Highlights Q1 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.
Q1 2019: €23.5 million net loss to equity holders (Q1 2018: net profit of €4.3 million), including €16 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 (Q1 2018 €12.7 million positive impact).
Real Estate
Q1 2019: net profit to equity holders of €1.2 million, compared with a net loss of €3.2 million in Q1 2018 mainly following the improved performance of the shopping mall Galleria Dalian and higher delivery of apartments in the joint venture projects.
Water Infrastructure
Q1 2019: €2.9 million net loss to equity holder compared with a net loss of €0.3 million in Q1 2018 mainly due to negative FX impact and one-offs.
Other
The completion of the sale transaction of Avis Ukraine on March 14, 2019, resulted in a gain of €1.5 million in Q1 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 May 2019 the Company transferred an amount of approximately €36.5 million (NIS 145 million) to the trustee of Debenture Holders B for a partial repayment to Debenture Holders B.
Ariel Hasson, CEO of Kardan NV:
“The results of the 1st quarter of 2019 showed a mixed picture, with the Real Estate activities showing improved results, while the Water Infrastructure activities were impacted by foreign exchange and one-time costs. Furthermore, at the Kardan holding level, foreign exchange differences and the high interest payments on our debentures severely impacted our results, all in all resulting in a net loss of €23.5 million.

All metrics at our shopping mall Galleria Dalian continue to improve gradually, reflected by increased rental income over a lower cost base, contributing to an increased operational profit and a positive NOI. The high interest payments on the Dalian loan however continue to burden the results of our real estate operations. All in all, Kardan Land China showed a profit for the quarter, demonstrating the improvement in its operations.

Our water infrastructure activities faced delays in some projects which we are hopeful could be closed in the coming quarters. FX costs and one-time operational costs related to optimization of the cost base of Tahal impacted the overall result.

Given our financial and negative equity position, the future remains challenging for Kardan. We continue to do our utmost to monetise assets while further advancing our operating activities. In parallel, the negotiations with the debenture holders are still ongoing and advancing. In the last weeks we made a pre-payment of NIS 145 million (€ 36.5 million) to the debenture holders. The funds originated from proceeds from the sale of Avis Ukraine and from dividends from KLC and KFS. Looking at the current progress of the discussions with the debenture holders, we hope the settlement will be finalized in the coming months. We continue to be fully committed to coming to an agreement to allow the Company to move forward and repay its debt in the interest of all stakeholders.

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