Kimberly Enterprises Regulatory News (KBE)

Kimberly Enterprises N.V.

('Kimberly' or 'the Company')

Results for the six month period ended 30 June 2015

Kimberly Enterprises N.V., the AIM-listed Central and Eastern European property developer (KBE: L), announces its unaudited results for the six month period ended 30 June 2015.

Financial Summary

"Kimberly's continues to try and meet its obligations towards its creditors and to reach a payments schedule with Engel Resources and Development Ltd. ("ERD") in order to repay the Group's outstanding loans from ERD."

Liron Or, CEO of Kimberly Enterprises N.V.

Enquiries:

Financial Position

The interim financial statements have been prepared on a going concern basis, which assumes that the Group will be able to raise funding to meet its obligations to the banks, its employees and service providers, as disclosed in note 5.a.

During the reporting period the Group reached settlement agreements with most of its former employees and service providers for past open debts.

Since January 2011, the Group has been in breach of the obligation to make the lease payments for Marina Dorcol. During the reporting period, the management recorded an expense of EUR 1,501 thousands (as a result of the lease interest and inflation) on the unpaid overdue lease contracted payments.

At 30 June 2015, the Group is in breach of EUR 23.4 million. After the reporting date, the Company further breached its obligation to pay by an additional amount of EUR 0.1 million.

Management considers it is unlikely that some of the projects related to the joint ventures will generate sufficient cash inflows to repay all obligations when they fall due.

In order to manage its financial situation, 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 additional financial assistance to fund the Company's immediate liabilities.

During the reporting period, ERD provided several bridge loans for a total amount of EUR 304 thousands.

In order to finance the Company's immediate liabilities and to stabilise its financial position, the management decided to realise several assets. During and after the reporting period, the Company realised several assets in Poland, Czech Republic and Canada.

At 30 June 2015, the Group has current liabilities totalling EUR 56,633 thousands, which exceeds its current assets amounting to EUR 817 thousands and a negative equity which amounts to EUR 35,840 thousands.

Management believes that the above mentioned conditions indicate the existence of material uncertainties 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 realised other than in the normal course of business and at amounts which could differ significantly from the amounts stated in the interim financial statements.

During the reporting period, the jointly controlled entities, Arces and ENMAN, repaid part of the loans granted by the Company in the total amount of EUR 4,645 thousands. The amount was generated from the sale of the plot in Troja (see note 8.b.vi.1) and sales of assets in Poland and the Czech Republic.

An amount of EUR 4,000 thousands was used to repay part of the loans granted by ERD (see note 6.a.1) while the remainder was used to repay the overdue liabilities of the Company and to finance the Group operational activity in the upcoming few months.

During the reporting period, the jointly controlled entity, MLP, repaid part of the loans granted by the Company in the total amount of EUR 351 thousands. The amount was generated following the sale of Trianon plot in Montreal, Canada (see note 8.c.iv.2).

Trading Performance

1. As previously reported , on 22 January 2015, a wholly owned subsidiary of ENMAN, signed an agreement to sell a plot designed for residential purposes in Czech Republic ("Troja") for a total cash consideration of CZK 195 million (EUR 7,113 thousands).

On 30 April 2015, the above mentioned sale agreement has been finalised following which the Company recognised a profit before tax on income in the amount of EUR 0.5 million (which was recorded under the "share of loss of equity-accounted investments, net of tax").

The net proceeds of the disposal were EUR 5,890 thousands (the Company's share is EUR 2,945 thousands) and were distributed to the joint venture's partners during the reporting period.

2. In the line with the Company's strategy, after the reporting period, two wholly owned subsidiaries of ENMAN sold a plot designed for residential purposes in Czech Republic ("Veleslavin phase 2") for a total cash consideration of CZK 63 million (approximately EUR 2.3 million).

The net proceeds of the disposal are expected to be approximately EUR 1.8 million (the Company share is EUR 0.45 million) and the profit of the transaction is expected to be immaterial and will be recorded under the "share of loss of equity-accounted investments, net of tax".

3. On 8 May 2015, Montreal Residential Master Limited ("MLP") sold one of the plots in Montreal, Canada ("The Trianon plot") for a total consideration of CAD 3.05 million (EUR 2.2 million).

MLP recognised a profit before tax on income in the amount of EUR 342 thousands (the Company's share is EUR 68 thousands which was recorded under the "share of loss of equity-accounted investments, net of tax").

The Company's share in the net proceeds of the disposal was EUR 351 thousands which was distributed to the Company during the reporting period.

Based on prior agreements with ERD all the net future proceeds generated from the Company's assets in Canada will be used to repay the outstanding debts of the Company and Eurobul to ERD.

4. On 14 May 2015, the Company, ERD and Eurobul (see note 6.2.b) signed a new amendment to the agreements which were signed on 30 July 2009 with the following below main clauses:

· The Company agreed to repay ERD a total amount of EUR 4,000 thousands from the recent distributions generated from Arces and ENMAN, the amount was fully paid on 15 May 2015 (see note 8).

· The Company agreed to set a repayment framework of an additional EUR 1,300 thousands which will be repaid from future proceeds which the Company will be entitled to. As of the signature of the accounts the Company did not pay ERD any funds according to this clause.

· All future repayments are subject to keeping the necessary funds in the Company and Eurobul which will allow the companies to meet their obligations to employees and service providers as they fall due.

· The parties agree that all the net future proceeds generated from the Company's assets in Canada will be used to repay the outstanding debts of the Company and Eurobul to ERD. As of the signature of the accounts the Company did not pay ERD any funds according to this clause.

5. As previously reported, After the reporting period, the Company reached an agreement with funds managed by Heitman LLC ("Heitman") according to which the Company will waive its share of a funds distribution generated from Arces International B.V. ("Arces") and ENMAN B.V. ("ENMAN") amounting to EUR 1.1 million (out of an aggregate distribution of EUR 3.5 million, which was fully repaid during August 2015), which will instead all be paid to Heitman. In return Heitman will transfer to the Company all its rights in Arces and ENMAN.

Arces and ENMAN are both joint venture companies, which own and develop land in Eastern European countries, currently jointly owned by Heitman and the Company.

Following the transaction the Company will own 100% of both Arces and ENMAN and will consolidate both companies in its consolidated financial statements. The Company estimates that it will recognise a maximum loss of EUR 0.6 million as a result of the transaction. The Company expects that the total future cash flow generated from asset sales by Arces and ENMAN will increase by approximately EUR 3.3 million as a result of the transaction (EUR 2.2 million net after the settlement of the distribution of EUR 1.1 million mentioned above).

The information contained in this note regarding projected recognition of a loss and changes in cash flows of the Company constitute forward-looking statements. Such statements are based on the current expectations and certain assumptions of the Company's management, of which many are beyond the Company's control. Actual results or performance may (negatively or positively) vary materially from those described in the relevant forward-looking statement.

Condensed consolidated statement of financial position

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated statement of profit or loss

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated statement of comprehensive income

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated statement of changes in equity

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated statement of cash flows

The notes are an integral part of these condensed consolidated interim financial statements.

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 2015 comprise the Company, its subsidiaries and the Group's interests in associates and joint ventures (together referred to as the "Group").

The Group is primarily involved in holding 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.

Copies of these interim financial statements of the Group are available on the Company's website (www.kimberly-enterprises.com) and upon request from the Company's registered office.

NOTE 2 - BASIS OF ACCOUNTING

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 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 consolidated financial statements as at and for the year ended 31 December 2014.

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2014.

These interim financial statements were authorised for issue by Company's Board of Directors on 12 August 2015.

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 2014.

NOTE 4 - GOING CONCERN

The interim financial statements have been prepared on a going concern basis, which assumes that the Group will be able to raise funding to meet its obligations to the banks, its employees and service providers, as disclosed in note 5.a.

During the reporting period the Group reached settlement agreements with most of its former employees and service providers for past open debts.

Since January 2011, the Group has been in breach of the obligation to make the lease payments for Marina Dorcol. During the reporting period, the management recorded an expense of EUR 1,501 thousands (as a result of the lease interest and inflation) on the unpaid overdue lease contracted payments.

At 30 June 2015, the Group is in breach of EUR 23.4 million. After the reporting date, the Company further breached its obligation to pay by an additional amount of EUR 0.1 million.

Following the above, the municipality initiated several claims during recent periods to collect those debts.

In the event that it does not settle the debt, the Company is exposed to the following sanctions and risks:

· Termination of the lease contracts which will cause the loss of the right to use of land;

· Should any party commence bankruptcy procedure against Marina Dorcol, the Company would lose control of Marina Dorcol and would be exposed to uncertainty with respect to compensation from the bankruptcy estate, since the Company will be in the "last row of creditors".

In the event that the Serbian municipality decides to terminate the lease contract, it has to give to the Company a written notice of its intention to do so and detail the reasons for the termination. The Company will have 90 days to remedy the breach in order to avoid the agreement termination (i.e. perform the payment obligation, and if it fails to do so the municipality is entitled to terminate the agreement).

In the event that the Company does not accept the reasons for the termination, they should initiate a procedure before the Commercial Court in Belgrade for the determination of the validity of the request for the termination and whether the request is based on valid legal and commercial reasons.

In the event of termination, the final result of termination would be the restitution of the amounts paid by the Group in respect of Marina Dorcol based on the agreements with the municipality, decreased with the amount of compensation for usage of such land for the period of duration of lease and for compensation of damages which occurred for the municipality, if any.

However, the management of the Company estimates, inter alia, based on its legal advisor that it is not likely that the Serbian municipality will act to terminate the agreement between the parties and/or that bankruptcy procedure against Marina Dorcol will commence. The Group is currently in the process of negotiation with the municipality of Belgrade to restructure the arrangement.

Management considers it is unlikely that some of the projects related to the joint ventures will generate sufficient cash inflows to repay all obligations when they fall due.

In order to manage its financial situation, 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 additional financial assistance to fund the Company's immediate liabilities.

During the reporting period, ERD provided several bridge loans for a total amount of EUR 304 thousands.

In order to finance the Company's immediate liabilities and to stabilise its financial position, the management decided to realise several assets. During and after the reporting period, the Company realised several assets in Poland, Czech Republic and Canada.

At 30 June 2015, the Group has current liabilities totalling EUR 56,633 thousands, which exceeds its current assets amounting to EUR 817 thousands and a negative equity which amounts to EUR 35,840 thousands.

Management believes that the above mentioned conditions indicate the existence of material uncertainties 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 realised other than in the normal course of business and at amounts which could differ significantly from the amounts stated in the interim financial statements.

During the reporting period, the jointly controlled entities, Arces and ENMAN, repaid part of the loans granted by the Company in the total amount of EUR 4,645 thousands. The amount was generated from the sale of the plot in Troja (see note 8.b.vi.1) and sales of assets in Poland and the Czech Republic.

An amount of EUR 4,000 thousands was used to repay part of the loans granted by ERD (see note 6.a.1) while the remainder was used to repay the overdue liabilities of the Company and to finance the Group operational activity in the upcoming few months.

During the reporting period, the jointly controlled entity, MLP, repaid part of the loans granted by the Company in the total amount of EUR 351 thousands. The amount was generated following the sale of Trianon plot in Montreal, Canada (see note 8.c.iv.2).

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 2014.

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.

The Group relies on external funding to finance its current and future development projects. Future acquisitions of investment properties and land designated for residential projects and the ability of the Group to expand its operations is partly dependent on its ability to obtain future bank financing. The Group intends to repay its existing bank loans from its operating activity (mainly sales of housing units and undeveloped plots).

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

Whilst in the past financing banks have agreed to prolong existing loan facilities of the Company and its joint ventures project's subsidiaries, there is no assurance that these banks will be prepared to extend existing loan facilities beyond currently committed maturity dates. In the event that a bank is not willing to extend a project loan, it has the option to call in its security. In most cases these loans are secured by the assets they are financing.

b. Carrying amounts and fair values

The carrying amounts of certain financial assets and liabilities, including cash and cash equivalents, prepayments and other assets, trade payables and other payables are the same or proximate to their fair value.

The fair values of the other assets and 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 floating rate interest-bearing loans from bank has been calculated using market interest rate of 4.75% taking into consideration the specific loans conditions (securities provided, currency, etc.).

The fair value of loans and amounts due to related parties and joint ventures have been calculated using market interest rate of 6.95% taking into consideration the specific loans conditions (securities provided, currency, etc.).

The fair value of short term receivables and payables expected to be settled within 12 months was deemed to be equal to their carrying amounts.

The fair value of the finance lease liability has been calculated using market interest rate estimated 7%.

NOTE 6 - RELATED PARTIES

a. Related party transactions

1. Support due to the Company's financial situation

In order to manage its financial situation the Company has approached ERD, the parent company of the Company's immediate parent company, Engel General Developers Ltd., to provide additional financial assistance to fund the Company's immediate liabilities.

During the reporting period, ERD provided several bridge loans for a total amount of EUR 304 thousands.

On 14 May 2015, the Company, ERD and Eurobul (see note 6.2.b) signed a new amendment to the agreements which were signed on 30 July 2009 with the following below main clauses:

· The Company agreed to repay ERD a total amount of EUR 4,000 thousands from the recent distributions generated from Arces and ENMAN, the amount was fully paid on 15 May 2015 (see note 8).

· The Company agreed to set a repayment framework of an additional EUR 1,300 thousands which will be repaid from future proceeds which the Company will be entitled to. As of the signature of the accounts the Company did not pay ERD any funds according to this clause.

· All future repayments are subject to keeping the necessary funds in the Company and Eurobul which will allow the companies to meet their obligations to employees and service providers as they fall due.

· The parties agree that all the net future proceeds generated from the Company's assets in Canada will be used to repay the outstanding debts of the Company and Eurobul to ERD. As of the signature of the accounts the Company did not pay ERD any funds according to this clause.

2. Trading transactions

Operating results

The revenue in the amount of EUR 71 thousands in the profit or loss of the interim financial statement, comprise of management fee charges to the joint venture of Arces and ENMAN. The related cost in the amount of EUR 107 thousands is presented under cost of sales.

Finance income and finance costs

- Loans granted to the Group by ERD

The Group recorded finance costs relating to the loans granted by ERD in the total amount of EUR 0.6 million in the profit or loss of the interim financial statements.

The Group recorded a loss in the amount of EUR 2.9 million under net foreign exchange loss in the profit or loss of the interim financial statements, due to the weakness of the EUR vs. the ILS (-10.7%) during the reporting period.

- Other finance income

Finance income of EUR 206 thousands in profit or loss in the interim financial statements relates to interest on given loans to the Company's joint ventures.

b. Securities and support provided by parent company

At 30 June 2015, interest-bearing loans from bank in a total amount of EUR 2,846 thousands, granted to a wholly controlled entity EURO-BUL Ltd. ("Eurobul"), are being secured by guarantees provided by ERD.

In September 2014, ERD and Eurobul reached an agreement ("agreement") with the lender bank to restructure the overdue loan granted to Eurobul.

The above mentioned new interest-bearing loans are being secured by guarantees provided by ERD to the lender bank.

During the reporting period, as part of the above agreement with the lender bank, the Company and ERD repaid an amount of EUR 160 thousands. The amount repaid by ERD was recorded as additional loan provided by ERD.

c. Directors

As of 30 June 2015, the Company has 4 directors (31 December 2014: 4 directors).

NOTE 7 - OPERATING SEGMENTS

Basis of segmentation

The Group's CEO (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 and its joint ventures are currently facing create a more general decision making process which is different from a company or group of companies operating in a liquid position, hence, the Group's CEO makes decisions about resources and reviews operating results of business as one operating segment.

NOTE 8 - INVESTMENT AND LOANS IN EQUITY-ACCOUNTED INVESTMENTS

At 30 June 2015, the Company holds interests in the following joint ventures:

a. Arces International B.V. ("Arces").

b. ENMAN B.V. ("ENMAN").

c. Montreal Residential Holdings Master Limited Partnership ("MLP").

None of the Group's equity-accounted investments are publicly listed entities and consequently do not have published price quotations.

a. Arces International B.V.

Arces International B.V. ("Arces") - a holding company domiciled in The Netherlands. The Company and HCEPP II Luxembourg Master S.à r.l ("Heitman") each hold 50% of Arces' issued share capital.

Arces was incorporated with the purpose of investment in real estate development project companies in Eastern Europe. Arces has investments in Poland, Hungary and the Czech Republic.

After the reporting period, the Company signed with Heitman an agreement of selling Heitman's rights in Arces, see note 9(3).

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

Comments in respect to the investment in Arces:

i. Due to the joint venture continuing to accumulate losses the Company recognised a loss related to given loan to Arces that is part of the net investment and presents the loss as share of profit (loss) of equity-accounted investments in the 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 JV; therefore losses are accounted only until the Company's interest is reduced to zero.

Due to the above, and because Arces repaid part of the loans provided by the Company during the reporting period, the Company reversed previous recorded losses in the total amount of EUR 496 thousands (which was recorded under the "share of loss of equity-accounted investments, net of tax"); therefore the net investment in Arces is presented at nil.

iii. Loans granted by the Company to the joint venture -

· Denominated in Euro currency.

· The loan bears interest of 15% per annum.

· No repayment date has been set. Repayment is expected from the proceeds of the sale of the related projects financed by the loans.

· During the reporting period, a total amount of EUR 1,700 thousands was repaid by Arces to the Company.

iv. Arces has a finance exposure with respect to interest-bearing loans from bank that financed the project in Gyor, Hungary in the amount of EUR 12,648 thousands (the Company's share is EUR 6,324 thousands). The bank management claims that the loan was additionally guaranteed by Arces. The Company has disputed the validity of this guarantee with the bank management and there is disagreement between the Company and its joint venture partner ("Heitman") regarding the validity and rights to sign over this guarantee, however, no official legal claim has been filed by any of the parties.

In 2011, following a liquidation process, Arces ceased to consolidate the Hungarian subsidiary (Engel-Projekt Kft.) which held the project in Gyor in its consolidated financial statements.

v. Significant events during the reporting period:

1. In 2012, one of the Group project's previous contractors issued a lien against Arces' bank account, for the total amount of EUR 0.4 million (the Company's share is EUR 0.2 million).

During the reporting period, the high court in Hungary accepted the Group's appeal, rejected the claim. After the reporting period, the Company succeed to remove the lien against Arces' bank account.

b. ENMAN B.V.

ENMAN B.V. ("ENMAN") - a holding company domiciled in The Netherlands. The Company and HEPP III Luxembourg Master S.à r.l. ("Heitman") each hold 50% of ENMAN's issued share capital.

In July 2010 the Company signed an amendment to its joint venture agreement with Heitman according to which the Company's share in profit distributions from ENMAN is 25% and the Company's share in profit distributions from "Troja" project in the Czech Republic is 50% (the percentage of shares holding remained unchanged).

ENMAN was incorporated with the purpose of investment in real estate development project companies in Eastern Europe. ENMAN has investments in Poland, Hungary, Romania and the Czech Republic.

After the reporting period, the Company signed with Heitman an agreement of selling Heitman's rights in ENMAN, see note 9(3).

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

Comments in respect to the investment in ENMAN:

i. Due to the joint venture previous periods accumulate losses the Company recognised in previous periods a loss related to given loan to ENMAN that was part of the net investment and presented the loss as share of profit (loss) of equity-accounted investments in the 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 JV.

iii. Loans granted by the Company to the joint venture -

· Denominated in Euro currency.

· The loans bear interest of 8% per annum.

· No repayment date has been set. Repayment is expected from the proceeds of the sale of the related projects financed by the loans.

· During the reporting period, a total amount of EUR 2,945 thousands was repaid by ENMAN to the Company.

iv. In 2013, a receiver was appointed by court in Hungary due to an appeal of one of the creditors in the subsidiary, Engel Ingatlan Kft. ("Ingatlan"), which owns the Punko project in Hungary.

As a consequence ENMAN does not control Ingatlan, therefore ceased to consolidate Ingatlan in its consolidated financial statements.

ENMAN provided guarantees for the interest payments and the costs overruns, to the lender bank. The amount of the unpaid interest-bearing loans from bank at the disposal date was EUR 6,099 thousands (the Company's share is EUR 1,525 thousands), part of the related interest and cost overrun was not paid before the liquidation process.

v. Since the Group's share in ENMAN is 25% for all its subsidiaries apart from one ("Troja"), the Company's share in net assets of EUR 4,157 thousands (2014: EUR 3,545 thousands), reflected in the table above, is becoming a net asset of EUR 549 thousands (2014: net asset of EUR 104 thousands) due to the profit in the subsidiary Troja Garden s.r.o for the period of EUR 1,366 thousands (2014: EUR 850 thousands).

vi. Significant events during and after the reporting period:

1. On 22 January 2015, a wholly owned subsidiary of ENMAN, signed an agreement to sell a plot designed for residential purposes in Czech Republic ("Troja") for a total cash consideration of CZK 195 million (EUR 7,113 thousands).

On 30 April 2015, the above mentioned sale agreement has been finalized following which the Company recognised a profit before tax on income in the amount of EUR 0.5 million (which was recorded under the "share of loss of equity-accounted investments, net of tax").

The net proceeds of the disposal were EUR 5,890 thousands (the Company's share is EUR 2,945 thousands) and were distributed to the joint venture's partners during the reporting period.

2. After the reporting period, two wholly owned subsidiaries of ENMAN sold a plot designed for residential purposes in Czech Republic ("Veleslavin phase 2") for a total cash consideration of CZK 63 million (approximately EUR 2.3 million).

The net proceeds of the disposal are expected to be approximately EUR 1.8 million (the Company share is EUR 0.45 million) and the profit of the transaction is expected to be not material and will be recorded under the "share of loss of equity-accounted investments, net of tax".

c. Montreal Residential Holdings Master Limited Partnership

Montreal Residential Holdings Master Limited Partnership ("MLP") - 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").

At the end of the reporting period, MLP holds two parcels of land in Montreal, Quebec, Canada which are slated for the development of residential projects (one plot has been sold during the reporting period, see note 8.c.iv.2).

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

Comments in respect to the investment in MLP:

i. Due to the joint venture accumulated losses the Company recognised a loss related to given loan to MLP that is part of the net investment and presents the loss as share of profit (loss) of equity-accounted investments in the 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 JV; therefore losses are accounted only until the Company's interest is reduced to zero.

iii. Loans granted by the Company to joint venture -

· Denominated in CAD currency.

· The loans bear no interest.

· No repayment date has been set. Repayment is expected from the proceeds of the sale of the related projects financed by the loans.

· During the reporting period, a total amount of EUR 351 thousands was repaid by MLP to the Company.

iv. Significant events during the reporting period:

1. The Company and MLP were in a legal proceeding with a minority shareholder who was employed as technical manager for the Canadian projects and was dismissed by the Company. The amount of the claim was CAD 13 million (approximately EUR 9.4 million).

According to the court past decision, disposal of assets in Canada will require the approval of the court.

In 2013, the trial in regard to the above legal procedure was held in the Canadian court.

In August 2014, the Canadian court delivered a verdict which dismissed the claims of the plaintiff and ordered the plaintiff to pay the Company a total amount of CAD 80 thousands plus interest (approximately EUR 57 thousands plus interest). The plaintiff filed an appeal on the above verdict, which was rejected by the court during the reporting period.

2. On 8 May 2015, MLP sold one of the plots in Montreal, Canada ("The Trianon plot") for a total consideration of CAD 3.05 million (EUR 2.2 million).

MLP recognised a profit before tax on income in the amount of EUR 342 thousands (the Company's share is EUR 68 thousands which was recorded under the "share of loss of equity-accounted investments, net of tax").

The Company's share in the net proceeds of the disposal was EUR 351 thousands which was distributed to the Company during the reporting period.

Based on prior agreements with ERD all the net future proceeds generated from the Company's assets in Canada will be used to repay the outstanding debts of the Company and Eurobul to ERD.

NOTE 9 - SIGNIFICANT EVENTS DURING AND AFTER THE REPORTING PERIOD

1. On 4 May 2015, a receiver was appointed by a court in Hungary due to a claim of the Hungarian tax authorities in the subsidiary, Turlington Kft. ("Turlington").

As a consequence the Company does not control Turlington, therefore ceased to consolidate it in its consolidated financial statements and recognised an income in the amount of EUR 437 thousands which is recorded under "other income (loss)" at the condensed consolidated statements of profit or loss.

The following table summarises the liabilities that were de-recognised at the interim financial statements due to the loss of control in Turlington:

2. On 1 May 2015, a liquidator was appointed to the subsidiaries Palace Engel s.r.o. ("Prokopsky") and Palace Engel Development s.r.o. ("Barandov"), the Company hold 64% interest in each of these subsidiaries.

As a consequence the Company does not control Prokopsky and Barandov, therefore ceased to consolidate them in its consolidated financial statements and recognised a loss in the amount of EUR 12 thousands which is recorded under the "other income (loss)" at the condensed consolidated statements of profit or loss.

3. After the reporting period, the Company reached an agreement with funds managed by Heitman LLC ("Heitman") according to which the Company will waive its share of a funds distribution generated from Arces International B.V. ("Arces") and ENMAN B.V. ("ENMAN") amounting to EUR 1.1 million (out of an aggregate distribution of EUR 3.5 million, which was fully repaid during August 2015), which will instead all be paid to Heitman. In return Heitman will transfer to the Company all its rights in Arces and ENMAN.

Arces and ENMAN are both joint venture companies, which own and develop land in Eastern European countries, currently jointly owned by Heitman and the Company.

Following the transaction the Company will own 100% of both Arces and ENMAN and will consolidate both companies in its consolidated financial statements. The Company estimates that it will recognise a maximum loss of EUR 0.6 million as a result of the transaction. The Company expects that the total future cash flow generated from asset sales by Arces and ENMAN will increase by approximately EUR 3.3 million as a result of the transaction (EUR 2.2 million net after the settlement of the distribution of EUR 1.1 million mentioned above).

The information contained in this note regarding projected recognition of a loss and changes in cash flows of the Company constitute forward-looking statements. Such statements are based on the current expectations and certain assumptions of the Company's management, of which many are beyond the Company's control. Actual results or performance may (negatively or positively) vary materially from those described in the relevant forward-looking statement.

NOTE 10 - NEW IFRS PRONOUNCEMENT

1. Amendments to IAS 19 - Defined Benefit Plans: Employee Contributions

(Effective for annual periods beginning on or after 1 February 2015. The amendments apply retrospectively. Earlier application is permitted).

The amendments are relevant only to defined benefit plans that involve contributions from employees or third parties meeting certain criteria. Namely that they are:

- set out in the formal terms of the plan;

- linked to service; and

- independent of the number of years of service.

When these criteria are met, a company is permitted (but not required) to recognise them as a reduction of the service cost in the period in which the related service is rendered.

The Company does not expect the Amendment to have any impact on the financial statements since it does have any defined benefit plans that involve contributions from employees or third parties.

2. IFRS 3 - Business Combinations

The amendment to IFRS 3 Business Combinations (with consequential amendments to other standards) clarifies that when contingent consideration is a financial instrument, its classification as a liability or equity is determined by reference to IAS 32, rather than to any other standard. It also clarifies that contingent consideration that is classified as an asset or a liability shall be measured at fair value at each reporting date.

The Company does not expect the Amendment to have any impact on the financial statements.

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