Highlights 9M and Q3 2019:
Following is a summary of net profit (loss) attributable to equity holders 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.
Net profit (loss) attributable to equity holders (In €thousands) 9M 2019 9M 2018 Q3 2019 Q3 2018
Real Estate (development and investment property)
4,483(11,605) 3,024 (4,504)
Water Infrastructure (discontinued operations)
(18,384) 1,784 (8,526) 911
Impairment on investment in TGI
(15,985) - (13,985) -
Net result for Water Infrastructure segment
(34,369) 1,784 (22,511) 911
Other – Avis (discontinued operations)
1,472 908 - -
(28,414) (8,913) (19,487) (3,593)
Holding (Corporate Finance and G&A)
(64,311) (15,075) (26,663) (9,321)
(92,725) (23,988) (46,150) (12,914)
• 9M 2019: €92.7 million net loss to equity holders (9M 2018: net loss of €24.0 million), mainly due to the negative impact of foreign exchange differences and change in the Israeli CPI on the Company’s debentures of €42.4 million (9M 2018 €1.2 million positive) and losses at the Water Infrastructure activities and an impairment on the investment of Kardan in Tahal (both accounted for in discontinued operations).
• Q3 2019: €46.2 million net loss to equity holders (Q3 2018: net loss of €12.9 million), including €19.8 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 (Q3 2018 €3.6 million negative impact), a loss of €8.5 million of the water infrastructure activities, and a €14 million impairment of Kardan’s investment in Tahal.
• 9M 2019: considerable improvement of net profit to equity holders to €4.5 million (9M 2018: net loss of €11.6 million), as a result of delivery of apartments in both Europark Dalian (in Q3 2019) and the residential projects and improved operations at Galleria Dalian.
• 9M 2019: €18.4 million net loss to equity holders (excluding the impairment on the investment in TGI) compared to a profit of €1.8 million in 9M 2018, mainly due to provisions for impairments and losses on projects in the amount of €13.8 million.
• The completion of the sale transaction of Avis Ukraine on March 14, 2019, resulted in a gain of €1.5 million in 9M 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 has signed a non-binding letter of intent – which was revised in October 2019 - with FIMI Funds regarding an investment transaction in Tahal in exchange for issued shares that will grant the investor a controlling stake in Tahal. The negotiations are still on-going.
Ariel Hasson, CEO of Kardan NV:
“The results of Kardan continues to be burdened by foreign exchange movements as well as project difficulties and consequent write-downs in our Water Infrastructure activities. During the quarter Tahal was awarded a second contract in Kazakhstan and we see developments in Angola progressing. Also, the efficiency measures that were taken are starting to bear fruit. However, Tahal made significant losses in the first nine months of the year. Consequently, due to Tahal’s financial position and the fact that we are still in discussions regarding a potential investment in Tahal, the board of directors of Kardan decided to significantly impair the investment value of Tahal in Kardan’s books.
On a positive note, we are very pleased with the continued positive performance of our Real Estate activities in China. In the first nine months of the year there was a high delivery of residential units in the Europark project and the performance of the shopping mall, Galleria Dalian, further improved. The net operating income of Galleria Dalian also continues to improve and reached a €1 million quarterly result. We estimate that the healthy development of the mall will continue in the coming quarters. The total Real Estate segment significantly increased the operational result from an operational loss of € 0.9 million last year to a profit of € 12.0 million in the first nine months of 2019.
The Company is in close cooperation with the representatives of the debenture holders on various matters surrounding the operation of the Company and the subsidiaries. To date, there has not been further material progress on the matter of the debt settlement.”
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