Highlights divisions (all figures represent Kardan stake):
Real Estate:
GTC SA net contribution Q3-2011: loss of EUR 43 million (9M-2011: loss of
EUR 52 million) mainly due to negative revaluations in South Eastern Europe (SEE)
GTC China (now called Kardan Land China) net contribution Q3-2011: profit of
EUR 10 million (9M-2011: profit EUR 20 million), including the proceeds from the sale of 50% of shopping mall in Chengdu China: apartments sold and paid for but not yet handed over will generate approximately EUR 30 million gross profit in coming 2 years.
Water Infrastructure:
Tahal Group International net contribution Q3-2011: loss of EUR 1 million (9M-2011:
loss of EUR 5 million), mainly due to lower revenues and internal restructuring;
Restructuring plan initiated to strengthen marketing and sales as well as cost cutting measures;
Tahal Assets successful in China: two new wastewater treatment licenses signed in
Q3-2011;
Current capacity of Tahal Assets in China: 630,000 m3/day to increase
to 840,000m3/day by 2014.
Financial Services:
Banking and retail lending services net contribution Q3-2011: profit of EUR 1 million
(9M-2011: loss of EUR 9 million, due to continuing provisioning on vintage portfolios);
Acquisition of NLB Banka Sofia has provided Bulgarian financial services activities with banking license.
The Management Board of Kardan N.V. (“Kardan”) commented on the results of Q3 and 9M-2011:
“2011 started off with a slightly improved macroeconomic sentiment. In Q2-2011, markets started to show hesitation and in Q3-2011 the Eurozone crisis led to worldwide instability and a deterioration of consumer confidence, impacting the real economies. This also had its influence on Kardan. It
decreased expectations of short term economic growth in Central and Eastern Europe (CEE) and South Eastern Europe (SEE) and consequently impacted revaluations of our real estate assets in the region. Adjusted forecasts of real estate appraisers in SEE specifically expect a downwards pressure
on rental income, as a result of weaker consumer purchasing power.
On the other hand our real estate business in China is progressing according to plan, as reflected in improved results and fundamentals going forward. In addition, our water infrastructure activities are well on track to generate long term cash flows by, among others, signing new licenses for
wastewater treatment plants in China.
The current market circumstances are challenging. However, the GDP growth forecasts for emerging markets are promising and clearly indicate that these markets, in which we operate, are the main growth engine for the world economy. Within all our divisions we are taking measures to weather this
storm, whilst staying focused on our business strategy which is to initiate, develop and manage long term cash flow generating assets in emerging markets. In CEE we have building rights to continue our development of commercial assets in selected areas, and in China we also have building rights
to achieve our development objectives over the short to medium term, depending on macroeconomic progress. As the demand for clean water remains strong we are strengthening our organization to successfully take on projects and develop wastewater treatment facilities. At the beginning of October, in accordance with our declared strategy to focus on our core emerging market activities,
the Israeli activities were spun off, leaving Kardan with a strong position in real estate in CEE and China, a reputable water infrastructure organization active in emerging markets worldwide and a specialized banking and retail lending operation in Bulgaria and Romania. In addition, also in line
with our strategy, we have deleveraged. Our development strategy, focusing on real estate and water infrastructure assets, conveys our confidence in the growth prospects of emerging markets”, says Alain Ickovics, chairman of the management board.
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