Kardan N.V. — Earnings Release 2016

Nov 24, 2016

PRESS RELEASE

Amsterdam/Tel Aviv, November 24, 2016 Number of pages: 11

Q3 AND FIRST 9M OF 2016 RESULTS KARDAN N.V.

Ariel Hasson, CEO of Kardan NV: "Kardan achieved a number of important milestones in the 3rd quarter of 2016 and the period thereafter.

First of all, we have completed the sale of our 100% subsidiary TBIF, which included our banking and retail lending activities. The total consideration from the sale amounted to €82 million and the sale contributed a gain of €15.2 million.

The backlog of our Water Infrastructure activities more than doubled since Tahal, together with its joint venture partner, won a 7 year large scale agricultural project in Angola. This project is an important milestone for Tahal as it adds \$ 370 million to its current backlog and allows Tahal to continue and strengthen its future profitability. In our Real Estate activities, we saw a rather stable development both in sale and delivery of apartments and in our shopping mall Galleria Dalian. Unfortunately, high financing expense at the holding level and at our real estate operation dragged the quarterly result to a net loss of € 3.4 million.

We have used the released funds from the sale of TBIF, to complete our 2017 principle repayment obligations, ahead of schedule, until the next repayment in February 2018. This has put us in the position to continue to strengthen our assets and divest assets in a manner that will allow us to maximize their value."

Highlights Q3 + 9M 2016:

Kardan N.V.

• Q3 2016: € 3.3 million net loss (Q3 2015: € 4.3 million net profit);
• 9M 2016: € 9.2 million net loss (9M 2015: € 4.9 million net loss);

Real Estate Asia

• Q3 2016: € 2.5 million net loss (Q3 2015: € 3.9 million net loss);
• 9M 2016: € 10.8 million net loss, impacted by finance expenses (9M 2015: € 12.8 million net profit, including revaluation gain of Galleria Dalian);

Water Infrastructure

• Q3 2016: € 0.3 million net profit (Q3 2015: € 1.4 million net profit);
• 9M 2016: € 2.0 million net profit to equity holders (9M 2015: € 20.2 million profit, including €19.0 million gain on the sale of KWIG);

Other

• Q3 2016: The sale of TBIF (banking and retail lending activities) was completed in August 2016, generating a profit of € 15.2 million.
• Q3 2016: Heavy finance expenses of €13.5 million on the debentures, including €6.7 million on NIS/EUR revaluation.

The Q3 + 9M 2016 condensed interim consolidated income statements split into the different segments of Kardan N.V. is shown in the table below.

Condensed Interim Consolidated Income Statement Kardan N.V.

For the three months ended September 30, 2016 (in € million)

	Real	Water	Other	Total	Total
	Estate Asia	Infrastructure		Q3 - 2016	Q3 – 2015
		In € millions
Total revenues Total expenses	2.3 4.2	27.9 27.0	- 1.6	30.2 32.8	42.8 46.8
Profit (loss) from operation before fair value adjustments, disposal of assets and financial expenses	(1.9)	0.9	(1.6)	(2.6)	(4.0)
Profit (loss) from fair value adjustments and disposal of assets and investments	-	-	(1.7)	(1.7)	0.1
Result from operations before finance expenses	(1.9)	0.9	(3.3)	(4.3)	(3.9)
Financing income (expenses), net Equity Earnings (losses)	(3.5) 1.7	0.2 (0.3)	(13.6) 0.8	(16.9) 2.2	0.9 1.8
Profit (Loss) before income tax	(3.7)	0.8	(16.1)	(19.0)	(1.2)
Income tax (expenses)/benefit	1.2	(0.5)	(0.2)	0.5	0.1
Profit (Loss) from continuing operations	(2.5)	0.3	(16.3)	(18.5)	(1.1)
Profit (Loss) from discontinued operations	-	-	15.2	15.2	5.4
Profit (Loss) for the period	(2.5)	0.3	(1.1)	(3.3)	4.3
Attributable to: Non-controlling interest	-	-	-	-	-
Net result for equity holders	(2.5)	0.3	(1.1)	(3.3)	4.3
Other comprehensive income (loss)				0.1	(12.6)
Total Comprehensive Income / (Loss) to Kardan equity holders				(3.2)	(8.3)

*) Given the sale, the results of TBIF are being reported as discontinued operations as part of 'Other' and 'banking and retail lending' is no longer presented as a reportable segment.

For the nine months ended September 30, 2016:

	Real	Water	Other	Total	Total	Total
	Estate Asia	Infrastructure		9M- 2016	9M - 2015	12M- 2015
		In € millions
Total revenues Total expenses	6.4 12.3	87.3 83.7	2.6 3.9	96.3 99.9	133.0 140.2	173.9 185.5
Profit (loss) from operation before fair value adjustments, disposal of assets and financial expenses	(5.9)	3.6	(1.3)	(3.6)	(7.2)	(11.6)
Profit (loss) from fair value adjustments and disposal of assets and investments	(0.4)	1.0	(1.6)	(1.0)	22.4	21.1
Result from operations before finance expenses	(6.3)	4.6	(2.9)	(4.6)	15.2	9.5
Financing income (expenses), net Equity Earnings (losses)	(10.8) 1.4	0.5 (0.3)	(19.7) 1.1	(30.0) 2.2	(46.8) 0.2	(64.9) 2.7
Profit (Loss) before income tax	(15.7)	4.8	(21.5)	(32.4)	(31.4)	(52.7)
Income tax (expenses)/benefit	4.9	(2.7)	(0.5)	1.7	(6.2)	(6.5)
Profit (Loss) from continuing operations	(10.8)	2.1	(22.0)	(30.7)	(37.6)	(59.2)
Profit (Loss) from discontinued operations	-	(0.1)	21.6	21.5	32.7	36.3
Profit (Loss) for the period	(10.8)	2.0	(0.4)	(9.2)	(4.9)	(22.9)
Attributable to: Non-controlling interest Net result for equity holders	-	-	-	-	-	-
	(10.8)	2.0	(0.4)	(9.2)	(4.9)	(22.9)
Other comprehensive income (loss)				(11.2)	(5.6)	(2.0)
Total Comprehensive Income / (Loss) to Kardan equity holders				(20.4)	(10.5)	(24.9)

*) Given the sale, TBIF is being reported as discontinued operations as part of 'Other' and 'banking and retail lending' is no longer presented as a reportable segment.

Overall summarized review of Q3 + 9M 2016 results

If developments are specifically attributable to Q3 2016, these are mentioned separately in all following analyses.

Kardan recognized a consolidated net loss of € 3.3 million for Q3 2016 (Q3 2015: € 4.3 million net profit), bringing the result for the first nine months of 2016 to a consolidated net loss of € 9.2 million (9M 2015: € 4.9 million net loss).

The segment Real Estate Asia showed a gradual improvement in revenues, mainly as a result of rental revenues from Galleria Dalian in China. The loss of € 10.8 million in 9M 2016 resulted among other from high finance expenses compared with finance income which contributed to a profit of € 12.8 million in 9M 2015, which included a significant fair value adjustment on the completion of the shopping mall in Dalian in Q2 2015.

The Water Infrastructure segment contributed a total profit of € 2.0 million in 9M 2016 compared with a profit of € 20.2 million in 9M 2015. The 9M 2015 results include a gain of €19.0 million from the sale of KWIG. Despite lower revenues, the segment Water Infrastructure increased its profit from continuing operations from € 1.2 million in 9M 2015 to € 2.1 million in 9M 2016, due to lower financing costs (9M 2015 included a one off charge) and strict cost control. The level of marketing activities increased, demonstrated by a large number of new tenders and by obtaining a new large contract which has doubled the backlog in Q4.

'Other' showed a net loss of € 0.4 million (9M 2015: net loss of € 37.9 million), mainly due to corporate financing costs. In 9M 2015 the revaluation of the NIS versus the EUR resulted in negative impact of € 23 million in 9M 2015, compared to €3.5 million in the 9M 2016. The financial services activities that were not sold in the TBIF transaction contributed positively to the results, following a positive one-off sale of a portfolio. The profit from discontinued operations of € 21.6 million relate to the contribution of the activities of TBIF (banking and retail lending) in Bulgaria and Romania that were sold in August 2016 and the profit on the sale of those activities amounted to € 15.2 million.

Taking into account the direct equity impact of foreign currency translation differences and changes in the hedge reserves combined with the net result, the total comprehensive loss to Kardan NV's shareholders amounted to € 20.4 million in 9M 2016 compared to a comprehensive loss of € 10.5 million in 9M 2015.

Equity

Kardan N.V. (company only, in € million)	September 30, 2016	December 31, 2015
Total Assets	424.1	574.3
Total Equity	50.9	71.5
Equity/Total assets (%)	12%	12%

The shareholders' equity of Kardan N.V. decreased from € 71.5 million as of December 31, 2015 to € 50.9 million as of September 30, 2016 mainly as the result of the substantial negative foreign exchange revaluation due to the weakening of the RMB versus the EUR and due to the loss in the period. For further details, reference is made to the statement of changes in equity in the 9M 2016 consolidated condensed interim financial statements.

Covenants

As at September 30, 2016, the Company and its subsidiaries were not in breach of any covenants.

Highlights per segment:

The result from operations before finance expenses of each segment is presented in note 4 of the condensed 9M 2016 interim consolidated financial statements called "Segment result". In this press release, additional segment information is provided for information purposes.

REAL ESTATE

Kardan is active in development and management of Real Estate through the segment Real Estate Asia, which comprises its 100% subsidiary Kardan Land China ('KLC') operating in China.

Results Real Estate Asia

	September 30	For the nine months ended		For the three months ended September 30	Full year
	2016	2015	2016	2015	2015
			In € millions
Delivery of units	0.6	0.5	0.3	-	0.8
Rental revenues	2.8	1.0	1.0	0.7	1.8
Management fee and other revenues	3.0	2.6	1.0	0.9	4.1
Total revenues	6.4	4.1	2.3	1.6	6.7
Cost of sales	0.6	0.4	0.3	-	0.9
Cost of rental revenues	1.3	0.9	0.5	0.3	1.5
Cost of management fee and other revenues	3.7	2.0	1.2	1.4	3.2
Gross profit	0.8	0.8	0.3	(0.1)	1.1
SG&A expenses	6.7	8.6	2.2	3.1	11.4
Adjustment to fair value (impairment) of investment property	(0.4)	21.7	-	(0.2)	20.9
Gain on disposal of assets and other income	-	0.3	-	0.1	0.4
Equity earnings (losses)	1.4	0.2	1.7	1.5	2.6
Result from operations before finance expenses	(4.9)	14.4	(0.2)	(1.8)	13.6
Financing income (expenses), net	(10.8)	1.4	(3.5)	(3.3)	(1.6)
Income tax (expenses) / benefit	4.9	(3.0)	1.2	1.2	(3.1)
Profit (loss) from continuing operations	(10.8)	12.8	(2.5)	(3.9)	8.9
Net profit (loss) for the period	-	-	-	-	8.9
Attributable to:
Equity holders (Kardan N.V.)	(10.8)	12.8	(2.5)	(3.9)	8.9

Residential projects Kardan Land China
Units sold in the period
	9M/16	9M/15	Q3/16	Q3/15	2015
Joint Venture projects*
Olympic Garden	437	417	131	176	563
Suzy	7	56	6	20	64
Palm Garden	68	53	17	18	70
City Dream	554	291	165	132	423
	1,066	817	319	346	1,120
100% owned
Dalian	2	267	-	267	269
Total	1,068	1,084	319	613	1,389

* 100% number presented; KLC holds approx. 50%

Additional information Kardan Land China	2016 (30.09)				2015 (31.12)
Balance sheet (in € millions)
Share of investment in JVs	67.5				69.6
Investment Property	236.8				250.3
Inventory	96.0				99.7
Cash & short term investments	24.1				43.0
Total Assets	494.1				523.2
Loans and Borrowings	108.5				100.7
Advance payments from buyers	32.5				34.3
Total Equity	300.8				324.5
Operational Information Residential	9M/16	9M/15	Q3/16	Q3/15	FY 2015
Revenue Residential - JV (in € million)	46.1	39.4	24.8	7.1	69.6
Gross profit residential - JV (in € million)	9.6	11.9	4.2	3.2	16.0

Gross profit residential - JV (in € million)	9.6	11.9	4.2	3.2	16.0
Apartments sold in period (a)	1,068	1,084	319	613	1,389
Apartments delivered in period (b)	1,207	1,233	687	225	2,012
Total apartments sold, not yet delivered (c)	2,068	2,685	2,068	2,685	2,208

(a) All residential apartments, incl. Dalian (100%).

(b) Includes 3 apartments delivered in the Dalian project in 9M 2016 (9M 2015 – 2 apartments).

(c) Includes approximately € 20 mn gross profit (Kardan Land China share) as of September 30, 2016.

Result analysis for the first nine months of 2016

If developments are specifically attributable to Q3 2016, these are mentioned separately in all following analysis.

The Real Estate Asia segment, fully comprising Kardan Land China, contributed a loss of € 10.8 million in 9M 2016 compared with a net profit of € 12.8 million in 9M 2015. This is largely explained by the significant fair value gain which was recognized upon completion of Galleria Dalian in Q2 2015, as well as .a significant positive effect from exchange rate differences of € 6.4 million. In 9M 2016, exchange rate differences amounting to € 1.2 million negatively impacted the results on top of heavy finance expenses on a loan.

During 9M 2016 the total revenues increased to € 6.4 million compared with € 4.1 million in 9M 2015, reflecting the rental revenues of shopping mall Galleria Dalian gradually kicking in following the opening in August 2015.Therefore 9M 2015 only include a € 1.0 million of rental income form Galleria Dalian.

Delivery of units relates to the revenue resulting from the handover of apartments of the Europark Dalian project. Management fee and other revenues predominantly relates to the asset management activities of Galleria Chengdu and Galleria Dalian and the residential joint venture projects. The revenues show an increasing trend, but due to start-up costs related to the opening of the Dalian shopping mall in August 2015, the results of the asset management activities were negative in 9M 2016 compared with a positive result in the same period last year.

A decrease was recognized in SG&A expenses mainly due to decrease in staff costs and marketing expenses associated with residential apartments.

'Equity earnings', comprises the result of the residential activities from joint venture projects, which contributed a profit of € 1.4 million in 9M 2016 compared with a profit of €0.2 million in 9M 2015, despite stable deliveries of apartments but at higher prices per sqm. The improvement was mainly the result of foreign currency gains in 9M 2016 related to USD loans, offset by impairments in Q2 and Q3 2016, compared with foreign currency losses and impairments in 9M 2015. The gross margin on the residential apartments was flat at 21% (9M 2015- 22%).

'Financing income (expenses), net', which include the net exchange rate differences, was impacted by the devaluation of the RMB versus the Euro in 9M 2016 contributing a loss of € 1.2 million compared with the substantial appreciation of the RMB during 9M 2015 which contributed a gain of € 6.4 million. Furthermore, the financing expenses were impacted by the interest expenses related to the Europark Dalian project loan.

Income tax (expenses) / benefit in 9M 2016 include a deferred tax benefit which relates to taxable losses. In 9M 2015 this mainly included deferred tax expenses related to the fair value gain of Galleria Dalian.

Additional Information

Investment property fully relates to the Galleria Dalian shopping mall, of which the value decreased by 5% (from December 31, 2015) mostly due to the depreciation of the RMB versus the Euro. The signing rate of the shopping mall was around 74% as of October 31, 2016. The planned food market will add an additional 6%. The opening rate of shops in the mall is gradually increasing and stood at 66% as of October 31, 2016 (December 31, 2015: 43%). A significant improvement in tenant proceeds was noted during Q3 2016, mainly as a result of strong performing anchor tenants. Also footfall significantly increased, mainly due to marketing events and the summer season.

The rate of unsold completed units in inventory (including the inventory of joint venture projects) increased to 18% compared with 10% on December 31, 2015 all related to one project. The sale of apartments slightly decreased (1,068 apartments) in 9M 2016 compared with 9M 2015 (1,084 apartments).

'Loans and borrowings', which predominantly relate to the use of a construction loan for Europark Dalian, increased by 8% as at September 30, 2016 compared to year end 2015, mainly as the result of an additional withdrawal in February 2016 amounting to RMB 100 million.

The decrease in equity in the reporting period by 7% (y-o-y) is attributable to foreign currency effect and the loss in the period combined.

WATER INFRASTRUCTURE

Tahal Group International B.V. ('TGI'), Kardan's water infrastructure company, focuses on executing water related projects worldwide through its subsidiary Tahal, which is active in Africa, Central and Eastern Europe, India and in other regions and countries, such as Israel.

Results Water Infrastructure

		For the nine months ended September 30,				For the three months ended September 30,
	2016	2015	2016	2015	2015
			In € millions
Contract revenues	87.3	129.8	27.9	41.8	167.9
Contract cost	73.0	109.6	23.2	35.9	142.9
Gross profit	14.3	20.2	4.7	5.9	25.0
In %	16.4%	15.6%	16.8%	14.1%	14.9%
SG&A expenses	10.7	12.5	3.8	3.5	17.4
Equity earnings / (losses)	(0.3)	(1.5)	(0.3)	(0.4)	(1.5)
Gain on disposal of assets and other income	1.0	-	-	0.2	0.3
Result from operations before financing expenses	4.3	6.2	0.6	2.2	6.4
Financing income (expenses), net	0.5	(2.1)	0.2	0.4	(2.1)
Income tax (expenses) / benefits	(2.7)	(2.9)	(0.5)	(1.0)	(2.9)
Profit (loss) from continuing operations	2.1	1.2	0.3	1.6	1.4
Net profit (loss) from discontinued operations Net profit (loss)	(0.1) 2.0	19.0 20.2	- 0.3	(0.2) 1.4	20.1 21.5
Attributable to: Non-controlling interest holders	-	-	-	-	-
Equity holders (Kardan N.V.)	2.0	20.2	0.3	1.4	21.5

Additional Information Water Infrastructure*	2016 (30.09)	2015 (31.12)
Balance sheet (in € million)
Cash & short term investments	13.1	24.0
Total Assets	146.8	171.2
Net debt/(Net cash)	(2.2)	(21.9)
Equity	42.6	64.8
Equity / Assets	29%	37.9%
Other (in USD million)
Backlog*	300	311

*subsequent to the balance sheet date a contract with overall expected proceeds amounting to USD 370 million was signed which is added to the existing backlog.

Result analysis first nine months of 2016

The Water Infrastructure segment contributed a total profit of € 2.0 million in 9M 2016 compared with a profit of € 20.2 million in 9M 2015. The 9M 2016 results include a loss of € 0.1 million compared with a gain of €19.0 million on the sale of KWIG in the comparable period in 2015. The Water Infrastructure segment contributed a profit from continuing operations of € 2.1 million compared with a profit of € 1.2 million in 9M 2015.

Revenue decreased by 33% y-o-y in 9M 2016 compared to the same period of last year. This was mainly due to completion of two large projects as of September 30, 2016. Due to the phasing of these projects, 9M 2015 included USD 47.6 million more revenues from these projects compared with 9M 2016. Furthermore, revenue was impacted by delays in several projects' progress and by delays in receiving certain needed permits to carry out project work. As a result of projects mixture, the gross margin improved and stands at 16.4% in 9M 2016 compared with 15.6% in 9M 2015.

SG&A expenses in 9M 2016 decreased mainly as a result of improved operational efficiency. This reduction was slightly offset by an increase in S&M expenses as a result of a large number of new tenders compared with 9M 2015.

Gain on disposal of assets and other income relates mainly to the Q2 2016 sale of an asset in Bulgaria.

Financing income (expenses) amounted to an income of € 0.5 million compared with an expense of € 2.1 million in 9M 2015. This is mainly due to an early repayment of a loan during Q1 2015 which resulted in a one-off charge of € 3 million.

In 9M 2016, the small net loss from discontinued operations primarily relates to the weakening of the USD versus the Euro (as the consideration from the sale of the remaining 25% of KWIG was denominated in USD) and also due to additional tax expenses which are attributed to the sale.

Additional information

TGI's former subsidiary KWIG, which focuses on developing water assets (e.g. wastewater, water treatment and water supply plants) in China was sold at the beginning of 2015 and the first phase of the sale (75%) was completed in March 2015. The second phase (25%) was completed in June 2016. Results related to the remaining part of KWIG (25%) are presented as discontinued operations.

Subsequent to the balance sheet date Tahal won a 7 year large scale agricultural project in Angola, together with its joint venture partner. The project is expected to add \$370 million in Q4 2016 to the backlog and will allow Tahal to continue to improve its future profitability.

OTHER

	For the nine months ended September 30		For the three months ended September 30		Full Year
	2016	2015	2016	2015	2015
			In € millions
Corporate expenses:
General and administration expenses	(2.6)	(3.8)	(0.8)	(1.2)	(5.1)
Financing income (expense), net	(20.4)	(45.4)	(13.5)	4.2	(60.1)
Other expenses	-	-	-	-	(0.8)
Equity earnings (losses)	-	(0.1)	-	-	(0.1)
Income tax expenses	(0.5)	(0.3)	(0.2)	(0.1)	(0.5)
	(23.5)	(49.6)	(14.5)	2.9	(66.6)
Continuing operations of the former 'banking and retail
lending' segment:
Gain on disposal of assets and other income	(1.6)	0.4	(1.7)	-	(0.5)
Equity earnings (losses)	1.1	1.6	0.8	0.7	1.7
Other expenses, net	2.0	(4.0)	(0.9)	(2.4)	(4.1)
	1.5	(2.0)	(1.8)	(1.7)	(2.9)
Profit (loss) from continuing operations	(22.0)	(2.0)	(16.3)	1.2	(69.5)
Profit (loss) from discontinuing operations	21.6	13.7	15.2	5.4	16.2
Net profit (loss)	(0.4)	(37.9)	(1.1)	6.6	(53.3)
Attributable to:
Equity holders (Kardan NV)	(0.4)	(37.9)	(1.1)	6.6	(53.3)

As a result of completing the sale of TBIF, its results and the profit from the sale were reclassified as discontinued operations and are now presented under Other.

Results under Profit (loss) from continuing operations relate to the corporate holding and finance expenses of Kardan N.V. and its direct subsidiary GTC Real Estate Holding BV (GTC RE) and the results of the assets which were part of the TBIF group, but were not sold as part of the sale of TBIF. These assets are mainly Avis Ukraine and the mortgage activities, which are reported under Equity earnings (losses).

Corporate expenses

The decrease in General and administration expenses in 9M 2016 compared with 9M 2015 relates primarily to efficiency measures, the forfeiture of options and a reduction in expenses which were related to the debt settlement with the debenture holders in 2015.

Financing income (expenses) decreased significantly in 9M 2016 compared with in 9M 2015, mainly attributable to foreign exchange differences. The Company's debentures are denominated in NIS, which revaluated significantly versus the EUR, and are linked to the CPI. In 9M 2016 an expense of € . 3 5 million (Q3 2016: € 6.7 million) was recognized from the strengthening of the NIS against the Euro while in 9M 2015 an expense of € 23 million was recognized (Q3 2015: €16 million income).

The Income tax expenses relates to tax on hedge instruments.

Continuing operations of the former 'banking and retail lending' segment realized a profit of € 1.5 million (9M 2015: loss of € 2.0 million), mainly as a result of the sale of a portfolio in Q2 2016. In Q3 2016 the company recognized a loss of €1.7 million due revaluation of the remaining mortgage activity in light of its disposal in Q4 2016.

Discontinued operations

Results under Profit (loss) from discontinuing operations relate to the contribution of the activities of TBIF (banking and retail lending) in Bulgaria and Romania, that were sold in August 2016 and the profit from the sale of these activities. The profit from the sale of TBIF amounted to € 15.2 million.

DISCLAIMER

This press release contains forward-looking statements and information, for example concerning the financial condition, results of operations, businesses and potential exposure to market risks of Kardan N.V. and its group companies (jointly "Kardan Group"). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements (including "forward looking statements" as defined in the Israeli Securities Law). Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. These forward-looking statements are identified by the use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. A variety of factors, many of which are beyond Kardan Group's control, affect our operations, performance, business strategy and results and could cause the actual results, performance or achievements of Kardan Group to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For Kardan Group, particular uncertainties arise, amongst others but not limited to and not in any order of importance, (i) from dependence on external financing with the risk that insufficient access to capital threatens its capacity to grow, execute its business model, and generate future financial returns (ii) from concentration of its business in Central Eastern Europe and China as a result of which Kardan Group is strongly exposed to these particular markets (iii) from risks related to the financial markets as a result of Kardan N.V.'s listings on Euronext Amsterdam and the Tel Aviv Stock Exchange and (iv) from it being a decentralized organization with a large number of separate entities spread over different geographic areas in emerging markets, so that Kardan Group is exposed to the risk of fraudulent activities or illegal acts perpetrated by managers, employees, customers, suppliers or third parties which expose the organization to fines, sanctions and loss of customers, profits and reputation etc. and may adversely impact Kardan Group's ability to achieve its objectives and (v) from any of the risk factors specified in Kardan N.V.'s Annual Report and in the related "Periodic Report" (published by Kardan N.V. in Israel) published in April, and which is also available at the Kardan website. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Kardan N.V. does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

About Kardan

Kardan identifies and develops assets in promising emerging markets, mainly in Asia (predominantly China), Africa and selected CEE and CIS countries.

Its activities are mainly focused on three sectors that benefit from the rising middle class: Real Estate, Water Infrastructure and Banking & Retail Lending. Company headquarters are in the Netherlands. Kardan aims at holding controlling interests in its investments and is actively involved in the definition and implementation of their strategy through its local business platforms. Total assets as of September 30, 2016 amounted to € 649 million; revenues totaled € 96 million in the first nine months of 2016.

Kardan is listed on Euronext Amsterdam and the Tel Aviv Stock Exchange.

The Directors' Report including the non-statutory consolidated financial statements, drawn up in line with the Dutch and Israeli regulations, are presented in a separate document and form an integral part of this release.

The investor relation presentation will be published on the corporate site, www.kardan.nl , close to the publication of this release.

For further information please contact:

Floor van Maaren / Eva Lindner

+31 (0)6 2959 7746 / +31 (0) 6 3422 2831

Investor@kardan.nl

www.kardan.nl

"This press release contains regulated information (gereglementeerde informatie) as defined in the Dutch Act on Financial Supervision (Wet op het financieel toezicht)"