Highlights H1 and Q2 2019:
Following is a summary of net profit (loss) by activity. Management evaluates performance of main segments by
their operational result. Further information that includes detailed segment analysis can be found further in this
report.

Kardan N.V.
H1 2019: €46.6 million net loss to equity holders (H1 2018: net loss of €11.1 million), including negative impact of foreign exchange differences and change in the Israeli CPI of €22.6 million (H1 2018 €4.8 million positive) and a loss at the Water Infrastructure activities (discontinued operations).
Q2 2019: €23.1 million net loss to equity holders (Q2 2018: net loss of €15.3 million), including €6.6 million negative impact as a result of foreign exchange translation differences of the EUR versus the NIS and change in Israeli CPI on the Company’s debentures (Q2 2018 €7.9 million negative impact).


Real Estate
H1 2019: net profit to equity holders of €1.5 million (H1 2018: net loss of €7.1 million), mainly as a result of improved operations at Galleria Dalian and higher delivery of residential units in the joint venture projects, partly offset by high interest expenses on the Dalian project construction loan.
Water Infrastructure
H1 2019: €11.9 million net loss to equity holders compared to a profit of €0.9 million in H1 2018 mainly due to provisions for impairments and for losses on projects.
Other
The completion of the sale transaction of Avis Ukraine on March 14, 2019, resulted in a gain of €1.5 million in H1 2019 (included as part of results from discontinued operations).
The Company did not repay the February 2018 and February 2019 scheduled payments of principal and interest to the Company’s Debenture Holders (series A and B). As a result, starting February 2018 the Company is in default.
In April 2019, each of the assemblies of Debenture Holders (series A and B) approved of the understandings reached in relation to the balance payments; following which, in June 2019, the Company carried out a partial repayment of the balance payments to Debenture Holders B in the amount of approximately €36.5 million (NIS 145 million).
In August 2019 the Company announced it has signed a non-binding letter of intent with a third party in relation to a possible investment transaction in Tahal by the investor in exchange for issued shares that will grant the investor a controlling stake in Tahal.
Ariel Hasson, CEO of Kardan NV:

“The results of the first half of 2019 reflect the challenges Kardan is facing. On our infrastructure activities, we faced delays in the start-up of our new projects in Africa. This, together with the pressure on liquidity and new provisions on exposures to a number of projects, emphasized the importance of strengthening the financial position of Tahal through a capital increase. Since Kardan at its current state is unable to support such capital increase, we have taken steps to secure funding through the on-boarding of a new investor. We are confident that with such capital increase Tahal will be able to overcome these setbacks and move forward with further development of its business.

On the positive side, we are pleased with the continuous positive developments of our Real Estate activities. We increased our operational result thanks to improved operations of Galleria Dalian and a higher delivery of residential units in the joint venture projects.

In addition, the foreign exchange rate movements continued to burden our high interest expenses. The weakening of the Yuan and strengthening of the Israeli Shekel both impacted Kardan negatively. All in all we booked a net loss to equity holders of €46.6 million.

In the last quarter there have not been advancement in the discussions with the representatives of the debenture holders regarding the debt settlement. We still anticipate that an agreement will be reached in 2019.”