Kimberly Enterprises Regulatory News (KBE)

Kimberly Enterprises N.V.

('Kimberly' or 'the Company')

Results for the six month period ended 30 June 2017

Kimberly Enterprises N.V., the AIM-listed Central and Eastern European property developer (AIM: KBE), announces its unaudited results for the six month period ended 30 June 2017.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Financial Summary

Enquiries:

Financial Position - going concern

In order to manage its financial situation, in previous periods, the Company approached Engel Resources and Development Ltd. ("ERD"), the parent company of the Company's immediate parent company, Engel General Developers Ltd. ("EGD"), to provide financial assistance to fund the Company's immediate liabilities.

As of 30 June 2017, the outstanding debt toward ERD is EUR 26,541 thousands and is due by 31 October 2017. During the reporting period, ERD did not provide any additional bridge loans to the Company.

In order to finance the Company's immediate liabilities and to stabilize its financial position, management has acted to realize several assets during the previous reporting periods.

ERD support is still required to extend the repayment date of its loans beyond 31 October 2017.

At 30 June 2017, the Group has current liabilities totalling EUR 27,899 thousands, which exceeds its current assets amounting to EUR 3,145 thousands and a negative equity which amounts to EUR 24,104 thousands.

The financial statements are prepared based on a going concern basis. However, management believes that the above mentioned condition (i.e. the need to extend the repayment date of the loans granted by ERD) indicates the existence of material uncertainty which cast significant doubt on the Group's ability to continue as a going concern.

Should the going concern assumption not be appropriate, adjustments would have to be made to reflect a situation where the assets may need to be realized other than in the normal course of business and at amounts which could differ significantly from the amounts stated in the consolidated financial statements

Trading Performance

During the period the Company sold 3 units of the Velaslavin project in Czech republic. 

In addition, on March 29, 2017, the Company sold its investment in wholly owned subsidiary, ENMAN B.V. for an amount of 1 EUR and as a consequence recognized income of EUR 891 thousands (see note 9).

Condensed consolidated interim statement of financial position

Condensed consolidated interim statement of profit or loss

Condensed consolidated interim statement of comprehensive income

Condensed consolidated interim statement of changes in equity

Condensed consolidated interim statement of cash flows

Notes to the condensed consolidated interim financial statements

NOTE 1 - REPORTING ENTITY

Kimberly Enterprises N.V. (the "Company") is a company domiciled in The Netherlands. These condensed consolidated interim financial statements ("interim financial statements") as at and for the six months ended 30 June 2017 comprise the Company, its subsidiaries (together referred to as the "Group") and the Group's interests in an associate and a joint venture.

The Group is primarily involved in holding, developing and selling real-estate assets in Eastern Europe.

The Company has been listed on the Alternative Investment Market ("AIM") of the London Stock Exchange, United Kingdom since 15 December 2005.

NOTE 2 - BASIS OF ACCOUNTING

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union, and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 December 2016 ("last annual financial statements"). They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

These interim financial statements were authorised for issue by the Company's Board of Directors on 10 August 2017.

NOTE 3 - USE OF JUDGEMENTS AND ESTIMATES

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.

NOTE 4 - GOING CONCERN

 In order to manage its financial situation, in previous periods, the Company approached Engel Resources and Development Ltd. ("ERD"), the parent company of the Company's immediate parent company, Engel General Developers Ltd. ("EGD"), to provide financial assistance to fund the Company's immediate liabilities.

As of 30 June 2017, the outstanding debt toward ERD is EUR 26,541 thousands and is due by 31 October 2017. During the reporting period, ERD did not provide any additional bridge loans to the Company.

In order to finance the Company's immediate liabilities and to stabilize its financial position, management has acted to realize several assets during the previous reporting periods.

ERD support is still required to extend the repayment date of its loans beyond 31 October 2017.

At 30 June 2017, the Group has current liabilities totalling EUR 27,899 thousands, which exceeds its current assets amounting to EUR 3,145 thousands and a negative equity which amounts to EUR 24,104 thousands.

The financial statements are prepared based on a going concern basis. However, management believes that the above mentioned condition (i.e. the need to extend the repayment date of the loans granted by ERD) indicates the existence of material uncertainty which cast significant doubt on the Group's ability to continue as a going concern.

Should the going concern assumption not be appropriate, adjustments would have to be made to reflect a situation where the assets may need to be realized other than in the normal course of business and at amounts which could differ significantly from the amounts stated in the consolidated financial statements.

NOTE 5 - FINANCIAL RISK MANAGEMENT

All the aspects of the Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2016.

a. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

In order to handle the liquidity risk of the Company, the management realised several assets during the previous reporting periods in Czech Republic and Canada. In addition the Company is acting to minimise its operational costs.

See note 4 which includes the Group's going concern analysis and describes the financial difficulties and liquidity risks.

b. Carrying amounts and fair values

The carrying amounts of certain short term financial assets and liabilities expected to be settled within 12 months, including cash and cash equivalents, trade payables and other payables were deemed to be equal to their fair values.

The fair values of other financial assets and financial liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

Reconciliation of the financial assets carrying amounts:

The fair value of loans and amounts to related parties has been calculated using market interest rate of 0.5% (31 December 2016: 0.5%) taking into consideration specific conditions (securities provided, currency, etc.).

The fair value of loans and amounts due to related parties and joint ventures has been calculated using market interest rate of 4.95% (31 December 2016: 4.95%) taking into consideration specific conditions (securities provided, currency, etc.).

NOTE 6 - RELATED PARTIES

a. Related party transactions

1. Support due to the Company's financial situation

At 30 June 2017, the outstanding debt due to Engel Resources and Development Ltd. ("ERD") is EUR 26,541 thousands and is due by 31 October 2017. During the reporting period, ERD did not provide any additional bridge loans to the Company.

During the reporting period the Company repaid part of the loan granted by ERD to the amount of EUR 503 thousands.

In order to secure this debt, the Company has pledged the shares of Marina Dorcol D.o.o to ERD.

2. Trading transactions

The Group recognised interest and adjustment in relation to the Israeli CPI expense relating to the loans granted by ERD in the total amount of EUR 936 thousands.

The Group recognised a loss of EUR 382 thousands in net foreign exchange loss (in relation to loans received which are denominated in ILS) due to the weakening of the EUR against the ILS (1.4%) during the reporting period.

b. Directors

During the first quarter of 2017 a new executive director was appointed (Mr. Sagee Kadosh).

At 30 June 2017, the Company has 3 directors (31 December 2016: 2 directors).

NOTE 7 - OPERATING SEGMENTS

Basis of segmentation

The Group's CODM (the chief operating decision maker) considers the whole operation as one operating segment while trying to ensure sufficient liquidity to meet the liabilities when due. The liquidity issues the Group is currently facing require a general decision making process which is different from a company or group of companies operating in a liquid position.

The basis of segmentation is the same as that presented in the annual consolidated financial statements for the year ended 31 December 2016.

NOTE 8 - LOANS AND AMOUNTS TO EQUITY-ACCOUNTED INVESTMENT

At 30 June 2017, the Company holds interest in one joint venture, Montreal Residential Holdings Master Limited Partnership ("MLP").

MLP is not a publicly listed entity and consequently does not have published price quotation.

Details as per the investment and loan in MLP

Montreal Residential Holdings Master Limited Partnership ("MLP") is a holding partnership domiciled in Canada.

The Company owns ECG Trust Canada Holding Trust ("ECG") (95% interest) which holds 20% interest in future distributions of MLP (The Company owns 50% of the voting rights in MLP).

The remaining 80% in future distributions is owned by Lehman Brothers Real Estate Partners II ("Lehman Brothers") represented by Silverpeak Real Estate Partners ("Silverpeak").

The following table summarises the financial statement of MLP as included in its own consolidated financial statements (figures in the table represent 100% of the joint venture's financial statements). The table also reconciles the summarised financial statement to the carrying amount of the Group's interest in MLP.

Comments in respect to the investment in MLP:

i. In previous periods the joint venture continued to accumulated losses and thus the Company recognised a loss related to the loan given to MLP that was part of the net investment and presented the loss as share of profit (loss) of equity-accounted investment in the consolidated statement of profit or loss.

ii. The Company did not provide any guarantees for the joint venture and has not incurred legal and constructive obligation on behalf of the joint venture; therefore losses are accounted for to the extent that the Company's interest is reduced to zero.

iii. Loans granted by the Company to joint venture -

· Are denominated in CAD currency.

· Bear no interest.

· Have not set repayment date. Repayment is expected from the proceeds of the sale of the related projects financed by the loans.

NOTE 9 - SIGNIFICANT EVENTS DURING THE REPORTING PERIOD

On March 29 2017, the Company sold its investment in the wholly owned subsidiary, ENMAN B.V. ("ENMAN") to a third party for an amount of 1 EUR ("Sale of ENMAN").

As a consequence of the sale of ENMAN, the Company no longer controls ENMAN, therefore ceased consolidating ENMAN in its consolidated financial statements. The Company recognized income of EUR 891 thousands under "other income" in profit or loss on the sale of its investment in ENMAN.

The income was mainly due to liability recorded in previous years under Enman's statement of financial position for a finance exposure with respect to interest-bearing bank loans that financed the Ingatlan project in Budapest, Hungary. ENMAN provided guarantees to the lender bank for interest payments and cost overruns; however, no official legal claim has been filed by any of the parties.

The Company did not provide any guarantees for ENMAN's and its subsidiaries' liabilities.

The following table summarises the derecognised amounts of assets and liabilities disposed at the date of the sale.

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