no_19_tkd_q3_report_2011_12

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

Galeria Sandecja, Nowy Sącz, Poland

2/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Table of contents

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 10

Project portfolio status 10

TKD Nordeuropa 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

Summary | TK Development A/S | Interim report Q1-Q3 2011/12 3/30

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.

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

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

• 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 Hra-dec 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 %.

• 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 pre-mises 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 to-tal 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 com-pleted and thus generate cash flow. The annual net rent from the current leases amounts to DKK 144 mil-lion, 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.

• 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.

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

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

• 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 com-pleted projects, makes this profit estimate subject to increased uncertainty.

Further information is available from Frede Clausen, Presi-dent and CEO, on tel. +45 8896 1010.

The expectations for future developments presented in this announcement, including earnings expectations, are natu-rally subject to risks and uncertainties and may be affected by various factors, such as global economic conditions and other significant issues, including credit-market, interest-rate and foreign-exchange developments. Reference is also made to the section “Risk issues” in the Group’s 2010/11 Annual Report.

4/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Consolidated financial highlights and key ratios

CONSOLIDATED FINANCIAL HIGHLIGHTS AND KEY RATIOS

DKKm Q1-Q3 2011/12

Q1-Q3 2010/11

Full year 2010/11

Financial highlightsNet revenue 272.6 326.8 576.9Value adjustment, investment properties, net 26.0 1.1 30.0Gross profit/loss 169.0 162.7 256.0Profit/loss before financing (EBIT) 74.4 65.6 127.2Financing, etc. -67.0 -50.4 -53.2Profit/loss before tax 38.8 16.6 74.2Profit/loss for the period 44.3 10.2 73.6Shareholders’ share of profit/loss for the period 44.3 10.2 73.6

Balance sheet total 4,521.0 4,503.3 4,622.0Property, plant and equipment 429.9 364.4 394.2 of which investment properties 364.7 356.9 358.6Total project portfolio 3,386.6 3,396.6 3,424.7 of which projects in progress or completed 3,386.6 3,396.6 3,424.7 of which prepayments received from customers 0.0 0.0 0.0Contract work in progress 0.0 9.7 12.2Equity 1,884.9 1,818.7 1,866.0

Cash flow from operating activities 19.1 -138.1 -182.7Net interest-bearing debt, end of period 2,154.4 2,138.2 2,170.2

Key ratiosReturn on equity (ROE) *) 3.1 % 0.8 % 4.3 %EBIT margin 27.3 % 20.1 % 22.1 %Solvency ratio (based on equity) 41.7 % 40.4 % 40.4 %Equity value in DKK per share 44.8 43.2 44.4Price/Book Value (P/BV) 0.3 0.6 0.5Number of shares, end of period 42,065,715 42,065,715 42,065,715Average number of shares, adjusted 42,065,715 32,746,192 35,095,222Earnings per share (EPS) in DKK 1.1 0.3 2.1Dividend in DKK per share 0.0 0.0 0.0Listed price in DKK per share 15 25 23

Key ratios adjusted for warrantsReturn on equity (ROE) *) 3.1 % 0.8 % 4.3 %Solvency ratio (based on equity) 41.7 % 40.4 % 40.4 %Equity value in DKK per share 44.8 43.2 44.4Diluted earnings per share (EPS-D) in DKK 1.1 0.3 2.1

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.

Management's review | TK Development A/S | Interim report Q1-Q3 2011/12 5/30

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 ad-ditional 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 in-terpretations applicable for financial years beginning at 1 February 2011.

The implementation of new and amended financial repor-ting standards and interpretations has not impacted recog-nition and measurement. Thus, the new standards and in-terpretations 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. Refe-rence is made to the Group’s Annual Report for 2010/11 for a complete description of the Group’s accounting po-licies.

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 assess-ments made by Management in applying the Group’s ac-counting policies, and the associated, estimated material uncertainty, are the same as those made in the prepara-tion 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 corre-sponding 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 in-vestment properties.

The value adjustment of the Group’s investment proper-ties 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 ex-tension 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 pe-riod 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 in-come that is recognized in gross profit, also involves finan-cing 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. Good-will relates to the business unit Euro Mall Holding. There are no indications of any need to impair the value of good-will.

6/30 TK Development A/S | Interim report Q1-Q3 2011/12 | Management's review

Investment properties and investment properties under construction

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 invest-ment properties and 7.0 % for the Czech investment pro-perty, including the extension in progress.

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 va-luation 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

result of the handover of and investment in projects.

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 sin-ce 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.

Receivables

Total receivables amounted to DKK 259.2 million, a decre-ase of DKK 51.5 million from 31 January 2011, which is pri-marily 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, de-pending 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 po-sitive in the amount of DKK 19.1 million (first nine months of 2010/11: DKK -138.1 million), due in part to a net re-duction 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 Ma-nagement 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 projectsIn 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, SwedenThis 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 agre-ement 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, DenmarkIn Q1 2011/12, the Group transferred residential develop-ment rights for about 6,600 m² of land at Hadsundvej, Aal-borg, Denmark, to a private investor.

Tivoli Residential Park, service/office space, Targówek, Warsaw, PolandIn 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 re-cognized in Q3 2011/12.

Sale of Euro Mall Centre ManagementIn the second quarter of 2011/12, the Group sold its stake in Euro Mall Centre Management to the US Group CB Ri-chard 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 projectsTK 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 opportuni-ties. 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 shop-ping 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 pro-jects 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 expectati-ons and is also performing satisfactorily.


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 perfor-ming 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 conclu-ded with Bahne, Panduro Hobby and Kong Kaffe. In ad-dition, 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 post-pone 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 con-struction due to the continued unrest on international, fi-nancial 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 accom-modated 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 pro-ject 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

sale of the units started in spring 2011. The residential units are expected to be sold as owner-occupied apart-ments 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 (fac-tory 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. Construc-tion 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 pro-cesses among financing sources, tenants and investors alike; see under “Market conditions”. Against this back-ground, the Group has postponed the expected construc-tion start dates for several projects relative to the original estimates in the Interim Report for the first six months of 2011/12.

Incentive schemesAt the Annual General Meeting on 24 May 2011, the Su-pervisory Board of TK Development was authorized to is-sue 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 al-locating warrants is to forge a link between the individual staff member’s efforts and long-term value creation in the Group.

Post-balance sheet eventsNo major events affecting the Company other than those mentioned in the Management’s review have occurred af-ter the reporting date.


Market conditionsIn 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 pro-tracted 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 lo-cations is expected to be under pressure.

It appears from TK’s Interim Report published in Septem-ber 2011 that the renewed unrest on the international financial markets has generated mounting uncertainty for the property market, negatively impacting TK Develop-ment. The volatility on the international financial markets continues, and credit institutions are reluctant to provide loans to finance real property, with a resulting negative ef-fect for TK Development.

Investors continue to be reluctant to invest in real proper-ty. For TK Development, the combination of these factors means that negotiations to sell the Group’s projects are taking longer than previously expected.

OutlookThe 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 natu-rally subject to risks and uncertainties and may be affected by various factors, such as global economic conditions and other significant issues, including credit-market, interest-rate and foreign-exchange developments. Reference is also made to the section “Risk issues” in the Group’s 2010/11 Annual Report.


THE GROUP’S PROJECT PORTFOLIO

Project portfolio statusThe Group’s project portfolio comprised 974,000 m² at 31 October 2011. The project portfolio consists of sold pro-jects of 112,000 m² and of remaining projects of 862,000 m². At 31 January 2011, the Group’s project portfolio com-prised 933,000 m².

The development in the Group’s project portfolio is outli-ned below:

DKKm 31.01.10 31.01.11 31.10.11

SoldCompleted 0 0 0In progress 2 12 8Not initiated 12 14 19Total 14 26 27

RemainingCompleted 1,352 2,107 2,075In progress 720 149 199Not initiated 1,164 1,143 1,086Total 3,236 3,399 3,360

Net project portfolio 3,250 3,425 3,387Forward funding 351 284 273Gross project portfolio 3,601 3,709 3,660Forward funding in % of gross carrying amount of sold projects 96.2 % 91.6 % 91.0 %Table 1

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 conse-quence of the handover of projects sold on the basis of forward-funding agreements.

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

(’000) m² 31.01.10 31.01.11 31.10.11

SoldCompleted 0 0 0In progress 25 4 3Not initiated 121 112 109Total 146 116 112

Remaining Completed 87 115 110In progress 60 50 57Not initiated 664 652 695Total 811 817 862

Total project portfolio 957 933 974Number of projects 66 67 67Table 2

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 2011DKKm

TKD Nord-

europa

Euro Mall

Holding

Group total*) Per cent of total

Sold Completed 0 0 0 0.0 %In progress 5 3 8 0.2 %Not initiated 13 6 19 0.6 %Total 18 9 27 0.8 %

RemainingCompleted 959 1,081 2,040 61.5 %In progress 151 48 199 6.0 %Not initiated 430 620 1,050 31.7 %Total 1,540 1,749 3,289 99.2 %

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

TKD Nord-

europa

Euro Mall

Holding

Group total *)

Per cent of total

Sold Completed 0 0 0 0.0 %In progress 2 1 3 0.1 %Not initiated 5 104 109 11.1 %Total 7 105 112 11.2 %

Remaining Completed 45 65 110 11.3 %In progress 40 17 57 5.9 %Not initiated 413 282 695 71.6 %Total 498 364 862 88.8 %

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 Nord-europa primarily operates in the retail property segment (shopping centres and retail parks), the office segment and the mixed segment.

Project portfolioThe development potential of the project portfolio repre-sented 505,000 m² at 31 October 2011, of which sold pro-jects 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, DenmarkIn Frederikssund, TKD Nordeuropa has constructed a shop-ping 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. Du-ring the first year after its opening, the shopping centre had more than 3.2 million visitors and continues to per-form well with a satisfactory influx of customers.

Premier Outlets Center, Ringsted, DenmarkThis project has been developed in a 50/50 joint venture with Miller Developments, a Scottish subsidiary of the Mil-ler 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 sig-ned a lease agreement and opened its outlet in the centre in December 2011. The current occupancy rate is 59%. Ne-gotiations with several potential Danish and international tenants are ongoing.

Retail park, Aabenraa, DenmarkTKD 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, DenmarkTKD Nordeuropa owns a property of about 3,000 m² at Vasevej in Birkerød, rented by SuperBest. Plans are in pro-gress to build an extension of about 1,400 m².

Projects in progress

Amerika Plads, underground car park, Copenhagen, Den-markKommanditaktieselskabet 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 under-ground 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, Den-markAfter handing over the Føtex supermarket to Dansk Super-marked in the Group’s retail park at Østergade, Brønder-slev, 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 be-ginning of 2011. Negotiations with potential tenants for the remaining premises of about 1,300 m² are ongoing.

Trøjborgvej, Aarhus, DenmarkTKD 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 ren-tal 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, SwedenThis 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 regar-ding the sale of the entire project, and the existing building was handed over to the investor in April 2011. The exten-sion has been fully let and construction started in autumn 2011, with the opening scheduled for spring 2012.

Projects not initiated

Østre Teglgade, Copenhagen, DenmarkTKD 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 well-suited for a combined housing and office project. The pro-ject may be built in phases in step with letting and/or sale.


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

Project name City/town Country SegmentFloor space

(m²)

TKD’s owner-

ship interest

Construction start/expected construction start

Opening/expected opening

Completed

Sillebroen, shopping centre Frederikssund DKRetail/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 2008Mid-2009/ early 2010

Vasevej Birkerød DK Mixed 4,400 100 % - -

In progress

Amerika Plads, underground car park Copenhagen DKUnderground car park 32,000 50 % 2004 Continuously

Shopping-street property, Mejlstedgade Brønderslev DK Retail 2,400 100 % - -

Trøjborgvej Aarhus DK Mixed 5,400 2) 20 % End-2010 End-2011

Retail park, Kofoten Kristianstad SE Retail 1,700 100 % Autumn 2011 Spring 2012

Not initiated

Østre Teglgade Copenhagen DKOffice/residential 32,700 1) 100 % Continuously Continuously

Amerika Plads, lot C Copenhagen DK Mixed 13,000 50 % 2012 2014

Amerika Plads, lot A Copenhagen DK Office 11,800 50 % 2012 2013

BROEN, shopping centre Esbjerg DK Retail 28,000 100 % Spring 2012 Spring 2014

Aarhus South, phase II Aarhus DK Retail 2,800 100 % 2013 2013

Ejby Industrivej Copenhagen DK Office 12,900 100 % 2012 2012

Østre Havn/Stuhrs Brygge Aalborg DK Mixed 72,000 1) 50 % Continuously ContinuouslyRetail park, Marsvej Randers DK Retail 10,500 100 % 2012 2013

Retail park, Enebyängen, phase II 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 ContinuouslyPirkkala 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 % - -

TKD Nordeuropa, total floor space approx. 414,0001) TKD Nordeuropa’s share of profit on development amounts to 70 %.2) Based on fee income.


Amerika Plads, lots A and C, Copenhagen, DenmarkKommanditaktieselskabet 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 commer-cial and residential space on lot C. Construction will take place as the space is let.

The shopping centre BROEN, Esbjerg, DenmarkTKD Nordeuropa has an option for a plot in Esbjerg earmar-ked 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 Ejendomsudvik-ling 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, Skorin-gen, 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, DenmarkIn the area previously occupied by Aalborg Shipyard at Stuhrs Brygge, TKD Nordeuropa is developing a busi-ness and residential park of about 72,000 m² through a company jointly owned with Frederikshavn Maritime Er-hvervspark 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 develop-ment and execution of specific projects. The preparations for a new local plan comprising 30,000 m² of housing, of-fices and parking facilities have now started.

Retail park, Marsvej, Randers, DenmarkIn October 2010, the Group took over a plot of land on Marsvej in Randers, Denmark, intended for a retail de-velopment project of 10,500 m². Letting has been initiated, and there is a satisfactory level of interest among potential tenants.

Retail park, Enebyängen, Danderyd, SwedenIn 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 Planta-gen, 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 ser-vice/commercial space, Gothenburg, SwedenTKD Nordeuropa and the Swedish housing developer JM

AB have entered into a cooperation agreement with SKF Sverige AB to develop SKF’s former factory area in the old part of Gothenburg. The contemplated project comprises a total floor space of about 75,000 m²: 30,000 m² for a shop-ping 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 responsi-bility 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, SwedenIn 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 accom-modated 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, FinlandIn 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, LithuaniaTKD 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.


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 re-tail parks) and the mixed segment and in Poland, also the residential segment.

Project portfolioThe development potential of the project portfolio repre-sented 469,000 m² at 31 October 2011, of which sold pro-jects 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, PolandIn the Polish town of Tarnów, Euro Mall Holding has con-structed a 16,500 m² shopping centre, comprising a super-market 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 satisfac-tory influx of customers.

Galeria Sandecja, shopping centre, Nowy Sącz, PolandIn 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 satisfac-tory influx of customers.

Fashion Arena Outlet Center, Prague, Czech RepublicIn 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 RepublicEuro 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, PolandEuro 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

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 RepublicIt 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 Develop-ment in which TK Development has a 20 % ownership in-terest. 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, Po-landBased 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, PolandReference is made to “Projects in progress” above.

Shopping centre, Jastrzębie, PolandThis 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 Hol-ding 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 construc-tion start date have not yet been determined.

Bytom Retail Park, Bytom, PolandEuro Mall Holding intends to develop a retail park with to-tal leasable space of about 25,800 m² on its site at the Ple-jada 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 outlineThe outline below lists the key projects of Euro Mall Hol-ding’s project portfolio. The carrying amounts of the pro-jects listed below accounted for more than 95 % of the to-tal carrying amount of the project portfolio at 31 October 2011.

Project name City/town Country Segment Floor space (m²)

TKD’s owner-

ship interest

Construction start/expected construction start

Opening/expected opening

Completed

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 October 2009

Fashion Arena Outlet Center Prague CZ Retail 25,000 75 % Spring 2007Phase I: November 2007 Phase II: October 2010

Most Retail Park, phase I Most CZ Retail 6,400 100 % Autumn 2008 April 2009

In progress

Residential Park, Bielany, phase I Warsaw PLResidential/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 initiatedStocznia, multifunctional centre, Young City Gdansk PL Mixed 61,000 1) 76 % 2013 2016

Residential park, Bielany Warsaw PLResidential/services 48,350 100 % Continuously Continuously

Poznan Warta Poznan PL Residential 50,000 100 % - -

Shopping centre, Jastrzębie Jastrzębie PL Retail 43,300 1) - - -

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 % Spring 2013 Autumn 2013

Designer Outlet Village Moravia Moravia CZ Retail 21,500 100 %Phase I:Autumn 2012

Phase I:Autumn 2013

Retail park, Prešov Prešov SK Retail 9,300 100 % Spring 2013 Autumn 2013

Euro Mall Holding, total floor space approx. 380,0001) Based on fee income.


Retail park, Teplice, Czech RepublicEuro 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 pro-cess 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 RepublicIn 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 ex-pected to start in autumn 2012, with the opening schedu-led 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 RepublicIn 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 (fac-tory 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. Construc-tion of the first phase is expected to start in autumn 2012, with the opening scheduled for autumn 2013.

Retail park, Prešov, SlovakiaEuro 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 pro-cess has commenced, but is taking longer than expected. Construction is now expected to start in spring 2013, with the opening scheduled for autumn 2013.


TK DEVELOPMENT, REMAINING GROUP ACTIVITIES

Remaining group activities

TK Development, remaining group activities, includes the company TK Development A/S, which is the ultimate pa-rent 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


INVESTMENT PROPERTIES

The Group’s investment properties

Project name City/town Segment Floor space*) (m²)

Ownership interest Opening

Futurum Hradec Králové, Czech Republic Hradec Králové Retail 18,300 20 % November 2000Futurum Hradec Králové, Czech Republic - extension Hradec Králové Retail 9,950 20 %

Scheduled for spring 2012

Germany Lüdenscheid / Berlin Residential/mixed 26,000 100 % 1994-1998Total investment properties, including extension in progress 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 cen-tre, 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 “In-vestment properties under construction”. The current oc-

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 cash-flow model over a ten-year period. The assessed return requirement is unchanged compared to 31 January 2011.

Futurum Hradec Králové, Czech Republic - extension


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 Ras-mussen being elected as the Deputy Chairman of the Su-pervisory 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, Ma-nagement 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

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

The Supervisory and Executive Boards have today consid-ered 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 re-viewed by the Company’s auditors, is presented in accor-dance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Danish disclosure requirements for interim reports prepared by listed companies.

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

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 activi-ties 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.

Aalborg, 22 December 2011

EXECUTIVE BOARD

SUPERVISORY BOARD

Frede ClausenPresident and CEO

Robert AndersenExecutive Vice President

Niels RothChairman

Torsten Erik RasmussenDeputy Chairman

Per Søndergaard PedersenJesper Jarlbæk

Jens Erik Christensen

STATEMENT BY THE SUPERVISORY AND EXECUTIVE BOARDS ON THE INTERIM REPORT

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

CONSOLIDATED FINANCIAL STATEMENTS

DKKm Note Q1-Q3 2011/12

Q1-Q3 2010/11

Q3 2011/12

Q3 2010/11

Full year 2010/11

Net revenue 272.6 326.8 113.0 119.9 576.9External direct project costs 2 -129.6 -165.2 -38.2 -63.2 -350.9Value adjustment of investment properties, net 26.0 1.1 9.2 0.0 30.0Gross profit/loss 169.0 162.7 84.0 56.7 256.0

Other external expenses 25.8 27.0 8.1 8.6 36.6Staff costs 66.7 67.7 21.5 22.1 89.2Total 92.5 94.7 29.6 30.7 125.8

Profit/loss before financing and depreciation 76.5 68.0 54.4 26.0 130.2Depreciation and impairment of non-current assets 2.1 2.4 0.6 0.8 3.0Profit/loss before financing 74.4 65.6 53.8 25.2 127.2

Income from investments in associates 4 31.4 1.4 -0.5 0.5 0.2Financial income 4.6 12.7 1.4 4.1 28.2Financial expenses -71.6 -63.1 -24.0 -21.6 -81.4Total -35.6 -49.0 -23.1 -17.0 -53.0

Profit/loss before tax 38.8 16.6 30.7 8.2 74.2Tax on profit/loss for the period -5.5 6.4 3.3 4.2 0.6Profit/loss for the period 44.3 10.2 27.4 4.0 73.6

Earnings per share in DKK

Earnings per share (EPS) of nom. DKK 15 1.1 0.3 0.7 0.1 2.1Diluted earnings per share (EPS-D) of nom. DKK 15 1.1 0.3 0.7 0.1 2.1

Comprehensive income statement

Profit/loss for the period 44.3 10.2 27.4 4.0 73.6Foreign-exchange adjustment, foreign operations -34.2 15.0 -30.9 2.5 4.2Tax on foreign-exchange adjustment, foreign operations 6.3 3.0 6.4 1.9 -4.2Value adjustment of hedging instruments -0.9 -4.2 -1.0 1.7 -2.3Tax on value adjustment of hedging instruments 0.1 0.9 0.1 -0.3 0.4Comprehensive income statement for the period 15.6 24.9 2.0 9.8 71.7

Income statement

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

Balance sheet

DKKm Note 31.10.2011 31.01.2011 31.10.2010

ASSETS

Non-current assets

Goodwill 33.3 33.3 33.3Intangible assets 33.3 33.3 33.3

Investment properties 364.7 358.6 356.9Investment properties under construction 60.0 28.8 0.0Other fixtures and fittings, tools and equipment 5.2 6.8 7.5Property, plant and equipment 429.9 394.2 364.4

Investments in associates 0.4 3.6 27.0Receivables from associates 2.5 2.5 2.5Other securities and investments 2.0 1.9 1.2Deferred tax assets 298.0 287.2 292.0Other non-current assets 302.9 295.2 322.7

Total non-current assets 766.1 722.7 720.4

Current assets

Projects in progress or completed 3,386.6 3,424.7 3,396.6

Trade receivables 106.9 155.0 129.5Receivables from associates 16.8 17.8 1.9Contract work in progress 0.0 12.2 9.7Corporate income tax receivable 2.4 0.0 0.0Other receivables 112.2 106.6 98.3Prepayments 20.9 19.1 13.0Total receivables 259.2 310.7 252.4

Securities 4.0 4.0 4.0Deposits in blocked and escrow accounts 5 31.3 63.6 58.9Cash and cash equivalents 5 73.8 96.3 71.0

Total current assets 3,754.9 3,899.3 3,782.9

ASSETS 4,521.0 4,622.0 4,503.3


Balance sheet

DKKm Note 31.10.2011 31.01.2011 31.10.2010

EQUITY AND LIABILITIES

Equity

Share capital 631.0 631.0 631.0Other reserves 6 131.4 160.1 176.7Retained earnings 1,122.5 1,074.9 1,011.0Total equity 1,884.9 1,866.0 1,818.7

Liabilities

Credit institutions 150.9 146.4 146.6Provisions 3.9 7.2 12.7Deferred tax liabilities 49.5 55.1 64.4Other debt 3.9 3.9 3.9Total non-current liabilities 208.2 212.6 227.6

Credit institutions 2,123.3 2,199.5 2,120.7Trade payables 82.3 104.8 109.0Prepayments received from customers 0.0 0.0 0.0Corporate income tax 15.1 21.6 13.7Provisions 11.1 10.1 11.7Other debt 183.7 188.3 187.3Deferred income 12.4 19.1 14.6Total current liabilities 2,427.9 2,543.4 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


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 Share capital Other reservesRetained earnings Total equity

Equity at 1 February 2010 560.9 21.8 1,010.7 1,593.4Profit/loss for the period 0.0 0.0 10.2 10.2Other comprehensive income for the period 0.0 14.7 0.0 14.7Total comprehensive income for the period 0.0 14.7 10.2 24.9Capital decrease -140.2 140.2 0.0 0.0Capital increase 210.3 0.0 0.0 210.3Cost on capital increase 0.0 0.0 -12.7 -12.7Share-based payment 0.0 0.0 2.8 2.8Equity at 31 October 2010 631.0 176.7 1,011.0 1,818.7

Equity at 1 February 2011 631.0 160.1 1,074.9 1,866.0Profit/loss for the period 0.0 -28.7 44.3 15.6Other comprehensive income for the period 0.0 0.0 0.0 0.0Total comprehensive income for the period 0.0 -28.7 44.3 15.6

Share-based payment 0.0 0.0 3.3 3.3Equity at 31 October 2011 631.0 131.4 1,122.5 1,884.9


Cash flow statement

DKKm Q1-Q3 2011/12

Q1-Q3 2010/11

Full year 2010/11

Profit/loss before financing 74.4 65.6 127.2Adjustments for non-cash items: Value adjustment, investment properties, net -26.0 -1.1 -30.0 Depreciation 1.9 2.3 3.1 Share-based payment 3.3 2.8 3.9 Provisions -1.9 -4.5 -5.1 Foreign-exchange adjustment 2.2 -4.3 1.1Increase/decrease in investments in projects, etc. 13.4 -75.2 -84.5Increase/decrease in receivables 57.8 18.2 -22.0Changes in deposits on blocked and escrow accounts 32.4 4.5 -0.3Increase/decrease in payables and other debt -28.1 -39.3 -42.4Cash flows from operating activities before net financials and tax 129.4 -31.0 -49.0

Interest paid, etc. -98.2 -91.6 -124.6Interest received, etc. 1.0 3.8 6.1Corporate income tax paid -13.1 -19.3 -15.2Cash flows from operating activities 19.1 -138.1 -182.7

Investments in equipment, fixtures and fittings -0.5 -0.6 -0.6Sale of equipment, fixtures and fittings 0.1 0.3 0.5Investments in investment properties -12.0 -0.1 -1.8Purchase of securities and investments 0.0 -0.8 -2.3Sale of securities and investments 27.7 0.0 0.0Cash flows from investing activities 15.3 -1.2 -4.2

Repayment, long-term financing -24.8 -0.8 -1.2Raising of long-term financing 29.4 121.4 121.6Raising of project financing 19.0 254.5 317.4Reduction of project financing/repayments, credit institutions -74.9 -443.8 -435.3Capital increase 0.0 210.3 210.3Cost of share issue 0.0 -12.7 -13.3Cash flows from financing activities -51.3 128.9 199.5

Cash flows for the period -16.9 -10.4 12.6

Cash and cash equivalents, beginning of period 96.3 77.5 77.5Foreign-exchange adjustment of cash and cash equivalents -5.6 3.9 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.


Notes

Note 1. Segment information 26Note 2. External direct project costs 26Note 3. Share-based payment 27Note 4. Income from investments in associates 27Note 5. Liquidity reserves 28Note 6. Other reserves 28Note 7. Changes in contingent assets and contingent liabilities 29Note 8. Transactions with related parties 29

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 TKD Nordeuropa

Euro Mall Holding TKD Elimination Total

31.10.2011Net revenue, external customers 94.4 170.9 7.3 0.0 272.6Profit/loss after tax -50.3 97.4 -2.8 0.0 44.3Segment assets 1,749.0 2,149.0 2,062.1 -1,439.1 4,521.0Segment liabilities 1,517.8 1,251.8 177.2 -310.7 2,636.1

DKKm TKD Nordeuropa

Euro Mall Holding TKD Elimination Total

31.10.2010Net revenue, external customers 232.1 87.5 7.2 0.0 326.8Profit/loss after tax 0.7 8.5 1.0 0.0 10.2Segment assets 1,784.5 2,074.2 2,088.7 -1,444.1 4,503.3Segment liabilities 1,460.8 1,252.7 270.0 -298.9 2,684.6

Note 2. External direct project costs

Q1-Q32011/12

Q1-Q32010/11

Full year2010/11

Project costs 125.0 165.0 346.9Impairment losses on projects in progress and completed projects 4.6 0.2 4.0External direct project costs, total 129.6 165.2 350.9

Page


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 de-scription, 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 mil-lion, 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) 28.9 Expected volatility (%) 35 %Risk-free interest rate (%) 2.5 %Expected dividend rate (%) 0 %Term to expiry (months) 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 exer-cised in the intermediate exercise period.

The development in outstanding warrants is shown below:

Number of warrants 31.10.2011 31.01.2011 31.10.2010Outstanding warrants, beginning of the period 1,207,812 1,350,000 1,350,000Allocated during the period 500,000 554,516 554,516Lapsed due to termination of employment 0 -20,704 -20,704Expired in the period 0 -676,000 -676,000Outstanding warrants, end of period 1,707,812 1,207,812 1,207,812

Number of warrants exercisable at the reporting date 761,497 0 0Share-based payment recognized in the profit or loss (DKK million) 3.3 3.9 2.8

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:

Q1-Q32011/12

Q1-Q3 2010/11

Full year2010/11

Profit on sale 30.9 0.0 0.0Other income from associates 0.5 1.4 0.2Total income from investments in associates 31.4 1.4 0.2

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


Note 6. Other reserves

Special reserve

Reserve for value adjust-

ment of avail-able-for-sale

financial assets

Reserve for value

adjustment of hedging

instruments

Reserve for foreign-ex-

change adjust-ments Total

Other reserves at 1 February 2010 0.0 -0.1 0.0 21.9 21.8Capital decrease 140.2 0.0 0.0 0.0 140.2Other comprehensive income:Foreign-exchange adjustment 0.0 0.0 0.0 15.0 15.0Value adjustment of hedging instruments 0.0 0.0 -4.2 0.0 -4.2Value adjustment of financial assets available for sale 0.0 0.0 0.0 0.0 0.0Deferred tax on other comprehensive income 0.0 0.0 0.9 3.0 3.9Other comprehensive income, total 0.0 0.0 -3.3 18.0 14.7Other reserves at 31 October 2010 140.2 -0.1 -3.3 39.9 176.7

Other reserves at 1 February 2011 140.2 -0.1 -1.9 21.9 160.1Other comprehensive income:Foreign-exchange adjustment 0.0 0.0 0.0 -34.2 -34.2Value adjustment of hedging instruments 0.0 0.0 -0.9 0.0 -0.9Value adjustment of financial assets available for sale 0.0 0.0 0.0 0.0 0.0Deferred tax on other comprehensive income 0.0 0.0 0.1 6.3 6.4Other comprehensive income, total 0.0 0.0 -0.8 -27.9 -28.7Other reserves at 31 October 2011 140.2 -0.1 -2.7 -6.0 131.4

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.

Note 5. Liquidity reserves

The liquidity reserves break down as follows:

31.10.2011 31.01.2011 31.10.2010

Cash and cash equivalents 73.8 96.3 71.0Unutilized credit facilities 95.3 71.1 210.7Total 169.1 167.4 281.7Deposited funds for later release 31.3 63.6 58.9Total liquidity reserve 200.4 231.0 340.6


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 31.01.2011 31.10.2010

Supervisory Board and Executive Board (and their related parties)Holding of shares, in terms of number 1,355,435 *) 3,631,447 3,631,347Obligation towards Executive Board, employee bonds 1.5 1.5 1.5Underwriting commission, rights issue 0.0 0.3 0.0

Joint ventures Fee from joint ventures 2.2 3.9 0.7Interest income from joint ventures 2.0 3.1 5.3Interest expenses, joint ventures -2.1 -3.3 -2.7Receivables from joint ventures 72.3 67.6 70.6Payables to joint ventures 98.7 94.8 98.3

AssociatesInterest income from associates 0.1 0.2 0.1Receivables from associates 19.3 20.3 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.

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 pub-lished Annual Report.

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

COMPANY INFORMATION

Aalborg CopenhagenVestre Havnepromenade 7 Arne Jacobsens Allé 16, 3rd fl.DK-9000 Aalborg DK-2300 Copenhagen ST: (+45) 8896 1010 T: (+45) 3336 0170

Helsinki StockholmUudenmaankatu 7, 4. Gamla Brogatan 36-38FIN-00 120 Helsinki S-101 27 StockholmT: (+358) 103 213 110 T: (+46) 8 751 37 30

Vilnius PragueGynėjų str. 16 Karolinská 650/1LT-01109 Vilnius CZ-186 00 Prague 8T: (+370) 5231 2222 T: (+420) 2 8401 1010

Warsaw Berlinul. Mszczonowska 2 Ahornstraße 16PL-02-337 Warsaw D-14163 BerlinT: (+48) 22 572 2910 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

ISIN code: DK0010258995 (TKDV) • Municipality of registered office: Aalborg, DenmarkHomepage: www.tk-development.dk • e-mail: [email protected]

TK Development A/S: CVR no. 24256782 • TKD Nordeuropa A/S: CVR no. 26681006 • Euro Mall Holding A/S: CVR no. 20114800

no_19_tkd_q3_report_2011_12

Documents

groups project portfolio

project outline

groups total project

groups projects

project portfolio status

summary tk development

tal project area

interim report q1q3