Interim report for the six-month period ending 31 July 2010

Announcement no. 17/2010, 29 September 2010, TK Development A/S, CVR 24256782

Fashion Arena Outlet Center, Prague, Czech Republic TABLE OF CONTENTS

Summary 3 Consolidated financial highlights and key ratios 4 TK Development in outline 5 First six months 2010/11 5 Handed-over projects 5 Progress in the Group’s projects 5 Market conditions 6 Further project opportunities 6 Increase of capital base – to strengthen the Group’s financial platform 7 Incentive schemes 7 Post-balance sheet events 7 Outlook for 2010/11 7 The Group’s project portfolio 8 TKD Nordeuropa 9 Euro Mall Holding 12 Investment properties 15 Financial review 16 Other matters 18 Statement by the Supervisory and Executive Boards on the Interim Report 19 Consolidated financial statements 20 Company information 27

2/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Table of contents Summary

• TK Development recorded a profit of DKK 6.2 million • The Group’s project portfolio comprised 986,000 m² at after tax, compared to DKK 68.2 million in the same 31 July 2010 (957,000 m2 at 31 January 2010). period the year before. • Since the beginning of 2010, the market situation has • Consolidated equity totalled DKK 1,610.3 million at 31 developed favourably. The general investment climate is July 2010, corresponding to a solvency ratio of 35.1 %. marked by cautious optimism and a higher propensity to invest. There is growing demand for real property, • The Group’s 10,900 m² retail park in Uppsala, Sweden, with investors continuing to focus mainly on quality and was completed and opened fully let in March 2010. The location. retail park was sold, based on forward funding, and handed over to the investor, an institutional fund of • Management believes that land prices, construction German IVG Funds, in April 2010. costs, rent levels and property prices have stabilized at a new level. The new price levels underpin the profitability • The Group’s Sillebroen Shopping Centre in Frede- of future property development, and new projects in the rikssund, Denmark, was completed and opened as portfolio are thus expected to generate a normal profit. planned on 25 March 2010. The shopping centre has a current occupancy rate of 92 %, and negotiations with • An Extraordinary General Meeting was held on 1 July tenants for the remaining premises are ongoing. The 2010, at which the General Meeting resolved to carry centre enjoyed a successful opening and has a satisfac- out a capital increase in the form of a rights issue with tory influx of customers. total gross proceeds of DKK 210.3 million. The capital increase was implemented in August 2010. • The Group’s total project portfolio amounted to DKK 3,440 million at 31 July 2010, of which DKK 2,059 mil- • The capital increase has placed TK Development in a lion is attributable to projects that have been completed stronger position to seize the project opportunities in and thus generate cash flow. The annual net rent from the present market. the current leases amounts to DKK 148.3 million, equal to a return on invested capital of about 7.2 %. • For the 2010/11 financial year, the Group still expects to generate a profit after tax of about DKK 100 million. • In August 2010, the Group took over the development of a 5,400 m2 property project at Trøjborgvej in Århus, Denmark. A building permit has been granted, and the Further information is available from Frede Clausen, President and project has been fully financed. The project will be car- CEO, on tel. +45 8896 1010. ried out in cooperation with Nordica Real Estate A/S via a jointly owned project company in which the Group The expectations for future developments presented in this announcement, has a 20 % stake. including earnings expectations, are naturally subject to risks and uncer- tainties and may be affected by various factors, such as global economic • In conjunction with the takeover of the Trøjborgvej conditions and other significant issues, including credit-market, interest- project in Århus, Denmark, the Group sold two com- rate and foreign-exchange developments. Reference is also made to the pleted retail parks to the jointly owned project company. section “Risk issues” in the Group’s 2009/10 Annual Report.

• Based on satisfactory pre-construction letting, TK De- velopment began building the second phase of the Fash- ion Arena Outlet Center, Prague, the Czech Republic, of about 7,000 m² in April 2010. Construction on the second phase is progressing according to plan, and the opening is scheduled for October 2010.

Summary | TK Development A/S | Interim report for the six-month period ending 31 July 2010 3/27 Consolidated financial highlights and key ratios

DKKm H1 H1 Full year 2010/11 2009/10 2009/10

Financial highlights: Net revenue 206.9 1,177.7 1,369.9 Value adjustment, investment properties, net 1.1 2.1 -10.9 Gross profit/loss 106.0 161.4 200.5 Profit/loss before financing 40.4 84.7 57.5 Financing, etc. -32.9 -4.6 -17.9 Profit/loss before tax 8.4 80.6 39.4 Profit/loss for the period 6.2 68.2 25.4 Shareholders’ share of profit/loss for the period 6.2 68.2 25.4

Balance sheet total 4,586.9 4,191.4 4,377.3 Property, plant and equipment 364.9 380.5 364.3 of which investment properties 356.6 368.3 355.1 Project portfolio 3,439.6 2,922.5 3,249.5 of which total project portfolio 3,439.9 2,925.8 3,253.5 of which prepayments from customers -0.3 -3.3 -4.0 Contract work in progress 10.7 0.0 17.8 Equity 1,610.3 1,605.7 1,593.4

Cash flow from operating activities -181.8 -270.5 -582.8 Net interest-bearing debt, end of period 2,369.6 1,851.5 2,178.9

Key ratios: Return on equity (ROE) *) 0.8 % 8.8 % 1.6 % EBIT margin 19.5 % 7.2 % 4.2 % Solvency ratio (based on equity) 35.1 % 38.3 % 36.4 % Equity value (nom. DKK 20) 57.4 57.3 56.8 Price/Book Value 0.4 0.4 0.5 Earnings per share (EPS) of nom. DKK 20 0.2 2.4 0.9 Dividend (in DKK per share) 0.0 0.0 0.0 Listed price of shares (nom. DKK 20) 24 25 29

Key ratios adjusted for warrants: Return on equity (ROE) *) 0.8 % 8.8 % 1.6 % Solvency ratio (based on equity) 35.1 % 38.3 % 36.4 % Equity value (nom. DKK 20) 57.4 57.3 56.8 Diluted earnings per share (EPS-D) of nom. DKK 20 0.2 2.4 0.9

The calculation of key ratios was based on the guidelines issued by the Danish Society of Financial Analysts. Basis for calculating solvency ratio: equity and liabilities end of period.

*) Annualized.

4/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Consolidated financial highlights and key ratios TK Development in outline

First six months 2010/11 rate of 92 %, and negotiations with tenants for the remaining premises are ongoing. The centre enjoyed a successful open- TK Development recorded a profit of DKK 6.2 million after ing and has a satisfactory influx of customers. tax in the first six months of 2010/11, compared to DKK 68.2 million in the corresponding period the year before. The Group’s Galeria Sandecja Shopping Centre in Nowy Sącz, Poland, which opened in October 2009, is performing TKD Nordeuropa’s profit after tax amounted to DKK 1.3 well, with a satisfactory influx of customers. The shopping million against DKK 63.9 million in the same period the year centre has been fully let, but a few leases have changed hands. before. Euro Mall Holding’s profit after tax amounted to DKK 1.2 million compared to DKK 2.4 million in the same The Group’s Galeria Tarnovia Shopping Centre in Tarnów, period the year before. The profit after tax on the remain- Poland, which opened in November 2009, has been fully let, ing Group activities amounted to DKK 3.7 million after tax but a few leases have changed hands. The shopping centre is against DKK 1.9 million in the same period the year before. performing well and has a satisfactory influx of customers.

The balance sheet total amounted to DKK 4,586.9 million at The Group’s total project portfolio amounted to DKK 3,440 31 July 2010 against DKK 4,377.3 million at 31 January 2010. million at 31 July 2010, of which DKK 2,059 million is attrib- Consolidated equity totalled DKK 1,610.3 million, and the utable to projects that have been completed and thus generate solvency ratio stood at 35.1 %. cash flow. The operation of these completed projects, which largely consist of shopping centres, is proceeding satisfacto- Handed-over projects rily. The annual net rent from the current leases amounts to DKK 148.3 million, equal to a return on invested capital of In the first quarter of 2010/11, the Group handed over about 7.2 %. projects of about 11,000 m². No projects were handed over in the second quarter of 2010/11. The Group’s remaining retail projects on which construction Retail park, Uppsala, Sweden is already ongoing or about to start are still attracting a fair TKD Nordeuropa has developed and constructed a 10,900 amount of interest from tenants. During the period under re- m² retail park in Uppsala, Sweden. The retail park has been view, the Group concluded several lease agreements for such sold to an institutional fund of German IVG Funds on the projects, which are thus progressing as planned. basis of forward funding. The retail park opened fully let in March 2010 and was handed over to the investor in April In August 2010, TK Development took over the development 2 2010. of a 5,400 m property project at Trøjborgvej in Århus. The project premises consist of a 1,200 m2 supermarket unit let to 2 Tivoli Residential Park, Targówek, Warsaw, Poland REMA 1000, a business lease of close to 900 m and rental 2 In autumn 2008, the Group completed its first housing housing of 3,300 m . A building permit has been granted, and project in Poland. The project consists of 280 apartments the project has been fully financed. The project is scheduled sold as owner-occupied units, of which the majority were for completion in autumn 2011 and will be carried out in co- handed over to the new owners in previous financial years. operation with Nordica Real Estate A/S via a jointly owned The remaining four residential units were handed over to the project company in which the Group has a 20 % stake. TK buyers in Q1 2010/11. Development will be paid on a fee basis for the services made available by the Group to the jointly owned project company.

Progress in the Group’s projects At the same time as taking over the Trøjborgvej project in TK Development continues to focus on executing existing Århus, Denmark, the Group sold two completed retail parks projects in the portfolio, as well as on securing satisfactory with total premises of 3,900 m² to the jointly owned project pre-construction letting or sales. This has ensured sustained company. good project progress and further optimization of the indi- vidual projects. Although earnings on part of the Group’s In Poland, the construction of 5,600 m² of office space in the existing project portfolio are under pressure from the eco- Tivoli Residential Park, Warsaw, started in spring 2010, and is nomic downturn and its impact on market conditions, lower progressing as planned. Of the total project premises, about construction costs have partially offset this effect. 3,500 m² has been sold to a user, based on forward funding.

The Group’s Sillebroen Shopping Centre in Frederikssund, Based on satisfactory pre-construction letting, TK Develop- Denmark, was completed and opened as planned on 25 ment began building the second phase of the Fashion Arena March 2010. The shopping centre has a current occupancy Outlet Center, Prague, the Czech Republic, of about 7,000

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 5/27 m² in April 2010. Construction on the second phase is pro- Overall, Management believes that land prices, construction gressing according to plan, and the opening is scheduled for costs, rent levels and property prices have stabilized at a new October 2010. level. The new price levels underpin the profitability of future property development, and new projects in the portfolio are Market conditions thus expected to generate a normal profit.

As a result of the economic crisis, the Group has faced dif- Macroeconomic indicators in the form of GDP, private con- ficult market conditions in the past few years. sumption and unemployment in the Group’s markets appear from the figure below. The indicators give reason to expect The financial markets have been subject to uncertainty, with growth in all the Group’s markets. credit institutions being extremely reluctant to provide loans for financing real property or requiring high equity contribu- Macroeconomic indicators: tions to the individual projects from both project developers 2009 2010e 2011e 2012e and investors. GDP (% y/y) Denmark -4.7 1.4 1.8 2.0 The economic downturn has caused land and construction Sweden -5.1 4.2 2.8 3.1 prices to drop continuously over the past few years, but with Finland -8.0 3.5 3.0 3.5 great variations from project to project and country to coun- Latvia -18.0 -1.8 3.0 4.3 try. Lithuania -14.9 0.9 3.2 4.0 Poland 1.8 3.4 3.0 3.7 Czech Republic -4.0 2.2 3.0 3.5 The Group has experienced slackened demand for rental Slovakia *) -4.7 3.6 3.9 N/A space in recent years, with tenants taking longer to make lease decisions. Lower private consumption and the consequent Private consumption (% y/y) impacts have been putting pressure on rent levels for some Denmark -4.6 3.2 2.2 1.7 time. Sweden -0.8 3.0 2.5 2.5 Finland -1.9 2.4 2.6 3.0 The investment climate in the past few years has been char- Latvia -22.2 -3.6 3.8 4.8 acterized by uncertainty about real property pricing due to Lithuania -16.8 -3.5 4.0 5.0 the low number of completed property deals in the Group’s Poland 2.3 1.8 1.8 2.1 markets. This has resulted in a general wait-and-see attitude Czech Republic -0.1 1.5 2.4 3.0 among investors. Slovakia *) -0.7 1.5 3.1 N/A

Unemployment (%) Since the beginning of 2010, the market situation has devel- Denmark 3.4 4.4 4.7 4.5 oped favourably. Sweden 8.3 8.4 7.7 7.1 Finland 8.2 8.5 8.1 7.7 In the letting market, tenants are focusing increasingly on Latvia 17.1 21.5 20.0 18.2 location, which means project location is even more critical Lithuania 13.7 17.0 16.0 14.8 than in the past. Rent levels in the retail segment are expected Poland 11.0 12.2 11.4 10.8 to be stable in the period ahead. The Group’s projects are still Czech Republic 8.1 9.0 8.0 7.5 attracting a fair amount of interest from tenants, particularly Slovakia *) 12.1 14.0 13.4 N/A retail projects on which construction is already ongoing or Source: Nordea Bank, Economic Outlook, September 2010 *) OECD Economic Outlook No. 87, May 2010 about to start. During the period under review, the Group concluded several lease agreements for such projects.

The present investment climate is marked by cautious opti- Further project opportunities mism and a higher propensity to invest. There is a growing In recent years, the market conditions have opened up new demand for real property, with investors continuing to focus project opportunities. Management is currently assessing spe- mainly on quality and location. cific new project opportunities, and the Group expects to en- ter into agreements regarding several of these projects. Management finds that land prices will continue to fluctuate greatly depending on location and use. The level of construc- Moreover, TK Development has experienced an increase in tion costs is considered fairly stable, with some variation from the opportunities for entering into long-term option agree- country to country. ments for land on favourable terms. To underpin the Group’s long-term earnings potential, TK Development is working

6/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Management's review to secure future project opportunities, including by enter- rants for a total of up to nominally DKK 8,000,000 (400,000 ing into long-term option agreements for land. Long-term shares of DKK 20 each) to the Executive Board and other option agreements have been concluded for projects where executive staff members. On 4 June 2010, the Supervisory construction startup is expected within a period of one to Board decided to exercise this authorization, and therefore three years, which means that the Group can work on the 100,000 warrants have been granted to the Executive Board contemplated project for a fairly long period, allowing time and 294,000 warrants to 26 executive staff members. Thus, for negotiations with public authorities, prospective tenants a total of 394,000 warrants have been allocated. The aim of and investors. The aim is to enable the best possible project allocating warrants is to forge a link between the individual preparation before construction startup, including to secure a staff member’s efforts and long-term value creation in the high occupancy rate. Group. Reference is also made to company announcement no. 7/2010. The market conditions in recent years have also opened up alternative earnings possibilities. These options include taking As a consequence of the capital reduction and capital increase over competing development projects or making the Group’s implemented in August 2010, see above, the Supervisory core competencies available to credit institutions with dis- Board resolved, in accordance with the Company’s Articles tressed projects that can be completed within a relatively of Association, to adjust the number of warrants allocated short period of time. to the Company’s Executive Board and other executive staff members as well as the subscription price for exercising the Increase of capital base – to strength- warrants. en the Group’s financial platform The adjustment was made to ensure that the value of the In order to strengthen the Group’s financial platform and al- warrants for the employees will be maintained after imple- low proactive use of the earnings potential offered by existing mentation of the above-mentioned alterations to TK Devel- projects and new project opportunities, it was resolved at the opment’s capital structure. The adjustment means that the Extraordinary General Meeting on 1 July 2010 to carry out a employees will be allotted a number of additional warrants, capital increase in the form of a rights issue with total gross and that the subscription price upon exercising them will be proceeds of DKK 210.3 million. The capital increase was reduced. Reference is also made to company announcement fully subscribed for and implemented in August 2010. no. 14/2010.

For technical reasons, a capital reduction was implemented Post-balance sheet events immediately before the capital increase, whereby the de- nomination of all shares was written down from DKK 20 No major events affecting the Company other than those to DKK 15. The capital reduction amounted to DKK 140.2 mentioned in the Management’s review have occurred after million, which was allocated to a special fund under equity. the reporting date. Subsequently, this special fund can only be used following a resolution to this effect at a General Meeting. The capital in- Outlook for 2010/11 crease was implemented by issuing 14,021,905 new shares of nominally DKK 15 at a price of DKK 15, thus yielding gross Based on market expectations in the current financial year, proceeds of DKK 210.3 million. Reference is also made to the sales already completed and the potential of the existing company announcement no. 12/2010. project portfolio, with several completed projects being ready for sale, Management still expects to generate a profit after tax Thus, TK Development is in a stronger position to seize the of about DKK 100 million. project opportunities in the present market. TK Develop- ment is currently considering specific projects for which it The expectations for future developments presented in this announcement, would like to secure the rights at the current price level. Man- including earnings expectations, are naturally subject to risks and uncer- agement expects that this will help the Group gain faster ac- tainties and may be affected by various factors, such as global economic cess to project opportunities with a higher anticipated return conditions and other significant issues, including credit-market, interest- than that offered by most of the existing ongoing projects in rate and foreign-exchange developments. Reference is also made to the the portfolio. section “Risk issues” in the Group’s 2009/10 Annual Report.

Incentive schemes At the Annual General Meeting on 25 May 2010, the Supervi- sory Board of TK Development was authorized to issue war-

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 7/27 The Group’s project portfolio The development of the Group’s project portfolio is shown below (in square metres): Project portfolio status (‘000) m² 31.01. 31.01. 31.07. The Group’s project portfolio comprised 986,000 m² at 31 2009 2010 2010 July 2010. The project portfolio consists of sold projects of 135,000 m² and of remaining projects of 851,000 m². At Sold Completed 0 0 0 31 January 2010, the Group’s project portfolio comprised In progress 56 25 15 957,000 m². Not initiated 127 121 120 Total 183 146 135 The development in the Group’s project portfolio is outlined below: Remaining Completed 35 87 115 31.01. 31.01. 31.07. In progress 103 60 42 DKKm 2009 2010 2010 Not initiated 639 664 694 Total 777 811 851 Sold Completed 0 0 0 Total project portfolio 960 957 986 In progress 4 2 10 Number of projects 63 66 67 Not initiated 41 12 11 Table 2 Total 45 14 21 The table below shows the distribution of the carrying Remaining amounts of projects in the portfolio at 31 July 2010 for the Completed 565 1,352 2,059 two business units. In progress 813 720 204 Not initiated 1,118 1,164 1,156 Projects at TKD Euro Group, total *) Total 2,496 3,236 3,419 31 July 2010 Nord- Mall Per cent DKKm europa Holding of total Net project portfolio 2,541 3,250 3,440 Forward funding 943 351 344 Sold Gross project portfolio 3,484 3,601 3,784 Completed 0 0 0 0.0 % Forward funding in % of In progress 10 10 10 0.3 % gross carrying amount of 95.4 % 96.2 % 94.2 % Not initiated 7 7 11 0.3 % sold projects Total 17 17 21 0.6 % Table 1 Remaining By means of forward funding, the Group reduces the funds Completed 1,033 991 2,024 60.1 % tied up in the portfolio of sold projects. The overall reduc- In progress 121 83 204 6.1 % tion in forward funding since 31 January 2010 results from Not initiated 479 641 1,120 33.2 % a reduction due to the handover of the Group’s 10,900 m² Total 1,633 1,715 3,348 99.4 % retail park in Uppsala, Sweden, sold on the basis of forward funding, and an increase due to forward funding accumulated Project portfolio 1,650 1,719 3,369 100.0 % *) excl. TK Development, Parent Company, a total of DKK 71 million. on sold projects in progress. Table 3

As appears from the table above, the carrying amount of re- maining completed projects increased substantially during the period under review. This increase is attributable to the recent opening of the Group’s Sillebroen Shopping Centre in Frede- rikssund, Denmark.

8/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Management's review The table below shows the number of square metres in the TKD Nordeuropa project portfolio, distributed on the two business units. The remaining part of the Group has no development projects. The Group’s activities in Northern Europe are placed in the wholly-owned subgroup TKD Nordeuropa. TKD Nordeu- Projects at TKD Euro Group, total*) ropa primarily operates in the retail property segment (shop- 31 July 2010 Nord- Mall Per cent ping centres and retail parks), the office segment and the (‘000) m² europa Holding of total mixed segment.

Sold Completed 0 0 0 0.0 % Project portfolio In progress 15 0 15 1.5 % Not initiated 7 113 120 12.2 % The development potential of the project portfolio repre- Total 22 113 135 13.7 % sented 533,000 m² at 31 July 2010, of which sold projects accounted for 21,000 m² and remaining projects for 478,000 Remaining m². The project portfolio had a total development potential Completed 57 58 115 11.7 % of 510,000 m² at 31 January 2010. In progress 32 10 42 4.3 % Not initiated 422 272 694 70.4 % Completed projects Total 511 340 851 86.3 % Sillebroen, shopping centre, Frederikssund, Denmark In Frederikssund, TKD Nordeuropa has constructed a shop- Project portfolio 533 453 986 100.0 % ping centre with a total floor space of about 28,000 m². The *) excl. TK Development, Parent Company Table 4 shopping centre comprises supermarket units of about 5,000 m² and speciality stores and restaurants of about 20,000 m². A more detailed description of all major projects appears In addition, the project includes about 3,000 m² of residential from the section concerning the project portfolio under the space. The occupancy rate has reached 92 %, and the tenants individual business units. include Kvickly, Fakta, Hennes & Mauritz, Synoptik, Matas, Skoringen, Deichmann and Vero Moda. The centre opened in

Sillebroen, shopping centre, Frederikssund, Denmark

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 9/27 Project outline The outline below lists the key projects of TKD Nordeu- ing amount of the project portfolio at 31 July 2010. In terms ropa’s project portfolio. The carrying amounts of the projects of carrying amount, TKD Nordeuropa’s five largest projects listed below accounted for more than 95 % of the total carry- represented a total of DKK 1,112.6 million at 31 July 2010.

Floor TKD’s Construction start/ Opening/ Project name City/town Country Segment space ownership expected construction expected opening (m²) interest start

Completed Retail/ Sillebroen, shopping centre Frederikssund DK resi­dential 28,000 100 % 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 Retail park, Anelystparken Århus DK Retail 2,800 100 % Early 2008 Mid-/autumn 2008 Retail park, Østergade Brønderslev DK Retail 1,100 100 % Autumn 2008 Mid-2009 Vasevej Birkerød DK Mixed 4,400 100 % - - Retail park, Kofoten, Kristianstad Kristianstad SE Retail 6,300 100 % Mid-2008 Mid-2011

In progress Retail park, Enebyängen, Autumn 2010/ Danderyd Danderyd SE Retail 14,500 100 % Autumn 2009 spring 2012 Under- Amerika Plads, ground car underground car park Copenhagen DK park 32,000 50 % 2004 As units are completed

Not initiated Office/ Østre Teglgade Copenhagen DK residential 24,000 1)100 % As units are completed As units are completed Amerika Plads, lot C Copenhagen DK Mixed 13,800 50 % 2012 2014 Amerika Plads, lot A Copenhagen DK Office 11,000 50 % 2011 2013 Shopping centre, Esbjerg Esbjerg DK Retail 28,000 100 % 2010/11 2012/13 Århus South, phase II Århus DK Retail 2,800 100 % 2011 2011 Ejby Industrivej Copenhagen DK Office 12,900 100 % 2011 2011 Hadsundvej Aalborg DK Mixed 8,600 100 % As units are completed As units are completed Østre Havn/Stuhrs Brygge Aalborg DK Mixed 80,000 1)50 % As units are completed As units are completed Retail park, Mejlstedgade Brønderslev DK Retail 2,400 100 % - - Trøjborgvej Århus DK Mixed 5,400 2) End-2010 Autumn 2011 Handelskvarteret Kulan Gothenburg SE Mixed 45,000 100 % 2012 2014 Retail park, Karlstad Karlstad SE Retail 15,000 100 % End-2011 End-2012 Retail park, Söderhamn Söderhamn SE Retail 10,000 100 % Mid-2011 Mid-2012 Pirkkala Retail Park, phase II Tammerfors FI Retail 5,500 100 % 2011 2011 Kaarina Retail Park Turku FI Retail 7,500 100 % 2011 2011 DomusPro Retail Park Vilnius LT Retail 13,600 100 % - - Milgravja Street Riga LV Residential 10,400 100 % - - Ulmana Retail Park Riga LV Retail 12,700 100 % - -

TKD Nordeuropa, total floor space approx. 415,000 1) TKD Nordeuropa’s share of profit on development amounts to 70 %. 2) Based on fee income.

10/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Management's review March 2010. A multi-storey car park with about 800 parking price is expected to be in the SEK 280 million range, based spaces has been established at the centre. An agreement has on forward funding. The project premises have been fully let, been made regarding the sale to a private investor of options and construction started in November 2009. The project will to build the residential space. be built in two phases, the first consisting of 11 stores to open in October 2010, and the second consisting of Plantagen to Premier Outlets Center, Ringsted, Denmark open in spring 2012. This project has been developed in a 50/50 joint venture with Miller Developments, a Scottish subsidiary of the Miller Amerika Plads, underground car park, Copenhagen, Denmark Group. The project consists of a factory outlet centre and Kommanditaktieselskabet Danlink Udvikling (DLU), which restaurant facilities, with a total floor space of 13,200 m² and is owned 50/50 by Udviklingsselskabet By og Havn I/S and about 1,000 parking spaces. This is Denmark’s first major fac- TKD Nordeuropa, owns three projects at Amerika Plads: lot tory outlet centre. The centre opened in March 2008, and the A, lot C and an underground car park. Part of the under- current occupancy rate is 60 %. The most recent newcomers ground car park in the Amerika Plads area has been built. to the Premier Outlets Centre are G-Star and Diesel. Negotia- The Group expects to sell the total parking facility upon final tions with several potential Danish and international tenants completion. are ongoing. The centre is expected to be sold after a run-in and maturing period. Projects not initiated Østre Teglgade, Copenhagen, Denmark Retail park, Anelystparken, Århus, Denmark TKD Nordeuropa owns an attractively located project area This project consists of a 2,800 m² retail park, which has been of 24,000 m² at Teglholmen. The area is well-suited for a fully let. The retail park has been completed and handed over housing or office project. The project may be built in phases to the tenants. After the reporting date, the project was sold in step with letting and/or sale. A local plan for the area is to a project company owned 80/20 by Nordica Real Estate currently being drawn up. A/S and TKD Nordeuropa. Amerika Plads, lots A and C, Copenhagen, Denmark Retail park, Østergade, Brønderslev, Denmark Kommanditaktieselskabet Danlink Udvikling (DLU), which Following the handover of a Føtex supermarket to Dansk is owned 50/50 by Udviklingsselskabet By og Havn I/S and Supermarked and a petrol station to OK Benzin, this project TKD Nordeuropa, owns three projects at Amerika Plads: lot comprises retail premises of about 1,100 m², let to Punkt 1 A, lot C and an underground car park. A building complex and an amusement arcade operator. After the reporting date, with about 11,000 m² of office space is to be built on lot A, the project was sold to a project company owned 80/20 by and a building complex with about 13,800 m² of commercial Nordica Real Estate A/S and TK Development. and residential space on lot C. Construction will take place as the space is let. Vasevej, Birkerød, Denmark TKD Nordeuropa owns a property of about 3,000 m² at Va- Shopping centre, Esbjerg, Denmark sevej in Birkerød, rented by SuperBest. Plans are in progress The Group and DSB Ejendomsudvikling A/S have pro- to build an extension of about 1,400 m². gressed far in the new project development on the railway land at Esbjerg station, Denmark. The plan is to build a Kofoten, Kristianstad, Sweden 28,000 m² shopping centre. The local planning process has TKD Nordeuropa owns a property in Kristianstad. After the been initiated, and the final local plan is expected to be avail- addition of an extension, the project will comprise a retail able at the beginning of 2011. park of about 6,300 m². The existing complex of about 4,500 m², is fully let. The entire project is expected to be completed Århus South, phase II, Denmark by mid-2011. In Århus, the Group owns an area for developing a 5,300 m² retail project. The project consists of two phases, of which Projects in progress the first completed phase of about 2,500 m² was handed Retail park, Enebyängen, Danderyd, Sweden over in a previous financial year to the investors: a property TKD Nordeuropa is building a retail park of about 14,500 m² company and a user. Construction of the second, 2,800 m2 in the municipality of Danderyd near Stockholm. The lease phase will start once the letting status and relevant authority agreements concluded include 4,300 m² let to supermarket approvals are in place. operator Coop Extra, 4,000 m² let to a furniture store and other premises let to Plantagen. The project has been sold to Østre Havn/Stuhrs Brygge, Aalborg, Denmark the German investment fund Commerz Real. The total selling In the area previously occupied by Aalborg Shipyard at

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 11/27 Stuhrs Brygge, TKD Nordeuropa is developing a business DomusPro Retail Park, Vilnius, Lithuania and residential park of about 80,000 m² through a company TKD Nordeuropa owns a plot of land in Vilnius reserved for jointly owned with Frederikshavn Maritime Erhvervspark on building a 13,600 m² retail park. The Group has postponed a 50/50 basis. The area was acquired by the jointly owned the startup of construction until the project has been sold company, with payment being effected for the development or satisfactory pre-completion letting achieved, relative to the rights acquired in step with the development and execution market situation in the country. of specific projects. The local plan for part of the area allows for the construction of about 8,000 m² of residential space. Euro Mall Holding Negotiations with an investor for this project are ongoing. TK Development carries on its activities in Central Europe Retail park, Mejlstedgade, Brønderslev, Denmark primarily through Euro Mall Holding, with the main focus After handing over the Føtex supermarket to Dansk Super- on the retail property segment (shopping centres and retail marked in the Group’s above-mentioned retail park at Øster- parks) and the mixed segment and in Poland, also the resi- gade, Brønderslev, the Group has taken over the previous dential segment. 2,400 m² Føtex property, which is to be let to retail stores. Project portfolio Trøjborgvej, Århus, Denmark TKD Nordeuropa has taken over the development of a 5,400 The development potential of the project portfolio repre- m² property project at Trøjborgvej in Århus, Denmark. The sented 453,000 m² at 31 July 2010, of which sold projects project premises consist of a 1,200 m² supermarket unit let to accounted for 113,000 m² and remaining projects for 340,000 REMA 1000, a business lease of close to 900 m² and rental m². The project portfolio had a total development potential housing of 3,300 m². A building permit has been granted, of 447,000 m² at 31 January 2010. and the project has been fully financed. The project is sched- uled for completion in autumn 2011 and will be carried out Projects completed in cooperation with Nordica Real Estate A/S via a jointly The Galeria Tarnovia Shopping Centre, Tarnów, Poland owned project company in which TKD Nordeuropa has a In the Polish town of Tarnów, Euro Mall Holding has con- 20 % stake. TKD Nordeuropa will be paid on a fee basis for structed a 16,500 m² shopping centre, comprising a supermar- the services made available by the Group to the jointly owned ket of about 2,000 m² and specialty stores of about 14,500 project company. m². The fully-let shopping centre opened in November 2009.

The Kulan commercial district, shopping centre and service/commercial The Galeria Sandecja Shopping Centre, Nowy Sącz, Poland space, Gothenburg, Sweden In the Polish town of Nowy Sącz, Euro Mall Holding has TKD Nordeuropa and the Swedish housing developer JM developed a 17,300 m² shopping centre, consisting of a 5,000 AB have entered into a cooperation agreement with SKF Sve- m² hypermarket and specialty stores of about 12,300 m². The rige AB to develop SKF’s former factory area in the old part centre opened fully let in October 2009. of Gothenburg. The contemplated project comprises a total floor space of about 75,000 m²: 30,000 m² for a shopping Fashion Arena Outlet Center, Prague, Czech Republic centre, 15,000 m² for services/commercial use and 30,000 m² In Prague, the Group is developing a 25,000 m² factory outlet for housing. TK Development will be in charge of developing centre. This project is being developed in a joint venture with the 45,000 m² for a shopping centre, services and commercial an international business partner. The first 18,000 m² phase, facilities, while JM AB will have responsibility for the 30,000 which opened on 15 November 2007, has a current occupan- m² of housing. The acquisition of land for the project will be cy rate of 96 %. Following satisfactory pre-construction let- completed following the adoption of a local plan, expected ting of the second, 7,000 m² phase of this project, construc- in 2012. tion was started in spring 2010. The current occupancy rate for phase II is 47 %, and thus 82 % for the total outlet centre. Kaarina Retail Park, Turku, Finland The second phase is projected to open in October 2010. At In the Finnish town of Turku, TKD Nordeuropa owns a present, negotiations with several potential Czech and inter- plot of land allowing for the construction of a 7,500 m² retail national tenants for the remaining premises are ongoing. park. Work is proceeding on an extension of the project to about 13,000 m², and negotiations with potential users/ten- Most Retail Park, Czech Republic ants are ongoing. 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

12/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Management's review rate for this phase is 87 %. Based on the estimated construc- letting and construction management of the project on a fee tion start date, the second phase is scheduled to open in au- basis. The next project steps and construction start date have tumn 2012. not yet been determined.

Projects in progress Bytom Retail Park, Bytom, Poland Tivoli Residential Park, service/office space, Targówek, Warsaw, Po- Euro Mall Holding intends to develop a retail park with total land leasable space of about 25,800 m² on its site at the Plejada Group is developing about 5,600 m² of service/office space Shopping Centre in Bytom, which is centrally located in the on the land owned by Euro Mall Holding in the Targówek Katowice region. Construction of the project will be phased area in Warsaw. The Group has entered into an agreement in step with letting. Letting efforts are ongoing, and construc- with a user regarding the sale of about 3,500 m² of this space tion will start as space is let. for a headquarters building. The sales agreement is based on forward funding. Construction began in spring 2010 and is Liberec Retail Park, phase II, Czech Republic expected to be completed in mid-2011. This project consists of a 17,600 m² retail park. The first 11,400 m² phase, which opened on 17 September 2008, has Fashion Arena Outlet Center, Prague, Czech Republic been sold and handed over to the investor. The second 6,200 For more details about phase II of the project, please see the m² phase is scheduled to open in autumn 2011. The project description above under completed projects. has been sold to GE Real Estate Central Europe on the basis of forward funding. Projects not initiated Stocznia Multifunctional Centre, Young City, Gdansk, Poland Futurum Hradec Králové, extension, Czech Republic Based on current plans, this multifunctional centre in Gdansk, The Futurum Hradec Králové Shopping Centre, owned by a Poland, will have total premises of about 61,000 m², to be de- joint venture between GE Capital, Heitman and TK Devel- veloped in a joint venture with Atrium European Real Estate. opment in which TK Development has a 20 % ownership The centre will comprise retail, restaurant and leisure facili- interest, is to be extended by almost 10,000 m². The current ties. Atrium European Real Estate has undertaken the overall occupancy rate is 77 %. Construction is expected to start in project financing and will retain a long-term investment in the autumn 2010, and the opening is scheduled for spring 2012. retail, restaurant and leisure premises. Negotiations are being held with several tenants, all indicating keen interest in renting Retail park, Teplice, Czech Republic premises in the centre. During the development period, TK Euro Mall Holding owns plots of land in Teplice with a view Development will generate earnings through fee income and to constructing a retail park of about 7,600 m². A building a profit share based on the rental income obtained when the permit has been granted for the project. Letting is ongoing, centre opens. The building permit is expected to be issued at and construction is expected to start in spring 2012, with the the end of 2010. Once the work on the infrastructure starts, it opening scheduled for autumn 2012. will be decided when to initiate project construction. Shopping centre, Frýdek Místek, Czech Republic Residential park, Bielany, Warsaw, Poland In the Czech town of Frýdek Místek, Euro Mall Holding has Euro Mall Holding owns a tract of land in Warsaw allowing acquired a long-term option to buy a plot of land for the for the construction of 900-1,000 residential units. The plan purpose of building a 14,800 m² shopping centre. Construc- is to build the project in four phases. Construction of the first tion is expected to start in autumn 2012, with the handover phase is anticipated to start in spring 2011, once the relevant scheduled for autumn 2013. authority approvals are in place and the pre-construction sale has reached a satisfactory level, with handover scheduled for Retail park, Prešov, Slovakia 2012. The remaining phases will then be handed over succes- Euro Mall Holding owns plots of land in Prešov with a view sively. The residential units are expected to be sold as com- to constructing a retail park of about 9,300 m². A building monhold units to private users. permit has been granted for the project. Letting is ongoing, and construction is expected to start in spring 2012, with the Shopping centre, Jastrzębie, Poland opening scheduled for autumn 2012. 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 en- tered into an agreement with Atrium European Real Estate regarding Euro Mall Holding’s assistance for development,

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 13/27 Project outline

The outline below lists the key projects of Euro Mall Hold- ing amount of the project portfolio at 31 July 2010. In terms ing’s project portfolio. The carrying amounts of the projects of carrying amount, Euro Mall Holding’s five largest projects listed below accounted for more than 95 % of the total carry- represented a total of DKK 1,420.5 million at 31 July 2010.

Floor TKD’s Construction start/ Project name City/town Country Segment space ownership expected construction Opening/ (m²) interest start expected opening

Completed Galeria Tarnovia Tarnów PL Retail 16,500 100 % Autumn 2008 November 2009 Galeria Sandecja Nowy Sącz PL Retail 17,300 100 % Mid-2008 October 2009 Fashion Arena Outlet Center, phase I Prague CZ Retail 17,800 75 % Spring 2007 November 2007 Most Retail Park, phase I Most CZ Retail 6,400 100 % Autumn 2008 Spring 2009

In progress Services/ Tivoli Residential Park, Targówek Warsaw PL offices 5,600 100 % Spring 2010 Mid-2011 Fashion Arena Outlet Center, phase II Prague CZ Retail 7,200 75 % Spring 2010 October 2010

Not initiated Stocznia multifunctional centre, Young City Gdansk PL Mixed 61,000 1) 76 % 2011 2013 Residential/ As units are Residential Park, Bielany Warsaw PL service 57,300 100 % Spring 2011 Completed Retail/ Poznan Warta Poznan PL residential 50,000 100 % - - Shopping centre, Jastrzębie Jastrzębie PL Retail 43,300 1) - - - As units are Bytom Retail Park Bytom PL Retail 25,800 100 % As units are completed completed Prague Airport Ruzyne II Prague CZ Mixed 6,900 100 % 2013 2013 Sterboholy Retail Park Prague CZ Retail 6,000 100 % 2013 2013 Liberec Retail Park, II Liberec CZ Retail 6,200 100 % Early 2011 Autumn 2011 Hradec Futurum Hradec Králové, extension Králové CZ Retail 9,950 2 ) 20 % Autumn 2010 Spring 2012 Retail park, Teplice Teplice CZ Retail 7,600 100 % Spring 2012 Autumn 2012 Frýdek Shopping centre, Frýdek Místek Místek CZ Retail 14,800 100 % Autumn 2012 Autumn 2013 Most Retail Park, phase II Most CZ Retail 2,000 100 % Spring 2012 Autumn 2012 Retail park, Prešov Prešov SK Retail 9,300 100 % Spring 2012 Autumn 2012

Euro Mall Holding, total floor space approx. 370,000 1) Based on fee income. 2) Euro Mall Holding’s share of profit amounts to 50 %.

14/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Management's review Investment properties

The Group’s investment properties Floor space*) Ownership Project name City/town Segment Opening (m²) interest Futurum Hradec Králové, the Czech Republic Hradec Králové Retail 18,300 20 % Nov. 2000 Germany Lüdenscheid/Berlin Residential/mixed 26,000 100 % 1994-1998 Total investment properties 44,300 *) incl. common areas

The Group’s investment properties are included in the bal- There are plans to extend the Futurum Hradec Králové Shop- ance sheet under property, plant and equipment. The value ping Centre by almost 10,000 m². Construction is expected of these properties is measured at fair value and amounted to to start in autumn 2010, and the opening is scheduled for DKK 356.6 million at 31 July 2010 against DKK 355.1 mil- spring 2012. lion at 31 January 2010. Germany Central Europe The Group has five investment properties in Germany, of Euro Mall Holding’s investment property Futurum Hradec which a combined commercial and residential property is Králové had a carrying amount of DKK 160.5 million at 31 located in Lüdenscheid in the western part of the country, July 2010, based on a required rate of return of 7.0 % p.a., whereas the four remaining properties are residential rental calculated on the basis of a discounted cash-flow model over properties on the outskirts of Berlin. a five-year period. The assessed return requirement isun- changed compared to 31 January 2010. At 31 July 2010, the properties were recognized at DKK 196.1 million based on a required rate of return of 6.5 % The investment property is owned through a joint venture p.a. calculated on the basis of a discounted cash-flow model with GE Capital and Heitman. TK Development has access over a ten-year period. The assessed return requirement is un- to a performance-based share of the value adjustments on changed compared to 31 January 2010. part of the property, which has been included in the carrying amount. In the period under review, the letting situation was satisfactory.

Futurum Hradec Králové, Czech Republic

Management's review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 15/27 Financial review

The value adjustment of the Group’s investment properties Accounting policies amounted to DKK 1.1 million against DKK 2.1 million in The Interim Report is presented in accordance with IAS 34, the first half of 2009/10 and relates to the Group’s Czech Interim Financial Reporting, as adopted by the EU, and in ac- investment property. cordance with additional Danish disclosure requirements for Interim Reports prepared by listed companies. The Interim The gross margin for the first half of 2010/11 includes the Report for the period from 1 February 2010 to 31 July 2010 profit on account on a single project, an amount of DKK 2.4 has been presented in accordance with the financial reporting million recognized according to the percentage of comple- standards (IFRS/IAS) and IFRIC interpretations applicable tion method. An amount of DKK 0.0 million was recognized for financial years beginning at 1 February 2010. in the same period in 2009/10.

The implementation of new and amended financial reporting Staff costs and other external expenses standards and interpretations has not impacted recognition Staff costs and other external expenses amounted to DKK and measurement. Thus, the new standards and interpreta- 64.0 million for the first six months of 2010/11, a 13.7 % tions have no effect on the earnings per share and the diluted decline compared to the same period of 2009/10. earnings per share. Staff costs totalled DKK 45.6 million, down by 16.8 % on the With the exception of the changes mentioned above, the ac- same period of 2009/10. This decline reflects the full impact counting policies have been applied consistently with those of the measures implemented earlier to adapt the organiza- presented in the Annual Report for 2009/10. Reference is tion to economic trends. The number of employees in the made to the Group’s Annual Report for 2009/10 for a com- Group totalled 133 at 31 July 2010 against 136 at 31 January plete description of the accounting policies applied. 2010.

No interim financial statements have been prepared for the Other external expenses amounted to DKK 18.4 million, a Parent Company. The Interim Report is presented in DKK, 5.2 % reduction compared to the first half of 2009/10. which is the Parent Company’s functional currency. The In- terim Report has not been audited. Financing In the period under review, the Group recorded net finan- Accounting estimates and assessments cing expenses of DKK 32.9 million, up DKK 28.3 million on the same period the previous year. This increase in finan- The most significant accounting estimates and assessments cing expenses since 31 July 2009 is a natural consequence of made by Management in applying the Group’s accounting the Group completing and opening three shopping centres, policies, and the associated, estimated material uncertainty, as these centres, besides yielding rental income that is rec- are the same as those made in the preparation of the An- ognized in gross profit, also involve financing expenses after nual Report for 2009/10. For a more detailed description, their opening, which impact profit as well. reference is therefore made to the Group’s 2009/10 Annual Report. Balance sheet Income statement The Group’s balance sheet total amounted to DKK 4,586.9 Revenue million at 31 July 2010, an increase of DKK 209.6 million, or The revenue for the first six months of 2010/11 totalled 4.8 %, compared to 31 January 2010. DKK 206.9 million against DKK 1,177.7 million in the cor- responding period the year before. A substantial amount of Goodwill Goodwill amounted to DKK 33.3 million at 31 July 2010 and the revenue in the first half of 2009/10 is attributable to the relates to the business unit Euro Mall Holding A/S. There are Group’s multifunctional centre Entré, Malmö, Sweden, which no indications of any need to impair the value of goodwill. was handed over to the investor in June 2009. Investment properties Gross margin The valuation of the Group’s investment properties is made The gross margin for the first half of 2010/11 amounted to on the basis of a discounted cash-flow model, where future DKK 106.0 million against DKK 161.4 million in the first cash flows are discounted to net present value on the basis of half of 2009/10. The gross margin consists mainly of profits a given return requirement. The valuation at 31 July 2010 is on handed-over projects, the operation of the Group’s com- based on an unchanged required rate of return compared to pleted projects and the operation and value adjustment of the 31 January 2010, amounting to 6.5 % for the German invest- Group’s investment properties. ment properties and 7.0 % for the Czech investment property.

16/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Financial review The total value of the Group’s investment properties The solvency ratio amounts to 35.1 %. amounted to DKK 356.6 million at 31 July 2010 against DKK 355.1 million at 31 January 2010. Of the value at 31 Non-current liabilities July 2010, DKK 196.1 million relates to the Group’s German The Group’s non-current liabilities represented DKK 223.1 investment properties and DKK 160.5 million relates to the million at 31 July 2010, an increase of DKK 119.3 million Group’s Czech investment property. from 31 January 2010, due mainly to long-term bank finan- cing. Deferred tax assets Deferred tax assets were recorded at DKK 292.7 million in Current liabilities the balance sheet at 31 July 2010 against DKK 284.9 million Current liabilities represented DKK 2,753.5 million at 31 July at 31 January 2010. The valuation of the tax assets is based 2010, a DKK 73.4 million increase from 31 January 2010. on existing budgets and profit forecasts for a five-year period. The valuation for the first three years has been based on an Financial liabilities are offset in the usual manner against assessment of specific projects in the Group’s project port- trade receivables and tied-up cash and cash equivalents, to folio. The valuation for the next two years has been based on the extent that the Company has a right of setoff and also specific projects in the project portfolio with a longer time intends or is contractually obliged to realize assets and liabili- horizon than three years as well as various project opportuni- ties at the same time. At 31 July 2010, no setoffs were made ties. against receivables or tied-up cash.

Project portfolio The Group’s short-term debt to credit institutions consists of The total project portfolio grew by DKK 186.4 million com- operating and project credits. TK Development has entered pared to 31 January 2010, amounting to DKK 3,439.9 mil- into a general agreement with the Group’s main banker about lion at 31 July 2010. This growth is partly attributable to the both types of credit. The agreement and conditions are rene- Group’s completion of the Sillebroen Shopping Centre in gotiated on an annual basis. Frederikssund, Denmark, and the ongoing construction of phase II of the Fashion Arena Outlet Center in Prague, the In addition, the Group has entered into project-financing Czech Republic. agreements with various banks in Denmark and abroad. Project credits are usually granted with different terms to ma- Total prepayments based on forward-funding agreements turity, depending on the specific project. Of the total project amounted to DKK 344.0 million at 31 July 2010 against credits outstanding at 31 January 2010, credits worth DKK DKK 350.7 million at 31 January 2010. The decline should 298.3 million were due to mature in the 2010/11 financial be viewed in relation to the handover of the Group’s 10,900 year. The majority of these credits have been prolonged, with m² retail park in Uppsala, Sweden, in Q1 2010/11, where the only one project credit of DKK 176 million, due to mature at sales agreement was based on forward funding. At 31 July the end of the financial year, awaiting prolongation. Manage- 2010, forward funding represented about 94 % of the gross ment expects this project credit to be prolonged. carrying amount of sold projects. Cash flow statement Receivables Total receivables amounted to DKK 276.5 million, the same The Group’s cash flows from operating activities are negative level as at 31 January 2010. in the amount of DKK 181.8 million and relate chiefly to project investments. During the period under review, these Cash and cash equivalents investments included completion of the Sillebroen Shopping Cash and cash equivalents amounted to DKK 85.7 million Centre, Frederikssund, Denmark, and the ongoing construc- at 31 July 2010, a DKK 8.2 million increase compared to 31 tion of phase II of the Fashion Arena Outlet Center, Prague, January 2010. The increase is a combined result of cash freed the Czech Republic. up from projects handed over and the conclusion of a few improved financing agreements on the one hand, and the There was no significant investment activity during the period use of cash resources for operations and investments in new under review, and cash flows from investing activities were projects on the other. negative in the amount of DKK 1.4 million.

Equity Most of the Group’s financing activities consist of raising At 31 July 2010, the Group’s equity came to DKK 1,610.3 and reducing project financing. The cash flows from finan- million, against DKK 1,593.4 million at 31 January 2010. cing activities for the period were positive in the amount of DKK 188.3 million, reflecting that bank loans are the main The increase in equity since 31 January 2010 is due mainly to source of financing for investment in projects. the profit recorded for the period and the positive market- value adjustments after tax of DKK 8.9 million.

Financial review | TK Development A/S | Interim report for the six-month period ending 31 July 2010 17/27 Other matters

The Supervisory Board

At the Company’s Annual General Meeting on 25 May 2010, the Chairman of the Company’s Supervisory Board, Poul Lauritsen, resigned from his position. Jens Erik Christensen was elected to take the vacant seat on the Supervisory Board. The Supervisory Board subsequently held a board meeting for the purpose of electing officers and appointed Niels Roth as the new Chairman.

Financial targets

To provide for sufficient future financial resources, Manage- ment 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 bank- er to meet a liquidity target and a solvency target. Both targets were met during the period under review.

Shareholders

After the capital increase referred to above, the Group has registered the following major shareholders of TK Develop- ment A/S:

Ownership and Direct and indirect ownership voting interest in % Carl Ejler Rasmussen Holding Sweden AB, Pirgatan 13, 374 35 Karlshamn, Sweden 7.44 Dava I ApS, c/o Kurt Daell, Lysagervej 25, 2920 Charlottenlund, Denmark 6.44 Holberg Fenger Holding A/S, Frode Jakobsens Plads 4, 5th fl., 2720 Vanløse, Denmark 5.81

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 2009/10, which is available at the Group’s website www.tk-development.dk.

18/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Other matters Statement by the Supervisory and Executive Boards on the Interim Report

The Supervisory and Executive Boards have today consid- results of the Group’s operations and cash flows for the pe- ered and adopted the Interim Report for the period from 1 riod from 1 February 2010 to 31 July 2010. February to 31 July 2010 for TK Development A/S. Moreover, we consider the Management’s review to provide The Interim Report, which has not been audited, is presented a fair presentation of the development in the Group’s activi- in accordance with IAS 34, Interim Financial Reporting, as ties and financial affairs, the results for the period and the adopted by the EU, and additional Danish disclosure require- Group’s overall financial position, and to provide a true and ments for Interim Reports prepared by listed companies. 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 July 2010 and of the

Aalborg, 29 September 2010

EXECUTIVE BOARD

Frede Clausen Robert Andersen President and CEO Executive Vice President

SUPERVISORY BOARD

Niels Roth Torsten Erik Rasmussen Chairman of the Supervisory Board Deputy Chairman of the Supervisory Board

Kurt Daell Per Søndergaard Pedersen

Jesper Jarlbæk Jens Erik Christensen

Statement by the Supervisory and Executive Boards | TK Development A/S | Interim report for the six-month period ending 31 July 2010 19/27 Consolidated financial statements

Income statement and comprehensive income statement

Full year DKKm H1 H1 Q2 Q2 2010/11 2009/10 2010/11 2009/10 2009/10

Net revenue 206.9 1,177.7 47.2 1,128.1 1,369.9 External direct project costs -102.0 -1,018.4 -8.0 -990.9 -1,158.5 Value adjustment of investment properties, net 1.1 2.1 -0.4 -1.4 -10.9 Gross profit/loss 106.0 161.4 38.8 135.8 200.5

Other external expenses 18.4 19.4 9.1 9.8 38.6 Staff costs 45.6 54.8 23.1 28.2 99.9 Total 64.0 74.2 32.2 38.0 138.5

Profit/loss before financing, depreciation and amortization 42.0 87.2 6.6 97.8 62.0 Depreciation, amortization and impairment of non current assets 1.6 2.5 0.7 1.4 4.5 Profit/loss before financing 40.4 84.7 5.9 96.4 57.5

Income from investments in associates 0.9 0.5 0.2 0.4 -0.2 Financial income 8.6 6.0 0.5 -1.6 10.6 Financial expenses -41.5 -10.6 -24.6 0.8 -28.5 Total -32.0 -4.1 -23.9 -0.4 -18.1

Profit/loss before tax 8.4 80.6 -18.0 96.0 39.4 Tax on profit/loss for the period 2.2 12.4 -4.7 15.8 14.0 Profit/loss for the period 6.2 68.2 -13.3 80.2 25.4

Earnings per share

Earnings per share (EPS) of nom. DKK 20 0.2 2.4 -0.5 2.8 0.9 Diluted earnings per share (EPS-D) of nom. DKK 20 0.2 2.4 -0.5 2.8 0.9

Comprehensive income statement

Profit/loss for the period 6.2 68.2 -13.3 80.2 25.4 Exchange-rate adjustments, foreign operations 12.5 -0.2 0.0 -16.5 32.5 Tax on exchange-rate adjustments 1.1 29.4 1.2 29.0 -5.8 Value adjustment of hedging instruments -5.9 0.0 -5.9 0.0 31.4 Tax on value adjustment of hedging instruments 1.2 0.0 1.2 0.0 0.0 Comprehensive income statement for the period 15.1 97.4 -16.8 92.7 83.5

20/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Consolidated Financial Statement Balance sheet

DKKm 31.07.10 31.01.10 31.07.09

ASSETS

Non-current assets

Goodwill 33.3 33.3 33.3 Intangible assets 33.3 33.3 33.3

Investment properties 356.6 355.1 368.3 Other fixtures and fittings, tools and equipment 8.3 9.2 12.2 Property, plant and equipment 364.9 364.3 380.5

Investments in associates 26.4 24.7 24.9 Other securities and investments 1.2 1.3 1.3 Deferred tax assets 292.7 284.9 259.5 Other non-current assets 320.3 310.9 285.7

Total non-current assets 718.5 708.5 699.5

Current assets

Projects in progress or completed 3,439.9 3,253.5 2,925.8

Trade receivables 129.6 106.5 237.4 Receivables from associates 2.8 2.9 7.7 Contract work in progress 10.7 17.8 0.0 Other receivables 118.7 125.7 156.8 Prepayments 14.7 17.4 15.4 Total receivables 276.5 270.3 417.3

Securities 4.0 4.0 4.0 Deposits in blocked and escrow accounts 62.3 63.5 66.2 Cash and cash equivalents 85.7 77.5 78.6

Total current assets 3,868.4 3,668.8 3,491.9

ASSETS 4,586.9 4,377.3 4,191.4

Consolidated Financial Statement | TK Development A/S | Interim report for the six-month period ending 31 July 2010 21/27 DKKm 31.07.10 31.01.10 31.07.09

EQUITY AND LIABILITIES

Equity

Share capital 560.9 560.9 560.9 Other reserves 30.7 21.8 -7.1 Retained earnings 1,018.7 1,010.7 1,051.9 Total equity 1,610.3 1,593.4 1,605.7

Liabilities

Credit institutions 146.6 26.0 106.7 Provisions 10.7 14.7 22.5 Deferred tax liabilities 61.9 59.2 25.1 Other debt 3.9 3.9 2.9 Total non-current liabilities 223.1 103.8 157.2

Credit institutions 2,374.9 2,298.0 1,898.6 Trade payables 126.7 144.1 255.9 Prepayments from customers 0.3 4.0 3.3 Corporate income tax 18.8 24.9 26.5 Provisions 16.2 14.2 14.1 Other debt 202.3 185.8 220.7 Deferred income 14.3 9.1 9.4 Total current liabilities 2,753.5 2,680.1 2,428.5

Total liabilities 2,976.6 2,783.9 2,585.7

TOTAL EQUITY AND LIABILITIES 4,586.9 4,377.3 4,191.4

22/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Consolidated Financial Statement Statement of changes in equity

The share capital of TK Development A/S is not divided into classes of shares and consists of 28,043,810 shares each with a nom. value of DKK 20 (nom. DKK 560,876,200).

Reserve for Reserve for Share fair value on fair value Reserve for Retained Total DKKm capital available-for- on hedging exchange earnings equity sale securities instruments adjustments

Equity at 1 February 2009 560.9 -0.1 -31.4 -4.8 981.4 1,506.0

Comprehensive income for the period 0.0 0.0 0.0 29.2 68.2 97.4 Dividend distributed 0.0 0.0 0.0 0.0 0.0 0.0 Share-based payment 0.0 0.0 0.0 0.0 2.3 2.3 Equity at 31 July 2009 560.9 -0.1 -31.4 24.4 1,051.9 1,605.7

Equity at 1 February 2010 560.9 -0.1 0.0 21.9 1,010.7 1,593.4 Comprehensive income for the period 0.0 0.0 -4.7 13.6 6.2 15.1 Dividend distributed 0.0 0.0 0.0 0.0 0.0 0.0 Share based payment 0.0 0.0 0.0 0.0 1.8 1.8 Equity at 31 July 2010 560.9 -0.1 -4.7 35.5 1,018.7 1,610.3

Consolidated Financial Statement | TK Development A/S | Interim report for the six-month period ending 31 July 2010 23/27 Cash flow statement

H1 Full year DKKm H1 2010/11 2009/10 2009/10

Profit/loss before financing 40.4 84.7 57.5 Adjustments for non-cash items: Value adjustments, investment properties, net -1.1 -2.1 10.9 Depreciation and amortization 1.6 2.4 4.2 Share based payment 1.8 2.3 3.9 Provisions -2.2 17.8 9.9 Exchange-rate adjustments -5.4 -36.3 -10.4 Increase/decrease in investments in projects, etc. -135.7 -263.0 -521.8 Increase/decrease in receivables -3.7 -79.3 71.9 Changes in deposits in blocked and escrow accounts 1.2 50.0 52.8 Increase/decrease in payables and other debt -5.7 31.5 -108.5 Cash flow from operating activities before net financials and tax 108.8 -192.0 -429.6

Interest paid, etc. -61.2 -60.6 -128.8 Interest received, etc. 2.7 4.2 5.3 Corporate income tax paid -14.5 -22.1 -29.7 Cash flow from operating activities -181.8 -270.5 -582.8

Purchase of property, plant and equipment -0.6 -0.7 -1.0 Disposal of property, plant and equipment 0.1 0.5 2.1 Investment in investment properties -0.1 0.0 -0.7 Purchase of securities and investments -0.8 0.0 0.0 Cash flow from investing activities -1.4 -0.2 0.4

Repayment, long-term financing -0.6 -0.6 -1.2 Raising of long-term financing 121.2 0.0 0.0 Raising of project financing 223.0 356.7 704.1 Reduction of project financing/repayments, credit institutions -155.3 -122.7 -160.2 Cash flow from financing activities 188.3 233.4 542.7

Cash flow for the period 5.1 -37.3 -39.7 Cash and cash equivalents, beginning of period 77.5 111.0 111.0 Exchange-rate adjustment of cash and cash equivalents 3.1 4.9 6.2 Cash and cash equivalents, end of period 85.7 78.6 77.5

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

24/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Consolidated Financial Statement Notes

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, the Parent Company. The segment information has been stated accordingly.

TKD Euro Mall DKKm Nordeuropa Holding TKD Elimination Total

31 July 2010 Net revenue, external customers 145.8 56.9 4.2 0.0 206.9 Profit/loss after tax 1.3 1.2 3.7 0.0 6.2 Segment assets 1,887.7 2,083.8 1,982.7 -1,367.3 4,586.9 Segment liabilities 1,563.7 1,274.3 372.5 -233.9 2,976.6

TKD Euro Mall DKKm Nordeuropa Holding TKD Elimination Total

31 July 2009 Net revenue, external customers 1,126.9 45.4 5.4 0.0 1,177.7 Profit/loss after tax 63.9 2.4 1.9 0.0 68.2 Segment assets 1,723.6 1,845.4 2,001.6 -1,379.2 4,191.4 Segment liabilities 1,304.6 1,077.8 395.9 -192.6 2,585.7

Note 2. External direct project costs

DKKm H1 H1 Full year 2010/11 2009/10 2009/10 Project costs 101.8 1,018.4 1,155.0 Impairment losses on projects in progress and completed projects 0.2 0.0 3.5 Reversal of impairment losses on projects in progress and completed projects 0.0 0.0 0.0 External direct project costs, total 102.0 1,018.4 1,158.5

Note 3. Share-based payment The Group has two incentive schemes. One scheme was allocated to the Executive Board and other executive staff members in 2008 and is described in more detail in the Group’s Annual Report for 2009/10.

Moreover, at the Annual General Meeting on 25 May 2010, the Supervisory Board of TK Development was authorized to issue warrants for a total of up to nominally DKK 8,000,000.00 (400,000 shares of DKK 20 each) to the Executive Board and other executive staff members in the Group. On 4 June 2010, the Supervisory Board decided to exercise this authorization and issued 100,000 warrants to the Executive Board and 294,000 warrants to other executive staff members, a total of 394,000 warrants.

Under the three-year warrant scheme, warrants can be exercised at the earliest two years after the grant date, and any shares subscribed for are subject to an additional lock-up period of up to two years. This means that shares up to a market value equal to the subscription amount, plus tax liability, can be disposed of without limitation, while shares in excess of such amount can be disposed of, at the earliest, during four half-yearly trading windows in the two-year lock-up period, such that up to 1/4 of such shares can be disposed of during each window. The 394,000 warrants correspond to 1.4 % of the share capital.

The warrants allocated under the incentive scheme can be exercised in three six-week periods placed as follows:

• following publication of the preliminary announcement of financial statements for the 2011/12 financial year (from around 30 April 2012); • following publication of the interim report for the six months ending 31 July 2012 (from around 30 September 2012); and • following publication of the preliminary announcement of financial statements for the 2012/13 financial year (from around 30 April 2013).

The subscription price has been fixed as a simple average of the daily market prices quoted for all trades in the TK Development share during the period from 9 to 22 June 2010, plus an annual 8 % adjustment to reflect an advance return to existing shareholders and less dividend payments made to shareholders until the time of exercise of the warrants. Thus, based on a price of DKK 24.3 per share of nominally DKK 20, the subscription price, before a deduction for any dividend, can be calculated at DKK 28.0, DKK 28.9 and DKK 30.3 for the exercise of warrants in the three respective six-week periods.

Consolidated Financial Statement | TK Development A/S | Interim report for the six-month period ending 31 July 2010 25/27 Note 3. Share-based payment, continued

Based on a price of DKK 23.5 per share and an annual dividend of DKK 0 per share, using the Black-Scholes pricing formula, the value of the newly issued warrants has been calculated at DKK 1.9 million, to be expensed over the term of the incentive scheme. The calculation is based on an anticipated future volatility of 40 % and an interest level of 5 % p.a. In addition, it is assumed that the warrants will be exercised in the second exercise period.

The outstanding warrants can be specified as follows

Number of warrants 31.07.10 31.01.10 31.07.09

Outstanding warrants, beginning of the period 1,350,000 1,376,000 1,376,000 Granted during the period 394,000 0 0 Forfeited due to termination of employment -18,000 -26,000 0 Expired during the period -676,000 0 0 Exercised during the period 0 0 0 Outstanding warrants, end of period 1,050,000 1,350,000 1,376,000

Number of warrants exercisable at the reporting date 0 676,000 690,000

Share-based payment recognized in the income statement 1.8 3.9 2.3

Note 4. 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 5. Transactions with related parties

The Company has no related parties with a controlling interest.

Related parties with significant influence in the Company and the Group are specified below: • Supervisory Board and Executive Board (and their related parties) • Joint ventures and associates.

31.07.10 31.01.10 31.07.09

Supervisory Board and Executive Board (and their related parties) Holding of shares, in terms of number 2,340,498 2,382,628 2,382,934 Obligation towards Executive Board, employee bonds 1.5 1.5 1.5

Joint ventures and associates Fee from joint ventures 0.4 0.3 0.3 Interest income from joint ventures 3.6 5.0 1.8 Interest expenses, joint ventures -1.9 -9.7 -0.2 Interest income from associates 0.1 0.3 0.2 Receivables from associates 2.8 2.9 7.7 Receivables from joint ventures 89.2 87.1 140.0 Payables to joint ventures 114.6 110.1 109.3

26/27 TK Development A/S | Interim report for the six-month period ending 31 July 2010 | Consolidated Financial Statement Company information

ISIN code: DK0010258995 (TKDV) • Municipality of registered office: Aalborg, Denmark Homepage: www.tk-development.dk • e-mail: [email protected] TK Development A/S: CVR 24256782 • TKD Nordeuropa A/S: CVR 26681006 • Euro Mall Holding A/S: CVR 20114800

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

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

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

Warsaw Berlin ul. Mszczonowska 2 Ahornstraße­ 16 PL-02-337 Warsaw D-14163 Berlin T: (+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, Kurt Daell, Jesper Jarlbæk and Jens Erik Christensen

Company information | TK Development A/S | Interim report for the six-month period ending 31 July 2010 27/27