Highlights Q2 and H1 2017:
(In € millions) H1 2017 H1 2016 Q2 2017 Q2 2016
Real Estate (5.2) )8.3( (3.3) )6.3(
Water Infrastructure (discontinued operations) 2.2 1.6 1.3 1.9
Banking and Retail lending (discontinued operations) - 6.5 - 2.6
Other (banking and retail lending - continuing operations) 1.4 3.3 0.7 3.3
Total Operations (1.6) 3.1 (1.3) 1.5
Holding (Corporate Finance and G&A) (18.3) )9.0( (0.8) )9.3(
Total (19.9) )5.9( (2.1) )7.8(
Q2 2017: € 2.1 million loss to equity holders (Q2 2016: loss of € 7.8 million), including a significant positive impact of € 5.3 million as a result of foreign exchange translation differences of the EUR versus the NIS and Israeli CPI on the Company’s debentures in Q2 2017.
H1 2017: € 19.9 million loss to equity holders (H1 2016: loss of € 5.9 million),
mainly as result of negative foreign exchange effects in Q1 2017.
Both Real Estate and Water Infrastructure improved their contribution to the net result in H1 2017 vs H1 2016. Avis Ukraine showed a strong performance and contributed equity earnings of € 1.6 million in H1 2017.
Ariel Hasson, CEO of Kardan NV: “Kardan’s real estate and water infrastructure activities continued its positive operational performance in Q2 2017. In Real Estate, the sales process of the apartments in the new C towers in Dalian commenced, with encouraging interest, in July 2017. We also see good performance of our joint venture residential projects.
In Water Infrastructure, we were recently awarded a USD 176M agricultural project in Zambia, and 3 agricultural projects in Angola, totaling USD 291M. We continue to see strong business development opportunities for new projects and are hopeful to secure additional strategic projects in the course of the coming months.
Unfortunately currency movements had a severe negative impact on our equity position, although the trend in currencies reversed over the last weeks, compensating for part of the decline in our equity. However, the expected closing of the sale of Star Pump Storage should generate a gain to strengthen our equity position. In addition, the intended sale of Tahal is also expected to generate a gain that will further increase our equity.
We remain of the view that the sale of Tahal, once completed, will enable us to meet our 2018 debt repayment obligations. We will continue to do the utmost to divest assets in a manner that will allow us to maximize value and proceeds, in the interest of all of Kardan’s stakeholders.”
Condensed Interim Consolidated Income Statement Kardan N.V.
For the six and three month periods ended June 30, 2017 (in € million)
Total Total Total Total Total
H1 - 2017 H1 - 2016 Q2 - 2017 Q2 - 2016 12M - 2016
Total revenues 4.3 6.6 2.7 4.6 11.1
Total expenses 10.7 10.3 6.1 4.9 21.8
Loss from operations before fair value
adjustments, disposal of assets and financial
(6.4) (3.7) (3.4) (0.3) (10.7)
Loss from fair value adjustments and disposal of
assets and investments, net - (0.3) - (0.4) (4.2)
Result from operations before finance
(6.4) (4.0) (3.4) (0.7) (14.9)
Financing expenses, net (24.5) (13.4) (4.6) (10.1) (47.3)
Equity earnings 10.0 - 4.6 (3.4) 3.9
Loss before income tax (20.9) (17.4) (3.4) (14.2) (58.3)
Income tax (expenses)/benefit (1.2) 3.4 - 1.9 4.5
Loss from continuing operations (22.1) (14.0) (3.4) (12.3) (53.8)
Profit from discontinued operations *) 2.2 8.1 1.3 4.5 22.5
Loss for the period attributable to Kardan
equity holder (19.9) (5.9) (2.1) (7.8) (31.3)
Other comprehensive income (loss) (16.4) (11.3) (14.6) (1.4) (2.5)
Total Comprehensive Income / (loss)
attributable to Kardan equity holders (36.3) (17.2) (16.7) (9.2) (33.8)
Overall summarized review of Q2 and H1 2017 results
Kardan recognized a consolidated net loss attributable to equity holders of € 2.1 million for Q2 2017 (Q2 2016:
€ 7.8 million net loss), bringing the result for the first half of 2017 to a consolidated net loss of € 19.9 million (H1 2016:
€ 5.9 million), mainly due to higher financing costs in H1 2017 (€ 24.5 million) compared with H1 2016 (€ 13.4 million).
The financing costs included a net positive foreign exchange impact of € 5.3 million of the revaluation of the EUR versus the NIS and the Israeli CPI on the Company’s debentures in Q2 2017 (Q2 2016: € 2 million negative), partially offsetting the significant negative foreign exchange and the Israeli CPI impact in Q1 2017. This resulted in a loss of € 6.2 million from foreign exchange and CPI on the Company’s debentures in H1 2017 (H1 2016: € 4.8 million gain).
The Real Estate activities showed an improvement in revenue from delivery of units in Europark Dalian project - € 1.1 million in H1 2017 (H1 2016: € 0.3 million). Rental revenues from Galleria Dalian continued to grow gradually.
This brings total revenues of the Real Estate activities to € 4.3 million in H1 2017, an increase compared to € 4.0 million in H1 2016, despite the fact that the management contract of Galleria Chengdu expired as per year-end 2016.
Equity earnings from joint venture residential projects increased substantially to € 8.4 million (€ 0.3 million loss in H1 2016) as a result of the delivery of residential units. The net loss contributed by the Real Estate activities amounted
to € 5.2 million in H1 2017 which mainly included the interest expenses related to the Europark Dalian loan and were also impacted by the devaluation of the RMB versus the EUR during the first half of 2017. The net loss in H1 2016 (€ 8.3 million) included a deferred tax benefit of € 3.7 million.
The revenue of the Water Infrastructure activities increased by 17% compared to H1 2016, following the progress in various new and existing projects, and contributed a net profit of € 2.2 million in H1 2017 (H1 2016: € 1.6 million).
As of Q1 2017, TGI (Kardan NV’s water infrastructure subsidiary) is presented as Held-For-Sale, its results as discontinued operations, and is no longer presented as a segment in the Company’s consolidated financial statements.
Avis Ukraine continued to show strong results and contributed a net profit of approximately € 0.8 million in each of the first two quarters of 2017.
Kardan N.V. – Press Release – Q2 2017 Results – Page 3
Taking into account the direct equity impact of foreign currency translation differences and changes in the hedge reserves combined with the net result, the total comprehensive loss to Kardan NV’s shareholders amounted to
€ 36.3 million in H1 2017 compared to a comprehensive loss of € 17.2 million in H1 2016. The other comprehensive loss was mainly a result of changes in foreign exchange rates.
Equity Kardan N.V.
(company only, in € million)
June 30, 2017 December 31, 2016
Total Assets 388.7 409.7
Total Equity 1.1 37.3
Equity/Total assets (%) 0.3% 9.1%
The shareholders’ equity of Kardan N.V. decreased from € 37.3 million as of December 31, 2016 to € 1.1 million
as of June 30, 2017 mainly due to the loss in the period of € 19.9 million and the strengthening of the EUR versus
As at June 30, 2017, the Company and its subsidiaries met their financial covenants.
For additional details refer to section 3 of the chapter “Significant Events and Developments” which is included in
the Company’s Directors’ Report as of June 30, 2017.
For further information on the Company’s financial position please refer to Note 2 to the financial statements.
In their review report as of June 30, 2017, the auditors draw the attention to the existence of significant doubts
regarding the Company’s ability to meet future liabilities when they become due and its ability to continue as a going
concern. As of the date of the financial statements, the Company is in the process of obtaining the required funds
for the repayment of its liabilities (for further details refer to section 3 of the Directors’ Report and Note 2 to the
financial statements as of June 30, 2017).
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