deposited funds for later release Total liquidity reserve

Note 6. Other reserves

Other reserves at 1 February 2010 Capital decrease Other comprehensive income: Foreign-exchange adjustment Value adjustment of hedging instruments Value adjustment of financial assets available for sale Deferred tax on other comprehensive income Other comprehensive income, total Other reserves at 31 October 2010 Other reserves at 1 February 2011 Other comprehensive income: Foreign-exchange adjustment Value adjustment of hedging instruments Value adjustment of financial assets available for sale Deferred tax on other comprehensive income Other comprehensive income, total Other reserves at 31 October 2011

Special reserve

Reserve for value adjustment of available-for-sale financial assets

Reserve for value adjustment of hedging instruments

Reserve for foreign-exchange adjustments

Total

0.0 140.2

-0.1 0.0

0.0 0.0

21.9 0.0

21.8 140.2

0.0 0.0 0.0 0.0 0.0 140.2

0.0 0.0 0.0 0.0 0.0 -0.1

0.0 -4.2 0.0 0.9 -3.3 -3.3

15.0 0.0 0.0 3.0 18.0 39.9

15.0 -4.2 0.0 3.9 14.7 176.7

140.2

-0.1

-1.9

21.9

160.1

0.0 0.0 0.0 0.0 0.0 140.2

0.0 0.0 0.0 0.0 0.0 -0.1

0.0 -0.9 0.0 0.1 -0.8 -2.7

-34.2 0.0 0.0 6.3 -27.9 -6.0

-34.2 -0.9 0.0 6.4 -28.7 131.4

The special reserve concerns a special fund that arose in connection with the capital reduction implemented in August 2010, when the denomination of the Group’s shares was changed from DKK 20 to DKK 15. This reserve can be used only following a resolution passed at the General Meeting. The reserve for value adjustment of financial assets available for sale comprises the accumulated net change in the fair value of financial assets classified as available for sale. The reserve is dissolved as the relevant financial assets are sold or expire. The reserve for value adjustment of hedging instruments comprises unrealized losses on forward-exchange transactions and interest-rate hedging transactions concluded to hedge future transactions. The reserve for foreign-exchange adjustments comprises all foreign-exchange adjustments arising on the translation of financial statements for enterprises with a functional currency other than Danish kroner; foreign-exchange adjustments relating to assets and liabilities that are part of the Group’s net investment in such enterprises; and foreign-exchange adjustments relating to any hedging transactions that hedge the Group’s net investment in such enterprises. On the sale or winding-up of subsidiaries, the accumulated foreign-exchange adjustments recognized in other comprehensive income in respect of the relevant subsidiary are transferred to the profit or loss.

28/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Consolidated financial statements


Note 7. Changes in contingent assets and contingent liabilities There have been no significant changes in the Group’s contingent assets and contingent liabilities since the most recently published Annual Report.

Note 8. Transactions with related parties The Company has no related parties with a controlling interest. The Company has the following related parties: - Supervisory Board and Executive Board (and their related parties) - Joint ventures and associates. 31.10.2011 Supervisory Board and Executive Board (and their related parties) Holding of shares, in terms of number Obligation towards Executive Board, employee bonds Underwriting commission, rights issue

1,355,435 1.5 0.0

31.01.2011

*)

31.10.2010

3,631,447 1.5 0.3

3,631,347 1.5 0.0

Joint ventures Fee from joint ventures Interest income from joint ventures Interest expenses, joint ventures Receivables from joint ventures Payables to joint ventures

2.2 2.0 -2.1 72.3 98.7

3.9 3.1 -3.3 67.6 94.8

0.7 5.3 -2.7 70.6 98.3

Associates Interest income from associates Receivables from associates

0.1 19.3

0.2 20.3

0.1 4.4

This includes a shareholding of 2,709,450 shares held by Kurt Daell. Kurt Daell retired from the Supervisory Board at the Annual General Meeting in May 2011. *)

Consolidated financial statements | TK Development A/S | Interim report Q1-Q3 2011/12 29/30


COMPANY INFORMATION

ISIN code: DK0010258995 (TKDV) • Municipality of registered office: Aalborg, Denmark Homepage: www.tk-development.dk • e-mail: tk@tk.dk TK Development A/S: CVR no. 24256782 • TKD Nordeuropa A/S: CVR no. 26681006 • Euro Mall Holding A/S: CVR no. 20114800

Aalborg Vestre Havnepromenade 7 DK-9000 Aalborg T: (+45) 8896 1010

Copenhagen Arne Jacobsens Allé 16, 3rd fl. DK-2300 Copenhagen S T: (+45) 3336 0170

Helsinki Uudenmaankatu 7, 4. FIN-00 120 Helsinki T: (+358) 103 213 110

Stockholm Gamla Brogatan 36-38 S-101 27 Stockholm T: (+46) 8 751 37 30

Vilnius Gynėjų str. 16 LT-01109 Vilnius T: (+370) 5231 2222

Prague Karolinská 650/1 CZ-186 00 Prague 8 T: (+420) 2 8401 1010

Warsaw ul. Mszczonowska 2 PL-02-337 Warsaw T: (+48) 22 572 2910

Berlin Ahornstraße­16 D-14163 Berlin T: (+49) 30 802 10 21

Executive board: Frede Clausen and Robert Andersen Supervisory board: Niels Roth, Torsten Erik Rasmussen, Per Søndergaard Pedersen, Jesper Jarlbæk and Jens Erik Christensen

30/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Company information


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