Kardan N.V. — Earnings Release 2013

May 31, 2013

PRESS RELEASE Amsterdam/Tel Aviv, May 30, 2013 Number of pages:17

KARDAN Q1 2013: EUR 22 MILLION LOSS (Q1 2012: EUR 14 MILLION LOSS) Continued focus on servicing debt and operational efficiency Impairments in Romania and forex expenses

Highlights segments Q1 of 2013:

Kardan N.V.

• EUR 22 million loss attributable to shareholders (Q1 2012: EUR 14 million loss)
• Significant negative impact due to strengthening of Israeli Shekel versus Euro (EUR 20 million)

Real Estate Asia

• Lower (110) number of apartments delivered (Q1 2012: 512); lower revenues
• Revaluation gain on development progress Europark Dalian retail center.
• Higher (575) number of apartments sold (Q1 2012: 81)
• EUR 2 million profit (Q1 2012: EUR 1 million profit)

Real Estate Europe

• Impairments of EUR 25 million (GTC SA, 100%) in Romania mainly due to new legislation on zoning
• Financial statements GTC SA deconsolidated from Kardan in Q1 2013
• Real Estate Europe: EUR 5 million loss (Q1 2012: EUR 1 million profit)

Water Infrastructure Assets

• Lower revenues, as no revenues from construction of water facilities
• Improved gross profit margin to 45% (Q1 2012: 35%)
• EUR 2 million profit (Q1 2012: EUR 1 million profit)

Water Infrastructure Projects

• Significantly higher revenues (mainly progress in new projects in Africa)
• Continued focus on cost
• Gain on sale of real estate asset in Tel Aviv
• EUR 5 million profit (Q1 2012: EUR 2 million loss)

Banking and Retail Lending

• Substantially higher revenues and lower provisioning
• One-off gain on recovery payment on former investment in Serbia
• Break even (Q1 2012: EUR 11 million loss)

Shouky Oren, CEO of Kardan N.V. stated: "We have reported a loss of EUR 22 million mainly due to a currency impact and negative revaluations: 1) the appreciation of the Israeli Shekel versus the Euro impacted our income statement negatively by EUR 20 million, but was offset by EUR 9 million on our balance sheet, and 2) impairments on real estate assets mainly in Romania were again necessary. From an operational business point of view, the implemented efficiency measures have led to better results. Kardan is however, still facing challenges. Our current main priority at the holding level is servicing our debt. We are actively pursuing all possibilities, among others to materialize value into cash and are fully committed to succeed.

It should be noted that the presentation of our first quarter 2013 results, and consequentially our income statement, is impacted by two accounting issues: 1) the deconsolidation of the financial statements of GTC SA from our results and 2) the implementation of the equity method for joint ventures."

During the first quarter of 2013, it was decided no longer to consolidate the financial statements of GTC SA, the leading Central and (South) Eastern European real estate developer in which Kardan holds a 28% stake, in the results of Kardan (see note 6 in the Financial Statements). Consequently, our share in the results of GTC SA is presented as Equity in net earnings in associated companies in the income statement.

In addition, as of January 1, 2013, following the adoption of IFRS 11(Joint Arrangements), all the joint ventures which were previously proportionally consolidated in the financial results, are also presented as Equity earnings / (losses) in joint ventures and associated companies. Consequently, there are material changes in the presentation of both the Real Estate Europe as well as the Real Estate Asia segment. The impact on the other segments is immaterial. The comparative results have been adjusted to conform to these changes.

The Q1 2013 condensed interim consolidated income statement split into the different segments of Kardan N.V. is shown in the table 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 Q1 2013 results of every individual segment is analyzed in more detail.

Condensed Interim Consolidated Income Statement Kardan N.V.

For the first three months ended March 31, 2013 (in EUR thousands)

		Real Estate		Infrastructure	Banking			Total
					and Retail
Total revenues	Asia 1,172	Europe -	Assets 6,247	Projects 27,761	lending 6,103	Other 9	Q1-2013 41,292	Q1-2012 28,993	FY 2012 161,778
Total expenses	2,043	-	4,858	27,688	6,759	1,245	42,593	41,409	186,885
Profit (loss) from operation before fair value adjustments, disposal of assets and financial expenses	(871)	-	1,389	73	(656)	(1,236)	(1,301)	(12,416)	(25,107)
Profit (loss) from fair value adjustments, disposal of assets and investments, equity earnings (loss)	2,166	31,850	495	8,348	1,482	-	44,341	3,421	9,057
Result from operations before finance expenses	1,295	31,850	1,884	8,421	826	(1,236)	43,040	(8,995)	(16,050)
Financing income (expenses), net	1,451	1	181	(592)	(305)	(25,207)	(24,471)	(9,382)	9,756
Profit (Loss) before income tax	2,746	31,851	2,065	7,829	521	(26,443)	18,569	(18,377)	(6,294)
Income tax (expenses)/benefit	(387)	-	(606)	(2,740)	(152)	(748)	(4,633)	2,364	(938)
Profit (Loss) from continuing operations	2,359	31,851	1,459	5,089	369	(27,191)	13,936	(16,013)	(7,232)
Profit (Loss) from discontinued operations	-	(56,508)	-	-	-		(56,508)	3,099	(131,948)
Profit (Loss) for the period	2,359	(24,657)	1,459	5,089	369	(27,191)	(42,572)	(12,914)	(139,180)
Attributable to:
Non-controlling interest	-	(19,873)	(310)	59	(5)	-	(20,129)	1,066	(106,004)
Net result for the segment	2,359	(4,784)	1,769	5,030	374	(27,191)	(22,443)	(13,980)	(33,176)
Profit (Loss) for the period	2,359	(24,657)	1,459	5,089	369	(27,191)	(42,572)	(12,914)	(139,180)

Overall review of Q1 2013

The result from continuing operations of Real Estate Asia amounted to a consolidated profit of EUR 2,359k, which includes a revaluation profit on the development progress of the retail project in Dalian and foreign exchange gains. Equity earnings (reflecting the results of the residential activities in joint venture and the result of the 50% in retail center Chengdu) amounted to a loss of EUR 383k, on the back of substantially lower revenue, in line with fewer deliveries of apartments in comparison to Q1 2012, mitigated slightly by a positive contribution from the retail center in Chengdu.

The financial statements of the contributing operating company within Real Estate Europe, GTC SA, are no longer consolidated in the results of Kardan. The reported contribution to the result of continuing operations therefore does not relate to operational results but primarily reflects an accounting effect of the deconsolidation. To evaluate Real Estate Europe fully, the loss from discontinued operations, which combines an effect of the deconsolidation with the first quarter 2013 results of GTC SA, needs to be taken into account also.

GTC SA (100%) recorded a loss of EUR 22,774k attributable to equity holders in Q1 2013, mainly due to negative revaluations of approximately EUR 25 million relating to a land plot and an office building in Romania.

For a more detailed analysis of the GTC SA results see page 8.

A EUR 6,548k profit from continuing operations was reported in Q1 2013 for Water infrastructure (Q1 2012: loss of EUR 1,036k). Tahal Projects reported a profit following higher revenues, tight cost control and a gain on the sale of a real estate asset in Tel Aviv. The result of Tahal Assets in Q1 2013 was near equal to the result reported in the corresponding period, albeit on lower revenues this quarter as, unlike last year, no construction or expansion activities took place in Q1 2013 in China.

The Banking and Retail Lending segment improved significantly. TBIF reported positive revenues, EUR 6,103k in Q1 2013, following hardly any provisioning (which is deducted from revenues) whereas revenue was EUR (2,527k) in Q1 2012 when substantial provisions were taken on mainly legacy portfolios. With better quality portfolios, improved risk management, a one-off gain and following significant deleveraging, TBIF reported a small positive contribution of EUR 369k, compared to a loss of EUR 11,342k in the first quarter of last year.

Included in "Other" are the expenses and finance costs of the holding companies Kardan N.V. and GTC Real Estate Holding B.V. (GTC RE). Mainly due to the strengthening of the Israeli Shekel (NIS) versus the Euro, a loss of EUR 27,191k was reported in Q1 2013, substantially more than the loss reported in Q1 2012. Currently, the Company's equity is mostly exposed to the Chinese RMB on its assets side and to the NIS on its liabilities side. Changes in the NIS exchange rate mostly impact the income statement while changes in RMB mostly impact the equity directly.

The loss from discontinued operations in Q1 2013 of EUR 56,508k is fully attributable to the deconsolidation of the financial statements of GTC SA from the results of Kardan and includes two elements: 1) the Company's share in the results of GTC SA in the reporting period and 2) the loss relating to the deconsolidation in the amount of EUR 30,208k, which also includes the reclassification of equity reserves related to GTC SA to the income statement.

The net result of Q1 2013 for equity holders of Kardan N.V. amounted to a loss of EUR 22,443k (Q1 2012: loss of EUR 13,980k).

Equity

Kardan N.V. – balance sheet (company only, in EUR thousands)	March 31, 2013	December 31, 2012
Total Assets	603,883	642,462
Total Equity	159,854	167,044*
Equity/Total assets (%)	26%	26%

(*) Restated to reflect the retrospective impact of adopting IFRS 11 (Joint Arrangements)

Shareholder's equity of Kardan N.V. decreased from EUR 167,044k as of December 31, 2012 to EUR 159,854k as of March 31, 2013, mainly due to the loss in the period. The impact of the loss was mitigated by positive equity movements related to foreign exchange rate translations and hedges.

Covenants

Subsequent to the balance sheet date, GTC Real Estate Holding BV has come to an agreement with a lending bank and received a waiver with respect to loan covenants. For additional information on covenants and the waiver, see note 7 in the Financial Statements.

Highlights per segment:

Every segment result for the first quarter of 2013 is analyzed separately below.

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 SA, of which it holds 28%.

It is noted that as of January 1, 2013, IFRS 11 – which requires that the results of certain joint ventures need to be presented as Equity in net earnings of joint ventures and associated companies - is primarily applicable to Real Estate Asia; consequently the comparative period as well as full year 2012 have been reclassified to conform to current presentation.

It is also noted that during the first quarter of 2013, it was decided no longer to consolidate the financial statements of GTC SA, the leading Central and (South) Eastern European real estate developer in which Kardan holds a 28% stake in the results of Kardan (see note 6 of the Financial Statements). Consequently, our share in the results of GTC SA is presented as "Equity earnings / (losses)" in the income statement and the results of the comparative period and those of the full year 2012 have also been reclassified below to conform to current presentation.

Real Estate Asia

General developments China and Kardan Land China

China reported 7.7% y-o-y GDP growth in the first quarter of 2013, slightly lower than the full year 2012 growth (7.8%), due to unexpected slower industry production. Domestic consumption (public and private), however, was the biggest driver of growth (4.3 percentage points) in the first quarter. Export contributed 1.1 percentage points. The rapid rise of a new consumer class continues, evidenced among others by 3 million new jobs having been created in China in Q1 2013. Retail sales of consumer goods increased by 12.6% y-o-y (end of March 2013); remarkably, the growth of retail fashion was higher than the luxury fashion for the first time which is a good development for Kardan Land China, which focuses on developing shopping malls for middle class consumers.

Real estate investment rose by 20.2% y-o-y in Q1 2013; it represented 11% of total GDP in the first quarter. Compared to the last quarter of 2012, however, real estate investment decreased mainly due to the Chinese New Year holidays and winter season. As the prices of houses in the 70 largest cities of China show a slight increase again, the Chinese government will continue to focus on containing speculation in the (residential) real estate markets. In February 2013, the Chinese government issued a recommendation to implement an option, which legally already existed, to charge 20% capital gains tax on the profit of the sale of houses and to prefer this option to the other option which is a 2% (on average) charge of the transaction value.

Kardan Land China ("KLC") mainly focuses on mixed-use projects (retail combined with residential), and is also active in the sale of residential apartments (together with a 50% partner) for own use in Tier 2 and Tier 3 cities. The strategy of KLC is to initiate, develop and manage mixed-use projects in those cities where purchasing power and internal consumption show above country average growth, driven by continuing urbanization and expansion of the middle class. Dalian and Chengdu – the two

cities where KLC is active in managing and developing large retail (and mixed-use) centers, continue to record above country average GDP growth.

Results Real Estate Asia

	Real Estate Asia
		For the quarter ended March 31	Full Year
		In EUR thousands
	2013	2012	2012
Management fee and other revenues	1,172	1,072	4,937
Total revenues	1,172	1,072	4,937
Other expenses, net	533	522	2,378
Gross profit	639	550	2,559
SG&A expenses	1,510	1,394	7,305
Adjustment to fair value (impairment) of investment
properties	2,535	-	10,383
Gain on disposal of assets and other income	14	-	-
Equity earnings (losses)	(383)	3,572	9,652
Result from operations before finance expenses	1,295	2,728	15,289
Financing income (expenses), net	1,451	(1,816)	291
Income tax (expenses) / benefit	(387)	88	(1,675)
Profit (loss) from continuing operations	2,359	1,000	13,905
Net profit (loss)	2,359	1,000	13,905
Attributable to: Equity holders (Kardan N.V.)	2,359	1,000	13,905
Additional information Real Estate Asia	2013 (31.03)		2012* (31.12)
Balance sheet (in EUR thousands)
Share of investment in JVs	96,559		93,099
Investment Property Under Construction	90,442		82,355
Inventory	98,436		93,187
Cash & short term investments	38,440		36,130
Total Assets	348,839		326,471
Loans and Borrowings	44,039		37,751
Advance payments from buyers	15,210		8,947
Total Equity *restated according to IFRS 11	263,887		256,846
Jointly controlled ventures:
Operational Information Residential	Q1 2013	Q1 2012	FY 2012
Revenue Residential (in EUR thousands)	3,486	14,502	60,361
Gross profit residential (in EUR thousands)	1,210	3,362	18,012
Apartments sold* in period	575**	81	1,194**
Apartments delivered in period ***	110	512	2,272
Total apartments sold, not yet delivered	4,502	4,684	4,037
Jointly controlled ventures: Operational
Information Retail (in EUR thousands)
Revenue Retail (50% rental Chengdu, 100% service fees)	1,758	1,473	6,383
Gross profit Retail	1,124	690	3,828

* Apartments are considered to be sold once the contract has been signed and a minimal deposit has been made, which is currently set at 30% of the sale price. If a lower deposit is made at signing, the apartment is "reserved" until 30% or more has been received by KLC. On average, the remainder of the price is deposited within approximately two months after the contract has been signed. In Q1 2013, 11% of mentioned sold apartments were reserved and in FY 2012 the number amounted to 9% of the total.

** This number relates to all residential apartments, including the Europark project (Dalian)

*** Reflects number of apartments 100%; Kardan Land China holds 50%

Revenues

In line with IFRS 11, Kardan Land China reports the results of its residential activities as well as the results of the 50% stake in retail center Chengdu as "Equity in net earnings of joint ventures". Consequently, reported revenues relate to "management and service recharge revenues" only.

In the first quarter of 2013, total revenues increased by 9% y-o-y, mainly due to an increase in the service management fees for tenants in the retail center in Chengdu as well as a higher management fees charged by Kardan Land head quarter.

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

SG&A expenses in Q1 2013 were 8% higher than in the corresponding period last year, mainly due to an increase in general and administrative expenses following the expansion of activities (e.g. Dalian) in comparison to Q1 2012.

Adjustment to fair value of investment properties

The positive adjustment to fair value in the first quarter of 2013 relates fully to the Europark Dalian retail center, of which the development is progressing according to plan.

Equity earnings / (losses)

This new line item relates to the share of profit / (loss) of the joint venture companies (i.e. Chengdu and the residential projects excluding the Dalian project, as this is fully held by Kardan Land China).

Residential

Residential revenue is recognized when apartments are handed over. In the first quarter of 2013 revenue from the delivery of apartments was substantially less than in the corresponding period in 2012, in line with the number of deliveries: 110 in Q1 2013 compared to 512 in Q1 2012. The number of deliveries represents 100%: Kardan Land China has a stake of approximately 50%, consequently the revenue represents 50% of the total revenues booked on these deliveries.

The gross profit margin on residential activities increased from 30% year end 2012 to 35% as at March 31, 2013, resulting from a different mix (generally larger) of apartments that were delivered. Kardan Land China aligns the pace of construction to match the market conditions and to keep the percentage of completed unsold apartments in the inventory low (March 31, 2013: 3%).

Retail

Rental income from the 50% stake in Chengdu combined with 100% service management fees increased in Q1 2013 y-o-y by 19% following higher fixed income on slightly better occupancy and higher turnover related income (based on the turnover of the tenants). The gross profit margin on the retail activities (Chengdu) increased from 60% year end 2012 to 64% as at March 31, 2013, mainly due to the increase in turnover related income.

Reconciliation to equity earnings result

Due to the low residential revenue recognized in the first quarter of 2013 (low number of delivery of apartments), a relatively stable cost base compared to Q1 2012, and mitigated slightly by a positive contribution from the retail center in Chengdu, the total contribution of the joint ventures amounted to a loss of EUR 383k. In Q1 2012, the positive contribution was the result of a substantially higher number of deliveries of apartments as well as positive results from the retail center in Chengdu which included a valuation gain.

Financing Income/expenses

Net financing income changed from an expense in Q1 2012 to an income in Q1 2013, due to a positive translation effect of the RMB compared to the Euro which contributed EUR 1,723k to the financing income, whereas in Q1 2012 there was a negative translation effect of EUR 1,960k.

Income tax (expenses) / benefit

Income tax expenses in Q1 2013 mainly included the deferred tax charge on the valuation gain on the retail center of Europark Dalian.

Additional Information

"Loans and borrowings" increased by 17% to EUR 44,039k compared to the balance as at year end 2012, which for the majority relates to the loan for Europark Dalian.

"Advance Payments from Buyers", relating to the sold apartments of the Dalian project only, increased substantially to EUR 15,210k in comparison to year end 2012. As mentioned in the note to the "Other operational information – residential" table above, advance payment for one apartment usually is paid in two phases: 30% of the price at signing of the contract and the remainder within on average two months (depending on whether the buyer takes a mortgage for the purchase). If at signing the buyer pays less than the required 30%, the apartment is kept "in reserve" until the threshold of 30% has been met. The increase of "advance payments from buyers" in Q1 2013 is mainly due to second payments on already signed contracts, as well as to a small number of newly signed contracts. In line with the equity method currently applicable to the Real Estate Asia segment results presentation, advance payments from the other (joint venture) residential projects are presented as part of the total amount "Share of Investments in associated companies" in the balance sheet.

Real Estate Europe

General developments Central and Eastern Europe (CEE) and GTC SA

The macroeconomic situation of Central and (South) Eastern European countries has generally still not improved. The fiscal austerity measures that governments need to take to deleverage combined with the increasing unemployment throughout the European Union have further negatively impacted consumer confidence. Households are generally paying down their debts and saving rather than spending, thereby affecting retail real estate markets particularly in South Eastern European countries. GTC SA consequently focuses on optimal management of its large scale shopping centers, selling selected assets to generate free cash, improving its operating results, and on preparing the development of two shopping centers in Warsaw.

Poland's economic development has slowed down to a 0.4% GDP growth y-o-y, mainly due to a continued lackluster industry production and an increasing unemployment rate (end of Q1 2013: 14.3%, end of 2012: 13.4%) leading to a tumble in consumer confidence. Although the purchasing power of employed people improved slightly, as salaries went up fractionally and the inflation rate decreased to a level below 2%, this did not overall translate into stronger retail sales. Warsaw still features an undersupply in terms of modern retail space and the pipeline for the years 2013 and 2014 is scarce. GTC SA plans to develop two shopping centers in the rapidly growing residential clusters Wilanów and Bialoleka in Warsaw, which are expected to be completed in 2015.

Romania reported a 2.1% (y-o-y) GDP growth in Q1 2013. Business confidence remained subdued however, keeping Romania's office real estate market slightly hesitant. However, planned developments in quality locations are still in demand; GTC SA is planning to develop an office building in Bucharest to be completed in 2015.

Bulgaria is slowly showing signs of a recovery in private consumption, albeit still on a low purchasing level. GDP growth in Q1 2013 was 0.4% y-o-y. The outcome of the recent elections does not bode well in terms of stabilizing the political situation in the country. Supply exceeds demand in the retail real estate market in Bulgaria, and absorption in the short term will be a challenge for market participants given the slow pace of growth in consumer purchasing power.

Results Real Estate Europe

Real Estate Europe comprises GTC SA which operates in Central and (South) Eastern Europe. As of the first quarter of 2013 the financial statements of GTC SA (in which Kardan holds a 28% stake) are no longer consolidated in the results of Kardan. The effect of the deconsolidation is presented in the table below.

	Real Estate Europe
	For the three months ended March 31,		Full Year
		In EUR thousands
	2013	2012	2012
Gain on disposal of assets and other income	-	-	(4,335)
Equity earnings / (losses)	31,850	(508)	(2,183)
Result from operations before financing expenses	31,850	(508)	(6,518)
Financing income (expenses), net	1	-	(1)
Income tax (expenses) / benefit	-	-	-
Profit (loss) from continuing operations	31,851	(508)	(6,519)
Net profit (loss) from discontinued operations	(56,508)	3,099	(132,473)
Net profit (loss)	(24,657)	2,591	(138,992)
Attributable to:
Non-controlling interest holders	(19,873)	1,308	(105,527)
Equity holders (Kardan N.V.)	(4,784)	1,283	(33,465)
	(24,657)	2,591	(138,992)

Real Estate Europe:

Equity in net earnings of associated companies and joint ventures

"Equity in net earnings of associated companies and joint ventures" includes a bargain gain in the amount of EUR 31,868k which was recognized as a result of the provisional purchase price allocation that is associated with the deconsolidation of GTC SA.

For further details see Note 6 in the Financial Statements.

Net profit (loss) from discontinued operations

"Net profit (loss) from discontinued operations" includes two elements: 1) the Company's share in the results of GTC SA in the reporting period and 2) the loss relating to the deconsolidation in the amount of EUR 30,208k, which also includes the reclassification of equity reserves related to GTC SA to the income statement.

GTC SA

To clarify the operational results of GTC SA, the condensed income statement of GTC SA is presented below (adjusted for the accounting policy of Kardan N.V.):

		GTC SA
	Q1 2013	Q1 2012	FY 2012
		(in EUR thousands)
Rental and service revenue	28,105	29,413	119,816
Cost of rental operations	(8,420)	(8,263)	(35,891)
Rental margin	19,685	21,150	83,925
	70%	72%	70%
Residential sales revenue	2,893	4,850	19,029
Cost of residential sales	(2,955)	(4,771)	(19,036)
Gross profit from operations	19,623	21,229	83,918
SG&A expenses	(1,129)	(5,727)	(22,035)
Other income /(expenses)	(848)	(519)	(4,086)

Profit (loss) from revaluation of Invest.
Property and impairment	(25,469)	2,366	(114,630)
Operating profit (loss)	(7,823)	17,349	(56,833)
Financial expenses, net	(13,137)	(15,687)	(61,237)
Share of profit (loss) of associates	411	(137)	(8,031)
Profit (loss) before tax	(20,549)	1,525	(126,101)
Tax	(5,644)	1,527	(6,096)
Profit (loss) for the period	(26,193)	3,052	(132,197)
Attributable to:
Equity holders	(22,774)	6,323	(96,037)
Minority interest	(3,419)	(3,271)	(36,160)

Additional information GTC SA	2013 (31.03)	2012 (31.12)
Balance sheet (in EUR thousands)
Inventory & residential land bank	165,135	168,826
Investment property	1,466,063	1,485,835
Assets held for sale	7,878	42,453
Cash & short term investments	222,526	249,661
Investment in associates and joint ventures	116,759	117,087
Total Assets	2,005,762	2,087,375
Total bank debts and financial liabilities	1,106,835	1,124,942
Total Equity	717,521	740,727
Other
Loan to Value*	55%	53%
Completed commercial space(sqm)**	575,464	576,221
Value completed commercial space (EUR k)**	1,302,455	1,308,398
Average occupancy	91%	91%
Average yield completed assets	8.3%	8.3%

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

** Excludes Czech Republic and Ukraine, excludes assets held for sale

Revenues

Rental and service revenues decreased y-o-y in Q1 2013 by 4% due to the sale of Platinium Business Park in Warsaw in Q4 2012. As a result of improved efficiency in asset management, GTC SA was able to keep the rental margin at 70% in Q1 2013 (FY 2012: 70%). Average occupancy of completed properties at GTC SA remained stable with 91% at the end of Q1 2013 compared to year end 2012.

SG&A expenses

Cost cutting of G&A expenses continues: the decrease compared to Q1 2012 is attributable to approximately EUR 1 million in cost cutting and a share based payment program provision reversal of just over EUR 2 million (where this was zero in Q1 2012). In addition, selling expenses decreased following less sale and leasing activities.

Profit (loss) from revaluation of investment property and impairment

The net devaluation of investment properties and impairment in Q1 2013 is mainly attributable to assets in Romania, following A) a change of zoning of land on which GTC SA was planning to develop Galleria Bucharest, and B) yield expansion with respect to the office building City Gate in Bucharest.

Income tax

The income tax expense mainly relates to the operations in Poland and a foreign exchange impact on deferred taxes.

Net profit / (loss) attributable to Equity holders

The contribution to the equity holders of GTC SA amounted to a loss of EUR 22,774k (Q1 2012: profit of EUR 6,323k).

Taking into account several one-off items related to the deconsolidation of the financial statements of GTC SA in the Kardan results, the result of Real Estate Europe amounts to a loss of EUR 4,784k in Q1 2013.

Additional Information GTC SA

Total Equity of GTC SA decreased to EUR 718 million (March 31, 2013) from EUR 741 million as of year-end 2012, primarily attributable to the recorded Q1 2013 results and other equity movements. Mainly following the devaluation of assets, the loan to assets value ratio arrived at 55% as at March 31, 2013 (December 31, 2012: 53%).

As at March 31, 2013, the short term loans (including derivatives) amounted to EUR 243 million (December 31, 2012: EUR 253 million), of which EUR 103 million relating to bonds (including hedges) has been redeemed after balance sheet date.

GTC SA is listed on the Warsaw Stock Exchange. For full details on the GTC SA first quarter 2013 results, which were published on May 14, 2013, reference is also made to the company website: www.gtc.com.pl.

WATER INFRASTRUCTURE

Tahal Group International B.V. ("TGI"), Kardan's water infrastructure company, 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 but also in Turkey, whilst Tahal Projects is mostly involved in projects in Africa, Central and Eastern Europe, Latin America as well as in Israel.

General developments water infrastructure and Tahal

Access to clean or treated water is a prerequisite for social and economic development. This is recognized throughout the world. However, funding of such projects is an increasing challenge in uncertain macroeconomic circumstances worldwide. As availability of funding for the execution of projects is crucial for Tahal Projects, they include the organization of funding as part of their tender offers.

In China, where Tahal Assets is mainly active, the Government acknowledges the country's environmental deficit as an ongoing challenge and has therefore, among others, embraced a Public Private Partnership policy making it possible for (non-) Chinese companies to initiate and execute infrastructure projects.

Results Infrastructure Assets*

	Assets
	For the three months		Full year
	ended March 31
		In EUR thousands
	2013	2012	2012
Contract revenues	6,247	8,582	35,619
Contract cost	3,400	5,608	22,697
Other expenses, net	12	16	-
Gross profit	2,835	2,958	12,922
SG&A expenses	1,446	1,324	6,698
Equity earnings / (losses)	71	9	104
Gain on disposal of assets and other income	424	157	427
Result from operations before financing expenses	1,884	1,800	6,755
Financing income (expenses) net	181	(440)	(4,358)
Income tax (expenses) / benefit	(606)	(699)	(1,983)
Profit (loss) from continuing operations	1,459	661	414
Net profit (loss)	1,459	661	414

Attributable to:
Non-controlling interest holders	(310)	(311)	(664)
Equity holders (Kardan N.V.)	1,769	972	1,078

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

Additional Information Assets	2013	2012
Balance sheet (in EUR thousands)	(31.03)	(31.12)
Cash & short term investments	3,447	3,232
Total Assets	166,346	162,526
Net Debt (excl shareholder loans)**	55,280	53,134
Equity*	97,693	95,116
Equity*/ Assets	59%	59%
* Group equity including shareholder loan

** Bank loans net of cash and cash equivalents

Revenues

The revenue of Tahal Assets is mainly generated by Kardan Water in China. Tahal Assets recorded 27% lower revenue in Q1 2013 than in the corresponding period last year when Kardan Water was constructing as well as expanding the capacity of plants which, according to accounting practice, results in revenue.

Gross Profit

The gross profit margin increased to 45% in Q1 2013 from 35% in Q1 2012, as the gross margin on operating facilities is higher than on the construction thereof.

Sales & Marketing, and General & Administrative expenses (SG&A) SG&A expenses increased y-o-y by 9% in Q1 2013 mainly as a result of one-off items.

Results Infrastructure Projects*

	Projects
	For the three months	Full Year
	ended March 31
		In EUR thousands
	2013	2012	2012
Contract revenues	27,761	21,865	107,348
Other revenues	-	1	3
Contract cost	24,012	19,862	99,265
Other expenses, net	(12)	(9)	-
Gross profit	3,761	2,013	8,086
SG&A expenses	3,688	3,904	13,363
Equity earnings / (losses)	1	(31)	182
Gain on disposal of assets and other income	8,347	(2)	(1,055)
Result from operations before financing expenses	8,421	(1,924)	(6,150)
Financing income (expenses), net	(592)	239	(1,967)
Income tax (expenses) / benefits	(2,740)	(12)	903
Profit (loss) from continuing operations	5,089	(1,697)	(7,214)
Net profit (loss)	5,089	(1,697)	(7,214)
Attributable to:
Non-controlling interest holders	59	69	187
Equity holders (Kardan N.V.)	5,030	(1,766)	(7,401)

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

Additional Information Projects	2013 (31.03)	2012 (31.12)
Balance sheet (in EUR thousands)
Cash & short term investments	9,561	22,643
Total Assets	129,341	135,150
Net debt (excl. shareholder loans)**	(7,092)	(17,471)
Equity*	30,967	33,302
Equity* / Assets	24%	25%
Other (in USD million)
Backlog	393	411

* Group equity including shareholder loan

** Bank loans net of cash and cash equivalents

Revenues

Revenues in Q1 2013 increased significantly by 27% y-o-y primarily as the result of new projects in Africa and the Middle East which started later in 2012 and in the beginning of this year.

Only when the first down payment of a new project has been received does Tahal Projects recognize the full value of the project into its backlog. Revenue starts to be recognized on these projects according to the relevant agreements, which is generally after the first invoice has been sent or the first agreed upon phase of the project has been completed.

Gross profit

The gross profit margin improved in Q1 2013 to 14% (Q1 2012: 9%) resulting from higher revenues, tight cost control and no provisioning (which was still necessary in Q1 2012) on older projects.

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

End of 2011, Tahal initiated a major reorganization to, among other things, bring down SG&A costs. In Q1 2013 SG&A expenses were 6% less than in the corresponding period of 2012.

Gain (loss) on disposal of assets and other income

The gain of EUR 8.347k (before tax) reported in Q1 2013 relates to the sale of Tahal's rights in a leased real estate asset in Tel Aviv, Israel, to an unrelated third party for NIS 74 million (approximately EUR 15 million).

Financing income /(expenses) net

In Q1 2012 there was a financial income following advance payments from various projects which led to less use of credit facilities. Advance payments were less substantial in the first quarter of 2013, leading to financing expenses which were also impacted by currency translation effects.

Income tax (expenses) / benefit

The material increase in tax expenses in Q1 2013 compared to Q1 2012 is attributable to the sale of the real estate asset in Tel Aviv as mentioned above.

Additional information Tahal Projects

New agreements in Q1 2013 amounted to USD 26 million (projects are generally US dollar denominated). The backlog position as at end of March 2013 was USD 393 million, slightly lower than at the end of year 2012 (USD 411 million). Contracts which were added to the portfolio in the first quarter of this year include projects in Poland and Israel and some smaller projects in other countries.

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), in Bulgaria and Romania. In addition, KFS is active in Ukraine with leasing activities through its 66% holding in Avis Ukraine. In line with IFRS 11 Joint Arrangements, the results of Avis and two other small entities are presented according to the equity method.

In 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 and TBIF

Challenges to accelerate growth in Romania include uncertainty in the Eurozone and export markets, political developments in the context of local and parliamentary elections and absorption of EU funds. In the medium term, the key challenge for Romania is to achieve steady economic growth and improve living standards while meeting fiscal targets, and to continue structural reforms and the modernization of the public administration. In the first quarter of 2013 GDP growth was 2.1% y-o-y. The inflation rate is around 4% and unemployment is less than 7% (albeit that youth unemployment is around 23%). Tight financing conditions coupled with ongoing deleveraging by banks hinder the flow of credit to the economy which impedes growth. The driver for growth is to be domestic demand with investment as a key contributor. It must be noted though that consumer sentiment is prudent and that the poverty rate in Romania is still in the highest of Europe. 2013 is expected to continue to be a challenging year for Romania.

GDP growth in Q1 2013 for Bulgaria was minimal at 0.4% y-o-y. Households are slowly starting to spend more and save less in Bulgaria, resulting in a recovery in private consumption, albeit still on a low purchasing level. The Bulgarian labor market and household sentiment are still very fragile however. Moreover, the country is not in a political stable situation. The financial sector in Bulgaria, however, remains relatively strong. Monthly data from the banking sector indicate a continuation of the downward trend in both deposit and lending interest rates along with a modest growth in corporate credit, supporting domestic demand. TBIF obtained a branch license for TBI Bank in Romania in the last quarter of 2012 and its operations commenced in 2013.

	For the year ended March 31	Full Year
	2013	2012	2012
		In EUR thousands
Banking and retail lending activities Other revenues	5,698 405	(2,973) 446	10,966 2,905
Total revenues	6,103	(2,527)	13,871
Costs of banking and lending activities Other expenses, net	6,392 29	6,712 58	23,601 2,886
Gross profit	(318)	(9,297)	(12,616)
SG&A expenses	338	293	1,464
Equity earnings / (losses)	307	220	921
Gain on disposal of assets and other income	1,175	4	(1,189)
Impairment losses on goodwill	-	-	(3,850)
Result from operations before financing expenses	826	(9,366)	(18,198)
Financing income (expenses), net	(305)	(2,159)	(3,087)
Income tax (expenses) / benefits	(152)	183	(8)
Profit (loss) from continuing operations	369	(11,342)	(21,293)
Net profit (loss) from discontinued operations	-	-	525
Net profit (loss)	369	(11,342)	(20,768)
Attributable to:
Non-controlling interest holders	(5)	-	-
Equity holders (Kardan N.V.)	374	(11,342)	(20,768)

Results Banking & Retail Lending

Additional Information KFS Banking & Retail Lending	2013 (31.03)	2012 (31.12)
Balance sheet (in EUR thousands)
Net loan portfolio	121,059	124,711
Cash	43,141	31,122
Total Assets	235,154	223,631
Deposits	88,154	67,150
Total Equity	43,611	42,537
Other
Provisions	35%	34%

Revenues

In line with the increasing trend of revenues that was set in during 2012, the banking and retail lending activities recorded significantly higher revenues in the first quarter of 2013 than in the corresponding period last year when substantial provisions – which are deducted from revenues – were taken. Lower provision levels in the first quarter of 2013 are required due to better quality portfolio, improved risk management, a higher coverage level (= provisions / non performing loans) and stricter loan terms.

Gross profit

"Gross result" in Q1 2013 amounted to a loss of EUR 318k, markedly better than in the first quarter of 2012, on higher revenues combined with lower costs of banking and lending activities resulting from optimizations made to align expenses with portfolio levels as well as the result of the integration of the non-banking and banking operations.

Equity earnings

The equity earnings relate to the leasing activities of Avis Ukraine, of which Kardan Financial Services holds 66%, as well as to the mortgage activities operations in Bulgaria (of which 50% is owned). The improvement is mainly attributable to Avis Ukraine.

Gain on disposal of assets and other income

The reported "other income" in Q1 2013 largely consists of a one off recovery payment relating to a former investment in Serbia.

Financing income (expenses), net

During 2012 KFS took significant measures in paying down debt, using among others the proceeds of the sale of Sovcombank which was completed in Q2 of 2012.

Additional Information

As at March 31, 2013, the total portfolio of KFS showed a 3% decrease in comparison to December 31, 2012, chiefly due to generation not compensating repayments and maturities, as well as to write offs of fully provided legacy portfolios in the first quarter. The strong growth in deposit taking by TBI bank in Bulgaria continued in Q1 2013. As at the end of the quarter, a 31% growth of deposits in comparison to end of December 2012 was reported. The growth derives mostly from retail clients.

Other Expenses

	For the three months ended March 31		Full Year
	2013	2012	2012
	in EUR thousands
General and administration expenses	(1,236)	(1,725)	(7,228)
Financing income (expenses), net	(25,207)	(5,206)	18,878
Income tax (expenses) / benefit	(748)	2,804	1,825
Profit (loss) from continuing operations	(27,191)	(4,127)	13,475
Net profit (loss)	(27,191)	(4,127)	13,475
Attributable to:
Equity holders (Kardan N.V.)	(27,191)	(4,127)	13,475

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 decreased in Q1 2013 by 22% in comparison to Q1 2012, following a decrease in management at Kardan holding and a reduction in other professional service costs.

Financing income (expenses), net

The financing expenses in Q1 2013 were substantially negatively impacted by a revaluation loss of EUR 20,104k related to foreign exchange differences, with regard to the debentures, resulting from the strengthening of the Israeli Shekel (NIS) versus the Euro. Currently, the company equity is mostly exposed to the Chinese RMB on its assets side and to NIS on its liabilities side. Changes in the NIS exchange rate mostly impact the income statement while changes in RMB mostly impact the equity directly.

Income tax

The income tax expense relates to deferred tax on hedge instruments.

OUTLOOK 2013

Kardan N.V.

Management attention in 2013 is foremost focused on the cash flow and bringing down the debt position of Kardan N.V. and of its intermediate holding companies, mainly by selling assets. In addition, attention is given to consistent improvement of operations.

A cash flow forecast for the coming two years can be found in the Directors' Report on page 12.

Real Estate Asia

Kardan Land China expects to deliver approximately 2,000 apartments during 2013, similar to the number delivered in 2012. The sale of residential apartments is dependent on the economy in China, which appears to be stabilizing, as well as on measures which the Chinese government may take to control the real estate market, in particular the speculation in this market. As purchasing power is continuing to increase in China, Kardan Land China anticipates growth in revenue from the Chengdu retail center. With respect to the large project Europark Dalian, Kardan Land China anticipates to continue to sell apartments and to sign lease agreements with retailers. Completion of the mall is planned for the end of 2014. The focus of Kardan Land China will continue to be on developing mixed-use projects.

Real Estate Europe

GTC SA management aims to continue to decrease the leverage of GTC SA (Loan to Value: 55% as at March 31, 2013), mainly through the sale of assets which should generate free cash of in total EUR

120 million by the end of 2014 and will be utilized to repay its liabilities (including bonds and project loans). In addition GTC SA will continue to focus on active asset management and further operational improvement and reducing general expenses as well as on development of carefully selected assets.

Water infrastructure Assets

Tahal Assets expects to increase the capacity of its plants in China to 670,000m3/day by the end of 2013 (end of 2012: 630,000.m3/day), which will have a positive impact on its revenues.

Water Infrastructure Projects

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. Revenues and profitability are expected to increase from existing and recently signed projects (y-o-y). The backlog (in USD) is expected to increase by approximately 10% (y-o-y) by the end of 2013.

Banking and Retail Lending

TBIF will continue to operationally merge its consumer finance and leasing activities in Bulgaria and Romania into TBI Bank, allowing the Bank to increase loan origination by raising deposits and to enjoy synergetic effects of business consolidation. TBIF plans to open at least 5 branches of TBI Bank in Romania; 3 will be new branches and 2 are conversions of existing TBI points of sale to bank branches. The consumer and leasing markets in Bulgaria and Romania are expected to remain difficult. TBI Bank Romania expects to be able to raise deposits during 2013, which is expected to positively support its activity.

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, World Economic Outlook (April 2013) European Commission; Economic Forecast Spring 2013 World Bank; Global Economic Prospects, Assuring growth over the medium term, January 2013

Real Estate:

Jones Lang LaSalle: City Reports Q1 2013 Jones Lang LaSalle: Pulse, Poland Retail Market Q1 2013 Colliers International: Poland Research & Forecast Report Q1 2013 DTZ Research: Property Times, China City Reports (Chengdu Q1 2013 and Dalian Q1 2013) CBRE: MarketView, Warsaw Retail & Warsaw Office, February 2013

Water Infrastructure

www.globalwaterintel.com Water21, Magazine of the International Water Association, October 2012 McKinsey Quarterly: Infrastructure productivity: how to save USD 1 trillion a year, January 2013

Financial Services Bulgarian National Bank, Economic Review Summaries Unicredit; EEMEA Macro Flashes 2012 / 2013

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 on Friday May 31, 2013, at 09.30 CET. To take part in the call, please use the following dial-in number:

Dial in number NL: +31 (0)45 6316902 Conference ID: 4619277

Dial in number UK: +44 (0)207 1532027 Conference ID: 4619277

Please confirm your attendance to eventmanagement@citigateff.nl.

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 and in the related "Periodic Report" (published by Kardan N.V. in Israel) published in April, 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 March 31, 2013 amounted to EUR 1.1 billion; revenues totaled EUR 41 million in the first quarter of 2013. 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: Caroline Vogelzang Director Investor Relations +31 (0)20 305 0010 Vogelzang@kardan.nl www.kardan.nl

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