TK Development has downgraded its profit forecast for the 2002/03 financial year to DKK 20 ââ¬" 40 million after tax. The main reason is a delay in the sale of projects, including the Groupââ¬â¢s share of the Fieldââ¬â¢s project, and derived effects. Management upholds its previous profit forecast of DKK 200 ââ¬" 240 million after tax for the 2003/04 financial year.
At its board meeting today, the Board of Directors decided to downscale the profit forecast for the current financial year from DKK 150 ââ¬" 180 million after tax to DKK 20 ââ¬" 40 million after tax. The main reason for this downward revision is a delay in the sale of projects due to slower decision-making on the part of investors, and in particular the thwarted expectation that the Groupââ¬â¢s share of the Fieldôs project would be sold in whole or in part in the current financial year.
This slowdown in sales means that the Groupââ¬â¢s capital resources are currently utilized to capacity under its Balance Sheet Management Model. Consequently the projects to be implemented have been prioritized, based on profitability and the amount of tied-up capital. Some projects have been postponed with a view to further optimization, while others have been withdrawn. These derived effects have had a negative impact on the Groupââ¬â¢s profit and thus contributed to the downgrading of the profit forecast for the current financial year.
Management will continue to focus on the Groupââ¬â¢s tied-up liquidity and capital and will
apply the principles established for balance sheet management and gearing in order to
reduce the balance sheet total. The Annual Accounts for the 2002/03 financial year ending on 31 January 2003 will be published on 29 April 2003.
Profit forecast for the 2003/04 financial year
A DKK 200 ââ¬" 240 million profit after tax is expected for the 2003/04 financial year, in line
with previous profit forecasts. The delay in the sale of projects will also affect the overall level of activity for the 2003/04 financial year, as the Group will be close to fully utilizing its capital resources under the Balance Sheet Management Model until additional projects have been sold.
The above-mentioned prioritization of projects in 2002/03 will be upheld in the 2003/04
financial year, and the Group will continue to implement projects in light of their estimated profitability and tied-up capital. At the same time, this will reduce risks and increase budget reliability for the projects that will be completed. This applies to several of the projects that have been put on hold in 2002/03 with implementation expected in the 2003/04 financial year. Accordingly, Management is confident that its profit forecast for the 2003/04 financial year is well anchored.
The Fieldôs project in outline
The Fieldôs shopping centre project in the ÃËrestad, Copenhagen, is being developed in
joint ownership with the Steen & Strøm Group. The first phase of the project comprises
about 95,000 square metres, plus a 60,000 square metre multi-storey car park. About
85,000 square metres have been allocated to retail trade, restaurants and leisure
activities. Construction is proceeding according to plan, and the centre is expected to open as scheduled in March 2004. The occupancy rate has reached about 75%, including premises reserved in advance.
Negotiations with potential investors are ongoing, and consequently a share of the profit
on the Fieldââ¬â¢s project has been included in the Groupââ¬â¢s profit forecast for the 2003/04
financial year.
Further information is available from Frede Clausen, President and CEO, tel. +45 88 96 10 10.
