Ellomay Capital Ltd 20-F/A, filed Jun 29, 2023
Ellomay Capital Ltd. (ELLO)
20-F/A
2023-06-29
For: 2022-12-31
View Original
Added on
August 22, 2026
About this 20-F/A
Ellomay Capital Ltd filed this 20-F/A on June 29, 2023, covering the fiscal year ended December 31, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31 , 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company report......
For the transition period from __________________ to __________________
Commission File Number 001-35284
(Exact Name of Registrant as specified in its charter)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Tel: +972 -3-797-1111 ; Facsimile: +972-77-344-6856
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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||
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Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Title of Class
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Title of Class
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 12,852,585 1 ordinary shares, NIS 10.00 par value per share.
| 1 |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☑
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☑ Non-accelerated filer ☐ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP ☐
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Other ☐
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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):
Yes ☐ No ☑
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Auditor Firm Id: |
Auditor Name: |
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Auditor Location: |
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2
Table of Contents
3
EXPLANATORY NOTE
As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, updated certifications of our principal executive officer and our principal financial officer are being filed as exhibits to this Form 20-F/A. This Form 20-F/A also includes Exhibit 15.2, which contains the consent of Somekh Chaikin, an independent registered public accounting firm and a member of KPMG International, with respect to their report included in the Dorad Financial Statements.
This Form 20-F/A should be read in conjunction with the 2022 Form 20-F and our other filings with the Securities and Exchange Commission. This Form 20-F/A speaks as of the date of the initial filing of the 2022 Form 20-F. Other than as expressly set forth above, this Form 20-F/A does not, and does not purport to, amend, update or restate the information in any part of the 2022 Form 20-F or reflect any events that have occurred after the 2022 Form 20-F was filed. The filing of this Form 20-F/A, and the inclusion of newly executed certifications, should not be understood to mean that any other statements contained in the 2022 Form 20-F are true and complete as of any date subsequent to the filing date of the 2022 Form 20-F. Accordingly, this Form 20-F/A should be read in conjunction with the 2022 Form 20-F.
4
PART
III
ITEM
18: Financial Statements
Our Financial Statements were included in pages F-1 – F-106
of the 2022 Form 20-F.
The audited financial statements of Dorad Energy Ltd. for the year
ended December 31, 2022 are included in pages FD-1 – FD-51 of this Form 20-F/A.
ITEM
19: Exhibits
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Number |
Description |
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1.1 |
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1.2 |
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2.1 |
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2.2 |
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4.1 |
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4.2 |
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4.3 |
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4.4 |
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4.5 |
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4.6 |
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4.7 |
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4.8 |
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4.9 |
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4.10 |
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4.11 |
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4.12 |
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4.13 |
5
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Number |
Description |
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4.14 |
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4.15 |
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4.16 |
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4.17 |
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4.18 |
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4.19 |
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4.20 |
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4.21 |
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8 |
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12.1 |
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12.2 |
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13 |
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15.1 |
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15.2 |
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101.INS** |
XBRL Instance Document(15)
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101.SCH** |
XBRL Taxonomy Extension Schema Document(15)
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101.CAL** |
XBRL Taxonomy Calculation Linkbase Document(15)
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101.DEF** |
XBRL Taxonomy Extension Definition Linkbase Document(15)
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101.LAB** |
XBRL Taxonomy Label Linkbase Document(15)
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101.PRE** |
XBRL Taxonomy Presentation Linkbase Document(15)
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104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit
101) |
_____________________________________
| * |
The original language version is on file with the Registrant and is available upon request. |
| ** |
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section
18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
| (1) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2012 and incorporated by reference herein.
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| (2) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2018 and incorporated by reference herein.
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| (3) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2011 and incorporated by reference herein.
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| (4) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2019 and incorporated by reference herein.
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| (5) |
Included in the Registrant’s Form 6-K dated May 17, 2018 and incorporated by reference herein. |
| (6) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2021 and incorporated by reference herein.
|
| (7) |
Included in the Registrant’s Form 6-K dated October 14, 2005 and incorporated by reference herein. |
| (8) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2010 and incorporated by reference herein.
|
| (9) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2013 and incorporated by reference herein.
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| (10) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2014 and incorporated by reference herein.
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| (11) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2017 and incorporated by reference herein.
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| (12) |
Included in the Registrant’s Form 6-K dated June 8, 2022 and incorporated by reference herein. |
| (13) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2020 and incorporated by reference herein.
|
| (14) |
Included in the Registrant’s Form 6-K dated July 1, 2021 and incorporated by reference herein. |
| (15) |
Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2022 and incorporated by reference herein.
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6
SIGNATURES
The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Ellomay Capital Ltd. | |||
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By: |
/s/
Ran Fridrich |
|
| Ran Fridrich |
|||
| Chief Executive Officer and Director | |||
Dated: June 29, 2023
7
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Dorad Energy Ltd.
Financial Statements
As at December 31, 2022 |
Dorad Energy Ltd.
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Financial Statements as at December 31, 2022 |
Contents
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Page |
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FD-3 | |
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FD-5 | |
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FD-6 | |
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FD-7 | |
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FD-8 | |
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FD-9 – FD-51 |
FD
- 2
Somekh Chaikin
KPMG Millennium Tower
17 Ha’arba’a Street, PO Box 609
Tel Aviv 61006, Israel
+972 3 684 8000
Independent Auditors’
Report
The Board of Directors
Dorad Energy Ltd.
Dorad Energy Ltd.
We have audited the financial statement of Dorad Energy Ltd (“the Company”),
which comprise the statement of financial position as of December 31, 2022 and the related statements of profit or loss, changes
in equity, and cash flows for the year ended December
31, 2022, and the related notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2022, and its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB).
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in
the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities
for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other
ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of
Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IFRS as issued by the IASB; and for the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether
there are conditions or events, considered in the aggregate, that raise significant doubt about the Company’s ability to continue
as a going concern for one year after the date that the financial statements are authorized for issuance.
Auditors’ Responsibilities
for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our
opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit
conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or
in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
KPMG Somekh Chaikin, an Israeli partnership and
a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee
FD
- 3
Somekh Chaikin
KPMG Millennium Tower
17 Ha’arba’a Street, PO Box 609
Tel Aviv 61006, Israel
+972 3 684 8000
In performing an audit in accordance with
GAAS, we:
• Exercise
professional judgment and maintain professional skepticism throughout the audit.
• Identify
and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit
procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
•
Obtain an understanding of internal control relevant to the audit in order to design
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. Accordingly, no such opinion is expressed.
• Evaluate
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well
as evaluate the overall presentation of the financial statements.
• Conclude
whether, in our judgment, there are conditions or events, considered in the aggregate, that raise significant doubt about the Company’s
ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those
charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain
internal control related matters that we identified during the audit.
/s/
Somekh Chaikin
Somekh Chaikin
Member Firm of KPMG International
Member Firm of KPMG International
Tel Aviv
June 21, 2023
June 21, 2023
KPMG Somekh Chaikin, an Israeli partnership and
a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee
Dorad Energy Ltd.
|
Statements of Financial Position
|
|
December 31 |
December 31 |
|||||||||||
|
2022 |
2021 |
|||||||||||
|
Note |
NIS thousands |
NIS thousands |
||||||||||
|
Current assets |
||||||||||||
|
Cash and cash equivalents |
4 |
151,481 |
201,860 |
|||||||||
|
Trade receivables |
5 |
238,581 |
248,844 |
|||||||||
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Other receivables |
6 |
32,809 |
40,289 |
|||||||||
|
Total current assets |
422,871 |
490,993 |
||||||||||
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Non-current assets |
||||||||||||
|
Restricted deposit |
12A1B |
514,543 |
480,476 |
|||||||||
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Prepaid expenses |
12A4 |
32,072 |
33,235 |
|||||||||
|
Fixed assets |
7 |
3,253,196 |
3,378,466 |
|||||||||
|
Intangible assets |
6,404 |
6,038 |
||||||||||
|
Right of use assets |
17 |
57,486 |
57,530 |
|||||||||
|
Total non-current assets |
3,863,701 |
3,955,745 |
||||||||||
|
Total assets |
4,286,572 |
4,446,738 |
||||||||||
|
Current liabilities |
||||||||||||
|
Current maturities of loans from banks |
8 |
279,506 |
280,753 |
|||||||||
|
Current maturities of lease liabilities |
17 |
4,645 |
4,622 |
|||||||||
|
Trade payables |
9 |
228,468 |
324,532 |
|||||||||
|
Current tax liabilities |
11 |
- |
21,795 |
|||||||||
|
Other payables |
10 |
11,439 |
7,100 |
|||||||||
|
Financial derivatives |
16 |
- |
268 |
|||||||||
|
Total current liabilities |
524,058 |
639,070 |
||||||||||
|
Non-current liabilities |
||||||||||||
|
Loans from banks |
8 |
2,211,895 |
2,356,785 |
|||||||||
|
Other Long-term liabilities |
12.A.6 |
17,529 |
15,834 |
|||||||||
|
Long-term lease liabilities |
17 |
49,292 |
48,871 |
|||||||||
|
Provision for dismantling and restoration |
3.G |
|
50,000 |
50,000 |
||||||||
|
Deferred tax liabilities |
11 |
215,016 |
192,676 |
|||||||||
|
Liabilities for employee benefits, net |
160 |
160 |
||||||||||
|
Total non-current liabilities |
2,543,892 |
2,664,326 |
||||||||||
|
Equity |
13 |
|||||||||||
|
Share capital |
11 |
11 |
||||||||||
|
Share premium |
642,199 |
642,199 |
||||||||||
|
Capital reserve for activities with controlling shareholders |
3,748 |
3,748 |
||||||||||
|
Retained earnings |
572,664 |
497,384 |
||||||||||
|
Total equity |
1,218,622 |
1,143,342 |
||||||||||
|
Total liabilities and equity |
4,286,572 |
4,446,738 |
||||||||||
|
/s/ Michal Abadi Boiangiu |
/s/ Eli Asulin |
/s/ David Bitton | ||
|
Michal Abadi Boiangiu |
Eli Asulin |
David Bitton | ||
|
Chairman of the |
Chief Executive Officer |
Chief Financial Officer | ||
|
Board of Directors |
Date of approval of the financial statements June 21, 2023.
The accompanying notes are an integral part of the financial statements.
FD
- 5
Dorad Energy Ltd.
|
Statements of Profit or Loss |
|
2022 |
2021 |
2020 |
||||||||||||||
|
Note |
NIS thousands |
NIS thousands |
NIS thousands |
|||||||||||||
|
Revenues |
2,369,220 |
2,103,911 |
2,407,221 |
|||||||||||||
|
Operating costs of the power plant |
||||||||||||||||
|
Energy costs |
544,118 |
428,051 |
522,110 |
|||||||||||||
|
Electricity purchase and infrastructure services |
1,088,127 |
1,053,997 |
1,185,225 |
|||||||||||||
|
Depreciation and amortization |
239,115 |
225,715 |
237,575 |
|||||||||||||
|
Other operating costs |
157,189 |
114,360 |
155,368 |
|||||||||||||
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Total cost of power plant |
2,028,549 |
1,822,123 |
2,100,278 |
|||||||||||||
|
Profit from operating the power plant |
340,671 |
281,788 |
306,943 |
|||||||||||||
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General and administrative expenses |
14 |
24,066 |
24,502 |
24,926 |
||||||||||||
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Other incomes |
12.A.18 |
- |
11,603 |
1,279 |
||||||||||||
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Operating profit |
316,605 |
268,889 |
283,296 |
|||||||||||||
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Financing income |
52,131 |
4,694 |
3,056 |
|||||||||||||
|
Financing expenses |
271,116 |
219,013 |
157,428 |
|||||||||||||
|
Financing expenses, net |
15 |
218,985 |
214,319 |
154,372 |
||||||||||||
|
Profit before taxes on income |
97,620 |
54,570 |
128,924 |
|||||||||||||
|
Taxes on income |
11 |
22,340 |
12,844 |
29,622 |
||||||||||||
|
Profit for the year |
75,280 |
41,726 |
99,302 |
|||||||||||||
The accompanying notes are an integral part of the financial statements.
FD
- 6
Dorad Energy Ltd.
|
Statements of Changes in Equity
|
|
Capital |
||||||||||||||||||||
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reserve for |
||||||||||||||||||||
|
activities with |
||||||||||||||||||||
|
Share |
controlling |
Retained |
||||||||||||||||||
|
Share capital |
premium |
shareholders |
earnings |
Total equity |
||||||||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
NIS thousands |
NIS thousands |
||||||||||||||||
|
For the year ended December 31, 2022 |
||||||||||||||||||||
|
Balance as at January 1, 2022
|
11 |
642,199 |
3,748 |
497,384 |
1,143,342 |
|||||||||||||||
|
Profit for the year |
- |
- |
- |
75,280 |
75,280 |
|||||||||||||||
|
Balance as at December 31,
2022 |
11 |
642,199 |
3,748 |
572,664 |
1,218,622 |
|||||||||||||||
|
For the year ended December 31, 2021 |
||||||||||||||||||||
|
Balance as at January 1, 2021
|
11 |
642,199 |
3,748 |
555,658 |
1,201,616 |
|||||||||||||||
|
Dividend to the Company’s shareholders (Note 12.A.17) |
- |
- |
- |
(100,000 |
) |
(100,000 |
) | |||||||||||||
|
Profit for the year |
- |
- |
- |
41,726 |
41,726 |
|||||||||||||||
|
Balance as at December 31,
2021 |
11 |
642,199 |
3,748 |
497,384 |
1,143,342 |
|||||||||||||||
|
For the year ended December 31, 2020 |
||||||||||||||||||||
|
Balance as at January 1, 2020
|
11 |
642,199 |
3,748 |
576,356 |
1,222,314 |
|||||||||||||||
|
Dividend to the Company’s shareholders (Note 12.A.17) |
- |
- |
- |
(120,000 |
) |
(120,000 |
) | |||||||||||||
|
Profit for the year |
- |
- |
- |
99,302 |
99,302 |
|||||||||||||||
|
Balance as at December 31,
2020 |
11 |
642,199 |
3,748 |
555,658 |
1,201,616 |
|||||||||||||||
The accompanying notes are an integral part of the financial statements.
FD
- 7
Dorad Energy Ltd.
|
Statements of Cash Flows
|
|
2022 |
2021 |
2020 |
||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
||||||||||
|
Cash flows from operating activities: |
||||||||||||
|
Profit for the year |
75,280 |
41,726 |
99,302 |
|||||||||
|
Adjustments: |
||||||||||||
|
Depreciation, amortization, and fuel consumption |
242,345 |
228,099 |
241,288 |
|||||||||
|
Taxes on income |
22,340 |
12,844 |
29,622 |
|||||||||
|
Financing expenses, net |
218,985 |
214,319 |
154,372 |
|||||||||
|
483,670 |
455,262 |
425,282 |
||||||||||
|
Change in trade receivables |
9,991 |
48,875 |
(4,959 |
) | ||||||||
|
Change in other receivables |
7,480 |
(18,888 |
) |
1,284 |
||||||||
|
Change in trade payables |
(127,907 |
) |
22,926 |
16,627 |
||||||||
|
Change in other payables |
4,339 |
3,292 |
(6,700 |
) | ||||||||
|
Change in Other long-term liabilities |
1,695 |
15,834 |
- |
|||||||||
|
(104,402 |
) |
72,039 |
6,252 |
|||||||||
|
Taxes on income paid |
(21,795 |
) |
- |
- |
||||||||
|
Net cash provided by operating activities |
432,753 |
569,027 |
530,836 |
|||||||||
|
Cash flows from investing activities: |
||||||||||||
|
Proceeds from (payment for) settlement of financial derivatives |
13,652 |
392 |
(4,318 |
) | ||||||||
|
Investment in long-term restricted deposits |
- |
(53,175 |
) |
(6,000 |
) | |||||||
|
Investment in fixed assets |
(110,715 |
) |
(72,530 |
) |
(48,309 |
) | ||||||
|
Investment in intangible assets |
(1,810 |
) |
(2,020 |
) |
(4,738 |
) | ||||||
|
Interest received |
6,433 |
1,584 |
3,046 |
|||||||||
|
Net cash used in investing activities |
(92,440 |
) |
(125,749 |
) |
(60,319 |
) | ||||||
|
Cash flows from financing activities: |
||||||||||||
|
Repayment of lease liability principal |
(4,726 |
) |
(4,624 |
) |
(4,523 |
) | ||||||
|
Repayment of loans from banks |
(255,705 |
) |
(210,449 |
) |
(195,359 |
) | ||||||
|
Dividends and exchange rate paid |
- |
(100,000 |
) |
(123,739 |
) | |||||||
|
Interest paid |
(159,804 |
) |
(162,781 |
) |
(170,003 |
) | ||||||
|
Net cash used in financing activities |
(420,235 |
) |
(477,854 |
) |
(493,624 |
) | ||||||
|
Decrease in cash and cash equivalents |
(79,922 |
) |
(34,576 |
) |
(23,107 |
) | ||||||
|
Effect of exchange rate fluctuations on cash and |
||||||||||||
|
cash equivalents |
29,543 |
(10,643 |
) |
4,165 |
||||||||
|
Cash and cash equivalents at beginning of year |
201,860 |
247,079 |
266,021 |
|||||||||
|
Cash and cash equivalents at end of year |
151,481 |
201,860 |
247,079 |
|||||||||
The accompanying notes are an integral part of the financial statements.
FD
- 8
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December
31, 2022 |
Note 1 - General
| A. |
Reporting entity |
Dorad Energy Ltd. (hereinafter - “the Company”) was
incorporated on November 25, 2002, with the aim of engaging in the production of electricity and construction of the infrastructure required
for said operation. The company official address is 13 Ben Gurion Street, Bnei Brak.
The company's shareholders:
Eilat Ashkelon Infrastructure Services Ltd. (hereinafter –
EAIS) – 37.5%
Zorlu Enerji Elektrik Uretim A.S (a foreign company) (hereinafter
– Zorlu) – 25%
U. Dori Energy Infrastructures Ltd. (hereinafter – Dori Energy)
– 18.75%
Edelcom Ltd. (hereinafter – Edelcom) – 18.75%
| B. |
Definitions |
In this financial statement
| • |
Related party as defined in International Accounting Standard (2009) 24 regarding related parties. |
| • |
Interested parties within their meaning in Paragraph (1) of the definition of an “interested party” in Section 1 of the
Securities Law - 1968. |
| • |
All references to laws, regulations, court proceedings refer to the State of Israel, unless otherwise indicated. |
| C. |
Licenses and legal environment |
| 1. |
The construction of the power plant was officially designated a “National Infrastructure” Project, as defined in paragraph
1 of the Planning and Building Law-1965 by the Prime Minister, Minister of Finance and Minister of the Interior. In July 2009, the Licensing
Authority of the National Planning and Construction Board for National Infrastructures approved the building permit for the establishment
of a power station. (Building License No. 2-01-2008). |
On April 13, 2014, the Public Utilities Authority - Electricity
("PUA") passed a resolution of which a permanent production license and a supply license will be granted to the Company, subject to the
approval of the Minister of National Infrastructure, Energy and Water ("Minister of Energy"). Accordingly, on May 12, 2014, the Company
was issued production licenses for 20 years with an option for additional period of extension and a supply license for one year and on
May 19, 2014, the Company began commercial operation of the station.
On August 12, 2014, the Company filed a request to extend the
supply license for an additional 19 years. On July 13, 2015, after the Company filed a petition with the High Court of Justice against
the Minister of National Infrastructures and the Public Electricity Services Authority for issuance of a conditional order that will require
extending the license for the said period, the license was received, which is effective up to May 11, 2034.
FD
- 9
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 1 - General (cont’d)
| C. | Licenses and legal environment (cont’d) |
| 2. |
On January 31, 2022, the PUA published a
decision regarding “Electricity Rates for Customers of IEC in 2022” which in accordance the average production component will
increase by about 13.6%, compared to 2021, from February 1, 2022, and will remain in effect to the end of 2022. On April 12, 2022, the
PUA published a decision regarding "Annual Electricity Rate Update 2022", which, among other things, averaged a 9.4% increase in the production
component, compared to 2021, as of May 1, 2022, and will remain in effect to the end of 2022. On July 28, 2022, the PUA published a decision
regarding "Annual Electricity Rate Update 2022", which, among other things, averaged a 24.3% increase in the production component, compared
to 2021, as of August 1, 2022, and will remain in effect to the end of 2022. On December 26, 2022, the PUA published a decision regarding
“Electricity Rates for Customers of IEC in 2023” which in accordance the average production component will decrease by about
0.7%, compared to 2022, from January 1, 2023, and will remain in effect to the end of 2023. Subsequent to the reporting period,
On January 26, 2023, the PUA published an update of the aforementioned decision according to which the average production component decreased
by approximately 1.2% compared to the rate of 2023. On March 26, 2023, the PUA published an update of the aforementioned decision according
to which the average production component decreased by about 1.4% compared to the rate in the previous decision, which came into effect
as of April 1, 2023 and for the rest of 2023. |
Note 2 - Basis of Preparation
| A. |
Declaration of compliance with international financial reporting standards.
|
These financial statements have been prepared by the Company,
in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, as issued
by the International Accounting Standard Board (IASB). These financial statements were authorized for issue by the Company’s Board
of Directors on June 21, 2023.
| B. |
Functional and presentation currency |
These financial statements are presented in NIS, which is the Company’s
functional currency, and have been rounded to the nearest thousand. The NIS is the currency that represents the principal economic environment
in which the Company operates.
| C. | Basis of measurement |
The financial statements have been prepared on the historical cost
basis except for the following assets and liabilities:
| • |
Derivative financial instruments at fair value through profit or loss; |
| • |
Deferred tax liabilities; |
| • |
Provisions |
For further information regarding the basis of measurement of the above assets and liabilities,
see Note 3, regarding Significant Accounting Policies.
| D. | Impact of the Corona Virus |
Following the outbreak of the Corona Virus (COVID-19) in China
in December 2019, and spreading to many other countries in early 2020, there has been a decline in economic activity in many regions of
the world and in Israel as well. The spread of the virus has, among other things, disrupted the supply chain, decreased in global transport
volume, traffic and employment restrictions declared by the Israeli government and other governments around the world, as well as financial
and commodity market declines in Israel and around the world. The company is complying and acting accordingly to the guidelines of the
Ministry of Energy and Ministry of Health on dealing with the Corona epidemic crisis, including on preparations for the operation and
maintenance of the power plant and shift work as required. The company continuously examines the options for dealing with material damage
to its income as a result of the spread of the virus.
FD
- 10
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 2 - Basis of Preparation (cont’d)
| E. |
Use of estimates and judgments |
The preparation of financial statements in conformity with IFRSs
requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
The preparation of accounting estimates used in the preparation
of the Company’s financial statements requires management to make assumptions regarding circumstances and events that involve considerable
uncertainty. Management of the Company prepares the estimates on the basis of past experience, various facts, external circumstances,
and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future
periods affected. Information about assumptions made by the Company with respect to the future and other reasons for uncertainty with
respect to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities
in the next financial year are included in the following notes:
Useful lives of fixed assets and residual value
On May 19, 2014, the construction of the power plant was completed
and is available for use as of this date and therefore as of this date, the depreciation of the power plant began. Accordingly, the Company
examined the useful life of each significant item of fixed assets as described in Note 3C3 below considering the expected residual value
at the end of the useful life. The estimated residual value, depreciation method and useful life, will be evaluated by the Company, at
least once per reporting year and adjusted when necessary.
Impairment of assets
The Company examines at the end of each reporting year whether
there have been any events or changes in circumstances that indicate impairment of fixed assets. When indication of impairment revealed
the company checks whether the carrying amount of the fixed assets is recoverable out of the discounted cash flows expected from that
asset or the fair value of the asset less selling costs (“net selling price”) of that asset, and if necessary an impairment
provision is recorded up to the amount that is recoverable. (See note 7 regarding fixed assets).
Assessment of the probability
of contingent liabilities
The Company creates provisions or reverses provisions in respect
of contingent liabilities Among other things, based on the premise whether it is more likely than not that an outflow of economic resources
will be required in respect of legal claims pending against the Company and its investees. See note 12.
Determination of the lease
period
For the purpose of determining the lease period, the Company takes
into consideration the period in which the lease cannot be canceled, including extension options which is reasonably certain to be
exercised and / or cancellation options that are reasonably certain to be exercised. See note 17 regarding lease.
Determining the discount
rate of a lease liability
The Company discounts the lease payments using its incremental
borrowing rate. An increase or decrease in the lease liability, right-of-use asset and depreciation and financing expenses recognized.
See note 17 regarding lease.
| F. | Operating cycle period |
The Company normal operating cycle is one year. As a result, current
assets and current liabilities include items whose exercise date will take place in the Company’s normal operating cycle.
FD
- 11
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies
The accounting policies set out below have been applied consistently
for all periods presented in these financial statements.
|
A. |
Foreign currency transactions |
Transactions in foreign currencies are translated to the respective
functional currency of the Company entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign currency
gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted
for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the
end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in
terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
|
B. |
Financial instruments |
|
1. |
Non-derivative financial assets |
Classification and measurement of financial
assets and financial liabilities initial recognition and measurement
The Company first recognizes customers at the time of their creation.
The rest of the financial assets and financial liabilities are initially recognized on the date that the Company becomes a party to the
contractual terms of the instrument. In general, a financial asset is initially measured at fair value plus, in the case of a financial
asset or a financial liability not presented at fair value through profit and loss, transaction costs directly attributable to the acquisition
or issue of the financial asset. A customer that does not include a significant financing component is initially measured at the transaction
price.
Financial assets - classification and subsequent
measurement
The Company has balances of trade receivables and other receivables
held within the framework of a business model whose objective is the collection of contractual cash flows. The contractual cash flows
in respect of these financial assets include only principal and interest payments reflecting consideration for the time value of the money
and the credit risk. Accordingly, these financial assets are measured at amortized cost and their effect is credited to profit and
loss.
Derecognition of financial
assets
Financial assets are derecognized when the contractual rights of
the Company to the cash flows from the asset expire, or the Company transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset were transferred.
When the Company retains substantially all of the risks and rewards of ownership of the financial asset, it continues to recognize the
financial asset.
FD
- 12
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
B. |
Financial instruments (cont’d)
|
|
2. |
Non-derivative financial liabilities
|
Non-derivative financial liabilities include loans and borrowings
from banks, lease liabilities, and trade and other payables.
Initial recognition of
financial liabilities
Non-derivative financial liabilities include loans and borrowings
from banks and related parties, trade and other payables.
The Company initially recognizes debt securities issued on the
date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Company becomes
a party to the contractual provisions of the instrument.
Subsequent measurement
of financial liabilities
Financial liabilities are recognized initially at fair value less
any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost
using the effective interest method. Financial liabilities are designated at fair value through profit or loss if the Company manages
such liabilities and their performance is assessed based on their fair value in accordance with the Company’s documented risk management
strategy, providing that the designation is intended to prevent an accounting mismatch, or the liability is a combined instrument including
an embedded derivative.
Derecognition of financial
liabilities
Financial liabilities are derecognized when the obligation of the
Company, as specified in the agreement, expires or when it is discharged or cancelled.
Offset of financial instruments
Financial assets and liabilities are offset, and the net amount
presented in the statement of financial position when, and only when, the Company currently has a legal right to offset the amounts and
intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
| 3. |
Derivative financial instruments |
Economic
hedging
Hedge accounting is not applied to derivative instruments used
to hedge financial assets and financial liabilities denominated in foreign currency. Changes in the fair value of these derivatives are
recognized in profit or loss, as income or financing expenses.
|
4. |
CPI-linked assets and liabilities that are not measured
at fair value |
The value of CPI-linked financial assets and liabilities, which
are not measured at fair value, is remeasured every period in accordance with the actual increase/decrease in the CPI.
|
5. |
Share capital |
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options Deducting the effect of the tax, are recognized as a deduction from equity.
FD
- 13
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
| C. |
Fixed assets |
| 1. |
Recognition and measurement |
Fixed asset items are measured at cost less accumulated depreciation
and accumulated impairment losses.
The cost of self-constructed assets includes costs directly attributable
to the assets, direct labor, any other costs directly attributable to bringing the assets to a working condition for their intended use,
estimates of dismantling and restoration costs of the items, and capitalized borrowing costs. During the running period, the Company capitalized
costs and revenues incurred as a result of competence tests attributed to the power plant.
Spare parts, auxiliary equipment and backup equipment are classified
as fixed assets once they meet the definition of fixed assets in accordance with IAS-16, otherwise they are classified as Inventory.
When major parts of a fixed asset item (including costs of major
periodic inspections) have different useful lives, they are accounted for as separate items (major components) of fixed assets. Gains
and losses on disposal of a fixed asset item are determined by comparing the proceeds from disposal with the carrying amount of the asset
and are recognized net within “other income” or “other expenses”, as relevant, in profit or loss.
Changes in commitments to dismantle and restore the power plant
except for changes caused by the passage of time, are added to or deducted from the cost of asset during the period in which they occur.
The amount deducted from the cost of the asset will not exceed its book value. The balance, if any, is recognized immediately in the profit
or loss statement.
|
2. |
Subsequent costs |
The cost of replacing part of a fixed asset item and other subsequent
expenses is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part
will flow to the company and its cost can be measured reliably. The book value of part of a fixed asset item that has been replaced has
been deducted. The costs of day-to-day servicing are recognized in profit or loss as incurred.
| 3. |
Depreciation |
Depreciation is the systematic allocation of the depreciable
amount of an asset over its useful life. The recoverable amount is the cost of the asset, or another amount that replaces the cost, less
its residual value.
Depreciation of fixed assets begins when it is available for
use. This means that it should be in the location and condition necessary for it to be capable of operating in the manner intended by
the management. The Company began to depreciate fixed assets from the day of the beginning of commercial operations, in accordance with
the depreciation rates listed below. Depreciation is recognized in the profit and loss statement on a straight-line basis (unless otherwise
stated) over the estimated useful life of each significant part of the fixed asset, since this method reflects the expected pattern of
consumption of future economic benefits best embodied in the asset.
FD
- 14
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
| C. |
Fixed assets (cont’d) |
| 3. |
Depreciation (cont’d) |
The estimated useful lives for the current period are as follows:
|
Depreciation |
||||
|
rate |
||||
|
Buildings and permanent connections |
4 |
% | ||
|
Turbine components |
4% or by operating hours |
|||
|
Machinery, equipment and apparatus |
mainly 4 |
%
| ||
|
Monitoring station |
10 |
% | ||
|
Spare parts |
4 |
% | ||
|
Backup diesel |
upon usage |
|||
|
Leasehold improvements |
10 |
% | ||
Depreciation methods, useful lives and residual values are reviewed
at each reporting period and adjusted when necessary.
|
D. |
Intangible assets |
| 1. |
Recognition and measurement |
Intangible assets are identifiable non-monetary assets that do
not have a physical substance. The Company intangible assets consist of the costs of software systems that were adapted to the Company
needs. Among others, these include the billing system, the customer consumption forecast system, operating system and the ERP system.
The intangible assets that were acquired by the Company have a finite useful life and are measured at cost less accumulated amortization
and accumulated impairment losses.
|
2. |
Subsequent expenditure |
Subsequent expenditure is capitalized only when it increases the
future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognized in profit or loss as incurred.
|
3. |
Amortization |
Amortization is the systematic allocation of the amount of an intangible asset over its useful life. The
recoverable amount is the cost of the asset, or another amount that replaces the cost, less its residual value. Amortization is recognized
in profit or loss on a straight-line basis over the estimated useful life of the intangible assets from the date that they are available
for use, since these methods reflect the anticipated consumption program of future economic benefits embodied in the asset in the best
form.
The estimated useful life for the current software systems is five
or three years.
Estimates regarding the amortization method and useful lives are
reviewed at each reporting period and adjusted when necessary.
FD
- 15
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
E. |
Impairment |
| 1) |
Non derivative financial assets |
Credit-impaired financial
assets
At each reporting date, the company assesses whether financial
assets carried at amortized cost and debt instruments at fair value through other comprehensive income are credit-impaired. A financial
asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the
financial asset have occurred.
| 2) |
Non-financial assets |
Timing of impairment testing
The carrying amounts of the Company’s non-financial assets,
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated.
Determining cash-generating
units
For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
Measurement of recoverable
amount
The recoverable amount of an assets or cash-generating unit is
the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows, before
tax, to their present value that reflects current market assessments of the value of money and the risks specific to the asset or from
the cash-generating unit, for which the estimated future cash flows from the asset were not adjusted.
Recognition of impairment
loss
An impairment loss is recognized if the carrying amount of an asset
or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.
Reversal of impairment
loss
In respect of other assets, for which impairment losses were recognized
in prior periods, an assessment is performed at each reporting date for any indications that these losses have decreased or no longer
exist. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortization, if no impairment loss had been recognized.
FD
- 16
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
F. |
Capitalization of borrowing costs |
Specific and non-specific borrowing costs were capitalized to qualifying
assets throughout the period required for completion and construction until they are ready for their intended use. Non-specific borrowing
costs are capitalized in the same manner to the same investment in qualifying assets, or portion thereof, which was not financed with
specific credit by means of a rate which is the weighted-average cost of the credit sources which were not specifically capitalized. Foreign
currency differences from credit in foreign currency are capitalized if they are considered an adjustment of interest costs. Other borrowing
costs are expensed as incurred.
|
G. |
Provisions |
A provision is recognized if, as a result of a past event, the
Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The carrying amount
of the provision is adjusted each period to reflect the time that has passed and is recognized as a financing expense.
Provision for dismantling
and restoration – The Company recognized a provision for removal and restoration costs regarding its commitment under long-term
lease on which the power plant is located. Changes to this provision arising from changes in the interest rate are added to or deducted
against the fixed asset.
|
H. |
Indemnification Asset
|
The Company recognizes indemnification assets for damages and faults caused to turbines
at the power plant and for loss of profits if it is virtually certain that the indemnity will be received.
| I. |
Revenues |
The company revenues mainly include revenues from selling electricity
to end customers or to the IEC and from providing availability to the system manager.
The Company recognizes revenues when the customer obtains control
over the goods or services, when the electricity reaches the customers and when the availability guarantee to the system manager. The
income is measured according to the amount of consideration to which the Company expects to be entitled in exchange for the transfer of
goods or services promised to the customer, other than amounts collected for third parties.
Identifying the contract
The company accounts for a contract with a customer only when the following conditions
are met:
| (a) |
The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and
they are committed to satisfying the obligations attributable to them. |
| (b) |
The company can identify the rights of each party in relation to the goods or services that will be transferred. |
| (c) |
The company can identify the payment terms for the goods or services that will be transferred. |
| (d) |
The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s future cash flows are expected to
change as a result of the contract); and |
FD
- 17
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
Identifying the contract (cont’d)
| (e) |
It is probable that the consideration, to which the Company is entitled to in exchange for the goods or services transferred to the
customer, will be collected. |
For the purpose of paragraph (e) the Company examines, inter alia, the percentage of
the advance payments received and the spread of the contractual payments, past experience with the customer and the status and existence
of sufficient collateral.
Identifying performance
obligations
On the contract’s inception date, the Company assesses the
goods or services promised in the contract with the customer and identifies as a performance obligation any promise to transfer to the
customer one of the following:
| (a) |
Goods or services (or a bundle of goods or services) that are distinct; or |
| (b) |
A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer.
|
The Company identifies goods or services promised to the customer
as being distinct when the customer can benefit from the goods or services on their own or in conjunction with other readily available
resources and the Company’s promise to transfer the goods or services to the customer is separately identifiable from other promises
in the contract. In order to examine whether a promise to transfer goods or services is separately identifiable, the Company examines
whether it is providing a significant service of integrating the goods or services with other goods or services promised in the contract
into one integrated outcome that is the purpose of the contract.
As part of contracts with customers for the sale of electricity,
the company identified a single performance obligation in each contract.
Variable consideration
The transaction price includes fixed amounts and amounts that may
change as a result of discounts, refunds, credits, price concessions, incentives, performance bonuses, penalties, claims and disputes
and contract modifications that the consideration in their respect has not yet been agreed by the parties.
The Company includes variable consideration, or part of it, in
the transaction price only when it is highly probable that its inclusion will not result in a significant revenue reversal in the future
when the uncertainty has been subsequently resolved. At the end of each reporting period and if necessary, the Company revises the amount
of the variable consideration included in the transaction price.
Satisfaction of performance obligations
Revenue is recognized when the company satisfies a performance
obligation by transferring control over promised goods or services to the customer.
Determining the transaction price
The transaction price is the amount of consideration that the company
expects to be entitled to in exchange for the transfer of goods or services promised to the customer, other than amounts collected for
the benefit of third parties. When determining the transaction price, the company takes into account the effects of all of the following:
variable consideration, the existence of a significant financing component in the contract, non-cash consideration and consideration to
be paid to the customer.
FD
- 18
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
J. |
Tax expense on Income
|
Income tax expense is comprised of deferred taxes.
Deferred taxes are recognized with respect to temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
measurement of deferred taxes reflects the tax consequences that will result from the way the Company expects, at the end of the reporting
period, to restore or remove the carrying amounts of assets and liabilities. Deferred tax is measured at the tax rates expected to apply
to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognized for tax loss carry forwards, tax benefits and deductible temporary differences, when it is probable
that future taxable income against which can be utilized. Deferred tax assets are reviewed at each reporting date and if it is not expected
that the related tax benefit will be exercised, they are reduced.
The Company offsets assets and deferred tax liability if there
is a legally enforceable right to offset the assets and current tax liabilities, and they relate to the same taxable income levied by
the same tax authority.
|
K. |
Employee benefits |
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under
which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations
for contributions to defined contribution pension plans are recognized as an expense in profit or loss in the periods during which related
services are rendered by employees.
|
L. |
Lease |
| (1) |
Determining whether an arrangement contains a lease |
On the inception date of the lease, the Company determines whether
the arrangement is a lease or contains a lease, while examining if it conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an
identified asset, the Company assesses whether it has the following two rights throughout the lease term:
|
(a) |
The right to obtain substantially all the economic benefits from use of the identified
asset; and |
|
(b) |
The right to direct the identified asset’s use. |
For lease contracts that contain non-lease components, such as
management fees, that are related to a lease component, the Company elected to account for the contract as a separate component from the
lease.
FD
- 19
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
L. |
Lease (cont’d) |
| (2) |
Leased assets and lease liabilities |
Contracts that award the Company control over the use of a leased
asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Company recognizes
a liability at the present value of the balance of future lease payments (these payments do not include certain variable lease payments
that do not depend on the index or the rate), and concurrently recognizes a right-of-use asset at the same amount of the lease liability,
adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease.
Since the interest rate implicit in the Company's leases is not
readily determinable, the incremental borrowing rate of the lessee is used. Subsequent to initial recognition, the right-of-use asset
is accounted for using the cost model and depreciated over the shorter of the lease term or useful life of the asset. The Company has
elected to apply the practical expedient by which short-term leases of up to one year and/or leases in which the underlying asset has
a low value, are accounted for such that lease payments are recognized in profit or loss on a straight-line basis, over the lease term,
without recognizing an asset and/or liability in the statement of financial position.
| (3) |
The lease terms |
The lease term is the non-cancellable period of the lease plus
periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option,
respectively.
| (4) |
Variable lease payments |
Variable lease payments that depend on an index or a rate, are
initially measured using the index or rate existing at the commencement of the lease and are included in the measurement of the lease
liability. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability
is adjusted against the right-of-use asset. Other variable lease payments that are not included in the measurement of the lease liability
are recognized in profit or loss in the period in which the event or condition that triggers payment occurs.
| (5) |
Depreciation of right-of-use asset |
After lease commencement, a right-of-use asset is measured on a
cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability.
Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, as follows: land
20.4 years, and offices 3.5 years.
| (6) |
Reassessment of lease liability |
Upon the occurrence of a significant event or a significant change
in circumstances that is under the control of the Company and had an effect on the decision whether it is reasonably certain that the
Company will exercise an option, which was not included before in the lease term, or will not exercise an option, which was previously
included in the lease term, the Company re-measures the lease liability according to the revised leased payments using a new discount
rate. The change in the carrying amount of the liability is recognized against the right-of-use asset or recognized in profit or loss
if the carrying amount of the right-of-use asset was reduced to zero.
FD
- 20
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 3 - Significant Accounting Policies (cont’d)
|
M. |
Financing income and expenses |
Financing income and expenses include changes in the fair value
of financial assets presented at fair value through the profit and loss and derivative hedging instruments which are recognized in profit
and loss. Interest income is recognized as it accrues using the effective interest method. Financing expenses include interest expenses
on bank loans, bank commissions and change in time value regarding provisions. In the statements of cash flows, interest received is presented
as part of cash flows from investing activities. Interest paid is presented as part of cash flows from financing activities. Foreign currency
gains and losses on financial assets and financial liabilities are reported on a net basis as either financing income or financing expenses
depending on whether foreign currency movements are in a net gain or net loss position.
Note 4 - Cash and Cash Equivalents
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
Balance in banks |
15 |
9 |
||||||
|
Deposits on demand |
151,466 |
201,851 |
||||||
|
151,481 |
201,860 |
Note 5 - Trade Receivables
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
Trade receivables |
3,372 |
36,934 |
||||||
|
Income receivable |
235,552 |
212,253 |
||||||
|
Provision for doubtful debt |
(343 |
) |
(343 |
) | ||||
|
238,581 |
248,844 |
Note 6 - Other Receivables
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
Government institutions |
1,634 |
826 |
||||||
|
Receivables for insurance |
11,252 |
20,233 |
||||||
|
Advances to suppliers |
594 |
377 |
||||||
|
Prepaid expenses |
19,329 |
18,853 |
||||||
|
32,809 |
40,289 |
FD
- 21
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 7 - Fixed Assets
|
A. |
Composition |
|
Furniture |
Leasehold |
|||||||||||||||
|
Power plant |
and equipment |
improvements |
Total |
|||||||||||||
|
NIS thousands |
||||||||||||||||
|
Cost |
||||||||||||||||
|
Balance as at January 1, 2021 |
4,955,284 |
3,269 |
825 |
4,959,378 |
||||||||||||
|
Additions |
72,360 |
160 |
11 |
72,531 |
||||||||||||
|
Disposals |
(27,176 |
) |
- |
- |
(27,176 |
) | ||||||||||
|
Balance as at December 31, 2021 |
5,000,468 |
3,429 |
836 |
5,004,733 |
||||||||||||
|
Additions |
110,650 |
65 |
- |
110,715 |
||||||||||||
|
Disposals |
(37,294 |
) |
- |
- |
(37,294 |
) | ||||||||||
|
Balance as at December 31, 2022 |
5,073,824 |
3,494 |
836 |
5,078,154 |
||||||||||||
|
Depreciation and impairment losses |
||||||||||||||||
|
Balance as at January 1, 2021 |
1,429,483 |
2,555 |
501 |
1,432,539 |
||||||||||||
|
Depreciation for the year |
220,569 |
250 |
85 |
220,904 |
||||||||||||
|
Disposals |
(27,176 |
) |
- |
- |
(27,176 |
) | ||||||||||
|
Balance as at December 31, 2021 |
1,622,876 |
2,805 |
586 |
1,626,267 |
||||||||||||
|
Depreciation for the year |
235,610 |
290 |
85 |
235,985 |
||||||||||||
|
Disposals |
(37,294 |
) |
- |
- |
(37,294 |
) | ||||||||||
|
Balance as at December 31, 2022 |
1,821,192 |
3,095 |
671 |
1,824,958 |
||||||||||||
|
Carrying amounts |
||||||||||||||||
|
As at December 31, 2021 |
3,377,592 |
624 |
250 |
3,378,466 |
||||||||||||
|
As at December 31, 2022 |
3,252,632 |
399 |
165 |
3,253,196 |
||||||||||||
|
B. |
Security |
See Note 12C regarding a lien on the Company’s assets that serves as security
for the liabilities of the Company and the shareholders to the funding groups.
FD
- 22
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 8 - Loans from Banks
Presented hereunder are contractual terms of the bank loans of
the company and it is carrying amounts. For further information regarding the company’s exposure to interest rate risks and liquidity
risks see Note 16 – financial instruments and note 12.A.1.
Details regarding interest rates and linkage
|
|
Currency and |
Carrying amount as at December 31 |
||||||||||||||
|
|
linkage base |
Effective interest
|
2022 |
2021 |
||||||||||||
|
% |
NIS thousands |
NIS thousands |
||||||||||||||
|
Loans from banks |
CPI-linked |
5.1 |
% |
2,491,401 |
2,637,538 |
|||||||||||
|
Less current maturities (including interest as at December 31)
|
NIS |
|||||||||||||||
|
|
279,506 |
280,753 |
||||||||||||||
|
2,211,895 |
2,356,785 |
|||||||||||||||
Note 9 - Trade Payables
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
Open debts |
51,555 |
128,530 |
||||||
|
Accrued expenses |
176,913 |
196,002 |
||||||
|
228,468 |
324,532 |
|||||||
Note 10 - Other Payables
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
Accrued expenses (*) |
9,876 |
6,067 |
||||||
|
Other payables |
1,563 |
1,033 |
||||||
|
11,439 |
7,100 |
|||||||
|
(*) Including
other payables due to related and interested parties (see note 18) |
1,617 |
1,554 |
||||||
FD
- 23
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 11 - Income Tax
|
A.
|
Details
regarding the tax environment of the Company |
| (1) |
Presented hereunder are the tax rates relevant to the Company in the years 2020-2022: 23% |
On January 4, 2016, the Knesset plenum passed the Law for the Amendment
of the Income Tax Ordinance (Amendment 216) - 2016, by which, inter alia, the corporate tax rate would be reduced by 1.5% to a rate of
25% as from January 1, 2016. Furthermore, on December 22, 2016, the Knesset plenum passed the Economic Efficiency Law (Legislative
Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016, by which, inter alia, the corporate tax rate would
be reduced from 25% to 23% in two steps. The first step will be to a rate of 24% as from January 2017 and the second step will be to a
rate of 23% as from January 2018. As a result of the reduction in the tax rate, the deferred tax balances as at December 31, 2019 and
2020 were calculated according to the new tax rates specified in the Economic Efficiency Law (Legislative Amendments for Achieving Budget
Objectives in the Years 2016 and 2017), at the tax rate expected to apply on the date of reversal. Current taxes for the reported periods
are calculated according to the tax rates presented above.
| (2) |
The Company is an “Industrial Company” as defined in the Encouragement of Industry (Taxes) 1969 and accordingly is entitled
to certain benefits including accelerated depreciation. |
|
B.
|
Composition
of income tax expense |
|
|
Year ended |
Year ended |
Year ended |
|||||||||
|
|
December 31, |
December 31, |
December 31, |
|||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
|
NIS thousands |
NIS thousands |
NIS thousands |
|||||||||
|
Tax expenses for previous years |
- |
20,466 |
- |
|||||||||
|
Deferred tax expense |
22,340 |
(7,622 |
) |
29,622 |
||||||||
|
Total tax expense |
22,340 |
12,844 |
29,622 |
|||||||||
| C. |
Deferred tax liabilities and assets recognized |
The deferred taxes are calculated using the tax rate expected to
apply when reversed as described above. Changes in the tax liabilities and assets are attributed to the following items:
|
Provisions |
||||||||||||||||
|
and other |
||||||||||||||||
|
timing |
Tax losses |
|||||||||||||||
|
Fixed assets |
differences |
carried forward |
Total |
|||||||||||||
|
NIS thousands |
||||||||||||||||
|
Balance of deferred tax asset (liability) as at January 1, 2021 |
(620,264 |
) |
12,107 |
407,859 |
(200,298 |
) | ||||||||||
|
Tax assessment (see note f below) |
344,274 |
- |
(344,274 |
) |
- |
|||||||||||
|
Changes recognized in the |
||||||||||||||||
|
profit and loss statements |
26,393 |
249 |
(19,020 |
) |
7,622 |
|||||||||||
|
Balance of deferred tax |
||||||||||||||||
|
asset (liability) as at |
||||||||||||||||
|
December 31, 2021 |
(249,597 |
) |
12,356 |
44,565 |
(192,676 |
) | ||||||||||
|
Changes recognized in the |
||||||||||||||||
|
profit and loss statements |
(56,969 |
) |
135 |
34,494 |
(22,340 |
) | ||||||||||
|
Balance of deferred tax |
||||||||||||||||
|
asset (liability) as at |
||||||||||||||||
|
December 31, 2022 |
(306,566 |
) |
12,491 |
79,059 |
(215,016 |
) | ||||||||||
FD
- 24
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 11 - Income Tax (cont’d)
D. Reconciliation
between the theoretical tax on the pre-tax profit and the tax expense.
|
Year ended |
Year ended |
Year ended |
||||||||||
|
December 31, |
December 31, |
December 31, |
||||||||||
|
2022 |
2021 |
2020 |
||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
||||||||||
|
Profit before taxes on income |
97,620 |
54,570 |
128,924 |
|||||||||
|
Statutory tax rate of the company
|
23 |
% |
23 |
% |
23 |
% | ||||||
|
Tax calculated according to the Company’s
statutory tax rate |
22,453 |
12,551 |
29,652 |
|||||||||
|
Non-deductible expenses and others (Exempt
revenue) |
||||||||||||
|
(113 |
) |
293 |
(30 |
) | ||||||||
|
Income tax expense |
22,340 |
12,844 |
29,622 |
|||||||||
| E. |
Tax losses carried forward |
The total amount of forward losses from business as at December 31,
2022 is approximately NIS 345 million (as of December 31, 2021 – NIS 194 million). The Company has recorded deferred
taxes in respect of these losses, since the Company expects to utilize them against taxable income for tax purposes that will be created
for the Company in the foreseeable future.
| F. |
Tax assessments |
The company has final tax assessments up to and including the year
ended December 31, 2020.
On December 30, 2021, the company signed an assessment agreement
for the years 2015-2020 with the Tax Authority which Determined the treatment of the depreciation of the station throughout the period
of its operation in which it was determined that the company would adjust depreciation expenses in the amount of approximately NIS 1,871
million that a tax liability created for the company for the tax year 2020 in the amount of approximately NIS 22 million Including interest
and linkage. According to the agreement, the amortization expenses adjusted as stated above will be allowed for deduction to the Company
as a current business expense in equal parts starting from January 1, 2021, for a period of 5 years, NIS 374 million each year. It is
also stipulated that in connection with the arbitration procedure, for which a derivative claim was filed (see note 12.A.9), the company
will reflect the results of the arbitral award in the first tax report it submits after the date of the ruling and clarification of the
claim in a final and absolute manner.
FD
- 25
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees
| A. |
Commitments |
|
1.
|
Financing
agreements |
On November 29, 2010 (hereinafter: “the Financial Closing
Date”), the Company signed a financing agreement and several related agreements with Bank Hapoalim Ltd. as the financial organizer,
Clal Credit and Financing Ltd. from the Clal Insurance Enterprises Holdings Ltd. Company as the organizer of the institutional consortium
as well as the bank and institutional investors consortium (hereinafter: “the Financing Parties”) to provide financing in
the amount of up to NIS 3,850 million linked to CPI, though not more than 80% of the costs of the construction of a power plant for generating
electricity in Ashkelon, subject to the terms of the provisions of the financing agreement and the related agreements (hereinafter: “the
Financing Agreements”). Likewise, bank guarantees will be provided to third parties according to the project documents. The financing
agreement includes representations and warranties concerning the Company and the project where breaching these representations and warranties
is likely to lead, inter alia, to the demand for immediate repayment of the outstanding credit and/or a breach of its obligations and/or
to the cancellation of the license.
Accordingly, the Company is required to comply the following debt coverage:
| 1. |
The Company is required to maintain a debt coverage ratio of 1.10:1 over two consecutive calculation periods, and a debt coverage
ratio of 1.05:1 over the entire calculation period. |
| 2. |
The Company is required to maintain a minimal loan life coverage ratio of 1.10:1. |
As at December 31, 2022, In accordance with the expected Company
cash flow, the Company is in compliance with the above coverage ratios
The annual interest rate on the company debt to the financing
corporations is updated every three years, according to the company rating. Subsequent to the reporting period, on April 4, 2023, the
company received from the rating company S&P Maalot an update of the company debt rating forecast to ILAA-/Negative. The updating
of the aforementioned forecast had no effect on the company interest rate.
Within the framework of the Financing Agreements, and at the same
time as the signing of the financing agreement, other agreements related to the financing agreement were signed including the following:
| a. |
Capital Injection Agreement and a Subordinated Loan Agreement |
These agreements include the obligation of the shareholders towards
the Company and the Financing Parties, to inject, separately, and each according to their relative share, from time to time and in parallel
with each request to draw from the financing facilities, a total of up to approximately 20% cash (hereinafter:” the Shareholders
Investment”), and this either for the issuance of shares or as shareholders loans, which in any case, will be subordinate to and
pledged to the obligations of the Company towards the Financing Parties, according to the terms of the agreements. According to the Capital
Infusion Agreement and as security for the commitment of the shareholders to provide their relative portion of the Shareholders’
Investment, the shareholders provided on the same date, cash and bank guarantees in the amount of their obligation to inject the Shareholders
Investment; this, less any equity provided to the Company prior to that date. The Capital Infusion Agreement includes representations
and obligations with regards to the shareholders and the project where their breach is likely to lead, inter alia, to the demand for immediate
repayment of the outstanding credit and/or a breach of the Company’s obligations and/or to the cancellation of the license. According
to the Subordinated Loan Agreement, any shareholder loan will be linked to the CPI and bear interest at an annual rate of 10%. In addition,
it was agreed that any distribution to the shareholders, including loans repayment, will be subject to the compliance of the company with
the financial covenants as described in the financial agreement. During the period of this statement there was no change in the relative
holdings of the shareholders. Within the framework of the financing agreement, there is a lien on all the issued share capital of the
Company in favor of Poalim Trust Services Ltd., as the trustee of the Financing Parties.
FD
- 26
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
|
A.
|
Commitments
(cont’d) |
| 1. |
Financing agreements (cont’d) |
| b. |
Bank accounts agreement |
The agreement sets the establishment of the project bank accounts
and sets out the distribution of the cash flows among the accounts. In addition, the agreement sets out terms and procedures for executing
deposits and withdrawals from each account, determines the minimum balances in each of the capital reserves, and sets out the priorities
with respect to payments between the accounts and other terms regarding the management of the accounts, including the issue of transfers
between accounts. The main fund reserves are a debt service fund, a heavy maintenance fund, a fund for regulation fines guarantees and
a distribution fund. As at December 31, 2022, the deposits for the fund reserves sums to: NIS 221 million debt service reserve,
NIS 193 million in the major maintenance fund, NIS 91 million in the distribution fund and NIS 10 million in the fines
and regulation fund. These amounts are classified in the statement of financial position as “long‑term restricted deposits”.
|
2.
|
Agreement
to lease land under operating lease |
In 2008 an agreement was signed between the Company and EAIS for
the lease of 74.5 dunams of land for the power plant, for a period of 24 years and 11 months from the date of its operation. Also, in
2008, the Company participated in this payment and transferred to EAIS the amount of NIS 3,047 thousand in respect of its relative
share in the lease period which were paid by EAIS to ILA. According to IFRS 16 instructions the depreciated cost of this amount is
classified as “long‑term prepaid expenses” and is amortized over the lease period.
During 2010 the Company signed an addendum to the land sub-lease
agreement. According to the addendum to the agreement, in exchange for the lease of the lands designated for the project, an annual payment
of NIS 3,705 thousand will be paid for a period of 25 years. See also Note 18 Related and Interested Parties. The land lease is treated
according to IFRS 16 (see note 17 lease).
FD
- 27
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
|
A.
|
Commitments
(cont’d) |
|
3.
|
O&M
Agreement |
An agreement between the Company and the Eilat-Ashkelon Power Plant
Services Company - EAPPS (“the Maintenance Contractor”) for the operation and maintenance of the power plant for a predetermined
monthly payment defined in the Agreement for a period of 24 years and 11 months commencing the date of receipt of the Permanent Production
certificate. The Maintenance Contractor will transfer some of the larger maintenance projects to a subcontractor (Zolru O&M) under
a separate agreement, however it will retain full responsibility towards the Company with respect to all of its obligations under the
agreement.
During 2013, the Maintenance Contractor entered into a sub-contracting
agreement with EZOM Ltd, a related party held by related companies. The maintenance and operation will be managed by EZOM Ltd. The maintenance
contractor will retain full responsibility regarding his obligations toward the Company.
During August 2016 and in accordance with price review mechanism
existing in the O&M agreement there was an update for the prices of some of the items included in the O&M agreement. The update
was applied retroactively from the beginning of 2016.
On December 2017, a direct agreement was signed between the company
and EZOM Ltd which replaced EAPPS. The agreement terms are the same as the agreement with EAPPS.
On November 29, 2022, the agreement between the company and EAPPS
was converted to EAIS.
On August 22, 2022, the operating contractor announced that on
August 15, 2022, the name of the company was changed from EZOM Ltd to Edeltech O&M Ltd. The company was also informed that 25% of
ordinary shares in the Maintenance Contractor company, which provide voting rights, were transferred to Edeltech Holdings 2006 Ltd., which
from that date owns 100% of the issued and paid-up share capital of the Maintenance Contractor company.
| 4. |
Gas Pipeline Agreement |
On November 25, 2010, the Company signed a standard agreement approved
by the Gas Authority according to which in accordance the government company Israel Natural Gas Lines Ltd. (“INGL”) connected
the power plant to the natural gas pipeline. The company paid connection fees in the amount of NIS 47 million which was recognized as
prepaid expenses classified under non-current assets and will be amortized over the operating period. In addition, according to the agreement,
the company is obligated to pay INGL Commencing from the date of end of the connection in November 2013, a monthly payment for the capacity
in the pipeline and a variable payment for gas flowing through the pipeline.
|
5.
|
Diesel Storage
agreement |
On June 17, 2013, the company entered into an agreement with Eilat
Ashkelon Pipeline Company Ltd (hereinafter: “EAPC”) regarding storage of petrol in their plant.
According to the agreement, the company will store petrol at the
necessary quantities for backup of reserve fuel as required by Electricity Market Regulations and for the Company’s current needs,
estimating at 14,000 square meters.
EAPC are the controlling shareholder - of Eilat Ashkelon Infrastructure
Services Ltd. who are an interested party and related party, see note 18. On March 25, 2019, assignment of debt and right was made for
a diesel storage agreement to the Europe Asia Pipeline Company Ltd. (hereinafter "the Operational operator") according to the assignment
all duties and rights of the company will now be with the Operator. Except for the assignment, there were no changes to the agreement.
FD
- 28
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
| 6. |
Agreement to purchase natural gas |
On October 15, 2012, the Company entered into an agreement with
the partners in the Tamar license (“Tamar”) by which, subject to the fulfillment of suspense conditions provided in the agreement,
the Company will purchase natural gas from Tamar for operating the power plant it is constructing in Ashkelon.
As of December 31, 2014, the financial scope of the Company commitment
to purchase gas from the date of its flow, as defined in the agreement, to the actual consumption of gas is estimated at NIS 100,800 thousand,
this commitment was not recognized in the Company books. However, in accordance with the agreement, if the Company does not actually consume
the minimum quantity it has undertaken, it will be required to consume this quantity, in addition to the minimum gas quantity to which
the Company is obligated each year during the following three years.
On April 30, 2015, the Company received a notification from Tamar
whereby the “interim period”, as defined in the agreement, began on May 5, 2015. Pursuant to the agreement, during the
interim period supply of the gas to the Company will be subject to the quantities of the natural gas that will be available to Tamar at
that time after supply of natural gas to other customers of Tamar with which contracts were signed for supply of natural gas prior to
the signing of the agreement with the Company. The interim period will end when Tamar completes, should it ultimately complete, a project
for expansion of the supply capacity of a system for treatment and transfer of natural gas from the Tamar reserve, upon existence of the
preconditions detailed in the agreement. In the Company’s estimation, the impact of Tamar’s notification on its activities
is not expected to be significant. On November 26, 2016, the company received notification from Tamar whereby the interim period will
end on September 30, 2020. On April 2, 2019, the Company entered into an addendum to the agreement with the partners in the Tamar license
("Tamar") according to which the gas quantities specified in the addendum to the agreement that the Company purchase from Tamar will not
be included for the purpose of calculating the quantities of gas at the time of the reduction of the purchases from Tamar, in accordance
with the instructions of the agreement with Tamar and in accordance with the layout instructions for increasing the quantity of natural
gas produced from the Tamar natural gas field And rapid development of natural gas fields leviathan, Karish and Tanin and additional fields
from August 16, 2015 ("Gas layout"). The addendum to the agreement was subject to certain suspending conditions which been fulfilled in
July 2019. On January 22, 2020, the Company received notification from the partners in the Tamar license (“Tamar”) that the
"Interim Period" will end, as defined in the agreement, on March 1, 2020. According to the notification and the terms of the agreement,
Tamar will consider the Company as a permanent customer commencing from the end of the "Interim Period".
On March 22, 2021, the Company entered into an addendum to the
agreement with the partners in the Tamar reservoir (hereinafter: "Tamar"). According to this addendum, the parties agreed on the amount
of gas that the company will purchase from Tamar reservoir as of January 1, 2022. The agreement also provides that the company will be
entitled to compensation in the amount specified in the agreement. The compensation received in the 3rd quarter 2022 and presented in
the other payables and other long-term liabilities section.
FD
- 29
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
| 6. |
Agreement to purchase natural gas |
On April 5, 2021, the Company entered into an additional gas
purchase agreement with Tamar pursuant to which the company is entitled to purchase additional quantities of gas from Tamar in a period
of 4 years ending on April 5, 2025. As part of the agreement, the Company will receive a grant in the amount specified in the agreement,
which depends partly, among other things, in the amount of gas consumption quantities determined in the agreement. Half of the grant received
in the first quarter of 2022 and half on the date of termination of the contract after meeting the conditions according to the agreement.
The addendums to the agreement and the additional agreement were
subject to certain suspending conditions that were met on July 14, 2021. The grant and the compensation will be recognized in profit or
loss as a decrease in energy costs over the periods specified in the addendum and the additional agreement.
|
7.
|
Agreement
to sell electricity |
As at the reporting date the Company has agreements to sell electricity
at full of the production capacity of the power station. The electricity delivery agreements are, mainly, based on a reduced rate compared
to the rate applicable to electricity consumers in the general market, as defined by the Authority for Public Services-Electricity.
|
8.
|
Property
tax assessments in respect of the station |
In 2014 The Company sign a settlement agreement with Ashkelon Municipality
according to which the annual municipal tax rate Until the year 2025 including was determined.
On March 1, 2022, the company received a municipal rate assessment
from the Ashkelon Municipality for the years 2019-2022 in the amount of approximately NIS 18 million (of which a total of NIS 13.9 million
is attributed to the years 2019-2021) due to a change in its claim that there was an error in the size of the property. For this, the
company at the power plant in Ashkelon is liable for both property taxes and its classification. On March 6, 2022, the company filed an
objection with the Ashkelon Municipality's municipal rate director regarding these charges. In this objection, it was argued, among other
things, that in 2015 the company signed a compromise agreement with the Ashkelon Municipality, which regulated the payment of municipal
rates until 2025 and must be acted upon and there is no basis for correcting the assessment. Subsequent to the reporting period, the director
of property taxes rejected what was submitted in the answer to the request and an appeal was filed against this answer to the Appeals
Committee for Property Tax Affairs. In the opinion of the Company's management, based on the position of the Company legal advisers, to
the objection that the Company submitted is not fully accepted there is a probability exceeding 50% that the Company will not be required
to pay more than NIS 1.5 million for the said assessment. During the reporting period, the company included a provision in the said amount.
FD
- 30
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
|
A.
|
Commitments
(cont’d) |
|
9.
|
Claims by Dori
Energy, Zorlu, Edelcom and EAIS |
| a) |
Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael within the arbitration
|
On April 12, 2015, the Company received two letters from representatives
of Dori Energy (hereinafter- "The Representatives") that were addressed to the Company’s Chairman of the Board. As part of these
letters, the company is requested to take legal action to reveal the engagement between one of the shareholders of the Company, Zorlu
Enerji Elektrik Uretim A.S., and the construction contractor of the Dorad power station, Wood Group (EPC contractor). The aforesaid letters
are advance notices to the Company regarding the intention of the representatives to file a derivative claim insofar as their requests
are not accepted.
After examining all the facts relevant to the aforesaid letters
and consulting with legal counsel, the Company replied to the representatives on May 26, 2015, and rejected their request to take legal
action. On July 16, 2015, the representatives filed with the court a motion to approve a derivative claim in the name of the Company against
Zorlu (including the representatives of Zorlu on the Company’s Board of Directors) and the EPC contractor. In the framework of the
motion to which also the derivative claim was attached, the representatives demanded that documents and information regarding the engagement
between Zorlu and the EPC contractor be disclosed and handed over.
On November 15, 2015, the Company filed its reply in which it reiterated
its position that the motion for approval of the derivative claim should be denied.
On January 12, 2016, the representatives filed a motion to amend
the motion for approval of a derivative claim (hereinafter: ‘the motion for amendment”). The motion for amendment raises new
allegations by which Zorlu together with Ori Edelsborg (a director in the company) and companies under his control supposedly conspired
to deceive the Company by “inflating” the cost of the EPC agreement for the purpose of splitting between them the profits
from such “inflation”. In addition, in the framework of the motion for amendment it is requested to add Mr. Ori Edelsborg
and companies under his control as defendants to the amended motion for approval of a derivative claim and, also, to remove from the claim
the representatives of Zorlu on the Company's Board of Directors. It is noted that the motion for approval of a derivative claim as well
as the amended motion for approval of a derivative claim that was attached to the motion for amendment, do not include any monetary relief
rather request that the court give the representatives permission to split the relief so that they may file a separate monetary claim
in the future on behalf of the company with respect to the company financial damages, after they receive all the documents and information
they are requesting. On April 20, 2016, a discussion in court focused on the application to amend the derivative claim was held in court.
At the end of the discussion, the court accepted the application to amend the derivative claim in a matter that the amended derivative
claim is on the agenda. At the end of July 2016, the respondents filed their responses to the court regarding the amended application
of the derivative claim. In accordance with their responses, they deny the Allegations included in the application and according to them
they did not do any injustice to the company and therefore the company has no cause of action against them. On December 27, 2016, following
a negotiation between the parties, an arbitration agreement has been signed between the parties which in accordance, it was agreed to
transfer the proceeding to arbitration and on January 3, 2017, The Representatives filed a motion to cancel the proceedings which was
approved by the Supreme Court on January 8, 2017.
FD
- 31
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
|
A.
|
Commitments
(cont’d) |
| a) |
Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael within the arbitration (cont'd)
|
Following the nomination of the new arbitrator (see note: 12.A.9.e)
on April 30, 2019, a preliminary meeting was scheduled with the new elected arbitrator. During the year 2020 and the year of the report,
several hearings and evidentiary hearings were held that included the summoning of witnesses and determined. On February 15, 2021, the
arbitrator approved the plaintiff request for a change of litigant, so that in place of the late Hami Rafael, Rani Friedrich will come
as a litigant in the legal proceedings. On October 31, 2021, Edelcom summaries were filed
in its lawsuit, as well as summaries in Dori and Rafael's lawsuit. On March 10, 2022, the company submitted summaries on its behalf, in
which it reiterated its position, according to which, in view of the circumstances of the arbitration procedure, it does not take any
position on it and leaves the decision on it to the discretion of the arbitrator. On July 26, 2022, the arbitrator announced that he would
issue a decision during the first quarter of 2023. Subsequent to the reporting period, on March 3, 2023, the arbitrator announced that
he would issue a decision during the second quarter of 2023. Also, in accordance with the arbitrator decision, the company submitted a
notice regarding the legal expenses paid as part of the arbitration procedure in the amount of approximately NIS 6 million.
In the Company estimation, based on the opinion of its legal counsel,
at this stage cannot intelligently assess the results of the arbitration proceedings.
| b) |
Third party notice from Zorlu within the arbitration |
On April 30, 2017, Zorlu sent a third-party notice to the Company,
Dori Energy and Dori Group, according to which, to the extent Dori Energy claim is accepted, it will comply with all the rights it had
in connection with its right to construct the power plant, including the right to the profits it was supposed to receive under this construction
in such a manner that the third parties would owe Zorlu. See Section 12.A.9.a regarding the Company assessment of the results of
the arbitration process.
FD
- 32
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
9.
|
Claims by Dori
Energy, Zorlu, Edelcom and EAIS (cont’d) |
| c) |
Petition to Approve a Derivative Claim filed by Edelcom within the arbitration |
On July 25, 2016, Edelcom submitted an application for approval
of a derivative claim on behalf of the Company against Amos Luzon group, currently set Amos Luzon Development and Energy Ltd. (hereinafter:
“the Dori Group”), Dori Energy and Ellomay Clean Energy Ltd. (hereinafter: “Ellomay”). Edelcom’s claim is
about an entrepreneurship agreement that was signed on November 25, 2010 between the Company and Dori Group, pursuant to which in consideration
for the management and entrepreneurship services of the power station project the Dori Group received from the Company payment in the
amount of NIS 49.4 million and it undertook to continue holding, directly or indirectly, at least 10% of the Company’s share capital
for a period of 12 months from the date the power station is handed over to the Company by the construction contractor (hereinafter and
respectively: “the entrepreneurship agreement” and “the entrepreneurship fee”).
According to Edelcom, Dori Group holdings in the Company are through
Dori Energy, which on November 25, 2010, entered into a triangular investment agreement between Dori Energy, Ellomay and the Dori Group
(hereinafter: “the Dori Energy investment agreement”). In addition, according to Edelcom, when the Dori Energy investment.
agreement was signed Ellomay received management rights in Dori
Energy that are equal to those of the Dori Group while at the same time Ellomay formally held only 40% of the issued share capital of
Dori Energy and therefore it was expected that the management rights granted to it would correspond to its holding rate in Dori Energy
at that time. In view of the aforesaid, according to Edelcom the Dori Group holdings have fallen below 10% and it has therefore breached
its commitment according to the entrepreneurship agreement. On January 4, 2017, following a signed arbitration agreement between the parties,
a request was filed to the court by the parties for cancellation of the claim and the claim will be heard within the arbitration proceedings.
See Section 12.A.9.a regarding the Company assessment of the results of the arbitration process.
| d) |
Statement of Claim filed by Edelcom within the arbitration |
On July 27, 2017, Edelcom submitted a lawsuit against Amos Luzon
Group, Dori Energy and Ellomay ("Defendants"), in respect of the transfer of company shares in contrary to the provisions of the shareholders
agreement signed between the Company and its shareholders on November 25, 2010 (hereinafter: "Shareholders Agreement"). According to Edelcom,
the defendants interpreted unlawfully and in bad faith the provisions of the shareholders agreement while contracted in investment agreement
followed by an allocation of shares made in contrary to the provisions of the shareholders agreement. Edelcom claims for a various of
declaratory remedies and an operative remedy which will enforce of the sanctions set forth in the shareholders agreement, an order directed
to the company and ordered her to withhold any payment due to Dori Energy by virtue of its status as a shareholder in the company, including
dividends or repayment of shareholders loan, and an order addressed to the company and ordered her to suspend deceased Mr. Menachem Refael
role as a director of the Company from Dori energy and prohibit deceased Mr. Rephael be present or vote in meetings of the Board. The
parties agreed that this claim will be transferred to the arbitration proceedings. On October 22, 2019, the arbitrator ruled to delete
the claim regarding Edelcom claim regarding the right of refusal.
FD
- 33
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
9.
|
Claims by Dori
Energy, Zorlu, Edelcom and EAIS (cont’d) |
|
e)
|
Statement
of Claim filed by Edelcom |
On March 28, 2018, Zorlu and Edelcom filed a motion to remove the
arbitrator from its position. On October 22, 2018, the District Court rejected the demand that the arbitrator be removed from its position.
On February 12, 2019, the Supreme Court accepted the appeal of Zorlu and Edelcom and the arbitrator was removed from its position.
On March 28, 2018, Zorlu and Edelcom filed a motion to remove the
arbitrator from its position. On October 22, 2018, the District Court rejected the demand that the arbitrator be removed from its position.
On February 12, 2019, the Supreme Court accepted the appeal of Zorlu and Edelcom and the arbitrator was removed from its position.
|
10.
|
Faults in production
units |
| 1. |
On November 21, 2018, a malfunction was discovered in the generator of one of the two steam turbines of the power station as a result
that turbine was temporarily out of use until its repair in February 2019. This failure did not have materially effect on the Company
operations. In 2019, the company recognized indemnification property in the amount of NIS 5.3 million (USD 1.5 million) for this
failure which paid during 2019 and 2020. In 2021, the company recognized indemnification property in the amount of approximately NIS 20
million (USD 6.5 million). During the first, second and third quarters of 2022, approximately NIS 20.5 million (approximately USD 6 million)
were received. During the fourth quarter in 2022, the company recognized an additional indemnity asset for the said malfunction in the
amount of approximately NIS 9 million (approximately USD 2.6 million). In the company opinion, based on the company insurance consultant,
the company has adequate insurance coverage for the consequences of the said malfunction and that it is certain that the company will
receive the balance of the indemnity property in the amount of approximately NIS 11.3 million (approximately USD 3 million) during 2023.
Subsequent to the reporting period, a total of approximately NIS 21 million (approximately USD 6 million) was received from the insurance
companies. |
FD
- 34
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
10.
|
Faults in production
units |
| 2. |
On January 26, 2022, components from the gas turbine in the power plant where damaged in the manner that this turbine was temporarily
out of use, a malfunction did not material impair the Company current operations, the Company deducted the reduced cost of the said components
which was imputed to profit and loss in the depreciation and amortization note of approximately NIS 10 million and accordingly during
the third quarterly the Company replaced these components with refurbished components at a cost of approximately NIS 20 million. Subsequent
to the reporting period, On January 12, 2023, the company sent to the company maintenance contractor a demand for compensation for the
aforementioned damages, which are not insured under the insurance in the amount of approximately USD 4.6 million caused to the company
Claiming that the damage was caused by the negligence of the maintenance contractor.
|
Subsequent to the reporting period, On February 5, 2023, the maintenance
contractor rejected the company demand. On February 27, 2023, the company decided to activate the arbitration mechanism in accordance
with the operation and maintenance agreement between the parties. On May 1, 2023, A preliminary discussion was held with the agreed arbitrator,
in which dates were set for meetings for the beginning of 2024.
| 3. |
On July 4, 2022, a malfunction was discovered in one of the steam turbines in the power plant in such a way that this turbine was
temporarily out of use. The malfunction was treated by installing a specific replacement component in the steam turbine and the steam
turbine returned to operation at the end of July 2022. The cost of repairing the malfunction component in the steam turbine is not material
to the company. |
FD
- 35
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
11.
|
Memorandum
of understanding with Alon Energy Centers |
On March 6, 2019, the Company signed a memorandum of understanding
with Alon Energy Centers Limited partnership. ("Alon Gat"), which constructs a private power
plant for the production of electricity in Kiryat Gat with a capacity of approximately 73 megawatts.
On November 11, 2019, the Company signed an addition to the memorandum
of understanding (the memorandum and Additions Document will be referred to as "Detailed Agreement") under the Detailed Agreement Alon
Gat will serve as a producer who will provide the Company with the full availability of the power station and will sell the electricity
produced at the power plant to the Company, which will serve as supplier. In exchange
for availability and energy payments to be paid to Alon Gat for a period of 5 years and extension options cumulative to 6 years with each
party the option of early termination of the detailed agreement subject to certain conditions with prior notice. In accordance with the
detailed agreement, Alon Gat, who holds the production license, will be responsible for operating the power plant and generating electricity
at the station and will bear all costs related to operating the power plant, availability, and power generation. The company will be responsible
for all activities related to the power supply and power plant sales to the customers and the electricity company. On November 12, 2019,
commercial operation of the power plant began and the implementation of the detailed agreement. In addition, conditions have been set
in the agreement which at the time of their existence, each of the parties may cancel in advance notice, including for any case of regulatory
change which materially affects the implementation of the contract between the parties. Following the August 2019 hearing before implementing
the detailed agreement and the PUA resolution as of January 2020, regarding the standards on consumption plan anomalies amendment, which
constitutes a regulatory change as defined in the agreement and may affect the financial feasibility of the agreement.
On August 12, 2021, the Company signed an amendment to the agreement
that includes addressing consumption plan anomalies. As part of the amendment to the agreement, it will examine the economic viability
following the PUA resolution in respect of a change in the production Tariff and a material change in the demand hours cluster. which
constitutes a regulatory change as defined in the agreement and may affect the financial feasibility of the agreement, therefore, as of
the date of the report the conditions for recognition of a right of use asset and lease liability have not been fulfilled accordance with
IFRS 16.
Subsequent to the reporting period, on January 8, 2023, Alon
Gat announced the termination of the agreement on March 31, 2023.
|
12.
|
Acquisition
of natural gas |
On October 30, 2017, the Company signed an agreement with Energian
Israel ("Energian") regarding the acquisition of natural gas, in a cumulative volume of approximately 6 BCM over a period of 14 years,
from the Karish and Tanin reserves held by them and whose completion is expected to be by the end of 2020. The company will purchase about
half of the gas required to operate the company power plant, the rest of the demand will continue to be supplied by Tamar. According to
the agreement, if the Company does not actually consume the minimum quantity it has undertaken, it will be forced to consume this quantity.
In November 2018, all the suspending conditions included in the agreement were fulfilled.
At the beginning of November 2022, Energian began to flow gas to
the company power plant facility.
FD
- 36
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
13.
|
Third party
notice from IEC |
On November 22, 2020, the Electric Company announced to the company
that a class action lawsuit had been filed against it, claiming that the IEC had been negligent in supervising the conduct of private
electricity suppliers and thus causing damage to electricity consumers. It is alleged that the private electricity suppliers gave false
reports in the consumption plans submitted to the system manager at the IEC while utilizing the rules set by the PUA in the standards.
On November 22, 2020, the IEC filed a third-party notice against the company. On October
31, 2021, a hearing was held on the request to send notices to third parties. Subsequent to the reporting period, on April 10, 2023, the
court decided to reject the request to send a third parties notice from IEC. On June 11, 2023, IEC filled an appeal to the Supreme Court
against the Court decision. In the Company estimation, based on the opinion of its legal counsel, at this stage cannot intelligently assess
the results of the IEC appeal.
| 14. |
Possibility to expand the station by adding a turbine at the area of the
existing station |
The company is considering the possibility of constructing an
expansion to the power plant in the area of the existing station which will be a complementary part to the station and will be synergistic
to it. On July 13, 2020, the Company submitted to the National Infrastructure Committee (hereinafter: “NIC’) plans for public
objections and NIC approval. On January 11, 2021, following the company request, the NIC decided to postpone the final decision. On December
27, 2021, NIC Decided to bring the construction of the said expansion to government consideration (In the decision there is a condition
for the building permit detailed in NIC decision number 20/2021). Subsequent to the reporting period, on May 28, 2023, the Government
Secretary announced and published, that the Government approved the plans for national infrastructures regarding, among other things,
the construction of an expansion to the power plant at the Dorad Ashkelon site (Dorad 2).
| 15. |
Change in the clusters of demand hours |
On August 28, 2022, the Electricity Authority issued a resolution
in which, among other things, a change in the clusters of demand hours (hereinafter: "Mashab") was established, according to the decision
the shoulder Mashab was canceled, peak hours will be shifted in some seasons from noon to evening hours and the number of months in the
summer season will be expanded to 4 months (June to September instead of July and August). Subsequent to the reporting period, on January
1, 2023, the decision enters into force. The company is examining the impact of the aforementioned decision on the company results.
| 16. |
Virtual supplier |
On March 3, 2021, the Electricity Authority issued a resolution
establishing a regulation for suppliers who do not have the means to produce and amend criteria for new suppliers (hereinafter: "virtual
supplier"). According to the decision, in September 2021, the supply segment will be opened to competition gradually. Suppliers will purchase
all the electricity supplied to their consumers from the system manager up to a general quota of 400 Megawatts, of which 100 Megawatts
for domestic consumers based on the principle of based on first come, first-served basis. To meet the conditions of the supply license,
on June 14, 2021, the company provided a guarantee in the amount of NIS 2 million in favor of the Electricity Authority. On July 19, 2021,
the Company received the supply license for suppliers without means of production. The company is in the process of obtaining all the
necessary approvals from the company board and financier to start operating as a virtual supplier. The implementation of the decision
is not expected to have a material effect on the Company results.
FD
- 37
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
| A. |
Commitments (cont’d) |
|
17.
|
Dividend distribution
|
On February 27, 2020, the Company Board of Directors decided to
distribute a dividend of NIS 120 million. On March 4, 2020, the Company paid a dividend of NIS 90 million to its Israeli shareholders
and even purchased approximately USD 8.7 million (approximately NIS 30 million). On the same date) for the payment of the dividend to
a shareholder that is a foreign company subject to the receipt of withholding tax deduction. On March 17, 2020, upon receipt of a withholding
tax certificate, the Company transferred to the foreign company the dividend of USD 8.7 million (approximately NIS 34 million at the date
of payment).
On May 6, 2021, the Company Board of Directors decided to distribute
a dividend of NIS 100 million. On May 11, 2021, the Company paid a dividend of NIS 75 million to its Israeli shareholders and even purchased
approximately USD 7.7 million (approximately NIS 25 million on the same date) for the payment of the dividend to a shareholder that is
a foreign company subject to the receipt of withholding tax deduction. On June 1, 2021, upon receipt of a withholding tax certificate,
the Company transferred to the foreign company the dividend of USD 7.7 million (approximately NIS 25 million at the date of payment).
|
18.
|
Settlement
agreement with the Egyptian gas supplier |
On December 28, 2020, the Company signed a settlement agreement
with East Mediterranean Gas company (hereinafter: "EMG"), in the agreement the Company will remove any claim against EMG for the amounts
paid by the Company to EMG in respect of the canceled gas agreement and in return will receive an amount of approximately NIS 13 million,
an amount of approximately NIS 1.3 million was received on December 29, 2020. The balance of NIS 11.6 million received during 2021.
|
B.
|
Bank guarantees
|
As at the date of the report, the Company provided, through its
shareholders, based on their proportionate holdings in the Company and pursuant by the financing agreements bank guarantees to INGL, the
Public Utilities Authority (“PUA”), for purposes of compliance with the terms of the licenses granted to the Company, and
in favor of NOGA, as required under the Company’s agreement with NOGA, and in accordance with the guidelines published by the PUA.
On January 2022, there was an update to the amount of the guarantee provided to NOGA whereas the total updated amount is NIS 146 million.
In order to comply with the terms of the supply license of a virtual supplier, the company has provided a guarantee in the amount of NIS
2 million in favor of the PUA.
FD
- 38
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 12 - Contingent Liabilities, Commitments and Guarantees (cont’d)
|
C.
|
Liens
|
During the month of January 2011, the Company placed liens on
its assets as collateral for the obligations of the Company and its shareholders as follows:
| 1. |
Fixed lien – A fixed lien and first priority mortgage and an assignment by
way of lien on all the assets and rights with respect to the power plant in Ashkelon (“the Project”) and all as detailed in
the mortgage deed and its appendices. |
| 2. |
Floating lien - An unlimited first priority floating lien on all of the rights and
assets of the borrower, any object and/or equipment and any other tangible or intangible asset of any type as specified in the financing
agreements. |
| 3. |
Lien on account of guarantees to third parties – a fixed lien, mortgage and
assignment by way of a first priority lien, and a second priority lien on all assets and rights with respect to the account of guarantees
including the funds, the securities, the documents and the notes of others of any type that will be deposited in the account from time
to time, as detailed in the mortgage deed and all of its appendices. |
| 4. |
Lien on the land of the project – A fixed lien and first priority mortgage
and an assignment by way of lien on all of the rights, existing and future, of the pledger with no exceptions, per the development agreement
that was signed between the pledger and the Israel Lands Administration (“ILA”) with respect to the land. |
Note 13 - Share Capital
Composition of the share capital in nominal
values:
|
Number of shares |
||||||||||||
|
December 31 |
||||||||||||
|
Issued and |
Issued and |
|||||||||||
|
Authorized |
paid-in |
paid-in |
||||||||||
|
2022 |
2021 |
|||||||||||
|
Ordinary shares of NIS 1 par value |
500,000 |
10,640 |
10,640 |
|||||||||
See Note 12A(1)(a) regarding an issuance of shares against a conversion
of loans into equity.
Note 14 - General and Administrative Expenses
|
For the year ended December 31 |
||||||||||||
|
2022 |
2021 |
2020 |
||||||||||
|
NIS thousands |
||||||||||||
|
Wages and related expenses |
13,923 |
13,490 |
13,191 |
|||||||||
|
Rental and office maintenance |
2,700 |
2,581 |
2,310 |
|||||||||
|
Profession services |
6,578 |
7,263 |
8,583 |
|||||||||
|
Depreciation |
772 |
919 |
913 |
|||||||||
|
Other |
93 |
8 |
30 |
|||||||||
|
Expenses (income) doubtful debt |
- |
241 |
(101 |
) | ||||||||
|
24,066 |
24,502 |
24,926 |
||||||||||
FD
- 39
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 15 - Financing Income and Expenses, Net
|
Year ended December 31 |
||||||||||||
|
2022 |
2021 |
2020 |
||||||||||
|
NIS thousands |
||||||||||||
|
Financing income |
||||||||||||
|
Net foreign exchange |
31,784 |
- |
- |
|||||||||
|
Revaluation of derivatives |
13,914 |
3,110 |
- |
|||||||||
|
Interest income from bank deposits |
6,433 |
1,584 |
3,056 |
|||||||||
|
Total financing income |
52,131 |
4,694 |
3,056 |
|||||||||
|
Financing expenses |
||||||||||||
|
Revaluation of derivatives |
- |
- |
11,050 |
|||||||||
|
Interest expense on bank loans |
268,802 |
206,328 |
132,763 |
|||||||||
|
Net foreign exchange loss |
- |
8,768 |
11,228 |
|||||||||
|
Bank commissions |
587 |
1,030 |
645 |
|||||||||
|
Lease financing expenses |
1,472 |
1,484 |
1,546 |
|||||||||
|
Other financing expenses |
255 |
1,403 |
196 |
|||||||||
|
Total financing expenses |
271,116 |
219,013 |
157,428 |
|||||||||
|
Net financing expenses |
218,985 |
214,319 |
154,372 |
|||||||||
Note 16 - Financial Instruments
| A. |
Overview |
The Company has exposure to the following risks from its use of
financial instruments:
| ● |
Credit risk |
| ● |
Liquidity risk |
| ● |
Market risk |
This note presents quantitative and qualitative information about
the Company’s exposure to each of the above risks, and the Company’s objectives, policies and processes for measuring and
managing risk.
In order to manage these risks and as described hereunder (see
note 16.E.1), the Company executes transactions in derivative financial instruments. Presented hereunder is the composition of the derivatives:
|
December 31 |
||||||||
|
|
2022 |
2021 |
||||||
|
NIS thousands |
||||||||
|
Derivatives presented
under current liability |
||||||||
|
Forward exchange contracts used for economic
hedge |
- |
(268 |
) | |||||
FD
- 40
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| B. |
Risk management framework |
The Board of Directors has overall responsibility for the establishment
and oversight of the Company risk management framework. The Board has established the Financial Committee, which is responsible for defining
a risk management policy. The committee reports regularly to the Board of Directors on its activities.
| C. |
Credit Risk |
Credit Risk is a risk for a financial loss caused to the company
if the counterparty of the financial instrument fails to meet his contractual obligations.
Cash and cash equivalents
As at December 31, 2022, the Company has cash and cash equivalents
in the amount of NIS 151,481 thousand (December 31, 2021 - NIS 201,860 thousand). The Company’s cash and cash equivalents
are deposited with a financial institution having a high credit rating (international rating scale).
Pledge deposits
The company does not hold pledge deposits.
Restricted deposits
As at December 31, 2022 the Company has deposits in the amount
of NIS 514,543 thousand that are restricted according to the financing agreements (December 31, 2021 – NIS 480,476 thousand). The
Company’s restricted deposits are held with a financial institution having a high credit rating (international rating scale).
Trade and other receivables
(Current assets)
The Company’s exposure to credit risk is influenced mainly
by the individual characteristics of each customer. The Company has established a credit policy under which each new customer is analyzed
individually for credit worthiness, If necessary, the customer will be examined individually again. The Company review includes external
ratings, when available. The collection from the company customers is carried out on a regular basis.
| D. |
Liquidity risk |
Liquidity risk is the risk that the Company will encounter difficulty
in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The
Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company
reputation.
The Company has contractual commitments due to financing agreements,
O&M agreement, the Gas Purchase agreement and the Gas Pipeline agreement. For further information see Note 12.
FD
- 41
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| D. |
Liquidity risk (cont’d) |
The following are the contractual maturities of financial liabilities
at undiscounted amounts and based on the rates at the reporting date, including estimated interest payments.
|
December 31, 2022 |
||||||||||||||||||||||||||||
|
Carrying |
Contractual |
6 months |
More than |
|||||||||||||||||||||||||
|
amount |
cash flows |
or less |
6-12 months |
1-2 years |
2-5 years |
5 years |
||||||||||||||||||||||
|
NIS thousands |
||||||||||||||||||||||||||||
|
Non-derivative financial liabilities
|
||||||||||||||||||||||||||||
|
Trade payables |
228,468 |
228,468 |
228,468 |
- |
- |
- |
- |
|||||||||||||||||||||
|
Other payables |
9,876 |
9,876 |
9,876 |
- |
- |
- |
- |
|||||||||||||||||||||
|
Lease liabilities |
53,937 |
53,937 |
199 |
4,446 |
4,645 |
12,939 |
31,708 |
|||||||||||||||||||||
|
Loans from banks |
2,491,401 |
2,891,099 |
190,630 |
177,477 |
365,859 |
998,116 |
1,159,017 |
|||||||||||||||||||||
|
2,783,682 |
3,183,380 |
429,173 |
181,932 |
370,504 |
1,011,055 |
1,190,725 |
||||||||||||||||||||||
FD
- 42
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| D. |
Liquidity risk (cont’d) |
|
December 31, 2021 |
||||||||||||||||||||||||||||
|
Carrying |
Contractual |
6 months |
More than |
|||||||||||||||||||||||||
|
amount |
cash flows |
or less |
6-12 months |
1-2 years |
2-5 years |
5 years |
||||||||||||||||||||||
|
NIS thousands |
||||||||||||||||||||||||||||
|
Non-derivative financial liabilities |
||||||||||||||||||||||||||||
|
Trade payables |
324,532 |
324,532 |
324,532 |
- |
- |
- |
- |
|||||||||||||||||||||
|
Other payables |
6,067 |
6,067 |
6,067 |
- |
- |
- |
- |
|||||||||||||||||||||
|
Lease liabilities |
53,493 |
53,493 |
296 |
4,329 |
4,622 |
16,134 |
28,112 |
|||||||||||||||||||||
|
Loans from banks |
2,637,538 |
3,162,681 |
211,102 |
170,088 |
355,211 |
1,011,752 |
1,414,528 |
|||||||||||||||||||||
|
3,021,630 |
3,549,773 |
541,997 |
174,417 |
359,833 |
1,027,886 |
1,442,640 |
||||||||||||||||||||||
Bodies that provided financing
for the project’s construction
Credit risk from bodies that provided financing to the Company
for the project’s construction in respect of the financing agreements as described in Note 12A(1). These bodies have a high credit
rating.
| E. |
Market risk |
Market risk is the risk that changes in market prices will affect
the Company’s income. The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimizing the return.
As of December 31, 2022, and since the beginning of commercial
operation of the power plant, the management estimates that the main risks are changes in regulations applicable to the area of operations
as approved by the electricity authority and changes in load, system, and time (“TAOZ”), a change in the gas purchase costs
and other changes in the electricity and gas market, COVID-19 effect, political and security events.
FD
- 43
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| E. |
Market risk (Cont'd) |
| (1) |
Linkage and foreign currency risk |
As a result of the Company's agreement with the construction contractor,
maintenance contractor and the gas suppliers, as described in Note 12, the Company is exposed to changes in the dollar/NIS exchange rate.
In order to reduce this exposure, the Company entered into forward transactions to purchase dollars for NIS. As a result of loans
from banks and shareholders that are linked to the CPI, the Company is exposed to changes in the CPI. To reduce this exposure, the Company
entered forward transactions to purchase CPI.
| (a) |
The exposure to linkage and foreign currency risk |
The Company's exposure to linkage and foreign currency risk is
as follows:
|
December 31, 2022 |
||||||||||||||||||||||||
|
|
Non-financial |
Unlinked |
CPI-linked |
US Dollar linked |
Euro linked |
Total |
||||||||||||||||||
|
|
NIS thousand |
|||||||||||||||||||||||
|
Financial assets and financial liabilities: |
||||||||||||||||||||||||
|
Current assets: |
||||||||||||||||||||||||
|
Cash and cash equivalents |
- |
91,588 |
- |
59,893 |
- |
151,481 |
||||||||||||||||||
|
Trade receivables |
- |
238,581 |
- |
- |
- |
238,581 |
||||||||||||||||||
|
Other receivables |
32,809 |
- |
- |
- |
- |
32,809 |
||||||||||||||||||
|
Non-current assets: |
||||||||||||||||||||||||
|
Restricted deposits |
- |
270,716 |
- |
243,827 |
- |
514,543 |
||||||||||||||||||
|
Prepaid expenses |
32,072 |
- |
- |
- |
- |
32,072 |
||||||||||||||||||
|
Fixed assets |
3,253,196 |
- |
- |
- |
- |
3,253,196 |
||||||||||||||||||
|
Intangible assets |
6,404 |
- |
- |
- |
- |
6,404 |
||||||||||||||||||
|
Right of use assets |
57,486 |
- |
- |
- |
- |
57,486 |
||||||||||||||||||
|
Current liabilities: |
||||||||||||||||||||||||
|
Current maturities of loans from banks |
- |
- |
279,506 |
- |
- |
279,506 |
||||||||||||||||||
|
Current maturities of lease liabilities |
- |
- |
4,645 |
- |
- |
4,645 |
||||||||||||||||||
|
Trade payables |
- |
206,749 |
- |
21,714 |
5 |
228,468 |
||||||||||||||||||
|
Current tax liabilities |
||||||||||||||||||||||||
|
Other accounts payable |
1,563 |
9,876 |
- |
- |
- |
14,439 |
||||||||||||||||||
|
Financial derivatives |
||||||||||||||||||||||||
|
Non-current liabilities: |
||||||||||||||||||||||||
|
Loans from banks |
- |
- |
2,211,895 |
- |
- |
2,211,895 |
||||||||||||||||||
|
Other long-term liabilities |
- |
- |
- |
17,529 |
- |
17,529 |
||||||||||||||||||
|
Long-term lease liabilities |
- |
- |
49,292 |
- |
- |
49,292 |
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Provisions for dismantling and restoration |
50,000 |
- |
- |
- |
- |
50,000 |
||||||||||||||||||
|
Deferred tax liabilities |
215,016 |
- |
- |
- |
- |
215,016 |
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Liabilities for employee benefits, net |
160 |
- |
- |
- |
- |
160 |
||||||||||||||||||
|
Total exposure in statement of financial position in respect of financial assets and
financial liabilities |
3,115,228 |
384,260 |
(2,545,338 |
) |
264,477 |
(5 |
) |
1,218,622 |
||||||||||||||||
FD
- 44
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| E. |
Market risk (cont’d) |
| (1) |
Linkage and foreign currency risks (cont’d) |
| (a) |
The exposure to linkage and foreign currency risk (cont’d) |
The Company's exposure to linkage and foreign currency risk is as follows:
|
|
December 31, 2021 |
||||||||||||||||||||
|
|
Non-financial |
Unlinked |
CPI-linked |
US Dollar linked |
Total |
||||||||||||||||
|
|
NIS thousand5 |
||||||||||||||||||||
|
Financial assets and financial liabilities: |
|||||||||||||||||||||
|
Current assets: |
|||||||||||||||||||||
|
Cash and cash equivalents |
- |
151,323 |
- |
50,537 |
201,860 |
||||||||||||||||
|
Trade receivables |
- |
248,844 |
- |
- |
248,844 |
||||||||||||||||
|
Other receivables |
40,289 |
- |
- |
- |
40,289 |
||||||||||||||||
|
Non-current assets: |
|||||||||||||||||||||
|
Restricted deposits |
- |
268,317 |
- |
212,159 |
480,476 |
||||||||||||||||
|
Prepaid expenses |
33,235 |
- |
- |
- |
33,235 |
||||||||||||||||
|
Fixed assets |
3,378,466 |
- |
- |
- |
3,378,466 |
||||||||||||||||
|
Intangible assets |
6,038 |
- |
- |
- |
6,038 |
||||||||||||||||
|
Right of use assets |
57,530 |
- |
- |
- |
57,530 |
||||||||||||||||
|
Current liabilities: |
|||||||||||||||||||||
|
|
|||||||||||||||||||||
| Current maturities of loans from banks |
- |
- |
280,753 |
- |
280,753 |
||||||||||||||||
|
|
|||||||||||||||||||||
|
Current maturities of lease liabilities |
- |
- |
4,622 |
- |
4,622 |
||||||||||||||||
|
Trade payables |
- |
280,211 |
- |
44,321 |
324,532 |
||||||||||||||||
|
Current tax liabilities |
21,795 |
- |
- |
- |
21,795 |
||||||||||||||||
|
Other accounts payable |
7,100 |
- |
- |
- |
7,100 |
||||||||||||||||
|
Financial derivatives |
- |
- |
- |
268 |
268 |
||||||||||||||||
|
Non-current liabilities: |
|||||||||||||||||||||
|
Loans from banks |
- |
- |
2,356,785 |
- |
2,356,785 |
||||||||||||||||
|
Long-term lease liabilities |
15,834 |
- |
- |
- |
15,834 |
||||||||||||||||
|
|
- |
- |
48,871 |
- |
48,871 |
||||||||||||||||
|
Provisions for dismantling and restoration |
50,000 |
- |
- |
- |
50,000 |
||||||||||||||||
|
Deferred tax liabilities |
|||||||||||||||||||||
|
|
192,676 |
- |
- |
- |
192,676 |
||||||||||||||||
|
Liabilities for employee benefits, net |
160 |
- |
- |
- |
160 |
||||||||||||||||
|
Total exposure in statement of financial position in respect of financial assets and
financial liabilities |
3,227,993 |
388,273 |
(2,691,031 |
) |
218,107 |
1,143,342 |
|||||||||||||||
FD
- 45
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| E. |
Market risk (cont’d) |
| (1) |
Linkage and foreign currency risks (cont’d) |
| (a) |
The exposure to linkage and foreign currency risk (cont’d) |
The Company’s exposure to foreign currency risk due to
derivative financial instruments is as follows:
|
December 31, 2021 |
|||||||||||||
|
Currency/ |
Currency/ |
Principal |
Dates | ||||||||||
|
linkage |
linkage |
amount in |
range of |
|
|||||||||
|
receivable |
payable |
$ millions |
expiration |
Fair value |
|||||||||
|
NIS thousands |
|||||||||||||
|
Instruments used
|
|||||||||||||
|
Economic Hedge:
|
|||||||||||||
|
Forward foreign |
31.01.2022 |
||||||||||||
|
currency contracts |
US dollars |
NIS |
34 |
31.12.2022 |
(268 |
) | |||||||
| (b) |
Sensitivity analysis |
A change as at December 31 in the exchange rates of the following
currencies against the NIS, as indicated below, and a change in the CPI would have increased (decreased) profit or loss and equity by
the amounts shown below. This analysis is based on foreign currency exchange rate and CPI variances that the Company considered to be
reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain
constant.
|
December 31, 2022 |
December 31, 2021 |
|||||||||||||||
|
Increase |
Decrease |
Increase |
Decrease |
|||||||||||||
|
Profit or loss |
Profit or loss |
Profit or loss |
Profit or loss |
|||||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
NIS thousands |
|||||||||||||
|
Change in the exchange rate of: |
||||||||||||||||
|
5% in the US dollar (1) |
15,186 |
(15,186 |
) |
13,135 |
(13,135 |
) | ||||||||||
|
10% in the U.S. dollar (1) |
30,372 |
(30,372 |
) |
26,270 |
(26,270 |
) | ||||||||||
|
1% change in CPI (2) |
(24,914 |
) |
24,914 |
(26,375 |
) |
26,375 |
||||||||||
|
2% change in CPI (2) |
(49,828 |
) |
49,828 |
(52,751 |
) |
52,751 |
||||||||||
| (1) |
The sensitivity derives mainly from balances of cash, restricted deposits, derivatives and balances of trade and other payables in
foreign currency. |
| (2) | The effect of the change on equity is the same as in profit or loss. |
FD
- 46
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 16 - Financial Instruments (cont’d)
| F. |
Fair value |
| (1) |
Fair values versus carrying amounts |
The carrying amounts of certain financial assets and liabilities,
including cash and cash equivalents, other accounts receivable, pledged deposits, derivative financial instruments, trade payables, long
term loans from related parties and other accounts payable are the same or proximate to their fair value.
The fair values of the financial liabilities, together with
the carrying amounts shown in the statement of financial position, are as follows:
|
December 31 |
||||||||||||||||
|
2022 |
2021 |
|||||||||||||||
|
Carrying |
Fair |
Carrying |
Fair |
|||||||||||||
|
amount |
value |
amount |
value |
|||||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
NIS thousands |
|||||||||||||
|
Long-term loans from banks (*) |
2,491,401 |
2,477,757 |
2,637,538 |
2,728,343 |
||||||||||||
| (*) |
Including current maturities. |
| (2) |
Interest rates used for determining fair value |
The interest rates used to discount estimated cash flows, when
applicable, are based on the government yield curve at the reporting date (level 2 on fair value hierarchy) plus an adequate credit spread,
and were as follows:
|
December 31 |
||||||||
|
2022 |
2021 |
|||||||
|
% |
% |
|||||||
|
Long-term loans from banks |
3.3 |
% |
3.3 |
% | ||||
(3) Fair
value hierarchy
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined as follows:
| ● |
Level 1: quoted prices (unadjusted) in active markets for identical instruments |
| ● |
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly |
| ● |
Level 3: inputs that are not based on observable market data (unobservable inputs). |
|
December 31, 2021 |
||||||||||||||||
|
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
NIS thousands |
|||||||||||||
|
Derivatives used for hedging: |
||||||||||||||||
|
Forward foreign currency contracts |
- |
(268 |
) |
- |
(268 |
) | ||||||||||
FD
- 47
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 17 - Lease
The Company applies IFRS 16, Leases, as from
January 1, 2019. The Company has lease agreements with respect to the following items:
| (1) |
Land |
| (2) |
Offices |
| (1) |
Information regarding material lease agreements |
| (a) |
The Company leases land from EAIS for a period of 25 years during which the Company established a power station. The contractual
period ends on May 20, 2039. The total liability for the lease and the right of use assets recognized in the statement of financial position
as of December 31, 2022, for the lease was approximately NIS 52,896 thousand and NIS 56,464 thousand respectively. |
Following an agreement signed with the EAIS, regarding the land
lease, the Company paid NIS 3,047 thousand for its share of the lease payments paid by the EAIS to the ILA. This amount was capitalized
to the right of use assets and amortized during the lease period, see Note 12A (2).
| (b) |
The Company leases offices from Africa Israel for a period of 5 years with extension options, the extension periods end on December
8, 2022. On February 28, 2022, the company signed the extension of the agreement until June 30, 2025. The total liability for the lease
and the right of use assets recognized in the statement of financial position as of December 31, 2022, for the lease of the offices is
approximately NIS 1,041 thousand and approximately NIS 1,022 thousand respectively. |
| (2) |
Right-of-use assets |
| (a) |
Composition and changes |
|
Land * |
offices |
Total |
||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
||||||||||
|
Balance as at January 1, 2021 |
58,991 |
1,122 |
60,113 |
|||||||||
|
Depreciation on right-of- use assets |
(3,231 |
) |
(585 |
) |
(3,816 |
) | ||||||
|
Index on right-of-use assets |
1,212 |
21 |
1,233 |
|||||||||
|
Balance as at January 1, 2022 |
56,972 |
558 |
57,530 |
|||||||||
|
Addendum to office rental agreement |
- |
797 |
797 |
|||||||||
|
Depreciation on right-of- use assets |
(3,345 |
) |
(398 |
) |
(3,743 |
) | ||||||
|
Index on right-of-use assets |
2,837 |
65 |
2,902 |
|||||||||
|
Balance as at December 31, 2022 |
56,464 |
1,022 |
57,486 |
|||||||||
* The balance of land includes the classification of prepayment of lease payments,
see above in Note 17 (1) a.
FD
- 48
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 17 - Lease (cont’d)
| (3) |
Lease liability |
Maturity analysis of the Company lease liabilities
|
December 31, 2022 |
||||
|
NIS thousands |
||||
|
Less than one year |
4,645 |
|||
|
One to five years |
21,829 |
|||
|
More than five years |
27,463 |
|||
|
Total |
53,937 |
|||
|
Current maturities of lease liability |
4,645 |
|||
|
Long-term lease liability |
49,292 |
|||
|
Total |
53,937 |
|||
| (4) |
Additional information on leases |
|
Year ended December 31, 2022 |
Year ended December 31, 2021 |
Year ended December 31, 2020 |
||||||||||
|
NIS thousands |
NIS thousands |
NIS thousands |
||||||||||
|
(a) Amounts
recognized in profit or loss |
||||||||||||
|
Interest expenses on lease liability |
1,472 |
1,484 |
1,546 |
|||||||||
|
Year ended December 31, 2022 |
Year ended December 31, 2021 |
|||||||
|
NIS thousands |
NIS thousands |
|||||||
|
(a) Amounts
recognized in the statement of cash flows |
||||||||
|
Cash outflow for leases |
4,726 |
4,624 |
||||||
FD
- 49
Dorad Energy Ltd.
|
Notes to the Financial Statements as at December 31, 2022 |
Note 18 - Related and Interested Parties
Transactions with related and interested parties
Details of transactions with related and interested parties are
presented below (all the transactions are at market terms):
|
Year ended December 31 |
December 31 |
||||||||||||||||||||
|
2022 |
2021 |
2020 |
2022 |
2021 |
|||||||||||||||||
|
Related party/Interested party
|
Nature of transaction |
Transactions amounts |
Outstanding balance |
||||||||||||||||||
|
Parties having significant influence |
On December 2017 the Company entered into an agreement with Edeltech O&M Ltd regarding
operation and maintenance of the power plant including the purchasing of spare parts |
221,847 |
178,770 |
170,765 |
22,471 |
26,772 |
|||||||||||||||
|
Parties having significant influence |
The Company entered into an agreement with EAPSS regarding operation and maintenance
of the power plant including the purchasing of spare parts and repairs as from November 2012 see Note 12A(10). The payments will be made
on a monthly basis throughout the period of the agreement. See Note 12A(3)) regarding a subcontracting agreement between EAPSS and Ezom
Ltd. As of December 2017, the agreement is directly with Edeltech. From November 2022, the agreement was converted to EAIS.
|
3,458 |
3,336 |
3,310 |
- |
- |
|||||||||||||||
|
Parties having significant influence |
The Company entered into a lease agreement of the land for the power plant (see Note 12A(2)). |
4,124 |
4,019 |
4,056 |
- |
- |
|||||||||||||||
|
Related Party |
The Company engage with Ramat Negev Energy for purchase electricity and gas.
|
13,356 |
1,838 |
1,594 |
- |
- |
|||||||||||||||
|
Key management personnel |
Salary and benefits for the company Key management personnel |
5,694 |
5,446 |
5,621 |
2,049 |
1,964 |
|||||||||||||||
Note 19 - Subsequent Events
| A. |
On January 26, 2023, the PUA published an update of the aforementioned decision according to which the average production component
decreased by approximately 1.2% compared to the aforementioned rate. On March 26, 2023, the PUA published an update of the aforementioned
decision according to which the average production component decreased by about 1.4% compared to the rate in the previous decision, which
came into effect as of April 1, 2023, and for the rest of 2023. |
| B. |
On January 12, 2023, a demand for compensation was sent to the company maintenance contractor for damages in the amount of approximately
USD 4.6 million caused to the company due to a malfunction caused in January 2022 to one of the company gas turbines. On February 5, 2023,
the maintenance contractor rejected the company demand. On February 27, 2023, the company decided to trigger the arbitration mechanism
under the operation and maintenance agreement between the parties. On May 1, 2023, A preliminary meeting was held with the agreed arbitrator,
in which dates were set for meetings at the beginning of 2024 (note 12.A.10). |
| C. |
Regarding the insurance amounts received from the insurance companies after the reporting
date in the amount of approximately NIS 21 million (approximately USD 6 million), see note 12.A.10. |
| D. |
On January 8, 2023, Alon Gat announced the termination of the agreement with the company on March 31, 2023 (note 12.A.11).
|
Exhibit 12.1
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
I, Ran Fridrich, certify that:
|
1.
|
I have reviewed this amendment no. 1 to annual report on Form 20-F of Ellomay Capital Ltd.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| (c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
|
|
5.
|
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
Date: June 29, 2023
|
/s/ Ran Fridrich
|
||
|
Ran Fridrich
|
||
|
Chief Executive Officer
|
Exhibit 12.2
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
I, Kalia Rubenbach, certify that:
|
1.
|
I have reviewed this amendment no. 1 to annual report on Form 20-F of Ellomay Capital Ltd.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4.
|
The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
|
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
| (c) |
Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
|
| (d) |
Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
|
|
5.
|
The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
|
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
|
Date: June 29, 2023
|
/s/ Kalia Rubenbach
|
||
|
Kalia Rubenbach
|
||
|
Chief Financial Officer
|
Exhibit 13
Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of
1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
In connection with Amendment No. 1 of the Annual Report on Form 20-F of Ellomay Capital Ltd. (the “Company”) for
the year ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers of the Company hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the
Sarbanes-Oxley Act of 2002, that:
| A) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
| B) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Ran Fridrichy
|
||
|
Ran Fridrich
|
||
|
Chief Executive Officer
|
||
|
/s/ Kalia Rubenbach
|
||
|
Kalia Rubenbach
|
||
|
Chief Financial Officer
|
Date: June 29, 2023
Exhibit 15.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statements (Nos. 333-187533, 333-102288 and
333-92491) on Form S-8 and (Nos. 333-199696 and 333-144171) on Form F-3 of Ellomay Capital Ltd. of our report dated June 21, 2023, with respect to the financial statements of Dorad Energy Ltd. which report appears in the Form 20-F/A of Ellomay
Capital Ltd. dated June 29, 2023.
/s/ Somekh Chaikin
Somekh Chaikin
Member Firm of KPMG International
Tel-Aviv, Israel
June 29, 2023