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Financial Instruments
 12 Months Ended
Dec. 31, 2024
Disclosure of detailed information about financial instruments [abstract]  
Financial Instruments
Note 28 - Financial Instruments
 
  A.
Financial risk management policy 
 
The Group’s overall risk management policy focuses on activities to minimize possible negative effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge against certain risk exposures.
 
The individual responsible for the management of market risks in the Company is the Company’s CFO, who reports to the board of directors and to the financial statements review committee from time to time regarding his activities, in order to reduce the Company’s market risks, and the impact thereof on its operating results. 
 
The Company’s policy is to reduce the various risks to the extent feasible. The Company directs risk management towards economic exposure if there is a discrepancy between that exposure and the accounting exposure. 
 
The CFO also reports to the required organs in the Company on an ongoing basis regarding the status of the Company’s liquid balances and the balances of its liabilities, and regarding the composition thereof. 
 
The Company’s activities expose it to various financial risks, as follows:
 
  (1)
Changes in foreign currency exchange rates 
 
Some of the Company’s costs involved in project construction, finance costs, transactions and revenues are denominated in foreign currency, and the Company is therefore exposed to changes in those exchange rates, which affect the feasibility and profitability of the projects. The Company evaluates and makes use, from time to time, of derivative financial instruments, mostly forward transactions and currency options (hedging transactions”), to hedge its economic exposure to changes in foreign currency exchange rates. The derivative financial instrument below is treated under accounting hedging. 
 
​
​
​
 
​
 
Amount 
 receivable in 
 transaction 
 currency
​
​
Amount
 payable in 
 transaction 
 currency
​
​
 
 
​
Fair value
​
​
​
Project​
​
​
Millions
​
​
Millions
​
​
Expiration date​
​
​
USD millions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts (1)
​
​
PV+Storage
​
​
USD 3.6
​
​
NIS 13.2
​
​
January 2025
​
​
0.01
 
  (1)
Hedging transaction to hedge against the USD/NIS exchange rate, based on the schedule of payments to the main contractors of the projects.

 

   
Presented below is a sensitivity analysis which includes current balances of monetary items denominated in foreign currency, and which adjusts the translation thereof at the end of the period, to changes in the foreign currency exchange rate. The sensitivity analysis also includes loans to foreign operations in the Group which are denominated in a currency other than the currency of the lender or the borrower, which do not constitute a part of the net investment in the foreign operation (hereinafter: “loans to foreign operation”). The Company is also exposed to the equity in respect of its share in consolidated companies with a different functional currency from the Company’s functional currency (hereinafter: the “equity of foreign operation”). This exposure is carried to other comprehensive income (hereinafter: “OCI”). 
 
 
  
As of December 31, 2024
  
 
  
Increase 5%
          
Decrease 5%
  
 
  
OCI
    
Pre-tax profit
    
Value
    
Pre-tax profit
    
OCI
  
5% Change in the currency exchange rate
  
USD in thousands
  
 
                              
NIS vs EURO
                              
Loans to foreign operations
    
-
      
(626
)
    
12,511
      
626
      
-
  
 
                                        
Equity of foreign operations
                                        
NIS vs EURO
    
(41,569
)
    
-
      
831,371
      
-
      
41,569
  
NIS vs HUF
    
(462
)
    
-
      
9,249
      
-
      
462
  
Total effect OCI
    
(42,031
)
    
-
      
840,620
      
-
      
42,031
  
 
 
  
As of December 31, 2023
  
 
  
Increase 5%
            
Decrease 5%
  
 
  
OCI
    
Pre-tax profit
    
Value
    
Pre-tax profit
    
OCI
  
5% Change in the currency exchange rate
  
USD in thousands
  
 
                                        
NIS vs EURO
                                        
Loans to foreign operations
    
-
      
(803
)
    
16,052
      
803
      
-
  
 
                                        
Equity of foreign operations
                                        
NIS vs EURO
    
(43,583
)
    
-
      
871,663
      
-
      
43,583
  
NIS vs HUF
    
(367
)
    
-
      
7,345
      
-
      
367
  
Total effect on OCI
    
(43,950
)
    
-
      
879,008
      
-
      
43,950
  
 
  (2)
Change in index
 
Consolidated entities in Israel have revenues from electricity which are determined according to a tariff which is updated once per year in accordance with the consumer price index. On the other hand, loans taken out by consolidated entities were made, as much as possible, with the same linkage as the linkage to the electricity tariff. The Company also extended loans to investee entities and liability in respect of deferred consideration arrangement, which are linked to the consumer price index.
 
The following table presents the group's sensitivity to the index – the effect of a 3% change in the index:
 
 
  
As of December 31, 2024
  
 
  
Increase 3%
          
Decrease 3%
  
 
  
Pre-tax profit
    
Carrying value
    
Pre-tax profit
  
3% Change in the index rate
  
USD in thousands
  
 
                  
Loans to non-controlling interests
    
183
      
6,115
      
(183
)
Loans from banks and other financial institutions
    
(22,625
)
    
(754,163
)
    
22,625
  
Loans from non-controlling interests
    
(35
)
    
(1,173
)
    
35
  
Other financial liabilities
    
(74
)
    
(2,480
)
    
74
  
 
                        
 
    
(22,551
)
    
(751,701
)
    
22,551
  
 
 
  
As of December 31, 2023
  
 
  
Increase 3%
          
Decrease 3%
  
 
  
Pre-tax profit
    
Carrying value
    
Pre-tax profit
  
3% Change in the index rate
  
USD in thousands
  
 
      
Contract assets
    
2,982
      
99,416
      
(2,982
)
Loans to investee entities
    
188
      
6,264
      
(188
)
Loans to non-controlling interests
    
158
      
5,267
      
(158
)
Loans from banks and other financial institutions
    
(24,965
)
    
(816,087
)
    
23,972
  
Other financial liabilities
    
(78
)
    
(2,591
)
    
78
  
 
                        
 
    
(21,715
)
    
(707,731
)
    
20,722
  
 
  (B)
Financial risk factors
 
  (1)
Interest rate risk
 
Change in interest rates
 
Interest rate risk is due to loans bearing variable interest rates, which expose the Company to cash flow risk.
 
The following table presents the group's values of financial instruments which are exposed to cash flow risks in respect of interest rate changes which are not hedged in interest rate swap transactions and their sensitivity to the change of interest rate – the effect of a 2% change in the interest rate:
 
   
As of December 31, 2024
  
 
  
Increase 2%
    
Carrying
    
Decrease 2%
  
 
  
Pre-tax profit
    
value
    
Pre-tax profit
  
2% Change in the interest rate
  
USD in thousands
  
 
                  
Euribor-linked loan from banks (*)
    
(510
)
    
(142,123
)
    
510
  
SOFR-linked credit and loans from banks (*)
    
-
      
(206,379
)
    
-
  
Loans to investees with variable interest
    
219
      
10,951
      
(219
)
 
                        
 
    
(291
)
    
(337,551
)
    
291
  
 
 
  
As of December 31, 2023
  
 
  
Increase 2%
    
Carrying
    
Decrease 2%
  
 
  
Pre-tax profit
    
value
    
Pre-tax profit
  
2% Change in the interest rate
  
USD in thousands
  
 
                  
Euribor-linked loan from banks
    
(1,805
)
    
(90,259
)
    
1,805
  
SOFR-linked loans from banks (*)
    
-
      
(116,151
)
    
-
  
 
                        
 
    
(1,805
)
    
(206,410
)
    
1,805
  
 
  (*)
The company has loans which are linked to the SOFR interest rate and loans linked to the Euribor interest rate. The loans are used to finance projects under construction. Interest expenses during the construction period are capitalized to the cost of the facilities and have no impact on the Company’s results.

 

   
Interest rate swaps:
 
Through interest rate swaps, the Group engages in contracts to swap the differences between the amounts of fixed and variable interest rates, which are calculated in respect of agreed-upon stated principal amounts. These contracts allow the Group to reduce the cash flow exposure of debt issued at variable interest. The fair value of the interest rate swaps at the end of the reporting period is determined by discounting the future cash flows using the yield curves at the end of the reporting period, and the credit risk in the contract.
 
All interest rate swaps which replace variable interest rates with fixed interest rates are intended to hedge cash flows in order to reduce the Group’s exposure to cash flows from variable interest rates on loans.
 
The following table specifies the interest rate swap contracts which were designated as hedging instruments, which exist as of the end of the reporting period:
 
 
Interest rates
Par value
Final
Carrying value
Hedged contract
Original
After hedging
In thousands
repayment date
USD in thousands
Loan to finance the Lukovac project
3 month Euribor
0.75%
 EUR 15,807
(USD 16,455)
31/03/2031
728
Loan to finance the Picasso project
3 month Euribor
1.08%
EUR 66,974
(USD 69,718)
31/03/2039
4,202
Loan to finance the Gecama project
6 month Euribor
0.147%
EUR 131,801
(USD 137,200)
30/06/2035
18,728
Loan to finance the Attila projects
3 month
Bubor
1.445%-3.7%
HUF 11,732,624
(USD 29,782)
31/12/2030
4,152
Loan to finance the Bjorn project
6 month Euribor
0.526%
EUR 155,739
(USD 162,119)
28/12/2040
22,019
Loan to finance the Raaba ACDC project
3 month Euribor
2.908%
EUR 8,161
(USD 8,496)
30/12/2033
(334)
Loan to finance the Raaba Flow project
3 month Euribor
2.809%
EUR 18,160
(USD 18,903)
30/12/2033
(639)
Loan to finance the Pupin project
3 month Euribor
2.987%
EUR 54,726
(USD 56,968)
31/03/2040
(3,482)
Loan to finance the Atrisco project - PV
6 month
SOFR
4.0712%
USD 121,444
30/09/2049
(482)
Loan to finance the Atrisco project - BESS
6 month
SOFR
4.1049%
USD 177,771
30/09/2049
(1,222)
   
 
During the years 2024, 2023 and 2022, profit (loss) net of tax in the amount of USD (81) thousand, USD (23,380) thousand and USD 61,853, respectively, were recognized under other comprehensive income, in respect of the effectiveness of the cash flow hedge as a hedge against the cash flow risk in respect of interest rates.
 
  (2)
Credit risk
 
Credit risk refers to the risk that the counterparty will not fulfill its contractual obligations, and will cause the Group to incur financial loss. Upon the initial engagement, the Group estimates the quality of the credit which is given to the customer. The restrictions which are attributed to the Group’s customers are evaluated once per year, or more frequently, based on new information which has been received, and on its fulfillment of previous debt payments.
 
The Group measures the credit loss provision in respect of trade receivables according to the probability of insolvency throughout the instrument’s entire lifetime, and for contract assets in respect of concession arrangements (see Note 9) according to the probability of insolvency during the coming 12 months. In light of the fact that the Company’s customers are large, financially strong entities, mostly with regulatory support, the probability of insolvency is low, and the Company believes that the expected credit losses in respect of them are insignificant.
 
The Company deposits its balance of liquid financial assets in bank deposits and in securities. All the deposits are with a diversified group of leading banks preferably with banks that provide loans to the Company.
 
  (3)
Liquidity risk
 
The cash flow forecast is prepared by the Company’s finance department, both on the level of the various entities in the Group, and in consolidated terms. The finance department evaluates current forecasts of liquidity requirements in the Group in order to verify that sufficient cash is available for operating requirements, and while ensuring that the Company does not deviate from the credit facilities and financial covenants in respect of its credit facilities.
 
The Group’s forecasts take into account several factors, such as financing sources for expected investments and for debt service, which include, inter alia, cash flows from operating activities and from the realization of projects which the Company owns, and raisings of equity and debt which include, inter alia, rights issues, long-term loans and debentures. The Group’s forecasts also take into account the fulfillment of obligatory financial covenants, the fulfillment of certain liquidity ratio targets, and the fulfillment of external requirements such as laws or regulations, when relevant.
 
The cash surplus which is held by the Group’s entities, which are not required in order to finance the activity as part of working capital, are invested in stable investment channels such as fixed period deposits, and other stable channels. These investment channels are chosen according to the desired repayment period, or according to their liquidity, such that the Group has sufficient cash balances, in accordance with the foregoing forecasts.
 
   
Presented below are details regarding the Company’s liabilities segmented by repayment years, except for current items in the statement of financial position, such as trade and other payables, which are expected to be repaid according to their carrying values during the coming year:
 
 
  
As of December 31, 2024(**)
  
 
                                
After
        
 
  
2025
    
2026
    
2027
    
2028
    
2029
    
2029
    
Total
  
 
  
USD
in thousands
    
USD
in thousands
    
USD
in thousands
    
USD
in thousands
    
USD
in thousands
    
USD
in thousands
    
USD
in thousands
  
Liability in respect of deferred consideration arrangement
    
(409
)
    
(352
)
    
(352
)
    
(352
)
    
(352
)
    
(2,148
)
    
(3,965
)
Liability in respect of put option
    
-
      
(24,961
)
    
-
      
-
      
-
      
-
      
(24,961
)
Loans from non-controlling interests
    
(10,573
)
    
(11,034
)
    
(9,683
)
    
(10,390
)
    
(10,084
)
    
(35,259
)
    
(87,023
)
Debentures(*)
    
(57,091
)
    
(163,601
)
    
(166,960
)
    
(103,867
)
    
(163,784
)
    
-
      
(655,303
)
Credit and loans from banks and other financial institutions (*)
    
(192,606
)
    
(193,499
)
    
(240,784
)
    
(262,858
)
    
(187,570
)
    
(1,796,531
)
    
(2,873,848
)
Liability in respect of tax equity arrangements
    
(10,536
)
    
(10,234
)
    
(10,253
)
    
(10,194
)
    
(9,884
)
    
(131,960
)
    
(183,061
)
Lease liability (*)
    
(14,114
)
    
(13,801
)
    
(15,097
)
    
(14,992
)
    
(15,001
)
    
(336,946
)
    
(409,951
)
 
                                                        
 
    
(285,329
)
    
(417,482
)
    
(443,129
)
    
(402,653
)
    
(386,675
)
    
(2,302,844
)
    
(4,238,112
)
 
  (*)
The above figures are presented according to their par values on the repayment date, including unaccrued interest, linked to the CPI / exchange rate as of the balance sheet date.
  (**)
The Company has commitments in power purchase agreements which are not reflected in the Company’s statement of financial position.
 
  C.
Fair value
 
  (1)
Details of assets and liabilities which are measured in the statement of financial position at fair value:
 
For the purpose of measuring the fair value of assets or liabilities, the Group classifies them according to a hierarchy which includes the following three levels:
 
  -
Level 1: Quoted (unadjusted) prices in active markets for identical properties or identical liabilities as those to which the entity has access on the measurement date.
 
  -
Level 2: Inputs, except for quoted prices which are included in level 1, which are observable in respect of the asset or liability, directly or indirectly.
 
  -
Level 3: Unobservable inputs in respect of the asset or liability.
 
   
The classification of assets or liabilities which are measured at fair value is based on the lowest level at which significant use was made for the purpose of measuring the fair value of the asset or liability, in their entirety.
 
Presented below are details regarding the Group’s assets and liabilities which are measured in the Company’s statement of financial position at fair value periodically, in accordance with their measurement levels.
 
Details regarding fair value measurement at Level 3
 
 
 
Valuation method for
Financial instrument
 
determining fair value
Non-marketable shares measured at fair value through profit or loss
 
Fair value measured using a valuation method that includes the discounted cash flow method
 
 
 
Performance-based (“earn out”) contingent consideration
 
Fair value measured using the discounted cash flow method
 
   
The tables hereunder presents the fair value of the financial instruments that are measured at fair value in accordance to the fair value hierarchy:
 
As of December 31, 2024:
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Total
 
 
 
USD
in thousands
 
 
USD
in thousands
 
 
USD
in thousands
 
 
USD
in thousands
 
Financial Assets at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
Non-marketable shares measured at fair value through profit or loss
 
 
-
 
 
 
-
 
 
69,216
 
 
 
69,216
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps          
 
 
-
 
 
 
55,118
 
 
-
 
 
 
55,118
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities at fair value:
                              
                               
Contracts in respect of forward transactions
 
 
-
 
 
 
(10
)
 
 
-
 
 
 
(10
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transactions to peg electricity prices swap (CFD differences contract)
 
 
-
 
 
 
(4,123
)
 
 
-
 
 
 
(4,123
)
                                 
Interest rate swaps          
 
 
-
 
 
 
(11,448
)
 
 
-
 
 
 
(11,448
)
 
   
As of December 31, 2023:
 
 
  
Level 1
    
Level 2
    
Level 3
    
Total
  
 
  

USD in thousands

    
USD in thousands
    
USD in thousands
    
USD in thousands
  
Financial Assets at fair value:
                        
Contracts in respect of forward transactions
    
-
      
171
      
-
      
171
  
 
                                
Interest rate swaps          
    
-
      
63,208
      
-
      
63,208
  
 
                                
Non-marketable shares measured at fair value through profit or loss
    
-
      
-
      
53,466
      
53,466
  
 
                                
Transactions to peg electricity prices swap (CFD differences contract)
    
-
      
11,384
      
-
      
11,384
  
                                 
Financial liabilities at fair value:
                                
 
                                
Interest rate swaps          
    
-
      
(7,217
)
    
-
      
(7,217
)
 
                                
Performance-based contingent consideration (“Earn Out”), see Note 8A(1)
    
-
      
-
      
(22,941
)
    
(22,941
)
                                 
Deal contingent hedge
    
-
      
(5,539
)
    
-
      
(5,539
)
 
   
The table hereunder presents a reconciliation from the opening balance to the closing balance of financial instruments carried at fair value level 3 of the fair value hierarchy:
 
 
  
2024
    
2023
  
 
  
Financial assets
  
Non-marketable shares measured at fair value through profit or loss
  
USD thousands
  
Balance as of January 1
    
53,466
      
42,918
  
Investment
    
14,707
      
5,682
  
Revaluation (*)
    
4,580
      
2,940
  
Translation differences
    
(3,537
)
    
1,926
  
Balance as of December 31
    
69,216
      
53,466
  
 
 
  
2024
    
2023
  
 
  
Financial liabilities
  
Performance-based (“earn out”) contingent consideration
  
USD thousands
  
Balance as of January 1
    
(22,941
)
    
(52,972
)
Revaluation
    
(403
)
    
25,377
  
Repayment
    
23,344
      
4,654
  
Balance as of December 31
    
-
      
(22,941
)
 
  (*)
Under financing income and expenses.

 

  (2)
Fair value of items which are not measured at fair value in the statement of financial position:
 
Except as specified in the following table, the Company believes that the carrying value of items which are not measured at fair value, including loans from non-controlling interests, is approximately identical to their fair value.
 
 
  
  
  
Carrying value
    
Fair value
  
 
  
  
  
As of December 31
    
As of December 31
  
 
  
Fair value level
  
2024
    
2023
    
2024
    
2023
  
 
  
  
  
USD in thousands
    
USD in thousands
    
USD in thousands
    
USD in thousands
  
Debentures
  
Level 1
    
616,334
      
454,091
      
601,511
      
430,889
  
 
  
 
                                
Loans from banks and other financial institutions (1)
  
Level 3
    
1,254,996
      
1,305,642
      
1,018,890
      
876,561
  
 
  
 
                                
Liability in respect of deferred consideration arrangement (1)
  
Level 3
    
2,480
      
2,591
      
2,562
      
3,019
  
 
  (1)
Fair value is determined according to the present value of future cash flows, discounted by an interest rate which reflects, according to the assessment of management, the change in the credit margin and risk level which occurred during the period.
 
D.
Other financial assets, Other financial liabilities and Financial liabilities through profit or loss
 
 
  
December 31
    
December 31
  
 
  
2024
    
2023
  
 
  
USD in thousands
    
USD in thousands
  
Current assets
            
Other financial assets
            
Contracts in respect of forward transactions
    
-
      
171
  
Interest rate swaps
    
975
      
805
  
Loans to non-controlling interests (3)
     446       -  
Non-current assets
                
Other financial assets
                
Loans to non-controlling interests
    
5,669
      
4,834
  
Transactions to peg electricity prices swap (CFD differences contract)
    
-
      
11,384
  
Interest rate swaps
    
54,143
      
63,208
  
 
                
 
    
60,787
      
80,402
  
Current liabilities
                
Other financial liabilities
                
Transactions to peg electricity prices swap (CFD differences contract)
    
(4,122
)
    
-
  
Interest rate swaps
    
(591
)
    
(154
)
Liability in respect of tax equity arrangement
    
(3,418
)
    
(1,070
)
Contracts in respect of forward transactions
    
(10
)
    
-
  
Financial liabilities through profit or loss
                
Performance-based contingent consideration (“Earn Out”) (1)
    
-
      
(13,860
)
Liability in respect of deferred consideration arrangement (2)
    
(184
)
    
(180
)
Non-current liabilities
                
Other financial liabilities
                
Interest rate swaps
    
(10,857
)
    
(7,868
)
Deal contingent hedge
    
-
      
(5,539
)
Liability in respect of tax equity arrangement
    
(97,008
)
    
(48,613
)
Financial liabilities through profit or loss
                
Liability in respect of deferred consideration arrangement (2)
    
(2,296
)
    
(2,411
)
Performance-based contingent consideration (“Earn Out”) as well as the founder’s put option (1)
    
(23,548
)
    
(32,113
)
 
                
 
    
(142,033
)
    
(111,808
)
 
  (1)
For additional details, see Note 8A(1).
 
  (2)
The Company has liabilities in respect of deferred consideration arrangements for initiation services which were provided by some of the towns in Halutziot project. In exchange for the initiation services, those towns are entitled to a percentage of the distributable free cash flows, as defined in the agreement. The balance of the liability in respect of the deferred consideration arrangement including current maturities (see also Note 12), as of December 31, 2024 and 2023, amounted to USD 2,480 thousand and USD 2,591 thousand, respectively.
 
  (3)
The current maturities related to Loans to non-controlling interests included in Other receivables in the Consolidated Statements of Financial Position.