R esu l ts in Q 1 2 0 1 3 / 1 4 and out l ook f or 2 0 1 3 / 1 4
tax paid, as well as other operating items.
Fi n a n c ial i s s u e s Capital increase
The Group’s cash flows from investing activities were nega-
At the Company’s Annual General Meeting on 22 May 2013,
tive in the amount of DKK 1.0 million (2012/13: positive in the
the Board of Directors was authorized to carry out a capital in-
amount of DKK 6.4 million), due mainly to additional invest-
crease with gross proceeds of about DKK 210-231 million. The
ments in the Group’s investments properties and investment
capital increase will help generate the cash resources required
properties under construction.
to underpin future operations and project flow, and thus longterm earnings. The capital increase has been discussed with
The cash flows from financing activities were negative in the
the Group’s major shareholders, who, together with a few major
amount of DKK 49.6 million (2012/13: negative in the amount
private and institutional investors, have given conditional sub-
of DKK 76.2 million). The negative cash flows result from a re-
scription and underwriting commitments for the total capital
duction of payables to credit institutions coupled with the fi-
increase.
nancing raised for project investments. The Board of Directors has appointed Nordea Bank Danmark
G o al s a n d s trategy
A/S to be the Manager of the offering. The more specific terms
As described in company announcement no. 6/2013 and the
and conditions governing the capital increase have not yet
Annual Report for 2012/13, in March 2013 Management resol-
been determined. The prospectus currently being prepared
ved to revise the Group’s strategy and business model and to
will set out the detailed terms and conditions of the capital in-
adjust its market focus.
crease. TK Development expects to publish the prospectus in the first half of August 2013 and expects the capital increase
In this connection, Management decided to carry out a number
to be completed in early September 2013.
of adaptations, the aim being to achieve the following results after a two-year transformation process:
A substantial portion of the proceeds from the capital increase will be used to reduce the debt to credit institutions, including
The remaining activities will have been limited to Denmark, Sweden, Poland and the Czech Republic. The portfolio of projects not initiated (plots of land) will have
project finance loans of DKK 68.5 million granted by a number of the Company’s major shareholders and members of Management.
been reduced from about DKK 1.1 billion to about DKK 500 million. The balance sheet will have been adjusted, with a solvency ratio of about 40 %.
Other financial issues The fact that a number of completed projects have not been sold means a substantial portion of the Group’s financial re-
Overheads will have been reduced by around 20 % relative
sources is tied up in these projects. This has made it difficult to
to 2012/13, with half of the reduction deriving from the
allocate the necessary capital to securing the progress of new
discontinuation of activities in Germany, Finland and the
projects. Therefore, in December 2012 Management decided to
Baltic States – cost cuts implemented at the beginning of
revise the Group’s sales strategy with a view to realizing faster
2013.
sales. The sale of several completed projects will free up the
Financing costs will have been normalized as a result of the initiatives implemented.
cash resources that are essential for strengthening the Group’s financial platform. Moreover, financial resources will be secured
The new reporting procedure – applied with effect as of the
to regenerate momentum and thus to realize the substantial
2012/13 Annual Report – will have provided a better over-
development potential inherent in several of the Group’s proj-
view of the Group’s activities, values, value creation and
ects.
expected development. TK Development is dependent on its ability to continue obtainFollowing implementation of the above-mentioned adaptati-
ing either full or partial financing of existing and new projects,
ons, Management believes that a platform for normalized ear-
either from credit institutions or from investors in the form of
nings will have been established.
forward funding, and on freeing up substantial cash resources from the sale of several major completed projects. Having sufficient cash resources is essential for the Group. In order to complete the development of its planned projects and there-
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