o
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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o
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report _____________
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Title of each class:
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Name of each exchange on which registered:
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ORDINARY SHARES, PAR VALUE
NIS 1.00 PER SHARE
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NASDAQ GLOBAL SELECT MARKET
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o
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U.S. GAAP
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x
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International Financial Reporting Standards as issued by the International Accounting Standards Board
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Other
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ITEM
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DESCRIPTION
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Page
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5
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1.
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6
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6
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3.
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6
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4.
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31
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4A.
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56
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5.
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56
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6.
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100
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7.
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112
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8.
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114
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9.
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114
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10.
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116
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11.
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129
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12.
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134
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13.
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135
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14.
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135
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15.
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135
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16A.
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136
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16B.
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136
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16C.
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136
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16D.
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137
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16E.
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137
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16F.
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138
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16G.
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138
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16H.
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138
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17.
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138
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18.
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138
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19.
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139
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CERTIFICATIONS | ||
INDEX TO FINANCIAL STATEMENTS
|
Currency
|
$1.00 as of December 31, 2012
|
|||
1 New Israeli Shekel (NIS)
|
0.267881 | |||
1 Euro
|
1.318136 | |||
1 Great British Pound (GBP)
|
1.617064 | |||
1 Hungarian Forint (HUF)
|
0.004526 | |||
1 Czech Republic Koruny (CZK)
|
0.052626 | |||
1 Romanian LEI (RON)
|
0.297084 | |||
1 Polish Zloty (PLN)
|
0.221958 | |||
1 Indian Rupee (INR)
|
0.018189 | |||
1 Crore (10 million INR)
|
181,891 |
HIGH
|
LOW
|
|||||||
MONTH
|
1 U.S. dollar =NIS
|
1 U.S. dollar =NIS
|
||||||
November 2012
|
3.952 | 3.810 | ||||||
December 2012
|
3.835 | 3.726 | ||||||
January 2013
|
3.791 | 3.714 | ||||||
February 2013
|
3.733 | 3.663 | ||||||
March 2013
|
3.733 | 3.637 | ||||||
April 2013
|
3.633 | 3.592 | ||||||
May 2013 (through May 8)
|
3.587 | 3.560 |
PERIOD
|
AVERAGE EXCHANGE RATE
|
|
January 1, 2008 - December 31, 2008
|
3.586 NIS/$1
|
|
January 1, 2009 - December 31, 2009
|
3.932 NIS/$1
|
|
January 1, 2010 - December 31, 2010
|
3.735 NIS/$1
|
|
January 1, 2011 - December 31, 2011
|
3.577 NIS/$1
|
|
January 1, 2012 - December 31, 2012
|
3.857 NIS/$1
|
FOR THE YEAR ENDED DECEMBER 31
|
||||||||||||||||||||||||
2012
|
2012
|
2011
|
2010
|
2009
|
2008
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($'000)
|
(NIS '000)
|
|||||||||||||||||||||||
Income revenues and gains
|
||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Revenues from sale of commercial centers
|
34,050 | 127,109 | 3,525 | 4,345 | - | 439,339 | ||||||||||||||||||
Revenue from hotel operations and management
|
59,692 | 222,828 | 286,548 | 403,822 | 396,736 | 384,220 | ||||||||||||||||||
Revenue from fashion merchandise and other
|
39,109 | 145,996 | 185,082 | 174,817 | 118,386 | 102,736 | ||||||||||||||||||
Total revenues
|
179,771 | 495,933 | 475,155 | 582,984 | 515,122 | 926,295 | ||||||||||||||||||
Gains and other
|
||||||||||||||||||||||||
Rental income from commercial centers
|
46,920 | 175,153 | 111,745 | 98,550 | 85,466 | 84,824 | ||||||||||||||||||
Gains from sale of real estate assets
|
14,432 | 53,875 | - | 198,777 | - | - | ||||||||||||||||||
Gains from changes of shareholding in investees
|
2,510 | 9,369 | - | - | 31,106 | 49,122 | ||||||||||||||||||
Total income revenues and gains
|
196,713 | 734,330 | 586,900 | 880,311 | 631,694 | 1,060,241 | ||||||||||||||||||
Expenses and losses
|
||||||||||||||||||||||||
Commercial centers
|
73,081 | 272,810 | 159,626 | 156,745 | 169,253 | 431,667 | ||||||||||||||||||
Hotel operations and management
|
54,154 | 202,158 | 240,784 | 341,291 | 353,229 | 355,049 | ||||||||||||||||||
Cost of fashion merchandise and other
|
41,728 | 155,772 | 211,743 | 197,574 | 134,142 | 118,040 | ||||||||||||||||||
General and administrative expenses
|
13,096 | 48,886 | 61,857 | 65,292 | 66,153 | 54,944 | ||||||||||||||||||
Share in losses of associates, net
|
2,337 | 8,726 | 7,568 | 8,275 | 14,039 | 12,952 | ||||||||||||||||||
Financial expenses
|
47,088 | 175,778 | 164,001 | 316,706 | 283,546 | 296,527 | ||||||||||||||||||
Financial income
|
(8,327 | ) | (31,083 | ) | (65,571 | ) | (40,927 | ) | (92,725 | ) | (135,278 | ) | ||||||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
13,455 | 50,229 | (275,537 | ) | 53,016 | 70,702 | (225,244 | ) | ||||||||||||||||
Write-down, charges and other expenses, net
|
110,267 | 411,625 | 290,276 | 83,660 | 256,802 | 68,797 | ||||||||||||||||||
346,879 | 1,294,901 | 794,747 | 1,181,632 | 1,255,141 | 977,454 | |||||||||||||||||||
Profit (loss) before income taxes
|
(150,166 | ) | (560,571 | ) | (207,847 | ) | (301,321 | ) | (623,447 | ) | 82,787 | |||||||||||||
Income taxes (tax benefits)
|
(2,745 | ) | (10,248 | ) | 63,283 | 3,992 | (35,571 | ) | 24,736 | |||||||||||||||
Profit (loss) from continuing operations
|
(147,421 | ) | (550,323 | ) | (271,130 | ) | (305,313 | ) | (587,876 | ) | 58,051 | |||||||||||||
Profit from discontinued operations, net
|
25,401 | 94,823 | 24,101 | 378,838 | (63,129 | ) | (81,218 | ) | ||||||||||||||||
Profit (loss) for the year
|
(122,020 | ) | (455,500 | ) | (247,029 | ) | 73,525 | (651,005 | ) | (23,167 | ) | |||||||||||||
Attributable to:
|
||||||||||||||||||||||||
Equity holders of the Company
|
(78,647 | ) | (293,590 | ) | (264,919 | ) | 61,998 | (530,942 | ) | (103,170 | ) | |||||||||||||
Non-controlling interest
|
(43,373 | ) | (161,910 | ) | 17,890 | 11,527 | (120,063 | ) | 80,003 | |||||||||||||||
(122,020 | ) | (455,500 | ) | (247,029 | ) | 73,525 | (651,005 | ) | (23,167 | ) | ||||||||||||||
Earnings per share - (in NIS)
|
||||||||||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
(4.22 | ) | (15.75 | ) | (11.44 | ) | (12.21 | ) | (21.51 | ) | (4.25 | ) | ||||||||||||
From discontinued operations
|
1.06 | 3.95 | 0.79 | 14.67 | 0.65 | 0.19 | ||||||||||||||||||
(3.16 | ) | (11.80 | ) | (10.65 | ) | 2.45 | (20.86 | ) | (4.05 | ) | ||||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||||||||||
From continuing operations
|
(4.22 | ) | (15.75 | ) | (11.44 | ) | (12.21 | ) | (21.53 | ) | (4.30 | ) | ||||||||||||
From discontinued operations
|
1.06 | 3.95 | 0.79 | 14.41 | 0.65 | 0.19 | ||||||||||||||||||
(3.16 | ) | (11.80 | ) | (10.65 | ) | 2.13 | (20.88 | ) | (4.11 | ) | ||||||||||||||
Dividend declared per share
|
0 | 0 | 0 | 0 | 0 | 6.60 |
DECEMBER 31
|
||||||||||||||||||||||||
2012
|
2012
|
2011
|
2010
|
2009
|
2008
|
|||||||||||||||||||
Convenience translation
|
||||||||||||||||||||||||
($ '000)
|
(NIS '000)
|
|||||||||||||||||||||||
Current Assets
|
290,492 | 1,084,410 | 1,258,227 | 2,123,961 | 2,384,465 | 2,572,610 | ||||||||||||||||||
Non-current Assets
|
1,609,966 | 6,010,001 | 9,112,840 | 8,578,752 | 7,023,724 | 6,119,102 | ||||||||||||||||||
Total
|
1,900,458 | 7,094,411 | 10,371,067 | 10,702,713 | 9,408,189 | 8,691,712 | ||||||||||||||||||
Current Liabilities
|
479,003 | 1,788,117 | 2,226,971 | 2,799,122 | 2,353,973 | 1,825,486 | ||||||||||||||||||
Non-current Liabilities
|
1,040,762 | 3,885,167 | 6,605,226 | 5,726,070 | 4,906,045 | 4,428,443 | ||||||||||||||||||
Shareholders' equity Attributable to:
|
||||||||||||||||||||||||
Equity holders of the company
|
82,938 | 309,606 | 359,630 | 760,740 | 946,450 | 1,373,692 | ||||||||||||||||||
Non-controlling interest
|
297,755 | 1,111,523 | 1,179,240 | 1,416,781 | 1,201,721 | 1,064,091 | ||||||||||||||||||
Total
|
1,900,458 | 7,094,411 | 10,371,067 | 10,702,713 | 9,408,189 | 8,691,712 |
|
·
|
Actions and decisions of the trustee, or delays in taking important business decisions, may adversely affect our business;
|
|
·
|
Actions and decisions of our various creditors (including the Note holders and, in particular, the holders of our Series A and Series B notes (which submitted the motion to the Court to liquidate our company, as described above)) and other third parties with interests in our stay of proceedings may be inconsistent with our business plan;
|
|
·
|
Our secured creditors may likely take possession of the security we have provided under our loan agreements with them;
|
|
·
|
Our business partners, third-party sources of financing, suppliers, customers and other third-party suppliers with whom we have established or developed business relationships;
|
|
·
|
We could lose our ability to obtain and maintain commercially reasonable terms with vendors and service providers;
|
|
·
|
Our ability to maintain customer contracts and sign new ones that are critical to our operations could be reduced;
|
|
·
|
We might not be able to retain management and other key personnel; and
|
|
·
|
Risks associated with third parties seeking and obtaining court approval to terminate or shorten the period for us to propose and confirm a plan of reorganization or to appoint a trustee.
|
|
·
|
we could be more vulnerable to general adverse economic and industry conditions;
|
|
·
|
we may find it more difficult to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;
|
|
·
|
we will be required to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our debt, reducing the available cash flow to fund other projects;
|
|
·
|
we may have limited flexibility in planning for, or reacting to, changes in our business and in the industry;
|
|
·
|
we may have a competitive disadvantage relative to other companies in our business segments with less debt;
|
|
·
|
we may face difficulties in establishing strategic or other long-term business joint ventures; and
|
|
·
|
we may not be able to refinance our Notes.
|
|
·
|
changes in global and national economic conditions, including global or national recession, such as those triggered by the recent economic crisis;
|
|
·
|
a general or local slowdown in the real property market which may make it difficult to sell a property, such as the recent global slowdown;
|
|
·
|
political events that may have a material adverse effect on the hotel industry;
|
|
·
|
competition from other lodging facilities, and oversupply of hotel rooms in a specific location;
|
|
·
|
material changes in operating expenses, including as a result of changes in real property tax systems or rates or labor laws;
|
|
·
|
changes in the availability, cost and terms of financing;
|
|
·
|
the effect of present or future environmental laws;
|
|
·
|
our ongoing need for capital improvements and refurbishments; and
|
|
·
|
material changes in governmental rules and policies.
|
|
·
|
employment levels;
|
|
·
|
availability of financing for homebuyers;
|
|
·
|
interest rates;
|
|
·
|
consumer confidence;
|
|
·
|
levels of new and existing homes for sale;
|
|
·
|
demographic trends;
|
|
·
|
urban development and changes;
|
|
·
|
housing demand;
|
|
·
|
local laws and regulations; and
|
|
·
|
acts of terror, floods or earthquakes.
|
|
·
|
difficulty in acquiring land suitable for residential building at affordable prices in locations where our potential customers would like to live;
|
|
·
|
shortages of qualified trades people;
|
|
·
|
reliance on local subcontractors, who may be inadequately capitalized;
|
|
·
|
shortages of materials; and
|
|
·
|
volatile increases in the cost of labor and materials, particularly increases in the price of lumber, drywall and cement, which are significant components of home construction costs.
|
|
·
|
The inability to obtain financing for development at attractive terms or at all;
|
|
·
|
delays in obtaining zoning (or land classification, as the case may be for each jurisdiction) and other approvals;
|
|
·
|
the unavailability of materials and labor;
|
|
·
|
the abilities of subcontractors to complete work competently and on schedule;
|
|
·
|
the surface and subsurface condition of the land underlying the project;
|
|
·
|
environmental uncertainties;
|
|
·
|
extraordinary circumstances or "acts of god"; and
|
|
·
|
ordinary risks of construction that may hinder or delay the successful completion of a particular project.
|
|
·
|
adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard;
|
|
·
|
the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;
|
|
·
|
the judgment was rendered by a court of competent jurisdiction, in compliance with due process and the rules of private international law prevailing in Israel;
|
|
·
|
the judgment was not obtained by fraudulent means and does not conflict with any other valid judgment in the same matter between the same parties;
|
|
·
|
no action between the same parties in the same matter is pending in any Israeli court at the time the lawsuit is instituted in a U.S. court; and
|
|
·
|
the laws of the state in which the judgment was rendered provide for the enforcement of judgments of Israeli courts.
|
|
·
|
Commercial and Entertainment Centers - Initiation, construction and sale of commercial and entertainment centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through PC. In certain circumstances and depending on market conditions, we operate and manage commercial and entertainment centers prior to their sale;
|
|
·
|
Hotels - Hotel operation and management;
|
|
·
|
Medical Industries - (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential Projects - Initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India; and
|
|
·
|
Fashion Apparel - Distribution and marketing of fashion apparel and accessories in Israel.
|
Name of Project
|
Location
|
Title
|
PC Share %1
|
Approximate Land Area (m2)
|
Approximate Gross Lettable Area (m2)
|
Estimated Completion
|
Status
|
||||||||||||||
Lodz Plaza
|
Lodz, Poland
|
Perpetual Usufruct
|
100 | 50,000 | 35,000 | 2015 |
Planning and development stage
|
||||||||||||||
Csiki Plaza
|
Miercurea Ciuc, Romania
|
Ownership
|
100 | 33,000 | 16,000 | - |
Planning and development stage
|
||||||||||||||
Uj Udvar2
|
Budapest, Hungary
|
Ownership
|
35 | 8,700 | 16,000 | - |
Operating, currently working
on refurbishment plans
|
||||||||||||||
Timisoara Plaza
|
Timisoara, Romania
|
Ownership
|
100 | 32,000 | 36,000 | 2015 |
Planning and development stage
|
||||||||||||||
Kielce Plaza
|
Kielce, Poland
|
Perpetual Usufruct
|
100 | 30,000 | 33,000 | 2015-2016 |
Planning and development stage
|
||||||||||||||
Leszno Plaza
|
Leszno, Poland
|
Perpetual Usufruct
|
100 | 17,000 | 16,000 | 2016 |
Planning and development stage
|
||||||||||||||
Visnjicka Plaza
|
Belgrade, Serbia
|
Land use rights
|
100 | 30,000 | 40,000 | 2014-2015 |
Planning and development stage
|
||||||||||||||
Shumen Plaza
|
Shumen, Bulgaria
|
Ownership
|
100 | 17,000 | 20,000 | 2016 |
Planning and development stage
|
||||||||||||||
Slatina Plaza
|
Slatina, Romania
|
Ownership
|
100 | 20,000 | 17,000 | 2016 |
Planning and development stage
|
||||||||||||||
Constanta Plaza
|
Constanta, Romania
|
Ownership
|
100 | 26,000 | 18,000 | 2015 |
Planning and development stage
|
||||||||||||||
Hunedoara Plaza
|
Hunedoara, Romania
|
Ownership
|
100 | 41,000 | 13,000 | 2016 |
Planning and development stage
|
||||||||||||||
Targu Mures Plaza
|
Targu Mures, Romania
|
Ownership
|
100 | 31,000 | 30,000 | 2016 |
Planning and development stage
|
||||||||||||||
Pireas Helios Plaza
|
Athens, Greece
|
Ownership
|
100 | 15,000 | 26,000 | 2015 |
Planning and development stage
|
1
|
Directly or indirectly.
|
2
|
Uj Udvar is currently active and has an approximate GLA of 12,000 square meters and approximately 14,000 square meters of parking areas.
|
Country
|
Estimated cost of completion
|
Percentage Pre-leased *
|
||
Poland
|
€126.6 million (approximately $166.8 million)
|
-
|
||
Romania
|
€145 million (approximately $191 million)
|
-
|
||
Hungary
|
€18.4 million (approximately $24.2 million)
|
-
|
||
Serbia
|
€74.2 million (approximately $97.8 million)
|
-
|
||
Bulgaria
|
€26.3 million (approximately $34.7 million)
|
-
|
||
Greece
|
€68 million (approximately $89.6 million)
|
-
|
Name of Project
|
Location
|
Title
|
PC Share %
|
Approximate Land Area (m2)
|
Approximate Gross Lettable
Area (m2)
|
Estimated Completion
|
Status
|
||||||||||||||
The Dream Island
|
Budapest, Hungary
|
Ownership / land use rights
|
43.5 | 1 | 320,000 | 350,000 | 2, 3 | 2015-2017 |
Planning and development stage. An exclusive casino license has been awarded.
|
||||||||||||
Casa Radio
|
Bucharest, Romania
|
Leasing for 49 years
|
75 | 4 | 97,000 | 600,000 | 2, 5 | 2014-2017 |
Planning and development stage
|
||||||||||||
Iasi Plaza
|
Iasi, Romania
|
Ownership
|
100 | 46,500 | 58,000 | 2016 |
Planning and development stage
|
||||||||||||||
Belgrade Plaza
|
Belgrade, Serbia
|
Ownership
|
100 | 9,000 | 70,000 | 2 | 2015 |
Planning and development stage
|
1
|
Indirectly (PC has a 50% shareholding in the joint venture partnership with MKB Bank that has an 87% interest in the consortium which owns the project. The remaining interests are 10% held by a company controlled by the managing director of the consortium and 3% owned by minority shareholders).
|
2
|
GBA.
|
3
|
This project is expected to include approximately 2,300 hotel rooms in several hotels of different categories, a 3,500 seat convention center, a 1,500 seat opera house, a 3,500 seat multi-purpose theater, a marina with anchorage capacity for 300 vessels, a retail area with approximately 50,000 square meters of GLA including a prestigious ‘Designer avenue’, a Roman cultural museum, and parking facilities for approximately 5,500 vehicles, as well as a casino of 40,000 square meters. The project is currently in the planning phase.
|
4
|
Other investors in the project include the Government of Romania, which will procure that the project company is granted the necessary development and exploitation rights in relation to the site for a 49-year period in consideration for a 15% interest in the project and an additional developer which holds 10%.
|
5
|
The project will consist of a complex with a planned GBA of approximately 600,000 square meters (including parking), and will include a commercial and entertainment center of approximately GLA of 100,000 square meters, with a hypermarket of approximately 6,500 square meters, a hotel of 35,000 square meters (320 rooms), an apartment hotel of 18,000 square meters, a ferris wheel, a conference center of 14,000 square meters and 140,000 square meters of offices.
|
Country
|
Estimated cost of completion
|
Percentage pre-leased *
|
||
Hungary
|
€816.4 million (approximately $1,075.6 million)
|
-
|
||
Romania
|
€776.1 million (approximately $1,022.5 million)
|
-
|
||
Serbia
|
€87.9 million (approximately $115.8 million)
|
-
|
|
·
|
Brashov - PC owns a 25% share in an office development project known as the Primavera Tower Brasov with a planned GLA of approximately 10,800 square meters. It is anticipated that the project will be completed in 2016.
|
|
·
|
Ploiesti - PC owns a 25% share in an office development project known as the Primavera Tower Ploiest, with an expected GLA of approximately 10,500 square meters. It is anticipated that the project will be completed in 2015.
|
Country
|
Estimated cost of completion
|
Percentage pre-leased *
|
||
Hungary
|
€42 million (approximately $55 million)
|
-
|
||
Romania
|
€47 million (approximately $62 million)
|
-
|
||
India
|
€74 million (approximately $97 million)
|
-
|
Name and
Rate of Hotel
|
Title
|
Our Share
As of December 31, 2012
|
Approximate
Constructed Area
(square feet)
|
Total Rooms
and description
|
Average Occupancy
Rates During 2012 (%)
|
Additional
information
|
||||||
Radisson Blu Astrid Antwerp
Antwerp, Belgium
Four Star Deluxe
|
Freehold
|
100%
|
223,000
|
247 rooms including business class suites & 19 new luxury apartments
|
74,1%
|
Includes an oceanarium attraction, 18 conference rooms, a bar, a restaurant and a fully equipped health club with a pool
|
||||||
Radisson Blu Bucharest
Bucharest, Romania
Five Star Hotel and ApartHotel (formerly Centerville)
|
Freehold
|
77%
|
900,000
|
424 rooms suites, executive suites and one exclusive royal suite and 294 apartments in a level of 4 and 5 stars
|
74%
|
The complex of both hotels includes several restaurants, a spa and a world class health academy, casino, shopping area and supermarket services
|
||||||
Park Inn
Antwerp, Belgium
Three star boutique
|
Freehold
|
100%
|
32,250
|
59 rooms going from standard to junior suite with terrace
|
87,5%
|
Includes a restaurant, a lounge and a fitness room
|
Name of Project
|
Location
|
Title
|
Share %1
|
Approximate Land Area (square meters)
|
Approximate Gross Built
Area (square meters)
|
Estimated Completion
|
|||||||||||
Prague III *
|
Prague, Czech Republic
|
Ownership
|
100 | 46,500 | 61,600 | -2 | |||||||||||
Roztoky
|
Prague, Czech Republic
|
Ownership
|
100 | 39,000 | 14,000 | 2015 | |||||||||||
Łódź
|
Łódź, Poland
|
Ownership
|
100 | 33,500 | 80,000 | - | |||||||||||
Plaza BAS Joint Venture | Fountain Park | Bucharest, Romania | Ownership | 12.5 | 14,000 | 16,600 | 2015-2016 | ||||||||||
Acacia Park | Ploiest, Romania | Ownership | 25 | 12,500 | 32,000 | 2015-2016 | |||||||||||
Green Land | Ploiest, Romania | Ownership | 25 | 18,400 | 25,800 | 2017-2018 | |||||||||||
Poiana Brasov | Brasov, Romania | Ownership | 25 | 73,000 | 138,000 | 2016-2019 | |||||||||||
Pine Tree Glade | Brasov, Romania | Ownership | 25 | 28,300 | 40,000 | 2017-2018 |
|
_____________________
|
1
|
Represents share percentage owned by PC.
|
2
|
Currently operates as a logistics and commercial center and an office building with GLA of approximately 44,300 square meters.
|
|
·
|
With respect to the projects developed in Romania - €230 million (approximately $297 million);
|
|
·
|
With respect to the projects developed in Poland - €210 million (approximately $272 million); and
|
|
·
|
With respect to the projects developed in the Czech Republic - €130 million (approximately $168 million).
|
Name of Project
|
Location
|
Title
|
Share %
|
Approximate Land Area (square meters)
|
Approximate Gross Built
Area (square meters)
|
Estimated Project Phase Completion
|
||||||||||||||
Bangalore Project
|
Bangalore, Karnataka State, India
|
Freehold and Development Rights
|
1, 2, 3 |
667,600 at first phase (of which rights to 218,500 obtained so far) 4
|
310,000 | 2013-2020 | ||||||||||||||
Chennai
|
Chennai, Tamil Nadu State, India
|
Ownership
|
801, 2 |
337,500 (of which rights to 303,500 obtained so far)
|
230,0005 (for sale)
|
2013-2018 | ||||||||||||||
Kochi
|
Kochi, Kerala State, India
|
Freehold and
Development Rights
|
501, 2, 6 |
166,000
(of which rights to 52,600 obtained so far)
|
575,000 | - | 7 | |||||||||||||
Trivandrum
|
Trivandrum, Kerala State, India
|
Ownership
|
502,8 | 43,500 | 120,000 | - | 7 |
|
________________________________________________
|
1
|
For information regarding the EPI Agreement, a joint venture agreement signed with PC in respect to our India operations, see “ - joint venture with PC to Develop Mixed-Use Projects in India” above.
|
2
|
For information regarding the rights of Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, in the projects, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
3
|
Effective holding in the project is subject to certain conditions as described below under “- Bangalore, Karnataka State, India.”
|
4
|
The original scope of the project was reduced from approximately 440 acres to approximately 165 acres. The above data relates to the project as revised pursuant to a framework agreement dated July 22, 2010.
|
5
|
As EPI is currently operating to secure a joint development agreement with local developer(s) for the development of the project land, this approximate GBA reflects the currently negotiated transaction. Correspondingly, this figure is comprised of two elements - plotted development parcels for sale and built up villa.
|
6
|
For information regarding the allotment of our shares in the Kochi Project SPV, see “Kochi, Kerala State, India.
|
7
|
Project is currently in planning and development stage.
|
8
|
Represents holding owned by PC (PC owns 50%).
|
|
·
|
EPI will remain the holder of 100% of the equity and voting rights in the SPV;
|
|
·
|
the scope of the new Project will be decreased to approximately 165 acres instead of 440 acres (the "New Project");
|
|
·
|
the Partner undertook to complete the acquisitions of the additional land and/or the development rights therein in order to obtain the ownership and/or the development rights over the 165 acres;
|
|
·
|
the SPV and/or EPI will not be required to pay any additional amounts in respect of such land acquisitions or with respect to the Project and its development; and
|
|
·
|
the Project will be re-designed as an exclusive residential project.
|
2012
|
2011
|
2010
|
Convenience Translation in U.S. Dollars for
2012
|
|||||||||||||
Israel
|
152,470 | 183,552 | 171,275 | 40,848 | ||||||||||||
Western Europe
|
169,319 | 171,359 | 484,617 | 45,357 | ||||||||||||
Central and Eastern Europe
|
400,325 | 246,860 | 232,044 | 107,239 | ||||||||||||
Other and Allocations
|
12,216 | (14,871 | ) | (7,625 | ) | 3,269 | ||||||||||
Total Revenues
|
734,330 | 586,900 | 880,311 | 196,713 |
2012
|
2011
|
2010
|
Convenience Translation in U.S. Dollars for
2010
|
|||||||||||||
Commercial and Entertainment Centers
|
300,541 | 111,726 | 102,895 | 80,509 | ||||||||||||
Hotels
|
276,703 | 286,548 | 602,599 | 74,123 | ||||||||||||
Medical Companies*
|
286,031 | 53,324 | 33,631 | 76,622 | ||||||||||||
Residential Projects
|
1,622 | 3,544 | - | 434 | ||||||||||||
Fashion Apparel
|
152,470 | 183,552 | 174,817 | 40,844 | ||||||||||||
Other and Allocations*
|
(283,037 | ) | (51,794 | ) | (33,631 | ) | (75,819 | ) | ||||||||
Total
|
734,330 | 586,900 | 880,311 | 196,713 |
|
·
|
shopping centers which are not in close proximity and which do not draw their clientele from the same population areas are not considered competitive;
|
|
·
|
we believe that large retail centers (known as "power centers"), even if they compete with our centers directly merely by virtue of their proximity to our commercial and entertainment centers, are at a disadvantage because they do not offer the entertainment facilities that are offered at our commercial and entertainment centers, and which we consider to be a significant element in the attraction of our patrons. These power centers also lack a wide range of services and common areas; and
|
|
·
|
in the regional cities of our targeted countries, competitive activity is more limited. In these cities, we compete with traditional shopping outlets. These outlets lack the added benefit of the entertainment activities that our centers offer and, accordingly, we believe that they have difficulty competing with us.
|
NAME OF COMPANY
|
COUNTRY OF ORGANIZATION
|
DIRECT/INDIRECT OWNERSHIP PERCENTAGE
|
||
Plaza Centers N.V.
|
The Netherlands
|
62.5% (1)
|
||
Elscint Holdings & Investment N.V.
|
The Netherlands
|
100%
|
||
Elbit Medical Technologies Ltd.
|
Israel
|
90% (2)
|
||
Elbit Plaza India Real Estate Holdings Limited
|
Cyprus
|
50% (3)(4)
|
||
Elbit Fashion Ltd.
|
Israel
|
100%
|
||
Elbit Plaza USA II, L.P.
|
U.S.A.
|
50% (5)
|
___________________
|
(1)
|
Approximately 56.9% on a fully diluted basis.
|
(2)
|
Approximately 95.6% on a fully diluted basis.
|
(3)
|
We hold 47.5% of the shares in EPI directly, and an additional 47.5% through PC. For additional information as to the joint venture signed between us and PC regarding EPI, see “Item 4.B Business Overview - Residential Projects.”
|
(4)
|
For details as to the grant of 5% of EPI’s equity to Mr. Abraham (Rami) Goren, our former Executive Vice Chairman of the board of directors, see "Item 6.B. Directors, Senior Management and Employees - Compensation of Directors and Officers - Agreements with our Former Executive Vice Chairman."
|
(5)
|
We hold 50% in Elbit Plaza USA II, LLP directly, and an additional 50% through PC.
|
|
·
|
Commercial and Entertainment Centers - Initiation, construction and sale of commercial and entertainment centers and other mixed-use real property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India, primarily through PC. In certain circumstances and depending on market conditions, we operate and manage commercial and entertainment centers prior to their sale;
|
|
·
|
Hotels - Hotel operation and management;
|
|
·
|
Medical Industries - (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential Projects - Initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India; and
|
|
·
|
Fashion Apparel - Distribution and marketing of fashion apparel and accessories in Israel.
|
|
·
|
We filed the proposed plan of Arrangement with the Court under Section 350 of the Companies Law on May 8, 2013. For details regarding the terms and conditions of the Arrangement, as well as the Letter of Undertakings we entered into with the trustees of certain of our Notes on March 19, 2013, please see "Item 10.C – Additional Information – Material Contracts" below.
|
|
·
|
In February 2013 we announced that we would temporarily cease making all principal payments due under our Series A and Series B notes and all interest payments due under all of our publicly-traded Notes, and thereafter we announced that we would temporarily cease making all payments (principal and interest) due under all of our publicly-traded Notes. On May 19, 2013 we executed the Letter of Undertakings, which, amongst other things, includes a provision that we not make any further payments to our Note holders. In addition, for a discussion of each of the dispute between our controlling shareholder and the Bank, our dispute with Bank Leumi, the purposed class action lawsuits that have been filed against us and the request from the trustees of our Series B notes with the Court to liquidate the Company, please see "Item 4.A. History and Development of the Company – Recent Events".
|
|
·
|
As described below in " – 2012", in August and November 2012 we entered into two note structured transactions with two leading global financial institutions. On February 20, 2013, the other parties notified us of the early termination of the transactions as a result of the decline in the market price of our outstanding Notes and consequent failure to meet the loan-to-value covenants under the agreements governing the transactions.
|
|
·
|
As discussed above under "Item 4.B – Business Overview – Medical Companies", on December 6, 2012, InSightec completed its issuance of Series C preferred shares for an aggregate amount of $30.9 million, which included $27.6 million invested by GE and $3.9 million invested by other investors. According to the terms of the transaction, GE and we converted all the existing shareholders loans that had been granted to InSightec into InSightec's series B-1 preferred shares in accordance with the terms of those loans. The transaction reflected a post-money valuation of InSightec of approximately $105.9 million (or pre-money valuation of $75 million and following the conversion of the loans as described above). As part of the transaction GE and InSightec signed the Cooperation Agreement that regulates the commercial relationship between the parties, including, amongst other things, with respect to product exclusivity, cooperation with respect to the development and sale of the parties' complementary products, distribution, marketing and sales, intellectual property rights and licenses, sale terms and conditions, and similar items. Under the Cooperation Agreement, InSightec is prohibited from developing systems that would be compatible with MRI systems manufactured by companies other than GE. Following the closing of the transaction, Elbit Medical's holding in InSightec was reduced to approximately 48.2% (approximately 40.7% on a fully diluted basis). After completion of the transaction we no longer have the right to appoint the majority of InSightec's board members and therefore we ceased to consolidate InSightec's financial statements, and our investment in InSightec is presented based on the equity method.
|
|
·
|
In November 2012, PC's board of directors approved the extension of the repurchase of its series A through B Notes in an amount of up to NIS 750 million (approximately $201 million), to be made until December 31, 2014. During 2012, PC purchased a total of NIS 271 million par value of its notes (approximately $73 million), for a total consideration of NIS 247 million (approximately $66 million).
|
|
·
|
In August 2012 we entered into a NIS 75 million (approximately $20 million) note structured transaction with a certain financial institution, pursuant to which we purchased a NIS denominated zero-coupon credit linked note due to mature on October 2, 2013 (the “CLN”) from the other party. The CLN referenced a portfolio of our notes (having a market value of NIS 75 million). The note portfolio was purchased by us under our note repurchase program that was announced on May 23, 2011 and in the framework of the transaction we sold the note portfolio to the other party. In consideration, the other party paid us the market value of the note portfolio and arranged for the issuance of the CLN at an issue price of NIS 37.5 million (approximately $10 million).
|
|
·
|
In June 2012 EPN Group LLC ("EPN Group") sold 47 of the shopping centers it held to BRE DDR Retail Holdings LLC, a joint venture between Blackstone Real Estate Partners VII L.P. and/or its affiliates and DDR Corp. (formerly known as Developers Diversified Realty Corporation) and/or its affiliates, for a purchase price of $1.43 billion. The total proceeds from the transaction, including cash and other net working capital items less property level financing which was repaid by EPN Group or assumed by the buyer at the closing (in the amount of approximately $928 million), amounted to approximately $530 million. The remaining two shopping centers were sold in July 2012 for $41.0 million.
|
|
·
|
On April 5, 2012, Elbit USA LLC (Elbit USA") and Eastgate Property LLC ("Eastgate") amended the warrant granted in connection with the $30 million term loan agreement dated September 21, 2011, with effect as of March 22, 2012, pursuant to which we agreed to cancel the proposed increase in the number of shares issuable under the warrant on and after such date from 3.3% of our outstanding shares at the date of exercise to 9.9% of our outstanding shares at the date of exercise and to reduce the exercise price from $3.00 per share to zero. The amendment also contains appropriate modifications to the adjustment provisions of the warrant as a result of the foregoing changes.
|
|
·
|
In March 2012, one of our wholly owned indirect subsidiaries entered into a share purchase agreement with PPHE for the sale of our holdings in certain subsidiaries which owned a 50% interest in the following hotels in the Netherlands: the Park Plaza Victoria Amsterdam Hotel, the Park Plaza Utrecht Hotel, the arthotel Amsterdam and the Park Plaza Airport Hotel. These hotels were jointly owned by us and PPHE and were managed by PPHE. The transaction reflected an asset value of €169 million (approximately $219 million) for all four hotels. The total net consideration payable to us was €26.5 million (approximately $34.5 million). In addition, approximately €58 million (approximately $75 million) of our subsidiaries’ share (50%) of banks loans were assumed by PPHE by virtue of the purchase of those subsidiaries and were eliminated from our consolidated balance sheet. The consideration was paid to us in May 2012 as follows: (i) €23 million (approximately $30 million) in cash; (ii) 700,000 ordinary shares of PPHE, with a market price of approximately €2.0 million (approximately $2.5 million), based on the quotation of such shares’ price on the London Stock Exchange as of March 30, 2012; and (iii) an additional payment in the aggregate amount of up €1.5 million (approximately $2.0 million) that shall be made on the fourth anniversary of the Transfer Date and shall be subject to certain adjustments, based on the PPHE shares’ market price, as set forth in the agreement. The total profit generated from the sale of the hotels amounted to approximately NIS 188 million ($50 million), out of which we recognized NIS 134 million ($36 million) in the shareholders equity due to the application of the revaluation model described above and NIS 54 million ($14 million) in the income statement.
|
|
·
|
In April 2012 we completed the sale of all our shares in Elbit Trade and all of its interests in GB Brands, which is the franchisee of the GAP and Banana Republic brand in Israel, to Gottex. The purchase price paid by Gottex under the agreement was NIS 25 million (approximately $7 million), plus the agreed value of the GAP inventory as of the closing date and adjustments based on the agreed value of the working capital attributed to the GAP activity as of the closing date. We recorded a gain in the amount of NIS 9.4 million (approximately $3 million).
|
|
·
|
In March 2012, PC opened the Kragujevac Plaza in Kragujevac, Serbia, the fourth largest city in Serbia and the capital of the Sumadjia Region in central Serbia. This commercial and entertainment center comprises 22,000 square meters of gross lettable area spread over two floors with approximately 700 parking spaces. The center includes a six screen cinema, the Arena Fun Factory entertainment center and Circus Playground, as well as over 95 shops with international and local brands.
|
|
·
|
In March, 2012, PC opened its first commercial center in India, the Koregaon Park Plaza in Pune, the second largest city in the state of Maharashtra. This commercial center comprises 41,500 square meters of gross lettable area spread over two and a half floors with approximately 930 car parking spaces and 930 two-wheeler slots, and includes a seven screen PVR cinema, the blu-O bowling and Timezone entertainment center as well as over 120 shops with international and local brands.
|
|
·
|
On February 23, 2012, InSightec and InSightec’s wholly owned subsidiary concluded a series of agreements with GEHC pursuant to which GEHC will provide financing to InSightec in the form of convertible notes up to a total of $13.75 million, bearing interest at a rate of 6% per annum or a rate equivalent to the interest applicable to the financing provided by us and Elbit Medical. The convertible notes are due and payable by October 1, 2016, and will be convertible into Series B-1 Preferred Shares of InSightec. In addition, we and Elbit Medical entered into a series of agreements with InSightec and GEHC pursuant to which, among other things, the financing granted to InSightec by us and Elbit Medical during 2010 and 2011 was amended to provide similar loan terms and security mechanisms as set forth in the funding agreement, so that Elbit Medical and us will receive convertible notes convertible on the same terms and up to the same amounts as the GEHC notes. The loans and convertible notes issued to GEHC and Elbit Medical and the note that will be issued to us will be secured, pari passu, by floating charges over the assets of InSightec and its wholly owned subsidiary.
|
|
·
|
In May 2011, PC's board of directors approved the repurchase of up to NIS 150 million of its series A through B Notes, to be made from time to time in the open market. During 2011, PC purchased an additional total of NIS 168 million par value of its notes, for a total consideration of NIS 152 million.
|
|
·
|
In November 2011, PC opened the Torun Plaza in Torun, Poland. This commercial and entertainment center comprises 40,000 square meters of gross lettable area spread over two floors with approximately 1,100 parking spaces. The center includes an eight screen cinema, fantasy park entertainment center as well as over 120 shops with international and local brands.
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·
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In October 2011, our 77% held subsidiary, S.C. Bucuresti Turism S.A ("BUTU") completed a refinancing of its five star Radisson Blu Hotel located in Bucharest, Romania. According to the facilities agreement, a leading international European bank granted BUTU a loan of up to €71.5 million. The loan could be drawn down in two tranches, with Tranche A in the amount of approximately €62.5 million having been drawn down on September 29, 2011, and Tranche B in the amount of approximately €9.0 million to be drawn down between December 31, 2012 and March 31, 2013, subject to the satisfaction of certain conditions as stipulated in the facilities agreement; we did not draw down the amounts available under Tranche B. The proceeds of the loan shall be used, inter alia, to repay BUTU's current outstanding bank facility and to repay to us our shareholder loans in the amount of approximately €25 million.
|
|
·
|
On September 22, 2011, PC undertook that it would not make any further distributions during 2011 other than a distribution of €30 million that was made on September 23, 2011, pursuant to an agreement entered into between PC and its Series A and Series B noteholders. Furthermore, PC undertook in the agreement that distributions in the years 2012 and 2013 will be subject to the following conditions:
|
|
o
|
any distribution of dividends (including a repurchase of shares that is not at an attractive price to PC) will not exceed €30 million;
|
|
o
|
any distribution of dividends will be derived only from the net cash flow derived from the realization of assets at a rate which will not exceed 50% of the cash flow from the realization of the foregoing assets;
|
|
o
|
if a distribution is made and the notes meet certain agreed upon average yield rates, PC will maintain certain reserve amounts secured in favor of the bondholders which may be used to repurchase or repay the notes; and
|
|
o
|
if a distribution is made and the notes meet certain agreed upon average yield rates, PC will be entitled to make distributions between €30 million and €50 million and it will maintain an amount equal to the distribution amount exceeding €30 million as a reserve secured in favor of the bondholders which may be used to repurchase or repay the notes.
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|
·
|
On September 21, 2011, our indirect subsidiary, Elbit USA entered into a secured term loan agreement (the “Term Loan Agreement”) with Eastgate for a term loan in the amount of $30 million (the "Term Loan"). As part of and in connection with the Term Loan, we granted to Eastgate a warrant to purchase our ordinary shares at an exercise price of $3.00 per share payable in cash, in exchange for the cancellation of debt or by forfeiting shares having a market value equal to the exercise price (i.e., "cashless exercise"), during a two-year period commencing on March 31, 2012. It was further agreed that if the Term Loan is repaid by March 22, 2012, six months from the closing, the warrant would entitle Eastgate to purchase up to 3.3% of our outstanding shares at the date of exercise. Otherwise, the warrant would entitle Eastgate to purchase up to 9.9% of our outstanding shares at the date of exercise. The exercise price and/or number of shares issuable upon exercise of the warrant are subject to adjustment for certain corporate events, transactions and dilutive issuances of securities. On September 22, 2011, we filed a prospectus supplement with the SEC under our shelf registration statement dated March 14, 2011, to register the warrant and up to 3,000,000 ordinary shares which may be issuable upon the exercise of the warrant. The terms and conditions of the warrant and the exercise thereof are subject to amendment under the Arrangement; for more information, please see "Item 10.C – Material Contracts – the Arrangement" below.
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|
·
|
On September 19, 2011, EDT distributed an interim dividend payment of $26 million. Elbit Plaza USA, L.P. ("Elbit Plaza USA") received a total distribution amount of $11.8 million. Each of ours and PC’s share in such distribution is approximately $5.9 million.
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|
·
|
On September 23, 2011, PC paid an interim cash dividend payment of €30 million to its shareholders, of which we received €18.7 million out of which €8.7 million was used by us to serve our debt to an Israeli bank under a loan agreement dated March 2011 pursuant to which we pledged 29% of PC's outstanding shares.
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|
·
|
On July 14, 2011, we concluded the off-market takeover bid made by EPN EDT Holdings II, LLC ("EPN Holdings") that we had commenced in March 2011, for all of the units in EDT not already held by EPN Holdings and its affiliates for the total consideration of $242 million. As a result of the purchases of EDT’s units during the offer period, EPN Holdings and its affiliates increased their interest in EDT from approximately 47.8% to approximately 96.4%. In August 2011 EPN Holdings completed the compulsory acquisition of the remaining EDT units and the EPN Group became the holder of 100% of the outstanding units of EDT, following which EDT was removed from the official list of the Sydney Stock Exchange and was voluntarily liquidated (while transferring the us REITs it held to the EPN Fund).
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|
·
|
In May 2011, our board of directors approved the repurchase of up to NIS 150 million of our series A through G Notes, to be made from time to time in the open market. During 2011, we purchased NIS 67.7 million par value of our notes for an amount of approximately NIS 53 million.
|
|
·
|
In March 2011, we entered into a new financing agreement (subsequently amended) with an Israeli bank in the amount of $70 million, replacing the previous financing agreement.
|
|
·
|
In March 2011, we issued additional unsecured non-convertible Series D Notes to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 96 million for gross proceeds of approximately NIS 108 million.
|
|
·
|
In January 2011, PC issued additional Series A and B Notes for an aggregate consideration of approximately NIS 300 million (approximately $79 million).
|
|
·
|
On December 31, 2010, we sold to PPHE all of our holdings in three companies that own three hotels in London, England, for a total consideration of £21 million, representing a total estimated asset value for the hotels of £230 million. The consideration was paid in a combination of loans, an issuance of one million ordinary shares of PPHE and a possible additional payment that is subject to adjustments. Prior to this transaction, these hotels were jointly owned by us and PPHE and were managed by PPHE. For additional information, see “Item 4.B. Business Overview – Recent Acquisitions and Dispositions of Hotels."
|
|
·
|
On December 29, 2010, EPN Management signed an agreement to purchase seven retail shopping centers located in the states of Georgia, Oregon and Florida from certain affiliates of Charter Hall Retail REIT. Following the signing of several amendments, EPN acquired one of the assets located in Atlanta, Georgia (Roswell Crossing) for a purchase price of approximately $21.5 million and assumed a bank loan of approximately $14 million.
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|
·
|
On November 29, 2010, we completed a refinancing of three of our jointly controlled hotels in London - the Park Plaza Riverbank, the Park Plaza Victoria and the Park Plaza Sherlock Holmes. The refinancing involved 5-year term facilities totaling £165 million with Aareal Bank AG, maturing in November 2015. The hotels were previously financed by a £195 million facility (with £181.9 million outstanding) from Goldman Sachs International, which was due in March 2011. In addition to the new facilities, PPHE and us provided an equity injection of £16.6 million of which £7.7 million was provided by us, in order to enable the borrowers to repay the balance of the amount that was outstanding to Goldman Sachs. PPHE and we severally guaranteed certain of the borrowers’ obligations, plus interest in a total amount of £25.8 million, of which our share amounts to £11.9 million. The facilities are non-recourse to us or any other company affiliated to us, other than the borrowers and their subsidiaries. For details regarding the sale of these hotels to PPHE at the end of 2010, see above.
|
|
·
|
On November 24, 2010, we closed a transaction to restructure our holdings in the medical companies InSightec and Gamida under Elbit Medical. In consideration for our shares of InSightec representing 65.9% of InSightec's outstanding share capital and our shares of Gamida representing 31.6% of Gamida's outstanding share capital at that time, we were issued shares of Elbit Medical representing a 90% interest in Elbit Medical and were granted options at zero exercise price to acquire shares of Elbit Medical which together with the shares issued represented shareholding of 97.9% in Elbit Medical, on a fully diluted basis. On December 8, 2010, Elbit Medical issued shares in a private placement in the aggregate amount of NIS 19 million, including a two year option to invest an additional aggregate amount of NIS 19 million, all at a pre-money valuation of Elbit Medical of NIS 800 million. As of the date of this annual report, we hold 95.63% of Elbit Medical's share capital (on a fully diluted basis). For additional information, see “Item 4.B. Business Overview – Medical Companies.”
|
|
·
|
On November 24, 2010, we completed a private placement of NIS 35 million principal amount of our Series D Notes as an expansion to the existing Series D Notes traded on the TASE.
|
|
·
|
In November 2010, PC announced the completion of the first tranche of a note offering to Polish institutional investors. PC raised an amount of PLN 60 million from the note offering with a three year maturity bearing interest of six month Polish WIBOR plus a margin of 4.5%.
|
|
·
|
On July 22, 2010, EPI entered into a new framework agreement with respect to the Bangalore Project, due to changes in the market conditions and to new commercial understandings between EPI and the third party seller of the project, pertaining, inter alia, to the joint development of the project and its magnitude and financing, the commercial relationships and working methods between the parties and the distribution mechanism of the revenues from the project. For additional information, see “Item 4.B. Business Overview – Residential Projects.”
|
|
·
|
In August 2010, we sold 15 million ordinary shares of PC to a Polish institutional investor, for an aggregate consideration of approximately NIS 98 million. Following this transaction, we owned approximately 62.36% of PC's outstanding shares.
|
|
·
|
In 2010 we issued additional unsecured non-convertible Series G Notes to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 461.5 million for gross proceeds of approximately NIS 459 million.
|
|
·
|
In June 2010, EPN Real Estate Fund L.P. ("EPN Fund") completed an investment of approximately $116 million in EDT, a trust traded on the Australian Stock Exchange. Following the completion of the transaction, EPN Fund was EDT's largest unit holder, holding an approximate 48% ownership interest in EDT.
|
|
·
|
In June 2010, EPN Fund raised $31 million in capital commitments from Menora and certain of its affiliates.
|
|
·
|
In April 2010, we, together with PPHE, acquired the Holiday Inn Schiphol Hotel located near the Amsterdam Schiphol Airport, for a purchase price of €30 million. The hotel operates under the "Park Plaza" brand name.
|
|
·
|
On February 9, 2010, Elbit Plaza USA entered into the framework and co-investment agreement with Eastgate.
|
|
·
|
Between January and March 2010, PC issued additional unsecured non-convertible Series B Notes to investors in Israel in an aggregate principal amount of approximately NIS 308 million for gross proceeds of approximately NIS 330 million.
|
|
·
|
During 2010 we repurchased 588,910 of our ordinary shares, for a total aggregate amount of NIS 30 million.
|
|
·
|
During 2010 we opened four GAP stores in Israel. Our aggregate investment in such stores totaled approximately NIS 21 million.
|
|
·
|
In 2010 PC completed the development of two shopping centers, Zgorzelec Plaza and Suwalki Plaza, both in Poland, and opened them to the public.
|
|
·
|
Derivative transactions with respect to PC's swap transactions: mainly the interest rate yield curves of the EURO.
|
|
·
|
With respect to the PPHE call option: the expected volatility of PPHE and our shares and the probability and the term for a "transaction" (as defined in the agreement) to occur.
|
|
·
|
Share based payment arrangements: the share price in respect of option plans adopted by our private investees which has no quoted market price; the expected stock price volatility over the term of the plan; and actual and projected employee stock option exercise behaviors.
|
|
·
|
Assuming a transaction/price between willing buyer and a willing seller, without duress and an appropriate time to market the property to maximize price;
|
|
·
|
Capitalization rates used to value the asset, market rental levels and lease expirations;
|
|
·
|
Average room rate of the hotels;
|
|
·
|
Discounted cash flow models;
|
|
·
|
Available sales evidence; and
|
|
·
|
Comparisons to valuation professionals performing valuation assignments across the market.
|
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
|
Convenience Translation
|
|||||||||||||||
(in NIS thousands)
|
(in $ thousands)
|
|||||||||||||||
(except for per share data)
|
||||||||||||||||
|
||||||||||||||||
Income revenues and gains
|
||||||||||||||||
Revenue
|
||||||||||||||||
Revenue from commercial centers
|
127,109 | 3,525 | 4,345 | 34,050 | ||||||||||||
Revenue from hotels operations and management
|
222,828 | 286,548 | 403,822 | 59,692 | ||||||||||||
Revenue from fashion merchandise and other
|
145,996 | 185,082 | 174,817 | 39,109 | ||||||||||||
Total revenues
|
495,933 | 475,155 | 582,984 | 132,851 | ||||||||||||
Gains and other
|
||||||||||||||||
Rental income from commercial centers
|
175,153 | 111,745 | 98,550 | 46,920 | ||||||||||||
Gain from changes of shareholding in investees
|
9,369 | - | - | 2,510 | ||||||||||||
Gain from sale of real estate assets
|
53,875 | - | 198,777 | 14,432 | ||||||||||||
Total income revenues and gains
|
734,330 | 586,900 | 880,311 | 196,713 | ||||||||||||
Expenses and losses
|
||||||||||||||||
Commercial centers
|
272,810 | 159,626 | 156,745 | 73,081 | ||||||||||||
Hotels operations and management
|
202,158 | 240,784 | 341,291 | 54,154 | ||||||||||||
Cost of fashion merchandise and other
|
155,772 | 211,743 | 197,574 | 41,728 | ||||||||||||
General and administrative expenses
|
48,886 | 61,857 | 65,292 | 13,096 | ||||||||||||
Share in losses of associates, net
|
8,726 | 7,568 | 8,275 | 2,337 | ||||||||||||
Financial expenses
|
175,778 | 164,001 | 316,706 | 47,088 | ||||||||||||
Financial income
|
(31,083 | ) | (65,571 | ) | (40,927 | ) | (8,327 | ) | ||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
50,229 | (275,537 | ) | 53,016 | 13,455 | |||||||||||
Write-down, charges and other expenses, net
|
411,625 | 290,276 | 83,660 | 110,267 | ||||||||||||
1,294,901 | 794,747 | 1,181,632 | 346,879 | |||||||||||||
Loss before income taxes
|
(560,571 | ) | (207,847 | ) | (301,321 | ) | (150,166 | ) | ||||||||
Income tax expenses (tax benefit)
|
(10,248 | ) | 63,283 | 3,992 | (2,745 | ) | ||||||||||
Loss from continuing operations
|
(550,323 | ) | (271,130 | ) | (305,313 | ) | (147,421 | ) | ||||||||
Profit from discontinued operations, net
|
94,823 | 24,101 | 378,838 | 25,401 | ||||||||||||
Profit (loss) for the year
|
(455,500 | ) | (247,029 | ) | 73,525 | (122,020 | ) |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation
|
||||||||||||||||
(in NIS thousands)
|
(in $ thousands)
|
|||||||||||||||
(except for per share data)
|
||||||||||||||||
Attributable to:
|
||||||||||||||||
Equity holders of the Company
|
(293,590 | ) | (264,919 | ) | 61,998 | (78,647 | ) | |||||||||
Non-controlling interest
|
(161,910 | ) | 17,890 | 11,527 | (43,373 | ) | ||||||||||
(455,500 | ) | (247,029 | ) | 73,525 | (122,020 | ) | ||||||||||
Loss from continuing operations
|
||||||||||||||||
Equity holders of the Company
|
(391,947 | ) | (284,610 | ) | (308,924 | ) | (104,995 | ) | ||||||||
Non-controlling interest
|
(158,376 | ) | 13,480 | 3,611 | (42,426 | ) | ||||||||||
(550,323 | ) | (271,130 | ) | (305,313 | ) | (147,421 | ) | |||||||||
Profit from discontinued operation, net
|
||||||||||||||||
Equity holders of the Company
|
98,357 | 19,691 | 370,922 | 26,348 | ||||||||||||
Non-controlling interest
|
(3,534 | ) | 4,410 | 7,916 | (947 | ) | ||||||||||
94,823 | 24,101 | 378,838 | 25,401 | |||||||||||||
Earnings (loss) per share
|
||||||||||||||||
Basic earnings per share:
|
||||||||||||||||
From continuing operation
|
(15.75 | ) | (11.44 | ) | (12.21 | ) | (4.22 | ) | ||||||||
From discontinued operations
|
3.95 | 0.79 | 14.67 | 1.06 | ||||||||||||
(11.80 | ) | (10.65 | ) | 2.45 | (3.16 | ) | ||||||||||
Diluted earnings per share:
|
||||||||||||||||
From continuing operation
|
(15.75 | ) | (11.44 | ) | (12.21 | ) | (4.22 | ) | ||||||||
From discontinued operations
|
3.95 | 0.79 | 14.41 | 1.06 | ||||||||||||
(11.80 | ) | (10.65 | ) | 2.13 | (3.16 | ) |
(i)
|
Revenues from sale of commercial and entertainment centers increased to NIS 127 million ($34 million) in 2012 compared to NIS 4 million in 2011. In 2012 we recognized revenues of NIS 30 million ($8 million) attributable to the sale of office space in India, and PC consummated the sale of land in Bulgaria and Hungary which generated revenues of NIS 97 million ($26 million).
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 223 million ($60 million) in 2012 compared to NIS 286 million in 2011. The decrease was mainly attributable to the sale of the four Dutch hotels in March 2012. This decrease was partially set off by an increase in the revenues from our hotels in the Belgium and Romania. The average occupancy rate in these hotels was approximately 72% in 2011 and 75% in 2012, but the average room rate decreased from €92 in 2011 to €91 in 2012 for an average number of rooms of 1,026 in 2011 and 2012.
|
|
(iii)
|
Revenues from the sale of fashion retail and other decreased to NIS 146 million ($39 million) in 2012 compared to NIS 185 million in 2011. The decrease was mainly attributable to the sale of the retail activity of GAP in April 2012, partially offset by the increase in the revenues attributable to the activity of Mango. The same store revenues in Mango amounted to NIS 126 million in 2012 compared to NIS 106 million in 2011.
|
|
(iv)
|
Rental income from commercial centers increased to NIS 175 million ($47 million) in 2012 compared to NIS 112 million in 2011 as a result of the operation of seven centers in 2012, of which six operated throughout the year, compared to the operation of five centers in 2011, four of which operated throughout the year. The increase in revenues was also due to the increase in the average occupancy rates from 78%-90% in 2011 to 80%-98% in 2012. PC's business model in respect of its commercial centers is to develop, rent and then sell the properties to third parties. Therefore, rental income from commercial centers represents only the lease income from the commercial and may not be sustainable in the future once PC will sell the commercial centers as part of its business cycle.
|
|
(v)
|
Gain from a sale of real estate assets increased to NIS 54 million ($14 million) compare to nil in 2011 attributable to the sale of four Dutch hotels in March 2012.
|
|
(vi)
|
Gain from changes of shareholding in investee increased to NIS 9 million ($2.5 million) compared to nil in 2011 attributable to the sale of the retail activity of GAP in April 2012.
|
|
(I)
|
Expenses of commercial and entertainment centers increased to NIS 273 million ($73 million) in 2012 compared to NIS 160 million in 2011 as a result of the operation of seven commercial centers in 2012 compared to the operation of five commercial centers in 2011 discussed above. In addition, expenses in 2012 includes NIS 19 million ($5 million) attributable to the sale of office space in India and NIS 90 million ($24 million) attributable to the sale of plots of land in Bulgaria and Hungary.
|
|
(II)
|
Cost of hotel operations and management decreased to NIS 202 million ($54 million) in 2012 compared to NIS 241 million in 2011. The decrease was mainly attributable to the sale of the four Dutch hotels in March 2012 discussed above.
|
|
(III)
|
Cost of fashion apparel and other decreased to NIS 156 million ($42 million) in 2012 compared to NIS 211 million in 2011. The decrease resulted from the sale of the retail activity of GAP in April 2012.
|
|
(IV)
|
General and administrative expenses decreased to NIS 49 million ($13 million) in 2012 compared to NIS 62 million in 2011. General and administrative expenses less non-cash expenses amounted to NIS 35 million ($9 million) in 2012 compared to NIS 37 million in 2011.
|
|
(V)
|
Financial expenses increased to NIS 176 million ($47 million) in 2012 compared to NIS 164 million in 2011. Such amount includes (a) interest and CPI-linked borrowings in the amount of NIS 394 million ($106 million) in 2012 compared to NIS 464 million in 2011; (b) loss from foreign currency translation differences and other in the amount of NIS 29 million (approximately $8 million) in 2012 compared to a gain in the amount of NIS 38 million in 2011; (c) gain from buy-back of notes in the amount of NIS 113 million ($30 million) in 2012 compared to NIS 64 million in 2011; and (d) financial expenses capitalized to qualified assets in the amount of NIS 134 million (approximately $36 million) in 2012 compared to NIS 198 million in 2011.
|
|
(vi)
|
Financial income decreased to NIS 31 million ($8 million) in 2012 compared to NIS 66 million in 2011. Such decrease was attributable mainly to a decrease in interest on deposit and receivable.
|
|
(vii)
|
Losses from changes in fair value of financial instruments amounted to NIS 50 million ($13 million) in 2012 compared to a gain of NIS 276 million in 2011. This decrease was mainly attributable to the following:
|
|
(i)
|
Loss from changes in fair value of financial instruments (measured at fair value through profit and loss (mainly PC's notes)) amounted to NIS 98 million ($13 million) in 2012 compared to a gain of NIS 353 million in 2011; and
|
|
(ii)
|
Gain from change in fair value of derivatives, embedded derivative and marketable securities (mainly swap transactions) executed by PC in respect of its notes amounted to NIS 48 million ($13 million) in 2012 compared to loss in the amount of NIS 77 million in 2011.
|
|
(viii)
|
Write-down, charges and other expenses, net, increased to NIS 411 million ($110 million) in 2012 compared to NIS 290 million in 2011. The increase was attributable to the write-down in PC's trading property in Eastern Europe in the amount of NIS 406 million ($109 million) in 2012 compared to NIS 371 million in 2011.
|
Segment
|
Hotels
|
Commer-cial Centers
|
Medical Industries*
|
Fashion Apparel
|
Residen-tial
|
Other and Allocations*
|
Total
|
|||||||||||||||||||||
Revenues
|
223 | 125 | 69 | 143 | 2 | (66 | ) | 496 | ||||||||||||||||||||
Rental income from commercial centers
|
- | 175 | - | - | - | - | 175 | |||||||||||||||||||||
Gain from sale of real estate assets
|
54 | - | - | 9 | - | - | 63 | |||||||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | 217 | - | - | (217 | ) | - | ||||||||||||||||||||
Total revenues and gains
|
277 | 300 | 286 | 152 | 2 | (283 | ) | 734 | ||||||||||||||||||||
Costs and expenses
|
202 | 273 | 70 | 155 | 10 | (70 | ) | 640 | ||||||||||||||||||||
Research and development expenses
|
- | - | 41 | - | - | (41 | ) | - | ||||||||||||||||||||
Other expenses (income), net
|
(6 | ) | 405 | - | - | - | 2 | 401 | ||||||||||||||||||||
Segment profit (loss)
|
81 | (378 | ) | 175 | (3 | ) | (8 | ) | (174 | ) | (307 | ) | ||||||||||||||||
Financial expenses (income), net
|
36 | 58 | - | 2 | - | - | 96 | |||||||||||||||||||||
Share in losses of associates, net
|
- | (1 | ) | (8 | ) | - | - | - | (9 | ) | ||||||||||||||||||
Unallocated general and administrative expenses
|
(49 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(80 | ) | ||||||||||||||||||||||||||
Financial income
|
31 | |||||||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
(50 | ) | ||||||||||||||||||||||||||
Loss before income taxes
|
(560 | ) | ||||||||||||||||||||||||||
Income taxes
|
10 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(550 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
95 | |||||||||||||||||||||||||||
Loss for the year
|
(455 | ) |
|
(i)
|
Revenues from sale of commercial and entertainment centers amounted to NIS 4 million in 2011 and in 2010.
|
|
(ii)
|
Revenues from hotel operations and management decreased to NIS 287 million in 2011 compared to NIS 404 million in 2010. The decrease was mainly attributable to the sale of the hotels in London in December 2010 as aforementioned. This decrease is partially set off by an increase in the revenues from our hotels in the Netherlands, Belgium and Romania. The average occupancy rate in these hotels was 73% in 2010 and 2011, but the average room rate increased from €95 in 2010 to €100 in 2011 for an average number of rooms of 1,678 in 2010 and 1,750 in 2011.
|
|
(iii)
|
Revenues from the sale of fashion retail and other increased to NIS 185 million in 2011 compared to NIS 175 million in 2010. The increase was mainly attributable to the operation of four additional GAP stores, which opened during 2010.
|
|
(vii)
|
Rental income from commercial centers increased to NIS 112 million in 2011 compared to NIS 98 million in 2010, as a result of the operation of five commercial centers in 2011, four of which operated throughout the year, compared to the operation of four commercial centers in 2010, two of which operated throughout the year. The increase in revenues was also due to the increase in the average occupancy rates from 52%-84% in 2010 to 78%-90% in 2011. PC's business model in respect of its commercial centers is to develop, rent and then sell the properties to third parties. Therefore, rental income from commercial centers represents only the lease income from the commercial and may not be sustainable in the future once PC will sell the commercial centers as part of its business cycle.
|
|
(iv)
|
Gain from a sale of real estate assets decreased to nil compare to NIS 199 million in 2010, as a result of the sale of three hotels in London, U.K. in December 2010. Offset by gain in 2011 from change of shareholding in investee in the U.S. operation in the amount of NIS 15 million compared to nil in 2010.
|
|
(i)
|
Expenses of commercial centers increased to NIS 160 million in 2011 compared to NIS 157 million in 2010.
|
|
(ii)
|
Cost of hotel operations and management decreased to NIS 241 million in 2011 compared to NIS 341 million in 2010. The decrease was mainly attributable to the sale of the hotels in London in December 2010 as aforementioned.
|
|
(iii)
|
Cost of fashion retail and other increased to NIS 212 million in 2011 compared to NIS 198 million in 2010. The increase resulted from the increase in the revenues as aforementioned.
|
|
(iv)
|
General and administrative expenses decreased to NIS 62 million in 2011 compared to NIS 65 million in 2010. General and administrative expenses offset non-cash expenses amounted to NIS 37 million in 2011 compared to NIS 49 million in 2010. The decrease in cash expenses was mainly attributable to increasing efficiency during 2011 in payroll expenses and other expenses in the amount of NIS 12 million.
|
|
(v)
|
Financial expenses, net decreased to NIS 164 million in 2011 compared to NIS 317 million in 2010. Such amount includes (a) interest and CPI linked borrowings in the amount of NIS 484 million compared to NIS 418 million in 2010; (b) gain from buy back of notes in the amount of NIS 64 million in 2011 (there were no note buy backs in 2010); offset by financial expenses capitalized to qualified assets in the amount of NIS 198 million in 2011 compared to NIS 164 million in 2010. The increase in interest and CPI linked borrowings in the amount of NIS 484 million in 2011 compared to NIS 418 million in 2010 is mainly attributable to: (i) an increase in bank loans as a result of progressing in the construction of new commercial centers offset by a decrease of loans attributable to our hotel operations as a result of selling the London hotels in December 2010, (ii) a net increase of NIS 28 million in interest expenses as a result of an increase in the principal amount of our and PC's notes issued during 2011; and (iii) an increase of NIS 22 million attributable to an increase in the Israeli consumer price index to which our and part of PC's notes are linked (2.53% in 2011 compared to 2.28% in 2010).
|
|
(vi)
|
Financial income increased to NIS 66 million ($17 million) in 2011 compared to NIS 41 million in 2010. Such increase was attributable mainly to decrease in exchange rate differences which in 2010 amounted to a loss of NIS 18 million compared to a gain of NIS 1 million in 2011. The loss in 2010 is mainly attributable to our deposits in Euro and U.S. dollars which decreased as a result of the devaluation of the Euro and the U.S. dollar against the NISS.
|
|
(vii)
|
Income from changes in fair value of financial instruments amounted to NIS 276 million in 2011 compared to loss of NIS 53 million in 2010. This increase was mainly attributable to the following:
|
|
(i)
|
Gain from changes in fair value of financial instruments (measured at fair value through profit and loss (mainly PC's notes)) amounted to NIS 356 million in 2011 compared to a loss of NIS 234 million in 2010; and
|
|
(ii)
|
Loss from change in fair value of derivatives and embedded derivative (mainly swap transactions) executed by PC in respect of its notes amounted to NIS 63 million in 2011 compared to gain in the amount of NIS 165 million in 2010.
|
|
(viii)
|
Impairment and other expenses, net, increased to NIS 290 million in 2011 compared to NIS 84 million in 2010. The increase was attributable to the impairment in PC's trading property in Eastern Europe in the amount of NIS 283 million in 2011 compared to NIS 44 million in 2010.
|
Segment
|
Hotels
|
Commer-cial Centers
|
Medical Industries*
|
Fashion Apparel
|
Residen-tial
|
Other and Allocations*
|
Total
|
|||||||||||||||||||||
Revenues
|
287 | 4 | 53 | 184 | 3 | (52 | ) | 479 | ||||||||||||||||||||
Rental income from commercial centers
|
- | 108 | - | - | - | - | 108 | |||||||||||||||||||||
Total income revenue and gains
|
287 | 112 | 53 | 184 | 3 | (52 | ) | 587 | ||||||||||||||||||||
Costs and expenses
|
241 | 160 | 101 | 212 | 2 | (101 | ) | 615 | ||||||||||||||||||||
Research and development expenses
|
- | - | 63 | - | (52 | ) | 11 | |||||||||||||||||||||
Other expenses (income), net
|
(13 | ) | 273 | 2 | 2 | 13 | - | 277 | ||||||||||||||||||||
Segment profit (loss)
|
59 | (321 | ) | (113 | ) | (30 | ) | (12 | ) | 101 | (316 | ) | ||||||||||||||||
Financial (expenses) income, net
|
(37 | ) | (34 | ) | 1 | (3 | ) | - | (1 | ) | (74 | ) | ||||||||||||||||
Share in losses of associates, net
|
(1 | ) | (6 | ) | (7 | ) | ||||||||||||||||||||||
Unallocated general and administrative expenses
|
(62 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(90 | ) | ||||||||||||||||||||||||||
Financial income
|
66 | |||||||||||||||||||||||||||
Changes in fair value of financial instruments measured at FVTPL
|
276 | |||||||||||||||||||||||||||
Loss before income taxes
|
(207 | ) | ||||||||||||||||||||||||||
Income taxes
|
63 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(271 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
24 | |||||||||||||||||||||||||||
Loss for the year
|
(247 | ) |
|
(i)
|
Equity investments in our commercial and entertainment centers, our hotels and our residential projects, which are constructed by our wholly owned and jointly-controlled subsidiaries (special purpose entities that are formed for the construction of our real estate projects (a “Project Company”)). We generally finance approximately 30%-35% of such projects through equity investments in the Project Companies, while the remaining 65%-70% is generally financed through a credit facility secured by a mortgage on the project constructed by the respective Project Company, registered in favor of the financial institution that provides such financing. The equity investments in the Project Companies are typically provided by us through shareholder loans that are subordinated to the credit facilities provided to the Project Company;
|
|
(ii)
|
Interest and principal payments on our notes and loans;
|
|
(iii)
|
Additional investment in Elbit Fashion, mainly for opening of new stores;
|
|
(iv)
|
Additional investment in our medical segment;
|
|
(v)
|
Equity investments in yielding assets in the U.S. and Western Europe;
|
|
(vi)
|
Other investments (including, among others, venture capital investments); and
|
|
(vii)
|
Payment of general and administrative expenses.
|
|
·
|
On December 6, 2012, InSightec completed its issuance of Series C preferred shares for an aggregate amount of $30.9 million, which included $27.6 million invested by GE and $3.9 million invested by other investors. According to the terms of the transaction, GE and we converted all the existing shareholders loans that had been granted to InSightec into InSightec's series B-1 preferred shares in accordance with the terms of those loans. The transaction reflected a post-money valuation of InSightec of approximately $105.9 million (or pre-money valuation of $75 million and following the conversion of the loans as described above). As part of the transaction GE and InSightec signed the Cooperation Agreement that regulates the commercial relationship between the parties, including, among other things, with respect to product exclusivity, cooperation with respect to the development and sale of the parties' complementary products, distribution, marketing and sales, intellectual property rights and licenses, sale terms and conditions, and similar items. Under the Cooperation Agreement, InSightec is prohibited from developing systems that would be compatible with MRI systems manufactured by companies other than GE for a defined time period. After completion of the transaction we no longer have the right to appoint the majority of InSightec's board members and therefore we ceased to consolidate InSightec's financial statements, and our investment in InSightec is presented based on the equity method.
|
|
·
|
In August 2012 we entered into a NIS 75 million (approximately $20 million) note structured transaction with a certain financial institution pursuant to which we purchased a NIS denominated zero-coupon credit linked note due to mature on October 2, 2013 (the "CLN") from the other party. The CLN referenced a portfolio of our notes (having a market value of NIS 75 million). The note portfolio was purchased by us under our note repurchase program that was announced on May 23, 2011 and in the framework of the transaction we sold the note portfolio to other party. In consideration, the other party paid us the market value of the note portfolio and arranged for the issuance of the CLN at an issue price of NIS 37.5 million (approximately $10 million.
|
|
·
|
As discussed above in " – Operating and Financial Review and Prospects", in June 2012 the EPN Group sold 47 of the shopping centers it held to BRE DDR Retail Holdings LLC for a purchase price of $1.43 billion. The total proceeds from the transaction, including cash and other net working capital items less property level financing which was repaid by the EPN Group or assumed by the buyer at closing (in the amount of approximately $928 million), amounted to approximately $530 million. The remaining two shopping centers were sold in July 2012 for $41.0 million.
|
|
·
|
On February 23, 2012, InSightec and InSightec’s wholly owned subsidiary concluded a series of agreements with GEHC pursuant to which GEHC will provide financing to InSightec in the form of convertible notes up to a total of $13,750,000, bearing interest at a rate of 6% per annum or a rate equivalent to the interest applicable to the financing provided by us and Elbit Medical. The convertible notes will be due and payable by October 1, 2016, and will be convertible into Series B-1 Preferred Shares of InSightec, In addition, we and Elbit Medical entered into a series of agreements with InSightec and GEHC pursuant to which, among other things, upon Elbit Medical obtaining the approval of its shareholders the financing granted to InSightec by us and Elbit Medical during 2010 and 2011 will be amended to provide similar loan terms and security mechanisms as set forth in this funding agreement, so that Elbit Medical and us will receive convertible notes convertible on the same terms and up to the same amounts as the GEHC notes. The convertible notes issued to GEHC and Elbit Medical and the note that will be issued to us will be secured, pari passu, by floating charges over the assets of InSightec and its wholly owned subsidiary.
|
|
·
|
In April 2012, we completed the sale of all our shares in Elbit Trade & Retail Ltd. and all the interests in G.B. Brands, Limited Partnership, which was the franchisee of the GapTM and Banana RepublicTM brands, to Gottex for a purchase price of approximately NIS 54.3 million (including the payment for the inventory purchased by Gottex and certain working capital items included in the closing initial balance sheet), which amount is subject to adjustment based upon Elbit Trade & Retail Ltd.'s financial statements as of the closing date.
|
|
·
|
In March 2012, we entered into a share purchase agreement with PPHE for the sale of our holdings in certain subsidiaries which own a 50% interest in the following hotels in the Netherlands: the Park Plaza Victoria Amsterdam Hotel, the Park Plaza Utrecht Hotel, the arthotel Amsterdam and the Park Plaza Airport Hotel. These hotels were jointly owned by us and PPHE and were managed by PPHE. The transaction reflected an asset value of €169 million (approximately $219 million) for all four hotels. The total net consideration payable to us was €26.5 million (approximately $34.5 million). In addition, approximately €58 million (approximately $75 million) of our subsidiaries’ share (50%) of banks loans was assumed by PPHE by virtue of the purchase of those subsidiaries and were eliminated from our consolidated balance sheet. The consideration was paid to us in May 2012 as follows: (i) €23 million (approximately $30 million) in cash; (ii) 700,000 ordinary shares of PPHE, with a market price of approximately €2.0 million (approximately $2.5 million), based on the quotation of such shares’ price on the London Stock Exchange as of March 30, 2012; and (iii) an additional payment in the aggregate amount of up €1.5 million (approximately $2.0 million) that shall be made on the fourth anniversary of the date of transfer and shall be subject to certain adjustments, based on the PPHE shares’ market price, as set forth in the agreement. The total profit generated from the sale of the hotels amounted to approximately NIS 188 million ($50 million), out of which we recognized NIS 134 million ($36 million) in the shareholders equity due to the application of the revaluation model described above and NIS 54 million ($14 million) in the income statement.
|
|
·
|
On October 3, 2011, BUTU completed a refinancing of its five star Radisson Blu Hotel located in Bucharest, Romania. According to the facilities agreement, a leading international European bank granted BUTU a loan of up to €71.5 million. The loan may be drawn down in two tranches, with Tranche A in the amount of approximately €62.5 million having been drawn down on September 29, 2011, and Tranche B in the amount of approximately €9.0 million to be drawn down between December 31, 2012 and March 31, 2013, subject to the satisfaction of certain conditions as stipulated in the facilities agreement. The proceeds of the loan shall be used, inter alia, to repay BUTU's current outstanding bank facility and to repay to us our shareholder loans in the amount of approximately €25 million.
|
|
·
|
On September 23, 2011, PC paid an interim cash dividend payment of €30 million (approximately $38.8 million) to its shareholders, of which we received €18.7 million (approximately $24.2 million), out of which €8.7 million (approximately $11.3 million) was used to serve our debt to an Israeli bank under a loan agreement dated March 2011 pursuant to which we pledged 29% of PC's outstanding shares.
|
|
·
|
On September 21, 2011, our indirect subsidiary, Elbit USA entered into the Term Loan Agreement with Eastgate, for the Term Loan in the amount of $30 million. In addition, we granted to Eastgate a warrant to purchase our ordinary shares at an exercise price of $3.00 per share payable in cash, in exchange for the cancellation of debt or by forfeiting shares having a market value equal to the exercise price during a two-year period commencing on March 31, 2012. It was further agreed that if the Term Loan is repaid by March 22, 2012, six months from the closing, the warrant would entitle Eastgate to purchase up to 3.3% of our outstanding shares at the date of exercise. Otherwise, the warrant would entitle Eastgate to purchase up to 9.9% of our outstanding shares at the date of exercise. The exercise price and/or number of shares issuable upon exercise of the warrant are subject to adjustment for certain corporate events, transactions and dilutive issuances of securities. On September 22, 2011, we filed a prospectus supplement with the SEC under our shelf registration statement dated March 14, 2011, to register the warrant and up to 3,000,000 ordinary shares which may be issuable upon the exercise of the warrant. On April 5, 2012, we and Eastgate amended the warrant, with effect as of March 22, 2012, pursuant to which we agreed to cancel the proposed increase in the number of shares issuable under the warrant on and after such date from 3.3% of our outstanding shares at the date of exercise to 9.9% of our outstanding shares at the date of exercise and to reduce the exercise price from $3.00 per share to zero. The amendment also contains appropriate modifications to the adjustment provisions of the Warrant as a result of the foregoing changes.
|
|
·
|
On September 19, 2011, EDT distributed an interim dividend payment of $26 million. Elbit Plaza USA received a total distribution amount of $11.8 million. Each of ours and PC’s share in such distribution is approximately $5.9 million.
|
|
·
|
In March 2011, we entered into a new financing agreement (subsequently amended) with an Israeli bank in the amount of $70 million, replacing the previous financing agreement. The new agreement is for a 6-year term and bears interest at a rate of LIBOR + 3.8% per annum. As security for this facility, we have pledged to the Israeli bank (i) an amount of 86 million shares of PC, representing approximately 29% of PC's outstanding shares, which will be subject to a 70% loan to value mechanism on PC's shares; (ii) all of our holdings in Elbit Trade & Retail Ltd. which, following the sale thereof to Gottex, was replaced with a pledge over all of our holdings in Elbit Fashion; and (iii) a deposit that equals next year’s principal and interest amount. In addition, we elected to exercise the option of pledging our holdings in some of our hotels in the Netherlands in order to credit the value of those holdings towards the satisfaction of the loan to collateral value ratio which, following the sale of those hotels to PPHE, was replaced with a pledge over certain receivables.
|
|
·
|
In March 2011, we issued additional unsecured non-convertible Series D Notes to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 96 million for gross proceeds of approximately NIS 108 million. For interest rates our notes, see “ - Other Loans” below.
|
|
·
|
In January 2011, PC issued additional Series A and B Notes for an aggregate consideration of approximately NIS 300 million.
|
|
·
|
In November 2010, we completed a private placement of NIS 35 million principal amount of our Series D Notes as an expansion to the existing Series D Notes traded on the TASE. These notes mature in 2020, will be linked to the Israeli consumer price index and will make annual payments of principal and semi-annual payments of interest at the rate per annum of 5%, linked to the Israeli consumer price index. The notes were approved for listing on the TASE, but initial re-sales are restricted by applicable securities laws. For interest rates of our notes, see “ - Other Loans” below.
|
|
·
|
In August 2010, we sold 15,000,000 ordinary shares of PC to a Polish institutional investor, for an aggregate consideration of approximately NIS 98 million (approximately $26 million).
|
|
·
|
In 2010 we issued additional unsecured non-convertible Series G Notes to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 461.5 million (approximately $130 million) for gross proceeds of approximately NIS 459 million. For interest rates of our notes, see “ - Other Loans” below.
|
|
·
|
In June 2010, EPN Fund raised $31 million in capital commitments from Menora.
|
|
The following table sets forth the components of our cash flows statements for the periods indicated:
|
Year ended December 31,
|
||||||||||||||||
2012
|
2012
|
2011
|
2010
|
|||||||||||||
Convenience
translation in $ thousands
|
NIS
Thousands
|
NIS
Thousands
|
NIS
Thousands
|
|||||||||||||
Net cash used in operating activities
|
(39,814 | ) | (148,624 | ) | (240,889 | ) | (333,011 | ) | ||||||||
Net cash provided by (used in) investing activities
|
494,516 | 1,846,028 | 325,352 | (367,377 | ) | |||||||||||
Net cash (used in) provided by financing activities
|
(474,188 | ) | (1,770,145 | ) | (580,640 | ) | 368,361 | |||||||||
Decrease in cash and cash equivalents
|
(19,486 | ) | (72,741 | ) | (496,177 | ) | (332,027 | ) |
|
(i)
|
Cash flow from operating activities in 2012 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 113 million (approximately $30 million). Most of the acquisitions and investments in trading properties in 2012 were: India (Koregaon Park and Kharadi projects) and Serbia (Krugajevac project).
|
|
(ii)
|
Cash flow from operating activities in 2011 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 404 million. Most of the acquisitions and investments in trading properties in 2011 were: Poland (Torun project); India (Koregaon Park); Serbia (Krugajevac project); and Romania (the Casa Radio project).
|
|
(iii)
|
Cash flow from operating activities in 2010 included negative cash flow resulting from the cost of purchase of trading properties and payments on the account of trading properties of NIS 350 million. Most of the acquisitions and investments in trading properties in 2010 were: Romania (the Casa Radio project); Poland (Suwalki and Zgorzelec projects); Czech Republic (Liberec project); and India (Koregaon Park).
|
|
(iv)
|
Cash flows from operating activities in 2012, 2011 and 2010 also included the proceeds from operations of our commercial centers, U.S. retail properties, hotel, retail and image guided segments less operating expenses of those segments (including research and development expenses, sales and marketing and general and administrative expenses attributable directly to those segments) as well as general and administrative expenses of our headquarters.
|
|
(i)
|
Proceeds from sale of U.S. real estate properties (which are classified as discontinued operations) in an amount of NIS 1,290 million (approximately $346 million).
|
|
(ii)
|
Proceeds from realization of our hotels in the Netherlands and from the sale of GAP in an amount of NIS 140 million (approximately $37 million).
|
|
(iii)
|
Proceeds from realization of long term deposits and loans in an amount of NIS 277 million (approximately $74 million), mainly attributable to the sale of the long term structures by PC.
|
|
(iv)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 24 million ($6 million).
|
|
(v)
|
Investments in associates and other companies in an amount of NIS 12 (approximately $3 million), mainly attributable to investment of the Group in InSightec.
|
|
(vi)
|
Proceeds from interest received from deposits in the amount of NIS 38 million (approximately $10 million).
|
|
(vii)
|
Proceeds from sale of available for sale marketable securities net of purchase of available for sale marketable securities amounted to NIS 73 million (approximately $20 million).
|
|
(viii)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 63 million (approximately $17 million).
|
|
(i)
|
During July 2011, EPN Holdings finalized the binding takeover bid offer in the EDT investments fund which began in March 2011, following which EPN Group's holdings in EDT increased to 97.5%. Thereafter, EPN Holdings completed the acquisition of the remaining units of EDT in accordance with the takeover offer. The total amount of the investments of the EPN Group in the framework of the binding takeover offer amounted to $242 million. The total amount of investment by us and PC in the framework of the binding takeover offer amounted to $57 million each. The total overall investment of the EPN Group in the acquisition of EDT as of the first investment transaction in April 2010 amounts to $358 million. The contribution of each of us and PC with respect to this amount is approximately $83 million each. These investments are included in cash used in discontinued investing activities.
|
|
(ii)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 34 million mainly attributable to the renovation of the Victoria hotel in Amsterdam and Radisson Blu Bucharest Hotel in Romania and leasehold improvements of Elbit Fashion’s new stores. Purchase of investment property in the U.S. in an amount of NIS 37 million is included in cash used in discontinued investing activities.
|
|
(iii)
|
Investments in associates and other companies in the amount of NIS 20 million mainly attributable to the increase in our shareholding in the EPN Group in 2011 from 43.3%, to 45.38% is included in cash used in discontinued investing activities.
|
|
(iv)
|
Proceeds from long-term deposits and long-term loans in the amount of NIS 33 million mainly attributable to proceeds from long-term loans provided to PPHE’s subsidiary in respect of a loan provided to it in the framework of the sale of our hotels in London.
|
|
(v)
|
Investments in long-term deposits and long term loans in the amount of NIS 46 million.
|
|
(vi)
|
Proceeds from interest received from deposits in the amount of NIS 65 million.
|
|
(vii)
|
Purchase of available for sale marketable securities net of proceeds from available for sale marketable securities amounted to NIS 1 million.
|
|
(viii)
|
Disposition of short-term deposits and marketable securities, net, in the amount of NIS 333 million.
|
|
(i)
|
Investment in initially-consolidated subsidiaries in the amount of NIS 135 million is attributable to our U.S. retail properties initially consolidated in June 2010 is included in cash used in discontinued investing activities.
|
|
(ii)
|
Purchase of property, plant and equipment, investment property and other assets in the amount of NIS 73 million mainly attributable to the renovation of the Radisson Blu Bucharest Hotel in Romania, the leasehold improvements of Elbit Trade & Retail Ltd.’s new stores and our hospital and agriculture activities in India.
|
|
(iii)
|
Proceeds from realization of property, plant and equipment, investments and loans in the amount of NIS 31 million.
|
|
(iv)
|
Reduction of cash flow from realization of investments in subsidiaries in the amount of NIS 21 million in connection with the sale of our three hotels in England. See "Item 4.B. Business Overview – Hotels – Recent Acquisitions and Dispositions of Hotels."
|
|
(v)
|
Proceeds from long-term deposits and long-term loans in the amount of NIS 119 million (approximately $33.5 million) mainly attributable to proceeds from realization of financial instrument by us in the amount of NIS 111 million.
|
|
(vi)
|
Investments in long-term deposits and long term loans in the amount of NIS 12 million.
|
|
(vii)
|
Proceeds from interest received from deposits in the amount of NIS 57 million.
|
|
(viii)
|
Proceeds from repayment of debt securities net of investment in debt securities in the amount of NIS 8 million attributable to our U.S. investment platform's activity in connection with the EDT transaction.
|
|
(ix)
|
Purchase of available for sale marketable securities net of proceeds from available for sale marketable securities amounted to NIS 58 million.
|
|
(x)
|
Investing in deposits and marketable securities, net in the amount of NIS 170 million.
|
|
(i)
|
Proceeds from re-issuance of our notes to financial institutions in an amount of NIS 58 million.
|
|
(ii)
|
Repurchase of notes by us and PC in the amount of NIS 184 million.
|
|
(iii)
|
Interest paid in cash by us in the amount of NIS 349 million on our borrowings (mainly notes issued by us and PC and loans provided to our hotels and commercial centers).
|
|
(iv)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 718 million, mainly attributable to the funds paid by PC and us for unsecured non-convertible notes and loans provided to PC. An amount of NIS 598 million ($160 million) of loans repaid is attributable to our U.S. real estate properties sold, and is included in cash used in discontinued financing activities.
|
|
(v)
|
Proceeds from selling derivatives in the amount of NIS 59 million.
|
|
(vi)
|
Proceeds from short-term credit in the amount of NIS 204 million, mainly attributable to new loans raised by PC during 2012 in order to finance the construction of its trading property.
|
|
(vii)
|
Repayment of short-term credit in the amount of NIS 255 million.
|
|
(i)
|
Dividend paid to non-controlling interest by PC in the amount of NIS 57 million (approximately $15 million).
|
|
(ii)
|
Repurchase of notes by us and PC in the amount of NIS 202 million (approximately $53 million).
|
|
(iii)
|
Interest paid in cash by us in the amount of NIS 390 million (approximately $102 million) on our borrowings (mainly notes issued by us and PC and loans provided to our hotels).
|
|
(iv)
|
Repayment of borrowings, net, of proceeds from loans in the amount of NIS 110 million (approximately $29 million), mainly attributable to the funds paid and funds raised by PC and us from unsecured non-convertible notes issued during 2011, loans provided to us and to our hotels. A net amount of NIS 109 million ($29 million) of loans received is attributable to our U.S. real estate properties, and is included in cash used in discontinued financing activities.
|
|
(v)
|
Proceeds from selling derivatives in the amount of NIS 223 million (approximately $58 million).
|
|
(vi)
|
Proceeds from transactions with non-controlling interests, net in the amount of NIS 382 million (approximately $100 million) mainly from the purchase of the remaining 52.2% units of EDT by EPN Group is included in cash used in discontinued financing activities.
|
|
(vii)
|
Proceeds from short-term credit in the amount of NIS 411 million (approximately $108 million), mainly attributable to new loans raised by PC during 2011 in order to finance the construction of its trading property.
|
|
(viii)
|
Repayment of short-term credit in the amount of NIS 158 million (approximately $41 million).
|
|
Our cash flow provided by financing activities in 2010 was influenced by the following factors:
|
|
(i)
|
Purchase of treasury shares by us in the amount of NIS 30 million.
|
|
(ii)
|
Interest paid in cash by us in the amount of NIS 329 million on our borrowings (mainly notes issued by us and PC and loans provided to our hotels).
|
|
(iii)
|
Proceeds from borrowings, net, of repayment of loans in the amount of NIS 456 million, mainly attributable to the funds raised by PC and us from unsecured non-convertible and convertible notes issued during 2010.
|
|
(iv)
|
Proceeds from selling derivatives in the amount of NIS 46 million.
|
|
(v)
|
Proceeds from transactions with non-controlling interests, net in the amount of NIS 121 million.
|
|
(vi)
|
Proceeds from short-term credit in the amount of NIS 275 million, mainly attributable to new loans raised by PC during 2010 in order to finance the construction of its trading property.
|
|
(vii)
|
Repayment by us of short-term credit in the amount of NIS 131 million related to a financial instrument.
|
2012
|
2011
|
2010
|
||||||||||||||||||||||
NIS million
|
%
|
NIS million
|
%
|
NIS million
|
%
|
|||||||||||||||||||
Current assets
|
1,084 | 15 | % | 1,258 | 12 | % | 2,124 | 20 | % | |||||||||||||||
Current liabilities
|
1,788 | 25 | % | 2,227 | 21 | % | 2,799 | 26 | % | |||||||||||||||
Non-current assets
|
6,010 | 85 | % | 9,113 | 88 | % | 8,579 | 80 | % | |||||||||||||||
Non-current liabilities
|
3,885 | 55 | % | 6,605 | 64 | % | 5,726 | 54 | % | |||||||||||||||
Shareholders’ equity:
|
||||||||||||||||||||||||
Attributable to our equity holders
|
310 | 4 | % | 360 | 3.5 | % | 761 | 7 | % | |||||||||||||||
Non-controlling interest
|
1,111 | 16 | % | 1,179 | 11.5 | % | 1,417 | 13 | % |
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series A Notes issued to the public
|
NIS 594.2 million (approximately $159 million)
|
NIS 197.5 million (approximately $53 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
6% per annum, linked to the Israeli CPI.
|
10 semi-annual installments commencing August 2009 through 2014.
Interest payable by semi-annual installments commencing 2006 through 2014.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series B Notes issued to the public
|
$14.8 million
|
$ 4.1 million (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
Libor + 2.65%
|
10 semi-annual installments commencing August 2009 through 2014.
Interest payable by semi-annual installments commencing 2006 through 2014.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series C Notes issued to the public
|
NIS 455 million (approximately $122 million)
|
NIS 260.0 million (approximately $70 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.3% per annum, linked to the Israeli CPI.
|
10 annual installments commencing September 2009 through 2018.
Interest payable by semi-annual installments commencing 2007 through 2018.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series D Notes issued to the public
|
NIS 746 million (approximately $200 million)
|
NIS 781.3 million (approximately $209 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5% per annum, linked to the Israeli CPI.
|
8 annual installments commencing April 2013 through 2020.
Interest payable by semi-annual installments commencing 2007 through 2020.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
Events of default include, among others, the cross default with other series of notes and delisting from both the TASE and NASDAQ Global Select Market.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series E Notes issued to the public
|
NIS 64.5 million (approximately $17 million) (less amount of notes repurchased by us, as described below)
|
NIS 59.6 million (approximately $16 million)
|
6.3% per annum, linked to the Israeli CPI.
|
10 annual installments commencing July 2012 through 2021.
Interest payable by semi-annual installments commencing 2007 through 2021.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series F Notes issued to the public
|
NIS 502.8 million (approximately $135 million)
|
NIS 272.2 million (approximately $73 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.7% per annum, linked to the Israeli CPI.
|
6 annual installments commencing October 2010 through 2015.
Interest payable by semi-annual installments commencing 2008 through 2015.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series G Notes issued to the public
|
NIS 466.5 million (approximately $125 million)
|
NIS 464.2 million (approximately $124 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
5.08% per annum, linked to the Israeli CPI.
|
5 annual installments commencing October 2014 through 2018 (10% of the principal will be payable on December 31, 2014, 20% of the principal will be payable on December 31 on each of 2015 and 2016, and 25% of the principal will be payable on December 31 on each of 2017 and 2018).
Interest payable by semi-annual installments commencing 2010 through 2018.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The notes are registered for trade on the TASE.
The notes are not registered under the Securities Act.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Series 1 Convertible Notes issued to the public
|
NIS 112 million (approximately $30 million)
|
NIS 103.1 million (approximately $28 million) (following repurchases of the notes by us and our subsidiary Elbit Financial)
|
6.25% per annum.
|
First half to be paid on December 31, 2013, and second half to be paid on December 31, 2014.
Interest payable by semi-annual installments commencing 2009 through 2014.
|
Principal Security and Covenants
|
Unsecured.
|
||||
Other Information
|
The notes are convertible into our ordinary shares at the price of NIS 128 per share until July 31, 2013 and at the price of NIS 200 per share thereafter.
In February 2013 we ceased making payments of outstanding principal under our Series A and Series B notes and payments of interest under all our outstanding Notes.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Bank Hapoalim B.M.
|
$70.0 million
|
$63.9 million
|
LIBOR + 3.8%; if LTV (Loan to Value) greater than 0.7; Increase of interest by 2.5%
|
6 annual installments commencing March 2011 through 2017.
Interest payable by quarterly installments commencing March 2011 through 2017.
|
Principal Security and Covenants
|
Pursuant to the applicable loan agreement, we are required to maintain compliance with certain financial covenants and other covenants relating to us and/or our subsidiaries, including:
· Total shareholders' equity higher than NIS 1,500 million;
· Loan To Value Ratio less than 0.75 (according to certain adjustments specified in the loan agreement);
· Total financial assets (solo) greater than $50 million;
· Ratio Net Debt / Cap less than 85%;
· PC's total financial assets greater than $80 million;
· Ratio Equity/Total Assets of PC greater than 25%; and
· other customary obligations and undertakings.
As to the pledge of 29% of Plaza Center's outstanding shares discussed above in "Item 5. Operating and Financial Review and Prospects", we are required to maintain a ratio between the net debt amount and the market value of the pledged shares (the "Collateral LTV Ratio"). If the Collateral LTV Ratio exceeds a certain rate, we may, at our sole discretion, do one or more of the following: (i) reduce the debt and (ii) provide a cash deposit pledged in favor of the bank. In the event that we fail to comply with any of the covenants, or upon the occurrence of an event of default (including the failure to provide additional securities), the bank shall be entitled to demand the immediate repayment of the loan and the interest rate will be increased. As of today we are in breach of that covenant and certain other covenants.
In the framework of the sale of our Dutch hotels to PPHE in March 2012, Bank Hapoalim B.M. has agreed to release the pledges over our (indirect) holdings in the Dutch hotels, which were replaced with an assignment by way of pledge over certain receivables due to us from PPHE's subsidiary. Please see "Item 4.B - Business Overview – Hotels".
|
||||
Other Information
|
In February 2013 the Bank notified us that we are in breach of covenants stipulated in the agreement such as our commitments to note holders and breach of commitments regarding LTV. The Bank has further notified us that it has the right to demand the immediate repayment of all the credit it has provided to the Company. The Bank also notified the Company that it shall use collateral made in its favor PPHE's subsidiary to repay the credit. Please see Item 4.B "Business Overview – Hotels".
In addition, under the terms of our loan agreement with the Bank we are required to deposit on March 31 of each year in a secured account an amount not less than the amount of the matured obligations. On March 31, 2013, we did not make the deposit of $14.5 million that was due on such date.
The Bank's collateral includes, in addition to the 29% of PC's shares and the assignment by way of pledge over PPHE's receivables (which secures also Elbit Fashion's credit line and Stand-by Letter of Credit), a bank account deposit and 100% of Elbit Fashion's shares. On March 24, 2013, we called for a meeting of our Note holders to approve our depositing such amount, and were asked to apply to the Banks for waivers of the default before a decision will be made. As of the date of this annual report discussions are underway with the Bank regarding the possibility of it participating and joining as a party to the Arrangement.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
EI
|
Bank Leumi Le-Israel B.M.
|
$24.2 million
|
$14.0 million
|
LIBOR + 3.5%
|
5 annual installments commencing June 2011 through March 2016.
Interest payable by quarterly installments commencing June 2011 through March 2016.
|
Principal Security and Covenants
|
Pursuant to the applicable loan agreement, we are obligated to maintain certain financial and other covenants, including:
· Total shareholders' equity higher than NIS 1,500 million;
· Loan To Value Ratio less than 0.75 (according to certain adjustments specified in the loan agreement);
· Total financial assets (solo) greater than $50 million;
· Ratio Net Debt / Cap less than 85%; and
· other customary obligations and undertakings.
In the event that we fail to comply with any of the covenants, or upon the occurrence of an event of default, the bank shall be entitled to demand the immediate repayment of the loan. As of the date of this annual report we are in breach of some of the aforementioned covenants.
|
||||
Other Information
|
In March 2013 we informed Bank Leumi that we would not be making the upcoming payment to it on March 29, 2013 of principal and interest due under the loans made by Bank Leumi to us. For more information regarding the letter we received from Bank Leumi demanding repayment of the outstanding balance of approximately $14.1 million (approximately NIS 52 million) due as well as the terms and conditions of the Arrangement (which, in the event it comes into effect, Bank Leumi will be subject to as an unsecured creditor), please see "Item 4.A – History and Development of the Company – Recent Events" and "Item 10.C – Material Contracts – The Arrangement". A disagreement has arisen with respect to the effectiveness of certain pledges over our bank account in Bank Leumi, which in our opinion should have been erased and have no binding effect.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
PC
|
Series A Notes issued to the public
|
NIS 172 million (approximately $46 million)
|
NIS 203 million* (approximately $54 million) (following repurchases of the notes by PC and its subsidiaries)
|
4.5% per annum, linked to the Israeli CPI.
|
Principal payable in 8 equal annual installments commencing December 31, 2010 through December 31, 2017.
Interest payable by semi-annual installments commencing December 31, 2007 through December 31, 2017.
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The Notes have been registered for trade on the TASE.
The Notes are not registered under the Securities Act.
* NIS 203 million are presented at fair value through profit and loss (the fair value as of December 31, 2012 was NIS 138.4 million.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
PC
|
Series B Notes issued to the public
|
NIS 730 million (approximately $196 million)
|
NIS 838 million* (approximately 224 million) (following repurchases of the notes by PC and its subsidiaries)
|
5.4% per annum, linked to the Israeli CPI
|
Principal payable in 5 equal annual installments commencing July 2011 through July 2015.
Interest payable by semi-annual installments commencing July 2008 through July 2015
|
Principal Security and Covenants
|
Unsecured
|
||||
Other Information
|
The Notes have been registered for trade on the TASE.
The Notes are not registered under the Securities Act.
* NIS 549 million are presented at fair value through profit and loss (the fair value as of December 31, 2012 was NIS 433.1 million) and NIS 289 million are presented at amortized cost.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
PC
|
Private note issuance to Polish institutional investors
|
PLN 60 million
|
PLN 60 million
|
6 Month Wibor+4.5%
|
Three years maturity, with balloon payment at the end of the maturity period.
Interest payable by semi-annual installments commencing May 2011 through November 2013.
|
Principal Security and Covenants
|
Certain circumstances shall be deemed events of default giving the bondholders the right to demand early redemption, which includes, among others, the following covenants:
· Breach of the cash position as a result of the payment of dividend or the buy-back program falls below Euro 50 million. Cash position shall be the sum of cash and cash equivalent of: cash, short and long interest bearing deposits with banks or other financial institutions, available for sale marketable securities, and restricted cash, calculated based on the consolidated financial statements.
· Breach of financial ratios – the Net Capitalization Ratio exceeds 70%; "Net Capitalization Ratio" is the Net Debt divided by the Equity plus the Net Debt, as calculated by PC's auditor; “Net Debt” mean PC's total debt under: loans and borrowings, lease agreements, notes, other debt securities and other interest bearing or discounted financial instruments in issue, less related hedge derivatives, cash and cash equivalents, short and long-term interest bearing deposits with banks or other financial institutions, available for sale marketable securities and restricted cash, calculated based on the consolidated financial statements.
· Failure to repay material debt – PC fails to repay any matured and undisputable debt in the amount of at least EUR 100 million within 30 days of its maturity.
|
Borrower
|
Lender
|
Facility Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
SIA DIKSNA ("Riga Plaza“)
|
MKB BANK ZRT, SEB BANK, AS “UNICREDIT BANK”
|
€36.4 million *
|
€31.9 million *
|
3 months Euribor + 2.5%
|
Expires on 2014 June 30. Quarterly annuity payments calculated according to 20 years amortization, with balloon payment.
|
Principal Security and Covenants
|
Registered first ranking mortgage on the real estate;
Assignment of all rights under relevant valid insurance policies;
Charges over each quota owned by PC in the borrower or share pledge agreement;
Assignment of all rights and claims under the construction agreements and construction warranties;
First ranking pledges on the borrowers’ accounts;
Prompt collection right to debit any of the bank accounts of the borrower;
Maintain a Debt Service Cover Ratio of 1.2;
Loan to Value ratio of 70%;
PC is not in compliance with the abovementioned DSCR and Loan to Value covenants. A one year waiver (until December 31, 2012) on the DSCR covenant was granted. Another one year waiver (until December 31, 2013) for these 2 covenants is now under process of establishment; and
Corporate guarantee of PC to invest equity up to a prescribed debt service cover ratio, in the event Riga Plaza is not sold 6 months following opening or the proceeds of such sale do not cover the repayment of the loan balance.
|
||||
Other Information
|
* Represents 50% of the loan, which is PC's shareholding in Riga Plaza.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
PC
|
GEFA Germany
|
US$ 4.56 million
|
€2.8 million
|
USD Libor + 4% per annum
|
Maturity of the loan is 5 March 2014, with a 75% balloon. Quarterly principal payments are $60,500.
|
Principal Security and Covenants
|
First priority aircraft mortgage entered into the Hungarian Aircraft Register at the CAA, Budapest.
Assignment of insurance proceeds.
|
||||
Other Information
|
Loan serves to finance the purchase of a company airplane.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Koregaon Park
|
AXIS, SBH (India)
|
INR 2,040 million - credit facility
|
INR 1,970 million
|
13.25% p.a.
|
Maturity of the loan is in first quarter of 2021.
|
Principal Security and Covenants
|
Assignment of all rights under insurance proceeds.
|
||||
Other Information
|
Corporate guarantee of PC.
Pledge on assets of the project company.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Koregaon Park
|
AXIS
|
INR 505 million – insurance claim facility
|
INR 505 million
|
11.50% p.a.
|
Maturity of the loan is in May 2013.
|
Principal Security and Covenants
|
Assignment of all rights under insurance proceeds.
|
||||
Other Information
|
Corporate guarantee of PC.
Pledge on assets of the project company.
|
Borrower
|
Lender
|
Facility amount
|
Amount Outstanding on Dec. 31, 2011
|
Interest
|
Payment Terms
|
Liberec Plaza
|
MKB BANK Zrt., ERSTE Bank AG
|
€25 million
|
€21.2 million
|
3 months Euribor+ 2.7% per annum
|
Repayment schedule:
2014- bullet payment of more than 90% of the principal.
|
Principal Security and Covenants
|
Registered first ranking mortgage and purchase option right on the real estate;
Assignment of all rights under relevant valid insurance policies;
Share pledge agreement;
Assignment of all rights and claims under the construction agreements and construction warranties;
First ranking pledges on the borrowers’ accounts;
Prompt collection right to debit any of the bank accounts of the borrower;
Completion guarantee of PC for the term of the construction;
Maintain Debt Service Cover Ratio of 1.15;
Loan to Value ratio of 85%; and
Corporate guarantee of PC for Debt Service.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount *
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
A: Valley View
B: Acacia Park
C: Acacia Park
D: Fountain Park
E: Primavera Tower
|
A: OTP Bank Nyrt.
B: Bank Leumi Romania
C: Bank Leumi Romania
D: Bank Leumi
E: MKB Bank Zrt
|
A: €8.2 million
B: €1.4 million
C: €1.3 million
D: €1.42 million
E: €1.5 million
|
A: €8.2 million
B: €0.762 million
C: €1.0 million
D: €1.42 million
E: €1.5 million
|
A:Euribor + 6% p.a.
B: Euribor + 6% p.a.,
C: Euribor + 5% p.a.
D: Euribor + 6% p.a.
E: Euribor + 4.5% p.a.
|
A: Expired. Only interest payments. Negotiations ongoing.
B: Expired in July 2012. Negotiations ongoing
C: Expired in July 2012. Negotiations ongoing.
D: Expired in September 2012. Only interest payments.
E: Expired March 31, 2012. Only interest payments. Negotiations ongoing.
|
Principal Security and Covenants
|
First ranking mortgage on the properties.
Corporate guarantee of owners in case of Fountain Park and Acacia Park in respect of the interest only.
|
||||
Other Information
|
* PC consolidates 50% of the abovementioned loan balances in its reports, with the exception of D, which is not presented as it is an equity held subsidiary (held 25% by PC).
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012*
|
Interest
|
Payment Terms
|
||||
Dream Island 2004 Kft
|
MKB Bank Zrt
|
€40.6 million
€3.8 million
|
I - €40.6 million
II - €0.7 million
|
3M Euribor + 2 % per annum
3M Euribor + 2% per annum
|
Expires March 31, 2015. Balloon payment of principal at the end.
II- Interest facility – Expires with one payment at March 31, 2015.
|
||||
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower.
Assignment of income.
Floating charge over the assets.
Assignment of insurance.
|
||||||||
Other Information
|
* PC's share in such loans is 43.5%.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
||||
Suwalki Plaza
|
ING Bank Slaski S.A
|
€33.5 million
|
€32,5 million
|
3 months Euribor + 1.65% per annum
|
Expires December 29, 2020. Quarterly payments with fixed principal amounts and balloon payment at the end.
|
||||
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Corporate guarantee of PC in the amount of €2.7 million for payment deficit of any outstanding amount due and payable to the lender.
Maintain a debt service cover ratio of 1.2.
Loan to value ratio of 0.7.
|
||||||||
Other Information
|
The loan was converted from Construction Loan to Investment loan at February 28, 2011.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Zgorzelec Plaza
|
Bank Zachodni WBK S.A.
|
€22.3 million
|
€21.6 million
|
3 months Euribor + 2.75% per annum for
|
Expires June 30, 2014.
|
Principal Security and Covenants
|
A first ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Completion and cost overrun guarantee of PC.
Maintain a debt service cover ratio of 1.15.
Loan to construction cost ratio of 0.80.
Loan to value ratio of 0.75.
PC is not in compliance with certain covenants included in the loan agreement and has a waiver in place until expiration of the loan.
|
||||
Other Information
|
Starting from January 2013 any excess cash should be used for repayment of trench 6 of the loan (1,5 m EUR)
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Torun Plaza
|
Bank PEKAO S.A
|
€50.1 million
|
€49.5 million
|
3 months Euribor + 3% per annum
|
Expires December 31, 2017. Quarterly payments with fixed principal amounts and balloon payment at the end.
|
Principal Security and Covenants
|
First ranking mortgage on the property.
Pledge on shares of borrower and pledge on bank accounts.
Assignment of rights from insurances, guaranties and agreements.
Maintain a debt service cover ratio of 1.25.
Loan to value ratio of 0.7.
|
||||
Other Information
|
Not applicable.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Praha Plaza s.r.o
|
Erste Bank AG
|
€7.5 million
|
€3.6 million
|
Euribor + 1.75%
|
Quarterly payments of €117,200, beginning on December 31, 2004. The remaining amount will be paid in one installment on December 31, 2016. Quarterly payment of interest until 2016.
|
Principal Security and Covenants
|
First ranking pre-emption right regarding the property.
Pledge on shares of Borrower, on accounts, on receivables from the lease agreements.
Assignment of insurance.
Maintenance of Debt Service Cover Ratio of 1.15.
Loan to Value ratio of 80%.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Kragujevac Plaza (Serbia)
|
OTP Bank Nyrt.
OTP Bank Srbija a.d
|
€30.4 million
|
€24.5 million (OTP HU) +
€5.9 million (OTP SRB)
|
3 months Euribor + 5.5%
|
Maturity of the loan - 2027. Quarterly annuity payments (interest and principal).
|
Principal Security and Covenants
|
First and second ranking mortgage over the property.
Pledge on shares of borrower, on accounts, on receivables from the lease agreements.
Assignment of all rights under insurance.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Tanoli Enterprises Ltd.
|
Barclays Bank Plc.
|
NIS 85 million (approximately $23 million)
|
NIS 85 million
|
6 months Telbor + 6%
|
Maturity of the loan - 2013. Semi-annual annuity payments (interest and principal).
|
Principal Security and Covenants
|
First and second ranking mortgage over the Bonds purchased by Tanoli.
Corporate guarantee for the due and punctual performance of Tanoli’s obligations under the loan documents.
|
||||
Other Information
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Bucuresti Turism SA
|
Raiffeisen Bank International (“RBI”)
|
€62.5 million
|
€58.7 million
|
Euribor + 4.6%
|
The principal is repayable in 20 quarterly installments of €0.65 million each, commencing September 2011, with a balloon payment of €58.5 million to be repaid on June 30, 2016.
|
Principal Security and Covenants
|
First rank mortgage on the Radisson Blu Bucharest Hotel and the Centerville Hotel.
Future and existing cash flow through the bank accounts opened at Raiffeisen Bank.
Pledge over the shares of Bucuresti Turism SA and its subsidiary held by the majority share holder (BEA Hotels Eastern Europe BV).
Pledge of receivables arising from lease agreements and insurance policies concluded by the borrower.
Guarantee of the yearly debt service from us.
Title insurance over the mortgage asset.
|
||||
Other Information
|
On April 3, 2012, we concluded an agreement with RBI fixing the Euribor at 1.40% from January 1, 2013, until the end of the loan.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV
|
Bank Hapoalim
|
€24.4 million
|
€17.5 million
|
Euribor + 1.75%
|
Semi-annual principal repayment of €625,000 to be paid commencing December 31, 2007 and ending on December 31, 2016.
€12,500,000 to be paid at the end of the term.
Interest is payable on a semi-annual basis.
|
Principal Security and Covenants
|
First ranking share pledge on Astrid Plaza shares.
First ranking mortgage over Astrid Plaza's real estate.
A mortgage mandate over Astrid Plaza's real estate.
First ranking pledge on a reserve fund of €1 million, which is blocked on a deposit account.
Required to maintain a debt service cover ratio.
|
||||
Other Information
|
We guaranty Astrid Plaza's undertakings under the loan agreement. The guaranty is unlimited in amount.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2012
|
Interest
|
Payment Terms
|
Astrid Plaza Hotel NV, for the Park Inn Hotel
|
Fortis Bank
|
A: €4 million
B: €3.5 million
|
A: €3.3 million
B: €2.9 million
|
A: 5.56%
B: 3.38%
|
Repayment over a 15 year period.
|
Principal Security and Covenants
|
A first ranking mortgage on the Park Inn hotel and its assets.
Subordination of loan granted by us to the borrower and undertaking not to reduce such loan below a given amount.
Compliance with certain financial and operational covenants.
Undertaking to maintain an equity/asset ratio.
We have furnished the bank with a guarantee up to the amount of €1.37 million.
|
Borrower
|
Lender
|
Original Amount
|
Amount Outstanding on Dec. 31, 2011
|
Interest
|
Payment Terms
|
Elbit Fashion
|
Bank Hapoalim
|
NIS 10 million (approximately $3 million)
|
NIS 10 million (approximately $3 million)
|
Prime + 2 %
|
Revolving short-term credit facility
|
Principal Security and Covenants
|
Fixed mortgage on all Elbit Fashion assets and a guarantee for the full amount provided to Elbit Fashion.
|
||||
Other Information
|
An additional Stand-By Letter of Credit has been provided by the bank to Elbit Fashion in the amount of approximately €3.8 million in order to secure payment to third party suppliers. The Stand-By Letter of Credit is in effect until December 31, 2013.
|
|
·
|
As part of the franchise and support agreements executed by our subsidiary, Elbit Trade & Retail Ltd. with third parties, which in turn were transferred to Elbit Fashion, and following such transfer Elbit Fashion has furnished Punto Fa with a stand-by letter of credit in the amount of approximately €3.75 million (approximately $4.9 million) in order to secure payments under the agreements.
|
|
·
|
As part of transactions for the realization and/or sale of our holdings in certain subsidiaries or projects, or the realization and sale of certain business activities, we have undertaken to indemnify the respective purchasers for certain losses and costs incurred in connection with the sale transaction, and in particular, with respect to a breach of representations and warranties by seller. The indemnification provisions are usually capped at the purchase price and are limited in time, as set forth in each of the relevant sale agreements. Our management estimates that no significant costs will be borne in respect of these indemnification provisions.
|
|
·
|
As part of a lease agreement executed in July 2007 between us and the Israel Land Administration for a long-term lease of land in Tiberius, Israel, we had undertaken to finalize the construction in July 2010. During 2010 we received an extension for an additional three years until July 2013. As of the date of this annual report, we believe that an extension will be obtained. We have provided the Israel Land Administration with two bank guarantees in the aggregate amount of NIS 10 million linked to the increase in the Israeli consumer price index in order to secure our undertakings included in the lease agreement. As a security for the guarantees, we pledged deposits in the same amount. In accordance with the terms of the lease agreement, in the event either of the parties does not comply with the terms of the agreement, the agreement can be terminated by the other party.
|
|
·
|
As part of the transactions for the sale of our real estate assets, we have undertaken to indemnify the respective purchasers for any losses and costs incurred in connection with the sale transactions. The indemnification provisions usually include: (i) indemnifications in respect of integrity of title on the assets and/or the shares sold (i.e.: that the assets and/or the shares are wholly owned and are free and clear from any encumbrances and/or mortgage and the like). Such indemnification generally survives indefinitely and is capped at the purchase price in each respective transaction; and (ii) indemnifications in respect of other representations and warranties included in such sale agreements (e.g.: development of the project, responsibility for defects in the development project, tax matters and others). Such indemnifications are limited in time (generally three years from closing) and are generally capped at 25% to 50% of the purchase price. Our management estimates (based (inter alia) on a professional opinion and past experience) that no significant costs will be borne in respect of these indemnification provisions.
|
|
·
|
A former subsidiary of PC incorporated in Prague ("Bestes"), which was sold in June 2006 is a party to an agreement with a third party ("Lessee"), for the lease of commercial areas in a center constructed on property owned by it, for a period of 30 years, with an option to extend the lease period by an additional 30 years, in consideration for €6.9 million (approximately $9.1 million), which has been fully paid. According to the lease agreement, the Lessee has the right to terminate the lease, subject to fulfillment of certain conditions set forth in the agreement. As part of the agreement for the sale of Bestes to Klepierre in June 2006, it was agreed that PC will remain liable to Klepierre in case the Lessee terminates its contract. PC’s management believes that this commitment will not result in any material amount due to be paid by it.
|
|
·
|
On November 21, 2010, Elbit Medical's shareholders approved the assignment of our indemnification obligations in favor of Gamida and its affiliated parties to Elbit Medical, without a right of reimbursement from us. Elbit Medical also undertook to indemnify Gamida and Teva Pharmaceutical Industries Ltd., as the shareholders of the joint venture Gamida Cell - Teva Joint Venture Ltd. for damages on certain matters. These indemnification undertakings of Elbit Medical replaced similar undertaking formerly made by us to these parties.
|
|
·
|
As required under the lease agreement for our new executive offices, in 2013 we provided bank guarantees to secure our compliance with the terms of the agreement in the total amount of approximately NIS 1.0 million.
|
|
·
|
We have guaranteed certain of PC's obligations to repay principal under its loan agreements with third parties up to an aggregate amount of NIS 205 million. For some such loans we have also guaranteed the payment of interest by PC. In addition, PC is a guarantor to obligations under loan agreements of its project companies with third parties up to an aggregate amount of NIS 261 million. PC also guaranteed the fulfillment of transactions entered into by three of its subsidiaries for a total aggregate amount of NIS 4.0 million.
|
|
·
|
We are a guarantor for Elbit Fashion's obligations under its lease agreements with respect to the Mango stores at all shopping malls (for a total of 28 stores) and with respect to its offices, and have undertaken to provide to secure its compliance with its agreements.
|
|
·
|
We have undertaken to provide guarantees for the benefit of the Israeli tax authority to secure Elbit Fashion's payment of customs duties and VAT, which are paid by way of direct debit authorization by Elbit Fashion, in the event that a debit authorization is rejected.
|
F.
|
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
|
Payments due by Period
(in NIS thousands)
|
||||||||||||||||||||
Contractual Obligations as of December 31, 2012
|
Total
|
Less than 1 Year
|
2-3 Years
|
4-5 Years
|
After 5 Years
|
|||||||||||||||
Long-Term Debt (1)
|
6,451,487 | 1,651,420 | 2,254,865 | 1,454,175 | 1,091,027 | |||||||||||||||
Operating Leases (2)
|
259,275 | 27,567 | 53,635 | 49,645 | 128,428 | |||||||||||||||
Purchase Obligations and Commitments (3)
|
681,706 | 96,791 | 200,165 | 192,375 | 192,375 | |||||||||||||||
Other Long-term Liabilities Reflected on Balance Sheet
|
2,771 | - | - | - | 2,771 | |||||||||||||||
Total
|
7,395,239 | 1,775,778 | 2,508,665 | 1,696,195 | 1,414,601 |
(1)
|
Long term debt includes interest that we will pay from January 1, 2013 through the loan maturity dates. Part of our loans bear variable interest rates and the interest presented in this table is based on the LIBOR rates known as of December 31, 2012. Actual payments of such interest (as presented in our financial statements) are significantly dependent upon the LIBOR rate prevailing as of the date of payment of such interest. For additional information in respect of the long term debt, see “Item 5.B. Liquidity and Capital Resources - Other Loans."
|
(2)
|
Our operating lease obligations are subject to periodic adjustment of the lease payments as stipulated in the agreements. In this table we included the lease obligation based on the most recent available information. For additional information in respect of our operating lease obligations see note 23A(4) to our annual consolidated financial statements.
|
(3)
|
Includes mainly commitments for construction suppliers, subcontractors and amount payable to third and related parties including estimated payments to a related party in respect of land acquisitions. Such obligations were not recorded as liabilities in the balance sheet, since, as of the balance sheet date, the construction services were not yet provided and/or certain conditions precedent for the plot acquisitions have not yet been fulfilled.
|
NAME
|
AGE
|
POSITION
|
Mordechay Zisser (1) (3)
|
58
|
Chief Executive Officer, Executive President and Director
|
Shimon Yitzhaki (1) (3)
|
58
|
Executive Chairman of the board of directors and Director
|
David Rubner (2) (4)
|
73
|
Director
|
Zvi Tropp (1) (2) (3) (4)
|
73
|
External Director
|
Moshe Lion
|
52
|
Director
|
Shmuel Peretz
|
73
|
Director
|
Elina Frenkel Ronen (1) (2) (4)
|
39
|
External Director
|
Dudi Machluf
|
41
|
CEO of Elbit Plaza USA and former Co-Chief Executive Officer of the Company until August 2012
|
Ran Shtarkman
|
45
|
CEO of PC and former Co-Chief Executive Officer of the Company until August 2012
|
Doron Moshe
|
42
|
Chief Financial Officer
|
Zvi Maayan
|
45
|
General Counsel
|
______________________________________
|
(1)
|
Member of the donation committee
|
(2)
|
Member of the audit committee
|
(3)
|
Member of the investment committee
|
(4)
|
Member of the compensation committee
|
Name and Address
|
Number of Shares
|
Percent of Shares Beneficially Owned (1)
|
||||||
Mordechay Zisser (2)
|
12,545,527 | (3) | 50.38 | % | ||||
Europe-Israel (M.M.S.) Ltd. (4)
|
12,399,987 | 49.79 | % | |||||
All officers and directors of the company as a group (11 persons)
|
12,843,777 | (5) | 51.58 | % |
(1)
|
The number of shares and percentages of ownership are based on our shares outstanding as of April 1, 2013. Such number excludes 3,388,910 treasury shares. Beneficial ownership is determined in accordance with the rules of the SEC based on voting and investment power with respect to such ordinary shares. Shares subject to options that are currently exercisable or exercisable within 60 days of April 1, 2013 are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not deemed to be outstanding and to be beneficially owned for the purpose of computing the percentage ownership of any other person. All information with respect to the beneficial ownership of any principal shareholder has been furnished by such shareholder or is based on the most recent Schedule 13D or 13G filed with the SEC and, unless otherwise indicated below, we believe that persons named in the table have sole voting and sole investment power with respect to all the shares shown as beneficially owned, subject to community property laws, where applicable. The shares beneficially owned by our directors include shares owned by their family members, as to which such directors disclaim beneficial ownership.
|
(2)
|
The information regarding the beneficial ownership of Europe-Israel and of Mr. Zisser is based on a Schedule 13D filed by them on March 4, 2013. Mr. Zisser is considered our indirect controlling shareholder by virtue of his control of Europe-Israel and serves as our Chief Executive Officer and Executive President and as a director. See footnote 4 below.
|
(3)
|
Includes (i) 12,399,987 of our shares held by Europe-Israel, which may be deemed to be beneficially owned by Mr. Mordechay Zisser, our Chief Executive Officer, Executive President and a director, by virtue of his control of Europe-Israel; (ii) 24,837 of our shares held by Marina Herzelia (Limited Partnership) 1988, which may be deemed to be beneficially owned by Mr. Mordechay Zisser, by virtue of his control of Control Centers Ltd., which wholly owns Marina Herzeliya (Limited Partnership) 1988; and (iii) 120,703 shares held by Mr. Zisser. See footnote 4 below. Certain of these shares are pledged as security to lending banks. A foreclosure event could lead to a change in the control of our company, which in turn may cause us to be in default of financial covenants with certain of our lending banks.
|
(4)
|
Europe-Israel is an Israeli corporation wholly-owned by Control Centers, a private company controlled by Mr. Mordechay Zisser.
|
(5)
|
Includes: (i) 12,399,987 shares held by Europe-Israel, which may be deemed to be beneficially owned by Mr. Mordechay Zisser (see footnote 4 above); (ii) 24,837 shares held by Marina Herzelia (Limited Partnership) 1988; (iii) 120,703 shares held by Mr. Zisser; and (iv) 681,500 options exercisable into 298,250 shares as of April 1, 2013 and vesting within 60 days thereafter granted to our other directors and officers pursuant to our 2006 Employees, Directors and Officers Incentive Plan, as amended.
|
NASDAQ
|
TASE
|
|||||||||||||||
Year Ended December 31,
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||||||||||
2012
|
3.32 | 1.80 | 3.23 | 1.74 | ||||||||||||
2011
|
13.97 | 1.98 | 12.74 | 1.93 | ||||||||||||
2010
|
24.76 | 12.05 | 25.08 | 12.37 | ||||||||||||
2009
|
28.09 | 9.30 | 28.75 | 10.03 | ||||||||||||
2008
|
56.09 | 7.58 | 56.55 | 7.51 |
NASDAQ
|
TASE
|
||||||||||||||||
Financial Quarter
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
|||||||||||||
2013
|
|||||||||||||||||
Q1 | 3.50 | 1.43 | 3.41 | 1.53 | |||||||||||||
Q2 (through May 8, 2013)
|
2.42 | 2.01 | 2.27 | 2.12 | |||||||||||||
2012 | |||||||||||||||||
Q1 | 3.32 | 2.25 | 3.23 | 2.43 | |||||||||||||
Q2 | 3.19 | 2.12 | 3.14 | 2.08 | |||||||||||||
Q3 | 2.89 | 2.04 | 2.90 | 2.02 | |||||||||||||
Q4 | 2.55 | 1.80 | 2.59 | 1.74 | |||||||||||||
2011 | |||||||||||||||||
Q1 | 13.97 | 10.95 | 13.99 | 11.17 | |||||||||||||
Q2 | 11.99 | 6.13 | 12.16 | 6.13 | |||||||||||||
Q3 | 6.84 | 1.98 | 6.16 | 1.99 | |||||||||||||
Q4 | 4.73 | 2.25 | 4.71 | 2.26 |
NASDAQ
|
TASE
|
|||||||||||||||
Month
|
High ($)
|
Low ($)
|
High ($)
|
Low ($)
|
||||||||||||
May 2013 (through May 8)
|
2.42 | 2.12 | 2.27 | 2.12 | ||||||||||||
April 2013
|
2.32 | 2.01 | 2.63 | 2.16 | ||||||||||||
March 2013
|
2.69 | 2.12 | 3.41 | 1.53 | ||||||||||||
February 2013
|
3.50 | 1.43 | 1.89 | 1.57 | ||||||||||||
January 2013
|
1.90 | 1.51 | 2.41 | 1.74 | ||||||||||||
December 2012
|
2.40 | 1.80 | 2.50 | 2.32 | ||||||||||||
November 2012
|
2.53 | 2.20 | 2.59 | 2.25 | ||||||||||||
October 2012
|
2.55 | 2.20 | 2.27 | 2.12 |
|
·
|
the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;
|
|
·
|
some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and
|
|
·
|
the transaction will increase the relative holdings of a shareholder that holds 5% or more of the company’s outstanding share capital or voting rights or that will cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or voting rights.
|
|
·
|
refrain from any conflict of interest between the performance of his duties for the company and the performance of his other duties or his personal affairs
|
|
·
|
refrain from any activity that is competitive with the company;
|
|
·
|
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and
|
|
·
|
disclose to the company any information or documents relating to a company’s affairs which the director or officer has received due to his position as such.
|
|
(ii)
|
A breach of the duty of loyalty vis-a-vis us, provided that the director or officer acted in good faith and had reasonable basis to believe that the act would not harm us;
|
|
(iv)
|
Reasonable litigation expenses, including attorney fees, incurred by the director or officer as a result of an administrative enforcement proceeding instituted against him. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Israeli Securities Law, 1968, as amended (the "Securities Law") and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees; or
|
|
(v)
|
Any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our directors or officers.
|
|
(i)
|
Any financial liability he incurs or imposed on him in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court, provided that any undertaking to indemnify be restricted to events that, in the opinion of the board of directors, are anticipated in light of our actual activity at the time of granting the undertaking to indemnify and be limited to a sum or measurement determined by the board of directors to be reasonable under the circumstances;
|
|
(ii)
|
Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he was ordered to pay by a court, within the framework of proceedings filed against him by or on behalf of us, or by a third party, or in a criminal proceeding in which he was acquitted, or in a criminal proceeding in which he was convicted of a felony which does not require a criminal intent; and
|
|
(iii)
|
Reasonable litigation expenses, including legal fees he incurs due to an investigation or proceeding conducted against him by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offense which does not require criminal intent, within the meaning of the relevant terms in the Companies Law or in connection with an administrative enforcement proceeding or a financial sanction. Without derogating from the generality of the foregoing, such expenses will include a payment imposed on the director or officer in favor of an injured party as set forth in Section 52(54)(a)(1)(a) of the Securities Law, and expenses that the director or officer incurred in connection with a proceeding under Chapters H'3, H'4 or I'1 of the Securities Law, including reasonable legal expenses, which term includes attorney fees.
|
|
(i)
|
a breach of the duty of loyalty to the company, unless, with respect to insurance coverage or indemnification, the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;
|
|
(ii)
|
an intentional or reckless breach of the duty of care;
|
|
(iii)
|
an act done with the intention of unduly deriving a personal profit; or
|
|
(iv)
|
a fine imposed on the officer or director.
|
|
·
|
the Letter of Undertakings will remain in effect until the end of the period of 14 days from the date on which we notify the Trustees of our intention to terminate the Letter of Undertakings for any reason (the “Interim Period”). In addition, we may notify the Trustees in writing of the termination of any of the undertakings included in the Letter of Undertakings for any reason following the end of the period of 14 days from the delivery of such notice, or with immediate effect if any of the Notes Series file a motion for the liquidation of our company;
|
|
·
|
without prejudicing anything in the Letter of Undertakings, the parties to the Letter of Undertakings intend to mutually investigate the possibility of formulating a plan of arrangement among us and the Noteholders as to the Company’s outstanding obligations to the Noteholders;
|
|
·
|
(i) nothing in the Letter of Undertakings will be deemed to obligate any of us, the Trustees, the Noteholders’ representatives (the “Representatives”) and/or Mordechay Zisser and the entities owned and/or controlled by him (the “Controlling Shareholder”) to enter into any arrangement and/or agreement of any kind, and nothing in the Letter of Undertakings will be deemed to constitute a representation and/or warranty whatsoever as to any consent and/or confirmation by either us, the Trustees and/or the Controlling Shareholder, to any arrangement among us and the Notes Holders; and (ii) the execution of the Letter of Undertakings will not prejudice any of the parties’ or Noteholders’ rights;
|
|
·
|
we undertook to fully cooperate with the Trustees, the Representatives and anyone acting of their behalf to enable them to conduct a due diligence investigation with respect to our financial condition for the objective of negotiating an arrangement and/or providing recommendations to the Noteholders as to any arrangement and/or relating to available courses of action to protect the Noteholders’ rights pursuant to the respective Notes and the exercise thereof, subject to confidentiality obligations;
|
|
·
|
we further undertook that during the Interim Period we and the entities under our control (excluding PC (the “Controlled Entities”)) will not: (i) either directly or indirectly, make any payments and/or engage in any transactions with the Controlling Shareholder and/or entities under the control of the Controlling Shareholder and/or Mr. Mordechay Zisser’s relatives (collectively, “Related Parties”) (but excluding D&O insurance and/or indemnification undertakings, to the extent these will be duly provided to all officers of the respective entity under applicable law); (ii) dispose and/or undertake to dispose of any material asset of ours and/or the Controlled Entities, and will not provide any guarantee and/or security of any kind, to secure our or any third party’s debt, without providing the Trustees a 14-day prior written notice accompanied by all relevant information (“Advance Notice”); (iii) carry out any activity and/or enter into any transaction which is not in our and/or the Controlled Entities’ (as the case may be) ordinary course of business, unless we provide the Trustees with Advance Notice; (iv) acquire and/or sell and/or pledge any of our securities, unless we provide Advance Notice; (v) deposit any cash or cash equivalent (including any securities) with any financial institution that is a creditor of ours (“Financial Creditors”) and/or any of the Controlled Entities, or with a bank account in any of the banks to which we and/or any of our Controlled Entities’ aggregate debt exceeds an amount of NIS 5 million, but excluding any deposits of any proceeds made by our subsidiaries in the framework of such subsidiaries’ on-going activity in the ordinary course; (vi), in the case of our company, announce and/or distribute any dividends and/or other distributions of any kind, to any of our shareholders, (vii) change or amend any term under its existing credit and/of funding facilities with any of its Financial Creditors; and (viii) enter into new investments, including any purchase of new assets and/or additional rights in existing assets (except for certain specific activities agreed-upon under the Letter of Undertakings), unless we provide Advance Notice. In addition, each of us and the Controlled Entities agreed during the Interim Period to notify the Trustees and the Representatives of actual or threatened litigation or claims against us and/or any of our Controlled Entities that exceeds or would reasonably be expected to exceed NIS 2.5 million.
|
|
·
|
In addition, during the Interim Period, we and our Controlled Entities will not make any payments to their respective creditors nor will any of us undertake any obligations to do so unless we provide the Trustees with Advance Notice, except for the following:
|
|
o
|
The making of payments and undertakings in the ordinary course of business, other than to Related Parties and Financial Creditors, subject to certain thresholds and exclusions;
|
|
o
|
The advance of working capital to the Company’s subsidiaries in India and the United States, subject to a certain threshold; and
|
|
o
|
Payments to secured creditors that are due and payable in accordance with the terms thereof, provided that the source of the funds used for the repayment of such secured debt was generated from the secured assets.
|
|
·
|
The Controlling Shareholder agreed that, during the Interim Period, they will not dispose of our securities and/or of the Controlled Entities held, directly or indirectly, by the Controlling Shareholder. In addition, there may not be any change in the Controlling Shareholder’s holdings (directly or indirectly) in any of our securities, provided that such undertaking will not apply in case of any conflict between this undertaking and any previous undertaking of the Controlling Shareholder towards Bank Hapoalim, if and to the extent any such other undertaking exists.
|
|
·
|
an individual citizen or resident of the United States for U.S. federal income tax purposes;
|
|
·
|
a corporation (or another entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any political subdivision thereof or the District of Columbia;
|
|
·
|
an estate, the income of which may be included in the gross income for U.S. federal income tax purposes regardless of its source; or
|
|
·
|
a trust if, in general, (i) a U.S. court is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions, or (ii) that has in effect a valid election under applicable U.S. Treasury Regulations to be treated as a U.S. person.
|
Functional currency
|
Linkage currency
|
Change in the exchange rate (%)
|
Profit (loss)
|
||||||||
(in NIS thousands)
|
|||||||||||
Financial assets
|
|||||||||||
Cash and deposits
|
NIS
|
U.S. dollar
|
+10 | % | 24,306 | ||||||
Cash and deposits
|
Euro
|
PLN
|
+10 | % | 1,966 | ||||||
Cash and deposits
|
NIS
|
Euro
|
+10 | % | 1,002 | ||||||
Cash and deposits
|
Euro
|
NIS
|
+10 | % | 2,312 | ||||||
Available for sale assets
|
Euro
|
U.S. dollar
|
+10 | % | 17,264 | ||||||
Loan to third party
|
Euro
|
GBP
|
+10 | % | 4,606 | ||||||
Total
|
51,456 | ||||||||||
Financial Liablities
|
|||||||||||
Loans at amortized cost
|
NIS
|
U.S. dollar
|
+10 | % | (29,032 | )(*) | |||||
Loans at amortized cost
|
Euro
|
NIS
|
+10 | % | (8,496 | ) | |||||
Debentures at amortized cost
|
NIS
|
U.S. dollar
|
+10 | % | (1,537 | ) | |||||
Debentures at amortized cost
|
Euro
|
NIS
|
+10 | % | (36,016 | )(**) | |||||
Loans at amortized cost
|
Euro
|
U.S. dollar
|
+10 | % | (1,368 | ) | |||||
Loans at amortized cost
|
RON
|
Euro
|
+10 | % |
28,878
|
||||||
Total
|
(105,327
|
) |
|
(*)
|
Until June 30, 2012, the effect of the exchange rates results in respect of these financial liabilities was offset against the exchange rate resulting from investments in foreign operations which had the same functional currency.
|
|
(**)
|
In respect of PC’s Debentures which are presented at amortized cost. Regarding the foreign currency risk of PC's notes at FVTPL see "Interest Rate Risk" below.
|
Scope of
Price change
|
Profit (loss)
|
|||||||
%
|
NIS thousands
|
|||||||
Exchange rate of the Euro against the NIS
|
+10 | % | 57,151 | |||||
Change in the Israeli CPI
|
+2.2 | % | (12,573 | ) | ||||
Change in the market interest rate
|
+1 | % | 8,036 |
Profit (loss)
|
||||
NIS thousands
|
||||
Deposits linked to the Euro
|
644 | |||
Loans, notes and convertible notes linked to the U.S. dollar
|
(6,390 | ) | ||
Loans and notes linked to the Euro (*)
|
(28,636 | ) | ||
Loans linked to the NIS
|
(1,859 | ) | ||
(36,241 | ) |
_______________________________
|
|
(*)
|
In respect of PC's notes which are linked to the Israeli consumer price index and for which PC has executed swap transactions in order to exchange the interest to variable interest rate. See note 17(i) to our annual consolidated financial statements.
|
|
PC raised a total of PLN 60 million (approximately NIS 71 million) from Polish institutional investors. The unsecured bearer notes governed by Polish law have a three year maturity and will bear interest at a rate of six months Polish WIBOR plus a margin of 4.5%. PC entered into a EUR-PLN cross-currency interest rate swap in order to hedge the expected payments in PLN (principal and interest) and to correlate them with the Euro. The derivative is measured at fair value and the notes are measured at amortized cost.
|
Functional
Currency
|
Linkage
Currency
|
Interest Rate % |
Average
Interest Rate %
|
Repayment Years
|
|||||||||||||||||||||||||||||||||||||
1
|
2 | 3 | 4 | 5 |
6 and thereafter
|
Total
|
|||||||||||||||||||||||||||||||||||
NIS million
|
|||||||||||||||||||||||||||||||||||||||||
€ | € | 6.98 | 6.98 | 74.5 | - | - | - | - | - | 74.5 | |||||||||||||||||||||||||||||||
€ |
U.S. dollar
|
Libor+4
|
4.3 | 0.9 | 12.8 | - | - | - | - | 13.7 | |||||||||||||||||||||||||||||||
€ | € |
Euribor + 1.65-6
|
4 | 58.6 | 268.1 | 123.5 | 31.7 | 233.1 | 351.2 | 1,066.2 | |||||||||||||||||||||||||||||||
€ | € |
Euribor + 1.75
|
3.3 | 6.2 | 6.2 | 6.2 | 67.7 | - | - | 86.3 | |||||||||||||||||||||||||||||||
€ |
NIS (linked to CPI)
|
4.5-5.4 | 4.5-5.4 | 319.9 | 319.9 | 319.9 | 40.6 | 40.6 | - | 1,040.9 | |||||||||||||||||||||||||||||||
€ | € | 4.44-5.56 | 4.44-5.56 | 2 | 2 | 2 | 2 | 2 | 20.5 | 30.5 | |||||||||||||||||||||||||||||||
NIS
|
U.S. dollar
|
Libor + 3.5-6.3
|
4-6.8 | 290.8 | - | - | - | - | - | 290.8 | |||||||||||||||||||||||||||||||
€ | NIS |
Telbor+6
|
8.76 | 85 | - | - | - | - | - | 85 | |||||||||||||||||||||||||||||||
NIS
|
U.S. dollar
|
Libor + 2.65
|
3.05 | 11 | 5.5 | - | - | - | - | 16.5 | |||||||||||||||||||||||||||||||
NIS
|
NIS (linked to CPI)
|
5-6.3 | 6.0 | 408.9 | 388.6 | 368.4 | 271.8 | 296.9 | 541.5 | 2,276.1 | |||||||||||||||||||||||||||||||
RON
|
€ |
Euribor + 4.6
|
4.8 | 12.9 | 12.9 | 12.9 | 250 | - | - | 288.7 | |||||||||||||||||||||||||||||||
NIS
|
NIS
|
6.25 | 6.25 | 54.2 | 54.2 | - | - | - | - | 108.4 | |||||||||||||||||||||||||||||||
NIS
|
NIS
|
Prime +2
|
5.47 | 8 | - | - | - | - | - | 8 | |||||||||||||||||||||||||||||||
INR
|
INR
|
11.5-13.25% | 11.5-13.25 | 43.7 | 10.6 | 12.1 | 13.8 | 15.7 | 71.1 | 167 | |||||||||||||||||||||||||||||||
1,376.6 | 1,080.8 | 845 | 677.6 | 588.3 | 984.3 | 5,552.6 |
|
a)
|
Financial instruments included in current assets - (cash and cash equivalents, deposits and marketable securities, trade receivables, other current assets and assets related to discontinued operation) - due to their nature, their fair values approximate to those presented in the balance sheet.
|
|
b)
|
Financial instruments included in non-current assets - the fair value of loans and deposits which bear variable interest rate is an approximation to those presented in the balance sheet.
|
|
c)
|
Financial instruments included in current liabilities - (short-term credit, suppliers, other current liabilities and liabilities related to discontinued operation) - due to their nature, their fair values approximate to those presented in the balance sheet. The fair value of derivatives (mainly swap transactions) is calculated by relying on valuations performed by third party experts, which take into account the expected future cash flow based on the terms and maturity of each contract using market interest rates for a similar instrument prevailing at the measurement date.
|
|
d)
|
Financial instruments included in long-term liabilities - The fair value of the traded liabilities (notes) is determined according to closing prices as of December 31, 2012 quoted on the Tel Aviv and Warsaw Stock Exchanges, multiplied by the quantity of the marketable financial instrument issued as of that date. The fair value of non-traded liabilities at a fixed interest rate is determined according to the present value of future cash flows, discounted at a rate which reflects, in our estimation, the level of risk embedded in the financial instrument. The fair value of liabilities which carried variable interest rate is approximately the amounts presented in the balance sheet.
|
As of December 31, 2012
|
||||||||
Book Value
|
Fair Value
|
|||||||
Long- term loans at fixed interest rate
|
(30,537 | ) | (30,537 | ) | ||||
Debentures
|
(2,410,489 | ) | (1,098,999 | ) | ||||
(2,441,026 | ) | (1,129,536 | ) |
Management’s Annual Report on Internal Control Over Financial Reporting
|
Services Rendered
|
2011 Fees
|
2012 Fees
|
||||||
Audit (a)
|
$ | 1,022,868 | $ | 736,618 | ||||
Audit-related (b)
|
- | $ | 34,601 | |||||
Tax (c)
|
$ | 111,814 | $ | 295,438 | ||||
All other fees (d)
|
- | - | ||||||
Total
|
$ | 1,134,682 | $ | 1,066,657 |
Period
|
(a) Total number of shares purchased
|
(b) Average price paid per share (in U.S. dollars)
|
||||||
July 2012
|
1,453,972 | 2.62 | ||||||
August 2012
|
96,350 | 2.73 |
Page
|
|
Report of independent registered public accounting firm
|
F-2-F-3
|
Consolidated Financial Statements:
|
|
Balance sheets
|
F-4-F-5
|
Statements of income
|
F-6-F-7
|
Statements of comprehensive income
|
F-8
|
Statements of changes in shareholders' equity
|
F-9-F-12
|
Statements of cash flows
|
F-13-F-15
|
Notes to the consolidated financial statements
|
F-16-F-183
|
Appendix
|
F-184
|
Page
|
|
F-2-F-3
|
|
Consolidated Financial Statements:
|
|
F-4-F-5
|
|
F-6-F-7
|
|
F-8
|
|
F-9-F-12
|
|
F-13-F-15
|
|
F-16-F-183
|
|
F-184
|
We have audited the accompanying consolidated balance sheets of Elbit Imaging Ltd. and its subsidiaries (the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of income, statements of comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
|
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.
|
In our opinion, based on our audits, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Elbit Imaging Ltd. and its subsidiaries as of December 31, 2012 and 2011, and the consolidated results of their operations, and their cash flows for each of the three years in the period ended December 31, 2012, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
|
The Company's financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3A to the financial statements, in the period commencing February 1, 2013 through February 1, 2014 the Company is to repay its debenture holders NIS 599 million (principal and interest). Said amount includes NIS 82 million originally payable on February 21, 2013, that its repayment was suspended following a resolution of the Company's Board of Directors. The Company's Board also resolved to suspend any interest payments relating to all the Company's debentures. In addition, as of December 31, 2012, the Company failed to comply with certain financial covenants relating to bank loans in the total amount as of such date of NIS 290 million. Further, as discussed in Note 3A(6), as of the approval date of the consolidated financial statements, the Company is in cross default with respect to borrowings (debentures, Company's bank loans and loans received by subsidiaries, for which the Company is a guarantor) in the total amount of approximately NIS 2.86 billion. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Notes 3A and 31F. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
As discussed in Notes 23B and 31D, claims have been filed against Group companies for some of which petitions have been applied to certify as class actions suits, and one of which was certified as a class action.
|
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 2
|
||||||||||||||
Convenience translation
(note 2D)
|
||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||
Current Assets
|
||||||||||||||||
Cash and cash equivalents
|
535,070 | 602,292 | 143,335 | |||||||||||||
Short-term deposits and investments
|
(4) | 327,830 | 409,338 | 87,819 | ||||||||||||
Trade accounts receivables
|
(5) | 47,528 | 72,049 | 12,732 | ||||||||||||
Other receivables
|
(6) | 136,276 | 101,566 | 36,506 | ||||||||||||
Prepayments and other assets (*)
|
(7) | 23,090 | 24,939 | 6,185 | ||||||||||||
Inventories
|
14,616 | 48,043 | 3,915 | |||||||||||||
1,084,410 | 1,258,227 | 290,492 | ||||||||||||||
Non-Current Assets
|
||||||||||||||||
Trading property (*)
|
(8) | 4,198,705 | 4,556,616 | 1,124,754 | ||||||||||||
Deposits, loans and other long-term balances
|
(9) | 55,116 | 380,077 | 14,765 | ||||||||||||
Investments in associates
|
(10) | 164,025 | 10,556 | 43,939 | ||||||||||||
Property, plant and equipment
|
(12) | 1,185,485 | 1,167,646 | 317,569 | ||||||||||||
Investment property
|
(13) | 123,723 | 2,672,571 | 33,143 | ||||||||||||
Other assets and deferred expenses (*)
|
(14) | 236,229 | 250,959 | 63,281 | ||||||||||||
Intangible assets
|
(15) | 46,718 | 74,415 | 12,515 | ||||||||||||
6,010,001 | 9,112,840 | 1,609,966 | ||||||||||||||
7,094,411 | 10,371,067 | 1,900,458 |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 2
|
||||||||||||||
Convenience translation
(Note 2D)
|
||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||
Current Liabilities
|
||||||||||||||||
Short-term credits (*)
|
(16) | 1,537,010 | 1,662,934 | 411,736 | ||||||||||||
Suppliers and service providers
|
75,887 | 219,229 | 20,329 | |||||||||||||
Payables and other credit balances
|
(17) | 135,689 | 261,744 | 36,348 | ||||||||||||
Other liabilities (*)
|
(18) | 39,531 | 83,065 | 10,590 | ||||||||||||
1,788,117 | 2,226,971 | 479,003 | ||||||||||||||
Non-Current Liabilities
|
||||||||||||||||
Borrowings (*)
|
(19) | 3,666,708 | 6,191,003 | 982,242 | ||||||||||||
Other financial liabilities
|
(20) | 14,021 | 215,752 | 3,756 | ||||||||||||
Other liabilities (*)
|
(21) | 91,127 | 89,828 | 24,411 | ||||||||||||
Deferred taxes
|
(22) | 113,309 | 108,642 | 30,353 | ||||||||||||
3,885,165 | 6,605,226 | 1,040,762 | ||||||||||||||
Commitments, Contingencies, Liens and Collaterals
|
(23) | |||||||||||||||
Shareholders' Equity
|
(24) | |||||||||||||||
Share capital and share premium
|
902,870 | 902,870 | 241,862 | |||||||||||||
Reserves
|
(505,980 | ) | (605,132 | ) | (135,541 | ) | ||||||||||
Retained earnings
|
81,237 | 230,413 | 21,761 | |||||||||||||
Treasury stock
|
(168,521 | ) | (168,521 | ) | (45,144 | ) | ||||||||||
Attributable to equity holders of the Company
|
309,606 | 359,630 | 82,938 | |||||||||||||
Non controlling interest
|
1,111,523 | 1,179,240 | 297,755 | |||||||||||||
1,421,129 | 1,538,870 | 380,693 | ||||||||||||||
7,094,411 | 10,371,067 | 1,900,458 |
Doron Moshe
Chief Financial Officer
|
Mordechay Zisser
CEO
|
December 31
|
||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||||||
(Except for per-share data)
|
||||||||||||||||||||
Income - revenues and gains Revenues
|
||||||||||||||||||||
Revenues from sale of commercial centers
|
(26A) | 127,109 | 3,525 | 4,345 | 34,050 | |||||||||||||||
Revenues from hotels operation and management
|
(26B) | 222,828 | 286,548 | 403,822 | 59,692 | |||||||||||||||
Revenues from fashion merchandise and other
|
145,996 | 185,082 | 174,817 | 39,109 | ||||||||||||||||
Total revenues
|
495,933 | 475,155 | 582,984 | 132,851 | ||||||||||||||||
Gains and other income
|
||||||||||||||||||||
Rental income from commercial centers
|
(26A) | 175,153 | 111,745 | 98,550 | 46,920 | |||||||||||||||
Gain from changes of shareholding in investees
|
9,369 | - | - | 2,510 | ||||||||||||||||
Gain from sale of real estate assets
|
53,875 | - | 198,777 | 14,432 | ||||||||||||||||
Total income - revenues and gains
|
734,330 | 586,900 | 880,311 | 196,713 | ||||||||||||||||
Expenses and losses
|
||||||||||||||||||||
Commercial centers
|
(26C) | 272,810 | 159,626 | 156,745 | 73,081 | |||||||||||||||
Hotels operations and management
|
(26D) | 202,158 | 240,784 | 341,291 | 54,154 | |||||||||||||||
Cost of fashion merchandise and other
|
(26E) | 155,772 | 211,743 | 197,574 | 41,728 | |||||||||||||||
General and administrative expenses
|
(26F) | 48,886 | 61,857 | 65,292 | 13,096 | |||||||||||||||
Share in losses of associates, net
|
8,726 | 7,568 | 8,275 | 2,337 | ||||||||||||||||
Financial expenses
|
(26G) | 175,778 | 164,001 | 316,706 | 47,088 | |||||||||||||||
Financial income
|
(26H) | (31,083 | ) | (65,571 | ) | (40,927 | ) | (8,327 | ) | |||||||||||
Change in fair value of financial instruments measured at fair value through profit and loss
|
(26I) | 50,229 | (275,537 | ) | 53,016 | 13,455 | ||||||||||||||
Write-down, charges and other expenses, net
|
(26J) | 411,625 | 290,276 | 83,660 | 110,267 | |||||||||||||||
1,294,901 | 794,747 | 1,181,632 | 346,879 | |||||||||||||||||
Loss before income taxes
|
(560,571 | ) | (207,847 | ) | (301,321 | ) | (150,166 | ) | ||||||||||||
Income tax expenses (tax benefit)
|
(22) | (10,248 | ) | 63,283 | 3,992 | (2,745 | ) | |||||||||||||
Loss from continuing operations
|
(550,323 | ) | (271,130 | ) | (305,313 | ) | (147,421 | ) | ||||||||||||
Profit from discontinued operations, net
|
(29) | 94,823 | 24,101 | 378,838 | 25,401 | |||||||||||||||
Profit (loss) for the year
|
(455,500 | ) | (247,029 | ) | 73,525 | (122,020 | ) |
December 31
|
||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||||||
Note
|
(in thousand NIS)
|
U.S.$'000
|
||||||||||||||||||
(Except for per-share data)
|
||||||||||||||||||||
Attributable to:
|
||||||||||||||||||||
Equity holders of the Company
|
(293,590 | ) | (264,919 | ) | 61,998 | (78,647 | ) | |||||||||||||
Non-controlling interest
|
(161,910 | ) | 17,890 | 11,527 | (43,373 | ) | ||||||||||||||
(455,500 | ) | (247,029 | ) | 73,525 | (122,020 | ) | ||||||||||||||
Loss from continuing operations
|
||||||||||||||||||||
Equity holders of the Company
|
(391,947 | ) | (284,610 | ) | (308,924 | ) | (104,995 | ) | ||||||||||||
Non-controlling interest
|
(158,376 | ) | 13,480 | 3,611 | (42,426 | ) | ||||||||||||||
(550,323 | ) | (271,130 | ) | (305,313 | ) | (147,421 | ) | |||||||||||||
Profit from discontinued operation, net
|
||||||||||||||||||||
Equity holders of the Company
|
98,357 | 19,691 | 370,922 | 26,348 | ||||||||||||||||
Non-controlling interest
|
(3,534 | ) | 4,410 | 7,916 | (947 | ) | ||||||||||||||
94,823 | 24,101 | 378,838 | 25,401 | |||||||||||||||||
Earnings (loss) per share - (in NIS)
|
(26K) | |||||||||||||||||||
Basic earnings per share:
|
||||||||||||||||||||
From continuing operation
|
(15.75 | ) | (11.44 | ) | (12.21 | ) | (4.22 | ) | ||||||||||||
From discontinued operations
|
3.95 | 0.79 | 14.67 | 1.06 | ||||||||||||||||
(11.80 | ) | (10.65 | ) | 2.45 | (3.16 | ) | ||||||||||||||
Diluted earnings per share:
|
||||||||||||||||||||
From continuing operation
|
(15.75 | ) | (11.44 | ) | (12.21 | ) | (4.22 | ) | ||||||||||||
From discontinued operations
|
3.95 | 0.79 | 14.41 | 1.06 | ||||||||||||||||
(11.80 | ) | (10.65 | ) | 2.13 | (3.16 | ) |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
Profit (loss) for the year
|
(455,500 | ) | (247,029 | ) | 73,525 | (122,020 | ) | |||||||||
Exchange differences arising from translation of foreign operations
|
(61,546 | ) | 41,726 | (391,583 | ) | (16,487 | ) | |||||||||
Gain (loss) from cash flow hedge
|
(13,893 | ) | (41,577 | ) | 37,441 | (3,722 | ) | |||||||||
Gain (loss) from available for sale investments
|
13,164 | (6,346 | ) | (864 | ) | 3,526 | ||||||||||
Adaption of the revaluation model -
|
||||||||||||||||
Beginning of the year
|
470,852 | - | - | 126,284 | ||||||||||||
Additions during the year
|
43,090 | - | - | 11,391 | ||||||||||||
Loss on hedging instruments designated in hedges of the net assets of foreign operations
|
37,971 | - | - | 10,172 | ||||||||||||
Reclassification adjustments relating to foreign operations disposed of in the year
|
(102,035 | ) | - | (34,291 | ) | (27,333 | ) | |||||||||
Income tax expenses (tax benefits) (see note 22)
|
(106,243 | ) | (1,480 | ) | 24,093 | (28,461 | ) | |||||||||
281,360 | (7,677 | ) | (365,204 | ) | 75,370 | |||||||||||
Comprehensive loss
|
(174,140 | ) | (254,706 | ) | (291,679 | ) | (46,650 | ) | ||||||||
Attributable to:
|
||||||||||||||||
Equity holders of the Company
|
(49,837 | ) | (264,454 | ) | (128,992 | ) | (13,351 | ) | ||||||||
Non-controlling interest
|
(124,303 | ) | 9,748 | (162,687 | ) | (33,299 | ) | |||||||||
(174,140 | ) | (254,706 | ) | (291,679 | ) | (46,650 | ) |
Share capital
|
Share premium
|
Other reserves
|
Stock-based compensation reserve
|
Foreign currency translation reserve
|
Retained earnings
|
Gross amount
|
Treasury stock
|
Attributable to share-holders of the company
|
Non Controlling interest
|
Total shareholders' equity
|
||||||||||||||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2010
|
38,038 | 835,269 | (36,458 | ) | 57,090 | (242,304 | ) | 433,334 | 1,084,969 | (138,519 | ) | 946,450 | 1,201,721 | 2,148,171 | ||||||||||||||||||||||||||||||
Profit for the year
|
- | - | - | - | - | 61,998 | 61,998 | - | 61,998 | 11,527 | 73,525 | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
- | - | 38,699 | - | (229,689 | ) | - | (190,990 | ) | - | (190,990 | ) | (174,214 | ) | (365,204 | ) | ||||||||||||||||||||||||||||
Purchase of Company's shares by a subsidiary
|
- | - | - | - | - | - | - | (30,002 | ) | (30,002 | ) | - | (30,002 | ) | ||||||||||||||||||||||||||||||
Issuance of shares to non controlling interest of subsidiary
|
- | - | (36,145 | ) | - | - | - | (36,145 | ) | - | (36,145 | ) | 22,431 | (13,714 | ) | |||||||||||||||||||||||||||||
Purchase by non controlling interest
|
- | - | - | - | - | - | - | - | - | 149,093 | 149,093 | |||||||||||||||||||||||||||||||||
Initially consolidated subsidiary
|
- | - | - | - | - | - | - | - | - | 182,843 | 182,843 | |||||||||||||||||||||||||||||||||
Exercise of shares by employees
|
13 | 2,473 | - | (2,486 | ) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Employee stocks expired
|
- | 6,832 | - | (6,832 | ) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | - | 9,429 | - | - | 9,429 | - | 9,429 | 23,380 | 32,809 | |||||||||||||||||||||||||||||||||
Balance - December 31, 2010
|
38,051 | 844,574 | (33,904 | ) | 57,201 | (471,993 | ) | 495,332 | 929,261 | (168,521 | ) | 760,740 | 1,416,781 | 2,177,521 |
Share capital
|
Share premium
|
Other reserves (*)
|
Stock-based compensation reserve
|
Foreign currency translation reserve
|
Retained earnings
|
Gross amount
|
Treasury stock
|
Attributable to share-holders of the company
|
Non Controlling interest
|
Total shareholders' equity
|
||||||||||||||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||||||||||||||||||
Balance - January 1, 2011
|
38,051 | 844,574 | (33,904 | ) | 57,201 | (471,993 | ) | 495,332 | 929,261 | (168,521 | ) | 760,740 | 1,416,781 | 2,177,521 | ||||||||||||||||||||||||||||||
Loss for the year
|
- | - | - | - | - | (264,919 | ) | (264,919 | ) | - | (264,919 | ) | 17,890 | (247,029 | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
- | - | (42,411 | ) | - | 42,876 | - | 465 | - | 465 | (8,142 | ) | (7,677 | ) | ||||||||||||||||||||||||||||||
Dividend paid to the non controlling interest by a subsidiary
|
- | - | - | - | - | - | - | - | - | (56,529 | ) | (56,529 | ) | |||||||||||||||||||||||||||||||
Purchase of unit holdings from non controlling interest by a subsidiary
|
- | - | (155,102 | ) | - | - | - | (155,102 | ) | - | (155,102 | ) | (226,634 | ) | (381,736 | ) | ||||||||||||||||||||||||||||
Issuance of shares to the non controlling interest by a subsidiary
|
- | - | 7,741 | - | - | - | 7,741 | - | 7,741 | (12,170 | ) | (4,429 | ) | |||||||||||||||||||||||||||||||
Initially consolidated subsidiary
|
- | - | - | - | - | - | - | - | - | 11,766 | 11,766 | |||||||||||||||||||||||||||||||||
Exercise of shares by employees
|
8 | 20,237 | - | (20,245 | ) | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | - | 10,705 | - | - | 10,705 | - | 10,705 | 36,278 | 46,983 | |||||||||||||||||||||||||||||||||
Balance - December 31, 2011
|
38,059 | 864,811 | (223,676 | ) | 47,661 | (429,117 | ) | 230,413 | 528,151 | (168,521 | ) | 359,630 | 1,179,240 | 1,538,870 |
Share capital
|
Share premium
|
Other reserves (*)
|
Revaluation of property, plant and equipment
|
Stock-based compensation reserve
|
Foreign currency translation reserve
|
Retained earnings
|
Gross amount
|
Treasury stock
|
Attributable to share-holders of the company
|
Non Controlling interest
|
Total shareholders' equity
|
|||||||||||||||||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance -
January 1, 2012
|
38,059 | 864,811 | (223,676 | ) | - | 47,661 | (429,117 | ) | 230,413 | 528,151 | (168,521 | ) | 359,630 | 1,179,240 | 1,538,870 | |||||||||||||||||||||||||||||||||
Loss for the year
|
- | - | - | - | - | - | (293,590 | ) | (293,590 | ) | - | (293,590 | ) | (161,910 | ) | (455,500 | ) | |||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
- | - | 34,737 | (**)190,690 | - | (126,087 | ) | (***)144,414 | 243,754 | - | 243,754 | 37,605 | 281,359 | |||||||||||||||||||||||||||||||||||
Transaction with non controlling interest
|
- | - | (9,954 | ) | - | - | - | - | (9,954 | ) | - | (9,954 | ) | 12,583 | 2,629 | |||||||||||||||||||||||||||||||||
Reclassification of a derivative (option) to equity following change in terms
|
- | - | 7,193 | - | - | - | - | 7,193 | - | 7,193 | - | 7,193 | ||||||||||||||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | - | - | 2,174 | 399 | - | 2,573 | - | 2,573 | 44,005 | 46,578 | ||||||||||||||||||||||||||||||||||||
Balance -
December 31, 2012
|
38,059 | 864,811 | (191,700 | ) | 190,690 | 49,835 | (554,805 | ) | 81,237 | 478,127 | (168,521 | ) | 309,606 | 1,111,523 | 1,421,129 |
(*)
|
Includes with non-controlling interest and hedging reserve.
|
(**)
|
Net of related tax expenses in the amount of NIS 61 million.
|
(***)
|
Net of related tax expenses in the amount of NIS 45 million.
|
Share capital
|
Share premium
|
Other reserves (*)
|
Revaluation of property, plant and equipment
|
Stock-based compensation reserve
|
Foreign currency translation reserve
|
Retained earnings
|
Gross amount
|
Treasury stock
|
Attributable to share-holders of the company
|
Non Controlling interest
|
Total shareholders' equity
|
|||||||||||||||||||||||||||||||||||||
Convenience translation (Note 2D), U.S.$'000
|
||||||||||||||||||||||||||||||||||||||||||||||||
Balance -
January 1, 2012
|
10,195 | 231,666 | (59,919 | ) | - | 12,768 | (114,952 | ) | 61,723 | 141,481 | (45,144 | ) | 96,338 | 315,896 | 412,234 | |||||||||||||||||||||||||||||||||
Loss for the year
|
- | - | - | - | - | - | (78,647 | ) | (78,647 | ) | - | (78,647 | ) | (43,373 | ) | (122,020 | ) | |||||||||||||||||||||||||||||||
Comprehensive income (loss)
|
- | - | 9,305 | (**)51,082 | - | (33,777 | ) | (***)38,686 | 65,296 | - | 65,296 | 10,074 | 75,370 | |||||||||||||||||||||||||||||||||||
Transaction with non controlling interest
|
- | - | (2,666 | ) | - | - | - | - | (2,666 | ) | - | (2,666 | ) | 3,370 | 705 | |||||||||||||||||||||||||||||||||
Reclassification of a derivative (option) to equity following change in terms
|
- | - | 1,927 | - | - | - | - | 1,927 | - | 1,927 | - | 1,927 | ||||||||||||||||||||||||||||||||||||
Stock-based compensation expenses
|
- | - | - | - | 582 | 107 | - | 689 | - | 689 | 11,788 | 12,477 | ||||||||||||||||||||||||||||||||||||
Balance -
December 31, 2012
|
10,195 | 231,666 | (51,353 | ) | 51,082 | 13,350 | (148,622 | ) | 21,762 | 128,080 | (45,144 | ) | 82,938 | 297,755 | 380,693 |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||||||
Loss for the year from continued operations
|
(550,323 | ) | (271,130 | ) | (305,313 | ) | (147,421 | ) | ||||||||
Income tax expenses (tax benefit) recognized in profit and loss
|
(10,248 | ) | 63,283 | 3,992 | (2,745 | ) | ||||||||||
Finance expenses (income) recognized in profit and loss
|
194,924 | (177,107 | ) | 328,795 | 52,216 | |||||||||||
Income tax paid in cash
|
- | (3,376 | ) | (1,555 | ) | - | ||||||||||
Depreciation and amortization (including impairment)
|
461,568 | 339,412 | 114,539 | 123,645 | ||||||||||||
Gain from fair value adjustment of investment property
|
(9,930 | ) | (19,700 | ) | (2,324 | ) | (2,660 | ) | ||||||||
Profit from realization of investments in subsidiaries (Appendix B)
|
(62,608 | ) | - | (198,777 | ) | (16,771 | ) | |||||||||
Share in losses of associates, net
|
8,726 | 7,568 | 8,275 | 2,338 | ||||||||||||
Profit from realization of assets and liabilities
|
- | - | (5,739 | ) | - | |||||||||||
Stock based compensation expenses
|
18,497 | 39,691 | 27,632 | 4,955 | ||||||||||||
Other
|
2,737 | (1,949 | ) | 12,416 | 733 | |||||||||||
Trade accounts receivables
|
(9,112 | ) | (7,662 | ) | 3,113 | (2,441 | ) | |||||||||
Receivables and other debit balances
|
7,791 | (12,630 | ) | 67,585 | 2,087 | |||||||||||
Inventories
|
7,287 | (8,240 | ) | (1,664 | ) | 1,952 | ||||||||||
Trading property and payment on account of trading property
|
(113,135 | ) | (403,624 | ) | (349,714 | ) | (30,307 | ) | ||||||||
Suppliers and service providers
|
(105,691 | ) | 106,503 | (33,610 | ) | (28,313 | ) | |||||||||
Payables and other credit balances
|
42,989 | 69,397 | (31,829 | ) | 11,516 | |||||||||||
Net cash used in operating activities of continuing operations
|
(116,528 | ) | (279,564 | ) | (364,178 | ) | (31,216 | ) | ||||||||
Net cash provided by (used in) discontinued operating activities
|
(32,096 | ) | 38,675 | 31,167 | (8,598 | ) | ||||||||||
Net cash used in operating activities
|
(148,624 | ) | (240,889 | ) | (333,011 | ) | (39,814 | ) |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||||||
Investment in initially-consolidated subsidiaries (Appendix C)
|
- | (2,197 | ) | (5,173 | ) | - | ||||||||||
Purchase of property plant and equipment, investment property and other assets
|
(24,227 | ) | (34,410 | ) | (72,925 | ) | (6,490 | ) | ||||||||
Proceeds from realization of property plant and equipment
|
2,000 | 1,018 | 31,282 | 536 | ||||||||||||
Proceeds from realization of investments in subsidiaries
(Appendix B)
|
139,827 | - | (21,349 | ) | 37,457 | |||||||||||
Investments in associates and other companies
|
(11,567 | ) | - | (2,591 | ) | (3,099 | ) | |||||||||
Proceed from realization of long-term deposits and long-term loans
|
277,436 | 33,431 | 119,489 | 74,320 | ||||||||||||
Investment in long-term deposits and long-term loans
|
(29 | ) | 46,133 | (11,925 | ) | (8 | ) | |||||||||
Interest received in cash
|
37,542 | 65,375 | 57,239 | 10,057 | ||||||||||||
Investments in debt security
|
- | - | (39,206 | ) | - | |||||||||||
Proceeds from repayment of debt security
|
- | - | 47,207 | - | ||||||||||||
Proceed from sale of available for sale marketable securities
|
154,943 | 45,051 | 50,576 | 41,506 | ||||||||||||
Purchase of available for sale marketable securities
|
(82,239 | ) | (46,325 | ) | (108,692 | ) | (22,030 | ) | ||||||||
Loans granted to a former subsidiary
|
- | (54,444 | ) | (62,431 | ) | - | ||||||||||
Short-term deposits and marketable securities, net
|
62,511 | 333,136 | (170,415 | ) | 16,746 | |||||||||||
Net cash provided by (used in) continued investing activities
|
556,197 | 386,768 | (188,914 | ) | 148,995 | |||||||||||
Net cash provided by (used in) discontinued investing activities
|
1,289,831 | (61,416 | ) | (178,463 | ) | 345,521 | ||||||||||
Net cash provided by (used in) investing activities
|
1,846,028 | 325,352 | (367,377 | ) | 494,516 | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||||||
Proceeds from re-issuance of debentures
|
58,080 | - | - | 15,559 | ||||||||||||
Dividend paid to non-controlling interest
|
- | (56,772 | ) | - | - | |||||||||||
Repurchase of debentures and treasury stock
|
(184,342 | ) | (202,439 | ) | (30,002 | ) | (49,382 | ) | ||||||||
Interest paid in cash
|
(348,946 | ) | (390,442 | ) | (328,559 | ) | (93,476 | ) | ||||||||
Proceeds from long-term borrowings
|
52,895 | 1,116,030 | 1,379,556 | 14,170 | ||||||||||||
Repayment of long-term borrowings
|
(770,898 | ) | (1,226,102 | ) | (923,753 | ) | (206,509 | ) | ||||||||
Proceeds from selling derivatives
|
59,040 | 222,543 | 45,834 | 15,816 | ||||||||||||
Proceeds from transactions with non-controlling interests, net
|
- | - | 121,218 | - | ||||||||||||
Proceed from short-term credit
|
203,990 | 411,484 | 275,218 | 54,645 | ||||||||||||
Repayment of short-term credit
|
(255,175 | ) | (157,850 | ) | (131,160 | ) | (68,357 | ) | ||||||||
Net cash provided by (used in) continued financing activities
|
(1,185,356 | ) | (283,548 | ) | 408,352 | (317,534 | ) | |||||||||
Net cash used in discontinued financing activities
|
(584,789 | ) | (297,092 | ) | (39,991 | ) | (156,654 | ) | ||||||||
Net cash provided by (used in) financing activities
|
(1,770,145 | ) | (580,640 | ) | 368,361 | (474,188 | ) | |||||||||
Decrease in cash and cash equivalents
|
(72,741 | ) | (457,538 | ) | (332,027 | ) | (19,486 | ) | ||||||||
Cash and cash equivalents at the beginning of the year
|
602,292 | 1,040,797 | 1,508,301 | 161,343 | ||||||||||||
Net effect on cash due to currency exchange rate changes
|
5,519 | 57,672 | (135,477 | ) | 1,478 | |||||||||||
Cash and cash equivalents at the end of the year
|
535,070 | 602,292 | 1,040,797 | 143,335 |
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Appendix A -
|
||||||||||||||||
Non-cash transactions
|
||||||||||||||||
Long-term loans assumed by the purchaser of investment property
|
1,114,521 | - | 122,338 | 298,559 | ||||||||||||
Acquisition of property plant and equipment, investment property and other assets by credit
|
804 | - | 8,539 | 215 | ||||||||||||
Appendix B -
|
||||||||||||||||
Proceeds from realization of investments in subsidiaries
|
||||||||||||||||
Working capital (excluding cash), net
|
(25,431 | ) | - | (90,387 | ) | (6,812 | ) | |||||||||
Property, plant equipment and other assets
|
382,344 | - | 456,102 | 102,423 | ||||||||||||
Long term receivable
|
(7,529 | ) | - | (104,205 | ) | (2,017 | ) | |||||||||
Long term liabilities
|
(272,165 | ) | - | (470,628 | ) | (72,908 | ) | |||||||||
Foreign currency transaction
|
- | - | (11,008 | ) | - | |||||||||||
Profit from realization of subsidiaries
|
62,608 | - | 198,777 | 16,771 | ||||||||||||
139,827 | - | (21,349 | ) | 37,457 | ||||||||||||
Appendix C -
|
||||||||||||||||
Initially consolidated subsidiaries
|
||||||||||||||||
Working capital (excluding cash), net
|
- | (134 | ) | (1,539 | ) | - | ||||||||||
Prepayment lease rights
|
- | - | - | - | ||||||||||||
Investment in investee company
|
- | (8,265 | ) | - | - | |||||||||||
Intangible asset
|
- | 25,341 | - | - | ||||||||||||
Property plant and equipment
|
- | - | 77,223 | - | ||||||||||||
Long term liabilities
|
- | - | (70,420 | ) | - | |||||||||||
Share Capital
|
- | - | (91 | ) | - | |||||||||||
Gain on disposal of interest in former associate
|
- | (2,736 | ) | - | - | |||||||||||
Non-controlling interest
|
- | (12,009 | ) | - | - | |||||||||||
- | 2,197 | 5,173 | - |
|
A.
|
Elbit Imaging Ltd. ("the Company") was incorporated in Israel. The Company's registered office is at 5 Kinneret Street Bnei Brak, Israel. The Company's shares are registered for trade on the Tel Aviv Stock Exchange and in the United States on the NASDAQ Global Select Market.
|
|
B.
|
The Group engages, directly and through its investee companies, in Israel and abroad, mainly in the following areas:
|
|
·
|
Commercial and entertainment centers - initiation, construction, and sale of shopping and entertainment centers and other mixed-use property projects, predominantly in the retail sector, located in Central and Eastern Europe and in India. In certain circumstances and depending on market conditions, the Group operates and manages commercial and entertainment centers prior to their sale.
|
|
·
|
Hotels - hotels operation and management, primarily in major European cities. For the sale of the Group’s hotels in Netherland and UK, see note 12C and D.
|
|
·
|
Medical industries and devices - (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment, and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine.
|
|
·
|
Residential projects - initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential, located primarily in India.
|
|
·
|
Fashion apparel - distribution and marketing of fashion apparel and accessories in Israel. With respect to the selling of GAP operation, see note 11E.
|
|
·
|
During 2012, the Company closed a transaction to sale all its investments in commercial centers in the US (see note 29B) and lost control over its holding in the subsidiary holding the medical industry and devices (see note 10B(2)). Accordingly, these operations are presented in these financial statements as discontinued operations.
|
|
C.
|
Financial position of the Company and Plaza Centers:
|
|
D.
|
Definitions:
|
The Company
|
-
|
Including Elscint
|
Elscint
|
-
|
A formerly 100% subsidiary of the Company, merged with the Company in 2010.
|
Group
|
-
|
The Company and its Investees
|
Investees
|
-
|
Subsidiaries, joint ventures and associates
|
PC
|
-
|
Plaza Centers N.V. Group, a material subsidiary (62.5%) operating in the field of commercial and entertainment centers.
|
Elbit Medical
|
-
|
Elbit Medical Technologies Ltd., a public Israeli company traded on the TASE, as for December 31, 2012, the Company holds 96% of Elbit Medical on a fully diluted basis.
|
InSightec Ltd.
|
-
|
As of December 31, 2012, an associate (48%) operating in the field of development, manufacturing and marketing of medical treatment systems (see note 10 B).
|
EPN Group
|
-
|
EPN GP, LLC, and EPN EDT Holdings II and their affiliates jointly ventures (45%), the Group's U.S. real estate investment funds.
|
Parent Company
|
-
|
Europe Israel (M.M.S.) Ltd. ("EIL").
|
Europe Israel Group
|
-
|
Europe Israel (M.M.S.) Ltd and its investee companies.
|
Control Centers
|
-
|
Control Centers Ltd. - the controlling shareholder of EIL ("CC").
|
Control Centers Group
|
-
|
Control Centers and its investee companies.
|
Ultimate controlling party
|
-
|
The controlling shareholder of Control Centers, Mr. Mordechay Zisser, who through December 31, 2011 served as the Company's Executive President, and as a director and during 2012 was nominated as the CEO of the Company, the Company's Executive President and as a director.
|
Related parties
|
-
|
As defined in International Accounting Standard ("IAS") no. 24.
|
|
A.
|
Statement of compliance:
|
|
B.
|
Basis for preparation:
|
|
C.
|
Presentation of the income statements:
|
|
D.
|
Convenience translation:
|
|
E.
|
Operating cycle; Restatement:
|
31/12/2012
|
As previously reported
|
Adjustments
|
As Restated
|
|||||||||
(NIS in thousands)
|
||||||||||||
Current assets
|
5,506,875 | (4,422,465 | ) | 1,084,410 | ||||||||
Non-current assets
|
1,587,536 | 4,422,465 | 6,010,001 | |||||||||
Current liabilities
|
2,735,235 | (947,118 | ) | 1,788,117 | ||||||||
Non-current liabilities
|
2,938,047 | 947,118 | 3,885,165 |
31/12/2011
|
As previously reported
|
Adjustments,
as restated
|
Present balance
|
|||||||||
(NIS in thousands)
|
||||||||||||
Current assets
|
6,052,765 | (4,794,538 | ) | 1,258,227 | ||||||||
Non-current assets
|
4,318,302 | 4,794,538 | 9,112,840 | |||||||||
Current liabilities
|
2,844,825 | (617,854 | ) | 2,226,971 | ||||||||
Non-current liabilities
|
5,987,372 | 617,854 | 6,605,226 |
|
F.
|
Basis for consolidation:
|
|
(i)
|
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company ("Subsidiaries"). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the reporting periods are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as the case may be. Where necessary, adjustments are made to the financial statements of subsidiaries to adjust their accounting policies with those of the Company. Material intra-group transactions, balances, income and expenses are fully eliminated on consolidation.
|
|
(ii)
|
Business combination - goodwill is measured as the fair value of the consideration transferred (including the fair value of any previously-held equity interest in the acquiree) and the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss.
|
|
(iii)
|
Transactions with non-controlling interest shareholders, in the context of which the Company retains control before and after the transaction, are treated as capital transactions.
|
|
(iv)
|
Transactions in which the Group attained control through step acquisitions of an entity which do not meet the definition of a business combination, are accounted for based on the cost of the asset acquired at each step.
|
|
(v)
|
When a control over a subsidiary is lost, a gain or loss is recognised in profit or loss and is measured as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest in that subsidiary, if any, and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment in an associate.
|
|
G.
|
Interest in joint ventures:
|
|
H.
|
Investments in associates:
|
|
I.
|
Foreign currency:
|
|
I.
|
Foreign currency: (cont.)
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
U.S. Dollar ($)
|
3.733 | 3.821 | ||||||
EURO ( €)
|
4.921 | 4.938 | ||||||
Romanian New Lei (RON)
|
1.108 | 1.139 | ||||||
Indian Rupee (INR)
|
0.068 | 0.072 |
December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
U.S. Dollar ($)
|
(2 | ) | 8 | (6 | ) | |||||||
EURO (€)
|
(0.5 | ) | 4 | (13 | ) | |||||||
Romanian New Lei (RON)
|
(3 | ) | 3 | (2 | ) | |||||||
Indian Rupee (INR)
|
(5 | ) | (9 | ) | 6 |
|
J.
|
Cash and cash equivalents:
|
|
K.
|
Financial assets:
|
|
K.
|
Financial assets: (cont.)
|
|
L.
|
Inventories:
|
|
•
|
Hotel inventory and fashion merchandise - by the "first-in, first-out" method;
|
|
•
|
Image guided treatment inventories -raw materials on the basis of moving average cost per unit; finished products on the basis of standard cost, which approximates actual production cost (materials, labor and indirect manufacturing costs).
|
|
M.
|
Trading property and prepayment:
|
|
N.
|
Property plant and equipment:
|
(i)
|
In 2012, the Group selected to change the accounting policy with respect to property, plant and equipment (hotels), and to adopt the revaluation model as oppose to the cost model applied until December 31, 2011. The change in the accounting policy was prospectively applied commencing January 1, 2012.
|
(ii)
|
Depreciation is calculated by the straight-line method over the assets estimated useful lives. Leasehold improvements are amortized over the estimated useful period of use not exceeding the lease period (including the period of renewal options that the Group intends to exercise).
|
%
|
|||
Hotels
|
1-4 | ||
Other buildings
|
2.0 - 2.5 | ||
Building operating systems
|
7.0 (average)
|
||
Others (*)
|
6.0 - 33.0 |
|
(*)
|
Consists mainly motor vehicles, office furniture and equipment, machinery and equipment, electronic equipment, computers and peripheral equipment.
|
|
O.
|
Investment property:
|
·
|
Land acquired with no defined and final designation. When the final use of a land is determined and it is evidenced by commencement of activities to get it ready for its intended use, the Group transfers the relevant part of the investment in the land to investment property and/or property plant and equipment and/or to trading property as the case may be.
|
|
P.
|
Lease:
|
|
Q.
|
Other assets and deferred expenses:
|
|
R.
|
Goodwill and intangible asset:
|
|
S.
|
Income taxes:
|
|
S.
|
Income taxes: (cont.)
|
|
T.
|
Impairment of tangible and intangible assets (excluding goodwill and including investments in associates):
|
|
U.
|
Financial liabilities and equity instruments issued by the Group:
|
|
U.
|
Financial liabilities and equity instruments issued by the Group (cont.):
|
|
U.
|
Financial liabilities and equity instruments issued by the Group (cont.):
|
|
V.
|
Derivative financial instruments and hedge accounting:
|
|
V.
|
Derivative financial instruments and hedge accounting (cont.):
|
§
|
Cash flow hedge
|
§
|
Hedges of net investments in foreign operations
|
|
W.
|
Provisions; Contingent Asset:
|
|
X.
|
Grants from the Office of Chief Scientist ("OCS"):
|
|
Y.
|
Retirement benefit costs:
|
|
Z.
|
Share-based payments:
|
|
AA.
|
Revenue recognition:
|
|
(i)
|
General - The Group recognizes revenue and gains when the amount of revenue, or gain, can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and specifics of each arrangement.
|
|
(ii)
|
Revenues from hotel operations are recognized upon performance of service.
|
|
(iii)
|
Revenues and Gains from sales of real estate assets (including hotels), property, plant and equipment and trading properties are recognized when all the following conditions are satisfied:
|
|
a.
|
the Group has transferred to the buyer the significant risks and rewards of ownership of the asset sold;
|
|
b.
|
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the asset sold;
|
|
c.
|
the amount of income can be measured reliably;
|
|
d.
|
it is probable that the economic benefits associated with the transaction will flow to the Group (including the fact that the buyer's initial and continuing investment is adequate to demonstrate commitment to pay);
|
|
e
|
the costs incurred or to be incurred in respect of the transaction can be measured reliably; and
|
|
f.
|
there are no significant acts that the Group is obliged to complete according to the sale agreement.
|
|
AA.
|
Revenue recognition: (cont.)
|
|
(iii)
|
(Cont.)
|
|
(iv)
|
Revenues from the sale of goods in the retail industry are recognized upon delivery.
|
|
AB.
|
Capitalization of borrowing costs:
|
|
AC.
|
Earnings (loss) per share:
|
|
AD.
|
Statement of cash flows:
|
|
AE.
|
Discontinued operation
|
|
1.
|
represents a separate major line of business or geographical area of operations;
|
|
2.
|
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or
|
|
3.
|
is a subsidiary acquired exclusively with a view to re-sale.
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates:
|
|
(1)
|
Use of estimates
|
|
a.
|
Impairment/write down of real estate properties
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(1)
|
Use of estimates (cont.)
|
|
a.
|
Impairment/write down of real estate properties (cont.)
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(1)
|
Use of estimates (cont.)
|
|
b.
|
Litigation and other contingent liabilities
|
|
c.
|
Accounting for income taxes
|
|
d.
|
Potential penalties, guarantees issued and expired building permits
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(1)
|
Use of estimates (cont.)
|
|
e.
|
Valuations of derivative, embedded derivative and share based payment arrangements
|
|
§
|
Derivative transactions: with respect to PC's swaps transactions: mainly the interest rate yield curves of the EURO.
|
|
§
|
With respect to Park Plaza option: the expected volatility of Park Plaza share; and the probability and the term for a Transaction (as defined in the agreement) to occur.
|
|
§
|
Share based payment arrangements: the share price in respect of options plans adopted by the Group's private investees which has no quoted market price; the expected stock price volatility over the term of the plan; and actual and projected employee stock option exercise behaviors.
|
|
f.
|
Fair value of investment property and hotels
|
|
·
|
Capitalization rates used to value the asset, market rental levels and lease expiries;
|
|
·
|
Average room rate of the hotels;
|
|
·
|
Discounted cash flow models;
|
|
·
|
Available sales evidence; and
|
|
·
|
Comparisons to valuation professionals performing valuation assignments across the market.
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(1)
|
Use of estimates (cont.)
|
|
f.
|
Fair value of investment property and hotels (cont.)
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (Cont.)
|
|
(1)
|
Use of estimates (cont.)
|
|
g.
|
Fair value of associate
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(2)
|
Critical judgment in applying accounting policies
|
|
a.
|
Capitalization of financing costs
|
|
b.
|
Classification of investment as held to maturity
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (cont.)
|
|
(2)
|
Critical judgment in applying accounting policies (cont.)
|
|
c.
|
Effective control
|
|
d.
|
Revenue recognition from sale of property, plant and equipment
|
|
e.
|
Classification of investment property as held for use
|
|
AF.
|
Critical judgment in applying accounting policies and use of estimates: (Cont.)
|
|
(2)
|
Critical judgment in applying accounting policies (cont.)
|
|
e.
|
Classification of investment property as held for use (cont.)
|
|
f.
|
Classification of trading property as current/non-current asset
|
|
AG.
|
New accounting standards and clarifications issued that are not yet effective:
|
|
·
|
IFRS 9, Financial Instruments
|
|
AG.
|
New accounting standards and clarifications issued that are not yet effective: (cont.)
|
|
·
|
IFRS 10, Consolidated Financial Statements
|
|
·
|
IFRS 11, Joint Arrangements
|
|
AG.
|
New accounting standards and clarifications issued that are not yet effective: (cont.)
|
|
·
|
IFRS 12, Disclosure of Interests in Other Entities
|
|
·
|
IFRS 13, Fair Value Measurement
|
|
·
|
Amendments to IAS 1, Presentation of Items of Other Comprehensive Income
|
|
AG.
|
New accounting standards and clarifications issued that are not yet effective: (cont.)
|
|
·
|
Annual Improvements 2009-2011 (May 2012)
|
|
·
|
Amendments to IFRS 10, IFRS 12 and IAS 27, Investment Entities Amends IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements to:
|
|
o
|
provide 'investment entities' (as defined) an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measure the investment in each eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement
|
|
o
|
require additional disclosure about why the entity is considered an investment entity, details of the entity's unconsolidated subsidiaries, and the nature of relationship and certain transactions between the investment entity and its subsidiaries
|
|
o
|
require an investment entity to account for its investment in a relevant subsidiary in the same way in its consolidated and separate financial statements (or to only provide separate financial statements if all subsidiaries are unconsolidated).
|
|
A.
|
The Company
|
|
(1)
|
Until February 2013, the Company repaid all the principal and interest payments relating, inter alia, to its debenture and bank loans according to their schedules. According to the repayment schedules of the Company’s Series 1 and Series A to Series G debentures (collectively, the "Notes"), the Company is required to repay the Note holders principal and interest in the aggregate amount of NIS 599 million for the period commencing February 1, 2013 until February 1, 2014. In addition, as of December 31, 2012, the Company failed to comply with certain financial covenants under Israeli long-term bank loans in the total amount as of such date of NIS 290 million. Accordingly, said amount is presented as short-term liability (see also note 31C). All said amounts relate to the Company on a standalone basis.
|
|
(2)
|
During 2012 and 2011, the Company recorded loss in the amount of NIS 456 million and NIS 247 million, respectively, out of which an amount of NIS 406 million and NIS 371 million, respectively, is attributable to non-cash write downs of Plaza’s trading properties, mainly in the CEE.
|
|
(3)
|
In the Beginning of February 2013, management's original cash collecting plan confronted delays, inter alia, due to the postponement in the distribution of dividend from Plaza as well as decline in the recent period in the price of Plaza's stock.
|
|
(4)
|
On February 5, 2013, the Company's Board of Directors decided to delay, at this stage, the payments of principal to Series A and Series B Note holders (scheduled for February 21, 2013) in the total amount of NIS 82 million. In addition, the Board resolved to authorize the management of the Company to commence accelerated negotiations with the trustees and representatives of all the Notes holders, in an attempt to formulate an agreement with all the debenture holders that will enable the Company to meet all its obligations.
|
|
(5)
|
On February 19, 2013, the Board of Directors of the Company resolved to suspend also any interest payments relating to all the Notes. See also note 31G.
|
|
(6)
|
As a result of the above mentioned and as mentioned in notes 31 C and D, as for the date of the approval of these financial statements, the Company is in cross default with respect to loans received by the Company, loans received by subsidiaries, for which the Company is a guarantor, and debentures in the total amount of NIS 2,857 million.
|
|
(7)
|
The Company's ability to meet all its obligations in the foreseeable future is highly dependent on the Company's ability to restructure its debt as mentioned in note 31 F. The aforesaid, together with the above described matters and the profound complexity associated with the negotiation process to reach the debt restructuring as mentioned in note 31 I, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
|
B.
|
Plaza Centers ("PC")
|
A.
|
Composition:
|
December 31
|
|||||||||
2 0 1 2
|
2 0 1 1
|
||||||||
Interest
|
|||||||||
rate
|
|||||||||
%
|
(in thousand NIS)
|
||||||||
Deposits at banks and financial institutions:
|
|||||||||
U.S. Dollar (i)
|
see (i) below
|
122,744 | 130,200 | ||||||
EURO (ii)
|
see (ii) below
|
46,957 | 86,017 | ||||||
NIS (iii)
|
see (iii) below
|
11,937 | 9,054 | ||||||
Credit linked note (see Note 19 E(3))
|
43,306 | - | |||||||
Others restricted deposits
|
5,169 | 17,899 | |||||||
230,113 | 243,170 | ||||||||
Marketable securities held for trading:
|
|||||||||
Shares
|
10,675 | 21,466 | |||||||
10,675 | 21,466 | ||||||||
Available for sale financial assets (iv)
|
see (iv) below
|
87,042 | 144,702 | ||||||
327,830 | 409,338 |
|
A.
|
Composition (cont.)
|
|
(i)
|
As of December 31, 2012, deposits in a total amount of NIS 34 million are restricted in respect of bank facilities requirements, which bear interest of 0%. An additional NIS 54 million are restricted in respect of tax and wind up payments expected following the US transaction, and bears annual interest of 0.3%.
|
|
(ii)
|
An amount of NIS 32 million and NIS 20.2 million as of December 31, 2012 and 2011, respectively, is restricted due to bank facility agreements signed to finance projects in Eastern Europe. These amounts carry an annual interest rate ranging between 0% and overnight LIBOR. An amount of NIS 10 million and NIS 10.3 million as of December 31, 2012 and 2011, respectively, is restricted in respect of IRS transaction. This amount is carrying fixed interest rate of 3.2%. An amount of NIS 48 million as of December 31, 2011 is pledged as security for derivative and financial instrument transactions with banks and financial institutions which bears an interest of 1 month Euribor.
|
|
(iii)
|
As of December 31, 2012 an amount of NIS 12 million is restricted in respect of bank facility agreement signed. The restricted amount is not carrying interest.
|
|
(iv)
|
Interest-bearing available-for-sale financial assets with a face value of NIS 58 million and NIS 123 million are outstanding as of December 31, 2012 and 2011, respectively. The available-for-sale financial assets have stated interest rates of 1% to 13%. As at December 31, 2012, part of the AFS Portfolio in the amount of NIS 3 million is pledged against secured bank loan.
|
|
B.
|
For Liens - see note 23D.
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Outstanding accounts
|
57,661 | 88,175 | ||||||
Less - allowance for doubtful accounts
|
(10,133 | ) | (16,126 | ) | ||||
47,528 | 72,049 |
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Income taxes
|
7,320 | 5,800 | ||||||
Governmental institutions (i)
|
11,754 | 32,485 | ||||||
Related parties
|
5,715 | 6,151 | ||||||
Loans to third parties (ii)
|
65,013 | 38,595 | ||||||
Insurance company receivable (refer to note 8C)
|
37,454 | - | ||||||
Other
|
9,020 | 18,535 | ||||||
136,276 | 101,566 |
|
(i)
|
As of December 31 2011, Includes mainly VAT receivable due to projects in Poland.
|
|
(ii)
|
The balance as of December 31, 2012 and 2011, respectively includes current maturities in the amount of NIS 46 million and NIS 13 million with respect to loans denominated in EURO provided to Park Plaza’s subsidiary regarding the sale of the Group's hotels in UK in 2010 (see note 9A (v) and 12 C)).
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Advance to suppliers
|
13,325 | 8,115 | ||||||
Prepaid expenses
|
9,765 | 16,824 | ||||||
23,090 | 24,939 | |||||||
|
A.
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Balance as of January 1
|
4,556,616 | 4,192,241 | ||||||
Acquisition and construction costs
|
139,664 | 422,241 | ||||||
Disposal during the year
|
(108,629 | ) | - | |||||
Capitalized borrowing costs
|
134,288 | 192,993 | ||||||
Write-down to net realizable value (see C, G below and
note 26J)
|
(453,835 | ) | (272,990 | ) | ||||
Foreign currency translation adjustments
|
(69,399 | ) | 22,131 | |||||
Balance as of December 31 (1)
|
4,198,705 | 4,556,616 | ||||||
|
(1)
|
The balance as of December 31, 2012 includes cost of large scale projects (Bangalore in India, Casa Radio in Romania and Dream Island in Hungary) in a total amount of NIS 1,253 million (as of December 31, 2011 - NIS 1,471 million).
|
|
B.
|
Additional information:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Accumulated write-down to net realizable value
|
995,635 | 541,800 | ||||||
Composition of trading property per stages of development:
|
||||||||
Under operation (*)
|
1,454,693 | 1,006,443 | ||||||
Under construction
|
90,241 | 608,688 | ||||||
Under planning and design
|
2,653,771 | 2,941,485 | ||||||
Total
|
4,198,705 | 4,556,616 | ||||||
|
(*)
|
In accordance with PC's strategic business model which is to construct commercial centers for sale while producing gains, commercial centers for which construction has been completed but not yet sold due to market condition as of the balance sheet date, are under operation but still designated for sale. See C below.
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Freehold
|
3,011,593 | 3,290,518 | ||||||
Leasehold
|
1,187,112 | 1,266,098 | ||||||
4,198,705 | 4,556,616 | |||||||
|
C.
|
Additional information in respect of PC's trading property:
|
|
C.
|
Additional information in respect of PC's trading property: (cont.)
|
As of December 31, 2012
|
||||||||||||
Project
|
Location
|
Purchase / transaction date
|
Rate of ownership by PC (%)
|
Nature of rights
|
Status of registration
of land
|
Status of the project
|
||||||
Suwalki Plaza
|
Poland
|
Jun-06
|
100
|
Ownership
|
Completed
|
Operational
|
||||||
Zgorzelec Plaza
|
Poland
|
Dec-06
|
100
|
Ownership
|
Completed
|
Operational
|
||||||
Torun Plaza
|
Poland
|
Feb-07
|
100
|
Ownership
|
Completed
|
Operational
|
||||||
Lodz residential
|
Poland
|
Sep-01
|
100
|
Ownership/ Perpetual usufruct
|
Completed
|
Planning and development stage
|
||||||
Lodz – plaza
|
Poland
|
Sep-09
|
100
|
Perpetual usufruct
|
Completed
|
Planning and development stage
|
||||||
Kielce Plaza
|
Poland
|
Jan-08
|
100
|
Perpetual usufruct
|
Completed
|
Planning and development stage
|
||||||
Lesnzo Plaza
|
Poland
|
Jun-08
|
100
|
Perpetual usufruct
|
Completed
|
planning and development stage
|
||||||
Liberec Plaza
|
Czech Republic
|
Jun-06
|
100
|
Ownership
|
Completed
|
Operational
|
||||||
Roztoky
|
Czech Republic
|
May-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Riga Plaza
|
Latvia
|
Feb-04
|
50
|
Ownership
|
Completed
|
Operational
|
||||||
Koregaon Park
|
India
|
Oct-06
|
100
|
Ownership
|
Completed
|
Operational
|
||||||
Kharadi
|
India
|
Feb-07
|
50
|
Ownership
|
Completed
|
Under construction
|
||||||
Trivandrum
|
India
|
Jun-07
|
50
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Casa Radio
|
Romania
|
Feb-07
|
75
|
Leasing for 49 years
|
Completed
|
Planning and development stage
|
||||||
Timisoara Plaza
|
Romania
|
Mar-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Miercurea Csiki Plaza
|
Romania
|
Jul-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Iasi Plaza
|
Romania
|
Jul-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Slatina Plaza
|
Romania
|
Aug-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Targu Mures Plaza
|
Romania
|
Mar-08
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Hunedoara Plaza
|
Romania
|
Feb-08
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Constanta Plaza
|
Romania
|
July-09
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Belgrade Plaza
|
Serbia
|
Aug-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Kragujevac Plaza
|
Serbia
|
Oct-07
|
100
|
Lease for 99 years
|
Completed
|
Operational
|
||||||
Sport-Star Plaza
|
Serbia
|
Dec-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Shumen Plaza
|
Bulgaria
|
Nov-07
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Dream Island
|
Hungary
|
Sep-03
|
43.5
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Arena Plaza Extension
|
Hungary
|
Nov-05
|
100
|
Land use rights
|
Completed
|
Planning and development stage
|
||||||
Uj Udvar
|
Hungary
|
Sep-07
|
35
|
Ownership
|
Completed
|
Planning and development stage
|
||||||
Helios Plaza
|
Greece
|
May-02
|
100
|
Ownership
|
Completed
|
Planning and development stage
|
|
D.
|
Additional information in respect of trading property in India:
|
|
(1)
|
Chennai, India
|
|
D.
|
Additional information in respect of EPI's trading property: (cont.)
|
|
(2)
|
Bangalore, India
|
|
D.
|
Additional information in respect of EPI's trading property: (cont.)
|
|
(2)
|
Bangalore, India (cont.)
|
|
·
|
EPI will remain the holder of 100% of the shareholdings and the voting rights in the SPV.
|
|
·
|
The scope of the new Project will be decreased to approximately 165 acres instead of 440 acres (the "New Project").
|
|
·
|
The Partner undertakes to complete the acquisitions of the additional land and/or the development rights therein in order to obtain the ownership and/or the development rights over the said 165 acres.
|
|
·
|
The SPV and/or EPI will not be required to pay any additional amounts in respect of such acquisitions or with respect to the Project and its development.
|
|
·
|
The project will be re-designed as an exclusive residential project.
|
|
D.
|
Additional information in respect of EPI's trading property: (cont.)
|
|
(2)
|
Bangalore, India (cont.)
|
|
E.
|
As of December 31, 2012 the Group pledged trading property in the amount of NIS 1,613 million in order to secure borrowings provided to the Group by financial institutions in the total amount of NIS 1,212 million. See also note 23D.
|
|
F.
|
As for commitments in respect of construction services and purchase of plots, see note 23A (3).
|
|
G.
|
Most projects classified as trading property were valued as of December 31, 2012 by independent third party appraisers. PC's management made adjustments to the fair values determined by the relevant appraiser to reflect the net realizable value of each trading property by neutralizing the developer's expected profits on costs from the valuations (apart from projects that for determining the impairment charge associated therewith their fair value was set as their net realizable value, see note 2M).
|
Retail
|
Offices
|
|||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 2
|
2 0 1 1
|
|||||||||||||
Estimated rental prices per sqm per month (in EURO)
|
||||||||||||||||
Romania
|
6-24 | 10-30 | 10.5 | 11 | ||||||||||||
Czech Republic
|
N/A | 10-15 | N/A | 13 | ||||||||||||
Serbia
|
16-34 | 10-24 | 14 | 14 | ||||||||||||
Latvia
|
N/A | 16 | N/A | N/A | ||||||||||||
Poland
|
8-18 | 9-20 | N/A | N/A | ||||||||||||
Greece
|
27 | 27 | N/A | N/A | ||||||||||||
Hungary
|
15 | 8-25 | 11-11.75 | 11.75 | ||||||||||||
India
|
5-19 | 8-22 | N/A | N/A | ||||||||||||
Average risk adjusted yield used (in percentage)
|
||||||||||||||||
Romania
|
8-9.75 | 8.00-8.75 | 8.5 | 8.50 | ||||||||||||
Czech Republic
|
8.35-8.66 | 7.25 | N/A | 7.25 | ||||||||||||
Serbia
|
9-9.75 | 9.00-9.75 | 9.25 | 9.25 | ||||||||||||
Latvia
|
8.75 | 8.40 | N/A | N/A | ||||||||||||
Poland
|
7.5-8.5 | 7.25-8.00 | N/A | N/A | ||||||||||||
Greece
|
8.5 | 8.25 | N/A | N/A | ||||||||||||
Hungary
|
7.5-9 | 8.25-8.75 | 8.5 | 8.50 | ||||||||||||
India
|
12 | 11 | N/A | N/A |
|
A.
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Deposits at banks and financial institutions (i)
|
71,532 | 57,519 | ||||||
Held to maturity financial instruments (ii)
|
- | 187,648 | ||||||
Financial instruments designated at FVTPL (iii)
|
- | 62,701 | ||||||
Derivative measured at FVTPL (iv)
|
22,934 | 15,148 | ||||||
Loans to third parties (v)
|
46,057 | 60,296 | ||||||
Loans to associates
|
- | 3,126 | ||||||
Others
|
3,956 | 6,843 | ||||||
144,479 | 393,281 | |||||||
Less - current maturity
|
(89,363 | ) | (13,204 | ) | ||||
55,116 | 380,077 | |||||||
|
(i)
|
December 31, 2012: Comprised mainly of NIS 10 million linked to the EURO and bearing annual interest rate of 0.2%-1.2% per annum and NIS 18 million linked to the NIS bearing interest of 1.5% per annum. Also include NIS 45 million credit link note (see Note 19 E(3)). December 31, 2011: Comprised mainly of NIS 27 million linked to the EURO and bearing annual interest rate of 0.2%-3.2% per annum, and NIS 23 million linked to the NIS bearing interest of 2.4% per annum. All deposits are mainly pledged as security for the repayment of long term borrowing, construction and other liabilities obtained by Group companies, which have been included as due and payable concurrently with the liabilities repayment dates.
|
|
(ii)
|
An amount of €38.0 million (NIS 188 million) was invested by PC in financial note ("Note") for a period of 15 years. The Note bear an interest of 11.5%-12% per annum, which is payable only if the margin between the 30 years EURO swap interest rate and the 10 years EURO swap interest rate (measured on a daily basis) is higher than the margin stated in the agreement. In June 2012, PC sold the Note for a total consideration of EUR 37.2 million (NIS 183 million). PC used the proceeds to repay a loan granted from issuer of the Note of a total amount of EUR 26.2 million (NIS 129 million).
|
|
(iii)
|
An amount of €13 million (NIS 64 million) was invested by PC in financial notes ("Notes") which pays a variable interest linked to the 10 year EURO CMS (Constant Maturity Swap, which is the mid-market annual swap rate) rate subject to a minimum annual interest rate of 6.25% and a maximum annual interest rate of 12.50%. In June 2012, PC sold the Note for a total consideration of EUR 13.5 million (NIS 66 million). PC used the proceeds to repay a loan granted from issuer of the Notes of a total amount of EUR 10 million (NIS 49 million), and the net proceeds totaled NIS 14.5 million.
|
|
(iv)
|
The balance as of December 31, 2012 and 2011 includes an amount of GBP 2.5 and 2.6 million (NIS 15) with regard to the sale of the Group's hotels in UK. As of December 31, 2012, the balance also include amount of GBP 1.2 (NIS 8) with regard to the sale of the Group's hotels in The Netherland. Said amounts determined by a third party expert and represents the fair value of a derivative contemplated in the sale agreements (see note 12 C and D).
|
|
(v)
|
The balance as of December 31, 2012 and 2011 includes an amount of NIS 46 million and NIS 59 million respectively, with respect to long-term loans provided to Park Plaza’s subsidiary regarding the sale of the Group's hotels in London (see Note 6 (ii) and 12 C). As for collateral of this loan see note 23 D (1).
|
|
B.
|
Liens - see note 23D.
|
|
A.
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Cost
|
75,330 | 82,058 | ||||||
Accumulated losses, net
|
(55,768 | ) | (54,576 | ) | ||||
Initial recognition of investment in associate due to loss of control over a subsidiary (ii)
|
150,752 | - | ||||||
Disposal of an associate
|
- | (11,097 | ) | |||||
Foreign currency translation adjustments
|
(6,289 | ) | (5,829 | ) | ||||
Total (i)
|
164,025 | 10,556 | ||||||
(i) Including goodwill
|
18,795 | 19,851 |
December 31
|
||||||||
2 0 1 2 | 2 0 1 1 | |||||||
(in thousand NIS)
|
||||||||
Equity Investment
|
315,032 | 322,458 | ||||||
Company's share in losses of associates
|
(522,008 | ) | (496,080 | ) | ||||
Reserve related to Company's loan
|
15,875 | - | ||||||
Reserve from transaction with non controlling interest
|
8,873 | 8,991 | ||||||
Conversion of loans into shareholders' equity
|
116,406 | - | ||||||
Gain from loss of control over a subsidiary
|
216,574 | - | ||||||
150,752 | (164,632 | ) | ||||||
Investments in associates are comprised of:
|
||||||||
Insightec (48%) (ii)
|
150,752 | - | ||||||
Gamida (31%)
|
18,864 | 16,085 | ||||||
Other
|
(5,591 | ) | (5,529 | ) |
|
B.
|
InSightec Ltd. ("InSightec")
|
|
(1)
|
InSightec Ltd. is engaged in the development, manufacturing and marketing of medical treatment systems, based on a unique technological platform, which combines the use of a focused ultrasound beam and a magnetic resonance imaging guided focused ultrasound treatment equipment ("MRgFUS technology") intended for the treatment of non-invasive tumors in the human body.
|
|
B.
|
InSightec Ltd. ("InSightec") (cont.)
|
|
(2)
|
Loss of control over Insightec
|
|
(i)
|
GE invested US$ 27.6 million in cash in exchange for InSightec's series C preferred shares. Simultaneously, Other Investors invested approximately US$ 3.3 million in cash in consideration for InSightec's series C preferred shares.
|
|
(ii)
|
GE and the Group converted all outstanding shareholder loans which have been granted to InSightec, into InSightec's series B-1 preferred shares in accordance with the terms of such loans.
|
|
(iii)
|
The Transaction reflects a post money valuation of InSightec of approximately US$ 105.9 million (or pre money valuation of US$ 75 million and following the conversion of the loans as described in II above).
|
|
(iv)
|
As part of the Investment Agreement GE and InSightec signed a Technology, Co-operation and Distribution Agreement. This agreement replaced the 2005 Global Distribution Agreement and two other prior agreements between InSightec and GE. According to the agreement, GE was awarded world-wide distribution rights for marketing and sales of InSightec's products. The Agreement also requires that the InSightec's products be compatible with GE imaging equipment for a period of five years or earlier upon the occurrence of certain events. This Agreement also provides GE with: (i) a right of first negotiation for exclusive distribution of new InSightec's products; (ii) a first priority right to quote and sell to new GE customers; and (iii) a first priority right to quote and sell new products to existing GE customers. The agreement also sets up a framework pursuant to which InSightec and GE will cooperate regarding mutual technology alignment and development.
|
|
(v)
|
As for December 31, 2012 the Group holdings in InSightec reduced to approximately 48%, and 41% on a fully diluted basis.
|
|
C.
|
Gamida Cell Ltd. ("Gamida"):
|
|
D.
|
The following is summarized data outlining items extracted from the associates' financial statements:
|
Gamida
|
Insightec
|
|||||||||||||||
As at December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 2
|
2 0 1 1
|
|||||||||||||
(in thousand NIS)
|
(in thousand NIS)
|
|||||||||||||||
Assets
|
29,950 | 31,947 | 106,928 | 24,940 | ||||||||||||
Liabilities
|
(16,687 | ) | (34,851 | ) | (81,368 | ) | (284,791 | ) | ||||||||
Net assets
|
13,263 | (2,904 | ) | 25,560 | (259,851 | ) |
Gamida
|
Insightec
|
|||||||||||||||||||||||
Year ended December 31
|
||||||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
|||||||||||||||||||
(in thousand NIS)
|
(in thousand NIS)
|
|||||||||||||||||||||||
Revenues
|
- | - | - | 69,457 | 56,602 | 33,621 | ||||||||||||||||||
Loss
|
(26,364 | ) | (33,252 | ) | (26,917 | ) | (59,914 | ) | (101,913 | ) | (77,032 | ) |
|
|
A.
|
Elbit Medical Technologies:
|
|
B.
|
Plaza Centers N.V. ("PC"):
|
|
(1)
|
PC conducts its activities in the field of establishing, selling and operating (until their sale) shopping and entertainment centers, as well as other mixed use projects (retail, office, residential) in Central and Eastern Europe, and India. As of December 31, 2012 the Group holds 62.52% in PC (56.24% on a fully diluted basis).
|
|
(2)
|
PC share repurchase program
|
|
In August 2010, the Company sold 15 million shares of PC in consideration for approximately NIS 98 million. The difference between the book value of the shares sold and the consideration received resulted in a loss of approximately NIS 48 million which was recognized to the equity holders of the Company.
|
|
During 2011, the Company purchased 788,100 of PC shares representing approximately 0.3% of PC's share capital for the total amount of NIS 2.6 million. The difference between the consideration and book value of the shares (resulted in a gain) is approximately NIS 5.3 million recognized to the equity holders of the Company.
|
|
In September 2011, PC distributed an interim dividend payment to its shareholders of €30 million (NIS 148 million). Of this, the Company and its wholly owned subsidiary have received a total distribution amount of €18.6 million (NIS 92 million).
|
|
B.
|
Plaza Centers N.V. ("PC"): (cont.)
|
(3)
|
PC Bondholder agreement
|
|
•
|
The total dividend will be capped at €30 million (NIS 148 million) per annum for each of the years 2012 and 2013.
|
|
•
|
Distribution of dividends will be made only from the net cash flows derived from the realization of assets and will be capped at 50% of net cash flows received.
|
|
•
|
Should a dividend be distributed while the average market yield of PC’s series A and B bonds exceeds a certain threshold, PC shall retain, for a period of 12 months following the dividend payment, a sum of not less than €70 million (NIS 346 million) in reserve accounts, of which a sum equal to the dividend payment can be used solely for the repurchase of bonds and / or making principal and interest payments to PC’s bondholders.
|
|
•
|
Should a dividend be paid while the average market yield of PC’s series A and B bonds is below a certain threshold, PC shall be entitled to distribute dividends of up to €50 million (NIS 247 million) per annum. Should this occur, the sum of the dividend exceeding €30 million (NIS 148 million) will be held in a reserve account, to be used solely for the repurchase of bonds and / or making principal and interest payments to PC’s bondholders.
|
|
C.
|
BEA Hotels N.V. ("BH"):
|
|
(1)
|
100% of the voting and equity rights in a company that holds and operates the Radisson Astrid and Park Inn hotels in Antwerp, Belgium,
|
|
(2)
|
Approximately 77% of SC Bucuresti Turism S.A. ("Bucuresti") which owns the Radisson hotel complex consisting of the Radisson hotel and the Centrivlle hotel (an apartment hotel), located in Bucharest, Romania. Bucuresti was purchased through a privatization tender published by the State Ownership Fund of the Romanian government, which was approved by the supreme court of Romania.
|
|
D.
|
Elbit- Plaza India Real Estate Holding Ltd. ("EPI"):
|
|
E.
|
Elbit Fashion
|
|
F.
|
Varcode
|
|
G.
|
As of December 31, 2012, the Group holds 7 joint ventures companies which are in various stage of development and construction of trading property in Eastern Europe and India; 2 joint venture companies which hold plots in India;
|
At December 31
and for the year then ended
|
||||||||||||
(in thousand NIS)
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
Current assets
|
40,139 | 161,808 | 163,603 | |||||||||
Non-current assets
|
1,054,738 | 3,903,527 | 3,489,666 | |||||||||
Current liabilities
|
(79,618 | ) | (673,061 | ) | (629,941 | ) | ||||||
Non-current liabilities
|
(253,946 | ) | (1,706,270 | ) | (1,555,770 | ) | ||||||
Net assets
|
761,313 | 1,686,004 | 1,467,558 | |||||||||
Revenues and rental income
|
81,883 | 475,593 | 808,060 | |||||||||
Expenses
|
(190,801 | ) | (454,011 | ) | (364,716 | ) | ||||||
Net profit (loss)
|
(108,918 | ) | 21,582 | 443,344 | ||||||||
A.
|
Composition:
|
December 31, 2012
|
||||||||||||||||||||
Real estate
|
||||||||||||||||||||
Hotels at
revaluation model (*) (**)
|
At cost model
|
|||||||||||||||||||
Operating
|
Under
construction
|
Other
|
Other fixed assets
|
Total
|
||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||
Cost:
|
||||||||||||||||||||
Balance as of January 1
|
1,154,525 | 107,708 | 33,505 | 174,390 | 1,470,128 | |||||||||||||||
Adjustment of Depreciation and amortization balance as of January 1
|
(196,130 | ) | - | - | - | (196,130 | ) | |||||||||||||
Additions during the year
|
14,761 | 1,294 | - | 6,373 | 22,428 | |||||||||||||||
Revaluation of hotels as of January 1, 2012
|
470,832 | - | - | - | 470,832 | |||||||||||||||
Revaluation of hotels during the year
|
50,396 | - | - | - | 50,396 | |||||||||||||||
Disposals during the year
|
(311 | ) | - | - | (6,399 | ) | (6,710 | ) | ||||||||||||
Disposals in respect of realized assets
|
(359,537 | ) | (50,558 | ) | - | (54,620 | ) | (464,715 | ) | |||||||||||
Foreign currency translation adjustments
|
(30,395 | ) | 150 | (119 | ) | (963 | ) | (31,327 | ) | |||||||||||
Balance as of December 31
|
1,104,141 | 58,594 | 33,386 | 118,781 | 1,314,902 | |||||||||||||||
Accumulated depreciation:
|
||||||||||||||||||||
Balance as of January 1
|
179,957 | - | 5,204 | 85,735 | 270,896 | |||||||||||||||
Adjustment to cost as of January 1, 2012 due to revaluation model
|
(179,957 | ) | - | - | - | (179,957 | ) | |||||||||||||
Additions during the year
|
47,549 | - | 523 | 12,577 | 60,649 | |||||||||||||||
Disposals during the year
|
(224 | ) | - | - | (4,810 | ) | (5,034 | ) | ||||||||||||
Disposals in respect of realized assets
|
(3,626 | ) | - | - | (35,613 | ) | (39,239 | ) | ||||||||||||
Foreign currency translation adjustments
|
(4,180 | ) | - | (19 | ) | (508 | ) | (4,707 | ) | |||||||||||
Balance as of December 31
|
39,519 | - | 5,708 | 57,381 | 102,608 | |||||||||||||||
Provision for impairment:
|
||||||||||||||||||||
Balance as of January 1
|
16,173 | - | 6,810 | 16,243 | 39,226 | |||||||||||||||
Adjustment to cost as of January 1, 2012 due to revaluation model
|
(16,173 | ) | - | - | - | (16,173 | ) | |||||||||||||
Impairment loss recognized (i))
|
- | - | 5 | 4,105 | 4,110 | |||||||||||||||
Foreign currency translation adjustments
|
- | - | (30 | ) | (324 | ) | (354 | ) | ||||||||||||
Balance as of December 31
|
- | - | 6,785 | 20,024 | 26,809 | |||||||||||||||
Net book value
|
1,064,622 | 58,594 | 20,893 | 41,376 | 1,185,485 | |||||||||||||||
(*)
|
There may be restrictions on the Company's ability to distribute dividends to its shareholders from the revaluation reserve, since it was not charged to retained earnings through profit and loss.
|
(**)
|
Had the Group continued to present the hotels based on the cost model, their net book value as of December 31, 2012 would have been NIS 680 million.
|
A.
|
Composition (cont.):
|
December 31, 2011
|
||||||||||||||||||||
Real estate at cost
|
||||||||||||||||||||
Hotels
|
||||||||||||||||||||
Operating
|
Under
construction
|
Other
|
Other fixed assets at cost
|
Total
|
||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||
Cost:
|
||||||||||||||||||||
Balance as of January 1
|
1,093,514 | 99,213 | 32,147 | 163,202 | 1,388,076 | |||||||||||||||
Additions during the year
|
20,876 | 6,588 | - | 4,510 | 31,974 | |||||||||||||||
Subsidiaries initially consolidated during the year
|
- | - | 462 | 462 | ||||||||||||||||
Disposals during the year
|
(641 | ) | - | - | (8,684 | ) | (9,325 | ) | ||||||||||||
Foreign currency translation adjustments
|
40,776 | 1,907 | 1,358 | 14,900 | 58,941 | |||||||||||||||
Balance as of December 31
|
1,154,525 | 107,708 | 33,505 | 174,390 | 1,470,128 | |||||||||||||||
Accumulated depreciation:
|
||||||||||||||||||||
Balance as of January 1
|
134,861 | - | 4,133 | 59,036 | 198,030 | |||||||||||||||
Additions during the year
|
40,729 | - | 919 | 17,734 | 59,382 | |||||||||||||||
Disposals during the year
|
(413 | ) | - | - | (5,229 | ) | (5,642 | ) | ||||||||||||
Foreign currency translation adjustments
|
4,780 | - | 152 | 14,194 | 19,126 | |||||||||||||||
Balance as of December 31
|
179,957 | - | 5,204 | 85,735 | 270,896 | |||||||||||||||
Provision for impairment:
|
||||||||||||||||||||
Balance as of January 1
|
29,731 | - | 7,107 | 7,466 | 44,304 | |||||||||||||||
Impairment loss recognized (de-recognised) (see note 26J )
|
(14,930 | ) | - | (602 | ) | 9,017 | (6,515 | ) | ||||||||||||
Foreign currency translation adjustments
|
1,372 | - | 305 | (240 | ) | 1,437 | ||||||||||||||
Balance as of December 31
|
16,173 | - | 6,810 | 16,243 | 39,226 | |||||||||||||||
Payment on account of fixed assets
|
- | - | - | 7,640 | 7,640 | |||||||||||||||
Net book value
|
958,395 | 107,708 | 21,491 | 80,052 | 1,167,646 |
|
B.
|
Composition of real estate assets included in property plant and equipment distinguished between freehold and leasehold rights:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Freehold rights
|
1,084,347 | 1,021,614 | ||||||
Leasehold rights
|
48,000 | 65,980 | ||||||
Net book value
|
1,132,347 | 1,087,594 | ||||||
|
C.
|
Disposal of UK hotels:
|
|
D.
|
Disposal of the Netherlands hotels:
|
|
E.
|
Annual depreciation rates - see note 2N (ii).
|
|
F
|
As of December 31, 2012 the Group pledged property plant and equipment in the amount of NIS 1,053 million in order to secure borrowings provided to the Group by financial institutions, mainly with respect to the hotels. See also note 23D.
|
|
G.
|
Within the framework of a lease agreement with the Israeli Land Authority ("ILA") in respect of plot located in, Tiberias Israel, the Company has undertaken to finalize the construction, as extended, in July 2013. As for December 31 2012, the Company believes that an extension will be obtained. Within the framework of the lease agreement the Company has provided the ILA with two bank guarantees in the aggregate amount of NIS 10 million linked to the increase in the Israeli consumer price index in order to secure the Company's undertakings under the lease agreement. In accordance with the lease agreement, in case of non-compliance with its terms the contract can be canceled. See also note 31 K.
|
|
H.
|
Operating Hotels valuation sensitivity analysis is detailed below:
|
Change in Discount rate
|
change in hotel FV
|
(NIS '000)
|
|
+0.5%
|
(11,316)-(16,531)
|
-0.5%
|
12,792-16,974
|
+1%
|
(21,648)-(32,668)
|
-1%
|
27,552-32,915
|
|
A.
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
At fair value
|
||||||||
Balance as of January 1
|
2,672,571 | 2,232,322 | ||||||
Additions during the year
|
20,492 | 59,116 | ||||||
Additions due to increase in holding rate
|
- | 111,932 | ||||||
Net gain (loss) from fair value adjustments (see note 29)
|
(10,937 | ) | 100,819 | |||||
Disposal during the year (see note 29)
|
(2,623,673 | ) | - | |||||
Foreign currency translation adjustments
|
65,270 | 168,382 | ||||||
123,723 | 2,672,571 |
|
B.
|
Land plot in Kochi, India:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Cost
|
||||||||
Advance for plot purchase (i)
|
223,760 | 237,922 | ||||||
Prepaid leasehold rights
|
8,747 | 13,542 | ||||||
Other
|
12,647 | 9,778 | ||||||
245,154 | 261,242 | |||||||
Accumulated amortization
|
||||||||
Prepaid leasehold rights
|
8,747 | 10,160 | ||||||
Other
|
178 | 123 | ||||||
8,925 | 10,283 | |||||||
Amortized cost
|
236,229 | 250,959 |
|
(i)
|
Include mainly advances in the amount of NIS 219 million (2011: NIS 230 million) for the purchase of plots in India (see note 8D).
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Cost
|
||||||||
Goodwill (i)
|
41,242 | 61,753 | ||||||
Intangible assets - Intellectual property and other
|
10,620 | 25,325 | ||||||
Distribution rights
|
1,040 | 2,427 | ||||||
52,902 | 89,505 | |||||||
Accumulated amortization of Intangible assets and impairment
|
6,184 | 15,090 | ||||||
Amortized cost
|
46,718 | 74,415 |
|
(i)
|
The goodwill is attributable mainly to the following cash generating units: As for December 31, 2011 and 2012: an amount of NIS 14 million is attributable to the activities of Varcode (note 11 F) an amount of NIS 27 million is attributable to the Bucuresti hotel (note 11 C (2)) and in 2011 an amount of NIS 20 million is attributable to the activities of InSightec.
|
|
A.
|
Composition short-term credits:
|
December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
|||||||||||
Interest
|
||||||||||||
rate
|
||||||||||||
%
|
(in thousand NIS)
|
|||||||||||
U.S. Dollar
|
1,044 | - | ||||||||||
EURO
|
Euribor + 0.4-5.5
|
- | 212,787 | |||||||||
INR
|
11.5 | 34,382 | - | |||||||||
NIS (i)
|
Prime + 1.5-1.75
|
8,124 | 14,566 | |||||||||
43,550 | 227,353 | |||||||||||
Current maturities (*)
|
1,493,460 | 1,435,581 | ||||||||||
1,537,010 | 1,662,934 |
|
B.
|
Liens and financial covenants - see note 23D and 23E respectively.
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Income taxes
|
31,658 | 12,283 | ||||||
Other governmental institutions
|
3,790 | 9,531 | ||||||
Wages and fringe benefits
|
16,868 | 30,473 | ||||||
Accrued interest payable
|
27,593 | 39,504 | ||||||
Real estate taxes payable
|
- | 25,021 | ||||||
Derivative measured at fair value through profit and loss (i)
|
16,335 | - | ||||||
Related parties
|
763 | 2,900 | ||||||
Liability in respect of acquisition of trading property
|
8,863 | 7,148 | ||||||
Loan from third parties
|
6,127 | 39,521 | ||||||
Accrued expenses, commissions and others (*)
|
23,692 | 95,363 | ||||||
135,689 | 261,744 |
|
(*)
|
The balance as of December 31, 2012 was decreased mainly due to a provision with respect to the settlement described in note 23 B 6 and to accrued expenses that as for December 31 2012 were classified to discontinued operation.
|
|
(i)
|
PC is paying a fixed interest of 6.98%% based on a nominal EUR amount of EUR 15.1 million and receiving an interest of six months WIBOR + 4.5% with the same amortization schedule as the Polish bonds. As of December 31, 2012 and 2011 (see note 20) the fair value of the EURO-PLN cross-currency swap, based on independent valuation, was negative in the amount of NIS 4 ֹmillion and NIS 10 million, respectively.
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Income in advance
|
39,528 | 80,124 | ||||||
other
|
- | 2,941 | ||||||
39,528 | 83,065 |
|
A.
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
At amortized cost:
|
||||||||
Loans from banks and financial institutions (see D below)
|
1,984,241 | 3,797,318 | ||||||
Debentures issued by the Company (see E below)
|
2,050,326 | 2,480,058 | ||||||
Debentures issued by PC (see F2 below)
|
360,163 | 537,685 | ||||||
Convertible debentures issued by the Company (see G below)
|
103,196 | 104,139 | ||||||
4,497,926 | 6,919,200 | |||||||
At fair value through profit and loss:
|
||||||||
Debentures issued by PC (see F1 below)
|
571,510 | 707,384 | ||||||
Debentures re-issued by the Company (see E3 below)
|
90,732 | - | ||||||
662,242 | 707,384 | |||||||
Total borrowings
|
5,160,168 | 7,626,584 | ||||||
Less - current maturities (see note 23E)
|
(1,493,460 | ) | (1,435,581 | ) | ||||
3,666,708 | 6,191,003 | |||||||
|
B.
|
Linkage basis and interest rates:
|
December 31, 2012
|
||||||||
Interest rates
|
||||||||
%
|
(in thousand NIS)
|
|||||||
NIS
|
6.25 | 103,196 | ||||||
NIS
|
Israeli CPI + 4.5-6.0
|
2,985,915 | ||||||
NIS
|
Libor + 6
|
84,968 | ||||||
EURO
|
Euribor + 1.75-5.5
|
1,431,733 | ||||||
EURO
|
3.4-5.56 | 30,537 | ||||||
INR
|
13.25-15 | 132,655 | ||||||
U.S. Dollar
|
Libor+ 2.65-4.0
|
318,940 | ||||||
PLN
|
Wibor + 4.5
|
72,226 | ||||||
5,160,170 |
|
C.
|
Repayment schedule:
|
December 31
|
||||
2 0 1 2
|
||||
(in thousand NIS)
|
||||
2013 - current maturities
|
1,493,460 | |||
2014
|
1,000,419 | |||
2015
|
758,841 | |||
2016
|
633,999 | |||
2017
|
543,736 | |||
2018 and thereafter
|
729,715 | |||
5,160,170 | ||||
|
D.
|
The following table provides breakdown of the Group's loans from banks and financial institutions:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Loans provided to the Company (i)
|
290,396 | 318,501 | ||||||
Loans provided to PC (mainly with respect to trading property)
|
1,294,509 | 1,198,934 | ||||||
Loans provided to Group Companies in the hotels
segment (ii)
|
399,336 | 692,401 | ||||||
Loans provided to Group Companies mainly in the investment property segment (see note 29B)
|
- | 1,587,482 | ||||||
1,984,241 | 3,797,318 | |||||||
|
(i)
|
For collaterals and financial covenants see also note 23 D (1) and E (3). As of December 31, 2012 the Company is non-compliant with these financial covenants.
|
|
(ii)
|
In October, 2011 a subsidiary holding the Bucharesti hotel in Bucharest, Romania ("Bucuresti") consummated a refinancing of its loan. According to the Facilities Agreement, the bank ("Lender"), has granted Bucuresti a loan of up to €71.5 million (the "Loan"). Tranche A in the amount of approximately €62.5 million has been drawn down in September 2011 and tranche B in the amount of approximately €9.0 million is drawable until March 31, 2013. As of the date of approval of these financial statements Tranche B hasn’t been drown down.
|
|
E.
|
Company's debentures
|
|
(1)
|
Following are the significant terms of the Company's debentures as of December 31, 2012:
|
Amortized cost
|
|||||||||||||||
Linkage
|
Interest
|
as at December 31,
|
|||||||||||||
Series
|
basis
|
rate
|
Repayment terms
|
2 0 1 2
|
2 0 1 1
|
||||||||||
%
|
(in thousand NIS)
|
||||||||||||||
A (ii)
|
Israeli CPI (i)
|
6.0 |
10 semi-annual equal installments commencing August 2009
|
197,515 | 338,142 | ||||||||||
B (ii)
|
U.S. Dollar
|
Libor+2.65
|
10 semi-annual equal installments commencing August 2009
|
15,366 | 28,083 | ||||||||||
C (ii)
|
Israeli CPI (i)
|
5.3 |
10 annual installments
commencing September 2009
|
260,064 | 342,221 | ||||||||||
D (ii) (iii)
|
Israeli CPI (i)
|
5.0 |
8 annual installments
commencing April 2013
|
781,293 | 858,804 | ||||||||||
E (ii)
|
Israeli CPI (i)
|
6.3 |
10 annual installments
commencing July 2012
|
59,575 | 73,243 | ||||||||||
F (ii)
|
Israeli CPI (i)
|
5.7 |
6 annual installments
commencing October 2010
|
272,221 | 371,224 | ||||||||||
G (ii)
|
Israeli CPI (i)
|
5.08 |
5 annual installments
commencing December 2014
|
464,292 | 468,341 | ||||||||||
2,050,326 | 2,480,058 |
|
(i)
|
Linked to the increase in the Israeli CPI over the base index as of the date the debentures were issued.
|
|
(ii)
|
The debentures terms provide that the debentures will be prepaid by the Company at the discretion of the holders of the debentures under certain circumstances, including: (i), if the Company’s securities are de-listed from trade on both the TASE and the Nasdaq Global Select Market, (except for series E, F and G) (ii) if forced payment is required of another series of the Company's debentures, (iii) if a stay of proceedings is imposed by a court upon the Company and not rescinded within 45 days, and (iv) if the Company ceases to make payment on its debentures or if there is a material risk that it will cease to make such payments.
|
|
(iii)
|
In March 2011, the Company issued additional unsecured non-convertible Series D debentures to investors in Israel, by expanding the existing series, in an aggregate principal amount of approximately NIS 96 million for gross proceeds of approximately NIS 108 million (USD 29 million).
|
|
E.
|
Company's debentures (cont.)
|
(2)
|
Buyback plan of Company's debentures
|
Series
|
Par Value
|
Debentures repurchased
that have been redeemed
and removed from trading
|
||||||
A | 19,467,003 | 3,380,000 | ||||||
B | 1,747,463 | - | ||||||
C | 58,289,688 | 3,611,497 | ||||||
D | 92,395,506 | 4,910,157 | ||||||
E | 8,146,801 | 1,810,000 | ||||||
F | 22,707,088 | 5,000,000 | ||||||
G | 18,995,130 | 5,000,000 | ||||||
Convertible debentures
|
3,642,561 | - | ||||||
225,391,240 | 23,711,654 |
|
(i)
|
In August 2012, the Group entered into a NIS 75 million bond structured transaction with a leading global financial institution (the "Transaction" and the "Counterparty" respectively), pursuant to which, the Group has purchased a NIS denominated zero-coupon credit linked note (the “CLN”) from the Counterparty. The CLN references a portfolio of the Company’s bonds (having a market value of NIS 75 million) (the "Bond Portfolio"). In the framework of the Transaction, the Group has sold the Bond Portfolio to the Counterparty. In consideration, the Counterparty has paid the Group, the market value of the Bond Portfolio and arranged for the issuance of the CLN, at an issue price of NIS 37.5 million.
|
|
E.
|
Company's debentures (cont.)
|
(3)
|
Transactions with financial institutions for financing repurchase of bonds (cont.)
|
|
(i)
|
(Cont.)
|
|
(ii)
|
In November 2012, the Group, entered into a NIS 150 million bond structured transaction with a leading global financial institution (the “Transaction” and the “Counterparty” respectively), pursuant to which, the Group was granted a NIS 75 million credit line for the purchase of a portfolio of the Company’s bonds having an aggregate market value of up to NIS 150 million (the “Bond Portfolio”). As of December 31, 2012 the Company utilized approximately NIS 21 million of the credit line.
|
Fair value
|
Payments to be paid contractually at maturity
|
||||||||||||||||
as of December 31,
|
as of December 31,
|
||||||||||||||||
Series
|
2 0 1 2(ii)
|
2 0 1 1(ii)
|
2 0 1 2(ii)
|
2 0 1 1(ii)
|
|||||||||||||
(In thousand NIS)
|
(In thousand NIS)
|
||||||||||||||||
A | 8,896 | - | 13,601 | - | |||||||||||||
B | 920 | - | 1,110 | - | |||||||||||||
C | 23,446 | - | 55,828 | - | |||||||||||||
D | 42,705 | - | 104,274 | - | |||||||||||||
E | 2,522 | - | 7,316 | - | |||||||||||||
F | 7,212 | - | 17,063 | - | |||||||||||||
G | 5,031 | - | 15,033 | - | |||||||||||||
90,732 | - | 214,225 | - |
|
F.
|
PC's debentures
|
|
(1)
|
PC's debentures measured at fair value through profit and loss ("FVTPL”):
|
Fair value
|
Payments to be paid contractually
at maturity
|
||||||||||||||||||||||
Linkage
|
Interest
|
Repayment
|
as of December 31,
|
as of December 31,
|
|||||||||||||||||||
Series
|
basis
|
rate
|
terms
|
2 0 1 2(ii)
|
2 0 1 1(ii)
|
2 0 1 2(ii)
|
2 0 1 1(ii)
|
||||||||||||||||
%
|
(In thousand NIS)
|
(In thousand NIS)
|
|||||||||||||||||||||
A |
Israeli CPI (i)
|
4.5 |
8 annual equal installments commencing December 2010
|
138,363 | 170,839 | 203,124 | 266,986 | ||||||||||||||||
B |
Israeli CPI (i)
|
5.4 |
5 annual equal installments commencing
July 2011
|
433,147 | 536,545 | 549,491 | 722,212 | ||||||||||||||||
571,510 | 707,384 | 752,615 | 989,198 |
|
(i)
|
The debentures are linked (principal and interest) to the increase of the Israeli CPI over the base index at the date of the debentures' issuance.
|
|
(ii)
|
PC's debentures (except the additional Notes issued during 2009-2011 see (2) below) were designated to FVTPL in accordance with the provisions stipulated in note 2U. The Fair value of PC's debentures as of December 31, 2012 and 2011 was determined based on their quoted market price in the TASE (see note 30D(2)d(.
|
|
F.
|
PC's debentures (cont.)
|
|
a)
|
Breach of the Cash Position as a result of the payment of dividend or the buy-back program- if at any time during a period of 90 days from the payment of dividend, or the acquisition of its own shares, the Cash Position falls below €50 million.
|
|
b)
|
Breach of financial ratios - the Net Capitalization Ratio exceeds 70%; Net Capitalization Ratio is the Net Debt divided by the Equity plus the Net Debt, as calculated by the PC’s auditor; “Net Debt” mean the PC’s total debt under: loans and borrowings, lease agreements, bonds, other debt securities and other interest bearing or discounted financial instruments in issue, less related hedge derivatives, cash and cash equivalents, short and long-term interest bearing deposits with banks or other financial institutions, available for sale marketable securities and restricted cash, calculated based on the Consolidated Financial Statements.
|
|
c)
|
Failure to repay material debt - PC fails to repay any matured and undisputable debt in the amount of at least €100 million (NIS 492 million) within 30 days of its maturity.
|
|
F.
|
PC's debentures (cont.)
|
|
(3)
|
Buyback plan of PC's debentures
|
Series
|
Par Value
|
Debentures repurchased
that have been redeemed
and removed from trading
|
|||||||
A | 100,256,975 | 10,161,662 | |||||||
B | 170,684,843 | 28,486,672 | |||||||
|
G.
|
Company's convertible debenture
|
|
H.
|
Liens and financial covenants - see note 23D and 23E.
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Grants from the Israeli Office of Chief Science ("OCS") (i)
|
- | 24,827 | ||||||
Embedded derivative financial liability carried at fair value through profit and loss
|
- | 2,417 | ||||||
Derivative measured at fair value through profit and loss (ii)
|
11,250 | 24,860 | ||||||
Loan from third parties (iii)
|
2,771 | 163,648 | ||||||
|
14,021 | 215,752 | ||||||
|
(i)
|
The balance for 2011 reflects the fair value of the total grants received from the OCS by InSightec net of royalties paid up to such date discounted at the applicable interest rate for similar loans having the same terms and conditions (27%). InSightec is obliged to pay royalties to the OCS - in respect of products, the development of which was funded by grants provided by the OCS - at a rate of 3.5% of the revenues from said products and up to the amount of the grants received. As for the decrease of the Company's holdings in Insightec, see note 10 B.
|
|
(ii)
|
a)
|
As for December 31, 2011: Within the framework of a credit agreement executed in September 2011 (See iii below) the Company granted to the Lender a warrant to purchase the Company’s ordinary shares at an exercise price of $3.00 per share during a two-year period commencing on March 31, 2012. The warrant was entitled the lender to purchase up to 9.9% of the Company's outstanding shares.
|
|
b)
|
As of December 31, 2011, PC had interest rate and EURO/NIS swap with notional amount of NIS 127 million. PC paid a fix interest of 6.82 % and received 4.5% interest linked to the Israeli CPI. The swaps were measured at fair value. Changes in the fair value were charged to the statement of income. This swap was settled in January 2012.
|
|
c)
|
In respect to loan agreement drown by a subsidiary holding the Radisson Blu, Bucharest ("BUTU") (see Note 19 D (ii)), BUTU entered into IRS transaction in which it will pay fixed interest rate of 1.4% and receives three months Euribor on a quarterly basis starting on January 1, 2013 and ending on June 30, 2016.
|
|
(iii)
|
As for December 2011, DDR has originated a USD 14 million (NIS 49 million) loan, to a subsidiary of EDT, at a fixed interest rate of 10%. The loan was assigned as part of selling the US operation (see note 29 B).
|
|
A.
|
Composition:
|
December 31
|
|||||||||
2 0 1 2
|
2 0 1 1
|
||||||||
(in thousand NIS)
|
|||||||||
Liability in respect of construction services (i)
|
76,747 | 77,020 | |||||||
Provisions
|
6,243 | 6,881 | |||||||
Retirement benefit obligation (see B below)
|
6,983 | 4,953 | |||||||
Other
|
1,154 | 974 | |||||||
91,127 | 89,828 |
|
(i)
|
Within the framework of an agreement for the acquisition of 75% holding in a company which holds the Casa Radio Project in Romania (Project Company), PC has undertaken to ensure that the Project Company will construct an office building for the Government of Romania at the Project Company’s own costs. Aggregately, and as of December 31, 2012, an amount of EUR 1.5 million (NIS 7 million) was utilized from the provision.
|
|
B.
|
Retirement benefit obligation
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Present value of funded defined benefit obligation
|
19,469 | 14,965 | ||||||
Fair value of plan assets
|
(12,486 | ) | (10,012 | ) | ||||
Net liability arising from defined obligation
|
6,983 | 4,953 | ||||||
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
%
|
%
|
|||||||
Discount rates
|
4.7-5.1 | 5-5.6 | ||||||
Expected return on plan assets
|
2.4-7 | 2.7-7.8 | ||||||
Expected nominal salaries increase
|
5 | 5 |
|
A.
|
Composition:
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
Current
|
7,276 | 1,659 | 771 | |||||||||
Deferred
|
(21,480 | ) | 61,038 | 3,312 | ||||||||
In respect of prior years
|
3,956 | 586 | (91 | ) | ||||||||
(10,248 | ) | 63,283 | 3,992 |
|
B.
|
Principle tax laws applicable to the major Group companies in their country of residence:
|
|
a.
|
The provision for current taxes of the Company and its Israeli subsidiaries was determined until 2007 in accordance with the provisions of the Israeli Income Tax Ordinance and the Income Tax Law (Adjustments for Inflation)-1985, which established the measurement of the results for tax purposes on a real basis pursuant to changes in the consumer price index. Commencing from 2008, the provisions of that law would no longer apply, except for transitional provisions intended to avoid distortions in the tax computations.
|
|
(1)
|
Planned reductions in corporate tax rates for the years 2012-2016 were fully cancelled.
|
|
(2)
|
Increase of the corporate tax rate in 2012 to 25%.
|
|
B.
|
Principle tax laws applicable to the major Group companies in their country of residence: (cont.)
|
b.
|
As from January 1, 2003, certain statutory provisions came into force and effect, concerning, among other things, the tax reform in Israel in respect of the following:
|
|
1)
|
(i)
|
Taxation of profits of foreign companies considered as Controlled Foreign Companies ("CFC"), if all the following conditions are met: (i) its shares or its rights on it are not listed in a stock exchange, however if they are partly listed, then less than 30% of the shares or of the rights of the company were offered to the public (ii) majority of revenues thereof are passive, as same is defined by law, or majority of profits thereof derive from passive revenues; (iii) the tax rate applying to the passive profits thereof in their country of residence does not exceed 20%; and (iv) more than 50% of the means of control therein are held, directly or indirectly, by Israeli residents. In accordance with the statutory provisions, a controlling shareholder in those companies having unpaid profits, as defined by law, is deemed to have been distributed as a dividend representing its respective share in such profits ("Deemed Dividend").
|
|
(ii)
|
Taxation of a dividend received in Israel, out of profits generated or accrued abroad, as well as a dividend originating abroad.
|
|
A Deemed Dividend and/or the distribution of dividends, as stated, will be subject to a tax rate of 25%, less withholding taxes which would have been paid abroad in respect of such dividend, had it in fact been distributed. Each Israeli assessee has the right to elect, at its sole discretion, to be assessed according to the Israeli corporate tax rate less taxes payable abroad in respect of these profits (including under certain circumstances taxes payable by a company held by the distributing company), as the case may be.
|
|
2)
|
Capital gain from the realization of assets which were acquired subsequent to January 1, 2003 will be taxed at a rate of 25%. Capital gain for assets which were acquired before January 1, 2003, will be taxed at a rate of 25% for the portion of the gain relating to the period subsequent to this date up to the realization date and corporate tax rate for the portion of the gain relating to the period from the acquisition date up to January 1, 2003.
|
|
3)
|
Method of loss offsetting - regarding business losses, capital losses, passive losses, marketable securities losses and CFC losses.
|
|
c.
|
During 2004, the Company, EIL and Elscint have finalized an arrangement with the Israeli Tax Authorities, effective from December 31, 2002, whereby a new tax basis has been determined for the Company’s investments (on a consolidated basis) in foreign subsidiaries ("Regulated Revaluation" and "Regulated Assets"). The arrangement provides for no additional tax to be imposed in Israel on gains generated from the realization of Regulated Assets, and on dividends distributed therefrom, and all up to the amount of the Regulated Revaluation.
|
|
B.
|
Principle tax laws applicable to the major Group companies in their country of residence: (cont.)
|
|
d.
|
In August 2010, the Israeli Tax Authority approved the request made by the Company for restructuring (hereinforth - "restructuring approval"). Within the framework of the restructuring, the Tax Authority approved the execution of a procedure composed of several stages, at the end of which Elbit Medical Technologies Ltd., a direct subsidiary of the Company, became the owner of the Group's entire holdings in InSightec and Gamida.
|
|
a.
|
Companies resident in the Netherlands are subject to corporate income tax at the general rate of 25% (25.5% prior to the year 2011). The first €200,000 of profits are taxed at a rate of 20%. Tax losses may be carried backwards for one year and carried forward for nine years. Taxpayers can elect for an extension of the loss carry backwards period to three years (instead of one year). The election is only available for losses suffered in the taxable years 2009, 2010 and 2011. If a taxpayer makes use of the election, two additional limitations apply: (i) the loss carry forward period for the taxable years 2009, 2010 and/or 2011 will be limited to a maximum of six years (instead of nine years); and (ii) the maximum amount of loss that can be carried backwards to the second and third year preceding the taxable year will be limited to €10 million per year. The amount of loss that can be carried back to the year directly preceding the taxable year for which the election is made will remain unrestricted. As of the taxable year 2012, the election for extended loss carry back is not available anymore and the regular loss carry back and carry forward limitations apply.
|
|
b.
|
Under the participation exemption rules, income (including dividends and capital gains) derived by Netherlands companies in respect of qualifying investments in the nominal paid up share capital of resident or nonresident investee companies, is exempt from Netherlands corporate income tax provided the conditions as set under these rules have been satisfied. Such conditions require, among others, a minimum percentage ownership interest in the investee company and require the investee company to satisfy at least one of the following tests:
|
|
(i)
|
Motive Test, the investee company is not held as passive investment;
|
|
(ii)
|
Tax Test, the investee company is taxed locally at an effective rate of at least 10% (calculated based on Dutch tax accounting standards);
|
|
(iii)
|
Asset Test, the investee company owns (directly and indirectly) less than 50% low taxed passive assets.
|
|
c.
|
Dividend distributions from a Netherlands company to qualifying Israeli corporate shareholders holding at least 25% of the shares of such Netherlands company is subject to withholding tax at a rate of 5% provided certain compliance related formalities have been satisfied.
|
|
B.
|
Principle tax laws applicable to the major Group companies in their country of residence: (cont.)
|
|
(3)
|
India
|
|
(4)
|
Cyprus
|
|
(5)
|
USA
|
|
a.
|
The US federal corporate income tax rate is 35%. Some states may also impose corporate income taxes, which vary from zero to approximately 12%, resulting in an effective corporate tax rate of generally around 40%. The federal tax rate on corporate capital gains is the same as that of ordinary income.
|
|
b.
|
The statutory withholding tax rate on US sourced income is generally 30%, which may be lowered under a relevant tax treaty. The US-Israel Tax Treaty sets a 17.5% withholding tax on interest payments to Israeli corporations, and a 25% or 12.5% withholding on dividends (depending on share of ownership).
|
|
c.
|
Due to EPN's acquisition of the remaining shares of EDT in September 2011, the REIT election status of REIT I and REIT II were terminated effective January 1, 2011 as a result of the closely-held nature of EPN Group. As such, the REITs are subject to US income taxes as a C-corporation at maximum of 35% of taxable income.
|
|
C.
|
Effective tax rate:
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
Israeli company's statutory tax rate (%)
|
25 | 24 | 25 | |||||||||
Loss before income taxes
|
(560,571 | ) | (207,847 | ) | (301,321 | ) | ||||||
The theoretical tax
|
(140,143 | ) | (49,883 | ) | (75,330 | ) | ||||||
Differences in tax burden in respect of:
|
||||||||||||
Exempt income, net of unrecognized expenses
|
1,351 | 17,646 | (63,335 | ) | ||||||||
Prior-year losses for which deferred taxes had not previously been recorded, including utilization
|
6,420 | (29,295 | ) | (10,114 | ) | |||||||
Losses and other timing differences for which deferred taxes had not been recorded
|
34,417 | 130,652 | 135,946 | |||||||||
The effect of different measurement principles applied for the financial statements and those applied for income tax purposes (including exchange differences)
|
45,010 | (52,390 | ) | (43,036 | ) | |||||||
Differences in tax rates on income of foreign subsidiaries
|
40,720 | 46,614 | 59,045 | |||||||||
The Group's share in results of associated companies
|
2,180 | 267 | 1,610 | |||||||||
Taxes for prior years
|
3,956 | 586 | (1,463 | ) | ||||||||
Other differences, net
|
(4,159 | ) | (914 | ) | 669 | |||||||
(10,248 | ) | 63,283 | 3,992 |
|
D.
|
Carry forward losses and deductions:
|
December 31
|
||||
2 0 1 2
|
||||
(in thousand NIS)
|
||||
2013
|
109,073 | |||
2014
|
80,944 | |||
2015
|
88,911 | |||
2016
|
94,215 | |||
2017 and thereafter
|
2,347,747 | |||
2,720,890 |
|
E.
|
Deferred income taxes:
|
|
(1)
|
Composition:
|
Year ended December 31, 2012
|
||||||||||||||||||||||||||||
Balance
as of January 1, 2012
|
Charge to profit and loss account
|
Charged to foreign currency translation reserve
|
Charge to AFS reserve
|
Foreign currency translation adjustments
|
out of consolidation/ Discontinued operations
|
Balance
as of December 31, 2012
|
||||||||||||||||||||||
(In thousand NIS)
|
||||||||||||||||||||||||||||
Accelerated depreciation differences in respect of property plant and equipment
|
(79,852 | ) | 2,220 | (59,072 | ) | - | (30 | ) | 52,359 | (84,375 | ) | |||||||||||||||||
Differences between fair value of real estate at acquisition and related cost for income tax purposes
|
(20,802 | ) | 606 | - | - | (120 | ) | 1,595 | (18,721 | ) | ||||||||||||||||||
Timing differences - income and expenses
|
(77,838 | ) | 24,038 | 1,805 | (3,120 | ) | 73 | 534 | (54,508 | ) | ||||||||||||||||||
Carry forward tax losses and deductions
|
73,224 | (5,384 | ) | - | - | 317 | (22,839 | ) | 45,318 | |||||||||||||||||||
Net deferred taxes
|
(105,268 | ) | 21,480 | (57,267 | ) | (3,120 | ) | 240 | 31,649 | (112,286 | ) |
|
E.
|
Deferred income taxes: (cont.)
|
|
(1)
|
Composition: (cont.)
|
Year ended December 31, 2011
|
||||||||||||||||||||||||||||||||
Balance
as of
January 1, 2011
|
Charge to profit and loss account
|
Charged to foreign currency translation reserve
|
Charge to AFS reserve
|
Foreign currency translation adjustments
|
Discontinued operations
|
Changes
in the
tax rates
|
Balance as of December 31, 2011
|
|||||||||||||||||||||||||
(In thousand NIS)
|
||||||||||||||||||||||||||||||||
Accelerated depreciation differences in respect of property plant and equipment and fair value adjustments of investment property
|
(34,294 | ) | 2,480 | - | - | (1,163 | ) | (46,875 | ) | - | (79,852 | ) | ||||||||||||||||||||
Differences between fair value of real estate at acquisition and related cost for income tax purposes
|
(20,704 | ) | 545 | - | - | (511 | ) | (132 | ) | - | (20,802 | ) | ||||||||||||||||||||
Timing differences - income and expenses
|
(645 | ) | (76,212 | ) | (3,695 | ) | 2,215 | 499 | - | - | (77,838 | ) | ||||||||||||||||||||
Carry forward tax losses and deductions
|
38,608 | 9,906 | - | - | 1,004 | 23,993 | (287 | ) | 73,224 | |||||||||||||||||||||||
Net deferred taxes
|
(17,035 | ) | (63,281 | ) | (3,695 | ) | 2,215 | (171 | ) | (23,014 | ) | (287 | ) | (105,268 | ) |
|
E.
|
Deferred income taxes: (cont.)
|
|
(2)
|
The deferred taxes are presented as follow:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Long-term liabilities
|
(113,309 | ) | (108,642 | ) | ||||
Long-term receivables
|
1,023 | 3,374 | ||||||
(112,286 | ) | (105,268 | ) | |||||
|
(3)
|
The Group did not record deferred tax assets in respect of the following items:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Accelerated depreciation differences in respect of property plant and equipment and investment property
|
15,044 | (9,375 | ) | |||||
Timing differences - income and expenses
|
88,981 | 52,878 | ||||||
Carry forward tax losses and deductions
|
534,283 | 670,205 | ||||||
638,308 | 713,708 |
|
F.
|
Final tax assessments:
|
|
G.
|
Deferred taxes in respect of investment in investee companies:
|
|
H.
|
The total accumulated current and deferred taxes expenses, which were charged directly to the shareholders' equity, as of December 31, 2012, 2011, and 2010 is NIS 60,387 NIS 1,480 and NIS 24,093 thousands, respectively.
|
|
I.
|
Tax Merger:
|
|
(1)
|
Majority of the assets transferred to the Company in the Merger and majority of the assets owned by it immediately prior to the Merger will not be sold during the period of two years following the Merger date. For this purpose, “majority of the assets” are the assets which market value at the Merger date was more than 50% of the total market value of the Company’s assets on that date;
|
|
(2)
|
The Controlling Shareholder of the Company is not allowed to sell more than 10% of the Company’s total shares, and/or to dilute its rights in the company under 25.29%, at any time during the two years following the Merger date.
|
|
J.
|
Tax assessments under inspection
|
|
A.
|
Commitments:
|
|
(1)
|
Hotels' management fees
|
|
(2)
|
Minimum future rental payments
|
Year ended December 31,
|
(in thousand NIS)
|
|||
2012
|
27,567 | |||
2013
|
27,184 | |||
2014
|
26,451 | |||
2015
|
25,802 | |||
2016
|
23,843 | |||
Thereafter
|
128,428 | |||
259,275 | ||||
|
(3)
|
Commitments in respect of construction services
|
|
(4)
|
Elbit Trade - franchise agreements
|
|
(5)
|
As for commitments to related parties, see note 27.
|
|
(6)
|
In relation to commitments deriving from lease agreement with Israel Land Authority, see note 12G.
|
|
B.
|
Claims:
|
|
(1)
|
The Company - application for 1999 class action
|
|
B.
|
Claims: (cont.)
|
|
(1)
|
The Company - application for 1999 class action (cont.)
|
|
B.
|
Claims: (cont.)
|
|
(2)
|
The Company - application for 2006 class action
|
|
B.
|
Claims: (cont.)
|
|
(3)
|
The Company and its subsidiaries - other claims
|
|
(4)
|
Claims filed by a former employee of EIL group
|
|
B.
|
Claims: (cont.)
|
|
(5)
|
Tax assessments under inspection
|
|
·
|
The financial expenses, initiation expenses, general and administrative expenses and selling and marketing expenses are nondeductible for tax purposes, as in view of the ITA, the Company is a holding company, and these expenses were not incurred in the process of generating of business income.
|
|
·
|
Business loss shouldn’t be allowed to set off against financial incomes, since for tax purposes providing loans is not the Company's business.
|
|
·
|
Gain from sale of the Company's shares by a subsidiary, is not tax exempt although the sale transaction was recorded as re-issuance of shares in the Company's financial statement.
|
|
·
|
Undistributed gains of a subsidiary accumulated through December 31, 2005, which is incorporated in Netherland and was classified as a Controlled Foreign Corporation (“CFC”) until such date should be taxed in Israel. In 2005, the subsidiary entered into a preliminary agreement for a future sale of commercial centers. The ITA argues that profits derived from this agreement in 2006-2008 should be recognized for tax purposes in the year in which the preliminary agreement was signed, that is, 2005. The Company recognized the gains from selling the underlying assets in the tax years 2006-2008, which are the dates in which the actual sales have occurred and all conditions precedent have been fulfilled. In 2006, PC was registered as a public company, and accordingly the CFC rules are not applicable commencing 2006. Accordingly, the subsidiary's classification as a CFC argument is not applicable.
|
|
(6)
|
In April 2010, a lawsuit was filed in the US ("Litigation") by former customers of InSightec (the "Plaintiffs") who in 2005 and 2006 purchased systems from InSightec. The lawsuit asserted claims based on alleged representations by the defendants in connection with, and following, the sale of the systems to the Plaintiffs.
|
|
B.
|
Claims: (cont.)
|
|
(7)
|
One of the Group‘s subsidiary, Fantasy Park So. Zo.o. (“Fantasy Park”), is involved in several legal proceedings with Klepierre S.A subsidiaries (“Klepierre”) in Poland relating to certain terms of the lease agreements signed between the parties and certain amendments related thereto (“Lease”). As of the date of the approval of these financial statements, an agreement was settled between the parties (under which Fantasy Park shall pay to Klepierre EUR 0.5 million (NIS 2.5 million) and premisses were vacated that settle all the pending disputes, as well as any other disputes that may arise in the future in connection with the Lease referred to above.
|
|
(8)
|
Other legal proceedings in the ordinary course of business
|
|
C.
|
Other contingent liabilities
|
|
(1)
|
Indemnification to directors and officers of the Company
|
|
(2)
|
Indemnification to directors and officers of Elscint
|
|
C.
|
Other contingent liabilities (cont.)
|
|
(3)
|
Indemnification to directors and officers of Plaza Centers
|
|
(4)
|
a.
|
Indemnification to directors and officers of InSightec
|
|
C.
|
Other contingent liabilities (cont.)
|
|
(4)
|
(Cont.)
|
|
b.
|
Indemnification to directors and officers of Gamida
|
|
c.
|
Indemnification to directors and officers of Elbit Technologies
|
|
C.
|
Other contingent liabilities: (cont.)
|
|
(5)
|
The Company received, in 2003, a letter from a certain insurer ("the Insurer") of EIL, Elscint and the Company (the "Insured Companies"), which insured against, inter alia, the lawsuit as described in item B(1) above, alleging against the Insured Companies, inter alia, that the Insured Companies have breached their disclosure duties under the Insurance Contract Law 1981, by failing to disclose to the Insurer material information prior to the issuance of additional cover to the policy purchased by EIL (the "Policy"), effective as of July 1999 (the "Additional Cover"), and prior to the replacement of the Policy and the Additional Cover by the issuance of a new policy effective as of August 1999 (the "Replacement Cover"). The letter states that the Policy, Additional Cover and Replacement Cover (the "Insurance Cover") issued by the Insurer will be cancelled unless the Insured Companies indicate that circumstances as at the issuance of the Insurance Cover differ from those stated in the letter. The Company's legal counsel replied on behalf of the Insured Companies In March 2003, rejecting all allegations. The parties conducted discussions between them pertaining to the matter referred to herein to negotiate a settlement. No notice of cancellation has been issued.
|
|
(6)
|
Indemnifications relating to sale of real estate assets
|
|
C.
|
Other contingent liabilities: (cont.)
|
|
(7)
|
Pending lease payments to a purchaser of a commercial center
|
|
(8)
|
PC is retaining the 100% holding in all its projects in Serbia after it was decided to discontinue the negotiations with a Serbian developer. PC has an obligation to pay the developer in any case there is major progress in the projects. The total remaining obligation is €0.9 million (NIS 4.5 million).
|
|
(9)
|
In 2001, the "Elezra Group" won the right to purchase, through privatization, the shares of the State of Israel owned Afridar - Ashkelon Housing and Development Ltd. ("Afridar"). The Elezra Group consists of Elezra Developments and Investments Ltd. ("Elezra") and Elbit Medical Holdings Ltd. - a subsidiary of the Company ("Elbit Holdings"), as well as the Company and Mr. Eli Elezra as an interested party of Elezra (altogether: the "Group"). Immediately following the win of the right, the members of the Group signed a principle-agreement so as to regulate and govern the relations thereof, according to which Elezra would bear the entire acquisition costs of the Afridar shares (NIS 80 million), while the Company and/or Elbit Holdings would hold the Afridar shares, which would be registered in their name, in trust for Elezra.
|
|
Elbit Holdings and Elezra would remain, under such circumstance, jointly and severally, liable to IGCA as well as to the State of Israel for all undertakings applicable to purchasers of Afridar shares. The sale of control in and to Afridar (directly or indirectly) is contingent on the assignment to the purchaser of all seller’s obligations in favor of IGCA, all as stipulated in the agreement. Elezra undertook to indemnify the Company and/or Elbit Holdings for any expense and/or damage and/or claim and/or loss and/or payment demand and/or any other expense incurred by the Company and/or Elbit Holdings in connection with the acquisition of the Afridar shares, the holding of same in trust, transfer thereof by and between the parties and the abovementioned principle-agreement. As of the date of approval of these financial statements, the rights in and to Afridar, had not been assigned Company’s management estimates that it is not exposed to any costs and/or damage in respect of these holdings.
|
|
C.
|
Other contingent liabilities: (cont.)
|
|
(10)
|
Waiver and reimbursement to Gamida and/or its officers
|
|
In November 2010, the general meeting of Elbit Medical Technologies Ltd. approved assignment of obligations granted by the Company for indemnification of Gamida, and its affiliated parties, from the Company to Elbit Technologies, without the right of reimbursement from the Company, as set forth hereunder.
|
|
Accordingly, in November 2010, Elbit Technologies irrevocably undertook towards Gamida and/or its officers, that they shall not be under liability, of any kind, directly or indirectly, towards it, its interested parties, its officers and towards any other person and/or third party, regarding the outline published by Elbit Technologies with respect to the transaction according to which the Company acquired control over Elbit Technologies (hereinafter, respectively the “Outline” and the “Transaction”) and/or its preparation and/or publication and/or the process of completing the transaction and/or reports of the company and Elbit Technologies as future reporting companies and/or any actions or other implications by virtue of the aforementioned, except: the undertaking and responsibility of Gamida to provide the information in good faith, provided however that such information must be at all times complete and accurate. Likewise Elbit Technologies has irrevocably undertaken, towards Gamida and its officers that, subject to the conditions specified in the undertaking document, it shall reimburse them, for any liability and/or damage and/or expense and/or loss that is caused to any of the aforementioned due to any law suit, claim and/or demand, of any kind and type, that is directed at them, directly or indirectly, in favor of another person and/or body, with respect to the process of completing the transaction, the outline, as well as any report or other action of the company with respect to the aforementioned information and/or to Gamida, its activities, its business etc (including through subsidiaries and affiliated companies) after completing the transaction and any presentation given in its framework or to any other entity and/or reliance on such presentation, and all provided that Gamida and/or its officers do not bear liability as set forth in the undertaking document with respect to the offering of their securities to the public and/or transforming any of them into a reporting company.
|
|
Similarly Elbit Technologies has undertaken to grant Gamida Cell - Teva Joint Venture Ltd. (hereinafter: “Gamida Cell”), a company held by Gamida, an irrevocable undertaking, according to which, inter alia, Elbit Technologies shall undertake to indemnify Gamida and Teva Pharmaceutical Industries Ltd. (hereinafter: “Teva”), which together hold the shares of Gamida Cell, as well as, Gamida Cell for any damage, expense or loss that they incure due to a law suit, claim or demand against Gamida Cell and/or against Gamida and/or against Teva, pertaining to transfer of information and/or description of Gamida Cell in the outline.
|
|
The undertakings of Elbit Technologies toward Gamida and Gamida Cell as set forth above are instead of a similar undertaking granted to Gamida and Gamida Cell on behalf of the Company. As of December 31, 2012 the Group holds 96% in Elbit Technologies on fully diluted basis.
|
|
D.
|
Liens, collateral and guarantees:
|
|
(1)
|
Corporate loans
|
|
(2)
|
Credit facilities financing real estate projects
|
|
(3)
|
Secured bank deposits - As to bank deposits made to secure long term borrowings, short term credits and other liabilities of the Group - see note 30C.(7).
|
|
D.
|
Liens, collateral and guarantees: (cont.)
|
|
(4)
|
Standby letters of credit - Within the framework of the franchise and support agreements executed by Elbit Fashion with third parties (see note 23A (4)), as for December 2012, Elbit Fashion has furnished the third parties with letters of credit in the aggregate amount of €3.75 million (NIS 18.9 million) in order to secure payments to the third parties under the agreements.
|
|
(5)
|
Within the framework of PC cross currency interest rate swap (“IRS”) transactions, selling call options and regular swaps (refer to note 17 i), executed between PC and commercial banks (the "Banks"), PC agreed to provide the Banks with a cash collateral deposit which will be calculated in accordance with a specific mechanism provided in each swap transaction agreement. Accordingly, as of December 31, 2012, PC has pledged, a security deposit in the amount of NIS 15 million and also established a bail mortgage up to NIS 20 million encumbering the real estate project.
|
|
|
E.
|
Financial covenants
|
|
(1)
|
Company loans in the amount of NIS 238 million (see (3)) below and NIS 52 million (see note 31). As for notices these banks provided the Company in June 2013 for immediate repayment of the entire amount of the loans, see note 31C.
|
|
(2)
|
PC's subsidiaries, which have been granted with loans the balance of which as of December 31, 2012, amounted to €88 million (NIS 433 million) for financing construction of trading property, are not in compliance with certain covenants included in the loans agreements. PC is negotiating with the financing banks in respect of settling the bank requirement and agreeing on new covenants and/or waivers. PC obtained waiver in place in respect of two of the secured bank facilities, and is in negotiations to secure waiver or agreement in respect of the remaining two facilities.
|
|
E.
|
Financial covenants (cont.)
|
|
(3)
|
As for December 31, 2012 the financial covenants that may materially impact the Company's operations and financial position are presented in the table below:
|
Segment
|
Financial covenants
|
Actual ratio
|
Comments
|
Balance as of December 31, 2012
(NIS '000)
|
The Company
|
Total shareholders' equity higher than NIS 1,500 million
|
NIS 1,421 million
|
As for collaterals, see D (1) above. See also note 31C
|
238
|
LTV (loan to value) < 0.75 (according to certain adjustments specified in the loan agreement)
|
0.93
|
|||
Total financial assets (solo) > $50 million
|
$74 million
|
|||
Ratio Net Debt / Cap < 85%
|
74%
|
|||
PC's total financial assets > $80 million
|
$134 million
|
|||
Ratio Equity/Total Assets of PC > 25%
|
47%
|
|||
Hotels
|
LTV (loan to value) < 0.6
|
0.34
|
289
|
|
DSCR (debt service coverage ratio) > 1.2
|
1.82
|
|||
Commercial centers
|
LTV < 0.7
|
0.45
|
244
|
|
LTV < 0.7
|
0.69
|
160
|
||
LTV < 0.75
|
1.14
|
Waiver in place
|
106
|
|
LTV < 0.65
|
0.73
|
Under Negotiation
|
152
|
|
LTV < 0.85
|
0.72
|
105
|
||
LTV < 0.70
|
0.75
|
Waiver in place
|
157
|
|
A.
|
Composition:
|
Ordinary shares
|
||||||||||||
of NIS 1.00 par value each
|
||||||||||||
December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
Authorized share capital
|
50,000,000 | 50,000,000 | 50,000,000 | |||||||||
Issued and outstanding (*)
|
24,885,833 | 24,885,833 | 24,885,691 | |||||||||
|
(*)
|
As of December 31, 2012, 2011 and 2010 excluding 3,388,910 treasury shares held by the Company.
|
|
B.
|
Company's Dividend policy:
|
|
A.
|
Options plan adopted by the Company:
|
Number of options
|
||||||||||||||||||||||||
Year ended December 31
|
||||||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||||||||||||||
Number of options
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
|||||||||||||||||||
(NIS)
|
(NIS)
|
(NIS)
|
||||||||||||||||||||||
Balance at the beginning of the year
|
1,709,251 | 18 | 2,148,917 | 53 | 1,780,917 | 52 | ||||||||||||||||||
Granted
|
20,000 | 10.25 | - | 399,500 | 55 | |||||||||||||||||||
Exercised
|
- | - | (30,500 | ) | 53 | |||||||||||||||||||
Forfeited
|
- | (439,666 | ) | 90 | (1,000 | ) | 32 | |||||||||||||||||
Balance at the end of the year (*)
|
1,729,251 | 18 | 1,709,251 | 18 | 2,148,917 | 53 | ||||||||||||||||||
Options exercisable at the year end
|
1,576,084 | 17 | 1,399,918 | 19 | 1,431,583 | 57 | ||||||||||||||||||
(*) Includes options granted to
other Company's key personnel
|
185,000 | 32 | 557,500 | 17.47 | 771,000 | 54.9 |
|
A.
|
Options plan adopted by the Company: (cont.)
|
Year ended December 31
|
||||||||
2 0 1 1
|
2 0 1 0
|
|||||||
Risk free interest rate (%)
|
3.75 | 3.59 | ||||||
Exercise coefficient
|
2.34 | 2.34 | ||||||
Contractual term
|
4.3 | 5 | ||||||
Expected volatility (%)
|
67.8 | 61.91 | ||||||
Expected dividend yield
|
None
|
None
|
||||||
Forfeited (%)
|
- | - | ||||||
Total cost of benefit (NIS thousand)
|
3,971 | 9,756 | ||||||
|
A.
|
Options plan adopted by the Company: (cont.)
|
Number of options
|
||||||||||||||||||||||||
Year ended December 31
|
||||||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||||||||||||||
Number of options
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
|||||||||||||||||||
($)
|
($)
|
($)
|
||||||||||||||||||||||
Balance at the beginning of the year
|
430,000 | 2 | 430,000 | 2 | 430,000 | 2 | ||||||||||||||||||
Granted
|
- | - | - | |||||||||||||||||||||
Balance at the end of the year (*)
|
430,000 | 2 | 430,000 | 2 | 430,000 | 2 | ||||||||||||||||||
Options exercisable at the year end
|
286,667 | 2 | 143,000 | 2 | - | - | ||||||||||||||||||
(*)Includes options granted to the Company's key personnel
|
80,000 | 2 | 180,000 | 2 | 180,000 | 2 |
Year ended December 31
|
|
2 0 1 0
|
|
Risk free interest rate (%)
|
3.15
|
Exercise coefficient
|
2.5-3.5
|
Contractual term
|
7
|
Expected volatility (%)
|
75.86
|
Expected dividend yield
|
None
|
Forfeited (%)
|
0-3
|
Total cost of benefit (NIS thousand)
|
11,635
|
|
A.
|
Options plan adopted by the Company: (cont.)
|
Year ended December 31
|
||||||||||||||||
2 0 1 2
|
2011
|
|||||||||||||||
Number of options (*)
|
Weighted average exercise price
|
Number of options (*)
|
Weighted average exercise price
|
|||||||||||||
(NIS)
|
(NIS)
|
|||||||||||||||
Balance at the beginning of the year
|
130,233,500 | 0.4 | - | |||||||||||||
Granted
|
29,071,000 | 0.13 | 130,483,500 | 0.4 | ||||||||||||
Exercised
|
- | (250,000 | ) | 0 | ||||||||||||
Balance at the end of the year (*)
|
159,304,500 | 0.14 | 130,233,500 | 0.4 | ||||||||||||
Options exercisable at the year end
|
- | - | ||||||||||||||
(*)Includes options granted to the Company's key personnel
|
- | - | 43,639,000 | 0.4 |
Year ended December 31
|
||||||
2 0 1 2
|
2011
|
|||||
Risk free interest rate (%)
|
3 | 4.83 | ||||
Exercise coefficient
|
None
|
None
|
||||
Contractual term
|
5 | 5 | ||||
Expected volatility (%)
|
54.5 | 53.1 | ||||
Expected dividend yield
|
None
|
None
|
||||
Forfeited (%)
|
0 | 0 | ||||
Total cost of benefit (NIS thousand)
|
6,127 | 19,924 |
|
B.
|
Options plan adopted by PC:
|
|
B.
|
Options plan adopted by PC: (cont.)
|
Number of options
|
||||||||||||||||||||||||
Year ended December 31
|
||||||||||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||||||||||||||
Number of options (i)
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
Number of options
|
Weighted average exercise price
|
|||||||||||||||||||
(GBP)
|
(GBP)
|
(GBP)
|
||||||||||||||||||||||
Balance at the beginning of the year
|
26,905,132 | 0.46 | 24,889,225 | 0.61 | 26,255,482 | 0.532 | ||||||||||||||||||
Granted
|
(108,335 | ) | 0.42 | 6,169,000 | 0.46 | 2,789,000 | 1.23 | |||||||||||||||||
Exercised
|
(2,989,557 | ) | 0.96 | (951,564 | ) | 0.53 | (3,954,541 | ) | 0.52 | |||||||||||||||
Forfeited
|
1,190,000 | 0.47 | (3,201,529 | ) | 1.4 | (200,716 | ) | 0.52 | ||||||||||||||||
Balance at the end of the year (*)
|
24,997,240 | 0.43 | 26,905,132 | 0.43 | 24,889,225 | 0.61 | ||||||||||||||||||
Options exercisable at the year end
|
12,471,556 | 0.43 | 19,380,778 | 0.458 | 15,279,330 | 0.527 | ||||||||||||||||||
(*) Includes:
|
||||||||||||||||||||||||
Options granted to the Company's CEO & Executive President
|
3,907,895 | 0.43 | 3,907,895 | 0.43 | 3,907,895 | 0.52 | ||||||||||||||||||
Options granted to other Company's key personnel
|
2,116,541 | 0.43 | 14,566,917 | 0.43 | 14,566,917 | 0.64 |
|
(i)
|
The options outstanding at 31 December 2012 have an exercise price in the range of GBP 0.39 to GBP 1.32 and have weighted average remaining contractual life of 10.3 years. The weighted average share price at the date of exercise for share options exercised in 2012 was GBP 0.48 (2011: GBP 0.88).
|
|
B.
|
Options plan adopted by PC: (cont.)
|
Year ended December 31
|
|||||
2 0 1 2
|
2 0 1 1 (i)
|
2 0 1 0
|
|||
Risk free interest rate (%)
|
0.24-4.13
|
0.46-5.49
|
0.55-5.65
|
||
Expected life of options (years)
|
9-10
|
7-10
|
5-7
|
||
Expected volatility (%) (ii)
|
40-60
|
33-52
|
40-58
|
||
Expected dividend yield
|
-
|
-
|
-
|
||
Forfeited (%)
|
2.5-5.9
|
2.5-5.9
|
2.5-5.9
|
||
Suboptimal exercise multiple
|
1.5-2
|
1.5-2
|
1.5-2
|
||
Total cost of benefit for options granted (or modified) during the year (NIS thousands)
|
3,783
|
11,897
|
7,164
|
||
|
(i)
|
Not including information in respect of the modification of the option plan in November 2011 (see above).
|
|
(ii)
|
Since PC has been a publicly traded company since October 2006, there is not enough information concerning PC share price. Therefore, in order to derive the expected stock price volatility, analysis was performed based on the data of PC, and of three other companies operating in the similar segment, which have similar market capital and are traded at the Warsaw Stock Exchange. The weight of the standard deviation for PC was ranging between 45% - 65% and the weight of the average of standard deviations of comparative companies was 35% - 55% (2011: the same).
|
|
|
C.
|
Options plan adopted by EPUS
|
Year ended December 31
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Number of options (*)
|
Weighted average exercise price
|
Number of options (*)
|
Weighted average exercise price
|
|||||||||||||
(USD)
|
(USD)
|
|||||||||||||||
Balance at the beginning of the year
|
488,750 | 12.74 | - | - | ||||||||||||
Granted
|
11,250 | 12.74 | 488,750 | 17 | ||||||||||||
Exercised (*)
|
(500,000 | ) | 1.9 | |||||||||||||
Balance at the end of the year (**)
|
- | 488,750 | 12.74 | |||||||||||||
Options exercisable at the year end
|
- | - | - | - | ||||||||||||
(**) Includes options granted to the Company's key personnel
|
- | - | 300,000 | 12.74 |
|
(*)
|
During 2012 and as part of the U.S transaction (see note 29) the Administration of the plan accelerated the vesting period
|
Year ended
December 31
|
|
2 0 1 2
|
|
Risk free interest rate (%)
|
0.48
|
Exercise coefficient
|
None
|
Contractual term
|
3.5
|
Expected volatility (%)
|
51.1
|
Expected dividend yield
|
None
|
Forfeited (%)
|
0
|
Total cost of benefit (USD thousand)
|
8,060
|
|
D.
|
Options plan adopted by PC India and Elbit India real estate
|
|
E.
|
Options plan adopted by Investee Company
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
A. Income from commercial centers
|
||||||||||||
Revenues from sale of trading property
|
127,109 | 3,525 | 4,345 | |||||||||
Rental income and management fees
|
141,025 | 76,300 | 61,260 | |||||||||
Other
|
34,128 | 35,445 | 37,290 | |||||||||
175,153 | 111,745 | 98,550 | ||||||||||
B. Revenues from hotel operations and management
|
||||||||||||
Rooms
|
137,146 | 179,396 | 259,894 | |||||||||
Food, beverage and other services
|
69,370 | 92,009 | 129,195 | |||||||||
Rental of commercial space
|
16,312 | 15,143 | 14,733 | |||||||||
222,828 | 286,548 | 403,822 |
C. Cost of commercial centers
|
||||||||||||
Direct expenses:
|
||||||||||||
Cost of trading property sold
|
109,628 | 3,203 | 5,185 | |||||||||
Wages and fringe benefits
|
10,341 | 9,089 | 10,019 | |||||||||
Allowance for doubtful debts
|
- | - | 3,223 | |||||||||
Energy costs
|
22,250 | 18,676 | 18,375 | |||||||||
Taxes and insurance
|
10,281 | 6,595 | 5,168 | |||||||||
Maintenance of property and other expenses
|
29,627 | 26,418 | 23,672 | |||||||||
182,127 | 63,981 | 65,642 | ||||||||||
Other operating expenses:
|
||||||||||||
Wages and fringe benefits
|
22,952 | 24,086 | 25,380 | |||||||||
Stock-based compensation expenses
|
7,755 | 19,000 | 13,366 | |||||||||
Professional services
|
23,933 | 19,756 | 17,830 | |||||||||
Advertising
|
20,063 | 12,931 | 14,637 | |||||||||
Other
|
12,705 | 14,845 | 13,845 | |||||||||
87,408 | 90,618 | 85,058 | ||||||||||
Depreciation and amortization
|
3,275 | 5,027 | 6,045 | |||||||||
272,810 | 159,626 | 156,745 |
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
D. Cost of hotel operations and management
|
||||||||||||
Direct expenses:
|
||||||||||||
Wages and fringe benefits
|
55,575 | 77,814 | 107,574 | |||||||||
Food and beverages
|
17,235 | 22,483 | 28,806 | |||||||||
Other
|
56,669 | 67,814 | 95,352 | |||||||||
129,479 | 168,111 | 231,732 | ||||||||||
Other operating expenses:
|
||||||||||||
Wages and fringe benefits
|
573 | 834 | 499 | |||||||||
Management fees and reimbursement expenses
|
12,677 | 15,252 | 21,884 | |||||||||
Business taxes, insurance and lease payments
|
8,592 | 11,838 | 25,536 | |||||||||
Other
|
3,819 | 3,432 | 7,746 | |||||||||
25,661 | 31,356 | 55,665 | ||||||||||
Depreciation and amortization
|
47,018 | 41,317 | 53,894 | |||||||||
202,158 | 240,784 | 341,291 |
E. Cost of fashion merchandise
|
||||||||||||
Direct expenses:
|
||||||||||||
Inventories - opening balance
|
36,140 | 28,504 | 26,652 | |||||||||
Purchases
|
61,620 | 101,550 | 78,222 | |||||||||
Less disposal during the year
|
19,982 | - | - | |||||||||
Less - inventories closing balance
|
10,676 | 36,140 | 28,330 | |||||||||
67,102 | 93,914 | 76,544 | ||||||||||
Other operating expenses:
|
||||||||||||
Wages and fringe expenses
|
32,562 | 38,417 | 38,512 | |||||||||
Rental, management fee and shops' maintenance
|
39,281 | 56,485 | 54,899 | |||||||||
Advertising
|
5,397 | 11,788 | 14,398 | |||||||||
Depreciation and amortization
|
6,064 | 7,379 | 8,520 | |||||||||
Other
|
5,366 | 3,760 | 4,701 | |||||||||
88,670 | 117,829 | 121,030 | ||||||||||
155,772 | 211,743 | 197,574 | ||||||||||
F. General and administrative expenses
|
||||||||||||
Wages and fringe benefits
|
24,718 | 24,262 | 30,274 | |||||||||
Stock-based compensation expenses
|
11,853 | 22,644 | 13,980 | |||||||||
Depreciation and amortization
|
1,752 | 1,852 | 1,990 | |||||||||
Other
|
10,563 | 13,099 | 19,048 | |||||||||
48,886 | 61,857 | 65,292 |
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
G. Financial expense
|
||||||||||||
Interest and CPI linkage on borrowings (i)
|
393,941 | 463,500 | 417,539 | |||||||||
Gain from buy back of debentures
|
(112,857 | ) | (64,110 | ) | - | |||||||
Sub Total
|
281,084 | 399,390 | 417,539 | |||||||||
Loss (gain) from foreign currency translation differences (net of exchange results recorded in foreign currency translation reserve)
|
21,483 | (42,754 | ) | 55,451 | ||||||||
Other financial expenses
|
7,507 | 4,968 | 7,954 | |||||||||
Total financial expenses
|
310,074 | 361,604 | 480,944 | |||||||||
Financial expenses capitalized to qualified assets (ii)
|
(134,296 | ) | (197,603 | ) | (164,238 | ) | ||||||
175,778 | 164,001 | 316,706 | ||||||||||
(i) Including results of swap transactions designated as cash flow hedge for the years
ended December 31, 2010.
In addition interest on debentures measured at FVTPL in the amount of NIS 61 million,
NIS 56 million and NIS 51 for the years ended December 31, 2012, 2011 and 2010, respectively.
|
||||||||||||
(ii) The rate applicable to non-specific credit
|
7.3 | % | 8.0 | % | 7.2 | % |
H. Financial incomes
|
||||||||||||
Interest on deposits and receivables
|
27,974 | 65,017 | 59,169 | |||||||||
Gain (loss) from foreign currency translation differences
|
3,109 | 554 | (18,242 | ) | ||||||||
31,083 | 65,571 | 40,927 | ||||||||||
I. Change in fair value of financial instruments at FVTPL
|
||||||||||||
Change in fair value of embedded derivative
|
- | 2,158 | 9,146 | |||||||||
Change in fair value of financial instruments measured at FVTPL (mainly debentures)
|
98,798 | (353,368 | ) | 236,837 | ||||||||
Change in fair value of derivatives (mainly swap and forward transactions)
|
(57,888 | ) | 60,857 | (173,813 | ) | |||||||
Gain (loss) on marketable securities
|
9,319 | 14,816 | (19,154 | ) | ||||||||
50,229 | (275,537 | ) | 53,016 |
J. Write down, charges and other expenses, net
|
||||||||||||
Write down, other property and other receivables (i)
|
413,564 | 263,720 | 44,446 | |||||||||
Initiation expenses (ii)
|
15,454 | 22,159 | 37,832 | |||||||||
Other, net (iii)
|
(17,393 | ) | 397 | 1,382 | ||||||||
411,625 | 286,276 | 83,660 | ||||||||||
|
(i)
|
Includes mainly impairment related to PC trading property based on external expert valuations.
|
|
(ii)
|
Includes mainly cost and expenses in respect of the Group's operations in India.
|
|
(iii)
|
The balance for 2012 includes NIS 37 million receivable from insurance company (see note 8 C)
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
K. Earnings per share
|
||||||||||||
1. Basic earnings per share:
|
||||||||||||
The earnings and weighted average number of ordinary shares used in the calculation of the basic earning per share are as follows:
|
||||||||||||
Loss from continuing operations
|
(391,947 | ) | (284,610 | ) | (308,924 | ) | ||||||
Profit from discontinued operation
|
98,357 | 19,691 | 370,922 | |||||||||
Weighted average number of shares used in computing basic earnings per share (thousands)
|
24,886 | 24,883 | 25,291 | |||||||||
2. Diluted earnings per share:
|
||||||||||||
The earnings and weighted average number of ordinary shares used in the calculation of the diluted earnings per share are as follows:
|
||||||||||||
Profit (loss) from continuing operations
|
(391,947 | ) | (284,610 | ) | (308,924 | ) | ||||||
Profit from discontinued operation
|
98,357 | 19,691 | 370,922 | |||||||||
Weighted average number of shares used in computing diluted earnings per share (thousands)
|
24,886 | 24,883 | 25,737 | |||||||||
Effect of diluted options on the number of shares (thousands)
|
- | - | - |
|
A.
|
Transactions with related parties:
|
|
(1)
|
As of December 31, 2012 the Company and/or its subsidiaries are bound by the following agreements, with Control Centers Ltd. ("CC"), the ultimate controlling party of the Company, and/or companies controlled thereby:
|
|
a.
|
An agreement according to which the Company will receive from CC (either directly or through its subsidiaries or affiliates) coordination, planning, execution and supervision services (the “Services”) over real estate projects of the Company and/or its subsidiaries and/or affiliates as defined in the agreement in consideration for a fee equal to 5% of the actual execution costs (excluding land acquisition costs, financing cost and the consideration for CC under the agreement) of each such project ("Supervision Fees").
|
|
A.
|
Transactions with related parties: (cont.)
|
|
(1)
|
(Cont.)
|
|
a.
|
(Cont.)
|
|
b.
|
An agreement between the Company and Jet Link Ltd., for the provision of aviation services, up to 150 flight hours per annum, for the operations and in connection with projects abroad, in consideration for payment calculated on the basis of the price list of Jet Link Ltd., deducted by a 5% discount. This aviation services agreement has expired in May 2011.
|
|
c.
|
In October 2011 PC extended for additional four-years term an agreement between PC and Jet Link Ltd under which the PC and/or its affiliates may use the airplane for their operational activities up to 275 flight hours per annum. PC will pay Jet Link Ltd. in accordance with its price list, deducted by a 5% discount.
|
|
A.
|
Transactions with related parties: (cont.)
|
|
(2)
|
The Group furnished a local municipality with a bank guarantee in a principal amount of approximately NIS 4.5 million to secure payment of the land betterment tax by Marina Herzliya Limited Partnership Ltd. (a subsidiary of the Control Centers Group). The above sum, including the interest and index accrued thereupon, as of December 31, 2012 amounted to NIS 9.6 million. In December 2012, the court, based its decision on the assessment of the valuator that was appointed by it, decided to reject the betterment tax demand. Consequently the bank guarantee was canceled.
|
|
B.
|
Benefits to key management personnel:
|
|
(1)
|
CEO & Executive President's services for the Company
|
|
B.
|
Benefits to key management personnel: (cont.)
|
|
(2)
|
Executive Director services for PC
|
|
(3)
|
Company's CEO & Executive President Bonus
|
|
B.
|
Benefits to key management personnel: (cont.)
|
|
(4)
|
Company's Chairman Bonus
|
|
(5)
|
Company's agreement with its former executive vice chairman
|
|
B.
|
Benefits to key management personnel: (cont.)
|
|
(6)
|
PC's agreement with the Company's former executive vice chairman
|
|
B.
|
Benefits to key management personnel: (cont.)
|
|
(7)
|
a.
|
Insurance policy for the Company's directors and officers
|
|
b.
|
Insurance policy for PC's directors and officers
|
|
c.
|
Insurance policy for the InSightec's directors and officers
|
|
B.
|
Benefits to key management personnel: (cont.)
|
|
(7)
|
(cont.)
|
|
d.
|
Insurance policy for the Gamida's directors and officers
|
|
(8)
|
As for directors' indemnification - see note 23C (1-4).
|
|
(9)
|
Shares and warrants issued to related parties - see note 25.
|
|
C.
|
The following table presents the components of the Group related party transactions and benefit (including bonus) granted to the Group's key management personnel:
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
a. Benefits to key management personnel
|
||||||||||||
Salaries, management fees, directors' fees and bonuses (i) (*)
|
9,927 | 13,038 | 15,485 | |||||||||
Post employment benefits
|
186 | 1,261 | 2,855 | |||||||||
Amortization of stock based compensation expenses
|
19,234 | 22,085 | 15,720 | |||||||||
29,347 | 36,384 | 34,060 | ||||||||||
(*) Number of recipients (excluding directors)
|
1 | 4 | 5 | |||||||||
b. Project expenses (coordination, supervision and aviation services) - charged, mainly to cost of trading property and property plant and equipment (see note 27 A(1))
|
8,211 | 21,960 | 44,332 |
|
D.
|
Balances with related parties:
|
Year ended
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Assets:
|
||||||||
Receivables and other debit accounts
|
5,715 | 6,151 | ||||||
Deposit, loans and other long-term receivables
|
1,082 | 1,082 | ||||||
6,797 | 7,233 | |||||||
Liabilities:
|
||||||||
Payables and other credit accounts
|
759 | 2,900 | ||||||
Benefits payable to former key management personnel
|
3,332 | 5,841 | ||||||
4,091 | 8,741 |
|
E.
|
Liens and guarantees - see notes 23D.
|
|
A.
|
General:
|
|
A.
|
General: (cont.)
|
|
·
|
Commercial and entertainment centers - Initiation, construction and sale, shopping and entertainment centers and other mixed-use real property projects, predominantly in the retail sector. In certain circumstances and depending on market conditions, the Group operates and manages a commercial and entertainment centers prior to its sale.
|
|
·
|
Hotels - Hotels operation and management.
|
|
·
|
Medical Industries and devices - (a) research and development, production and marketing of magnetic resonance imaging guided focused ultrasound treatment equipment and (b) development of stem cell population expansion technologies and stem cell therapy products for transplantation and regenerative medicine;
|
|
·
|
Residential projects - initiation, construction and sale of residential projects and other mixed-use real property projects, predominately residential.
|
|
·
|
Fashion apparel - distribution and marketing of fashion apparel and accessories.
|
|
·
|
Other activities - venture-capital investments - investments in high tech companies which are mainly engaged in research and development operations.
|
|
B.
|
Data regarding business segments
|
Commercial and entertainment Centers (i) (ii)
|
Hotels
|
Medical industries and devices
|
Residential
|
Fashion Apparel
|
Other activities and allocations
|
Total
|
||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||
Income – revenues and gains
|
300,541 | 276,703 | 69,457 | 1,622 | 152,470 | (66,463 | ) | 734,330 | ||||||||||||||||||||
Gain from loss of control over a subsidiary
|
- | - | 216,574 | - | - | (216,574 | ) | - | ||||||||||||||||||||
734,330 | ||||||||||||||||||||||||||||
Segment profit (loss)
|
(378,419 | ) | 81,396 | 174,793 | (8,135 | ) | (3,302 | ) | (174,370 | ) | (308,037 | ) | ||||||||||||||||
Financial expenses
|
(57,861 | ) | (35,966 | ) | - | - | (1,569 | ) | 48 | (95,348 | ) | |||||||||||||||||
Share in losses of associates, net
|
(427 | ) | - | (8,299 | ) | - | - | - | (8,726 | ) | ||||||||||||||||||
Unallocated general and administrative expenses
|
(48,886 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(80,428 | ) | ||||||||||||||||||||||||||
Financial income
|
31,083 | |||||||||||||||||||||||||||
Change in fair value of financial instruments measured at FVTPL
|
(50,229 | ) | ||||||||||||||||||||||||||
Profit before income taxes
|
(560,571 | ) | ||||||||||||||||||||||||||
Income taxes
|
10,248 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(550,323 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
94,823 | |||||||||||||||||||||||||||
Loss for the year
|
(455,500 | ) | ||||||||||||||||||||||||||
Purchase cost of segment assets
|
138,846 | 2,897 | 73 | - | 3,626 | 2,674 | 148,116 | |||||||||||||||||||||
Unallocated Purchase cost
|
- | |||||||||||||||||||||||||||
148,116 | ||||||||||||||||||||||||||||
Depreciation and amortization of segment assets
|
3,275 | 47,018 | - | - | 6,064 | 253 | 56,610 | |||||||||||||||||||||
Unallocated depreciation and amortization
|
1,752 | |||||||||||||||||||||||||||
58,362 | ||||||||||||||||||||||||||||
Provision for impairment of segment assets
|
406,249 | (8, 223 | ) | - | - | - | (8, 157 | ) | 389,869 | |||||||||||||||||||
Unallocated provision for impairment
|
6,303 | |||||||||||||||||||||||||||
396,172 | ||||||||||||||||||||||||||||
December 31, 2012:
|
||||||||||||||||||||||||||||
Segment assets
|
3,436,990 | 1,267,412 | 106,928 | 1,046,965 | 47,339 | 290,296 | 6,195,930 | |||||||||||||||||||||
Investment on the equity basis
|
(5,680 | ) | - | 18,952 | - | - | 150,752 | 164,024 | ||||||||||||||||||||
Unallocated assets
|
734,456 | |||||||||||||||||||||||||||
7,094,411 | ||||||||||||||||||||||||||||
Segment liabilities
|
1,158,185 | 434,510 | 81,368 | 1,753 | 38,011 | (56,489 | ) | 1,657,338 | ||||||||||||||||||||
Unallocated liabilities
|
4,015,944 | |||||||||||||||||||||||||||
5,673,282 |
|
(i)
|
Includes mainly rental income from commercial centers under operation until their sale and consideration from sales of trading property.
|
|
(ii)
|
Includes trading property and payments on accounts of trading property.
|
|
B.
|
Data regarding business segments
|
Commercial and entertainment Centers (i) (ii)
|
Hotels
|
Medical industries and devices
|
Residential
|
Fashion Apparel
|
Other activities and allocations
|
Total
|
||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||
Income – revenues and gains
|
111,726 | 286,548 | 53,324 | 3,544 | 183,552 | (51,794 | ) | 586,900 | ||||||||||||||||||||
Segment profit (loss)
|
(320,949 | ) | 58,812 | (112,807 | ) | (12, 579 | ) | (29,532 | ) | 101,526 | (315,529 | ) | ||||||||||||||||
Financial expenses
|
(34,058 | ) | (37,045 | ) | 654 | - | (3,294 | ) | (728 | ) | (74,471 | ) | ||||||||||||||||
Share in losses of associates, net
|
(743 | ) | - | (6,130 | ) | - | - | (695 | ) | (7,568 | ) | |||||||||||||||||
Unallocated general and administrative expenses
|
(61,857 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(89,530 | ) | ||||||||||||||||||||||||||
Financial income
|
65,571 | |||||||||||||||||||||||||||
Change in fair value of financial instruments measured at FVTPL
|
275,537 | |||||||||||||||||||||||||||
Profit before income taxes
|
(207,847 | ) | ||||||||||||||||||||||||||
Income taxes
|
63,283 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(271,130 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
24,101 | |||||||||||||||||||||||||||
Loss for the year
|
(247,029 | ) | ||||||||||||||||||||||||||
Purchase cost of segment assets
|
404,028 | 27,464 | - | 14,881 | 3,087 | 2,956 | 452,416 | |||||||||||||||||||||
Unallocated Purchase cost
|
58,123 | |||||||||||||||||||||||||||
510,539 | ||||||||||||||||||||||||||||
Depreciation and amortization of segment assets
|
5,027 | 41,317 | 1,273 | - | 7,379 | 1,242 | 56,238 | |||||||||||||||||||||
Unallocated depreciation and amortization
|
1,852 | |||||||||||||||||||||||||||
58,090 | ||||||||||||||||||||||||||||
Provision for impairment of segment assets
|
274,563 | (13,048 | ) | - | - | 1,341 | (2,377 | ) | 260,479 | |||||||||||||||||||
Unallocated provision for impairment
|
7,638 | |||||||||||||||||||||||||||
268,117 | ||||||||||||||||||||||||||||
December 31, 2011:
|
||||||||||||||||||||||||||||
Segment assets
|
3,357,612 | 1,227,194 | 39,873 | 1,061,866 | 99,888 | 150,731 | 5,937,164 | |||||||||||||||||||||
Investment on the equity basis
|
(5,657 | ) | - | 16,213 | - | - | - | 10,556 | ||||||||||||||||||||
Unallocated assets
|
4,423,347 | |||||||||||||||||||||||||||
10,371,067 | ||||||||||||||||||||||||||||
Segment liabilities
|
1,248,294 | 745,624 | 115,435 | 956 | 70,026 | (89,042 | ) | 2,091,293 | ||||||||||||||||||||
Unallocated liabilities
|
6,740,904 | |||||||||||||||||||||||||||
8,832,197 |
(i)
|
Includes mainly rental income from commercial centers under operation until their sale.
|
(ii)
|
Includes trading property and payments on accounts of trading property.
|
|
B.
|
Data regarding business segments (cont.)
|
Commercial and entertainment Centers (i) (ii)
|
Hotels
|
Medical industries and devices
|
Residential
|
Fashion Apparel
|
Other activities and allocations
|
Total
|
||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||
Income – revenues and gains
|
102,895 | 602,599 | 33,631 | - | 174,817 | (33,631 | ) | 880,311 | ||||||||||||||||||||
Segment profit (loss)
|
(97,536 | ) | 276,369 | (88,856 | ) | (19,480 | ) | (28,081 | ) | 58,625 | 101,041 | |||||||||||||||||
Financial expenses
|
(19,490 | ) | (87,715 | ) | (1,073 | ) | - | (3,482 | ) | 1,073 | (110,687 | ) | ||||||||||||||||
Share in losses of associates, net
|
(1,899 | ) | - | - | - | - | (6,376 | ) | (8,275 | ) | ||||||||||||||||||
Unallocated general and administrative expenses
|
(65,292 | ) | ||||||||||||||||||||||||||
Unallocated financial expenses
|
(206,019 | ) | ||||||||||||||||||||||||||
Financial income
|
40,927 | |||||||||||||||||||||||||||
Change in fair value of financial instruments measured at FVTPL
|
(53,016 | ) | ||||||||||||||||||||||||||
Profit before income taxes
|
(301,321 | ) | ||||||||||||||||||||||||||
Income taxes
|
3,992 | |||||||||||||||||||||||||||
Profit from continuing operations
|
(305,313 | ) | ||||||||||||||||||||||||||
Profit from discontinued operation
|
378,838 | |||||||||||||||||||||||||||
Profit for the year
|
73,525 | |||||||||||||||||||||||||||
Purchase cost of segment assets
|
375,554 | 99,965 | 3,379 | 66,607 | 11,605 | 17,182 | 574,292 | |||||||||||||||||||||
Unallocated Purchase cost
|
2,441,795 | |||||||||||||||||||||||||||
3,016,087 | ||||||||||||||||||||||||||||
Depreciation and amortization of segment assets
|
6,044 | 53,894 | 628 | - | 8,520 | (628 | ) | 68,458 | ||||||||||||||||||||
Unallocated depreciation and amortization
|
2,618 | |||||||||||||||||||||||||||
71,076 | ||||||||||||||||||||||||||||
Provision for impairment of segment assets
|
43,686 | (15,061 | ) | - | 5,466 | 3,580 | - | 37,671 | ||||||||||||||||||||
Unallocated provision for impairment
|
5,833 | |||||||||||||||||||||||||||
43,504 | ||||||||||||||||||||||||||||
December 31, 2010:
|
||||||||||||||||||||||||||||
Segment assets
|
4,071,426 | 1,204,159 | 43,141 | 1,046,146 | 95,873 | 39,377 | 6,500,122 | |||||||||||||||||||||
Investment on the equity basis
|
(4,697 | ) | - | - | - | - | 29,824 | 25,127 | ||||||||||||||||||||
Unallocated assets
|
4,177,465 | |||||||||||||||||||||||||||
10,702,714 | ||||||||||||||||||||||||||||
Segment liabilities
|
1,726,315 | 622,775 | 61,596 | 1,069 | 75,870 | (54,485 | ) | 2,433,140 | ||||||||||||||||||||
Unallocated liabilities
|
6,092,052 | |||||||||||||||||||||||||||
8,525,192 |
(i)
|
Includes mainly rental income from commercial centers under operation until their sale.
|
(ii)
|
Includes trading property and payments on accounts of trading property.
|
|
C.
|
Data regarding geographical areas:
|
|
(1)
|
Revenues and gains by geographical areas
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
East and central Europe(i)
|
400,325 | 246,860 | 232,044 | |||||||||
West Europe (ii)
|
169,319 | 171,359 | 484,617 | |||||||||
Israel
|
152,470 | 183,552 | 171,275 | |||||||||
Other and allocations
|
12,216 | (14,871 | ) | (7,625 | ) | |||||||
734,330 | 586,900 | 880,311 |
|
(i)
|
The following table provides an additional information in respect of the revenues and rental income in east and central Europe per countries:
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
Hungary
|
42,152 | 8,638 | 6,993 | |||||||||
Poland
|
89,852 | 66,134 | 56,345 | |||||||||
Czech Republic
|
18,178 | 14,305 | 18,321 | |||||||||
Romania
|
136,473 | 136,103 | 126,050 | |||||||||
Latvia
|
23,947 | 19,372 | 15,245 | |||||||||
Serbia
|
21,228 | - | - | |||||||||
Bulgaria
|
68,495 | 2,308 | 9,090 | |||||||||
400,325 | 246,860 | 232,044 |
|
(ii)
|
The following table provides additional information in respect of the revenues in west Europe per countries:
|
Year ended December 31
|
||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
||||||||||||
England
|
- | - | 338,944 | |||||||||
Netherland
|
69,849 | 81,635 | 73,404 | |||||||||
Belgium
|
72,002 | 72,352 | 64,200 | |||||||||
Other
|
27,468 | 17,372 | 8,069 | |||||||||
169,319 | 171,359 | 484,617 |
|
C.
|
Data regarding geographical areas:
|
|
(2)
|
Non current assets by geographical areas
|
Segment assets
|
||||||||
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
East and central Europe
|
4,310,458 | 3,736,362 | ||||||
West Europe
|
330,376 | 583,180 | ||||||
Israel
|
446,183 | 247,624 | ||||||
India
|
1,431,761 | 1,414,232 | ||||||
Other
|
(140,537 | ) | (33,675 | ) | ||||
6,378,241 | 5,947,723 |
NOTE 29
|
-
|
DISCONTINUED OPERATION
|
|
A.
|
Significant accounting policies related to discontinued operations
|
|
(i)
|
Revenue recognition of medical devices:
|
|
a.
|
persuasive evidence of an arrangement exists;
|
|
b.
|
delivery has occurred, or services have been rendered;
|
|
c.
|
the amount of revenue can be measured reliably; and
|
|
d.
|
it is probable that the economic benefits associated with the transaction will flow to the Group.
|
NOTE 29
|
-
|
DISCONTINUED OPERATION (CONT.)
|
|
A.
|
Significant accounting policies related to discontinued operations (cont.)
|
|
(i)
|
Revenue recognition (cont.):
|
|
(ii)
|
Research and development costs:
|
NOTE 29
|
-
|
DISCONTINUED OPERATION (CONT.)
|
|
A.
|
Significant accounting policies related to discontinued operations (cont.)
|
|
(iii)
|
Critical Judgment in applying accounting policies
|
|
B.
|
Discontinued operations:
|
NOTE 29
|
-
|
DISCONTINUED OPERATION (CONT.)
|
|
B.
|
Discontinued operations (cont.):
|
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 10
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
(Except for per-share data)
|
||||||||||||||||
Revenues and gains
|
||||||||||||||||
Gain from bargain purchase
|
- | - | 397,082 | - | ||||||||||||
Gain from changes of shareholding in investee
|
216,574 | 15,450 | - | 58,016 | ||||||||||||
Gain from fair value adjustment of investment property
|
- | 81,118 | 42,550 | - | ||||||||||||
Investment property rental Revenues
|
133,640 | 254,806 | 122,462 | 35,800 | ||||||||||||
Sale of medical systems
|
69,901 | 53,324 | 33,631 | 18,725 | ||||||||||||
420,115 | 404,698 | 595,725 | 112,541 | |||||||||||||
Expenses and losses
|
||||||||||||||||
Investment property expenses
|
58,063 | 112,262 | 50,571 | 15,554 | ||||||||||||
Expenses relating to realization of investment property and fair value adjustment
|
76,104 | - | - | 20,387 | ||||||||||||
Cost and expenses of medical systems operation
|
67,742 | 101,498 | 63,973 | 18,147 | ||||||||||||
Research and development expenses
|
44,192 | 58,776 | 58,514 | 11,838 | ||||||||||||
Financial expenses
|
85,567 | 94,183 | 47,327 | 22,922 | ||||||||||||
other expenses (income), net
|
(452 | ) | (9,391 | ) | (4,426 | ) | (121 | ) | ||||||||
331,216 | 357,328 | 215,959 | 88,727 | |||||||||||||
Profit from discontinued operations before income taxes
|
88,899 | 47,370 | 379,766 | 23,814 | ||||||||||||
Income tax (income) expenses
|
(5,924 | ) | 23,269 | 928 | (1,587 | ) | ||||||||||
Profit from discontinued operations
|
94,823 | 24,101 | 378,838 | 25,401 | ||||||||||||
Earnings (loss) per share -
(in NIS)
|
||||||||||||||||
Basic earnings per share
|
3.95 | 0.79 | 14.67 | 1.06 | ||||||||||||
Diluted earnings per share
|
3.95 | 0.79 | 14.41 | 1.06 |
NOTE 29
|
-
|
DISCONTINUED OPERATION (CONT.)
|
|
B.
|
Discontinued operations (cont.):
|
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
2 0 1 2
|
|||||||||||||
Convenience translation (Note 2D)
|
||||||||||||||||
(in thousand NIS)
|
U.S.$'000
|
|||||||||||||||
Reconcile to CF statement
|
||||||||||||||||
Operating activities
|
(32,096 | ) | 38,675 | 31,167 | (8,598 | ) | ||||||||||
Proceeds from sale of investment property
|
1,361,965 | - | 364,844 | |||||||||||||
Other investment activities
|
(72,134 | ) | (61,416 | ) | (178,463 | ) | (19,323 | ) | ||||||||
Repayment of investment property loans
|
(597,953 | ) | - | - | (160,180 | ) | ||||||||||
Other financing activities
|
13,164 | (297,092 | ) | (39,991 | ) | 3,526 | ||||||||||
Net cash provided by (used in) discontinued operations
|
672,946 | (397,183 | ) | (187,287 | ) | 180,269 |
|
A.
|
Principal accounting policies:
|
B.
|
Balances of financial instruments by categories:
|
|
(1)
|
Composition:
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Financial assets
|
||||||||
Cash and cash equivalents
|
535,070 | 602,292 | ||||||
Loans and receivables
|
429,499 | 493,668 | ||||||
Financial assets held for trading
|
10,675 | 21,466 | ||||||
Available for sale financial instruments
|
87,044 | 144,702 | ||||||
Held to maturity financial instruments
|
- | 187,648 | ||||||
Financial assets designated at fair value through profit and loss
|
- | 62,701 | ||||||
Derivative financial assets at fair value through profit and loss
|
22,934 | 15,148 | ||||||
1,085,222 | 1,527,625 | |||||||
Financial Liabilities
|
||||||||
Derivative financial liabilities at fair value through profit and loss
|
27,585 | 27,277 | ||||||
Financial liabilities designated at fair value through profit
and loss
|
662,242 | 732,212 | ||||||
Financial liabilities at amortized cost
|
4,704,044 | 7,747,286 | ||||||
5,393,871 | 8,506,775 | |||||||
|
(2)
|
Additional information:
|
|
a.
|
As for financing income and expenses resulting from the aforementioned financial instruments -see note 26G.
|
|
b.
|
The total change in fair value which is attributable to the change in the credit risk of PC's debentures measured at FVTPL for the year ended December 31, 2012 and 2011 amount to revenue of NIS 14 million and loss of NIS 297 million respectively.
|
|
C.
|
Management of financial risks:
|
|
(1)
|
Foreign currency risk
|
|
C.
|
Management of financial risks: (cont.)
|
|
(1)
|
Foreign currency risk (cont.)
|
Functional currency
|
Linkage currency
|
Change
in the exchange rate (%)
|
Profit (loss)
|
||||||
In thousand NIS
|
|||||||||
Assets
|
|||||||||
Cash and deposits
|
NIS
|
U.S. Dollar
|
+10%
|
24,306 | |||||
Cash and deposits
|
EURO
|
PLN
|
+10%
|
1,966 | |||||
Cash and deposits
|
NIS
|
EURO
|
+10%
|
1,002 | |||||
Cash and deposits
|
EURO
|
NIS
|
+10%
|
2,312 | |||||
Available for sale assets
|
EURO
|
U.S. Dollar
|
+10%
|
17,264 | |||||
Loan to third party
|
EURO
|
GBP
|
+10%
|
4,606 | |||||
51,456 | |||||||||
Financial liablities
|
|||||||||
Loans at amortized cost
|
NIS
|
U.S. Dollar
|
+10%
|
(29,032 | ) | ||||
Loans at amortized cost
|
EURO
|
NIS
|
+10%
|
(8,496 | ) | ||||
Debentures at amortized cost
|
NIS
|
U.S. Dollar
|
+10%
|
(1,537 | ) | ||||
Debentures at amortized cost (i)
|
EURO
|
NIS
|
+10%
|
(36,016 | ) | ||||
Loans at amortized cost
|
EURO
|
U.S. Dollar
|
+10%
|
(1,368 | ) | ||||
Loans at amortized cost
|
RON
|
EURO
|
+10%
|
(28,878 | ) | ||||
(105,327 | ) |
|
C.
|
Management of financial risks: (cont.)
|
|
(1)
|
Foreign currency risk (cont.)
|
|
(i)
|
In respect of PC's series B debentures and series A debentures which are represented at amortized cost.
|
Functional currency
|
Linkage currency
|
Change
in the exchange rate (%)
|
Profit (loss)
|
||||||
In thousand NIS
|
|||||||||
Assets
|
|||||||||
Cash and deposits
|
NIS
|
U.S. Dollar
|
+10%
|
13,603 | |||||
Cash and deposits
|
EURO
|
PLN
|
+10%
|
5,127 | |||||
Cash and deposits
|
NIS
|
EURO
|
+10%
|
713 | |||||
Cash and deposits
|
EURO
|
NIS
|
+10%
|
508 | |||||
Available for sale assets
|
EURO
|
U.S. Dollar
|
+10%
|
1,950 | |||||
Loan to third party
|
EURO
|
GBP
|
+10%
|
5,942 | |||||
27,843 | |||||||||
Financial liablities
|
|||||||||
Loans at amortized cost (i)
|
NIS
|
U.S. Dollar
|
+10%
|
(31,873 | ) | ||||
Loans at amortized cost
|
EURO
|
NIS
|
+10%
|
(6,000 | ) | ||||
Debentures at amortized cost
|
NIS
|
U.S. Dollar
|
+10%
|
(2,812 | ) | ||||
Debentures at amortized cost (ii)
|
EURO
|
NIS
|
+10%
|
(62,232 | ) | ||||
Loans at amortized cost
|
EURO
|
U.S. Dollar
|
+10%
|
(3,247 | ) | ||||
Loan at amortized cost
|
EURO
|
GBP
|
+10%
|
(337 | ) | ||||
Loans at amortized cost
|
RON
|
EURO
|
+10%
|
(30,246 | ) | ||||
(136,747 | ) |
|
(i)
|
The effect of the exchange rates results in respect of these financial liablities is offset against the exchange rate resulting from investments in foreign operations with the same functional currency.
|
|
(ii)
|
In respect of PC's series B debentures which are represented at amortized cost.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(1)
|
Foreign currency risk (cont.)
|
Functional currency
|
Linkage currency
|
Change
in the exchange rate (%)
|
Profit (loss)
|
||||||
In thousand NIS
|
|||||||||
Assets
|
|||||||||
Cash and deposits
|
NIS
|
U.S.Dollar
|
+10%
|
9,744 | |||||
Cash and deposits
|
EURO
|
PLN
|
+10%
|
3,984 | |||||
Cash and deposits
|
NIS
|
EURO
|
+10%
|
6,996 | |||||
Cash and deposits
|
EURO
|
U.S. Dollar
|
+10%
|
1,510 | |||||
22,234 | |||||||||
Financial liablities
|
|||||||||
Loans at amortized cost
|
NIS
|
U.S. Dollar
|
+10%
|
(15,702 | ) | ||||
Loans at amortized cost (i)
|
NIS
|
EURO
|
+10%
|
(20,349 | ) | ||||
Debentures at amortized cost
|
NIS
|
U.S. Dollar
|
+10%
|
(3,648 | ) | ||||
Debentures at amortized cost (ii)
|
EURO
|
NIS
|
+10%
|
(49,184 | ) | ||||
Loans at amortized cost
|
EURO
|
U.S. Dollar
|
+10%
|
(1,465 | ) | ||||
Loans at amortized cost
|
RON
|
EURO
|
+10%
|
(18,707 | ) | ||||
(109,055 | ) | ||||||||
|
(i)
|
The effect of the exchange rates results in respect of these financial liablities is offset agianst the exchange rate resulting from investments in foreign opertions with the same functional currency.
|
|
(ii)
|
In respect of PC's series B debentures which are represented at amortized cost.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(2)
|
Price risk
|
|
(1)
|
The balance as of December 31, 2012 and 2011 includes an amount of GBP 2.5 and 2.6 million (NIS 15) with regard to the sale of the Group's hotels in UK. As of December 31, 2012, the balance also include amount of GBP 1.2 (NIS 8) with regard to the sale of the Group's hotels in The Netherland. Said amounts determined by a third party expert and represents the fair value of a derivative contemplated in the sale agreements (see note 12 C and D).
|
|
(2)
|
December 31, 2011 - Within the framework of a credit agreement executed in September 2011 (see iv below) the Company granted to the Lender a warrant to purchase the Company’s ordinary shares at an exercise price of $3.00 per share during a two-year period commencing on March 31, 2012. The warrant will entitle the lender to purchase up to 9.9% of the Company's outstanding shares. in April 2012, the Company and the Lender agreed to amend the warrant granted by the Company in the way that the lender is entitled to purchase from the Company, at any time and from time to time during the period commencing on March 31, 2012 and ending on March 31, 2014, up to 3.3% (instead of 9.9%) of the Company's outstanding shares at a purchase price of 0.00$ (instead of 3.00$) per share, subject to the terms and conditions set forth in the warrant. As for December 31, 2012 the warrant was classified to the equity of the Company in its fair value as of that date.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(2)
|
Price risk (cont.)
|
Scope of
|
Profit (loss)
|
||||||||||||
price change
|
Year ended December 31
|
||||||||||||
%
|
2 0 1 2
|
2 0 1 1
|
2 0 1 0
|
||||||||||
(in thousand NIS)
|
|||||||||||||
Increase in the prices of marketable securities held for trade
|
+10%
|
1,067 | 2,147 | 15,576 | |||||||||
Increase in the fair value of Park Plaza shares
|
+10%
|
(2,192 | ) | (1,159 | ) | - | |||||||
Increrase in the fair value of the underlying assets used for the calculation of the embedded derivative's fair value
|
+5%
|
- | (318 | ) | (200 | ) | |||||||
Increrase in the fair value of the underlying assets used for the calculation of the derivative's fair value (2)
|
+10%
|
- | 1,442 | - | |||||||||
(1,125 | ) | 2,112 | 15,376 |
|
C.
|
Management of financial risks: (cont.)
|
|
(3)
|
Credit risk
|
|
(4)
|
Interest rate risk
|
|
C.
|
Management of financial risks: (cont.)
|
|
(4)
|
Interest rate risk (cont.)
|
Scope of
|
Profit (loss)
|
||||||||||||
price change
|
Year ended December 31
|
||||||||||||
%
|
2 0 1 2
|
(*)2 0 1 1 | 2 0 1 0 | ||||||||||
(in thousand NIS)
|
|||||||||||||
Devaluation of the NIS against the EURO
|
(i)
|
57,151 | 70,738 | 101,789 | |||||||||
Change in the Israeli CPI
|
(ii)
|
(12,573 | ) | (15,562 | ) | (23,055 | ) | ||||||
Change in the market interest rate
|
+1%
|
8,036 | 10,646 | 20,804 |
|
(i)
|
December 31, 2012, 2011 and 2010: +10%;
|
|
(ii)
|
December 31, 2012 and 2011: +2.2%, December 31, 2010 +3%
|
|
(*)
|
During 2011, the exposure to the above changes was lower, due to a EURO-NIS swap transaction which was in effect and was settled during September 2011.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(4)
|
Interest rate risk (cont.)
|
|
a.
|
Part of the Group’s long term borrowings as well as long term loans receivable are bearing variable interest rate (see notes 17 and 20). Cash and cash equivalent, short term deposits and short term bank credits are mainly deposited in or obtained at variable interest rate. Change in the market interest rate will affect the Group's finance income and expenses and its cash flow. In certain cases the Group uses interest rate swap transaction in order to swap loans with a variable interest rate to fixed interest rate or alternatively entered into loans with a fixed interest rate.
The following table presents the effect of an increase of 2% in the Libor rate with respect to financial assets and liabilities which are exposed to cash flow risk (before tax and before capitalization to qualifying assets):
|
Profit (loss)
|
||||||||||||
Year ended December 31
|
||||||||||||
2 0 1 2
|
(*)2 0 1 1 | 2 0 1 0 | ||||||||||
(in thousand NIS)
|
||||||||||||
Deposits linked to the EURO
|
644 | - | - | |||||||||
Deposits linked to the PLN
|
- | 227 | - | |||||||||
Held to Maturity financial notes linked to the EURO
|
- | 5,007 | - | |||||||||
Loans, debentures and convertible debentures linked to the U.S. Dollar
|
(6,390 | ) | (12,481 | ) | (9,710 | ) | ||||||
Loans and debentures linked to the EURO (i) (ii)
|
(28,636 | ) | (32,703 | ) | (44,328 | ) | ||||||
Loans linked to the NIS
|
(1,859 | ) | (1,498 | ) | (1,034 | ) | ||||||
(36,241 | ) | (41,448 | ) | (55,072 | ) | |||||||
|
(i)
|
In respect of PC's debentures which are linked to the Israeli CPI and for which PC has executed swap transactions in order to exchange the interest to variable interest rate (see note C(4) above).
|
|
(ii)
|
PC raised a total of PLN 60 million (approximately NIS 71 million) from Polish institutional investors. The unsecured bearer bonds governed by Polish law (the “Bonds”) have a three year maturity and will bear interest rate of six months Polish Wibor plus a margin of 4.5%. PC entered into a EURO-PLN cross-currency interest rate swap, in order to mitigate the expected payments in PLN (principal and interest) and to correlate them with the EURO. The derivative is measured at fair value and the debentures are measured at amortized cost.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(i)
|
Equity investments in the Group's shopping and entertainment centers, hotels and residential projects, which are generally constructed by the Group's Project Companies. The Company and/or PC generally finance approximately 25%-30% of such projects through equity investments in the Project Companies, while the remaining 70%-75% is generally financed through a credit facility secured by a mortgage on the project constructed by the respective Project Company, registered in favor of the financial institution that provides such financing. The equity investments in the Project Companies are typically provided by the Company or PC through shareholders loans that are subordinated to the credit facilities provided to the Project Company;
|
|
(ii)
|
Interest and principal payments on the Group debentures and loans;
|
|
(iii)
|
Payment of general and administrative expenses; and
|
|
(iv)
|
Additional investment in associates (mainly venture capital investments).
|
(v)
|
New Real Estate Investments.
|
|
C.
|
Management of financial risks: (cont.)
|
|
(5)
|
Liquidity risk (cont.)
|
1st year (iii)
|
2nd year
|
3rd year
|
4th year
|
5th year
|
6th year
and thereafter
|
Total
|
||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||
Financial liabilities
|
||||||||||||||||||||||||||||
Borrowing with fixed interest rate
|
||||||||||||||||||||||||||||
Loans linked to EURO
|
3,549 | 3,448 | 3,348 | 3,248 | 3,147 | 21,509 | 38,249 | |||||||||||||||||||||
Convertible Debentures
|
60,954 | 57,568 | - | - | - | - | 118,522 | |||||||||||||||||||||
PC's debentures linked to the Israeli CPI
|
366,757 | 349,845 | 332,938 | 44,285 | 42,460 | - | 1,136,285 | |||||||||||||||||||||
Debentures linked to the Israeli CPI
|
529,874 | 486,416 | 444,646 | 328,657 | 339,784 | 588,765 | 2,718,142 | |||||||||||||||||||||
961,134 | 897,277 | 780,932 | 376,190 | 385,391 | 610,274 | 4,011,198 | ||||||||||||||||||||||
Borrowing with variable interest rate
|
||||||||||||||||||||||||||||
Loans linked to the EURO
|
188,774 | 360,214 | 198,275 | 345,355 | 349,276 | 480,752 | 1,922,646 | |||||||||||||||||||||
Debenture linked to the EURO
|
79,482 | - | - | - | - | - | 79,482 | |||||||||||||||||||||
Loans linked to the NIS
|
100,846 | - | - | - | - | - | 100,846 | |||||||||||||||||||||
Loans linked to the U.S. Dollar (ii)
|
310,527 | 12,907 | - | - | - | - | 323,434 | |||||||||||||||||||||
Debentures linked to the U.S. Dollar
|
10,657 | 5,260 | - | - | - | - | 15,917 | |||||||||||||||||||||
690,286 | 378,381 | 198,275 | 345,355 | 349,276 | 480,752 | 2,442,325 | ||||||||||||||||||||||
Suppliers, payable and other credit balances
|
184,486 | 3,274 | 503 | 9,740 | - | - | 198,003 | |||||||||||||||||||||
Total financial liabilities
|
1,835,906 | 1,278,932 | 979,710 | 731,285 | 734,667 | 1,091,026 | 6,651,526 | |||||||||||||||||||||
Financial assets
|
||||||||||||||||||||||||||||
Cash and cash equivalent (i)
|
535,064 | - | - | - | - | - | 535,064 | |||||||||||||||||||||
Short term deposits (i)
|
327,830 | - | - | - | - | - | 327,830 | |||||||||||||||||||||
Trade receivables and other receivables
|
183,804 | - | - | - | - | - | 183,804 | |||||||||||||||||||||
Long term deposits, loans and investments
|
- | 23,493 | - | 22,934 | 5,329 | 2,760 | 54,516 | |||||||||||||||||||||
Total financial assets
|
1,046,698 | 23,493 | - | 22,934 | 5,329 | 2,760 | 1,101,214 |
|
C.
|
Management of financial risks: (cont.)
|
|
(5)
|
Liquidity risk (cont.)
|
1st year (iii)
|
2nd year
|
3rd year
|
4th year
|
5th year
|
6th year and thereafter
|
Total
|
||||||||||||||||||||||
(in thousand NIS)
|
||||||||||||||||||||||||||||
Financial liabilities
|
||||||||||||||||||||||||||||
Borrowing with fixed interest rate
|
||||||||||||||||||||||||||||
Loans linked to EURO
|
20,335 | 20,003 | 180,941 | 6,521 | 6,416 | 93,576 | 327,792 | |||||||||||||||||||||
Loans Linked to U.S. Dollar (ii)
|
281,860 | 370,988 | 71,091 | 523,207 | 209,772 | 286,630 | 1,743,548 | |||||||||||||||||||||
Convertible Debentures
|
7,000 | 63,003 | 59,503 | - | - | - | 129,506 | |||||||||||||||||||||
PC's debentures linked to the Israeli CPI
|
406,870 | 389,083 | 371,296 | 353,509 | 59,553 | 57,099 | 1,637,410 | |||||||||||||||||||||
Debentures linked to the Israeli CPI
|
417,662 | 509,148 | 468,974 | 430,352 | 318,624 | 901,892 | 3,046,652 | |||||||||||||||||||||
1,133,727 | 1,352,225 | 1,151,805 | 1,313,589 | 594,365 | 1,339,197 | 6,884,908 | ||||||||||||||||||||||
Borrowing with variable interest rate
|
||||||||||||||||||||||||||||
Loans linked to the EURO
|
892,013 | 131,674 | 91,695 | 88,219 | 385,567 | 351,435 | 1,940,603 | |||||||||||||||||||||
Debenture linked to the EURO
|
5,220 | 79,982 | - | - | - | - | 85,202 | |||||||||||||||||||||
Loans linked to the NIS
|
35,612 | 18,372 | 17,251 | 16,125 | - | - | 87,360 | |||||||||||||||||||||
Loans linked to the U.S. Dollar (ii)
|
46,258 | 341,389 | 81,966 | 65,956 | 70,847 | 82,686 | 689,102 | |||||||||||||||||||||
Debentures linked to the U.S. Dollar
|
12,106 | 11,763 | 5,796 | - | - | - | 29,665 | |||||||||||||||||||||
991,209 | 583,180 | 196,708 | 170,300 | 456,414 | 434,121 | 2,831,932 | ||||||||||||||||||||||
Suppliers, payable and other credit balances
|
429,631 | 6,608 | 2,865 | 2,729 | 2,599 | 16,670 | 461,102 | |||||||||||||||||||||
Total financial liabilities
|
2,554,567 | 1,942,013 | 1,351,378 | 1,486,618 | 1,053,378 | 1,789,988 | 10,177,942 | |||||||||||||||||||||
Financial assets
|
||||||||||||||||||||||||||||
Cash and cash equivalent (i)
|
602,292 | - | - | - | - | - | 602,292 | |||||||||||||||||||||
Short term deposits (i)
|
409,338 | - | - | - | - | - | 409,338 | |||||||||||||||||||||
Trade receivables and other receivables
|
173,615 | - | - | - | - | - | 173,615 | |||||||||||||||||||||
Long term deposits, loans and investments
|
- | 91,318 | 7,252 | 1,764 | 16,912 | 262,831 | 380,077 | |||||||||||||||||||||
Total financial assets
|
1,185,245 | 91,318 | 7,252 | 1,764 | 16,912 | 262,831 | 1,565,322 |
(i)
|
The Company's cash (solo report) amounted to NIS 370 million, see notes 11 B(3) and 23 E(1)).
|
(ii)
|
Includes loans in the amount of NIS 395 million, for which the Group is not in compliance with their covenants as of December 31, 2011. See also note 23 E (5).
|
|
C.
|
Management of financial risks: (cont.)
|
|
(6)
|
Consumer Price Index ("CPI") risk
|
|
(7)
|
Collaterals
|
December 31
|
||||||||
2 0 1 2
|
2 0 1 1
|
|||||||
(in thousand NIS)
|
||||||||
Long term borrowings
|
39,262 | 33,845 | ||||||
Short term credits
|
66,374 | 121,183 | ||||||
Guarantees provided by the Group
|
19,805 | 29,375 | ||||||
Interest rate swap transactions
|
14,762 | 29,135 | ||||||
Liabilities in respect of sale of Investment property
|
55,111 | - | ||||||
195,314 | 213,538 |
|
D.
|
Fair value of financial instruments:
|
|
(1)
|
Fair value of financial instruments
|
|
D.
|
Fair value of financial instruments (cont.)
|
|
(2)
|
The principal methods and assumptions which served to compute the estimated fair value of the financial instruments
|
|
a.
|
Financial instruments included in current assets (cash and cash equivalents, deposits and marketable securities, trade receivables, other current assets and assets related to discontinued operation) - Due to their nature, their fair values approximate to those presented in the balance sheet.
|
|
b.
|
Financial instruments included in non-current assets - the fair value of loans and deposits which bear variable interest rate is an approximate to those presented in the balance sheet.
|
|
c.
|
Financial instruments included in current liabilities - (short-term credit, suppliers, other current liabilities and liabilities related to discontinued operation)) - Due to their nature, their fair values approximate to those presented in the balance sheet.
|
|
d.
|
Financial instruments included in long-term liabilities - the fair value of the traded liabilities (debentures) is determined according to closing prices as of the balance sheet date quoted on the Tel- Aviv and Warsaw Stock Exchanges, multiplied by the quantity of the marketable financial instrument issued as of that date. The fair value of non-traded liabilities at fixed interest rate is determined according to the present value of future cash flows, discounted at a rate which reflects, in the estimation of the Group, the level of risk embedded in the financial instrument. The fair value of liabilities which carried variable interest rate is approximate to those presented in the balance sheet.
|
|
(3)
|
The following table presents the book value and fair value of the Group's financial assets (liabilities), which are presented in the financial statements at other than their fair value:
|
December 31
|
||||||||||||||||
2 0 1 2
|
2 0 1 1
|
|||||||||||||||
Book Value
|
Fair
Value
|
Book Value
|
Fair
Value
|
|||||||||||||
(In thousands NIS)
|
||||||||||||||||
Financial Notes held to maturity
|
- | - | 187,648 | 132,875 | ||||||||||||
Long- term loans at fixed interest rate
|
(30,537 | ) | (30,537 | ) | (1,550,990 | ) | (1,579,736 | ) | ||||||||
Debentures
|
(2,410,489 | ) | (1,098,999 | ) | (3,166,108 | ) | (1,448,648 | ) | ||||||||
(2,441,026 | ) | (1,129,536 | ) | (4,529,450 | ) | (2,895,509 | ) |
|
D.
|
Fair value of financial instruments (cont.)
|
|
(4)
|
Fair value levels
|
|
·
|
Level 1: fair value measurements derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
|
·
|
Level 2: fair value measurements derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
|
|
·
|
Level 3: fair value measurements derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
|
December 31, 2012
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(In thousands NIS)
|
||||||||||||||||
Marketable securities
|
10,675 | - | - | 10,675 | ||||||||||||
AFS financial assets
|
87,044 | - | - | 87,044 | ||||||||||||
Financial notes
|
- | 45,796 | - | 45,796 | ||||||||||||
Option measured at FVTPL
|
- | - | 22,934 | 22,934 | ||||||||||||
97,719 | 45,796 | 22,934 | 166,449 |
December 31, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(In thousands NIS)
|
||||||||||||||||
Marketable securities
|
21,466 | - | - | 21,466 | ||||||||||||
AFS financial assets
|
144,702 | - | - | 144,702 | ||||||||||||
Financial note and option measured at FVTPL (i)
|
- | - | 77,849 | 77,849 | ||||||||||||
166,168 | - | 77,849 | 244,017 |
(i)
|
The Company estimates the fair value of structured deposit B based on the bank's quote. This quote is tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the measurement date. The test is being done by using yield analysis for structured model.The change in the fair value included in the profit and loss for the year ended December 31, 2011 is loss of NIS 6.4 million.
|
|
D.
|
Fair value of financial instruments (cont.)
|
|
(4)
|
Fair value levels (cont.)
|
December 31, 2012
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3 (i)
|
Total
|
|||||||||||||
(In thousands NIS)
|
||||||||||||||||
PC's Debentures
|
571,510 | - | - | 571,510 | ||||||||||||
The Company Debentures
|
90,733 | - | - | 90,733 | ||||||||||||
PC's swap transactions and other swap transactions
|
27,586 | 2,058 | 29,644 | |||||||||||||
662,243 | 27,586 | 2,058 | 691,887 |
December 31, 2011
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3 (i)
|
Total
|
|||||||||||||
(In thousands NIS)
|
||||||||||||||||
PC's Debentures
|
707,384 | - | - | 707,384 | ||||||||||||
Exit fee to financing bank
|
- | - | 2,417 | 2,417 | ||||||||||||
Liability to the Office of Chief Scientist
|
- | - | 24,827 | 24,827 | ||||||||||||
PC's swap transactions and other
|
- | 17,584 | 7,276 | 24,860 | ||||||||||||
707,384 | 17,584 | 34,520 | 759,488 |
|
(i)
|
The changes in the fair value of the Group's financial liabilities included in Level 3 were charged mainly to the profit and loss as follows:
|
|
(ii)
|
See note 20 (A) (i).
|
|
A.
|
Suspension of payments to the Company's debenture holders
|
B.
|
An early termination of the debentures repurchase financing transactions
|
|
C.
|
Notice from Bank Hapoalim Ltd.
|
|
1.
|
Loan Amount: The outstanding balance of the Bank's loan (principal) as of November 27, 2013 is approximately US$59 million. Pursuant to that certain assignment by way of a pledge in favor of the Bank of loan proceeds the Company is entitled to receive from a subsidiary of Park Plaza Hotels Limited on or before December 31, 2013 in the amount of approximately EUR 9.36 million (approximately US$12.6 million) (the "Assigned Proceeds"), the Bank is entitled to credit the Assigned Proceeds either on the account of the Company's existing loan or on account of payment of credit facilities and other banking services that were provided to the Company's wholly owned subsidiary, Elbit Fashion Ltd., by the Bank. Nonetheless, the Assigned Proceeds will be credited in full on the account of the loan of the Company. Accordingly, the balance of the Company's debt to the Bank under the loan (principal), after payment of the Assigned Proceeds, will be in the amount of approximately US$47 million.
|
|
2.
|
Interest: The loan will bear interest of LIBOR + 3.8% (to be paid on a quarterly basis) + 1.3% (which shall accrue and be paid in a single installment on the maturity date of the loan principal).
|
|
3.
|
Maturity Date: The loan principal will be repaid in a single installment at the third anniversary of the Closing Date (as defined below) of the Arrangement.
|
C.
|
Notice from Bank Hapoalim Ltd. (cont.)
|
|
4.
|
The Company's Shares: The Bank shall be allotted ordinary shares of the Company as follows:
|
|
4.1.
|
At the date upon which the Company shall issue the shares and new notes (Series H and I) to its unsecured financial creditors pursuant to the Arrangement (the "Closing Date"), the Company shall issue to the Bank 16,594,036 ordinary shares of the Company, which shall constitute 3% of the Company's paid-up and issued capital, immediately after the closing of the Arrangement;
|
|
4.2.
|
If and in the event that the Company shall prepay the loan to the Bank in full prior to the elapse of 60 (sixty) calendar days from the earlier of: (i) the date upon which the Court's approval of the Arrangement shall have been awarded; or (ii) December 31, 2013 (such earlier date shall be referred to herein as the "Determination Date"), the Bank shall not be entitled to any of the shares so issued and accordingly, shall return those shares to the Company without any consideration;
|
|
4.3.
|
If and in the event that the Company shall prepay the loan to the Bank at any time during the period commencing 60 (sixty) calendar days from the Determination Date and ending 150 (one hundred and fifty) calendar days from the Determination Date, the Bank shall return to the Company, without any consideration, 8,423,368 shares out of the shares issued to the Bank as aforementioned;
|
|
4.4.
|
If and in the event that the Company shall prepay the loan to the Bank at any time after 150 (one hundred and fifty) calendar days from the Determination Date, the Bank shall be entitled to retain all the shares issued to it by the Company, with no further requirement to return any of those shares.
|
C.
|
Notice from Bank Hapoalim Ltd. (cont.)
|
|
5.
|
Collaterals (It is clarified that the specification of collaterals below does not include securities and/or pledges existing in favor of the Bank in respect of loans to subsidiaries, which shall remain in full effect and unchanged, and that the collaterals as aforesaid are in addition thereto): In addition to the collaterals which currently exist in favor of the Bank in respect of the above loan (i.e., a pledge on approximately 29% of the shares of Plaza Centers N.V. ("Plaza Centers"), the Assigned Proceeds and the share capital of Elbit Fashion Ltd.), the Bank shall receive a pledge on the Company's residual rights in its hotels in Romania and Belgium (subject to exceptions as specified in Section 6 below) to secure all of the Company's debts to the Bank, as specified below:
|
|
5.1.
|
A first-ranking fixed charge on the entire share capital of BEA Hotels Eastern Europe B.V. (a Dutch company through which the Company indirectly holds approximately 77% of the rights in the Radisson Blu hotel in Bucharest, Romania) ("BHEE") and the rights associated therewith, as well as on the rights to proceeds under shareholders loans provided to BHEE; and
|
|
5.2.
|
A first-ranking fixed charge on the entire share capital of Astrid Hotel Holdings B.V. (a Dutch company through which the Company indirectly holds all of the rights in two hotels in Antwerp: Radisson Astrid and Park Inn) ("AHH") and the rights associated therewith, as well as on the rights to proceeds under shareholders loans provided to AHH.
|
|
6.
|
Exceptions to the Collaterals:
|
|
6.1.
|
So long as the Company, its subsidiaries and companies directly and indirectly controlled by it (the "Subsidiaries") meet all of their debts and liabilities vis-à-vis the Bank, as shall be defined in the definitive agreement to be entered into between the Company and the Bank, the proceeds specified below that shall be received from the pledged assets shall be used by the Company and its Subsidiaries for their on-going operations, at their discretion, and shall not be used to prepay the debt contemplated in the loan to the Bank (subject to the provisions of Section 6.2 below):
|
|
6.1.1.
|
Net cash flow from the refinancing of the Radisson Blu hotel in Bucharest, Romania, up to EUR 24 million (over and above the debt which currently exists); and
|
|
6.1.2.
|
Net cash flow which derives from current operations of the pledged hotels.
|
C.
|
Notice from Bank Hapoalim Ltd. (cont.)
|
|
6.
|
Exceptions to the Collaterals; (cont.)
|
|
6.2.
|
Notwithstanding the provisions of Section 6.1, in the event that the Company shall sell, as a willing seller (other than in the framework of mandatory disposition), all or any of its rights in the pledged assets, the Company will undertake to prepay the Bank the amounts as specified below:
|
|
6.2.1.
|
Sale of the Company's rights in the Bucharest hotel – in the case of the sale of all of the rights or the sale of the control of the asset, the Company will undertake to prepay the Bank an amount of US$32 million; in the case of the sale of part of the rights in the asset, after which the Company retains control over the asset – a proportionate share of such amount. The balance of the net cash flow from the sale (if any) will be used by the Company and/or its Subsidiaries for their on-going operations.
|
|
6.2.2.
|
Sale of the Company's rights in its hotels in Belgium – in the case of the sale of all of the rights or the sale of the control of the assets, the Company will undertake to prepay the Bank an amount of US$5 million; in the case of the sale of part of the rights in the assets, after which the Company retains control of the assets – a proportionate share of such amount. The balance of the net cash flow from the sale (if any) will be used by the Company and/or its Subsidiaries for their on-going operations.
|
|
6.2.3.
|
In the case of a sale of Plaza Centers' shares which are held by the Company – the Company will undertake that the full net cash flow attributed to the shares held by the Company and pledged to the Bank will be used to prepay the loan to the Bank.
|
|
7.
|
Terms and Conditions of the Loan of Elbit Fashion Ltd.: The Bank shall extend the existing credit line and the standby letter of credit of Elbit Fashion Ltd. until December 31, 2014.
|
|
8.
|
Financial Covenants: The agreement shall include a financial covenant whereby if and in the event that the ratio between the Company's debt to the Bank and the total value of the collaterals (Plaza Centers' shares that are pledged to the Bank and the Company's residual rights in the hotels in Belgium and in Romania [i.e., the value of the hotels according to the assessor's appraisal as specified below, net of the debt attributed to the said hotels]) shall exceed the threshold of 85%, then the Bank shall have the right to accelerate the loan provided by the Bank to the Company. The said ratio shall be checked on a quarterly basis. The Company shall provide the Bank with external valuations of the pledged hotels, addressed to the Bank and carried out by an assessor who is acceptable to the Bank, once a year in the framework of the annual statements ("Annual Valuations"). The examination of the said covenant, which shall be made in the annual statement and in each one of the three quarters thereafter, shall be based on the Annual Valuations (unless the quarterly financial statements include an asset's impairment below the Annual Valuations), and on the prices of Plaza Centers' shares on the London Stock Exchange, as being on each one of the measurement dates on the last day of each quarter.
|
|
9.
|
Balance of Contractual Interest to Loan Amount: Subject to the provisions below, the balance of the contractual interest amounts that the Company shall owe the Bank on the Closing Date will be added to the loan principal.
|
C.
|
Notice from Bank Hapoalim Ltd. (cont.)
|
|
10.
|
Credit for Default Interest: The Bank shall credit the Company for any and all default interest collected or accrued thereby from the date on which the loan was accelerated by the Bank.
|
|
11.
|
Prepayment at the Company's Discretion: The Company shall be entitled to prepay the loan without prepayment fines or fees. Prepayment without such fines or fees will be made on the interest payment date only, provided, however, that Company shall have the right to prepay the loan to the Bank at any time up and until 150 (one hundred and fifty) calendar days from the Determination Date even if such date is not an interest payment date, and in such event, the Company shall pay the Bank a prepayment fee at the amount equal to the economic damage suffered by the Bank as a result from the prepayment of the loan prior to the consecutive interest payment date.
|
|
12.
|
Mandatory Prepayment: If and in the event that the Company shall prepay its debt to the noteholders, in whole or any part thereof, from the Company's internal sources (i.e., other than from a raising of capital and/or alternative debt), then the Company shall prepay the Bank an amount equal to the amount paid to the noteholders on such date multiplied by the ratio between the Company's debt to the Bank and the Company's total debt to the Bank and to the noteholders as of such date.
|
|
13.
|
Prepayment in the Case of a Distribution: In the case of a distribution as defined in the Israeli Companies Law, 5759-1999, including payment of a dividend in any manner to the Company's shareholders, the Company shall prepay the Bank an amount equal to the amount paid to the noteholders on such date multiplied by the ratio between the Company's debt to the Bank and the total debt of the Company to the Bank and to the noteholders as of such date.
|
|
14.
|
Waiver of Breaches and Claims: The Bank shall waive all and any claims and demands with respect to any existing breaches and/or grounds for acceleration of loans that the Bank has provided to the Company and to its Subsidiaries and any claim available thereto against the Company until this date.
|
|
15.
|
The Company and the Subsidiaries shall waive all and any claim or demand against the Bank in respect of the debt of the Company and the Subsidiaries to the Bank, including all of the components thereof and/or in respect of the credit provided to any of them by the Bank and/or in connection with the validity of the collaterals created by any of them in favor of the Bank.
|
|
16.
|
Subject to and after approval by the Company's unsecured financial creditors of these principles, the Company and the Bank shall enter into and sign a detailed definitive agreements and pledge documents, which shall reflect the general principles specified above, by and no later than November 30, 2013, subject to agreed extensions between the Bank and the Company. The definitive agreements and the pledge documents as aforesaid shall take effect concurrently and in conjunction with the effectiveness of the Arrangement.
|
D.
|
Notice from Bank Leumi
|
E.
|
Claims
|
|
1.
|
With respect to the claim described in note 23 B (1) on March 18, 2013, the plaintiffs filed an amended statement of claim in which they argued for oppression of the minority of ELT, mainly by: (a) refraining from distributing dividends; (b) directing ELT's profits to its control-holders in unfair transactions; (c) executing the Harmful Sale transaction (i.e. selling the control in ELT to Europe-Israel); (d) executing the Hotels and Marina Transactions.; (e) refraining from executing a tender offer for the minority shares in ELT .In their amended statement of claim the plaintiffs sought for damages, roughly calculated as follows:
|
|
a.
|
For class members who held ELT shares prior to February 25, 1999: the value of each member's ELT shares on February 24, 1999 minus the consideration each member actually received when he sold his ELT shares.
|
|
b.
|
For class members who held ELT shares prior to September 9, 1999: the value of each member's ELT shares on September 8, 1999 minus the consideration each member actually received when he sold his ELT shares.
|
|
2.
|
With respect to the claim described in note 23 B (2), in January 2013, the District Court ruled that the claim would not be certified as a class action, due to its similarity to the claim described in note 23 B (1). On March 17, 2013 the plaintiff appealed said ruling before the Supreme Court. On May 26, 2013, the Israeli Supreme Court dismissed the said appeal due to the fact that the appellant failed to pay court fees. This case was initially filed in the District Court of Haifa, Israel in September 2006 by Mr. Beeri against Elscint, the Company, their controlling shareholders (Europe Israel (MMS) Ltd. and Control Centers Ltd.) and past and present officers and directors of such companies and certain unrelated third parties.
|
E.
|
Claims (cont.)
|
|
3.
|
On April 11, 2013, a holder of Series B Notes filed a purported class action lawsuit against the Company in the District Court of Tel Aviv, in connection with allegations, mainly that the Company failed to pay Series A and B Notes in February 2013. The plaintiff argues that the failure to pay results from the Company's failure to timely identify and react to the decline in its business. The total amount claimed, if the lawsuit is certified as a class action, is estimated by the plaintiff to be approximately NIS 82 million. The personal amount claimed by the plaintiff is approximately NIS 622,000. On July 2, 2013 the Tel Aviv District Court decided that an initial hearing will be set for December 4, 2013. At this preliminary stage, the Company is unable to assess the lawsuit's chances of success and intends to vigorously defend against it.
|
|
1.
|
On February 25, 2013, Yoki Shemesh Ltd (the "Plaintiff") filed a claim and a motion to approve the claim as a Class Action, to the Tel Aviv District Court, in the amount of NIS 240,000,000, against the Company, its controlling shareholders, officers and others (the "Claim"). The Claim stated, that he company's decision to postpone payments to Series A and B bond holders is a breach of the rights of the Series A and B bond holders, and a breach of The Securities Law, 5728-1968. The Plaintiff sought that the Company shall make all payments it is obligated to towards the bond holders. On July 2, 2013, the District Court has approved a joint motion to dismiss the purported class action lawsuit.
|
F.
|
Purported restructuring
|
F.
|
Purported restructuring (cont.)
|
|
(1)
|
The Company will issue two series of new notes in the aggregate principal amount of NIS 666 million (approximately $188 million). The first series of new notes ( "Series H") will be in the aggregate principal amount of NIS 448 million (approximately $127 million), repayable in a single payment at the end of four and half years from the earlier of the date of issuance thereof or December 1, 2013. The second series of new notes ("Series I") will be in the aggregate principal amount of NIS 218 million (approximately $61 million), repayable in a single payment at the end of six years from the earlier of the date of issuance thereof or December 1, 2013. Both series of the new notes will bear interest at the rate of 6% per annum and will be linked to the Israeli consumer price index. Interest on the first series of new notes will be payable in cash on a semi-annual basis, while interest on the second series of new notes will be accrued to the Principal and will be payable on the final maturity date, subject to prepayment in the Company's sole discretion on June 30 and/or December 31 of any particular calendar year.
|
F.
|
Purported restructuring (cont.)
|
|
(2)
|
Eastgate warrant
|
|
(3)
|
Amendments to the Company's Articles of Association
|
|
(4)
|
Elbit Medical
|
F.
|
Purported restructuring (cont.)
|
|
(5)
|
Additional provisions
|
|
(6)
|
Tax ruling
|
F.
|
Purported restructuring (cont.)
|
|
(7)
|
Conditions precedent
|
G.
|
Letter of Undertaking with the trustees
|
G.
|
Letter of Undertaking with the trustees (cont.)
|
G.
|
Letter of Undertaking with the trustees (cont.)
|
H.
|
Submission of a request on behalf of the trustees of series B notes for liquidation
|
I.
|
Meetings of the Company's unsecured financial creditors for the approval of proposed restructuring of the Company
|
J.
|
Write-downs of Trading properties and investment property held for sale
|
·
|
The Company’s and PC’s Management reassessment of the probability of future development of certain properties in view of the financial crisis affecting the area in which the Group operates, and the Company’s deteriorating liquidity position. This primarily affected lands which were previously not written down below cost as the related completed project was expected to be sold above cost;
|
·
|
Disposal certain properties of PC subsequent to the reporting period at a selling price below their carrying amount (see M below).
|
K.
|
Tiberias - With respect to note 12 G, during June 2013, the Company filed for extension with the ILA.
|
L.
|
Bonds held in treasury
|
M.
|
Disposal of assets
|
M.
|
Disposal of assets (cont.)
|
N.
|
Appointment of a receiver of Europe - Israel's
|
O.
|
Settlement agreement with the Israeli Tax Authority
|
P.
|
Meeting of the Extraordinary General Meeting
|
Name of company
|
Abbreviated name
|
Country of organization
|
Direct/indirect ownership percentage
|
|||||
BEA Hotels NV
|
BEA
|
The Netherlands
|
100 | % | ||||
Elbit Medical Technologies Ltd.
|
Elbit Medical
|
Israel
|
90 | % | ||||
InSightec Ltd.
|
InSightec
|
Israel
|
48 | % (1) | ||||
Gamida Cell Ltd.
|
Gamida
|
Israel
|
28.8 | % (1) | ||||
Elbit Plaza India Real Estate Holdings Limited
|
EPI
|
Cyprus
|
50 | % (2)/(3) | ||||
Elbit Plaza USA, L.P.
|
Elbit Plaza USA
|
USA
|
100 | % (4) | ||||
EPN GP, LLC
|
EPN Group
|
USA
|
100 | % (5) | ||||
EPN EDT Holding II, LLC
|
EPN Group
|
USA
|
100 | % (5) | ||||
Elbit Trade & Retail Ltd.
|
Elbit Trade
|
Israel
|
100 | % | ||||
Elbit Ultrasound (Luxemburg) BV/SA R.L
|
EUBV
|
Luxemburg
|
100 | % | ||||
Plaza Centers N.V.
|
PC
|
The Netherlands
|
62.5 | % |
(1)
|
Held through Elbit Medical.
|
(2)
|
The Company holds 47.5% of the shares in EPI directly, and an additional 47.5% through PC.
|
(3)
|
For details as to the grant of 5% of EPI’s equity to the Company's former Executive Vice Chairman of the board of directors, see note 27 B.(5)& (6).
|
(4)
|
The Company holds 50% in Elbit Plaza USA directly, and an additional 50% through PC.
|
(5)
|
Indirectly held through Elbit Plaza USA.
|
1.1
|
Amended and Restated Memorandum of Association (incorporated by reference to Appendix B to Exhibit 99.1 of our Report on Form 6-K filed on April 2, 2009).
|
1.2
|
Amended and Restated Articles of Association (incorporated by reference to Exhibit 1.2 of our Annual Report on Form 20-F filed on April 25, 2012).
|
2.1
|
Form of ordinary share certificate (incorporated by reference to Exhibit 2.1 of our Annual Report on Form 20-F filed on June 26, 2009).
|
4.1
|
Framework Transaction Agreement dated July 29, 2005, among Klepierre S.A., Plaza Centers N.V. and others (incorporated by reference to Exhibit 4.15 of our Annual Report on Form 20-F filed on June 30, 2006).
|
4.2
|
English summary of Share Purchase Agreement dated June 14, 2007, among ELS Trust Ltd., Elscint Ltd. and Manofim Finances for Israel (Mapal) Ltd. for the sale of the Arena commercial and entertainment center in Israel (incorporated by reference to Exhibit 4.14 of our Annual Report on Form 20-F filed on July 2, 2007).
|
4.3
|
English translation of Agreement for the Provision of Consultancy Services for the Development of Real Estate Projects dated May 31, 2006, between Elbit Imaging Ltd. and Control Centers Ltd. (incorporated by reference to Exhibit 4.13 of our Annual Report on Form 20-F filed on July 2, 2007).
|
4.4
|
English translation of Deed of Trust dated January 31, 2008, between Plaza Centers N.V. and Reznik Paz Nevo, as amended on February 17, 2008 (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 30, 2008).
|
4.5
|
English translation of Employees, Directors and Offices Incentive Plan of 2006, as amended (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on June 26, 2009).
|
4.6
|
Framework Agreement dated April 22, 2010, among EPN GP, LLC, Macquarie DDR Management Limited, Macquarie DDR Management LLC, Developers Diversified Realty Corporation, DDR MDT Holdings II Trust, DDR Macquarie Fund LLC, DDR MDT PS LLC, DDR MDT MV LLC, Macquarie DDR U.S. Trust Inc., Macquarie DDR U.S. Trust II Inc., Macquarie MDT Holdings Trust, Macquarie MDT Holdings Inc., Belike Nominees Pty Limited and Macquarie Group Services Australia Pty Limited (incorporated by reference to Exhibit 4.6 of our Annual Report on Form 20-F filed on May 10, 2010).
|
4.7
|
English translation of Management Services Agreement dated May 31, 2006, between Elbit Imaging Ltd. and Europe-Israel (M.M.S.) Ltd. (incorporated by reference to Exhibit 4.7 of our Report on Form 6-K filed on June 16, 2010).
|
4.8
|
Share Purchase Agreement dated December 29, 2010, among B.E.A. Hotels N.V., PPHE Hotel Group Limited and Park Plaza Hotels Europe Holdings B.V. (incorporated by reference to Exhibit 4.8 of our Annual Report on Form 20-F filed on June 6, 2011).
|
4.9
|
Warrant issued by Elbit Imaging Ltd. to Eastgate Property LLC, dated September 22, 2011 (incorporated by reference to Exhibit 4.3 of our Report on Form 6-K filed on September 23, 2011).
|
4.10
|
Agreement of Purchase and Sale, dated as of January 10, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.10 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.11
|
First Amendment to Agreement of Purchase and Sale, dated as of January 24, 2012, among certain sellers and BRE DDR RETAIL HOLDINGS LLC (incorporated by reference to Exhibit 4.11 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.12
|
Share Purchase Agreement, dated as of March 30, 2012, by and among B.E.A. Hotels N.V., PPHE Netherland N.V. and PPHE Hotel Group Limited (incorporated by reference to Exhibit 4.12 of our Annual Report on Form 20-F filed on April 25, 2012).
|
4.13
|
Amendment No. 1, dated as of April 5, 2012, to the Warrant issued by Elbit Imaging Ltd. to Eastgate Property LLC on September 22, 2011 (incorporated by reference to Exhibit 4.4 of our Report on Form 6-K filed on April 6, 2012).
|
8.1
|
List of subsidiaries (incorporated by reference to Exhibit 8.1 of our Annual Report on Form 20-F filed on May 14, 2013).
|
12.1
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certificate of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
15.1
|
Consent of Brightman Almagor Zohar & Co.
|
15.2
|
Table of advisors relied upon in the consolidated financial statements for the years ended December 31, 2012, 2011 and 2010
|
15.3
|
Consent of Colliers International
|
15.4
|
Consent of Financial Immunities Ltd.
|
15.5
|
Consent of Financial Immunities Ltd.
|
15.6
|
Consent of Financial Immunities Ltd.
|
15.7
|
Consent of Financial Immunities Dealing Room Ltd.
|
15.8
|
Consent of Financial Immunities Dealing Room Ltd.
|
15.9
|
Consent of Financial Immunities Dealing Room Ltd.
|
15.10
|
Consent of Giza Zinger Even
|
15.11
|
Consent of Jones Lang LaSalle Kft
|
15.12
|
Consent of Giza Zinger Even
|
15.13
|
Consent of Giza Zinger Even
|
15.14
|
Consent of Giza Zinger Even
|
15.15
|
Consent of Giza Zinger Even
|
15.16
|
Consent of Giza Zinger Even
|
15.17
|
Consent of Giza Zinger Even
|
15.18
|
Consent of De-Kalo Ben-Yehuda
|
15.19
|
Consent of Financial Immunities Dealing Room Ltd.
|
Elbit Imaging Ltd.
|
|||
|
By:
|
/s/ Mordechay Zisser | |
Name: Mordechay Zisser | |||
Title: Chief Executive Officer | |||
Date: November 27, 2013
|