1. General
This interim condensed separate financial information is presented in accordance to rule 38(D)
of the Israeli Securities and exchange regulations (Periodic and immediate reports), 1970.
The condensed interim consolidated financial statements should be read in conjunction with the
additional financial information for the year ended December 31, 2012 and the accompanying
notes, and in conjunction to the consolidated interim financial statements for the nine and three
months ended September 30, 2013.
2. Going concern
As at September 30, 2013 the Company had, on a stand-alone basis, a working capital deficit of
€101,436 thousand, which is mainly due to the current maturities of the Company’s debentures.
In addition, in the first nine months of 2013 the Company incurred a loss attributable to the
equity holders in the amount of €106,515 thousand, which resulted in a decline in shareholders’
equity to €63,245 thousand. The Company also reported negative consolidated cash flows from
operations of €24,955 thousand in the nine months ended September 30, 2013. The cash balance
of the Company as at September 30, 2013 amounted to €15,374 thousand.
The Company’s consolidated financial statements as of September 30, 2013 have been prepared
under the assumption that the Company will continue as a going concern. This is based, among
others, on the Company’s current cash balances and the estimated cash flow that will derive
from raising loans (against pledge of free assets) and the sale of assets and/or repayment of
shareholder’s loans or dividend distribution by some of the Company’s subsidiaries
The Company has prepared a liquidity analysis for the next two years as of the balance sheet
date, which addresses the required liquidity for the Company to be able to repay the principle
and interest of debentures (series A and B) in the first quarter of February 2014 and 2015 in the
total amount of €103 million and €99 million, respectively and its other liabilities and to finance
its operations.
The repayments in 2014 are likely to be funded by existing cash balances of the Company, from
the net cash generated through the realized sale of GTC SA in November 2013 and by cash
expected from raising loans against pledge of free assets (see also in this note below) and by the
repayment of certain shareholder’s loans or dividend distribution by some of the Company’s
subsidiaries. In 2015 the repayments are likely to be funded mostly by cash to be generated
through the sale of certain assets, including the sale of investments in shares of certain
subsidiaries, by raising loans (against pledge of free assets) and / or repayment of certain
shareholder’s loans by some of the Company’s subsidiaries. In this context it should be noted
that the Company is engaged directly and through its subsidiaries in a number of negotiations -
in various stages – regarding materialization of such assets. The Company and its subsidiaries
are also conducting negotiations with respect to refinancing and debt financing. The proceeds
from the realization of these above mentioned plans will serve the Company within the
limitations of the agreement reached with debentures holders, as disclosed in Note 6 to the
consolidated interim financial statements.
Subsequent to the balance sheet date, in November 2013, a subsidiary of the Company (GTC
RE) completed the sale of its entire holding in GTC SA (see note 6B to the consolidated interim
financial statements). Following this transaction, the Company repaid loans in the amount of
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€101 million provided by a lending bank mainly against the pledge of GTC SA shares.
Regarding the amount to be repaid to debenture holders in February 2014, it should be taken
into account that an amount of €35 million was already transferred to a trust account in
November 2013 and is expected to be early repaid in December 2013.
In addition, the Company signed a conditional agreement for providing credit with the lending
bank in the amount of up to €33 million (see Note 7 to the consolidated interim financial
statements).
The realization, the price and the timing of the Company’s plans in relation to the sale of assets,
repayment of shareholder’s loans by certain subsidiaries, raising debt as well as meeting future
loan covenants, are uncertain and depend also on factors that are not wholly within the
Company’s control and on the willingness of third parties to invest and grant credit. The
Company believes that, in light of her financial resources in hand, the value of its total assets
which is considerably higher than its total liabilities and in light of the current indications
regarding the ability to realize a sale of assets and/or obtain credit in the required timeframe, it
will be able to realize its plans and that it will be able to repay its liabilities as they mature in the
foreseeable future.