Interim report on the current state of affairs of the main group companies - Third quarter 2010
CONTRACTING, DREDGING AND CONCESSIONS
DEME (AvH 50%) signed several important contracts in the third quarter, a.o. the site for the Olympic Winter Games in Sochi Russia, capital and maintenance dredging works in the LNG port of Soyo in Angola, dredging works for an LNG terminal in Mexico, petrochemical and port development in Malaysia and the construction of offshore wind farms in front of the German coast. This explains the evolution of the order book to 2,122 million euros per 30.09.2010 (compared to 2,073 million euros per 30.06.2010). DEME had also in the third quarter a very high level of activity and an almost complete fleet utilization. The execution of the various contracts runs as planned and yields the expected results. The investment program also remains on schedule, with a.o. the launching of the cutter dredger Al Jarraf, which is particularly equipped for dredging hard rock formations in the Gulf region. DEME continues to expect a further increase of the order book by year end.
ALGEMENE AANNEMINGEN VAN LAERE (AvH 100%) remains confronted with the continued very competitive market environment.
REAL ESTATE AND RELATED SERVICES
The rental income in 3Q10 of LEASINVEST REAL ESTATE (AvH 30.01%) was in line with last year, taking into account the sale of Axxes in July 2010. The occupancy rate (97.86% compared to 97.81% per 30.06.2010) and the rental yield (7.55% compared to 7.57%) also remained stable at a very decent level. The decrease of the real estate portfolio (at fair value), from 559 million euros at the end of June 2010 to 516 million euros at the end of the third quarter, was mainly due to the impact of the sale of the Axxess Business Park (44.4 million euros). In the fourth quarter, the rights in rem on the building Louizalaan 250 (Brussels) were transferred, which decreased the debt rate further to 44%.
EXTENSA (AvH 100%) realized an improvement of its results in the third quarter, mainly thanks to the sales of land parcels in Wondelgem, Hasselt and Herent. The projects in Roeselare (Belgium) and Istanbul (Turkey) are running as planned both in terms of sales as in terms of its construction.
COBELGUARD (AvH 39.6%) witnessed a continued successful development of its turnover and operational result, in line with previous years.
The exploitation activities (mainly holiday resorts) of FINANCIERE DUVAL (AvH 30%) had a good summer season and delivered the expected profit contribution. The order book of the real estate activity remained at a very decent level due to a number of new projects and should lead to a higher contribution to the result in 2011 thanks to the recent start of several construction sites. In the fourth quarter, AvH has increased its participation by means of a capital increase to a joint control level (50/50 of 75.59%) with the founder/CEO Eric Duval, in order to support the further development of the group.
ANIMA CARE (AvH 100%) managed 268 beds on 30.09.2010 spread over its three senior care facilities in Aalst, Berlare and in Résidence du Peuplier (Haut-Ittre) which was acquired in July. With these 268 beds in exploitation, Anima Care realized a break-even result. Anima Care is furthermore preparing the realization of greenfield developments (180 beds).
BANK DELEN (AvH 78.75%) realized again a very strong result in the third quarter. The assets under management showed a substantial increase to 14,587 million euros (versus 13,996 million euros per 30.06.2010 and 13,243 million euros per 31.12.2009), due to a positive market effect and to a continued strong net inflow of new assets, to which all branches of Bank Delen, as well as the Bank J.Van Breda & C° network contributed.
BANK J.VAN BREDA & C° (AvH 78.75%) also realized a strong commercial third quarter. The total client assets increased to 6,341 million euros (vs. 5,969 million euros at the end of June 2010 and 5,644 million euros end 2009), primarily driven by the growth of client deposits (to 2,731 million euros) and partly by an increase of entrusted funds (to 3,610 million euros). The loans to target customers remained more or less stable at 2,180 million euros, while the provisions for loan losses (0.16% of the loan portfolio) increased slightly but remained under control.
The third quarter results of the private equity participations are in line with the previous quarters and indicate a cautious economic recovery.
GROUPE FLO (GIB 47.72%) confirms the trend of sustainable profitability improvement and realized over the first 9 months of the year an increase of turnover (+5.6% to 277 million euros, +7.5% on a comparable basis) and net profit (+146% to 8.8 million euros). Groupe Flo benefits from the adjustment of its offer and business processes to the changed consumption patterns.
In October 2010, Sofinim increased its participation in HERTEL with 5% to 46.5%. Hertel continues its international expansion and finalized acquisitions in China, Australia and Azerbaijan in 3Q10.
EURO MEDIA GROUP (Sofinim 22.2%), the European market leader for audiovisual technical services, announced that it took the first step towards a stock market listing, depending in particular on the market conditions. This IPO should allow EMG to strengthen its growth opportunities and to confirm its position as market leader.
AR METALLIZING (formerly Alupa), a manufacturer of vacuum metallized paper, (Sofinim 100%) successfully completed the acquisition of its Italian competitor Rotoflex. Thanks to this acquisition, ARM has become the global leader in its sector. The integration of both companies runs better than planned.
ENERGY AND MATERIALS
In the third quarter, the plantation group SIPEF (AvH 22.74%) succeeded in reducing the decrease of the production volumes of palm oil by half to -3.8% (compared to -7.8% at the end of June 2010). It is expected that the total production volumes for palm oil for 2010 will be close to the 2009 numbers. The palm oil market has also reached the highest price level since the beginning of the year (USD 930 CIF Rotterdam) at the end of the third quarter. The profit expectations are therefore evolving towards an improvement of the recurrent results of 2009.
SAGAR CEMENTS (AvH 14.99%) has been confronted with sales price decreases and a drop in production and sales volumes in the third quarter. Besides the traditional seasonal impact of the monsoon, which was especially severe this year, there is a strong impact from the current overcapacity in the South Indian cement market. The merger with Amareswari Cement has been announced recently. On the one hand, the crushing capacity of Amareswari allows Sagar to optimize the use of its clinker capacity. On top of that, Amareswari owns substantial reserves of limestone which not only strengthens the resource position of Sagar Cements, but also aligns seamlessly with its own reserves. Amareswari is not equipped to produce clinker itself.
ORIENTAL QUARRIES & MINES (AvH 50%) is also not immune for the seasonal impact of the monsoon, but continued the expansion of the production capacity in spite of this. The start of the fourth quarry and of the crushing and screening plant in Bangalore is foreseen for the fourth quarter.
AvH & Subholdings
The net cash position of AvH amounted to 94.7 million euros at 30.09.2010, compared to 97.8 million euros at the end of the first half year.
Despite the fragile economic recovery, the board of directors of AvH is convinced that the current results of the group will show an important growth in the current year 2010.
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Source: Ackermans & van Haaren via Thomson Reuters ONE