The drop in the value of assets of Kardan NV (TASE: KRNV;AEX:KARD) continue to affect the company's financial results. The company reported a net loss attributable to equity shareholders of €32 million in 2012, after losing €148 million in 2011. Most of the loss was in the fourth quarter, in which the company, controlled by chairman Yosef Grunfeld, lost €27 million.
Kardan made a €101 million write-down on European properties held through subsidiary Globe Trade Centre SA (WSE:GTC) (GTC Poland). Looking forward, Kardan said, It is our expectation that markets will remain challenging also in 2013 for our Central and Eastern European real estate operations. We believe that our real estate activities in China will grow stronger. In addition, we expect that the improvement in the results in our water infrastructure and our financial services operations will continue to show a real turnaround."
Kardan has three core businesses overseas: real estate through GTC; water infrastructures through Tahal Group International BV; and financial services through KFS. The company's infrastructures and financial services businesses also lost money in 2012.
After a brief period of quiet, worries about Kardan's ability to meet its commitments on its NIS 2.2 billion (€450 million) bond debt reemerged, after subsidiary Kardan Land China Ltd. called off talks to sell some of its operations for €85 million. The news prompted Standard & Poor's Maalot Ltd. to cut Kardan's bond rating.
Kardan Yazamout (2011) Ltd. also suffered from its Kardan NV holding in 2012. The 55% drop in Kardan NV's market cap last year accounted for NIS 47 million of Kardan Yazamout's full-year loss of NIS 100 million. Kardan Yazamout's holdings include GM importer Universal Motors Israel Ltd. (UMI), Avis franchisee Kardan Vehicle Ltd. (TASE: KVCL), and developer Kardan Israel Ltd. (TASE:KRIS). In early 2013, it sold its holding in Kardan Municipal Services Ltd. for NIS 110 million.
Kardan NV's auditor said, "Realization of the company's plans to sell assets, repayment of loans by subsidiaries, and continuing to meet the financial covenants are uncertain as they are not under the company's full control. The company's management believes that it will be able to meet its commitments on time in the foreseeable future.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2013
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