“Kardan’s operating segments all reported a positive contribution totalling EUR 12.3 mn to the H1 2014 net
result, in comparison to EUR 9.1 mn in H1 of last year. However, as our outstanding debentures (despite
having been reduced by approximately EUR 68 mn in this reporting period) are denominated in Israeli Shekel
(NIS), the appreciation of the NIS versus the Euro and the change in CPI impacted our second quarter results
negatively by EUR 10 mn, leading to a net loss attributable to shareholders in the second quarter of 2014 of
EUR 6.9 mn. The net result for the shareholders in the first half year 2014 consequently was a loss of
EUR 3.9 mn, a significant improvement on the net loss of nearly EUR 41 mn in the corresponding period last
year, which included a negative foreign exchange impact too as well as the loss from our holding in GTC SA.
The construction of Galleria Dalian, the shopping mall of Kardan Land China’s (‘KLC’) major mixed-use project
in Dalian, is in its final stages. With agreed pre-leases currently of approximately 42% we are looking forward to
the opening in the first quarter of 2015. Earlier this year we sold the A2 building of this project, consisting mainly
of 201 small office home office apartments with parking spaces. The handover of the A2 building is expected to
take place later this year. A lower number of apartments sold this period compared to the corresponding period
last year (when the number of sold and delivered apartments was fairly exceptionally high) suggests that KLC
may face a more challenging period of demand moving forward.
Tahal Projects, specializing in water related projects worldwide, continued to improve its operating results; the
results in H1 of last year were influenced by a large one off gain on the sale of a real estate asset. Tahal is
building on its growing reputation with respect to water projects in the agricultural sector particularly, but also
because it is able to include the organization of financing projects in its carefully selected tenders. Tahal Assets,
mainly active in China through its subsidiary Kardan Water, reported higher revenues mainly due to construction
activities. As these activities have lower margins and following higher financing expenses, the net contribution
was break-even.
Our banking and retail lending company TBIF has reported significantly improved earnings in challenging
market circumstances, particularly in Bulgaria and Ukraine. Over the last few years, TBIF’s management has
implemented many new procedures which have had an appreciably positive impact on the efficiency and
prospects of the organization. With strong revenue growth and stable operational costs, an EBIT of over EUR 6
mn was recognized in this H1 reporting period compared with a loss of over EUR 3 mn in the corresponding
period last year.
Whilst we are gratified that our efforts and those of the management of our operating companies are resulting in
them becoming stronger and more profitable entities, we continue to place a major focus on our commitment to
repay our debts. Although we believe that we will be able to meet our upcoming repayment obligations as we
are in advanced negotiations regarding transactions, we have not yet been able to materialize these
transactions. As a consequence, the Company financial statements include an emphasis of matter regarding a
going concern” states Shouky Oren, CEO of Kardan N.V