Kenon Holdings(US:KEN)2025-05-21 10:01markdown [Independent Auditors' Review Report](index=3&type=section&id=Independent%20Auditors%27%20Review%20Report) This report confirms management's responsibility for interim financial information and the auditors' role in expressing a conclusion [Introduction](index=3&type=section&id=Introduction) This section confirms management's responsibility for interim financial information and the auditors' role in expressing a conclusion - Management is responsible for preparing interim financial information in accordance with IAS 34 and Chapter D of the Securities Regulations (Periodic and Immediate Reports), **1970**[3](index=3&type=chunk) - The auditors' responsibility is to express a conclusion on the interim financial information based on their review[3](index=3&type=chunk) [Review Scope](index=3&type=section&id=Review%20scope) The review, under Review Standard (Israel) 2410, is smaller than an audit, so no audit opinion is expressed - The review was conducted in accordance with Review Standard (Israel) **2410**[4](index=4&type=chunk) - The scope of a review is substantially smaller than an audit, and therefore, no audit opinion is expressed[4](index=4&type=chunk) [Conclusion](index=3&type=section&id=Conclusion) The review found no material issues, confirming financial information compliance with IAS 34 and Israeli regulations - The financial information was prepared, in all material respects, in accordance with IAS **34**[5](index=5&type=chunk) - The financial information complies, in all material respects, with the disclosure requirements of Chapter D of the Securities Regulations (Periodic and Immediate Reports), **1970**[6](index=6&type=chunk) [Letter of Consent in Connection with the Company's Shelf Prospectus](index=4&type=section&id=Letter%20of%20consent%20in%20connection%20with%20the%20Company%27s%20shelf%20prospectus) This section confirms the auditors' consent for the inclusion of their review reports in the Company's shelf prospectus [Consent to Inclusion of Reports](index=4&type=section&id=Consent%20to%20Inclusion%20of%20Reports) Somekh Chaikin consented to including their May 20, 2025 review reports in the Company's May 2023 shelf prospectus - Somekh Chaikin consented to the inclusion of their May **20**, **2025** review reports in the Company's shelf prospectus of May **2023**[8](index=8&type=chunk)[9](index=9&type=chunk) [Condensed Consolidated Interim Statements of Financial Position](index=5&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Financial%20Position) This statement provides a snapshot of the company's assets, liabilities, and equity at specific interim dates [Financial Position Overview](index=5&type=section&id=Financial%20Position%20Overview) Total assets slightly decreased to NIS 12,293 million, while shareholder equity significantly increased to NIS 4,857 million Fair Values of Financial Instruments (NIS million) | Metric | March 31, 2025 (NIS million) | March 31, 2024 (NIS million) | December 31, 2024 (NIS million) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------------------------ | | **Assets** | | | | | Total current assets | 1,206 | 1,480 | 1,345 | | Total non-current assets | 11,087 | 11,100 | 10,722 | | **Total assets** | **12,293** | **12,580** | **12,067** | | **Liabilities** | | | | | Total current liabilities | 812 | 1,070 | 644 | | Total non-current liabilities | 4,910 | 6,236 | 5,002 | | **Total liabilities** | **5,722** | **7,306** | **5,646** | | **Equity** | | | | | Total equity attributable to shareholders | 4,857 | 3,886 | 4,752 | | Non-controlling interests | 1,714 | 1,388 | 1,669 | | **Total equity** | **6,571** | **5,274** | **6,421** | | **Total liabilities and equity** | **12,293** | **12,580** | **12,067** | - Total assets decreased slightly by **NIS 287 million** (**2.28%**) from March **31**, **2024**, to March **31**, **2025**[10](index=10&type=chunk) - Total equity attributable to the Company's shareholders increased by **NIS 971 million** (**25%**) year-over-year[11](index=11&type=chunk) [Condensed Consolidated Interim Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Income) This statement details the company's revenues, expenses, and profit for the interim reporting periods [Income Statement Overview](index=7&type=section&id=Income%20Statement%20Overview) Profit for the period significantly increased to NIS 93 million, driven by higher operating profit and associate contributions Income Statement Overview (NIS million) | Metric | Q1 2025 (NIS million) | Q1 2024 (NIS million) | FY 2024 (NIS million) | | :----------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Revenues from sales and provision of services | 660 | 638 | 2,779 | | Gross income | 97 | 134 | 531 | | Share in profits of associates | 138 | 72 | 166 | | Operating profit | 167 | 103 | 636 | | Finance expenses, net | (47) | (61) | (301) | | Profit before taxes on income | 120 | 42 | 335 | | Expenses for income tax | (27) | (27) | (138) | | **Profit for the period** | **93** | **15** | **197** | | Attributable to the Company's shareholders | 66 | 18 | 111 | | Basic and diluted earnings per share (NIS) | 0.26 | 0.08 | 0.46 | - Profit for the period increased by **NIS 78 million** (**520%**) from Q1 **2024** to Q1 **2025**[12](index=12&type=chunk) - Share in profits of associates increased by **NIS 66 million** (**91.67%**) from Q1 **2024** to Q1 **2025**[12](index=12&type=chunk) [Condensed Consolidated Interim Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Comprehensive%20Income) This statement presents the total comprehensive income, including profit and other comprehensive income components, for the interim periods [Comprehensive Income Overview](index=8&type=section&id=Comprehensive%20Income%20Overview) Total comprehensive income significantly rose to NIS 132 million, primarily due to higher profit and positive FX differences Comprehensive Income Overview (NIS million) | Metric | Q1 2025 (NIS million) | Q1 2024 (NIS million) | FY 2024 (NIS million) | | :----------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Profit for the period | 93 | 15 | 197 | | Other comprehensive income for the period, net of tax | 39 | 16 | 30 | | **Total comprehensive income for the period** | **132** | **31** | **227** | | Attributable to the Company's shareholders | 104 | 37 | 121 | | Non-controlling interests | 28 | (6) | 106 | - Total comprehensive income for the period increased by **NIS 101 million** (**325.8%**) from Q1 **2024** to Q1 **2025**[13](index=13&type=chunk) - Foreign currency translation differences in respect of foreign operations contributed **NIS 109 million** to other comprehensive income in Q1 **2025**, compared to **NIS 65 million** in Q1 **2024**[13](index=13&type=chunk) [Condensed Consolidated Interim Statements of Changes in Equity](index=9&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Equity) This statement outlines the changes in the company's equity components over the interim reporting periods [Equity Changes Overview](index=9&type=section&id=Equity%20Changes%20Overview) Total equity increased to NIS 6,571 million, driven by profit, other comprehensive income, and non-controlling interest investments Equity Changes Overview (NIS million) | Metric | March 31, 2025 (NIS million) | March 31, 2024 (NIS million) | December 31, 2024 (NIS million) | | :----------------------------------- | :--------------------------- | :--------------------------- | :------------------------------ | | Share capital | 3 | 2 | 3 | | Share premium | 3,997 | 3,210 | 3,993 | | Capital reserves | 244 | 249 | 247 | | Retained earnings | 290 | 131 | 224 | | Total equity attributable to shareholders | 4,857 | 3,886 | 4,752 | | Non-controlling interests | 1,714 | 1,388 | 1,669 | | **Total equity** | **6,571** | **5,274** | **6,421** | | **Total liabilities and equity** | **12,293** | **12,580** | **12,067** | - Total equity increased by **NIS 1,297 million** (**24.6%**) from March **31**, **2024**, to March **31**, **2025**[15](index=15&type=chunk) - Retained earnings increased by **NIS 159 million** (**121.4%**) from March **31**, **2024**, to March **31**, **2025**[15](index=15&type=chunk) [Condensed Consolidated Interim Statements of Cash Flow](index=11&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flow) Operating cash flow decreased to NIS 233 million, while investing cash outflow increased and financing cash outflow decreased [Cash Flow Overview](index=11&type=section&id=Cash%20Flow%20Overview) Operating cash flow decreased to NIS 233 million, while investing cash outflow increased and financing cash outflow decreased Cash Flow Overview (NIS million) | Metric | Q1 2025 (NIS million) | Q1 2024 (NIS million) | FY 2024 (NIS million) | | :----------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | 233 | 263 | 765 | | Net cash used for investing activities | (314) | (247) | (1,712) | | Net cash provided by (used for) financing activities | (48) | (197) | 891 | | Net decrease in cash and cash equivalents | (129) | (181) | (56) | | Balance of cash and cash equivalents as of the end of the period | 837 | 838 | 962 | - Net cash provided by operating activities decreased by **NIS 30 million** (**11.4%**) from Q1 **2024** to Q1 **2025**[19](index=19&type=chunk) - Net cash used for investing activities increased by **NIS 67 million** (**27.1%**) from Q1 **2024** to Q1 **2025**, primarily due to increased investment in associates[19](index=19&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=13&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) These notes provide additional information and explanations supporting the condensed consolidated interim financial statements [NOTE 1 - General Information](index=13&type=section&id=NOTE%201%20-%20GENERAL) OPC Energy Ltd. is an Israeli public company in electricity generation; its US Renewable Energy Segment transitioned to equity method accounting - OPC Energy Ltd. is an Israeli public company, incorporated on February **2**, **2010**, with its securities traded on the TASE[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company and its investees are engaged in the generation and supply of electricity and energy through three reportable segments[24](index=24&type=chunk) - The US Renewable Energy Segment's financial data transitioned from consolidated to equity method accounting in November **2024**, following a transaction to bring in a new equity partner[25](index=25&type=chunk) [NOTE 2 – Basis of Preparation of the Financial Statements](index=13&type=section&id=NOTE%202%20%E2%80%93%20BASIS%20OF%20PREPARATION%20OF%20THE%20FINANCIAL%20STATEMENTS) Statements comply with IAS 34, use NIS as currency, maintain consistent estimates, and note energy revenue seasonality [A. Statement of Compliance with IFRS](index=13&type=section&id=A.%20Statement%20of%20compliance%20with%20International%20Financial%20Reporting%20Standards%20(IFRS)) This section confirms the financial statements' compliance with IAS 34 and relevant Israeli securities regulations - The Condensed Consolidated Interim Financial Statements were prepared in accordance with IAS **34** and Chapter D of the Securities Regulations (Periodic and Immediate Reports) **1970**[26](index=26&type=chunk) [B. Functional and Presentation Currency](index=13&type=section&id=B.%20Functional%20and%20presentation%20currency) This section specifies the New Israeli Shekel (NIS) as the Company's functional and presentation currency - The New Israeli Shekel (**NIS**) is the Company's functional and presentation currency[28](index=28&type=chunk) [C. Use of Estimates and Judgments](index=13&type=section&id=C.%20Use%20of%20estimates%20and%20judgments) This section clarifies that management's estimates and judgments are consistent with those in the annual financial statements - Management's judgment and main assumptions used in estimates are consistent with those in the Annual Financial Statements[29](index=29&type=chunk)[30](index=30&type=chunk) [D. Seasonality](index=14&type=section&id=D.%20Seasonality) This section explains the seasonal impact on energy revenues in both Israel and the United States - Energy revenues in Israel are based on the DSM Tariff, with different tariffs for summer, winter, and transitional seasons[31](index=31&type=chunk) - In the US, electricity tariffs are affected by demand (higher in summer/winter) and natural gas prices (higher in winter). Wind power is higher in winter, while solar radiation is higher in spring/summer[32](index=32&type=chunk) - The financial statements comply with International Accounting Standard **34** (IAS **34**) and Chapter D of the Securities Regulations (Periodic and Immediate Reports) **1970**[26](index=26&type=chunk) - The New Israeli Shekel (**NIS**) is the Company's functional and presentation currency[28](index=28&type=chunk) - Energy revenues in Israel are based on the DSM Tariff, with seasonality affecting tariffs across summer, winter, and transitional periods. In the US, electricity tariffs are unregulated and influenced by demand (higher in summer/winter) and natural gas prices (higher in winter), with renewable energy generation also subject to seasonal weather patterns[31](index=31&type=chunk)[32](index=32&type=chunk) [NOTE 3 - Significant Accounting Policies](index=14&type=section&id=NOTE%203%20-%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The Group's interim accounting policies are consistent with those applied in the Annual Financial Statements - The Group's accounting policies in these interim financial statements are consistent with those applied to the Annual Financial Statements[33](index=33&type=chunk) [NOTE 4 - Segment Reporting](index=15&type=section&id=NOTE%204%20-%20SEGMENT%20REPORTING) Q1 2025 consolidated revenues reached NIS 660 million, with total EBITDA of NIS 244 million, primarily from Israel and US segments - No changes in the composition or measurement of the Group's reportable segments during the reporting period[35](index=35&type=chunk) Segment Revenues and EBITDA (Q1 2025) | Segment | Revenues (NIS million) | EBITDA after proportionate consolidation (NIS million) | | :---------------------- | :--------------------- | :--------------------------------------------------- | | Energy Israel | 526 | 137 | | Energy Transition in the US | 779 | 277 | | US Renewable Energies | 45 | 27 | | Other activities in the USA | 89 | (8) | | Consolidated - total | 660 | 129 | | Total EBITDA (after adjustments) | | 244 | Segment Revenues and EBITDA (Q1 2024) | Segment | Revenues (NIS million) | EBITDA after proportionate consolidation (NIS million) | | :---------------------- | :--------------------- | :--------------------------------------------------- | | Energy Israel | 532 | 170 | | Energy Transition in the US | 518 | 166 | | US Renewable Energies | 60 | 28 | | Other activities in the USA | 21 | (9) | | Consolidated - total | 638 | 187 | | Total EBITDA (after adjustments) | | 236 | [NOTE 5 - Revenues from Sales and Provision of Services](index=18&type=section&id=NOTE%205%20-%20REVENUES%20FROM%20SALES%20AND%20PROVISION%20OF%20SERVICES) Total revenues increased to NIS 660 million in Q1 2025, with Israel as the largest contributor and US income rising Composition of Revenues from Sales and Provision of Services | Revenue Source | Q1 2025 (NIS million) | Q1 2024 (NIS million) | FY 2024 (NIS million) | | :----------------------------------- | :-------------------- | :-------------------- | :-------------------- | | Revenues from sale of energy to private customers (Israel) | 282 | 300 | 1,368 | | Revenues from private customers for infrastructure services (Israel) | 128 | 101 | 445 | | Total income in Israel | 526 | 532 | 2,312 | | Revenues from sale of electricity from renewable energy (*) (USA) | - | 56 | 195 | | Revenues from sale of retail electricity and others (USA) | 134 | 50 | 272 | | Total income in the USA | 134 | 106 | 467 | | **Total income** | **660** | **638** | **2,779** | - Total income increased by **NIS 22 million** (**3.45%**) from Q1 **2024** to Q1 **2025**[39](index=39&type=chunk) - Revenues from sale of electricity from renewable energy in the USA were **NIS 0 million** in Q1 **2025**, down from **NIS 56 million** in Q1 **2024**, due to deconsolidation and transition to the equity method for CPV Renewable[39](index=39&type=chunk) [NOTE 6 - Credit from Banking Corporations and Others, Debentures, Guarantees and Equity](index=19&type=section&id=NOTE%206%20-%20CREDIT%20FROM%20BANKING%20CORPORATIONS%20AND%20OTHERS%2C%20DEBENTURES%2C%20GUARANTEES%20AND%20EQUITY) OPC Israel secured new NIS 300 million financing; company received A1.il rating, reduced guarantees, and complies with covenants [A. Significant Events During and Subsequent to the Reporting Period](index=19&type=section&id=A.%20Significant%20events%20during%20and%20subsequent%20to%20the%20reporting%20period) This section highlights key financing events, including new loan agreements and credit ratings, occurring during and after the reporting period - OPC Israel secured a **NIS 300 million** loan from Israel Discount Bank Ltd., with **NIS 150 million** advanced in February **2025** for activity financing and shareholder loan repayment[41](index=41&type=chunk) Short-term Credit Facilities (NIS million) as of Report Date | Entity | Facility amount | Utilization as of the report date | | :---------------------- | :-------------- | :-------------------------------- | | The Company | 300 | - | | OPC Israel | 300 | 2 | | The Company for CPV Group | Approx. 174 | 92 | | CPV Group | Approx. 279 | 219 | | **Total** | **1,053** | **313** | - Midroog assigned an initial rating of A1.il with a stable outlook to the Company and its debentures on May **18**, **2025**[42](index=42&type=chunk) [B. Changes in the Group's Material Guarantees](index=20&type=section&id=B.%20Changes%20in%20the%20Group%27s%20material%20guarantees) This section outlines changes in the company's material bank guarantees, including releases and increases for various projects Bank Guarantee Amounts (NIS million) | Category | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Operating projects in Israel | 159 | 249 | | Projects under construction/development in Israel | 74 | 74 | | Sorek tender bid | 50 | 100 | | Virtual supply activity in Israel | 69 | 21 | | Operating projects in US Renewable Energies Segment | 45 | 22 | | Projects under construction/development in USA (CPV Group) | 380 | 339 | | **Total** | **777** | **805** | - Total material guarantees decreased from **NIS 805 million** to **NIS 777 million**, mainly due to the release of a bank guarantee for Zomet (**NIS 67 million**) and a decrease in the Sorek tender guarantee[44](index=44&type=chunk)[46](index=46&type=chunk) - Guarantees for virtual supply activity in Israel increased, and guarantees for US Renewable Energy projects under construction also rose[44](index=44&type=chunk)[46](index=46&type=chunk) [C. Financial Covenants](index=21&type=section&id=C.%20Financial%20covenants) This section presents the company's compliance with financial covenants for its debentures and other financing agreements Financial Covenants for Debentures (Series B, C, D) as of March 31, 2025 | Ratio | Required Value - Series B | Required Value - Series C and D | Actual Value | | :----------------------------------- | :------------------------ | :------------------------------ | :----------- | | Net financial debt to adjusted EBITDA | Will not exceed 13 (11 for distribution) | Will not exceed 13 (11 for distribution) | 5.2 | | The Company shareholders' equity ("separate") | Will not fall below NIS 250 million (NIS 350 million for distribution) | Will not fall below NIS 1 billion (NIS 1.4 billion for distribution) for Series C; NIS 2 billion (NIS 2.4 billion for distribution) for Series D | Approx. NIS 4,857 million | | The Company's equity to asset ratio ("separate") | Will not fall below 17% (27% for distribution) | Will not fall below 20% (30% for distribution) | 73% | | The Company's equity to asset ratio ("consolidated") | -- | Will not fall below 17% | 53% | Financial Covenants for Group Companies as of March 31, 2025 | Financial Covenants | Breach Ratio | Actual Value | | :----------------------------------- | :----------- | :----------- | | Approx. OPC Israel's equity capital | Will not fall below NIS 1,100 million | NIS 2,324 million | | OPC Israel's equity to asset ratio | Will not fall below 20% | 42% | | OPC Israel's ratio of net debt to EBITDA | Will not exceed 8 | 3.6 | | Hadera: Minimum expected DSCR | 1.10 | 1.10 | | Hadera: Average expected DSCR | 1.10 | 1.61 | | Hadera: LLCR | 1.10 | 1.53 | | The Company shareholders' equity ("separate") | Will not fall below NIS 1,200 million | Approx. NIS 4,898 million | | The Company's equity to asset ratio ("separate") | Will not fall below 30% | 73% | | The Company's net debt to EBITDA ratio | Will not exceed 12 | 5.2 | - As of March **31**, **2025**, the Company and Group companies comply with all stated financial covenants[48](index=48&type=chunk)[49](index=49&type=chunk) [D. Equity Compensation Plans](index=23&type=section&id=D.%20Equity%20compensation%20plans) This section details the company's equity compensation plans, including option allotments to executives and their fair value Allotments of Offered Securities (March 2025) | Offerees and allotment date | No. of options at the grant date (in thousands) | Average fair value of each option at the grant date (in NIS) | Exercise price per option (in NIS, unlinked) | Standard deviation | Risk-free interest rate | Cost of benefit (in NIS million) | | :-------------------------- | :---------------------------------------------- | :----------------------------------------------------------- | :------------------------------------------- | :----------------- | :---------------------- | :------------------------------- | | Executives, March 2025 | 441 | 11.80 | 31.98 | 30.4%-34.5% | 4.09%-4.15% | Approx. 5 | - Approximately **184 thousand** options awarded to the Chairman of the Board, Mr. Yair Caspi, expired in January **2025**[56](index=56&type=chunk) - In April **2025**, the Company's CEO, Mr. Giora Almogy, exercised approximately **626 thousand** options into approximately **3 thousand** Company shares[56](index=56&type=chunk) [E. Profit-Sharing Plan for CPV Group Employees](index=23&type=section&id=E.%20Profit-sharing%20plan%20for%20CPV%20Group%20employees) This section describes the CPV Group's employee profit-sharing plan, including its fair value and recognized liability - The fair value of the CPV Group employee profit-sharing plan was approximately **NIS 128 million** (**USD 34.5 million**) as of the report date, estimated using the option pricing model[54](index=54&type=chunk) - A liability of approximately **NIS 105 million** was recognized for the plan, included in 'Other payables and credit balances'[55](index=55&type=chunk) - OPC Israel entered into a **NIS 300 million** financing agreement with Israel Discount Bank Ltd., with **NIS 150 million** advanced in February **2025**[41](index=41&type=chunk) - Midroog set an initial rating of A1.il with a stable outlook for the Company and its debentures on May **18**, **2025**[42](index=42&type=chunk) - The Company complies with all financial covenants attached to Debentures (Series B, C and D) and corporate financing agreements as of March **31**, **2025**[48](index=48&type=chunk)[49](index=49&type=chunk) [NOTE 7 - Related and Interested Parties](index=24&type=section&id=NOTE%207%20-%20RELATED%20AND%20INTERESTED%20PARTIES) Rotem entered an energy purchase agreement with related party Dead Sea Works, deemed fair market value and not material - Rotem entered into an energy and capacity purchase agreement with Dead Sea Works Ltd. (a related party) for a period ending March **31**, **2030**[57](index=57&type=chunk) - The agreement involves Dead Sea Works providing up to **40 MWh** of energy and capacity with a discount on the DSM Tariff, and Rotem undertaking to consume a minimum annual quantity[57](index=57&type=chunk) - The Company's Audit Committee determined the engagement is an ordinary course of business transaction at fair market value, not likely to have a material effect on the Company's profitability, assets, and liabilities[59](index=59&type=chunk) [NOTE 8 - Financial Instruments](index=25&type=section&id=NOTE%208%20-%20FINANCIAL%20INSTRUMENTS) This note presents fair values of financial instruments, totaling NIS 4,644 million, and details the derivative fair value hierarchy [A. Financial Instruments Measured at Fair Value for Disclosure Purposes Only](index=25&type=section&id=A.%20Financial%20instruments%20measured%20at%20fair%20value%20for%20disclosure%20purposes%20only) This section presents the carrying and fair values of financial instruments measured for disclosure purposes only Fair Values of Financial Instruments (NIS million) | Instrument | March 31, 2025 (Carrying Value) | March 31, 2025 (Fair Value) | March 31, 2024 (Carrying Value) | March 31, 2024 (Fair Value) | December 31, 2024 (Carrying Value) | December 31, 2024 (Fair Value) | | :----------------------------------- | :------------------------------ | :-------------------------- | :------------------------------ | :-------------------------- | :--------------------------------- | :------------------------- | | Loans from banking corporations and financial institutions (Level 2) | 2,362 | 2,365 | 3,064 | 3,125 | 2,234 | 2,237 | | Loans from non-controlling interests (Level 2) | 508 | 507 | 471 | 479 | 514 | 508 | | Debentures (Level 1) | 1,774 | 1,710 | 1,948 | 1,869 | 1,891 | 1,805 | | **Total** | **4,644** | **4,582** | **5,483** | **5,473** | **4,639** | **4,550** | [B. Fair Value Hierarchy of Financial Instruments Measured at Fair Value](index=26&type=section&id=B.%20Fair%20value%20hierarchy%20of%20financial%20instruments%20measured%20at%20fair%20value) This section categorizes financial instruments measured at fair value into a hierarchy based on input observability Fair Value Hierarchy of Financial Instruments Measured at Fair Value (NIS million) | Instrument | March 31, 2025 | March 31, 2024 | December 31, 2024 | | :----------------------------------- | :------------- | :------------- | :---------------- | | **Financial assets** | | | | | CPI swap contracts (Level 2) | 41 | 41 | 44 | | Interest rate swaps (SOFR) (Level 2) | - | 30 | - | | **Total Financial Assets** | **41** | **71** | **44** | | **Financial liabilities** | | | | | CPI swap contracts (Level 2) | (1) | (2) | (1) | | Interest rate swaps (SOFR) (Level 2) | - | (3) | - | | Electricity price hedge contracts (Level 3) | - | (51) | - | | **Total Financial Liabilities** | **(1)** | **(56)** | **(1)** | - The balances for interest rate swaps (SOFR) and electricity price hedge contracts as of March **31**, **2024**, were related to CPV Renewable, which was deconsolidated in Q4 **2024**[66](index=66&type=chunk) - The Group attaches condensed interim financial statements for Towantic, Shore, and Fairview (Material Associates), with adjustments from US GAAP to IFRS[74](index=74&type=chunk)[76](index=76&type=chunk) - Shore entered into a refinancing agreement of approximately **NIS 1.57 billion** (**USD 436 million**), comprising a long-term loan and credit facilities, with a final repayment date of February **4**, **2032**[77](index=77&type=chunk) - Key adjustments between US GAAP and IFRS include differences in accounting for maintenance costs, hedge effectiveness, classification of intangible assets, presentation of restricted cash, right-of-use assets, compound financial instruments, property, plant and equipment allocation, and changes in financing agreements[101](index=101&type=chunk) [NOTE 9 - Significant Events During and Subsequent to the Reporting Period](index=27&type=section&id=NOTE%209%20-%20SIGNIFICANT%20EVENTS%20DURING%20AND%20SUBSEQUENT%20TO%20THE%20REPORTING%20PERIOD) War assessment unchanged; PPE purchases decreased; Hadera 2 hearing held; CPV Group increased Shore stake and received USD 50 million investment [A. General](index=27&type=section&id=A.%20General) This section provides general updates, including the impact of the Iron Swords War and changes in property, plant, and equipment purchases - No material change in the Company's assessments regarding the Iron Swords War[71](index=71&type=chunk) - Property, plant and equipment purchases were approx. **NIS 17 million** in Q1 **2025**, down from approx. **NIS 201 million** in Q1 **2024**[71](index=71&type=chunk) [B. OPC Israel](index=27&type=section&id=B.%20OPC%20Israel) This section provides updates on OPC Israel, specifically regarding the Hadera 2 Project petition - A hearing was held in April **2025** on the Hadera **2** Project petition, with the court proposing a rediscussion by the government[69](index=69&type=chunk) [C. CPV Group](index=27&type=section&id=C.%20CPV%20Group) This section details significant events related to CPV Group, including acquisitions and additional investments - CPV Group completed the acquisition of an additional **20%** stake in the Shore Power Plant on April **1**, **2025**, increasing its holding to approximately **89%**[72](index=72&type=chunk) - An additional **USD 50 million** was invested in April **2025** by the Investor in the US Renewable Energy Segment[72](index=72&type=chunk) CPV Group Investment Undertakings and Loan Provision (USD million) | Metric | Immediately prior to report approval date | As of March 31, 2025 | As of December 31, 2024 | | :----------------------------------- | :---------------------------------------- | :------------------- | :---------------------- | | Total investment undertakings and loan provision | 1,535 | 1,535 | 1,535 | | Utilization | (1,510) | (1,480) | (1,455) | | Balance of investment undertakings and loan provision | 25 | 55 | 80 | - The Company's assessment regarding the Iron Swords War remains unchanged compared to the Annual Financial Statements[71](index=71&type=chunk) - Purchases of property, plant and equipment totaled approximately **NIS 17 million** in Q1 **2025**, a significant decrease from approximately **NIS 201 million** in Q1 **2024**[71](index=71&type=chunk) - The acquisition of an additional **20%** stake in the Shore Power Plant by CPV Group was completed on April **1**, **2025**, increasing the holding stake to approximately **89%**[72](index=72&type=chunk) [NOTE 10 - Attachment of Financial Statements of Material Associates](index=28&type=section&id=NOTE%2010%20-%20ATTACHMENT%20OF%20FINANCIAL%20STATEMENTS%20OF%20MATERIAL%20ASSOCIATES) This note presents condensed interim financials for material associates (Towantic, Shore, Fairview) with US GAAP to IFRS adjustments [Shore](index=29&type=section&id=Shore) This section presents the condensed interim financial statements for Shore, a material associate, including its financial position, income, and cash flows [Statement of Financial Position](index=29&type=section&id=Shore%20Statement%20of%20Financial%20Position) This table summarizes Shore's assets, liabilities, and partners' equity at various interim dates Shore Statement of Financial Position (USD thousand) | Metric | March 31, 2025 (IFRS) | March 31, 2024 (IFRS) | December 31, 2024 (IFRS) | | :----------------------------------- | :-------------------- | :-------------------- | :----------------------- | | Cash and cash equivalents | 15,120 | 1,540 | 16,147 | | Restricted cash | 4,365 | 2,150 | 2,210 | | Property, plant & equipment | 487,763 | 510,121 | 493,615 | | Total assets | 764,006 | 849,505 | 833,625 | | Total liabilities | 581,228 | 705,729 | 715,012 | | Partners' equity | 182,778 | 143,776 | 118,613 | - Shore's total assets decreased by **USD 85,499 thousand** (**10.06%**) from March **31**, **2024**, to March **31**, **2025**[79](index=79&type=chunk) - Partners' equity increased by **USD 39,002 thousand** (**27.13%**) from March **31**, **2024**, to March **31**, **2025**[79](index=79&type=chunk) [Statements of Income and Other Comprehensive Income](index=31&type=section&id=Shore%20Statements%20of%20Income%20and%20Other%20Comprehensive%20Income) This table details Shore's revenues, operating results, and comprehensive income for interim periods Shore Statements of Income and Other Comprehensive Income (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Revenue | 41,320 | 44,111 | 166,914 | | Operating loss | 2,201 | (7,363) | (15,756) | | Finance expenses | 11,140 | 9,941 | 40,644 | | Loss for the period | (8,939) | (17,304) | (56,400) | | Other comprehensive loss | (6,894) | (7,965) | 6,997 | | Comprehensive loss for the period | (15,833) | (25,269) | (49,403) | - Shore's loss for the period improved by **USD 8,365 thousand** (**48.34%**) from Q1 **2024** to Q1 **2025**[81](index=81&type=chunk) - Operating loss improved significantly from **USD (7,363) thousand** in Q1 **2024** to **USD 2,201 thousand** operating profit in Q1 **2025**[81](index=81&type=chunk) [Material Adjustments to the Statement of Cash Flows](index=33&type=section&id=Shore%20Material%20adjustments%20to%20the%20statement%20of%20cash%20flows) This table presents Shore's cash flow activities, including operating, investing, and financing, for interim periods Shore Material Adjustments to Cash Flows (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Loss for the period | (8,939) | (17,304) | (56,400) | | Net cash provided by operating activities | (30,402) | (3,859) | 11,635 | | Net cash used for investing activities | 72,674 | (919) | (5,640) | | Net cash provided by financing activities | (43,299) | 869 | 4,704 | | Net increase (decrease) in cash and cash equivalents | (1,027) | (3,909) | 10,699 | | Balance of cash and cash equivalents as of the end of the period | 15,120 | 1,539 | 16,147 | - Net cash used for investing activities significantly changed from **USD (919) thousand** in Q1 **2024** to **USD 72,674 thousand** provided in Q1 **2025**[84](index=84&type=chunk) - Net cash provided by financing activities shifted from **USD 869 thousand** provided in Q1 **2024** to **USD (43,299) thousand** used in Q1 **2025**[84](index=84&type=chunk) [Fairview](index=35&type=section&id=Fairview) This section presents the condensed interim financial statements for Fairview, a material associate, including its financial position, income, and cash flows [Statement of Financial Position](index=35&type=section&id=Fairview%20Statement%20of%20Financial%20Position) This table summarizes Fairview's assets, liabilities, and partners' equity at various interim dates Fairview Statement of Financial Position (USD thousand) | Metric | March 31, 2025 (IFRS) | March 31, 2024 (IFRS) | December 31, 2024 (IFRS) | | :----------------------------------- | :-------------------- | :-------------------- | :----------------------- | | Cash and cash equivalents | 244 | 2,734 | 487 | | Restricted cash | 6,470 | 91 | 4,349 | | Property, plant & equipment | 847,728 | 868,269 | 854,635 | | Total assets | 893,927 | 937,401 | 895,997 | | Total liabilities | 526,208 | 380,310 | 537,777 | | Partners' equity | 367,719 | 557,091 | 358,220 | - Fairview's total assets decreased by **USD 43,474 thousand** (**4.64%**) from March **31**, **2024**, to March **31**, **2025**[86](index=86&type=chunk) - Partners' equity decreased by **USD 189,372 thousand** (**34%**) from March **31**, **2024**, to March **31**, **2025**[86](index=86&type=chunk) [Statements of Income and Other Comprehensive Income](index=37&type=section&id=Fairview%20Statements%20of%20Income%20and%20Other%20Comprehensive%20Income) This table details Fairview's revenues, operating results, and comprehensive income for interim periods Fairview Statements of Income and Other Comprehensive Income (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Revenue | 103,978 | 84,774 | 299,331 | | Operating profit | 39,498 | 35,954 | 124,759 | | Finance expenses | 507 | 731 | 22,140 | | Profit for the period | 38,991 | 35,223 | 102,619 | | Other comprehensive loss | (11,991) | (6,211) | 7,622 | | Comprehensive income for the period | 27,000 | 29,012 | 110,241 | - Fairview's revenue increased by **USD 19,204 thousand** (**22.65%**) from Q1 **2024** to Q1 **2025**[88](index=88&type=chunk) - Profit for the period increased by **USD 3,768 thousand** (**10.7%**) from Q1 **2024** to Q1 **2025**[88](index=88&type=chunk) [Material Adjustments to the Statement of Cash Flows](index=39&type=section&id=Fairview%20Material%20adjustments%20to%20the%20statement%20of%20cash%20flows) This table presents Fairview's cash flow activities, including operating, investing, and financing, for interim periods Fairview Material Adjustments to Cash Flows (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Profit for the period | 38,991 | 35,223 | 102,619 | | Net cash provided by operating activities | 37,664 | 41,167 | 125,851 | | Net cash used for investing activities | (2,121) | 1,919 | 12,428 | | Net cash used for financing activities | (35,786) | (40,670) | (138,109) | | Net increase (decrease) in cash and cash equivalents | (243) | 2,416 | 170 | | Balance of cash and cash equivalents as of the end of the period | 244 | 2,733 | 487 | - Net cash provided by operating activities decreased by **USD 3,503 thousand** (**8.51%**) from Q1 **2024** to Q1 **2025**[91](index=91&type=chunk) - Net cash used for investing activities shifted from **USD 1,919 thousand** provided in Q1 **2024** to **USD (2,121) thousand** used in Q1 **2025**[91](index=91&type=chunk) [Towantic](index=41&type=section&id=Towantic) This section presents the condensed interim financial statements for Towantic, a material associate, including its financial position, income, and cash flows [Statement of Financial Position](index=41&type=section&id=Towantic%20Statement%20of%20Financial%20Position) This table summarizes Towantic's assets, liabilities, and partners' equity at various interim dates Towantic Statement of Financial Position (USD thousand) | Metric | March 31, 2025 (IFRS) | March 31, 2024 (IFRS) | December 31, 2024 (IFRS) | | :----------------------------------- | :-------------------- | :-------------------- | :----------------------- | | Cash and cash equivalents | 3,980 | 963 | 9,068 | | Restricted cash | 26,081 | 82 | 20,662 | | Property, plant & equipment | 790,278 | 815,295 | 796,764 | | Total assets | 884,075 | 942,251 | 896,856 | | Total liabilities | 290,343 | 390,170 | 303,441 | | Partners' equity | 593,732 | 552,081 | 593,415 | - Towantic's total assets decreased by **USD 58,176 thousand** (**6.17%**) from March **31**, **2024**, to March **31**, **2025**[93](index=93&type=chunk) - Partners' equity increased by **USD 41,651 thousand** (**7.54%**) from March **31**, **2024**, to March **31**, **2025**[93](index=93&type=chunk) [Statements of Income and Other Comprehensive Income](index=43&type=section&id=Towantic%20Statements%20of%20Income%20and%20Other%20Comprehensive%20Income) This table details Towantic's revenues, operating results, and comprehensive income for interim periods Towantic Statements of Income and Other Comprehensive Income (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Revenue | 151,293 | 119,137 | 418,684 | | Operating profit | 44,625 | 29,483 | 134,759 | | Finance expenses | 3,590 | 3,357 | 15,094 | | Profit for the period | 41,035 | 26,126 | 119,665 | | Other comprehensive loss | (5,717) | (5,037) | (9,243) | | Comprehensive income for the period | 35,318 | 21,089 | 110,422 | - Towantic's revenue increased by **USD 32,156 thousand** (**27%**) from Q1 **2024** to Q1 **2025**[95](index=95&type=chunk) - Profit for the period increased by **USD 14,909 thousand** (**57.07%**) from Q1 **2024** to Q1 **2025**[95](index=95&type=chunk) [Material Adjustments to the Statement of Cash Flows](index=45&type=section&id=Towantic%20Material%20adjustments%20to%20the%20statement%20of%20cash%20flows) This table presents Towantic's cash flow activities, including operating, investing, and financing, for interim periods Towantic Material Adjustments to Cash Flows (USD thousand) | Metric | Q1 2025 (IFRS) | Q1 2024 (IFRS) | FY 2024 (IFRS) | | :----------------------------------- | :------------- | :------------- | :------------- | | Profit for the period | 41,035 | 26,126 | 119,665 | | Net cash provided by operating activities | 41,382 | 41,784 | 164,646 | | Net cash used for investing activities | (6,049) | (1,430) | 22,277 | | Net cash used for financing activities | (40,421) | (41,437) | (179,901) | | Net increase (decrease) in cash and cash equivalents | (5,088) | (1,083) | 7,022 | | Balance of cash and cash equivalents as of the end of the period | 3,980 | 963 | 9,068 | - Net cash used for investing activities increased by **USD 4,619 thousand** (**323%**) from Q1 **2024** to Q1 **2025**[99](index=99&type=chunk) - Net cash provided by operating activities slightly decreased by **USD 402 thousand** (**0.96%**) from Q1 **2024** to Q1 **2025**[99](index=99&type=chunk) [Key Adjustments Between US GAAP and IFRS](index=47&type=section&id=Key%20adjustments%20between%20US%20GAAP%20and%20IFRS) This section outlines the significant accounting differences and adjustments made to convert US GAAP financial statements to IFRS - Under IFRS, variable maintenance payments are capitalized to property, plant and equipment and amortized, while US GAAP recognizes them as current expenses[101](index=101&type=chunk) - IFRS recognizes adjustments for the ineffective portion of cash flow hedges in profit and loss, whereas US GAAP recognizes hedging results in full in other comprehensive income[101](index=101&type=chunk) - IFRS classifies certain intangible assets as property, plant and equipment, and certain contracts as leases (right-of-use assets), which differ from US GAAP classifications[101](index=101&type=chunk)