Kardan N.V. — Earnings Release 2012

Aug 30, 2012

PRESS RELEASE Amsterdam/Tel Aviv, August 30, 2012 Number of pages: 18

KARDAN Q2–2012 RESULTS:

EUR 11 MILLION LOSS TO EQUITY HOLDERS IN STILL DIFFICULT MARKETS; FOCUS ON CASH FLOW CONTINUES

Highlights segments Q2 and H1 – 2012:

Kardan N.V.

Q2 – 2012:

• Successful repurchases of Debentures
• Increased strategic focus on cost efficiency in segments
• H1 2012:
• EUR 25 million loss attributable to equity holders (H1 2011: EUR 36 million loss)

Real Estate Asia

Q2 – 2012:

• Contribution shopping center Chengdu the same (y-o-y), despite sale of 50% stake
• Construction of mixed-use project Europark Dalian under way
• Substantial deliveries of apartments (601) compared to Q2 2011 (350)
• Continued hesitant market for sale of residential apartments
• H1 2012:
• EUR 4 million profit attributable to Kardan (H1 2011: EUR 11 million profit)

Real Estate Europe

Q2 – 2012:

• GTC S.A. rights issue of EUR 100 million placed successfully; Kardan retains 28% stake
• GTC S.A. signed agreement to sell Platinium (I-V)
• H1 2012:
• EUR 4 million loss attributable to Kardan (H1 2011: EUR 8 million loss)

Water Infrastructure Assets

H1 – 2012:

• EUR 1 million loss attributable to Kardan, mainly due to one-off expenses (H1 2011: EUR 2 million profit)
• Capacity increase plan of Kardan Water in China on track

Water Infrastructure Projects

Q2 – 2012:

• Positive effect of reorganization on SG&A expenses

H1 – 2012:

• EUR 4 million loss attributable to Kardan (H1 2011: EUR 6 million loss)
• Delay in initiation of projects impacts revenue negatively
• Significant backlog position of EUR 347 million

Banking and Retail Lending

Q2 – 2012:

• Loss in Q2 2012 reduced to EUR 4 million (Q1 2012: loss of EUR 11 million)
• Sale of 50% stake in Sovcombank (Russia) completed successfully
• Deposit raising by TBI Bank (Bulgaria) successful, consumer and leasing markets in Romania and Bulgaria difficult

H1 – 2012:

• EUR 15 million loss attributable to Kardan (H1 – 2011: EUR 9 million loss)

Shouky Oren, CEO of Kardan N.V. stated: "The global macro-economic circumstances have not improved in the first half of 2012 compared to last year. Year-end 2011 we have had to report substantial negative revaluations and impairments, leading Kardan into a phase of setting short to mid - term priorities. Our strategy remains, i.e. to initiate, develop and manage cash generating assets in promising emerging markets, primarily in real estate and water infrastructure and to deliver financial services in selected markets.

We are currently focusing on our debt servicing capacity and thus on optimizing our future cash flows, in order to deal with the outstanding debentures of Kardan. We have recently repurchased debentures, which are listed on the Tel Aviv Stock Exchange, at prices which will allow us to reduce net debt and to bring back the leverage on the holding company levels. In addition, all our divisions are geared towards optimizing results and cash flows from their existing assets, whilst being very selective in possibilities to grow our asset base in line with our long term strategy".

The condensed consolidated income statement, both for Q2 – 2012 as well as for H1 – 2012, split into the different segments of Kardan N.V. are shown in the tables below. Management analyses the segment performance based on result from operations before finance expenses (in note 3 of the condensed interim consolidated financial statements called "Segment result"). In this press release, additional segment information is provided for information purposes.

Following the overall analysis, the Q2 and H1 – 2012 results of every individual segment is analyzed in more detail.

Condensed Consolidated Income Statement Kardan N.V.

		Real Estate		Infrastructure	Banking		Total	Total
					and Retail
	Asia	Europe	Assets	Projects	lending	Other	Q2 - 2012	Q2 - 2011
Total revenues	17	39	9	20	6	-	91	89
Total expenses	17	23	8	22	8	1	79	101
Profit (loss) from operation before fair value adjustments, disposal of assets and financial expenses	-	16	1	(2)	(2)	(1)	12	(12)
Profit (loss) from fair value adjustments and on disposal of assets and investments	-	(17)	1	-	-	-	(16)	(23)
Result from operations before finance expenses	-	(1)	2	(2)	(2)	(1)	(4)	(35)
Financing income (expenses), net	4	(16)	(4)	-	(3)	1	(18)	(32)
Profit (Loss) before income tax	4	(17)	(2)	(2)	(5)	-	(22)	(67)
Income tax (expenses)/benefit	(1)	(6)	-	-	-	(1)	(8)	5
Profit (Loss) from continuing operations	3	(23)	(2)	(2)	(5)	(1)	(30)	(62)
Profit (Loss) from discontinued operations	-	-	-	-	1	-	1	(14)
Profit (Loss) for the period	3	(23)	(2)	(2)	(4)	(1)	(29)	(76)
Attributable to:
Non-controlling interest Net result for equity holders	- 3	(18) (5)	- (2)	- (2)	- (4)	- (1)	(18) (11)	(40) (36)
Profit (Loss) for the period	3	(23)	(2)	(2)	(4)	(1)	(29)	(76)

For the three months ended June 30, 2012 (in EUR million)

* The results of 2011 have been restated as the results of Sovcombank have been classified as discontinued operations.

For the first half year ended June 30, 2012 (in EUR million)

		Real Estate		Infrastructure	Banking	Total		Total Total
					and
	Asia	Europe	Assets	Projects	Retail lending	Other	HY- 2012	HY - 2011	FY 2011*
Total revenues Total expenses	34 33	77 44	18 15	42 46	5 17	- 3	176 158	166 164	334 394
Profit (loss) from operation before fair value adjustments, disposal of assets and financial expenses	1	33	3	(4)	(12)	(3)	18	2	(60)
Profit (loss) from fair value adjustments and on disposal of assets and investments	3	(16)	1	-	-	-	(12)	(7)	(217)
Result from operations before finance expenses	4	17	4	(4)	(12)	(3)	6	(5)	(277)
Financing income (expenses), net	2	(33)	(4)	-	(4)	(4)	(43)	(55)	(123)
Profit (Loss) before income tax	6	(16)	-	(4)	(16)	(7)	(37)	(60)	(400)
Income tax (expenses)/benefit	(2)	(5)	(1)	-	-	2	(6)	(1)	27
Profit (Loss) from continuing operations	4	(21)	(1)	(4)	(16)	(5)	(43)	(61)	(427)
Profit (Loss) from discontinued operations	-	-	-	-	1	-	1	(11)	18
Profit (Loss) for the period	4	(21)	(1)	(4)	(15)	(5)	(42)	(72)	(409)
Attributable to:
Non-controlling interest Net result for equity holders	- 4	(17) (4)	- (1)	- (4)	- (15)	- (5)	(17) (25)	(36) (36)	(261) (148)
Profit (Loss) for the period	4	(21)	(1)	(4)	(15)	(5)	(42)	(72)	(409)

* The results of 2011 have been restated as the results of Sovcombank have been classified as discontinued operations.

Overall H1 – 2012 review

The developments in Q2 – 2012 do not differ materially from the developments in H1 – 2012. If developments are specifically attributable to Q2 these are mentioned separately.

Total consolidated result from continuing operations in H1 – 2012 arrived at EUR 43 million loss (H1 – 2011: EUR 61 million loss), mainly due to losses in Real Estate Europe and Banking and Retail Lending:

The result from continuing operations of Real Estate Asia decreased by EUR 7 million to EUR 4 million. On the one hand, the profit from rental operations and delivery of apartments increased while selling, general and administrative expenses ("SG&A") in H1 – 2012 decreased compared to H1 – 2011 (in which one-off expenses for a share option plan were recognized). On the other hand, in Q2 – 2012, the revaluation adjustment and gain on disposal of assets was much lower than in the second quarter of last year, when a significant revaluation profit on the sale of 50% of the shopping mall in Chengdu as well as a gain on the sale of a land plot were recognized.

Real Estate Europe (mainly GTC S.A.) recorded a loss from continuing operations of EUR 21 million, better by EUR 18 million than the loss of EUR 39 million recorded in H1 – 2011. In both years, negative revaluation results and impairments after tax were the main contributors to the loss. Although the revenue decreased marginally, the gross margin improved, leading to a slightly better operational gross profit (i.e. excluding impairments on inventory, which are recorded under "Other expenses, net" in the segment analysis). The development of the revenue in H1 – 2012 was negatively impacted by the sale of the 50% share in a retail center in Warsaw (Galeria Mokotow) in

Q3 of 2011, but positively influenced by the opening of new retail centers and office buildings. General and administrative expenses decreased and also finance expenses were slightly lower in the first half of 2012 when compared to the same period last year.

Water infrastructure lost EUR 5 million (H1 – 2011: loss of EUR 5 million). The results of "Projects" improved by EUR 2 million compared to H1 – 2011, primarily due to the reduction of overhead costs. On the other hand, the gross profit on "Projects" was lower, with revenues almost similar to the first half of last year.

The result of "Assets" was similar to last year. Revenues and gross profit were higher especially in China, also due to a contribution from the progress of construction/expansion of plants. Finance expenses also increased: in the second quarter of this year a combined loan/warrant agreement – which was signed in 2010 with private equity investor FIMI – was extended, resulting in an additional finance expense (revaluation of warrant due to the extension).

The Banking and Retail Lending segment recorded a loss of EUR 16 million (H1 – 2011: EUR 9 million loss). The economies of Bulgaria and Romania are weak, resulting in significant provisions on non performing loans which were taken particularly in the first quarter of this year, while the contribution of the performing portfolio could not off-set these provisions. New business originated by TBI Bank, that was acquired last year, should increase business volume and raise deposits. In H1 – 2012 the deposit base more than tripled to EUR 36 million when compared to year end 2011. New loan business is still slow, specifically in the SME segment.

Included in "Other" are the expenses and finance costs of the holding companies Kardan N.V. and GTC Real Estate Holding B.V. In H1 – 2012 the result was a loss of EUR 5 million (H1 – 2011: loss of EUR 16 million), primarily due to the result of profit recognized on the buy-back of debentures during the first six months of 2012.

The profit from discontinued operations in H1 – 2012 is the effect of the closing of the sale of Sovcombank in Russia. In H1 – 2011 the losses are also attributable to the Israeli activities, which were spun-off in Q4 – 2011.

The net result for equity holders of Kardan N.V. amounted to a loss of EUR 25 million (H1 – 2011: loss of EUR 36 million).

Equity

Kardan N.V. – balance sheet (company only, in EUR million )	30.06.2012	31.12. 2011
Total Assets	812	864
Total Equity	196	203
Equity/Total assets (%)	24%	23%

Shareholder's equity of Kardan N.V. decreased from EUR 203 million as of December 31, 2011 to EUR 196 million as of June 30, 2012, as the result of the loss of EUR 25 million which was off-set largely by positive foreign exchange results on the back of the strengthening of the RMB versus the Euro (EUR 12 million) and by positive hedge results amounting to EUR 4 million.

Covenants

In March 2012, the Company received a signed letter from a lending bank describing principal agreements between the Company and the bank relating to a change in required financial covenants relating to two loans in the amount of EUR 15 million each. According to the principal agreement, the financial covenants will be amended so that the Company is required to maintain a minimum shareholders' equity of EUR 160 million, and a ratio of equity to total stand-alone balance sheet of the Company of 21%. In addition, Kardan agreed to early repay an amount of EUR 35 million from the total outstanding loans of Kardan, GTC RE Holding and Tahal Group Assets, which was done in April 2012.

According to the letter received as described above, the Company and its subsidiaries meet the new agreed upon covenants. However, since an amendment to the loan agreements had not yet been signed on June 30, 2012, the Company and its subsidiaries had to present loans amounting to EUR 109 million as current liabilities. After reporting date, in August 2012, the new loan agreement was signed.

On June 30, 2012, a subsidiary of GTC S.A. was in breach of covenantsrelating to a loan in the amount of EUR 29 million, which was reclassified as current liability. In July, 2012, GTC S.A. received a waiver from the bank until March 2013.

For additional information on covenants, see note 8 in the Financial Statements.

Highlights per segment:

Every segment result for H1 – 2012 is analyzed separately hereunder. It is noted that only if the development in Q2 – 2012 significantly differs from the Q1 – 2012 development, the second quarter of 2012 is discussed separately.

Real Estate

Kardan is active in development and management of Real Estate through two segments: 1) Asia, which includes its 100% subsidiary Kardan Land China, and 2) Europe, which includes GTC S.A., of which it holds 28%, and a relatively small investment in Western Europe (49% holding in GTC Investments).

Real Estate Asia

General developments China

• GDP growth second quarter 2012: 7.6% (y-o-y, 8.1% y-o-y in Q1 2012);
• Inflation low at 2.2% end of June 2012;
• Slight slowdown in retail sales growth (June 2012: 13.7% y-o-y, March 2012: 15.2% y-o-y);
• Residential Real Estate market showing signs of recovery; Government stimulating buying apartments for own use.

GDP growth in China was 7.6% (y-o-y) in the second quarter of 2012, as the result of the policies that the Chinese government has installed in the past five quarters to slow down the economy. Due to the ongoing Eurozone issues and the slowdown of the global economy, which affects the Chinese export, the government lowered its full year growth target for 2012 to 7.5%. Inflation, however, has come down to around 2% as the result of the mentioned policies as well as on the back of lower food prices. Currently measures are being taken to support growth again by loosening up the monetary policy, such as lowering interest rates, permitting banks to have more flexibility in setting interest rates and easing the bank's reserve requirements. The government continues to focus on facilitating China's economic transformation to a more consumer based economy over the medium term, among others by measures to increase household income and by improving living standards. In line herewith, attention is given to relaxing restrictions for first time home buyers, owner occupied housing and low income groups. The process of urbanization continues, underpinning the ongoing demand for low to mid end residential real estate as well as for shopping centers in Tier 2 and Tier 3 cities, the two focal areas for Kardan Land China.

Retail sales growth (y-o-y: June 2012: 13.7%, vs March 2012: 15.2%) has shown some slowdown, but is still strong. This is reflected in the good performance of the shopping center in Chengdu. In the residential sector, Kardan Land China continued to feel the effect of the stringent mortgage measures imposed by the Chinese government, and of its decision not to decrease prices. Consequently, in Q1 of 2012, buyers were extremely hesitant to buy apartments (81 apartments sold vs 599 in Q1 – 2011). As of May of this year, interest rates have come down, which has created a slightly positive movement in the market again (Q2 – 2012: 136 apartments sold vs 541 in Q2 – 2011).

For the six months ended June 30 For the three months ended June 30 Full Year In EUR million 2012 2011 2012 2011 2011 Property rental and service recharge revenues 3 3 1 1 6 Delivery of apartments 31 14 16 11 43 Total revenues 34 17 17 12 49 Costs of property rental and service recharge operations 2 2 2 1 3 Cost of delivery of apartments 25 10 12 7 34 Other expenses, net - 1 - 1 1 Gross profit 7 4 3 3 11 SG&A expenses 6 9 3 7 16 Adjustment to fair value (impairment) of investment properties 3 17 - 14 17 Gain on disposal of assets and other income - 4 - 4 16 Result from operations before finance expenses 4 16 - 14 28 Financing income (expenses), net ² (1) ⁴ - ³ Income tax (expenses) / benefit (2) (4) (1) (4) (7) Net profit (loss) 4 11 3 10 24 Attributable to: Equity holders (Kardan N.V.) 4 11 3 10 24

Additional information Real Estate Asia	2012 (30.06)	2011 (30.06)	2011 (31.12)
Balance sheet (in EUR million)
Completed investment property	73	59	68
Investment Property Under Construction	59	-	54
Inventory	235	218	231
Cash & short term investments	63	48	67
Total Assets	518	461	514
Loans and Borrowings	44	52	43
Advance payments from buyers	124	118	136
Total Equity	259	208	247
Other
Apartments sold in period *	217	1,140	1,883
Apartments delivered in period *	1,113	493	1,767
Total apartments sold, not yet delivered *	4,219	5,646	5,115

* reflects number of apartments 100%; Kardan Land China holds 50%; numbers relate to six months 2012, 2011 and 12 months 2011

Revenues

"Property rental and service recharge revenues", attributable to the shopping center in Chengdu, remained the same in H1 – 2012 as in the comparable period last year At the end of August 2011, Kardan Land China sold 50% of the shopping mall to a Singapore investor; consequently as of September 1, 2011 Kardan Land China is only entitled to 50% of the rental income, but still to 100% of the asset management fees. The occupancy rate as of June 30, 2012 is 98%.

Residential revenue is recognized when apartments are handed over. In H1 – 2012, Kardan Land China delivered 1,113 apartments vis-à-vis 493 in the same period in 2011 (these numbers represent 100%: Kardan Land China has a stake of approximately 50%, consequently the revenue shown represents 50% of the total revenues booked on these deliveries).

Gross margin

The gross margin on rental and service recharge revenues was 47% compared to 50% in H1 – 2011; the margin was negatively impacted by a one-off property tax charge. Without this one-off charge, the gross margin in H1-2012 would have been 55%.

The gross margin on delivery of apartments was 20%, nearly equal to the margin in the full year 2011.

Sales & Marketing, and General Administrative expenses (SG&A)

Expenses in H1 – 2012 were substantially lower than in H1 – 2011: in Q2 – 2011, EUR 5 million expenses relating to employee options were recognized (in H1 – 2012: EUR 0.1 million). In the first half of 2012, higher commission costs, in line with higher deliveries of apartments, were recorded than in the corresponding period last year. And finally, marketing costs for the Dalian mixed-use project were incurred in H1 – 2012, but not in last year.

Adjustment to fair value of investment properties

The positive adjustment to fair value in both H1 – 2012 (recorded in Q1 – 2012) as in H1-2011, is attributable to the shopping mall in Chengdu (recorded mainly in Q2 – 2011).

Gain on disposal of assets and other income

The gain in H1 – 2011 was realized on the sale of a land plot in Hangzhou, China.

Financing Income/expenses

In H1 – 2012 a finance income was recognized on positive foreign exchange results of EUR 2 million (H1 – 2011: EUR 0.5 million profit), as the RMB strengthened versus the Euro particularly in the second quarter of this year.

Additional Information

From the outstanding "Loans and Borrowings", approximately EUR 25 million relates to the shareholder loan, which was repaid in full after the reporting date.

Sale of apartments is showing a slight increase in Q2 – 2012 (136) versus the first quarter of this year (81), but H1 – 2012 is still substantially slower than H1 of 2011. Now that the Chinese government is lowering the interest rates, buyers are carefully returning to the market. Kardan Land China has, however, slowed down the pace of construction to match the market conditions and to keep the percentage of completed unsold apartments in the inventory low (June 30, 2012: 4%).

Kardan Land China started the construction of a mixed-use project in Dalian, comprising of a shopping center (NRA – net rentable area – of approx. 65,000 sqm), residential apartments and small home offices (GFA -gross floor area- of approx. 100,000 sqm). The estimated total development cost, including land, amounts to approximately EUR 475 million. Besides Equity which has already been invested, the development of the project will be financed by a bank loan and proceeds from sale of apartments.

Real Estate Europe

General developments Central and Eastern Europe (CEE)

• Eurozone sovereign crisis deteriorated in Q2 2012;
• Consumer confidence low, particularly in Romania and Bulgaria;
• Polish market continues to demand quality assets in prime locations.

As of the beginning of May 2012, the Euro crisis ignited again. Trade declines and a higher volatility of capital flows are impacting CEE, as these countries are closely connected to the Euro area. Most of the CEE countries still report a positive GDP growth, but there are significant differences per country and overall the growth expectations have been brought down for 2012. In the Real Estate markets in CEE, the number of active investors and financiers has reduced considerably. However, prime locations and high quality assets, particularly in Warsaw, are still sought after.

Across CEE, office leasing activity is mostly driven by contract renewals, as new companies are hesitant in executing their expansion plans in the volatile economic markets. In addition, most active investors are showing a preference for retail real estate. GTC S.A. is planning to develop two large retail centers in Warsaw (by end of 2014), which have a combined NRA of 98,000 sqm (GTC S.A. share).

The pace of economic growth in Poland in the first half of 2012 was slower than in the comparative period in 2011. Consumer purchasing power in comparison to H1 – 2011 decreased slightly as the result of increased inflation. The demand for modern office space in Poland, particularly in Warsaw, remains strong. Rents are stable, although the average vacancy rate has increased slightly in comparison to year end 2011. Evidence of the strong demand for quality is the sale of the Platinium Business Park (I-V) by GTC S.A. in June 2012, which is in line with GTC S.A's indicated intention to sell assets to generate free cash of EUR 180 million by end of 2014 in order to deleverage. With the sale of Platinium 30% of this target has been achieved.

Although wages and salaries in Bulgaria and Romania have increased lately, the macro-economic and political (noteably in Romania) sentiment in both counties is holding consumers back in their spending behavior. Consequently, particularly the retail real estate markets remain challenging.

Results Real Estate Europe

Real Estate Europe comprises GTC S.A. which operates in Central and Eastern Europe, as well as the small entity GTC Western Europe, in which Kardan holds 49%. As the 28% that Kardan holds in GTC S.A. is a controlling stake, the results of GTC S.A. are 100% consolidated in the financial statements of Kardan. Consequently, the results of Real Estate Europe are mainly reflective of the results of GTC S.A.

		For the six months ended June 30,		For the three months ended June 30,
			in EUR million
	2012	2011	2012	2011	2011
Property rental and service recharge revenues	67	69	35	37	136
Delivery of apartments	10	10	4	6	25
Total revenues	77	79	39	43	161
Costs of property rental and service recharge operations	18	19	9	10	38
Cost of delivery of apartments	9	11	4	7	23
Operational Gross Profit	50	49	26	26	100
Other expenses, net	3	14	2	13	77
Gross profit	47	35	24	13	23
SG&A expenses Adjustment to fair value (impairment) of investment	14	17	8	11	29
properties	(11)	(26)	(13)	(40)	(221)
Impairment losses on goodwill	-	-	-	-	(11)
Equity in net earnings of associated companies	(5)	(1)	(4)	-	(4)
Result from operations before financing expenses	17	(9)	(1)	(38)	(242)
Financing income (expenses), net	(33)	(35)	(16)	(20)	(86)
Income tax (expenses) / benefit	(5)	5	(6)	11	(18)
Net profit (loss)	(21)	(39)	(23)	(47)	(346)
Attributable to:
Non-controlling interest holders	(17)	(31)	(18)	(36)	(262)
Equity holders (Kardan N.V.)	(4)	(8)	(5)	(11)	(84)
	(21)	(39)	(23)	(47)	(346)

2012 (30.06)	2011 (30.06)	2011 (31.12)
176	252	182
1,690	1,947	1,704
175	244	134
239	110	179
2,385	2,694	2,310
1,376	1,448	1,395
816	1,032	724
55%	54%	60%
634,917	536,000	579,856
1,621	1,702	1,465
89%	84%	87%
		8.1%
	8.4%	8%

* LTV = Loans net of cash and deposits / Investment Property, inventory and assets held for sale ** Includes Czech Republic & assets held for sale

Revenues

"Property rental and service recharge revenues" decreased by 3% y-o-y in H1 – 2012, to EUR 67 million (Q2 – 2012: EUR 35 million and Q1 – 2012: EUR 32 million) mainly due to the sale in Q3 – 2011 of 50% of Galeria Mokotow, the former retail center of GTC S.A. in Warsaw. The loss of revenue of Galeria Mokotow was almost fully compensated by the opening of new retail/office centers and increased occupancy versus H1 – 2011. Currently, average occupancy at GTC S.A. stands at 89%. In some retail centers, lease income per sqm is low as it is based on turnover of tenants which is low, as well as due to measures taken by GTC S.A. to maintain occupancy levels.

The residential market in CEE/SEE remains weak, with revenues in the first half of 2012 similar to the comparable period last year.

Operational Gross profit

H1 – 2012 gross profit on property rental and service recharge revenues remained almost the same as in H1 – 2011. The margin of GTC S.A. improved slightly to 73% from 72% (H1 – 2011). The gross profit (residential) was improved slightly compared to H1 – 2011. "Other expenses, net" includes, among others, impairment of inventory in the amount of EUR 1 million (H1 – 2011: EUR 12 million), reflecting the weak market, mainly recognized in Q2 in both years.

Sales & Marketing, and General Administrative expenses (SG&A)

The decrease in SG&A expenses was mainly recognized at GTC S.A. in Q2 of 2012. Due to the completion of leasing activities in newly completed assets, sales and marketing expenses decreased. In addition, administrative expenses were lower in Q2 of this year compared to last year – which included a one-off cost related to the sale of Galeria Mokotow – as the result of cost optimization measures taken by the management of GTC S.A.

Adjustment to fair value of investment properties

Semi-annual valuations were performed, as usual, by external appraisers. Both in Q2 – 2011 as in Q2 – 2012, revaluation losses on the GTC S.A. assets in Romania, Bulgaria and Croatia were partially compensated by gains in Poland. In the first quarter of this year, GTC S.A. reported a small positive revaluation result of EUR 2 million.

In addition, the portfolio of GTC Investments in Germany faced negative revaluations in Q2 – 2012; GTC RE's share in these losses amounted to EUR 2 million (H1 – 2011: nil).

Share in net earnings (loss) of associated companies

The negative contribution in H1 – 2012 mainly includes the negative revaluation results which were recorded (in Q2) in the Czech Republic and Ukraine by associated companies of GTC S.A.

Financing Income /expense

In the half year comparison 2012 versus 2011, financing expenses decreased by EUR 2 million. The composition of this decrease can be explained as follows: in the second quarter of this year the

financing expense decreased y-o-y by EUR 5 million, mainly due to one-off expenses in Q2 – 2011 related to the sale of Galeria Mokotow. In the first quarter of this year, however, financing expenses were higher by EUR 3 million (y-o-y) following the completion of new assets (until completion, the majority of finance expenses are capitalized).

The average interest rate payable by GTC S.A. in H1 – 2012 remained stable at 5%.

Direct result

The gross profit from operations, excluding impairments on inventory (recorded under "Other expenses, net"), and deducting SG&A and finance expenses, is slightly positive: EUR 1 million in H1 – 2012 compared to a loss of EUR 4 million in H1 – 2011. The improvement is mainly attributable to a reduction of the SG&A expenses by EUR 4 million compared to H1 – 2011.

Income tax

The income tax expense is largely the result of positive results of GTC S.A. in Poland, as well as the effect of a deferred tax liability which became smaller, as the difference between the tax base and the value of assets due to the strengthening of the PLN against the Euro decreased. For negative results in those activities where no turnaround is expected in the foreseeable future, no deferred tax asset is recognized. In H1 – 2011, GTC S.A. in Poland recognized a tax income largely relating to the sale of retail center Galeria Mokotow in Warsaw.

Net profit/ (loss) attributable to Equity holders

Kardan holds an indirect 28% stake in GTC S.A. Consequently, the majority of the consolidated result for shareholders is attributable to the non-controlling shareholders. In H1 – 2012 the contribution to the equity holders of Kardan from the Real Estate Europe segment was a loss of EUR 4 million (H1 – 2011: loss of EUR 8 million).

Additional Information GTC S.A.

Total Equity of GTC S.A. increased to EUR 816 million (June 30, 2012) from EUR 724 million as of year-end 2011 mainly due to the rights issue amounting to EUR 100 million (net), which was placed successfully.

Resulting from the cash raised through the rights issue, the loan to assets value improved to 55% as at June 30, 2012 (March 31, 2012: 60%). The short term loans (including derivatives) amount to EUR 337 million (March 31, 2012: EUR 251 million), of which EUR 139 million is repayable only upon (the completion of the) sale of the related assets (Platinium and residential apartments). As at June 30, 2012, the breached covenants of one loan of EUR 29 million were still under negotiation, consequently the loan was classified as a short term liability. After reporting date, these negotiations lead to a waiver of the breached covenant until March 2013. EUR 106 million relates to bonds (including hedges) to be redeemed by May 2013.

GTC S.A. is listed on the Warsaw Stock Exchange. For full details on the GTC S.A. H1 – 2012 results, which were published on August 16, 2012, reference is also made to the company website: www.gtc.com.pl.

Water Infrastructure

Tahal Group International ("TGI"), the fully owned water infrastructure company of Kardan, focuses on developing water assets (e.g. wastewater and water treatment plants) and on executing water related projects worldwide. Tahal Assets is mainly active in China and Turkey, whilst Tahal Projects is mostly involved in projects in Israel, Africa, Central and Eastern Europe as well as Latin America.

General developments water infrastructure

TGI focuses on emerging and frontier markets. Relevant market characteristics that Tahal takes into account in its assessment of entering a market / country are, among other, the political stability of a country as well as its legal infrastructure, the national Public Private Partnership policy and of course the local attitude and facilities to foreign investment. Market size, number of residents and present competition are of course also factors which are considered. In order to optimally secure its investment / income, Tahal frequently collaborates with International Finance Institutions, such as the EBRD. Due to the global economic challenges and the impact this has on the financial closing of projects, the initiation of projects tends to show delays when compared to the original plans.

Results Infrastructure Assets*

	For the six months ended June 30			For the three months ended June 30	Full year
			in EUR million
	2012	2011	2012	2011	2011*
Contract revenues	18	12	9	6	29
Contract cost	11	6	6	3	16
Other expenses, net	-	1	-	1	1
Gross profit	7	5	3	2	12
SG&A expenses	4	4	2	3	7
Gain on disposal of assets and other income	1	-	1	-	2
Result from operations before financing expenses	4	1	2	(1)	7
Financing income (expenses) net	(4)	(3)	(4)	-	(5)
Income tax (expenses) / benefit	(1)	-	-	-	(2)
Profit (loss) from continuing operations	(1)	(2)	(2)	(1)	-
Net profit (loss) from discontinued operations	-	3	-	3	2
Net profit (loss)	(1)	1	(2)	2	2
Attributable to:
Non-controlling interest holders	-	(1)	-	(1)	(1)
Equity holders (Kardan N.V.)	(1)	2	(2)	3	3

(*) Finance expenses of Tahal Group International have been allocated to Tahal Assets

Additional Information Assets (in EUR million)	2012 (30.06)	2011* (30.06)	2011* (31.12)
Cash & short term investments	12	9	17
Total Assets	179	208	171
Net Debt (excl shareholder loans)***	54	78	54
Equity**	84	73	84
Equity**/ Assets	47%	35%	49%

* Adjusted for reversal of discontinued operations

** Group equity including shareholder loan *** Bank loans net of cash and cash equivalents

Revenues

Revenue increased by 50% compared to H1 – 2011, generated mainly by Kardan Water in China, which activity accounts for the greater majority of the total revenue of Tahal Assets. The revenue increase in China is the result of the effect of value increase which is recognized under revenue during construction of two plants as well as of capacity expansion following the acquisition in H1 – 2011 of a new waste water treatment plant in Xuanhua with a capacity of 120 tons a day.

Gross profit

The gross profit margin, net of other expenses, decreased to 42% in H1 – 2012 (H1 – 2011: 46%), due to lower profit margins on younger plants.

Financing income (expenses) net

In Q2 – 2012, Tahal agreed to extend repayment of a loan (signed in 2010) of USD 25 million (approximately EUR 20 million) to FIMI, a private equity investor. In the original agreement, FIMI was granted a warrant to take a stake in the company for the same amount as the loan; the period to exercise the warrant was extended by two years. The change of the agreement combined with foreign exchange results resulted in a financing expense of EUR 2.5 million in the period compared to a financing income in H1 – 2011 of EUR 0.5 million.

Income tax (expense)/benefit

The relatively large income tax expense related to profits recognized in China, which could not be offset against negative results of activities in other countries.

Net profit/(loss) from discontinued operations

The discontinued operations mainly concern Milgam, an Israeli company that was sold as part of the spin-off of Kardan Yazamut (the Israeli activities) which was affected in October 2011.

Results Infrastructure Projects*

		For the six months ended June 30	For the three months ended June 30		Full Year
	in EUR million
	2012	2011	2012	2011	2011
Contract revenues	42	43	20	20	85
Contract cost	39	37	19	20	76
Other expenses, net	-	3	-	2	3
Gross profit	3	3	1	(2)	6
SG&A expenses	7	9	3	4	19
Gain on disposal of assets and other income	-	1	-	-	1
Result from operations before financing expenses	(4)	(5)	(2)	(6)	(12)
Financing income (expenses), net	-	(2)	-	(1)	(3)
Income tax (expenses) / benefits	-	1	-	1	1
Profit (loss) from continuing operations	(4)	(6)	(2)	(6)	(14)
Net profit (loss)	(4)	(6)	(2)	(6)	(14)
Attributable to:
Equity holders (Kardan N.V.)	(4)	(6)	(2)	(6)	(14)

	(*) General and Administrative expenses of Tahal Group International have been allocated to Tahal Projects
--	------------------------------------------------------------------------------------------------------------	--	--	--	--

Additional Information Projects	2012 (30.06)	2011 (30.06)	2011 (31.12)
Balance sheet (in EUR million)
Cash & short term investments	20	16	26
Total Assets	123	111	119
Net debt (excl. shareholder loans)**	(14)	7	(18)
Equity*	35	36	34
Equity* / Assets	29%	32%	29%
Other (in EUR million)
Backlog	347	163	316
New business	80	35	203

* Group equity including shareholder loan ** Bank loans net of cash and cash equivalents

Revenues

Revenue from Projects in the first half of 2012 remained nearly equal to the revenue in H1 – 2011, but was lower than expected. This is largely due to delays in initiation of a couple of projects, and more difficult economic circumstances in certain countries of activities.

Gross profit

In Q2 – 2012, the gross profit margin arrived at 2%, similar to the corresponding period last year. In comparison to H1 – 2011, the gross profit margin excluding the reorganization expenses decreased from 14% to 6% in H1 – 2012. In H1 – 2011, reorganization charges of EUR 2.5 million were recorded as "Other expenses, net".The currently delayed projects (see Revenue) are expected to have higher margins than the margins recognized in H1 - 2012.

Sales and Marketing, and General & Administrative expenses (SG&A)

In H1 – 2012 the expenses substantially decreased in comparison to the corresponding period last year, mainly to be explained by the effect of the reorganization which was initiated last year, which has resulted in a saving of over EUR 2 million (staff, closing of offices etc.). The saving specifically kicked in during Q2 – 2012.

Gain on disposal of assets and other income

In H1 – 2011, this included the participation in an Israeli desalination company that was sold in H2 – 2011.

Financing income/(expenses) net

These expenses decreased significantly, reflecting the improved cash position following the receipt of outstanding debts and advance payments on projects.

Additional information Tahal Projects

The new business in H1 – 2012 amounted to EUR 80 million , leading to a significant backlog position.

The main contract was the 3K project with the National Water Company of Ghana to design, construct, expand and upgrade the drinking water systems in the Kumawu, Konongo and Kwahu region of Ghana. This will take approximately three years from commencement. In Q2 – 2012, some smaller projects were signed.

Banking and Retail Lending

Kardan operates in the financial services sector through its 100% holding in Kardan Financial Services (KFS), which owns 100% of TBIF (banking and retail lending), mainly in Bulgaria and Romania. In July 2011, TBIF completed the acquisition of the Bulgarian bank TBI Bank, to upgrade its operation in Bulgaria into a full banking operation focused on retail and SME banking to be funded by deposit taking. End of May, 2012, TBIF closed the sale of its 50% in the Russian Sovcombank to its co shareholder in the bank.

General developments Bulgaria and Romania

Amidst an ongoing sovereign crisis in Europe, the macro-economic developments in both Bulgaria and Romania have showed modest recoveries in the second quarter of 2012.Consumer confidence remains low, however, which is reflected in a stagnant consumer credit market and a continuation of challenging market conditions for SME bank loans. In Bulgaria unemployment in Q2 – 2012 decreased, but remained at a level of over 10%. Although the labor market in Romania is in a somewhat better situation, the country does face issues, such as a.o. slow export growth and growing political instability due to the upcoming parliamentary election in November.

Results Banking & Retail Lending

		For the six months ended June 30	or the three month ended June 30	Full Year
	2012	2011	2012	2011	2011
			in EUR million
Banking and retail lending activities	2	12	5	7	4
Other revenues	3	3	1	1	6
Total revenues	5	15	6	8	10
Costs of banking and lending activities	14	15	6	7	35
Other expenses, net	2	2	1	2	5
Gross profit	(11)	(2)	(1)	(1)	(30)
SG&A expenses	1	2	1	1	3
Gain (loss) on disposal of assets and other income	-	(2)	-	(1)	2
Impairment losses on goodwill	-	-	-	-	(19)
Result from operations before financing expenses	(12)	(6)	(2)	(3)	(50)
Financing income (expenses), net	(4)	(4)	(3)	(2)	(12)
Income tax (expenses) / benefits	-	1	-	1	1
Profit (loss) from continuing operations	(16)	(9)	(5)	(4)	(61)

Net profit (loss) from discontinued operations	1	-	1	(10)	8
Net profit (loss)	(15)	(9)	(4)	(14)	(53)
Attributable to:
Equity holders (Kardan N.V.)	(15)	(9)	(4)	(14)	(53)
Additional Information KFS* Banking & Retail Lending	2012 (30.06)	2011 (30.06)	2011 (31.12)
Balance sheet (in EUR million)
Gross loan portfolio	167	195	226
Cash & Short term investments	30	13	15
Total Assets	253	195	211
Total Equity	47	41	46
Other
Provisions	39%	19.6%	29.5%
* Excluding Sovcombank

General

In the first half of 2011 Kardan signed the agreement to sell its remaining 50% in its Russian Sovcombank, for a pre-agreed fixed transaction price. No additional results from Sovcombank were recognized in the H1 – 2012 income statement, except for the interest received on the part of the purchase price that was paid on the closing date, as well as to the release of capital reserves.

It should also be noted that the results of TBI Bank are not included in H1 – 2011 results, as TBI Bank was acquired in Q3 of 2011. The results of TBI Bank are fully consolidated in the H1 – 2012 results.

Revenues

Excluding Sovcombank, the revenues in H1 – 2012 amounted to EUR 5 million compared to EUR 15 million in H1 – 2011.

The weak economic situations in Bulgaria and Romania have lead to a decrease of the average portfolio in H1 – 2012 in comparison to the corresponding period last year. Impairments on loans (deducted from revenues) amounted to EUR 10 million in H1 – 2012 (H1 – 2011: EUR 4 million), of which the majority (EUR 8 million) was recognized in Q1 – 2012.

Gross profit

The "gross profit" amounted to a loss of EUR 11 million (H1 – 2011: a loss of EUR 2 million) due to the provisions on consumer credits, deducted from "Revenues", and a portfolio which was too small to generate sufficient income to cover the overhead expenses. The majority of the loss (EUR 10 million) was recognized in Q1 – 2012 as a consequence of the impairment on loans.

Sales & Marketing, and General & Administrative expenses (SG&A)

These expenses comprise of employee and other expenses of KFS, the holding company of the banking & retail lending activities. In the first half of 2011 some one-off severance costs were incurred resulting from the sale of activities. In addition, a decrease in overhead costs was achieved. Consequently, SG&A expenses were substantially lower in the first half of 2012 than in H1 – 2011.

Gain on Disposal of Assets and other income

In H1 – 2011, the loss is attributable to the sale of VAB Leasing.

Net profit (loss) from discontinued operations

In the first half of 2011 the result is nil. In H1 – 2012 the profit relates to the interest income paid by the buyer of Sovcombank on the remainder of the purchase price as paid upon closing of the transaction, as well as to the release of capital reserves.

It is noted though, that the result in H1 – 2011 consisted of two substantial movements in Q1 and Q2, relating to VAB bank and Sovcombank respectively.

Additional Information

In H1 – 2012, the gross loan portfolio excludes Sovcombank, but includes the Bulgarian bank portfolio. Although the gross loan portfolio at TBI bank is showing an increasing trend, the total portfolio of KFS decreased resulting mostly from the macro economic situation in Bulgaria, particularly noticeable in the SME segment.

Deposits showed substantial growth in the first half of 2012, from EUR 11 million year-end 2011 to EUR 36 million by end of June, 2012. This growth derives mainly from retail clients, and was particularly strong in Q2 of 2012.

Other Expenses

	For the six months ended June 30		For the three months ended June 30		Full Year
	2012	2011	2012	2011	2011
			in EUR million
General and administration expenses	3	2	1	1	8
Financing income (expenses), net	(4)	(10)	1	(9)	(20)
Income tax (expenses) / benefit	2	(4)	(1)	(4)	(2)
Profit (loss) from continuing operations	(5)	(16)	(1)	(14)	(30)
Net profit (loss) from discontinued operations	-	(14)	-	(7)	8
Net profit (loss)	(5)	(30)	(1)	(21)	(22)
Attributable to:
Non-controlling interest holders	-	(4)	-	(3)	2
Equity holders (Kardan N.V.)	(5)	(26)	(1)	(18)	(24)

General

The results under "Profit (Loss) from continuing operations" relate to the holding and finance expenses of Kardan N.V. and its direct subsidiary GTC Real Estate Holding BV (GTC RE).

General and Administrative expenses

These expenses increased in H1 – 2012, due to one-off management expenses, largely recognized in Q2 – 2012.

Financing expenses (net)

In H1–2012, the financing expenses were positively impacted by a profit of EUR 10.4 million (Q2 – 2012: EUR 9.4 million) related to the repurchase of debentures issued by Kardan N.V., and were negatively impacted by a loss from revaluation of unhedged debentures in the amount of EUR 2 million (EUR 3 million in Q2 – 2012). In H1 – 2011 a profit of EUR 2.5 million was associated with exchange rate differences related to unhedged debentures.

Income tax

These amounts relate to deferred tax on hedge instruments. The same amount is recorded to shareholder's equity.

Net profit (loss) from discontinued operations and non controlling interest holders In H1 – 2011 the amounts are attributable to Kardan Israel Ltd., the subsidiary that was spun off in Q4 – 2011.

Additional Information

In the first half of 2012, Kardan, through GTC RE, repurchased 209,118,413 Debentures Series A of Kardan for a total amount of EUR 41 million, reducing the total outstanding debt by EUR 52 million when compared to the situation as at year end 2011. As at June 30, 2012, Kardan, through GTC RE and TCE, held 28.8% of Debentures Series A and 3.62% of Debentures Series B.

Subsequent to balance sheet date, Kardan, through GTC RE, purchased 222,118,772 Debentures Series A for a total amount of EUR 35.9 million and 120,222,513 Debentures Series B for a total amount of EUR 15.5 million, reducing the total outstanding debt by EUR 84 million. As a result of the purchases, Kardan will recognize a financial income from early repayment of debentures amounting to approximately EUR 33 million in the third quarter of 2012.

These purchases were funded by the proceeds from the sale of cross currency swaps and own cash sources. The sale of these swaps is justified by the change of the profile of the assets of Kardan N.V. and GTC RE Holding from a predominantly Euro related company into a company with increased exposure to the Chinese RMB.

Outlook 2012

Kardan N.V.

Management attention in 2012 will continue to be focused on the cash flow and debt position of Kardan N.V. and of its intermediate holding company GTC RE in view of coming redemption of (part of) the outstanding debentures, starting in 2013. A cash flow forecast for the coming two years can be found in the Director's Report on page 13.

The Debenture repurchase plans will contribute a profit of EUR 43 million in total to the 2012 results, of which approximately EUR 10 million has been recorded in the first half of this year; on the other hand the volatility of the finance expenses has increased due to the exposure to the exchange rate between the Euro and the Israeli NIS, in which currency the debentures are denominated.

Real Estate Asia

Kardan Land does not expect a noticeable recovery of the residential markets before the fourth quarter of 2012. For the full year 2012, we expect to deliver approximately 1,800 – 2,100 apartments (H1 – 2012: 1,113 delivered, Kardan Land has 50%), which were purchased over a year ago. The construction of the mixed–use project in Dalian (approximately 300,000 sqm of residential, retail and parking space) was initiated. Sales activities for the first apartments are planned for the fourth quarter of 2012.

Real Estate Europe

Markets outside of Poland will remain difficult. GTC S.A. Management aims to continue to decrease the leverage of GTC S.A. (55% as at June 30, 2012), mainly through the sale of assets which should generate free cash of EUR 180 million by end of 2014. In addition, GTC S.A. will continue to focus on active asset management, sale of assets and further improvement in operating margin and reducing general expenses.

Water infrastructure

The company will increase its focus to investment in water related Assets. In China, we expect that the capacity of our plants increases to 655,000 m3/day by the end of 2012 (end of 2011: 605,000 m3/day). Revenues in H 2–2012 (y-o-y) are consequently expected to increase. Entry into other markets is under review.

In the Project segment the spectrum of activities is more focused on Engineering, Procurement and Construction Projects (EPC) projects in frontier countries, as well as on design and engineering activities in Israel (on shore and off shore). Revenues are expected to increase from existing and recently signed projects (y-o-y).

Banking and Retail Lending

In the second half of 2012, TBIF will continue to merge its consumer finance and leasing activities in Bulgaria into the new bank, TBI Bank, allowing the Bank to sell new products more efficiently and to increase funding by raising deposits. The consumer and leasing markets in Bulgaria and Romania continue to be difficult. Whether the volume of new business will exceed the decline of the portfolio

due to regular redemptions depends to a significant extent on the development of the purchasing power and behavior of consumers and the viability of medium and small enterprises. The company's attempt to obtain a branch license in Romania is ongoing, but is not expected to be successful before end of 2012. If the markets are not deteriorating any further, the company expects that no further major provisions need to be taken.

This report also contains information regarding market developments which are based on external party research which was published in the following reports.

Macro-economic reports National Bureau of Statistics, China International Monetary Fund; Economic Report Asia, April 2012 International Monetary Fund, World Economic Outlook (July 2012) KBC, Economic Outlook Update, & Economic Outlook Central Europe, August & June 2012 European Commission; Economic Forecast Spring 2012 Center for Economic Development Bulgaria, (www.ced.bg); The economy of Bulgaria, July 2012 World Bank; Global Economic Prospects, Managing Growth in a Volatile World, June 2012 McKinsey Quarterly; Going for gold in emerging markets, August 2012

Real Estate: Jones Lang LaSalle: City Reports H1–2012 CBRE: Market View CEE Offices & European Valuation Monitor, August 2012

Water Infrastructure www.globalwaterintel.com

Financial Services Bulgarian National Bank, Economic Review Summaries, February 2012 Unicredit; Equity daily, August 2012

Kardan N.V. is not responsible for the nature or correctness of data presented in this section regarding market developments or projections.

Analyst & Investor Call

An analyst and investor call will be held today at 14.00 CET. To take part in the call, please use the following dial-in number:

Dial in number NL: +31 (0)45 6316902 Conference ID: 4555779

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DISCLAIMER

This press release contains forward-looking statements and information, for example concerning the financial condition, results of operations, businesses and potential exposure to market risks of Kardan N.V. and its group companies (jointly "Kardan Group"). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements (including "forward looking statements" as defined in the Israeli Securities Law). Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. These forward-looking statements are identified by the use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. A variety of factors, many of which are beyond Kardan Group's control, affect our operations, performance, business strategy and results and could cause the

actual results, performance or achievements of Kardan Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For Kardan Group, particular uncertainties arise, amongst others but not limited to and not in any order of importance, (i) from dependence on external financing with the risk that insufficient access to capital threatens its capacity to grow, execute its business model, and generate future financial returns (ii) from concentration of its business in Central Eastern Europe and China as a result of which Kardan Group is strongly exposed to these particular markets (iii) from risks related to the financial markets as a result of Kardan N.V.'s listings on NYSE Euronext Amsterdam and the Tel Aviv Stock Exchange and (iv) from it being a decentralized organization with a large number of separate entities spread over different geographic areas in emerging markets, so that Kardan Group is exposed to the risk of fraudulent activities or illegal acts perpetrated by managers, employees, customers, suppliers or third parties which expose the organization to fines, sanctions and loss of customers, profits and reputation etc. and may adversely impact Kardan Group's ability to achieve its objectives and (v) from any of the risk factors specified in Kardan N.V.'s Annual Report 2010 and in the "Periodic Report for 2011" published by Kardan N.V. in Israel on March 30, 2012 and which is also available at the Kardan website. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Kardan N.V. does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

About Kardan

Kardan identifies and develops assets in promising emerging markets, mainly in the CEE, CIS and China. Its activities are mainly focused on three sectors that benefit from the rising middle class: Real Estate, Water Infrastructure and Retail Lending. Company headquarters are in the Netherlands. Kardan aims at holding controlling interests in its investments and, through the development of local business platforms, is actively involved in the definition and implementation of their strategy. Total assets as of June 30, 2012 amounted to EUR 3.6 billion; revenues totalled EUR 176 million in H1 – 2012. Kardan is listed on NYSE Euronext Amsterdam and the Tel Aviv Stock Exchange.

The Director's Report including the financial reports, drawn up in accordance with the Dutch and Israeli regulations, are presented in a separate document and form an integral part of this release.

For further information please contact: Jan Slootweg Caroline Vogelzang Senior Executive Officer Director Investor Relations Office +31 (0)20 305 0010 +31 (0)20 305 0010 www.kardan.nl Vogelzang@kardan.nl

"This press release contains regulated information (gereglementeerde informatie) as defined in the Dutch Act on Financial Supervision (Wet op het financieel toezicht)"