FIRST QUARTER 2015 RESULTS KARDAN N.V.
“The first quarter of 2015 comprised many important developments for Kardan. We concluded the sale of TBI Credit and the first phase (75%) of the sale of our water infrastructure company KWIG in China. We plan to conclude the second and last phase (25%) by the end of June coming. In addition, in January we agreed with the Debenture Holders to postpone the February 2015 payment of principal and interest to August 2015. This was the first step of the full Debt Settlement for which the amended deeds of trust have been presented to the meetings of the Debenture Holders. The approval process is currently taking place and voting will take place soon. The pending final Debt Settlement in headline entails a deferral of the payments of principal until 2017 against certain conditions, collateral and restriction. Another big development in the first quarter 2015 was the depreciation of the Euro versus both the NIS and the RMB. Mainly as a consequence hereof, our net financing expenses were negatively impacted as our financial liabilities are in NIS, but our assets - and therefore also our equity - were positively impacted by this foreign exchange development. All subsidiaries contributed positively to the Q1 2015 net result of Kardan which also included the significant gain on the sale of KWIG. Although this result was more than off-set by the foreign exchange revaluation of the Euro, resulting in a reported Q1 2015 net loss to our equity holders of EUR 7.6 mn, our Total Comprehensive Income(*) for equity holders amounted to EUR 7.9 mn.
With the sale of Galleria Chengdu at the end of 2014 – and the consequential loss of rental revenue of this mall – and given the fact that the shopping mall of Europark Dalian has not yet opened, KLC’s first quarter of 2015 can be considered an ‘in between’ period. This is to some extent reflected in its Q1 2015 results, which mainly comprised a significant y-o-y increase in deliveries of apartments from joint venture projects and the positive impact of the appreciation of the RMB.
Since the sale of our water infrastructure assets operating company KWIG in China, we now present all our water infrastructure activities as one segment. The impact of the sale of KWIG on the results of Tahal was manifold: 1) a significant profit was recognized in the first quarter resulting from positive movements in currency, 2) the funds were used to repay early a USD 25 mn loan but consequently also incurred a relating one-off charge and 3) funds were transferred to Kardan which allowed us to fully pay the deferred 2015 interest and to early repay part of the 2015 principal. Looking at the underlying remaining operations and their results we are pleased both with Tahal’s financial developments as well as with its commercial and organizational efforts which we are confident will result in a continued improvement of its results over time. TBIF, the subsidiary representing our banking and retail lending segment, again reported a better profit which was achieved in challenging, albeit very gradually improving, market circumstances.