Note 9 – Material events during and after the reporting period

Notes to the consolidated interim financial statements as at September 30, 2014

Note 8 – Assets and liabilities held for sale and discontinued operations (cont.)

For the period

Cash flows provided by discontinued operations:

Net cash from (used in activities) current

activities  (26,584) (13,038) 261,111

Net cash from investing activities 197,074 - 277,518 Net cash used in financing activities - - (14,285)

Net cash from (used in) discontinued

operations 170,490 (13,038) 524,344

Note 9 – Material events during and after the reporting period

a. Signing a collective agreement between the Group companies, the General Organization of Workers in Israel and the Group's employees' committee

As mentioned in Note 24 (d) of the Annual Statements, on January 2, 2014 the Company's subsidiaries Clal Insurance, Clal Pension and Provident Funds, Clal Credit Insurance, Clalbit Systems Ltd and Clal Credit and Finance Ltd (hereinafter: the Companies) signed a collective agreement between the New General Organization of Workers in Israel and the Group's workers committee (hereinafter: the Agreement). The Agreement is valid until December 31, 2016, industrial quiet will be maintained until March 31, 2017 and there will be no salary raises except as stipulated in the Agreement in respect of the period until September 30, 2017. The Agreement will apply to all the Companies' employees, except employees in specific positions defined in the Agreement and managers in the rank defined in the Agreement (hereinafter: Employees). The main points of the Agreement are specified in Note 24 (d) of the Annual Statements.

As a result of applying section 14 of the Severance Pay Law, 5723-1963 to the Employees, both for past periods and from now on, the severance pay amounts in the Employees' funds included in the Agreement will be paid as of the eve of signing the Agreement, to the full amount of severance pay that they would have been entitled to according to the law had they been dismissed and accordingly the Companies will be exempt from seniority debt completions in respect of every salary raise given starting from the date of applying the Agreement. The liability for termination of employment was classified as a defined deposit liability instead of being classified as a defined benefit plan as was before signing the Agreement. This except for certain components that will continue to be classified as a defined benefit plan and measured accordingly.

The aforementioned change in the liabilities to Employees did not have a material effect on activity results.

Notes to the consolidated interim financial statements as at September 30, 2014

94 -2

Note 9 – Material events during and after the reporting period (cont.)

b. Share based payment

Following the aforementioned in Note 44 (a) (2) of the Annual Statements 221,000 warrants were allotted to 3 officers in the Company and 2 additional employees who are not officers in the Company on January 22, February 6, March 17 and October 19, 2014.

The allotments were performed according to an average exercise price of NIS 71.

Additionally, following the aforementioned in Note 1 (a) above and as approved in August 2014 by the Company's Board by recommendation of the Compensation Committee on May 8, 2014 after the creditors arrangement in IDB Development becoming valid, the condition of "transferring control" as defined in Note 43 (b) (4) (c), Note 43 (b) (5) (a) and Note 44 (a) (2) in the Annual Statements was fulfilled and thereafter the right to exercise the options allotted to the Company CEO became active in December 2012. Note that registering the full expense in respect of the options allotted to the CEO was completed in the financial statements for the first quarter of 2014. Furthermore, due to transferring control as mentioned in case of terminating of employee-employer relations during the 12 months thereafter, the remaining offerees that options were allotted to according to the 2013 plan, are entitled to exercise some of the options allotted to them as specified in the aforementioned Notes. The above had no material effect on the Company's financial statements.

c. Moving to the Atidim Tower and selling the HQ building

1. Following the aforementioned in Note 46 (b) (1) of the Annual Statements, moving the Group's activity to the Atidim Tower was completed in July 2014.

2. Following the aforementioned in Note 46 (b) (2) of the Annual Statements, on March 1, 2014 possession in the project was delivered to the Amot company. After evacuating the project, the Group's activities moved to its new offices at the Atidim Tower as mentioned in section 1 above.

Selling the rights in the project generated capital gains in the sum of approx. NIS 20 million after tax to the sellers, which was recognized in the period of three months ended on March 31, 2014, excluding expenses for accelerated depreciation of movables found in the project.

d. Broadgate

For details about closing the exposure for the open years on account of Broadgate's businesses after its sale, see Note 6 (c) (9).

e. Repayment and updating terms of loans

According to Note 29 (b) of the Annual Statements, during the reporting period the Company paid loans in the principal amount of approx. NIS 30 million, according to the original terms of the loans.

Also according to the policy for limiting the debt and financing costs of the Company and following the receipt of funds from Clal Finance Ltd as specified in Note 8 (a) (3) above, on November 11, 2014 the Company paid, by voluntary early payment, the total sum of approx. NIS 243 million from its loans to banking corporations.

Clal Insurance Enterprises Holdings Ltd

Notes to the consolidated interim financial statements as at September 30, 2014

Note 9 – Material events during and after the reporting period (cont.)

The amount paid by early repayment was used to pay all the Company's debts to one banking corporation (in the sum of approx. NIS 173 million) and partial repayment of the Company's debts to a second banking corporation (which is an interested party in the Company) in the sum of NIS 70 million (out of the total loan amount of approx. NIS 140 million).

Note that the loan agreements with both banking corporations include provisions regarding the Company's right to perform early repayment of the loans (including the formula for calculating commissions in respect of early payment).

Furthermore, the Company engaged with the second banking corporation to whom it partially paid the loan, in a new agreement for determining the dates of repayment of the remaining loan, so that the principal of the loan will be paid in two equal installments in 2018 and 2019 (instead of one repayment in 2015). The rest of the loan terms remain unchanged, except in respect of adjusting the financial criteria concerning the Company's maximum financing liabilities amount, that will be adjusted to the corresponding limit that the Company has in a financing agreement with a different bank so that the aforementioned amount will be NIS 750 million from now on (instead of NIS 1,500 million) and except for changing the formula for calculating the early repayment commission in respect of the early payment, if any will be done in the future, to one that reflects compensation for economic damage that might be caused to the bank as a result of early repayment of the loan balance.

Following that mentioned in Note 43 (a) (4) of the Company's financial statements for the year 2013 regarding the Company's engagement with bodies that might be considered material creditors of controlling shareholders in the Company and since the banking corporations are bodies as mentioned (in addition to one of the corporations being an interested party in the Company), for the sake of caution and in light of the fact that the controlling shareholders in the Company might be considered as having a personal interest in early repayment and determining the dates for paying the loan balance as mentioned , the transaction was reviewed by the Company's Audit Committee and the Board. On October 7, 2014, on October 23, 2014 and November 11, 2014 the Company's Audit Committee determined that early repayment and determining the dates for paying the loan balances as mentioned do not constitute an "exceptional transaction" as defined in the Companies Law, 5759-1999, considering all the terms.

The Company's Board approved the transaction on October 26, 2014 and November 11, 2014.

Notes to the consolidated interim financial statements as at September 30, 2014

96 -2

Note 9 – Material events during and after the reporting period (cont.)

Following that mentioned in Note 29 (f) of the Annual Statements regarding the Group's ratings:

Rating company Name of company

Rating Forecast Update date

Maalot

Rating the deferred liability notes debt (AA-) Test Nov-13 Rating the deferred liability notes debt (AA) Negative June-144)

Rating the debt (Tier 2 hybrid equity) (A+) Test Nov-13 Rating the debt (Tier 2 hybrid

equity)2) (AA-) Negative June-144)

Debt rating – Tier 2 subordinated

equity liability notes (Aa2) Negative May-13 Debt rating – Tier 2 subordinated

equity liability notes (Aa2) Stable July-14 Debt rating – Tier 2 Tier 2 hybrid

equity liability notes (Aa3) Negative May-13 Debt rating – Tier 2 hybrid equity

liability notes (Aa3) Stable July-14

Clal Finance Series A 3) (Baa1) Test Jan.-13

1) Rating the financial stability of the insurer.

2) The rating also refers to the two new Series, G and H, in the total sum of up to NIS 600 million nominal value.

3) Regarding payment of the bonds and turning Clal Finance into a non-reporting corporations, see Note 8 (a) (2) above.

4) In August 2014 Maalot retained the ratings presented in the above table.