investor presentation - kardan...dual listing on the nyse euronext amsterdam & tase tel -aviv...
TRANSCRIPT
Investor PresentationResults 9M -2011November, 2011
Profile
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Unique investment gateway to emerging markets
We initiate, develop and manage long term cash flow generating assets, mainly in Real Estate and Water Infrastructure in
promising Emerging Markets
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Kardan in short
Emerging Markets
Active in app. 30 countries
Focus:
- Real Estate: CEE and Asia
- Water Infrastructure: worldwide
- Smaller exposure to Financial Services activities
Stock listed on EURONEXT Amsterdam and Tel Aviv Stock Exchange
Total Assets of EUR 5 billion (consolidated as of September 30, 2011)
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Emerging Markets: Promising Growth.....
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-6
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0
2
4
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8
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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Change in GDP (%)
Developed countries
Emerging countries
Forecast
Source: IMF, World Economic Outlook, September 2011
...will change Global Balance
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40
45
50
55
60
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Share of World GDP (%)
Developed countries
Emerging countries
Forecast
Source: IMF, World Economic Outlook, September 2011
Middle Class Growth
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2009 2020 Number of People Number of People
(millions) Global Share (millions)
Global Share
North America 338 18% 333 10% Europe 664 36% 703 22% Asia Pacific 525 28% 1,740 54% Central& South America 181 10% 251 8% Middle East & Africa 137 7% 222 7%
World
1,845 100%
3,249 100%
Source: OECD, 2010
The main growth is in emerging markets
Lower Leverage
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Source: IMF, World Economic Outlook, September 2011
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20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Government Debt as % of GDP
Emerging countries
Developed countries Forecast
100%100% 92%
100%
28%
100%
100%
100%
Real EstateGTC Holding
Water InfrastructureTahal
Financial ServicesKFS
GTC SAKardan Land China
TBIFTahal
ProjectsTahal
Assets
Kardan N.V.
Controlling stakes in core activities (post spin-off Israeli activities)
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Our strategic criteria
Qualitative criteria Quantitative criteria
Promising Emerging Markets- growing & educated middle class
Exposure to needs of upcoming middle classes
Controlling stake
Investments created through our local platforms
≥ 15 % IRR per project
Comfortable loan to asset ratios
Extensive experience in initiating & developing businesses in Emerging Markets
What’s in it for our investors?
Benefit from our development capabilities in emerging markets
Value creation over the medium / long term
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Strategic focus
Operating / managing existing activities
Focus on expansion in real estate and water
infrastructure through existing and new platforms
Moving more to Asia
Strategic focus Financial strategy
Strengthening of financial position by deleveraging and increasing liquidity
Funding primarily at the level of subsidiaries rather than at Kardan NV holding level
Exit strategy:As business grows, attract (strategic / financial) private equity investors first, and then IPO or sell to confirm value creation
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Managing (y)our investments
Strong corporate governance Risk management
Two-tier board structure: Supervisory Board and Management Board
Headquarters in the Netherlands (Amsterdam)
Dual listing on the NYSE Euronext Amsterdam & TASE Tel-Aviv stock exchanges
Quarterly & Annual reports (in English).
External auditor: Ernst & YoungInternal auditor: Grant Thornton
Environmental & Social Governance (ESG)
Compliant with Israeli SOX
Corporate:
Decentralization – local platforms to optimize opportunities and minimize risks
Geographical diversification - presence in over 30 countries
No project value exceeds 5% of Kardan’s consolidated balance sheet
Subsidiaries / projects:
Land purchased with equity
Comfortable loan-to-value ratios
No dependency between divisions / operations
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Highlights Q3-2011
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Global State of the Markets: significant change of sentiment
70
80
90
100
110
03 January2011
15February
30 March2011
12 May2011
24 June2011
08 August2011
20September
02November
MSCI EM indexYear to mid November
DAX index8 November 2010 - 8 November 2011
Kardan:
Deleveraged
Spin-off of Israeli activities (completed October 5, 2011)
Initiated share buyback plan
Real Estate:
Completion of sale of Galeria Mokotow (GTC SA)
Eurozone crisis impacts value of assets GTC SA
Completion of sale of 50% stake in Galeria Chengdu (China); occupancy (30.9.11): 97%
Slight slow down in sales of apartments (China) due to Government financial measures
Water Infrastructure:
Initiated largest ever project (Quiminha, Angola); expected revenues of EUR 143 million
Signed two new WWTP licenses in China (assets)
Banking & Lending:
Integration of Banka Sofia initiated
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Highlights Q3-2011
Achievements last two years
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Divested assets (in EUR million)- Decreasing financial services activities 286*
- Sale of 16% GTC SA 195
- Sale of various real estate properties 446**
Reduced exposure and leverage (KNV, GTC RE and KFS)***
- Net debt position December 31, 2009 623September 30, 2011 424****
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Achievements over last two years
•*Includes EUR 83 million of Sovcombank still to be received in 2012•**Proceeds on the basis of 100%; Kardan did not receive this full amount
*** Company only*** *Includes proceeds from spin-off Israeli activities (approx. EUR 40 million)
Focused development :
- Spin-Off of Israeli activities (October 2011)
- Decreased exposure to Financial Services
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Achievements over last two years
REAL ESTATE- CEE- China
Possible expansion into Asia
WATER INFRASTRUCTURE- Assets- Projects
Expanding in emerging markets
Development of group assets:
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Achievements over last two years
Real Estate:
—Opened 5 shopping centers (165,000 sqm)
—Completed 4 office buildings (56,000 sqm)
—Sold approximately 5,000 apartments
Water Infrastructure:
—More than doubled the capacity of plants in China
—Initiated projects in Africa valued at overEUR 200 million
Avenue Mall Osijek, Croatia
Opening: April 2011
Xuanhua-China
Acquired Feb 2011
Our activities and markets
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Resi Inventory & Land Bank
10%Commercial Land Bank
13%
IPUC9%
Investment properties
68%
Real Estate: CEE activities (GTC S.A.)
Profile GTC SA (28%)
Developer and manager of office buildings and shopping centres
Founded in 1994 by Kardan in PolandOperating in 10 countries in CEE/SEE
Initial investment: USD 6mnCurrent market cap. approx. EUR 450 millionBook equity approx. EUR 900 million
Listed on the Warsaw stock exchange (WIG20) as of 2004
Delivered since 1994 over 1,000k sqm, of which over 400k sqm sold
Total investment properties value: EUR 1.4 billion;46% of standing portfolio is in Poland**
NOTES:* As of 30.09. 2011** Decreased due to sale of Galeria Mokotow
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*Includes Plaitium 1-4, exludes attributable GAVs fo Czech and Ukraine where GTC holds minority stakes
Split of total property portfolio; Total: EUR 2,114 million*
Breakdown of GTC SA Portfolio
** NRA is pro-rata to GTC SA
Real Estate: CEE Activities (GTC S.A.)
Today 2011 events
539,000 sqm of completed commercial propertyAverage occupancy 86%
Unstable macroeconomy, leading to negative revaluations (specifically South East Europe)
Significant refinancing agreements strengthen cash position to invest in pipeline
Development of best assets in core markets using liquidity and debt raising capacity
Focus is on Poland and the retail sector
Approx. 135,000 sqm to be completed ( 2012-2013)
Shopping malls: over 60% of new developments
2 shopping malls in Warsaw (120,000 NRA*), with catchment area of approx. 520,000 people
* GTC SA stake: 90,000 sqm
Sale of 50% stake in Galeria Mokotow
Sale of Platinium Business Park (Warsaw)
Land acquired in Bucharest (Romania) for office building
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Future plans
City Gate, Bucharest, Romania
Real Estate: Asia (Kardan Land China)
Profile Kardan Land China (100%)
Founded in 2005 by Kardan, incorporated in Hong Kong
Focuses on mixed use projects: residential & retail properties (shopping malls)
Offices in Beijing and Hong Kong. Project companies in Xi’an, Shenyang, Changzhou, Chengdu and Dalian
Approx. 3 mn sqm of residential & commercial space under various stages of development
Kardan Land China’s share is 50% in residential and in principle 100% in retail projects
Over 300 employees
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Residential portfolio & inventory status
September 30,2011Number of units
(100%)
Sold, handed over 6,682
Inventory:
Sold, not yet handed over 6,101
Unsold, completed 197
Unsold, under construction 1,858
Inventory total 8,156
To be developed 12,597
Total Units (Apartments) 27,435
Real Estate: Asia (Kardan Land China)
Today Galeria Chengdu
7 projects in 5 Tier II and III cities in China
1 commercial center (Chengdu), approx. 97% leased, of which 50% stake sold to PE to raise funding for further development
Units sold – but not yet delivered – to generate approximately EUR 30 million gross profit in coming 2 years
Existing Projects:
– Construction of 4 commercial centers totaling approx. 200,000 sqm
– Completion of sale and delivery of residential units
Acquisition of land plots for new projects
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Galleria Chengdu-China
sqm 35,000–NRA
Opened Nov 2010
Currently approx. 97%let
Development Cost: EUR 70 mn
Valuation EUR 118 million, based on 50% sale transaction , August 2011
Future plans
Water Infrastructure Activities
Profile Tahal Group International (100%)
Specializes in water-related infrastructure projects
Operates through the entire value chain, primarily in developing countries
Over 1,000 employees working in 30 countries
Over 50 years of experience
Major clients: governments, public utilities and water agencies
Two sub-divisions:
– Tahal Projects (100%): design, consulting and turn-key projects (EPC)
– Tahal Assets (100%): investments / development of assets, Build Operate Transfer (BOT) and Build Operate Own (BOO)- platforms in Israel, China and Turkey
5% <1%
36% 60%8% 13%
11% 13%
26% 6%
15% 8%
5% <1%
36% 60%8% 13%
11% 13%
26% 6%
15% 8%
The number of people living in scarce water conditions globally is expected to double in 20 years, and those in water stressed geographies should increase six times
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Global water supply versus population
Water Infrastructure activities
Today Outlook for coming years
Projects:
• Tenders more time consuming and challenging due to increase of stakeholders as a result of funding issues with governments
• Restructuring to make organization stronger and more efficient
• Initiated Quiminha project (Angola) with expected revenues of EUR 143 million
Main Assets:
China:- 8 WWT plants, 1 WS facility , 1 WR plant
current design capacity (WWT, WS, WR)
- Signed 2 new agreements for WWT plants (July 2011)
- Current capacity: 630,000 m3/day, expected expanded capacity by 2014: 840,000 m3/day
Projects:
Increase in water demand expected to result in increase of income
Assets:
China: continued acquisition of licenses for new plants
Development / acquisition of assets in other emerging markets
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Xuanhua-China
Concession -30 years
Capacity - 120,000 m3 per day
Acquired Feb 2011
Overview of our Financial Service activities
Banking and Retail Lending (TBIF, 100%)
Active in banking & retail lending as of 2001 (TBIF)
- consumer finance, leasing and mortgages
Two consumer finance organizations in Romania and Bulgaria (as of July 2011 Bulgaria has banking licence)
June 2011: announced agreement to sell 50% stake in Russian Bank, Sovcombank- closing expected in 2012
July 2011: acquired Bulgarian bank, Banka Sofia to attract deposits and increase margins
Key indicators TBIF** :
Outstanding net portfolio: EUR 186 mn (100% stake)
Total branches and POS: > 290
Total merchants: > 1,500
Total employees: > 1,380
** as of September 30, 2011, excluding Sovcombank, including Banka Sofia
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Key Financials
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Breakdown of profit (loss) to Kardan
Profit (loss) attributed to shareholders in EUR million 9M-2011 9M-2010 FY-2010
− Real Estate (34) 3 13
− Water infrastructure – Projects (7) 2 2
− Water infrastructure – Assets 2 2 3
− Financial Services – Banking & Retail lending (9) (6) (57)
− Financial Services – Insurance and Pension* - 31 31
− Rental and Leasing of vehicles** - 2 2
− Sale of vehicles** 6 6 7
− Other*** (25) (16) (28)
Total net result attributable to equity holders (67) 24 (27)
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(*) Activites sold in Q4-2010(**) These activities were spun-off in Q4-2011 and are presented as discontinued operations in the income statement (***) Includes activities which were spun-off in Q4-2011 and which are presented as discontinued operations in the income statement
Real Estate
GTC SA
* LTV= Loans net of cash and deposits / Investment property, inventory and assets held for sale
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GTC SA (100%, in EUR million)
9M-2011(30.09)
9M - 2010(30.09)
2010(31.12)
Rental + service Revenue 97 92 124
Residential Revenue 20 23 45
Gross profit rental 71 71 94
Gross profit residential 1 1 2
Revaluation /impairments (178) 15 43
Net Profit (Loss) (201) 8 29
Inventory & residential land bank 203 273 254
Investment Property 1,778 2,053 2,118
Total Assets 2,443 2,739 2,728
Total Equity 863 998 1,053
Cash & short term investments 204 199 230
Ratios
Gross margin rental 73% 77% 76%
Gross margin residential 5% 4% 4%
Loan to Value* 59% 57% 49%
Real Estate
Kardan Land China
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Kardan Land China (100%, in EUR million)
9M - 2011(30.09)
9M - 2010(30.09)
2010(31.12)
Rental + service Revenue 5 - 0.35
Residential Revenue 18 20 38
Gross profit margin rental 70% - -
Gross profit margin residential 23% 13% 14%
Revaluation (net of tax) 12 16 25
Net Profit (Loss) 23* 10 15
Completed investment property 64 - 110
Investment property under construction
- 86 -
Inventory 261 122 132
Total Assets 488 346 465
Advance payment from buyers 138 97 103
Total Equity 232 147 161
Cash & short term investments 49 52 124
Operational Parameters
Units sold in the period** 1,781 2,656 3,461
Units handed over in the period** 679 912 1,748
Total units sold, not yet delivered** 6,101 4,896 4,999*Before consolidation adjustment and Including EUR 7 million gain on the divestment of HIFC, Hangzhou and a charge of EUR 5 million with regard to an Employee Stock Option Plan. **The numbers presented reflect 100%. The Kardan Land China share is on average 50%.
Water Infrastructure
Tahal Projects & Tahal Assets
*Group equity including shareholder loan**Bank loans net of cash and cash equivalents***Projects with signed agreement and received first payment.
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Tahal Projects (100% in EUR million)
9M - 2011(30.09)
9M - 2010(30.09)
2010(31.12)
Revenues 66 79 112
Gross Profit 9 17 23
EBITDA (4) 7 10
Profit (Loss) (7) 2 2
Total Assets 117 132 142
Equity* / assets 30% 31% 29%
Net debt **(excl. SH loans) (2) 16 10
Cash 14 16 34
Other
Back Log *** 322 194 183
Tahal Assets(100% in EUR million)
9M - 2011(30.09)
9M - 2010(30.09)
2010(31.12)
Revenues 53* 48 65
Gross Profit 16 12 16
EBITDA 16** 3 7
Profit (Loss) 10** 1 3
Total Assets 167 181 186
Equity*** / assets 50% 36% 37%
Net debt ****(excl. SH loans) 33 49 58
Cash 25 23 15
*Incl.revenues of Tahal Assets Israel (Milgam) **Incl. operating results of Milgam and EUR 8 million proceeds from the sale of Milgam to Kardan NV, which are eliminated at Kardan NV level. ** * Group equity including shareholder loan; ****Bank loans net of cash and cash equivalents
Financial Services
Banking & Retail Lending
•incl. net interest income, net commission income and other operating income
** Banka Sofia (Bulgaria) is consolidated as of August 2011
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Bulgaria & Romania100% (In EUR million)
9M – 2011**(30.09)
9M - 2010(30.09)
2010(31.12)
Net banking income* 22 28 37
Profit (Loss) (6) 1 (3)
Total Equity 48 48 43
Total Assets 236 229 217
Equity / Assets 20% 21% 20%
Cash & ST investments 23 15 18
Operational Parameters 30.09.2011 30.09.2010 31.12.2010
Gross Loan Portfolio 237 210 204
Provisions 25.6% 15.9% 15.7%
Book value in TBIF (equity, loans and goodwill)
115 103 107
Maturity of liabilities
34
EUR millionsFree Cash
& Cash equivalents
Debt/loans maturing
Before September 30, 2012*
BeforeSeptember 30, 2013
Before September 30, 2014
Before September
30, 2015
After September 30, 2015 &
till September
30, 2029
Total
Kardan N.V. 45 30 65 108 108 279 590
GTC Group 305 426 172 262 41 582 1,483
KFS 236 148 39 7 2 29 225
Tahal Group International
39 33 11 24 4 14 86
Total 625 637 287 401 155 904 2,384
(*) Includes EUR 182 million and EUR 126 million (GTC SA) which was reclassified from long to short term loan with respect to a breach of existing covenants. A waiver for the EUR 182 million has been received in November 2011. GTC SA received a waiver for EUR 25 million after reporting date, and expects to have reached agreements with the banks for the remainder in the coming 2-3 months.
From the total debt payable after September 30, 2015, the total amounts due in the next five years are respectively EUR 124 million, EUR 107 million, EUR 88 million, EUR 259 million and EUR 79 million.
Thank You
Disclaimer
This presentation has been prepared on behalf of Kardan N.V. solely for information purposes. It is not an investment advice or an offer or solicitation for the purchase or sale of any financial instrument. While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the date of the presentation, Kardan N.V. makes no representationthat it is accurate or complete. The information contained herein is subject to change without notice. Neither Kardan N.V. nor any of its officers or employees accepts any liability for any direct or consequential loss arising from any use of this presentation or its contents. Copyright and database rights protection exist in this presentation and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of Kardan N.V. All rights are reserved.
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Investor Relations Contacts
The Netherlands Israel
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Caroline Vogelzang
Office: +31 20 305 0010
Mobile: +31 6 10 949 161
Kardan NV
Claude Debussylaan 30Viñoly Building, 13th floor1082 MD AmsterdamThe Netherlands
www.kardan.nl
Ohad Lev
Office: + 972 3 608 3444
Mobile: + 972 54 333 0830
Kardan (Israel)
154 Menachem Begin Rd.Tel Aviv 64921Israel