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|  |  |
|--|--|

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|  | ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--|---------|------------------------------------------------------------------------------------------------|

|  | ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016 |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------|

|  | ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--|---------|------------------------------------------------------------------------------------------|

|  | ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report...... For the transition period from __________________ to __________________ |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Title of each class                            |   | Name of each exchange on which registered |
|------------------------------------------------|--------|-------------------------------------------|
| Ordinary Shares, par value NIS 10.00 per share |   | NYSE MKT                                  |

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| 1 | Does not include a total of 256,184 ordinary shares held at that date as treasury shares under Israeli law, all of which were repurchased by Ellomay. For so long as such treasury shares are owned by Ellomay they have no rights and, accordingly, are neither eligible to participate in or receive any future dividends which may be paid to Ellomay’s shareholders nor are they entitled to participate in, be voted at or be counted as part of the quorum for, any meetings of Ellomay’s shareholders. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Introduction          |   | 6 |
|----------------------------|--------|---|
| Forward-Looking Statements |   | 7 |

|    Part I |
|---------------------|
|                |
| Item 1:             | Identity of Directors, Senior Management and Advisers |   | 9 |
|                |   |   |   |
| Item 2:             | Offer Statistics and Expected Timetable |   | 9 |
|                |   |   |   |
| Item 3:             | Key Information |   | 9 |
|                | Selected Financial Data | 9 |
|                | Capitalization and Indebtedness | 11 |
|                | Risk Factors | 11 |

| Item 4:  | Information on Ellomay             |   | 29 |
|----------|------------------------------------|--------|----|
|     | History and Development of Ellomay | 29     |
|     | Business Overview                  | 32     |
|     | Organizational Structure           | 83     |
|     | Property, Plants and Equipment     | 84     |
|     |                               |   |
| Item 4A: | Unresolved Staff Comments          | 87     |

| Item 5: | Operating and Financial Review and Prospects         |   |   87 |
|---------|------------------------------------------------------|--------|-----------|
|    | Operating Results                                    | 87     |
|    | Liquidity and Capital Resources                      | 93     |
|    | Research and Development, Patents and Licenses, Etc. | 102    |
|    | Trend Information                                    | 102    |
|    | Off-Balance Sheet Arrangements                       | 103    |
|    | Contractual Obligations                              | 103    |

| Item 6: | Directors, Senior Management and Employees |   |   104 |
|---------|--------------------------------------------|--------|------------|
|    | Directors and Senior Management            |   | 104        |
|    | Compensation                               |   | 106        |
|    | Board Practices                            |   | 111        |
|    | Employees                                  |   | 123        |
|    | Share Ownership                            |   | 124        |

| Item 7: | Major Shareholders and Related Party Transactions       | 127    |
|---------|---------------------------------------------------------|--------|
|    | Major Shareholders                                      | 127    |
|    | Related Party Transactions                              | 130    |
|    |                                                    |   |
| Item 8: | Financial Information                                   | 132    |
|    | Consolidated Statements and Other Financial Information | 132    |
|    | Significant Changes                                     | 133    |

----

| Item 9: | The Offer and Listing     | 133 |
|---------|---------------------------|-----|
|    | Offer and Listing Details | 133 |
|    | Markets                   | 134 |

|     |                                                               |       |
|----------|--------------------------------------------------------------------|------------|
| Item 10: | Additional Information                                             | 135        |
|     | Share Capital                                                      |   135 |
|     | Memorandum of Association and Second Amended and Restated Articles |   135 |
|     | Material Contracts                                                 | 143        |
|     | Exchange Controls                                                  | 143        |
|     | Taxation                                                           | 144        |
|     | Dividends and Paying Agents                                        |   152 |
|     | Statement by Experts                                               | 152        |
|     | Documents on Display                                               | 152        |

| Item 11:       | Quantitative and Qualitative Disclosures about Market Risk                  |   153 |
|----------------|-----------------------------------------------------------------------------|------------|
|           |                                                                        |       |
| Item 12:       | Description of Securities Other than Equity Securities                      |   156 |
|           |                                                                        |       |
| Part II        |
|           |                                                                        |       |
| Item 13:       | Defaults, Dividend Arrearages and Delinquencies                             | 156        |
|           |                                                                        |       |
| Item 14:       | Material Modifications to the Rights of Security Holders and Use of Proceed | 156        |
|           |                                                                        |       |
| Item 15:       | Controls and Procedures                                                     | 156        |
|           |                                                                        |       |
| Item 16A:      | Audit Committee Financial Expert                                            | 157        |
|           |                                                                        |       |
| Item 16B:      | Code of Ethics                                                              | 157        |
|           |                                                                        |       |
| Item 16C:      | Principal Accountant Fees and Services                                      | 157        |
|           |                                                                        |       |
| Item 16D:      | Exemptions from the Listing Standards for Audit Committees                  | 158        |
|           |                                                                        |       |
| Item 16E:      | Purchases of Equity Securities by the Company and Affiliated Purchasers     | 158        |
|           |                                                                        |       |
| Item 16F:      | Change in Registrant’s Certifying Accountants                         |  159  |
|           |                                                                        |       |
| Item 16G:      | Corporate Governance                                                        | 159        |
|           |                                                                        |       |
| Item 16H:      | Mine Safety Disclosure                                                      | 160        |
|           |                                                                        |       |
| Part III  |
|           |                                                                        |       |
| Item 17:       | Financial Statements                                                        | 160        |
|           |                                                                        |       |
| Item 18:       | Financial Statements                                                        | 160        |
|           |                                                                        |       |
| Item 19:       | Exhibits                                                                    | 161        |

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| · | Reduction or elimination, including retroactive amendments, of the government subsidies and economic incentives applicable to, or amendments to regulations governing the, renewable and other energy markets in which we operate or to which we may in the future enter; |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the market, economic and political factors in the countries in which we operate; |
|--------|----------------------------------------------------------------------------------|

| · | weather conditions and various meteorological and geographic factors; |
|--------|-----------------------------------------------------------------------|

| · | our contractors’ technical, professional and financial ability to deliver on and comply with their operation and maintenance undertakings in connection with the operation of our photovoltaic plants; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | changes in the prices of energy or in the components or raw materials required for the production of renewable energy; |
|--------|------------------------------------------------------------------------------------------------------------------------|

| · | our ability to  maintain and gain expertise in the energy market, and to track, monitor and manage the projects which we have undertaken; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

| · | our ability to meet our undertakings under various financing agreements, including to our debenture holders, and our ability to raise additional equity or debt financing in the future; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the risks we are exposed to due to our holdings in U. Dori Energy Infrastructures Ltd. and Dorad Energy Ltd.; |
|--------|---------------------------------------------------------------------------------------------------------------|

| · | the risks we are exposed to due to our involvement in WtE projects in the Netherlands; |
|--------|----------------------------------------------------------------------------------------|

| · | fluctuations in the value of currency; |
|--------|----------------------------------------|

| · | the price and market liquidity of our ordinary shares; |
|--------|--------------------------------------------------------|

| · | the fact that we may be deemed to be an “investment company” under the Investment Company Act of 1940 under certain circumstances (including as a result of the investments of assets following the sale of our business), and the risk that we may be required to take certain actions with respect to the investment of our assets or the distribution of cash to shareholders in order to avoid being deemed an “investment company”; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | our plans with respect to the management of our financial and other assets and our ability to identify, evaluate and consummate additional suitable business opportunities and strategic alternatives; and |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | the possibility of future litigation. |
|--------|---------------------------------------|

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|  | A. | Selected Financial Data |
|--|----|-------------------------|

----

|                                                                                          |   | For Year ended December 31, |       |
|-----------------------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                                          |   | 2016                        |       |   | 2015 |   |   | 2014 |   |   | 2013 |   |   | 2012 |   |
| Revenues                                                                                 |   | $                           | 12,872     |   |   | $ | 13,817 |   |   | $ | 15,782 |   |   | $ | 12,982 |   |   | $ | 8,890 |   |
| Operating expenses                                                                       |   |                        | (2,305     | ) |   |   | (2,854 | ) |   |   | (3,087 | ) |   |   | (2,381 | ) |   |   | (1,954 | ) |
| Depreciation expenses                                                                    |   |                        | (4,884     | ) |   |   | (4,912 | ) |   |   | (5,452 | ) |   |   | (4,021 | ) |   |   | (2,717 | ) |
| Gross profit                                                                             |   |                        | 5,683      |   |   |   | 6,051 |   |   |   | 7,243 |   |   |   | 6,580 |   |   |   | 4,219 |   |
| General and administrative expenses                                                      |   |                        | (4,679     | ) |   |   | (3,745 | ) |   |   | (4,253 | ) |   |   | (3,449 | ) |   |   | (3,110 | ) |
| Share of profits (losses) of equity accounted investee                                   |   |                        | 1,505      |   |   |   | 2,446 |   |   |   | 1,819 |   |   |   | (540 | ) |   |   | (232 | ) |
| Other income (expense), net                                                              |   |                        | 99         |   |   |   | 21 |   |   |   | 1,438 |   |   |   | (42 | ) |   |   | 146 |   |
| Gain on bargain purchase                                                                 |   |                        | -          |   |   |   | - |   |   |   | 3,995 |   |   |   | 10,237 |   |   |   | - |   |
| Capital loss, net                                                                        |   |                        | -          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (394 | ) |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating profit                                                                         |   |                        | 2,608      |   |   |   | 4,773 |   |   |   | 10,242 |   |   |   | 12,786 |   |   |   | 629 |   |
| Financing income                                                                         |   |                        | 290        |   |   |   | 2,347 |   |   |   | 2,245 |   |   |   | 204 |   |   |   | 550 |   |
| Financing income (expenses) in connection with derivatives, net                          |   |                        | 704        |   |   |   | 3,485 |   |   |   | (1,048 | ) |   |   | 1,543 |   |   |   | (2,277 | ) |
| Financing expenses                                                                       |   |                        | (4,050     | ) |   |   | (5,240 | ) |   |   | (4,592 | ) |   |   | (4,201 | ) |   |   | (2,046 | ) |
| Financing income (expenses), net                                                         |   |                        | (3,056     | ) |   |   | 592 |   |   |   | (3,395 | ) |   |   | (2,454 | ) |   |   | (3,773 | ) |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) before taxes on income                                                     |   |                        | (448       | ) |   |   | 5,365 |   |   |   | 6,847 |   |   |   | 10,332 |   |   |   | (3,144 | ) |
| Tax benefit (taxes on income)                                                            |   |                        | (625       | ) |   |   | 1,933 |   |   |   | (201 | ) |   |   | (245 | ) |   |   | 1,011 |   |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) for the year                                                               |   |                        | (1,073     | ) |   |   | 7,298 |   |   |   | 6,646 |   |   |   | 10,087 |   |   |   | (2,133 | ) |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Profit (Loss) attributable to:                                                                |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owners of the Company                                                                    |   |                        | (603       | ) |   |   | 7,553 |   |   |   | 6,658 |   |   |   | 10,068 |   |   |   | (2,110 | ) |
| Non-controlling interests                                                                |   |                        | (468       | ) |   |   | (255 | ) |   |   | (12 | ) |   |   | 19 |   |   |   | (23 | ) |
| Profit (loss) for the year                                                               |   |                        | (1,073     | ) |   |   | 7,298 |   |   |   | 6,646 |   |   |   | 10,087 |   |   |   | (2,133 | ) |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss) items that after initial                                    |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| recognition in comprehensive income (loss) were or will be transferred to profit or loss:     |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Foreign currency translation differences for foreign operations  |   |                        | (267       | ) |   |   | (141 | ) |   |   | (3,199 | ) |   |   | 6,038 |   |   |   | 1,620 |   |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income items that will not be transferred to profit or loss:              |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Presentation currency translation adjustments                    |   |                        | (1,542     | ) |   |   | (6,947 | ) |   |   | (9,082 | ) |   |   | - |   |   |   | - |   |
| Total other comprehensive income (loss)                                                  |   |                        | (1,809     | ) |   |   | (7,088 | ) |   |   | (12,281 | ) |   |   | 6,038 |   |   |   | 1,620 |   |
| Total comprehensive income (loss) for the year                                           |   |                        | (2,882     | ) |   |   | 210 |   |   |   | (5,635 | ) |   |   | 16,125 |   |   | $ | 513 |   |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share                                                          |   | $                           | (0.06      | ) |   | $ | 0.7 |   |   | $ | 0.62 |   |   | $ | 0.94 |   |   | $ | (0.2 | ) |
|                                                                                          |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted earnings (loss) per share                                                        |   | $                           | (0.06      | ) |   | $ | 0.7 |   |   | $ | 0.62 |   |   | $ | 0.94 |   |   | $ | (0.2 | ) |
| Weighted average number of shares used for computing basic earnings (loss) per share          |   |                        | 10,677,700 |   |   |   | 10,715,634 |   |   |   | 10,692,371 |   |   |   | 10,692,371 |   |   |   | 10,709,294 |   |
| Weighted average number of shares used for computing diluted earnings (loss) per share        |   |                        | 10,677,700 |   |   |   | 10,758,370 |   |   |   | 10,808,288 |   |   |   | 10,752,808 |   |   |   | 10,709,294 |   |

|             |   | For Year ended December 31, |   |
|------------------|--------|-----------------------------|--------|
|             |   | 2016                        |   |   | 2015 |   |   | 2014 |   |   | 2013 |   |   | 2012 |   |
| EBITDA (1)  |   | $                           | 7,492  |   |   | $ | 9,685 |   |   | $ | 15,694 |   |   | $ | 16,807 |   |   | $ | 3,346 |   |

| (1) | EBITDA is a non-IFRS measure and is defined as earnings before financial expenses, net, taxes, depreciation and amortization. We present this measure to enhance the understanding of our historical financial performance and to enable comparability between periods. While we consider EBITDA to be an important measure of comparative operating performance, EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our commitments, including capital expenditures and restricted cash and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. Not all companies calculate EBITDA in the same manner, and the measure as presented may not be comparable to similarly-titled measures presented by other companies. Our EBITDA may not be indicative of our historic operating results; nor is it meant to be predictive of potential future results. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                   |   | For Year ended December 31, |   |
|----------------------------------------|--------|-----------------------------|--------|
|                                   |   | 2016                        |   |   | 2015 |   |   | 2014 |   |   | 2013 |   |   | 2012 |   |
| Net income (loss) for the year    |   | $                           | (1,073 | ) |   | $ | 7,298 |   |   | $ | 6,646 |   |   | $ | 10,087 |   |   | $ | (2,133 | ) |
| Financing expenses (income), net  |   |                        | 3,056  |   |   |   | (592 | ) |   |   | 3,395 |   |   |   | 2,454 |   |   |   | 3,773 |   |
| Taxes on income (tax benefit)     |   |                        | 625    |   |   |   | (1,933 | ) |   |   | 201 |   |   |   | 245 |   |   |   | (1,011 | ) |
| Depreciation and amortization     |   |                        | 4,884  |   |   |   | 4,912 |   |   |   | 5,452 |   |   |   | 4,021 |   |   |   | 2,717 |   |
| EBITDA                            |   | $                           | 7,492  |   |   | $ | 9,685 |   |   | $ | 15,694 |   |   | $ | 16,807 |   |   | $ | 3,346 |   |

|                               |   | At December 31, |       |
|------------------------------------|--------|-----------------|------------|
|                               |   | 2016            |       |   | 2015 |   |   | 2014 |   |   | 2013 |   |   | 2012 |   |
| Working capital (deficiency)  |   | $               | 23,539     |   |   | $ | 23,410 |   |   | $ | 18,890 |   |   | $ | (4,384 | ) |   | $ | 27,977 |   |
| Total assets                  |   | $               | 156,174    |   |   | $ | 160,327 |   |   | $ | 159,087 |   |   | $ | 146,930 |   |   | $ | 128,740 |   |
| Total liabilities             |   | $               | 67,404     |   |   | $ | 66,262 |   |   | $ | 64,961 |   |   | $ | 47,169 |   |   | $ | 45,626 |   |
| Total equity                  |   | $               | 88,770     |   |   | $ | 94,065 |   |   | $ | 94,126 |   |   | $ | 99,761 |   |   | $ | 83,114 |   |
| Capital stock                 |   | $               | 102,339    | (1)  |   | $ | 102,348 | (2)  |   | $ | 102,590 | (3)  |   | $ | 102,590 | (3)  |   | $ | 102,068 | (3)  |
| Ordinary shares outstanding   |   |            | 10,677,370 | (1)  |   |   | 10,678,888 | (2)  |   |   | 10,692,371 | (3)  |   |   | 10,692,371 | (3)  |   |   | 10,692,371 | (3)  |

|  | (1) | Net of 256,184 treasury shares that were purchased during 2011, 2012, 2015 and 2016 according to share buyback programs authorized by our Board of Directors. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | Net of 254,666 treasury shares that were purchased during 2011, 2012 and 2015 according to share buyback programs authorized by our Board of Directors. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | Net of 85,655 treasury shares that were purchased during 2011 and 2012 according to a share buyback program authorized by our Board of Directors. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | The Dorad Power Plant is exposed to various risks, including noncompliance or breach by the contractor involved in the construction of its obligations during the warranty period causing delays and inability to provide electricity to Dorad’s customers, which may result, inter alia, in fines and penalties being imposed on Dorad or in higher operating expenses, or outside events and delays in supply of equipment or replacement parts required for the continued operations of the Dorad Power Plant, all of which may have a material adverse effect on Dorad’s results of operations and profitability; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The operation of the Dorad Power Plant is highly complex and dependent upon the continued ability: (i) to operate the various turbines, and (ii) to turn the turbines on and shut them down quickly based on demand. The profitability of Dorad also depends on the accuracy of the proprietary forecasting system used by Dorad. Any defects or disruptions, or inaccuracies in forecasts, may result in an inability to provide the amount of electricity required by Dorad’s customers or in over-production, both of which could have a material adverse effect on Dorad’s operations and profitability. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Dorad’s operations are dependent upon the expertise and success of its operations and maintenance contractor, who is responsible for the day-to-day operations of the Dorad Power Plant. In the event the services provided by such contractor will cause delays in the production of energy or any other damage to the Dorad Power Plant or to Dorad’s customers, Dorad may be subject to claims for damages and to additional expenses and losses and therefore Dorad’s profitability could be adversely affected. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Significant equipment failures may limit Dorad’s production of energy. Although such damages are generally covered by insurance policies, any such failures may cause disruption in the production, may not all be covered by the insurance and the correction of such failures may involve a considerable amount of resources and investment and could therefore adversely affect Dorad’s profitability. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The electricity sector in Israel is highly centralized and is dominated by the IEC, which controls and operates the electricity system in Israel, including the delivery and transmission of electricity, and also manufactures the substantial majority of electricity in Israel. In addition, the electricity sector is subject to various laws and regulations, such as in connection with the tariffs charged by the IEC, including the resolution from May 2013 to charge private manufacturers for the IEC’s system operation services, and the licensing requirement. The prices paid by Dorad to the IEC for system operation services provided to Dorad and the fees received by Dorad from the IEC for electricity sold to the IEC and for providing the IEC with energy availability are all based on tariffs determined by the Israeli regulator. The updates and changes to the regulation and tariffs may not necessarily involve negotiations or consultations with Dorad and may be unilaterally imposed on it. In addition, the employees of the IEC, who object to certain reforms in the Israeli electricity sector, have in the past applied sanctions to prevent the connection, and at a later stage threatened to disconnect, the Dorad Power Plant from the Israeli national grid as part of their efforts to prevent implementation of these reforms and may in the future do so again. Any changes in the tariffs, system charges or applicable regulations, failure by Dorad to maintain the required license, the inability of the IEC to pay Dorad or unilateral actions on the part of IEC’s employees may adversely affect Dorad’s plan of operations and could have a material adverse effect on Dorad’s profitability. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | The construction of the Dorad Power Plant was mainly financed by a consortium of financing entities pursuant to a long-term credit facility and such credit facility provides for pre-approval by the consortium of certain of Dorad’s actions and contracts with third parties. Changes in the credit ratings of Dorad and its shareholders, non-compliance with financing and other covenants, delays in provision of required pre-approvals or disagreements with the financial entities and additional factors may adversely affect Dorad’s operations and profitability. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The Dorad Power Plant is located in Ashkelon, a town in the southern part of Israel, in proximity to the Gaza Strip. The location of the Dorad Power Plant is within range of missile strikes from the Gaza Strip. In recent years, there has been an escalation in violence and missile attacks from the Gaza Strip, including a fifty day period in July and August of 2014 in which more than 4,500 missiles, rockets and mortar shells were fired from the Gaza Strip to Southern and Central Israel. Although measures were taken to protect the Dorad Power Plant from missile attacks, any such further attacks to the area or any direct damage to the location of the Dorad Power Plant may damage Dorad’s facilities and disrupt the operations of the Dorad Power Plant and thereafter its operations, and may cause losses and delays. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Dorad entered into a long-term natural gas supply agreement with the partners in the “Tamar” license, or Tamar, located in the Mediterranean Sea off the coast of Israel. This agreement includes a “take or pay” mechanism, subject to certain restrictions and conditions, that may result in Dorad paying for natural gas not actually required for its operations. In the event Dorad will be required to pay for natural gas that it does not need and cannot store for future use, Dorad’s results of operations and profitability could be adversely affected. Tamar is currently Dorad’s sole supplier of natural gas and has undertaken to supply natural gas to various customers and is permitted to export a certain amount of the natural gas to customers outside of Israel. Dorad’s operations will depend on the timely, continuous and uninterrupted supply of natural gas from Tamar and on the existence of sufficient reserves throughout the term of the agreement with Tamar. In addition, the price of the natural gas under the supply agreement with Tamar is linked to production tariffs determined by the Israeli Electricity Authority but cannot be lower than the “final floor price” included in the agreement. Due to the reduction in fuel and energy prices and the resulting reduction in the production tariff during 2015, the price for natural gas under the agreement with Tamar reached the final floor price in March 2016 and will not be further reduced in the event of future reductions in the fuel and energy prices and the production tariff, as are currently contemplated by the Israeli Electricity Authority. Any delays, disruptions, increases in the price of natural gas under the agreement, or shortages in the gas supply from Tamar will adversely affect Dorad’s results of operations. In addition, as future reductions in the production tariff will not affect the price of natural gas under the agreement with Tamar, Dorad’s profitability may be adversely affected. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | The Dorad power plant is subject to environmental regulations, aimed at increasing the protection of the environment and reducing environmental hazards, including by way of imposing restrictions regarding noise, harmful emissions to the environment and handling of hazardous materials. Currently the costs of compliance with the foregoing requirements are not material. Any breach or other noncompliance with the applicable laws may cause Dorad to incur additional costs due to penalties and fines and expenses incurred in order to regain compliance with the applicable laws, all of which may have an adverse effect on Dorad’s profitability and results of operations. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | As a result of the agreements with contractors of the Dorad Power Plant and the indexation included in the gas supply agreement, Dorad is exposed to changes in exchange rates of the U.S. dollar against the NIS. To minimize this exposure Dorad executed forward transactions to purchase U.S. dollars against the NIS. In addition, due to the indexing to the Israeli consumer price index under Dorad’s credit facility, it is exposed to fluctuations in the Israeli CPI, which may adversely affect its results of operations and profitability. As the hedging performed by Dorad does not completely eliminate such exposures, Dorad’s profitability might be adversely affected due to future changes in exchange rates or in the Israeli consumer price index. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | As the raw materials used to produce energy in the WtE market are not freely available (as is the case with wind, solar and hydro energies), the success of a WtE facility depends on its ability to procure and maintain sufficient levels of the waste applicable and suitable to the WtE technology the facility uses, in order to meet a certain of range of energy (gas, electricity or heat) production levels. The WtE facility is required to enter into long-term supply agreements with waste suppliers, such as farmers, food manufacturers and other specialized waste suppliers. Any increase in the price of waste or shortage in the type or quality of waste required to produce the desired energy levels with the technology used by the facility could slow down or halt operations, causing a material adverse effect on the results of operations. The quality and availability of a range of a certain feedstock mix might also increase the facility’s operating costs, either due to the need to purchase more expensive feedstock mix in order to meet the desired energy production levels, or due to increase in the amounts of residues and the resulting increase of removal of surplus quantities. In addition to the impact of  the quality of the feedstock on the production levels, maintaining and monitoring the feedstock quality is crucial, for preventing malfunctions in the process, for example due to high levels of certain chemicals that might harm the CHP engines. The quality and reliability of the gas upgrading component, which convert the biogas to grid quality gas (methane), in facilities that produce gas to grid, is important for determining the gas upgrading ratio, which ultimately regulate the gas production levels and therefor the revenue streams from the sales of gas, receiving subsidy for gas, and eventually the facility's profitability.  Therefore, any shortage of quality feedstock, changes in the feedstock mix available for use, and shortage in the gas upgrading component could have a material adverse effect on the results of operations of the WtE facilities. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | The WtE industry is subject to many laws and regulations which govern the protection of the environment, quality control standards, health and safety requirements, and the management, transportation and disposal of different types of waste. Environmental laws and regulations may require removal or remediation of pollutants and may impose civil and criminal penalties for violations. The costs arising from compliance with environmental laws and regulations may increase operating costs for our WtE facilities and we may be exposed to penalties for failure to comply with such laws and regulations. In addition, existing regulation governing waste management and waste disposal provide incentives to feedstock suppliers to use waste management solutions such as the provision of feedstock to WtE facilities. Any regulatory changes that impose additional environmental restrictions on the WtE industry or that relieve feedstock suppliers from the stringent regulation concerning waste management and disposal could increase our operating costs, limit or change the cost of the feedstock available to us, and adversely affect our results of operations. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | increasing our vulnerability to adverse economic, industry or business conditions and cross currency movements and limiting our flexibility in planning for, or reacting to, changes in our industry and the economy in general; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | requiring us to dedicate a substantial portion of our cash flow from operations to service our debt, thus reducing the funds available for operations and future business development; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | limiting our ability to obtain additional financing to operate, develop and expand our business. |
|--|--------|--------------------------------------------------------------------------------------------------|

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|  | · | Reliability - Solar energy production does not require fossil fuels and is therefore less dependent on this limited natural resource with volatile prices. Although there is variability in the amount and timing of sunlight over the day, season and year, a properly sized and configured system can be designed to be highly reliable while providing long-term, fixed price electricity supply. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Convenience - Solar power systems can be installed on a wide range of sites, including small residential roofs, the ground, covered parking structures and large industrial buildings. Most solar power systems also have few, if any, moving parts and are generally guaranteed to operate for 20-25 years, resulting in low maintenance and operating costs and reliability compared to other forms of power generation. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Cost-effectiveness - There are continual advancements in solar panel technology which are increasing the efficiency and lowering the cost of production, thus making the production of solar energy even more cost effective. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Environmental - Solar power is one of the cleanest electric generation sources, capable of generating electricity without air or water emissions, noise, vibration, habitat impact or waste generation. In particular, solar power does not generate greenhouse gases that contribute to global climate change or other air pollutants, as power generation based on fossil fuel combustion does, and does not generate radioactive or other wastes as nuclear power and coal combustion do. It is anticipated that environmental protection agencies will limit the use of fossil fuel based electric generation and increase the attractiveness of solar power as a renewable electricity source. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Security - Producing solar power improves energy security both on an international level (by reducing fossil energy purchases from hostile countries) and a local level (by reducing power strains on local electrical transmission and distribution systems). |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| PV Plant Title   | Installed Capacity1  | Location                                                   | Technology of Panels  | Connection to Grid  | FiT (€/kWh) 2  | Revenue in the year ended December 31, 2015 (in thousands)3  | Revenue in the year ended December 31, 2016 (in thousands)3  |
|-----------------------|---------------------------|-----------------------------------------------------------------|----------------------------|--------------------------|---------------------------|-------------------------------------------------------------------|-------------------------------------------------------------------|
| “Troia 8” | 995.67 kWp                | Province of Foggia, Municipality of Troia, Puglia region, Italy | Fix                        | January 14, 2011    | 0.318                     | $584(€526)                                                  | $544(€492)                                                  |
| “Troia 9” | 995.67 kWp                | Province of Foggia, Municipality of Troia, Puglia region, Italy | Fix                        | January 14, 2011    | 0.318                     | $599(€540)                                                  | $558(€504)                                                  |

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| PV Plant Title  | Installed Capacity1  | Location  | Technology of Panels  | Connection to Grid  | FiT (€/kWh) 2  | Revenue in the year ended December 31, 2015 (in thousands)3  | Revenue in the year ended December 31, 2016 (in thousands)3  |
|----------------------|---------------------------|----------------|----------------------------|--------------------------|---------------------------|-------------------------------------------------------------------|-------------------------------------------------------------------|

| “Del Bianco”      | 734.40 kWp | Province of Macerata, Municipality of Cingoli, Marche region, Italy     | Fix                 | April 1, 2011   | 0.3215 | $390(€352)       | $366(€331)       |
|-------------------------------|------------|-------------------------------------------------------------------------|---------------------|----------------------|--------|------------------------|------------------------|
| “Giaché”     | 730.01 kWp | Province of Ancona, Municipality of Filotrano, Marche region, Italy     | Duel Axes Tracker   | April 14, 2011  | 0.3215 | $394(€355)  | $465(€420)  |
| “Costantini”      | 734.40 kWp | Province of Ancona, Municipality of Senigallia, Marche region, Italy    | Fix                 | April 27, 2011  | 0.3215 | $414(€373)       | $401(€362)       |
| “Massaccesi”      | 749.7 kWp  | Province of Ancona, Municipality of Arcevia,  Marche region, Italy | Duel Axes Tracker   | April 29, 2011  | 0.3215 | $381(€344)       | $470(€425)       |
| “Galatina”        | 994.43 kWp | Province of Lecce, Municipality of Galatina, Puglia region, Italy       | Fix                 | May 25, 2011         | 0.318  | $560(€504)       | $452(€408)       |
| “Pedale (Corato)” | 2,993 kWp  | Province of Bari, Municipality of Corato, Puglia region, Italy          | Single Axes Tracker | May 31, 2011         | 0.2659 | $1,838(€1,656)   | $1,699(€1,535)   |

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| PV Plant Title  | Installed Capacity1  | Location  | Technology of Panels  | Connection to Grid  | FiT (€/kWh) 2  | Revenue in the year ended December 31, 2015 (in thousands)3  | Revenue in the year ended December 31, 2016 (in thousands)3  |
|----------------------|---------------------------|----------------|----------------------------|--------------------------|---------------------------|-------------------------------------------------------------------|-------------------------------------------------------------------|

| “Acquafresca”       | 947.6 kWp   | Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy | Fix | June 2011     | 0.2677 | $457(€412)     | $439(€397)     |
|---------------------------------|-------------|------------------------------------------------------------------------------------------|-----|---------------|--------|----------------------|----------------------|
| “D’Angella”   | 930.5 kWp   | Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy | Fix | June 2011     | 0.2677 | $458(€413)     | $428(€387)     |
| “Soleco”            | 5,923.5 kWp | Province of Rovigo, Municipality of Canaro, Veneto region, Italy                         | Fix | August 2011   | 0.2189 | $2,292(€2,065) | $2,046(€1,849) |
| “Tecnoenergy”       | 5,899.5 kWp | Province of Rovigo, Municipality of Canaro, Veneto region, Italy                         | Fix | August 2011   | 0.2189 | $2,253(€2,029) | $2,002(€1,809) |
| “Rinconada II”4     | 2,275 kWp   | Municipality of Córdoba, Andalusia, Spain                                           | Fix | July 2010     | N/A    | $894(€805)     | $851(€769)     |
| “Rodríguez I”  | 1,675 kWp   | Province of Murcia, Spain                                                                | Fix | November 2011 | N/A    | $666(€600)     | $621(€561)     |
| “Rodríguez II” | 2,691 kWp   | Province of Murcia, Spain                                                                | Fix | November 2011 | N/A    | $1,106(€996)   | $1,028(€929)   |
| “Fuente Librilla”   | 1,248 kWp   | Province of Murcia, Spain                                                                | Fix | June 2011     | N/A    | $531(€478)     | $502(€454)     |

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|  | · | an Engineering Procurement & Construction projects Contract, or an EPC Contract, which governs the installation, testing and commissioning of a photovoltaic plant by the respective Contractor; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | an Operation and Maintenance, or O&M, Agreement, which governs the operation and maintenance of the photovoltaic plant by the respective Contractor; |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a number of ancillary agreements, including: |
|--|--------|----------------------------------------------|

|  | o | one or more “surface rights agreements” or “lease agreements” with the land owners, which provide the terms and conditions for the lease of land on which the photovoltaic plants are constructed and operated; |
|--|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | with respect to our Italian PV Plants – |
|--|---|-----------------------------------------------|

|  | · | standard “incentive agreements” with Gestore dei Servizi Elettrici, or GSE, Italy’s energy regulation agency responsible, inter alia, for incentivizing and developing renewable energy sources in Italy and purchasing energy and re-selling it on the electricity market. Under such agreements, it is anticipated that GSE will grant the applicable FiT governing the purchase of electricity (FiTs are further detailed in “Material Effects of Government Regulations on the Italian PV Plants”); |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | one or more “power purchase agreements” with GSE, specifying the power output to be purchased by GSE for resale and the consideration in respect thereof  or, alternatively, a “power purchase agreements” with a private energy broker, specifying the power output to be purchased for resale and the consideration in respect thereof; and |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | one or more “interconnection agreements” with the Enel Distribuzione S.p.A, or ENEL, the Italian national electricity grid operator, which provide the terms and conditions for the connection to the Italian national grid. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | o | with respect to our Spanish PV Plant – |
|--|---|----------------------------------------------|

|  | · | Standard “power distribution agreements” with the applicable Spanish power distribution grid company such as Endesa Distribución Eléctrica, S.L.U., or Endesa, or Iberdrola Distribución Eléctrica, S.A.U., or Iberdrola, regarding the rights and obligations of each party, concerning, inter alia, the evacuation of the power generated in the facility to the grid; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Standard “representation agreements” with an entity that will act as the energy sales agent of the PV Principals in the energy market, in accordance with Spanish Royal Decree 436/2004. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | optionally, one or more “project financing agreements” with financing entities, as were already executed with respect to several of the PV Plants and as more fully described below, and as may be executed in the future with respect to one or more of the remaining PV Plants; and |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a stock purchase agreement in the event we acquire an existing company that owns a photovoltaic plant that is under construction or is already constructed. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | by way of sale on the electricity market (Italian Power Exchange IPEX), the so called “Borsa Elettrica”; |
|--|--------|----------------------------------------------------------------------------------------------------------------------|

|  | · | through bilateral contracts with wholesale dealers; and |
|--|--------|---------------------------------------------------------|

|  | · | via the so-called “Dedicated Withdrawal” introduced by AEEGSI Resolution no. 280/07 and subsequent amendments. This is the most common way of selling electricity, as it affords direct and quick negotiations with the national energy handler (GSE), which will in turn deal with energy buyers on the market. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Nominal Power kWp           | Non-Integrated | Partially Integrated | Arch. Integrated |
|-----------------------------|----------------|----------------------|------------------|
| 1 kW ≤ P ≤ 3 kW | 0.40 Euro/kWh  | 0.44 Euro/kWh        | 0.49 Euro/kWh    |
| 3 kW < P ≤ 20 kW   | 0.38 Euro/kWh  | 0.42 Euro/kWh        | 0.46 Euro/kWh    |
| P > 20 kW                | 0.36 Euro/kWh1 | 0.40 Euro/kWh        | 0.44 Euro/kWh    |

|                   | A                                                                         | B                                                                       | C                                                                          |
|------------------------|---------------------------------------------------------------------------|-------------------------------------------------------------------------|----------------------------------------------------------------------------|
| Nominal Power          | Plants entered in operation after December 31, 2010 and by April 30, 2011 | Plants entered in operation after April 30, 2011 and by August 31, 2011 | Plants entered in operation after August 31, 2011 and by December 31, 2011 |
| PV plants on buildings | Other PV plants                                                           | PV plants on buildings                                                  | Other PV plants                                                            | PV plants on buildings | Other PV plants |
| [kW]                   | [€ /kWh]                                                            | [€/kWh]                                                           | [€/kWh]                                                              | [€/kWh] | [€/kWh] | [€/kWh] |
| 1 ≤ P ≤ 3  | 0.402                                                                     | 0.362                                                                   | 0.391                                                                      | 0.347 | 0.380 | 0.333 |
| 3< P ≤20      | 0.377                                                                     | 0.339                                                                   | 0.360                                                                      | 0.322 | 0.342 | 0.304 |
| 20< P ≤200    | 0.358                                                                     | 0.321                                                                   | 0.341                                                                      | 0.309 | 0.323 | 0.285 |
| 200< P ≤1000  | 0.355                                                                     | 0.314                                                                   | 0.335                                                                      | 0.303 | 0.314 | 0.266 |
| 1000<P≤5000   | 0.351                                                                     | 0.313                                                                   | 0.327                                                                      | 0.2892 | 0.302 | 0.264 |
| P>5000              | 0.333                                                                     | 0.297                                                                   | 0.311                                                                      | 0.275 | 0.287 | 0.251 |

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| a) | the power capacity of the plant is not higher than 1 MW and - in the case of lands owned by the same owner - the PV plants are installed at a distance of at least 2 km; and |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b) | the installation of the PV plants does not cover more than 10% of the surface of agricultural land which is available to the applicant. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------|

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|                 | June 2011              | July 2011     | August 2011            |
|----------------------|------------------------|---------------|------------------------|
|                 | PV plants on buildings | Other plants  | PV plants on buildings | Other PV plants | PV plants on buildings | Other PV plants |
|                 | [€/kWh]          | [€/kWh] | [€/kWh]          | [€/kWh] | [€/kWh] | [€/kWh] |
| 1≤P≤3    | 0.387                  | 0.344         | 0.379                  | 0.337 | 0.368 | 0.327 |
| 3<P≤20      | 0.356                  | 0.319         | 0.349                  | 0.312 | 0.339 | 0.303 |
| 20<P≤200    | 0.338                  | 0.306         | 0.331                  | 0.300 | 0.321 | 0.291 |
| 200<P≤1000  | 0.325                  | 0.2914        | 0.315                  | 0.276 | 0.303 | 0.263 |
| 1000<P≤5000 | 0.314                  | 0.277         | 0.298                  | 0.264 | 0.280 | 0.250 |
| P>5000            | 0.299                  | 0.264         | 0.284                  | 0.251 | 0.269 | 0.238 |

|                 | September 2011         | October 2011    | November 2011          | December 2011   |
|----------------------|------------------------|-----------------|------------------------|-----------------|
|                 | PV plants on buildings | Other PV plants | PV plants on buildings | Other PV plants | PV plants on buildings | Other PV plants | PV plants on buildings | Other PV plants |
|                 | [€/kWh]          | [€/kWh]   | [€/kWh]          | [€/kWh]   | [€/kWh] | [€/kWh] | [€/kWh] | [€/kWh] |
| 1≤P≤3    | 0.361                  | 0.316           | 0.345                  | 0.302           | 0.320 | 0.281 | 0.298 | 0.261 |
| 3<P≤20      | 0.325                  | 0.289           | 0.310                  | 0.276           | 0.288 | 0.256 | 0.268 | 0.238 |
| 20<P≤200    | 0.307                  | 0.271           | 0.293                  | 0.258           | 0.272 | 0.240 | 0.253 | 0.224 |
| 200<P≤1000  | 0.298                  | 0.245           | 0.285                  | 0.233.          | 0.265 | 0.210 | 0.246 | 0.189 |
| 1000<P≤5000 | 0.278                  | 0.243           | 0.256                  | 0.223           | 0.233 | 0.201 | 0.212 | 0.181 |
| P>5000            | 0.264                  | 0.231           | 0.243                  | 0.212           | 0.221 | 0.191 | 0.199 | 0.172 |

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|                 | January – June 2012 | July – December 2012 |
|----------------------|---------------------------|----------------------------|
|                 | PV plants on buildings    | Other PV plants            | PV plants on buildings | Other PV plants |
|                 | [€/kWh]             | [€/kWh]              | [€/kWh] | [€/kWh] |
| 1≤P≤3    | 0.274                     | 0.240                      | 0.252 | 0.221 |
| 3<P≤20      | 0.247                     | 0.219                      | 0.227 | 0.202 |
| 20<P≤200    | 0.233                     | 0.206                      | 0.214 | 0.189 |
| 200<P≤1000  | 0.224                     | 0.172                      | 0.202 | 0.155 |
| 1000<P≤5000 | 0.182                     | 0.156                      | 0.164 | 0.140 |
| P>5000            | 0.171                     | 0.148                      | 0.154 | 0.133 |

|                 | PV plants on building     | Other PV plants          |
|----------------------|---------------------------|--------------------------|
|                 | Omni-comprehensive tariff | Auto-consumption premium | Omni-comprehensive tariff | Auto-consumption premium |
|                 | [€/kWh]             | [€/kWh]            | [€/kWh] | [€/kWh] |
| 1≤P≤3    | 0.375                     | 0.230                    | 0.346 | 0.201 |
| 3<P≤20      | 0.352                     | 0.207                    | 0.329 | 0.184 |
| 20<P≤200    | 0.299                     | 0.195                    | 0.276 | 0.172 |
| 200<P≤1000  | 0.281                     | 0.183                    | 0.239 | 0.141 |
| 1000<P≤5000 | 0.227                     | 0.149                    | 0.205 | 0.127 |
| P>5000            | 0.218                     | 0.140                    | 0.199 | 0.121 |

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|  | (i) | new (generally lower than the Fourth Conto Energia and decreasing every six months) tariffs, comprising both the incentives and the sale of electric energy (so called “omni-comprehensive tariffs”); |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | the provision for “large” photovoltaic plants of a register in which the same must be enrolled in order to qualify for the grant of the incentives; |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | bonuses for photovoltaic plants whose components are manufactured in European Union countries; and |
|--|-------|----------------------------------------------------------------------------------------------------|

|  | (iv) | bonuses for photovoltaic plants on buildings replacing asbestos roofs. |
|--|------|------------------------------------------------------------------------|

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|  | · | a measure consisting of granting the option to access a new revised incentive plan. This specific provision applies to producers of renewable energy and owners of plants to which the ”all-inclusive tariff” (tariffa omnicomprensiva) or certain “Green Certificates” (certificati verdi) apply and provides an alternative incentive system for production of renewable energy, which can be activated voluntarily on demand of each producer. The latter must choose either to continue maintaining the same incentive regime for the remaining period of duration of the plan, or access a new plan, enforced for the remaining duration of the plan extended by 7 years, but with a correspondent reduction in the nominal amount of the incentive, in a percentage which varies based on, inter alia, the remaining duration of the plan and the type of energy source. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | a replacement, starting from January 1, 2014, of the minimum guaranteed prices currently foreseen under the Italian mandatory purchase regime with the zonal hourly prices set out for each specific area (so called prezzi zonali orari, i.e. the average monthly price, correspondent to each hour, as resulting from the electric market price on the area where the PV plant is located). The replacement of minimum guaranteed prices with zonal prices applies to PV plants exceeding 100kWp. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For photovoltaic plants with an installed capacity of up to and including 100 kW – the minimum price, as defined by AEEGSI; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------|

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|   | • | For photovoltaic plants with installed capacity higher than 100 kW – the hourly zonal price. |
|--------|---------|----------------------------------------------------------------------------------------------------|

|  | (ii) | Minimum Guaranteed Prices determined by AEEGSI |
|--|------|------------------------------------------------|

|  | (iii) | AAEG resolution 36/E on depreciation of PV Plants |
|--|-------|---------------------------------------------------|

|  | (iv) | Imbalance costs under AEEGSI Resolution n. 281/2012 |
|--|------|-----------------------------------------------------|

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|  | (i) | imbalance costs are to be borne by the owners of PV plants, in an amount calculated by multiplying the discrepancy of the production forecast by a fixed parameter; |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | in the case that the owner of the PV plant is party to the GSE mandatory purchase regime, administrative costs borne by GSE in connection with forecast services are to be charged on the owner. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 1. | application of the actual imbalancing (i.e., the difference, hour by hour, between the measurement of the energy delivered/withdrawn into the grid in one day and the final delivery/withdrawal program as a consequence of the closing of the Electrical Markets and the Dispatchment Services Market). |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | sum of three components, which are a result of the application: |
|--|----|-----------------------------------------------------------------|

|  | · | to the actual imbalancing which falls within the tolerated thresholds of the price equal to that provided under section 40.3 of Resolution AEEGSI SI 111/06, as amended by Resolution 522/2014/R/eel; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | to the actual imbalancing exceeding the tolerated thresholds of the price equal to that provided under section 30.4(b) of Resolution AEEGSISI 111/06, as amended by Resolution 522/2014/R/eel. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | to the actual imbalancing which falls within the tolerated thresholds, considered as an absolute value, of an imbalancing price  equal to the area quota. The area quota must be intended as the ratio between the imbalancing costs which have not been allocated pursuant to the two aforementioned points and the sum of the absolute values of imbalancing costs, which fall within the tolerated thresholds. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (v) | Law 116/2014 on the tariff cuts |
|--|-----|---------------------------------|

|  | (i) | a reduction of 8% in the FiT for photovoltaic plants with nominal capacity above 900 kW, a reduction of 7% in the FiT for photovoltaic plants with nominal capacity between 500 kW and 900 kW and a reduction of 6% in the FiT for photovoltaic plants with nominal capacity between 200 kW and 500 kW (i.e., out of the twelve Italian photovoltaic plants owned by us, eight would be subject to a reduction of 8% in the FiT and four would be subject to a reduction of 7% in the FiT); |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (ii) | extending the 20-year term of the FiT to 24 years with a reduction in the FiT in a range of 17%-25%, depending on the time remaining on the term of the FiT for the relevant photovoltaic plant, with higher reductions applicable to photovoltaic plants that commenced operations earlier (based on the remaining years in the initial guaranteed FiT period of our existing Italian photovoltaic plants, the expected reduction in the FiT for the our photovoltaic plants would have been approximately 19%); |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | a rescheduling in the FiT so that during an initial period the FiT is reduced and during the second period the FiT is increased in the same amount of the reduction with the goal to guarantee an annual saving of at least Euro 600 million by the Italian public between 2015 and 2019, assuming all photovoltaic operators opt for this alternative); or |
|--|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iv) | the beneficiaries of FiT incentive schemes can sell up to 80% of the revenues deriving from the incentives generated by the photovoltaic plant to a selected buyer to be identified among the top EU banks. The selected buyer will become eligible to receive the original FiT and will not be subject to the changes set forth in alternatives (i) through (iii) above. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (ii) | Decree on option (iii) – rescheduling of the FiT over 20 years |
|--|------|----------------------------------------------------------------------|

|  | (iii) | CDP Decree |
|--|-------|------------|

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|  | A. | Measures on revamping interventions, which provide in particular that in order for a plant to continue benefitting from incentives, such interventions: |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | shall not entail an increase of more than 1% (5% for plants up to 20 kWp) of the nominal power of the plant or its single units; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | shall use new or regenerated components, in the case of definitive replacements; and |
|--------|------|--------------------------------------------------------------------------------------|

|   | (iii) | shall be communicated to GSE within 60 days. |
|--------|-------|----------------------------------------------|

|  | B. | Measures on the so called “fake fractioning”, providing in particular that in the case that two or more plants are: |
|--|----|---------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | fed by the same renewable source; |
|--|-----|-----------------------------------|

|  | (ii) | owned by the same entity or by entities belonging to the same group; and |
|--|------|--------------------------------------------------------------------------|

|  | (iii) | built on the same plot or on bordering plots; |
|--|-------|-----------------------------------------------|

|  | (i) | re-determine the applicable tariff, if the procedures on tariff admission were complied with notwithstanding the fake fractioning; or |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------|

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|  | (ii) | declare the retrospective forfeiture from the tariff, if the procedures on tariff admission were not complied with as a result of the fake fractioning. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 1. | Royal Decree 413/2014 which regulates electricity generation activity using renewable energy sources, cogeneration and waste, or RD 413/2014. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | Order IET/1045/2014 approving the retribution parameters for certain types of generation facilities of electricity from renewable energy sources, cogeneration and waste facilities, or Order 1045/2014. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | a) | The Specific Remuneration is calculated by reference to a “standard facility” during its “useful regulatory life”. Order 1045/2014 characterized the existing renewable installations into different categories (referred to as IT-category). These categories were created taking into account the type of technology, the date of the operating license and the geographical location of renewable installations. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | b) | According to RD 413/2014, the calculation of the Specific Remuneration of each IT-category shall be performed taking into account the following parameters: |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | the standard revenues for the sale of energy production, valued at the production market prices; |
|--|-----|--------------------------------------------------------------------------------------------------|

|  | (ii) | the standard exploitation costs; and |
|--|------|--------------------------------------|

|  | (iii) | the standard value of the initial investment. For this calculation, only those costs and investments that correspond exclusively to the electricity production activity will be taken into account. Furthermore, costs or investments determined by administrative rules or acts that do not apply throughout Spanish territory will not be taken into account. |
|--|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | c) | Order 1045/2014 established the relevant parameters applicable to each IT-category. Therefore, in order to ascertain the total amount of the Specific Remuneration applicable to a particular installation it is necessary to (1) identify the applicable IT-category and (2) integrate in the Specific Remuneration formula set forth in RD 413/2014 the economic parameters established by Order 1045/2014 for the relevant IT-category. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | d) | The Specific Remuneration is calculated for regulatory periods of six years, each divided into two regulatory semi-periods of three years. The first Regulatory Period commenced July 14, 2013 and terminates December 31, 2019. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | e) | The Specific Remuneration is designed to ensure a “reasonable rate of return” or profitability that during the first regulatory period (i.e., until December 2019) shall be equivalent to a Spanish 10-year sovereign bond calculated as the average of stock price in the stock markets during the months of April, May and June 2013, increased by 300 basis points (7.398% before taxes). |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | f) | Pursuant to RD 413/2014, the revenues from the Specific Remuneration are set based on the number of operating hours reached by the installation in a given year and adjusted to electricity market price deviations. Furthermore, the economic parameters of the Specific Remuneration might be reviewed by the Spanish government at the end of a regulatory period or semi-period, however the standard value of the initial investment and the useful regulatory life will remain unchanged for the entire Regulatory Useful Life of the installation, as determined by Order 1045/2014. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | • | Purchase of availability from a licensed private conventional manufacturer; |
|--|---------|-----------------------------------------------------------------------------|

|  | • | Payment for availability, start-ups and dynamic benefits; |
|--|---------|-----------------------------------------------------------|

|  | • | The plant is required to be under the full control of the system manager (currently the IEC); |
|--|---------|-----------------------------------------------------------------------------------------------|

|  | • | Capital and operational tariff for availability – including exchange rate linkage, indexes and interests; |
|--|---------|-----------------------------------------------------------------------------------------------------------------|

|  | • | During the first eighteen years the plant is entitled to capital and operational tariff and during the following two years the plant is entitled to operational tariff only; and |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Bonuses and fines mechanism, based on standard technical operational parameters. |
|--|---------|----------------------------------------------------------------------------------|

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| PV Plant                 | Size of Property | Location                                                     | Owners of the PV Plants/Lands                                                                                                    |
|--------------------------|------------------|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|
|                     |             |                                                         |                                                                                                                             |
| “Troia 8”    | 2.42.15 hectares | Province of Foggia, Municipality of Troia, Puglia region     | PV Plant owned by Leasint and leased to Ellomay Six S.r.l. / Building right granted to Ellomay PV Six S.r.l. from owners    |
| “Troia 9”    | 2.39.23 hectares | Province of Foggia, Municipality of Troia, Puglia region     | PV Plant owned by Leasint and leased to Ellomay Five S.r.l. / Building right granted to Ellomay PV Five S.r.l. from owners  |
| “Del Bianco” | 2.44.96 hectares | Province of Macerata, Municipality of Cingoli, Marche region | PV Plant owned  by Ellomay PV One S.r.l./ Building right granted to  Ellomay PV One S.r.l. from owners                 |

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| PV Plant | Size of Property | Location | Owners of the PV Plants/Lands |
|----------|------------------|----------|-------------------------------|
|     |             |     |                          |

| “Giaché”     | 3.87.00 hectares  | Province of Ancona, Municipality of Filotrano,  Marche region         | PV Plant owned by Ellomay PV Two S.r.l. / Building right granted to Ellomay PV Two S.r.l. from owners                            |
|-------------------------------|-------------------|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
| “Costantini”      | 2.25.76 hectares  | Province of Ancona, Municipality of Senigallia, Marche region              | PV Plant owned  by  Ellomay PV One S.r.l. / Building right granted to Ellomay PV One S.r.l. from owners                |
| “Massaccesi”      | 3,60,60 hectares  | Province of Ancona, Municipality of Arcevia,  Marche region           | PV Plant owned by Ellomay PV Two S.r.l. / Building right granted to Ellomay PV Two S.r.l. from owners                            |
| “Galatina”        | 4.00.00 hectares  | Province of Lecce, Municipality of Galatina, Puglia region                 | PV Plant and Land owned by Energy Resources Galatina S.r.l.                                                                           |
| “Pedale (Corato)” | 13.59.52 hectares | Province of Bari, Municipality of Corato, Puglia region                    | Building Right granted to Pedale S.r.l. that will own the PV Plant once constructed/ Land held by owners and leased to Pedale S.r.l.  |
| “Acquafresca”     | 3.38.26 hectares  | Province of Barletta-Trani, Municipality of Minervino Murge, Puglia region | Building Right granted to Murgia Solar S.r.l. owns the PV Plant. Land held by owners and leased to Murgia Solar S.r.l.                     |

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| PV Plant | Size of Property | Location | Owners of the PV Plants/Lands |
|----------|------------------|----------|-------------------------------|
|     |             |     |                          |

| “D’Angella”   | 3.79.570 hectares | Province of Barletta-Trani, Municipality of Minervino Murge, Puglia region | Building Right granted to Luma Solar S.r.l. that owns the PV Plant. Land held by owners and leased to Luma Solar S.r.l.    |
|---------------------------------|-------------------|----------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| “Soleco”            | 11.56.87 hectares | Province of Rovigo, Municipality of Canaro,Veneto region                   | Building Right granted to Soleco S.r.l. that owns the PV Plant. Land held by owners and leased to Soleco S.r.l.            |
| “Tecnoenergy”       | 11.66.78 hectares | Province of Rovigo, Municipality of Canaro, Veneto region                  | Building Right granted to Tecnoenergy S.r.l. that owns the PV Plant. Land held by owners and leased to Tecnoenergy S.r.l.  |
| “Rinconada II”      | 81,103 m2    | Municipality of Córdoba, Andalusia, Spain                             | Building Right granted to Ellomay Spain S.L. that owns the PV Plant. Land held by owners and leased to Ellomay Spain S.L.  |
| “Rodríguez I”  | 65,600 m2         | Lorca Municipality, Murcia Region                                          | Lease Agreement executed with owners.                                                                                      |
| “Rodríguez II” | 50,300 m2         | Lorca Municipality, Murcia Region                                          | Lease Agreement executed with owners.                                                                                      |
| “Fuente Librilla”   | 64,000 m2    | Fuente Librilla Municipality, Murcia Region                                | Lease Agreement executed with owners.                                                                                      |

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|                                             |   | Year ended December 31, |   |
|--------------------------------------------------|--------|-------------------------|--------|
|                                             |   | 2016                    |   |   | 2015 |   |   | 2014 |   |
|                                             |   |                    |   |   |   |   |   |   |   |
| Depreciation of the NIS against the Euro         |   |                    | (4.8   | )% |   |   | (10.1 | )% |   |   | (1.2 | )% |
|                                             |   |                    |   |   |   |   |   |   |   |   |   |   |
| Depreciation of the U.S. dollar against the Euro |   |                    | (3.4   | )% |   |   | (10.4 | )% |   |   | (11.8 | )% |
|                                             |   |                    |   |   |   |   |   |   |   |   |   |   |

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|  | (i) | a Senior Loan, to be applied to the costs of construction of the PV Plants (up to 80% of the relevant amount),  in the amount of Euro 4.1 million, accruing interest at the EURIBOR rate, increased by a margin of 200 basis points per annum, repaid semi-annually with a maturity date of December 31, 2027; and |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | a VAT Line, for payment of VAT due on the costs of construction in the amount of Euro 0.55 million, accruing interest at the EURIBOR rate, increased by 160 basis points per annum. As of December 31, 2013 the entire VAT Line was repaid. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 1. | Our equity, on a consolidated basis, shall not be less than $55 million; |
|--|----|--------------------------------------------------------------------------|

|  | 2. | The ratio of (a) the short-term and long-term debt from banks, in addition to the debt to holders of debentures issued by us and any other interest-bearing financial obligations, net of cash and cash equivalents and short-term investments and net of project finance, including hedging transactions in connection with such project finance, of our subsidiaries, or, together, the Net Financial Debt, to (b) our equity, on a consolidated basis, plus the Net Financial Debt, shall not exceed a rate of 65%; and |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The ratio of (a) our equity, on a consolidated basis, to (b) our balance sheet, on a consolidated basis, shall not be less than a rate of 20%. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 1. | Our equity, on a consolidated basis, shall not be less than $55 million; |
|--|----|--------------------------------------------------------------------------|

|  | 2. | The ratio of (a) the short-term and long-term debt from banks, in addition to the debt to holders of debentures issued by us and any other interest-bearing financial obligations, net of cash and cash equivalents and short-term investments and net of financing of projects, including hedging transactions in connection with such financing, of our subsidiaries, or, together, the Net Financial Debt, to (b) our equity, on a consolidated basis, plus the Net Financial Debt: |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | a. | Until and including the financial results for June 30, 2018 – shall not exceed the rate of 65% for purposes of the immediate repayment provision and shall not exceed the rate of 60% for purposes of the interest increase provision (due to failure to meet financial covenants as noted above); and |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | Commencing from the financial results for September 30, 2018 – shall not exceed the rate of 60% for purposes of the immediate repayment provision and shall not exceed the rate of 55% for purposes of the interest increase provision; and |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 3. | The ratio of (a) our equity, on a consolidated basis, to (b) our balance sheet, on a consolidated basis: |
|--|----|----------------------------------------------------------------------------------------------------------|

|  | a. | Until and including the financial results for June 30, 2018 – shall not be less than a rate of 20% for purposes of the immediate repayment provision and shall not be less than a rate of 25% for purposes of the interest increase provision; and |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | Commencing from the financial results for September 30, 2018 – shall not be less than a rate of 25% for purposes of the immediate repayment provision and shall not be less than a rate of 30% for purposes of the interest increase provision. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |   | Year ended December 31,     |   |
|-------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                    |   | 2016                        |   |   | 2015 |   |   | 2014 |   |
|                                                                    |   | (U.S. dollars in thousands) |   |
| Net cash from operating activities                                 |   | $                           | 8,206  |   |   | $ | 4,911 |   |   | $ | 3,336 |   |
| Net cash from (used in) investing activities                       |   |                        | 1,000  |   |   |   | (4,485 | ) |   |   | (16,065 | ) |
| Net cash from (used in) financing activities                       |   |                        | (2,795 | ) |   |   | 4,444 |   |   |   | 24,938 |   |
| Effect of exchange rate fluctuations on cash and cash equivalents  |   |                        | (1,478 | ) |   |   | (1,911 | ) |   |   | (3,689 | ) |
| Increase in cash and cash equivalents                              |   |                        | 4,933  |   |   |   | 2,959 |   |   |   | 8,520 |   |
| Cash and cash equivalents at beginning of year                     |   |                        | 18,717 |   |   |   | 15,758 |   |   |   | 7,238 |   |
| Cash and cash equivalents at end of year                           |   |                        | 23,650 |   |   |   | 18,717 |   |   |   | 15,758 |   |

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| Payments due by period(in thousands of U.S. dollars)         |   |
|--------------------------------------------------------------|--------|
| Contractual Obligations*                                     |   | Total |   |   | Less than 1 year |   |   | 1 – 3 years |   |   | 3 – 5 years |   |   | more than5 years |   |
| Finance lease obligations (including current maturities) (1) |   |   | 5, 753 |   |   |   | 508 |   |   |   | 1,016 |   |   |   | 1,016 |   |   |   | 3,213 |   |
| Long-term loans (including current maturities)(1)            |   |   | 22,256 |   |   |   | 1,309 |   |   |   | 3,421 |   |   |   | 3,772 |   |   |   | 13,754 |   |
| Long-term rent obligations(2)                                |   |   | 3,833 |   |   |   | 288 |   |   |   | 444 |   |   |   | 444 |   |   |   | 2,657 |   |
| Debentures (including current maturities)(1)                 |   |   | 43,184 |   |   |   | 6,888 |   |   |   | 13,057 |   |   |   | 12,099 |   |   |   | 11,140 |   |
| SWAP contracts                                               |   |   | 2,900 |   |   |   | 503 |   |   |   | 718 |   |   |   | 689 |   |   |   | 990 |   |
| FW contracts                                                 |   |   | 50 |   |   |   | - |   |   |   | - |   |   |   | 50 |   |   |   | - |   |
| Total                                                        |   |   | 77,977 |   |   |   | 9,496 |   |   |   | 18,656 |   |   |   | 18,070 |   |   |   | 31,755 |   |

| * | For contractual obligations related to our investment in the Italian and Spanish photovoltaic market, please refer to “Business.” |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (1) | These amounts include future payments of interest. |
|-----|----------------------------------------------------|

| (2) | Includes land lease agreements of our Italian and Spanish subsidiaries. Rent until September 2017 of our offices in Tel Aviv is also included. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name                       |   | Age    |   | Position with Ellomay                |
|----------------------------|--------|--------|--------|--------------------------------------|
|                       |   |   |   |                                 |
| Shlomo Nehama(1)(2)        |   | 62     |   | Chairman of the Board of Directors   |
| Ran Fridrich(1)(2)(3)      |   | 64     |   | Director and Chief Executive Officer |
| Hemi Raphael(1)(2)         |   | 65     |   | Director                             |
| Anita Leviant(1)(3)(4)(5)  |   | 62     |   | Director                             |
| Barry Ben Zeev(4)(5)(6)    |   | 65     |   | Director                             |
| Mordechai Bignitz(4)(5)(6) |   | 65     |   | Director                             |
| Kalia Weintraub            |   | 38     |   | Chief Financial Officer              |
| Ori Rosenzweig             |   | 40     |   | Chief Investment Officer             |

| (1) | Elected pursuant to the Shareholders Agreement, dated as of March 24, 2008, between S. Nechama Investments (2008) Ltd. and Kanir Joint Investments (2005) Limited Partnership (See “Item 7.A: Major Shareholders”). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Provides management services to the Company pursuant to the Management Services Agreement (See “Item 6.B: Compensation”). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Member of our Advisory Committee. |
|-----|-----------------------------------|

| (4) | Independent Director pursuant to the NYSE MKT rules. |
|-----|------------------------------------------------------|

| (5) | Member of our Audit and Compensation Committees. |
|-----|--------------------------------------------------|

| (6) | External Director pursuant to the Companies Law. |
|-----|--------------------------------------------------|

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|                                          |   | Salary(1)          |   |      | Management Fees |   |   | Bonus        |   |   | Share-Based Payment |   |   | Total  |   |
|------------------------------------------|--------|--------------------|--------|-----------|-----------------|--------|--------|--------------|--------|--------|---------------------|--------|--------|--------|--------|
| Name and Position                        |   | (US$ in thousands) |   |
| Shlomo Nehama, Chairman of the Board     |   |               | -      |      |            |   | 200    | (2)     |   |   | -                   |   |   |   | -      |   |   |   | 200 | (2)  |
| Ran Fridrich, CEO and Director      |   |               | -      |      |            |   | 100    | (2)(3)  |   |   | -                   |   |   |   | -      |   |   |   | 100 | (2)(3)  |
| Hemi Raphael, Director              |   |               | -      |      |            |   | 100    | (2)(3)  |   |   | -                   |   |   |   | -      |   |   |   | 100 | (2)(3)  |
| Kalia Weintraub, Chief Financial Officer |   |               | 273    | (4)  |            |   | -      |         |   |   | -                   |   |   |   | -      |   |   |   | 273 | (4)  |
| Ori Rosenzweig, Chief Investment Officer |   |               | 234    |      |            |   | -      |         |   |   | -                   |   |   |   | -      |   |   |   | 234 |   |

| (1) | Salary and related benefits are paid to our executive officers in NIS. Salary as reported herein includes the recipient’s gross salary plus payment of social and other benefits made by us to or on behalf of the recipient. Such benefits may include, to the extent applicable, payments, contributions and/or allocations for education funds, pension funds, managers’ insurance, severance, risk insurances (e.g., life, or work disability insurance), social security, tax gross-up payments, vacation, car, phone, convalescence pay and other benefits and perquisites consistent with our policies. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Such amounts are paid pursuant to the terms of the Management Services Agreement among the Company, Kanir and Meisaf Blue & White Holdings Ltd. For additional information, see “Management Services Agreement” below. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The Management Services Agreement provides for an aggregate payment to Kanir in connection with services provided by Messrs. Fridrich and Raphael. For purposes of this tabular presentation, we divided the aggregate annual payment of $200,000 to Kanir equally between Mr. Fridrich and Mr. Raphael, however, this division does not necessarily represent the actual amounts received by them. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes an amount of approximately $48,000 deposited in severance pay funds in order to fully fund the contingent severance pay obligation to the employee accumulated since the commencement of the employee’s employment. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | · | With respect to our chief executive officer, a controlling shareholder or a relative of a controlling shareholder, approval is required by the (i) compensation committee, (ii) board of directors and (iii) company’s shareholders with the “special majority” described above (in that order). Subject to certain conditions, the Israeli Companies Law provides an exemption from the shareholder approval requirement in connection with the approval of the Terms of Service and Employment of a CEO candidate. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | With respect to a director, approval is required by the (i) compensation committee, (ii) board of directors and (iii) company’s shareholders with a regular majority (in that order). |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | With respect to any other office holder, approval is required by the compensation committee and the board of directors (in that order); however, in the event of an update of existing Terms of Service and Employment, which the Compensation Committee confirms is not material, the approval of the compensation committee is sufficient. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Name of Beneficial Owner   |   | Number of Shares Beneficially Held (1) |      |   | Percent of Class |   |
|----------------------------|--------|----------------------------------------|-----------|--------|------------------|--------|
| Shlomo Nehama(2)(5)   |   |                                   | 4,016,842 |   |             |   | 37.6 | % |
| Hemi Raphael(3)(5)    |   |                                   | 3,240,921 |   |             |   | 30.4 | % |
| Ran Fridrich(4)(5)    |   |                                   | 2,903,184 |   |             |   | 27.2 | % |
| Anita Leviant(6)      |   |                                   | 8,333     |   |             |   | * |   |
| Barry Ben Zeev(6)     |   |                                   | 6,586     |   |             |   | * |   |
| Mordechai Bignitz(6)  |   |                                   | 4,583     |   |             |   | * |   |
| Kalia Weintraub       |   |                                   | -         |   |             |   | - |   |
| Ori Rosenzweig        |   |                                   | -         |   |             |   | - |   |

|  | (1) | As used in this table, “beneficial ownership” means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from March 15, 2017 through the exercise of any option or warrant. Ordinary shares subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 10,675,608 ordinary shares outstanding as of March 15, 2017. This number of outstanding ordinary shares does not include a total of 257,946 ordinary shares held at that date as treasury shares under Israeli law, all of which were repurchased by us. For so long as such treasury shares are owned by us they have no rights and, accordingly, are neither eligible to participate in or receive any future dividends which may be paid to our shareholders nor are they entitled to participate in, be voted at or be counted as part of the quorum for, any meetings of our shareholders.  |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | According to information provided by the holders, the 4,016,842 ordinary shares beneficially owned by Mr. Nehama consist of: (i) 3,551,869 ordinary shares held by Nechama Investments, an Israeli company, which constitute approximately 33.3% of our outstanding ordinary shares, and (ii) 464,973 ordinary shares held directly by Mr. Nehama, which constitute approximately 4.4% of our outstanding ordinary shares. Mr. Nehama, as the sole officer, director and shareholder of Nechama Investments, may be deemed to indirectly beneficially own any ordinary shares beneficially owned by Nechama Investments, which constitute (together with the shares held directly by him) approximately 37.6% of our outstanding ordinary shares. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (3) | The 3,240,921 ordinary shares beneficially owned by Mr. Raphael consist of: (i) 2,786,397 ordinary shares held by Kanir, which constitute approximately 26.1% of our outstanding share capital, (ii) 314,514 ordinary shares held by a BVI private company wholly-owned by Mr. Raphael, which constitute approximately 3% of our outstanding shares and (iii) 140,010 ordinary shares held directly by Mr. Raphael, which constitute approximately 1.3% of our outstanding shares. Mr. Raphael, by virtue of his position as a director and majority shareholder of Kanir Investments Ltd., or Kanir Ltd., the general partner in Kanir, and his position as a limited partner in Kanir, may be deemed to indirectly beneficially own the ordinary shares beneficially owned by Kanir. Mr. Raphael disclaims beneficial ownership of the shares held by Kanir, except to the extent of his pecuniary interest therein, if any. In addition, Mr. Raphael, as the sole shareholder of such private company, may be deemed to indirectly beneficially own any ordinary shares beneficially owned by the BVI private company.  |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | The 2,903,184 ordinary shares beneficially owned by Mr. Fridrich consist of: (i) 2,786,397 ordinary shares held by Kanir, which constitute approximately 26.1% of our outstanding share capital and (ii) 116,787 ordinary shares held directly by Mr. Fridrich, which constitute approximately 1.1% of our outstanding shares. Mr. Fridrich, by virtue of his position as a director of Kanir Ltd. and his position as a limited partner in Kanir, may be deemed to indirectly beneficially own the ordinary shares beneficially owned by Kanir. Mr. Fridrich disclaims beneficial ownership of the shares held by Kanir, except to the extent of his pecuniary interest therein, if any.  |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (5) | By virtue of the 2008 Shareholders Agreement between Nechama Investments and Kanir (see “Item 7.A: Major Shareholders”), Mr. Nehama, Nechama Investments, Kanir and Messrs. Raphael and Fridrich may be deemed to be members of a group that holds shared voting power with respect to 6,338,266 ordinary shares, which together constitute approximately 59.4% of our outstanding ordinary shares, and holds shared dispositive power with respect to 5,348,480 ordinary shares, which constitute 50.1% of our outstanding ordinary shares. Accordingly, taking into account the shares directly held by Messrs. Nehama, Raphael (taking into account also shares held by the private company wholly-owned by him) and Fridrich, they may be deemed to beneficially own approximately 63.7%, 63.6% and 60.5%, respectively, of the outstanding ordinary shares. Mr. Nehama and Nechama Investments both disclaim beneficial ownership of the ordinary shares beneficially owned by Kanir and Kanir Ltd., Kanir and Messrs. Raphael and Fridrich all disclaim beneficial ownership of the shares held by Nechama Investments.  |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (6) | (i) Anita Leviant holds currently exercisable options to purchase 8,333 ordinary shares with expiration dates ranging from August 1, 2018 to August 1, 2026 and exercise prices per share ranging between $4.7 - $9.37, (ii) Barry Ben Zeev holds currently exercisable options to purchase 6,586 ordinary shares with expiration dates ranging from December 30, 2019 to August 1, 2026 and exercise prices per share ranging between $5.9 - $9.37 and (iii) Mordechai Bignitz holds currently exercisable options to purchase 4,583 ordinary shares with expiration dates ranging from December 20, 2021 to August 1, 2026 and exercise prices per share ranging between $5.55 - $9.37. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                            |   | Ordinary SharesBeneficially Owned(1) |      |   | Percentage of Ordinary Shares Beneficially Owned |   |
|-----------------------------------------------------------------|--------|--------------------------------------|-----------|--------|--------------------------------------------------|--------|
|                                                            |   |                                 |      |   |                                             |   |
| Shlomo Nehama (2)(5)                                       |   |                                 | 4,016,842 |   |                                             |   | 37.6 | % |
| Kanir Joint Investments (2005) Limited Partnership (3)(4)(5)(6) |   |                                 | 2,786,397 |   |                                             |   | 26.1 | % |

| (1) | As used in this table, “beneficial ownership” means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security as determined pursuant to Rule 13d-3 promulgated under the U.S. Securities Exchange Act of 1934, as amended. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from March 15, 2017 through the exercise of any option or warrant. Ordinary shares subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based on a total of 10,675,608 ordinary shares outstanding as of March 15, 2017. This number of outstanding ordinary shares does not include a total of 257,946 ordinary shares held at that date as treasury shares under Israeli law, all of which were repurchased by us. For so long as such treasury shares are owned by us they have no rights and, accordingly, are neither eligible to participate in or receive any future dividends which may be paid to our shareholders nor are they entitled to participate in, be voted at or be counted as part of the quorum for, any meetings of our shareholders. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (2) | The 4,016,842 ordinary shares beneficially owned by Mr. Nehama consist of: (i) 3,551,869 ordinary shares held by Nechama Investments, which constitute approximately 33.3% of our outstanding ordinary shares and (ii) 464,973 ordinary shares and held directly by Mr. Nehama, which constitute approximately 4.4% of our outstanding ordinary shares. Mr. Nehama, as the sole officer, director and shareholder of Nechama Investments, may be deemed to indirectly beneficially own any ordinary shares owned by Nechama Investments, which constitute (together with his shares) approximately 37.6% of our outstanding ordinary shares. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Kanir is an Israeli limited partnership. Kanir Ltd., in its capacity as the general partner of Kanir, has the voting and dispositive power over the ordinary shares directly beneficially owned by Kanir. As a result, Kanir Ltd. may be deemed to indirectly beneficially own the ordinary shares beneficially owned by Kanir. Messrs. Hemi Raphael and Ran Fridrich, who are members of our Board of Directors, are the sole directors of Kanir Ltd. and Mr. Raphael is a majority shareholder of Kanir Ltd. As a result, Messrs. Raphael and Fridrich may be deemed to indirectly beneficially own the ordinary shares beneficially owned by Kanir, which constitute, together with their holdings as set forth in footnote (4), 30.4% and 27.2%, respectively, of our outstanding ordinary shares. Kanir Ltd. and Messrs. Raphael and Fridrich disclaim beneficial ownership of such ordinary shares except to the extent of their respective pecuniary interest therein, if any. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Raphael beneficially owns 454,524 ordinary shares, consisting of: (i) 314,514 ordinary shares held by a BVI private company wholly-owned by Mr. Raphael, which constitute approximately 3% of our outstanding shares and (ii) 140,010 ordinary shares held directly by Mr. Raphael, which constitute approximately 1.3% of our outstanding shares. Mr. Raphael, as the sole officer, director and shareholder of such private company, may be deemed to indirectly beneficially own any ordinary shares beneficially owned by such private company, which constitute (together with the shares held directly by him) approximately 4.3% of our outstanding ordinary shares. Mr. Fridrich directly owns 116,787 ordinary shares, which constitute approximately 1.1% of our outstanding shares. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | By virtue of the 2008 Shareholders Agreement, Mr. Nehama, Nechama Investments, Kanir, Kanir Ltd., and Messrs. Raphael and Fridrich may be deemed to be members of a group that holds shared voting power with respect to 6,338,266 ordinary shares, which constitute approximately 59.4% of our outstanding ordinary shares, and holds shared dispositive power with respect to 5,348,480 ordinary shares, which constitute 50.1% of the outstanding ordinary shares. Accordingly, taking into account the shares directly held by Messrs. Nehama, Raphael (taking into account also shares held by the private company wholly-owned by him) and Fridrich, they may be deemed to beneficially own approximately 63.7%, 63.6% and 60.5%, respectively, of our outstanding ordinary shares. Each of Mr. Nehama and Nechama Investments disclaims beneficial ownership of the ordinary shares beneficially owned by Kanir. Each of Kanir, Kanir Ltd. and Messrs. Raphael and Fridrich disclaims beneficial ownership of the ordinary shares beneficially owned by Nechama Investments. A copy of the 2008 Shareholders Agreement was filed with the Securities and Exchange Commission, or the SEC, on March 31, 2008 as Exhibit 14 to an amendment to a Schedule 13D and is not incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (6) | Bonstar Investments Ltd., or Bonstar, an Israeli company, holds 233,258 ordinary shares, which constitute approximately 2.2% of the outstanding ordinary shares. Bonstar is a limited partner of Kanir and assisted Kanir in the financing of the purchase of some of its ordinary shares. Accordingly, Bonstar may be deemed to be a member of a group with Kanir and its affiliates, although there are no agreements between Bonstar and either of such persons and entities with respect to the ordinary shares beneficially owned by each of them. Mr. Joseph Mor and Mr. Ishay Mor are the sole shareholders of Bonstar and Mr. Joseph Mor serves as the sole director of Bonstar. Messrs. Joseph Mor and Ishay Mor also hold, through a company jointly held by them, 175,000 ordinary shares, which constitute approximately 1.6% of the outstanding ordinary shares. By virtue of their control over Bonstar and the other company, Messrs. Joseph Mor and Ishay Mor may be deemed to indirectly beneficially own the 408,258 ordinary shares beneficially owned by Bonstar and by the other company, which constitute approximately 3.8% of the ordinary shares. Each of Bonstar and Messrs. Joseph Mor and Ishay Mor disclaims beneficial ownership of the ordinary shares beneficially owned by Kanir and Nechama Investments, except to the extent of their respective pecuniary interest therein, if any. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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----

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|       |   | NYSE MKT   |   |   | Tel Aviv Stock Exchange |   |
|------------|--------|------------|--------|--------|-------------------------|--------|
| Year       |   | High (US$) |   |   | Low (US$)               |   |   | High (NIS) |   |   | Low (NIS) |   |
| 2012  |   |       | 7.7    |   |                    |   | 4.25 |   |   |   | -- |   |   |   | -- |   |
| 2013  |   |       | 11.37  |   |                    |   | 6.1 |   |   |   | 40.69 |   |   |   | 31.39 |   |
| 2014  |   |       | 10.59  |   |                    |   | 8.56 |   |   |   | 39.91 |   |   |   | 29.72 |   |
| 2015  |   |       | 10.15  |   |                    |   | 7.73 |   |   |   | 39.93 |   |   |   | 29.97 |   |
| 2016  |   |       | 9.59   |   |                    |   | 7.05 |   |   |   | 36.21 |   |   |   | 27.09 |   |
|       |   |       |   |   |                    |   |   |   |   |

|                 |   | NYSE MKT   |   |   | Tel Aviv Stock Exchange |   |
|----------------------|--------|------------|--------|--------|-------------------------|--------|
| 2015                 |   | High (US$) |   |   | Low (US$)               |   |   | High (NIS) |   |   | Low (NIS) |   |
| First Quarter   |   |       | 9.5    |   |                    |   | 7.73 |   |   |   | 37.22 |   |   |   | 33.56 |   |
| Second Quarter  |   |       | 8.67   |   |                    |   | 7.83 |   |   |   | 33.81 |   |   |   | 29.97 |   |
| Third Quarter   |   |       | 10.15  |   |                    |   | 8.15 |   |   |   | 39.93 |   |   |   | 31.12 |   |
| Fourth Quarter  |   |       | 9.15   |   |                    |   | 8.06 |   |   |   | 36.79 |   |   |   | 31.82 |   |

----

|                 |   | NYSE MKT   |   |   | Tel Aviv Stock Exchange |   |
|----------------------|--------|------------|--------|--------|-------------------------|--------|
| 2016                 |   | High (US$) |   |   | Low (US$)               |   |   | High (NIS) |   |   | Low (NIS) |   |
| First Quarter   |   |       | 9      |   |                    |   | 7.46 |   |   |   | 35.66 |   |   |   | 28.7 |   |
| Second Quarter  |   |       | 8.85   |   |                    |   | 7.25 |   |   |   | 34.08 |   |   |   | 28.06 |   |
| Third Quarter   |   |       | 9.59   |   |                    |   | 7.11 |   |   |   | 36.21 |   |   |   | 29.01 |   |
| Fourth Quarter  |   |       | 9.09   |   |                    |   | 7.05 |   |   |   | 34.59 |   |   |   | 27.09 |   |

|                                         |   | NYSE MKT   |   |   | Tel Aviv Stock Exchange |   |
|----------------------------------------------|--------|------------|--------|--------|-------------------------|--------|
| 2016                                         |   | High (US$) |   |   | Low (US$)               |   |   | High (NIS) |   |   | Low (NIS) |   |
| First Quarter (through March 15, 2017)  |   |       | 8.83   |   |                    |   | 7.7 |   |   |   | 33.42 |   |   |   | 27.9 |   |

|                                      |   | NYSE MKT   |   |   | Tel Aviv Stock Exchange |   |
|-------------------------------------------|--------|------------|--------|--------|-------------------------|--------|
| Most Recent Six Months                    |   | High (US$) |   |   | Low (US$)               |   |   | High (NIS) |   |   | Low (NIS) |   |
| September 2016                       |   |       | 9.39   |   |                    |   | 8.97 |   |   |   | 36.21 |   |   |   | 33.89 |   |
| October 2016                         |   |       | 9.09   |   |                    |   | 8.15 |   |   |   | 34.59 |   |   |   | 31.15 |   |
| November 2016                        |   |       | 8.22   |   |                    |   | 7.05 |   |   |   | 31.15 |   |   |   | 27.96 |   |
| December 2016                        |   |       | 8.6    |   |                    |   | 7.07 |   |   |   | 32.14 |   |   |   | 27.09 |   |
| January 2017                         |   |       | 8.83   |   |                    |   | 8.11 |   |   |   | 33.42 |   |   |   | 31.21 |   |
| February 2017                        |   |       | 8.49   |   |                    |   | 7.7 |   |   |   | 32.28 |   |   |   | 27.9 |   |
| March 2017 (through March 15, 2017)  |   |       | 8.37   |   |                    |   | 8.08 |   |   |   | 31.79 |   |   |   | 30.2 |   |

----

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----

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|  | · | any amendment to the articles; |
|--|--------|--------------------------------|

|  | · | an increase in the company’s authorized share capital; |
|--|--------|--------------------------------------------------------------|

|  | · | a merger; or |
|--|--------|--------------|

|  | · | approval of related party transactions that require shareholder approval. |
|--|--------|---------------------------------------------------------------------------|

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----

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----

----

|   | (1) | an individual citizen or resident of the United States, |
|--------|-----|---------------------------------------------------------|

|   | (2) | a corporation or other entity taxable as a corporation for U.S. federal income tax purposes created or organized in or under the laws of the United States or any political subdivision thereof, |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | an estate the income of which is subject to U.S. federal income tax without regard to its source, or |
|--------|-----|------------------------------------------------------------------------------------------------------|

|   | (4) | a trust, if such trust was in existence on August 20, 1996 and has validly elected to be treated as a U.S. person for U.S. federal income tax purposes, or if (a) a court within the U.S. can exercise primary supervision over its administration and (b) one or more U.S. persons have the authority to control all of the substantial decisions of such trust. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | (1) | the excess distribution or gain will be allocated ratably over your holding period for the ordinary shares, |
|--------|-----|-------------------------------------------------------------------------------------------------------------|

|   | (2) | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                            |   | December 31, 2016 |   |
|---------------------------------|--------|-------------------|--------|
|                            |   | Increase          |   |   | Decrease |   |
|                            |   | Profit or loss    |   |   | Profit or loss |   |
|                            |   | US$ thousands     |   |
| Change in the exchange rate of: |   |              |   |   |   |   |
| 5% in the Euro                  |   |              | (768   | ) |   |   | 768 |   |
| 5% in NIS                       |   |              | (4,181 | ) |   |   | 4,181 |   |
|                            |   | December 31, 2015 |   |
|---------------------------------|--------|-------------------|--------|
|                            |   | Increase          |   |   | Decrease |   |
|                            |   | Profit or loss    |   |   | Profit or loss |   |
|                            |   | US$ thousands     |   |
| Change in the exchange rate of: |   |              |   |   |   |   |
| 5% in the Euro                  |   |              | (465   | ) |   |   | 465 |   |
| 5% in NIS                       |   |              | (7,625 | ) |   |   | 7,625 |   |
|           |   | December 31,   |   |
|----------------|--------|----------------|--------|
|           |   | 2016           |   |   | 2015 |   |
|           |   | Profit or loss |   |   | Profit or loss |   |
|           |   | US$ thousands  |   |
| Increase of 1% |   |           | 1,005  |   |   |   | 864 |   |
| Increase of 3% |   |           | 3,053  |   |   |   | 2,587 |   |
| Decrease of 1% |   |           | (1,043 | ) |   |   | (857 | ) |
| Decrease of 3% |   |           | (3,091 | ) |   |   | (2,581 | ) |

----

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|                  |   | 2016               |   |   | 2015   |   |
|-----------------------|--------|--------------------|--------|--------|--------|--------|
|                  |   | (US$ in thousands) |   |
| Audit Fees(1)         |   | $                  | 116    |   |   | $      | 117 |   |
| Audit-Related Fees(2) |   | $                  | 47     |   |   | $      | 16 |   |
| Tax Fees(3)           |   | $                  | 18     |   |   | $      | 28 |   |
|                  |   |               |   |   |   |   |   |   |
| Total                 |   | $                  | 181    |   |   | $      | 161 |   |

| (1) | Professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements or services that are normally provided by the accountants in connection with statutory and regulatory filings or engagements. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Professional services related to due diligence investigations. |
|-----|----------------------------------------------------------------|

| (3) | Professional services rendered by our independent registered public accounting firm for international and local tax compliance, tax advice services and tax planning. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Period                         |   | (a) Total Numbers of Shares Purchased(1) |   |   | (b) Average Price Paid per Share |   |   | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | (d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |   |
|--------------------------------|--------|------------------------------------------|--------|--------|----------------------------------|--------|--------|--------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------|--------|
|                           |   | (In U.S. dollars, except share amounts)  |   |
| January 1 – January 31   |   |                                     | 952    |   |                             |   | 8.1452 |                                                                                 |   |   | 952                                                                                                              |   |   | $ | 1,542,268 |   |
| March 1 – March 31  |   |                                     | 11     |   |                             |   | 8.41   |                                                                                 |   |   | 11                                                                                                               |   |   | $ | 1,542,175 |   |
| April 1 – April 30  |   |                                     | 330    |   |                             |   | 8.53   |                                                                                 |   |   | 330                                                                                                              |   |   | $ | 1,539,383 |   |
| November 1 – November 30 |   |                                     | 225    |   |                             |   | 7.435  |                                                                                 |   |   | 225                                                                                                              |   |   | $ | 1,537,716 |   |
| Total                     |   |                                     | 1,518  |   |                             |   |   |                                                                                 |   |   | 1,518                                                                                                            |   |   |   |   |   |

|  | (1) | All ordinary shares were repurchased pursuant to the share buyback program approved in May 2015 and were made in open-market transactions. Except as set forth in the table above, we did not repurchase any ordinary shares in any other monthly period during 2016. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

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| Number |   | Description                                                                                                                                                                                                                                |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1    |   | Memorandum of Association of the Registrant (translated from Hebrew), reflecting amendments through June 9, 2011*(1)                                                                                                                       |
| 1.2    |   | Second Amended and Restated Articles of the Registrant, reflecting amendments through June 20, 2012(1)                                                                                                                                     |
| 2.1    |   | Specimen Certificate for ordinary shares(2)                                                                                                                                                                                                |
| 4.1    |   | 1998 Share Option Plan for Non-Employee Directors(3)                                                                                                                                                                                       |
| 4.2    |   | 2000 Stock Option Plan(1)                                                                                                                                                                                                                  |
| 4.3    |   | Form of Indemnification Agreement between the Registrant and its officers and directors(1)                                                                                                                                                 |
| 4.4    |   | Form of Exemption Letter between the Registrant and its officers and directors(1)                                                                                                                                                          |
| 4.5    |   | Form of Registration Rights Agreement, dated September 12, 2005, among the Registrant, certain investors, Bank Hapoalim, Bank Leumi and Israel Discount Bank(4)                                                                            |
| 4.6    |   | Management Services Agreement, by and among the Registrant, Kanir Joint Investments (2005) Limited Partnership and Meisaf Blue & White Holdings Ltd., effective as of March 31, 2008(5)                                                |
| 4.7    |   | Giaché Building Right Agreement (summary of Italian version)(6)*                                                                                                                                                                      |
| 4.8    |   | Massaccesi Building Right Agreement (summary of Italian version)(6)*                                                                                                                                                                       |
| 4.9    |   | Troia 8 Building Right Agreement (summary of Italian version)(6)*                                                                                                                                                                          |
| 4.10   |   | Troia 9 Building Right Agreement (summary of Italian version)(6)*                                                                                                                                                                          |
| 4.11   |   | Investment Agreement, among U. Dori Group Ltd., U. Dori Energy Infrastructures Ltd. (currently Amos Luzon Entrepreneurship and Energy Group Ltd.) and Ellomay Clean Energy Ltd. , dated November 25, 2010 (summary of Hebrew version)(6)*  |
| 4.12   |   | Shareholders Agreement, among U. Dori Group Ltd. (currently Amos Luzon Entrepreneurship and Energy Group Ltd.), Ellomay Clean Energy Ltd. and U. Dori Energy Infrastructures Ltd., dated November 25, 2010 (summary of Hebrew version)(6)* |
| 4.13   |   | Acquafresca Building Right Agreement (summary of Italian version)(2)*                                                                                                                                                                      |
| 4.14   |   | D’Angella Building Right Agreement (summary of Italian version)(2)*                                                                                                                                                                  |
| 4.15   |   | Rinconada II Building Right Agreement (summary of Spanish version)(2)*                                                                                                                                                                     |
| 4.16   |   | Amendment No. 1 to Management Services Agreement, by and among the Registrant, Kanir Joint Investments (2005) Limited Partnership and Meisaf Blue & White Holdings Ltd., dated June 18, 2013(7)                                        |
| 4.17   |   | Soleco Building Right Agreement (summary of Italian version)(7)*                                                                                                                                                                           |
| 4.18   |   | Tecnoenergy Building Right Agreement (summary of Italian version)(7)*                                                                                                                                                                      |
| 4.19   |   | Deed of Trust between the Registrant and Hermetic Trust (1975) Ltd., governing the Company’s Series A Debentures, dated December 30, 2013 (translation of Hebrew version)(7)*                                                        |
| 4.20   |   | Rodríguez I Lease Agreements (summary of Spanish version)(3)*                                                                                                                                                                         |
| 4.21   |   | Rodríguez II Lease Agreements (summary of Spanish version)(3)*                                                                                                                                                                        |

----

| Number |   | Description                                                                                                                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.22   |   | Fuente Librilla Lease Agreement (summary of Spanish version)(3)*                                                                                                             |
| 4.23   |   | Updated Directors and Officers Compensation Policy, adopted July 5, 2016(8)                                                                                                  |
| 4.24   |   | Deed of Trust between the Registrant and Hermetic Trust (1975) Ltd., governing the Company’s Series B Debentures, dated March 1, 2017 (translation of Hebrew version)* |
| 8      |   | List of Subsidiaries of the Registrant                                                                                                                                       |
| 12.1   |   | Certification of Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) (Section 302 Certification)                                                       |
| 12.2   |   | Certification of Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) (Section 302 Certification)                                                       |
| 13     |   | Certification of Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(b) and Rule 15d-14(b) (Section 906 Certification)                       |
| 15.1   |   | Consent of Somekh Chaikin, Member Firm of KPMG International, Independent Registered Public Accounting Firm with respect to our financial statements                         |
| 15.2   |   | Consent of BDO Auditores S.L.P. with respect to the financial statements of Ellomay Spain S.L.                                                                               |
| 15.3   |   | Consent of BDO Auditores S.L.P. with respect to the financial statements of Rodríguez I Parque Solar, S.L.                                                              |
| 15.4   |   | Consent of BDO Auditores S.L.P. with respect to the financial statements of Rodríguez II Parque Solar, S.L.                                                             |
| 15.5   |   | Consent of Somekh Chaikin, Member Firm of KPMG International, Independent Registered Public Accounting Firm with respect to the financial statements of Dorad Energy Ltd.    |
|   |   |                                                                                                                                                                         |

| * | The original language version is on file with the Registrant and is available upon request. |
|---|---------------------------------------------------------------------------------------------|

| (1) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2012 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (2) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2011 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (3) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2014 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (4) | Included in the Registrant’s Form 6-K dated October 14, 2005 and incorporated by reference herein. |
|-----|----------------------------------------------------------------------------------------------------------|

| (5) | Included in the Registrant’s Form 6-K dated December 1, 2008 and incorporated by reference herein. |
|-----|----------------------------------------------------------------------------------------------------------|

| (6) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2010 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (7) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2013 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (8) | Included in Exhibit 99.2 of the Registrant’s Form 6-K dated May 18, 2016 and incorporated by reference herein. |
|-----|----------------------------------------------------------------------------------------------------------------------|

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|   | **Ellomay Capital Ltd.** |                                   |
|--------|--------------------------|----------------------------------------|
|   |                     |                                   |   |
|        | By:                      | /s/ *Ran Fridrich*                |   |
|   |                     | *Ran Fridrich*                         |   |
|   |                     | *Chief Executive Officer and Director* |   |
|   |                     |                                   |   |

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| Ellomay Capital Ltd. and its Subsidiaries Consolidated Financial StatementsAs at December 31, 2016 |
|---------------------------------------------------------------------------------------------------------|

----

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|                                                                            | Page     |
|---------------------------------------------------------------------------------|----------|
|                                                                            |     |
| Report of Independent Registered Public Accounting Firm                         | F-2      |
|                                                                            |     |
| Consolidated Statements of Financial Position                                   | F-3      |
|                                                                            |     |
| Consolidated Statements of Profit or Loss and Other Comprehensive Income (Loss) | F-4      |
|                                                                            |     |
| Consolidated Statements of Changes in Equity                                    | F-5      |
|                                                                            |     |
| Consolidated Statements of Cash Flows                                           | F-6-F-7  |
|                                                                            |     |
| Notes to the Consolidated Financial Statements                                  | F-8-F-73 |

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|                                                   |   |   |   |   | December 31      |    |   | December 31 |   |
|--------------------------------------------------------|--------|--------|--------|--------|------------------|---------|--------|-------------|--------|
|                                                   |   |   |   |   | 2016             |    |   | 2015        |   |
|                                                   |   | Note   |   |   | US$ in thousands |    |
| Assets                                                 |   |   |   |   |             |    |   |        |   |
|                                                   |   |   |   |   |             |    |   |        |   |
| Current assets:                                        |   |   |   |   |             |    |   |        |   |
|                                                   |   |   |   |   |             |    |   |        |   |
| Cash and cash equivalents                              |   | 3      |   |   |             | 23,650  |   |        |   | 18,717 |   |
| Marketable securities                                  |   | 4      |   |   |             | 1,023   |   |        |   | 6,499 |   |
| Restricted cash                                        |   | 4      |   |   |             | 16      |   |        |   | 79 |   |
| Trade and other receivables                            |   | 5      |   |   |             | 9,952   |   |        |   | 8,218 |   |
|                                                   |   |   |   |   |             | 34,641  |   |        |   | 33,513 |   |
| Non-current assets                                     |   |   |   |   |             |    |   |        |   |   |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Investment in equity accounted investee                |   | 6      |   |   |             | 30,788  |   |        |   | 33,970 |   |
| Advances on account of investments                     |   | 6      |   |   |             | 905     |   |        |   | - |   |
| Financial assets                                       |   | 6C     |        |   |             | 1,330   |   |        |   | 4,865 |   |
| Fixed assets                                           |   | 7      |   |   |             | 77,066  |   |        |   | 78,975 |   |
| Restricted cash and deposits                           |   | 4      |   |   |             | 5,399   |   |        |   | 5,317 |   |
| Deferred tax                                           |   | 19     |   |   |             | 2,614   |   |        |   | 2,840 |   |
| Long term receivables                                  |   | 5      |   |   |             | 3,431   |   |        |   | 847 |   |
|                                                   |   |   |   |   |             | 121,533 |   |        |   | 126,814 |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Total assets                                           |   |   |   |   |             | 156,174 |   |        |   | 160,327 |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Liabilities and Equity                                 |   |   |   |   |             |    |   |        |   |   |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Current liabilities                                    |   |   |   |   |             |    |   |        |   |   |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Current maturities of long term loans                  |   | 9      |   |   |             | 1,150   |   |        |   | 1,133 |   |
| Debentures                                             |   | 12     |   |   |             | 4,989   |   |        |   | 4,878 |   |
| Trade payables                                         |   |   |   |   |             | 1,684   |   |        |   | 869 |   |
| Other payables                                         |   | 8      |   |   |             | 3,279   |   |        |   | 3,223 |   |
|                                                   |   |   |   |   |             | 11,102  |   |        |   | 10,103 |   |
| Non-current liabilities                                |   |   |   |   |             |    |   |        |   |   |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Finance lease obligations                              |   | 10     |   |   |             | 4,228   |   |        |   | 4,724 |   |
| Long-term loans                                        |   | 11     |   |   |             | 17,837  |   |        |   | 13,043 |   |
| Debentures                                             |   | 12     |   |   |             | 30,548  |   |        |   | 35,074 |   |
| Deferred tax                                           |   | 19     |   |   |             | 925     |   |        |   | 823 |   |
| Other long-term liabilities                            |   | 13     |   |   |             | 2,764   |   |        |   | 2,495 |   |
|                                                   |   |   |   |   |             | 56,302  |   |        |   | 56,159 |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Total liabilities                                      |   |   |   |   |             | 67,404  |   |        |   | 66,262 |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Equity                                                 |   |   |   |   |             |    |   |        |   |   |   |
| Share capital                                          |   | 16     |   |   |             | 26,597  |   |        |   | 26,597 |   |
| Share premium                                          |   |   |   |   |             | 77,727  |   |        |   | 77,723 |   |
| Treasury shares                                        |   |   |   |   |             | (1,985  | )      |        |   | (1,972 | ) |
| Reserves                                               |   |   |   |   |             | (17,024 | )      |        |   | (15,215 | ) |
| Retained earnings                                      |   |   |   |   |             | 4,191   |   |        |   | 7,200 |   |
| Total equity attributed to shareholders of the Company |   |   |   |   |             | 89,506  |   |        |   | 94,333 |   |
| Non-Controlling Interest                               |   |   |   |   |             | (736    | )      |        |   | (268 | ) |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Total equity                                           |   |   |   |   |             | 88,770  |   |        |   | 94,065 |   |
|                                                   |   |   |   |   |             |    |   |        |   |   |   |
| Total liabilities and equity                           |   |   |   |   |             | 156,174 |   |        |   | 160,327 |   |

----

----

|                                                                             |   |   |   |   | For the year ended December 31           |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|------------------------------------------|--------|
|                                                                             |   |   |   |   | 2016                                     |   |   | 2015 |   |   | 2014 |   |
|                                                                             |   | Note   |   |   | US$ in thousands (except per share data) |   |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |
| Revenues                                                                         |   |   |   |   |                                     | 12,872 |   |   |   | 13,817 |   |   |   | 15,782 |   |
| Operating expenses                                                               |   | 18B    |        |   |                                     | (2,305 | ) |   |   | (2,854 | ) |   |   | (3,087 | ) |
| Depreciation expenses                                                            |   | 18B    |   |   |                                     | (4,884 | ) |   |   | (4,912 | ) |   |   | (5,452 | ) |
| Gross profit                                                                     |   |   |   |   |                                     | 5,683  |   |   |   | 6,051 |   |   |   | 7,243 |   |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses                                              |   | 18C    |   |   |                                     | (4,679 | ) |   |   | (3,745 | ) |   |   | (4,253 | ) |
| Share of profits of equity accounted investee                                    |   |   |   |   |                                     | 1,505  |   |   |   | 2,446 |   |   |   | 1,819 |   |
| Other income, net                                                                |   | 18D    |   |   |                                     | 99     |   |   |   | 21 |   |   |   | 1,438 |   |
| Gain on bargain purchase                                                         |   | 6      |   |   |                                     | -      |   |   |   | - |   |   |   | 3,995 |   |
| Operating Profit                                                                 |   |   |   |   |                                     | 2,608  |   |   |   | 4,773 |   |   |   | 10,242 |   |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Financing income                                                                 |   | 18A    |   |   |                                     | 290    |   |   |   | 2,347 |   |   |   | 2,245 |   |
| Financing income (expenses) in connection with derivatives, net                  |   | 18A    |   |   |                                     | 704    |   |   |   | 3,485 |   |   |   | (1,048 | ) |
| Financing expenses                                                               |   | 18A    |   |   |                                     | (4,050 | ) |   |   | (5,240 | ) |   |   | (4,592 | ) |
| Financing income (expenses), net                                                 |   |   |   |   |                                     | (3,056 | ) |   |   | 592 |   |   |   | (3,395 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) before taxes on income                                             |   |   |   |   |                                     | (448   | ) |   |   | 5,365 |   |   |   | 6,847 |   |
| Tax benefit (taxes on income)                                                    |   | 19     |   |   |                                     | (625   | ) |   |   | 1,933 |   |   |   | (201 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) for the year                                                       |   |   |   |   |                                     | (1,073 | ) |   |   | 7,298 |   |   |   | 6,646 |   |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) attributable to:                                                   |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Owners of the Company                                                            |   |   |   |   |                                     | (605   | ) |   |   | 7,553 |   |   |   | 6,658 |   |
| Non-controlling interests                                                        |   |   |   |   |                                     | (468   | ) |   |   | (255 | ) |   |   | (12 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) for the year                                                       |   |   |   |   |                                     | (1,073 | ) |   |   | 7,298 |   |   |   | 6,646 |   |
| Other comprehensive income (loss) items that after initial recognition           |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| in comprehensive income (loss) were or will be transferred to profit or loss:    |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation differences for foreign operations                  |   |   |   |   |                                     | (267   | ) |   |   | (141 | ) |   |   | (3,199 | ) |
| Other comprehensive income items that will not be transferred to profit or loss: |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Presentation currency translation adjustments                                    |   |   |   |   |                                     | (1,542 | ) |   |   | (6,947 | ) |   |   | (9,082 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Total other comprehensive loss                                                   |   |   |   |   |                                     | (1,809 | ) |   |   | (7,088 | ) |   |   | (12,281 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Total comprehensive income (loss) for the year                                   |   |   |   |   |                                     | (2,882 | ) |   |   | 210 |   |   |   | (5,635 | ) |
|                                                                             |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share                                                        |   |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |
| Basic earnings (loss) per share                                                  |   | 20     |   |   |                                     | (0.06  | ) |   |   | 0.7 |   |   |   | 0.62 |   |
| Diluted earnings (loss) per share                                                |   |   |   |   |                                     | (0.06  | ) |   |   | 0.7 |   |   |   | 0.62 |   |

----

----

|                                                                          |   |    |   |   |                                        |   |   | Non- controlling               |   |   | Total    |   |
|-------------------------------------------------------------------------------|--------|---------|--------|--------|---------------------------------------------|--------|--------|--------------------------------|--------|--------|----------|--------|
|                                                                          |   |    |   |   | Attributable to shareholders of the Company |   |   | Interests                      |   |   | Equity   |   |
|                                                                          |   |    |   |   |                                        |   |   |                           |   |   |     |   |   | Translation |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   | Share   |   |   | Share                                       |   |   | Retained earnings (accumulated |   |   | Treasury |   |   | reservefromforeign |   |   | Presentationcurrencytranslation |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   | capital |   |   | premium                                     |   |   | deficit)                       |   |   | shares   |   |   | operations |   |   | Reserve |   |   | Total |   |   |   |   |   |   |   |
|                                                                          |   |    |   |   | US$ in thousands                            |   |
| Balance as at                                                                 |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| January 1, 2016                                                               |   |    | 26,597 |   |                                        |   | 77,723 |                           |   |   | 7,200    |   |   |   | (1,972 | ) |   |   | 814 |   |   |   | (16,029 | ) |   |   | 94,333 |   |   |   | (268 | ) |   |   | 94,065 |   |
| Loss for the year                                                             |   |    | -      |   |                                        |   | -      |                           |   |   | (605     | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (605 | ) |   |   | (468 | ) |   |   | (1,073 | ) |
| Other comprehensive loss for the year                                         |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | - |   |   |   | (267 | ) |   |   | (1,542 | ) |   |   | (1,809 | ) |   |   | - |   |   |   | (1,809 | ) |
| Total comprehensive loss for the year                                    |   |    | -      |   |                                        |   | -      |                           |   |   | (605     | )      |   |   | - |   |   |   | (267 | ) |   |   | (1,542 | ) |   |   | (2,414 | ) |   |   | (468 | ) |   |   | (2,882 | ) |
| Transactions with owners of the Company,  recognized directly in equity: |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends to owners                                                           |   |    | -      |   |                                        |   | -      |                           |   |   | (2,404   | )      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,404 | ) |   |   | - |   |   |   | (2,404 | ) |
| Own shares acquired                                                           |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | (13 | ) |   |   | - |   |   |   | - |   |   |   | (13 | ) |   |   | - |   |   |   | (13 | ) |
| Share-based payments                                                          |   |    | -      |   |                                        |   | 4      |                           |   |   | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | - |   |   |   | 4 |   |
| Balance as at                                                                 |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  December 31, 2016                                                       |   |    | 26,597 |   |                                        |   | 77,727 |                           |   |   | 4,191    |   |   |   | (1,985 | ) |   |   | 547 |   |   |   | (17,571 | ) |   |   | 89,506 |   |   |   | (736 | ) |   |   | 88,770 |   |
|                                                                          |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as atJanuary 1, 2015                                                  |   |    | 26,180 |   |                                        |   | 76,932 |                           |   |   | (353     | )      |   |   | (522 | ) |   |   | 955 |   |   |   | (9,082 | ) |   |   | 94,110 |   |   |   | 16 |   |   |   | 94,126 |   |
| Profit for the year                                                           |   |    | -      |   |                                        |   | -      |                           |   |   | 7,553    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,553 |   |   |   | (255 | ) |   |   | 7,298 |   |
| Acquisition of subsidiary                                                     |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (29 | ) |   |   | (29 | ) |
| Other comprehensive loss for the year                                         |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | - |   |   |   | (141 | ) |   |   | (6,947 | ) |   |   | (7,088 | ) |   |   | - |   |   |   | (7,088 | ) |
| Total comprehensive loss for the year                                         |   |    | -      |   |                                        |   | -      |                           |   |   | 7,553    |   |   |   | - |   |   |   | (141 | ) |   |   | (6,947 | ) |   |   | 465 |   |   |   | (284 | ) |   |   | 181 |   |
| Transactions with owners of the Company,  recognized directly in equity: |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise of share options and warrants                                        |   |    | 417    |   |                                        |   | 784    |                           |   |   | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,201 |   |   |   | - |   |   |   | 1,201 |   |
| Own shares acquired                                                           |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | (1,450 | ) |   |   | - |   |   |   | - |   |   |   | (1,450 | ) |   |   | - |   |   |   | (1,450 | ) |
| Share-based payments                                                          |   |    | -      |   |                                        |   | 7      |                           |   |   | -        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7 |   |   |   | - |   |   |   | 7 |   |
| Balance as at                                                                 |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2015                                                             |   |    | 26,597 |   |                                        |   | 77,723 |                           |   |   | 7,200    |   |   |   | (1,972 | ) |   |   | 814 |   |   |   | (16,029 | ) |   |   | 94,333 |   |   |   | (268 | ) |   |   | 94,065 |   |
|                                                                          |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as atJanuary 1, 2014                                                  |   |    | 26,180 |   |                                        |   | 76,932 |                           |   |   | (7,011   | )      |   |   | (522 | ) |   |   | 4,154 |   |   |   | - |   |   |   | 99,733 |   |   |   | 28 |   |   |   | 99,761 |   |
| Profit for the year                                                           |   |    | -      |   |                                        |   | -      |                           |   |   | 6,658    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 6,658 |   |   |   | (12 | ) |   |   | 6,646 |   |
| Other comprehensive loss for the year                                         |   |    | -      |   |                                        |   | -      |                           |   |   | -        |   |   |   | - |   |   |   | (3,199 | ) |   |   | (9,082 | ) |   |   | (12,281 | ) |   |   | - |   |   |   | (12,281 | ) |
| Total comprehensive loss for the year                                         |   |    | -      |   |                                        |   | -      |                           |   |   | 6,658    |   |   |   | - |   |   |   | (3,199 | ) |   |   | (9,082 | ) |   |   | (5,623 | ) |   |   | (12 | ) |   |   | (5,635 | ) |
| Balance as at                                                                 |   |    |   |   |                                        |   |   |                           |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2014                                                             |   |    | 26,180 |   |                                        |   | 76,932 |                           |   |   | (353     | )      |   |   | (522 | ) |   |   | 955 |   |   |   | (9,082 | ) |   |   | 94,110 |   |   |   | 16 |   |   |   | 94,126 |   |

----

----

|                                                          |   | For the year ended December 31 |   |
|---------------------------------------------------------------|--------|--------------------------------|--------|
|                                                          |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                                          |   | US$ in thousands               |   |
| Cash flows from operating activities                          |   |                           |   |   |   |   |   |   |   |
|                                                          |   |                           |   |   |   |   |   |   |   |
| Profit (loss) for the year                                    |   |                           | (1,073 | ) |   |   | 7,298 |   |   |   | 6,646 |   |
|                                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
| Adjustments for:                                              |   |                           |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net Financing expenses (income)                               |   |                           | 3,056  |   |   |   | (592 | ) |   |   | 3,395 |   |
| Gain on bargain purchase                                      |   |                           | -      |   |   |   | - |   |   |   | (3,995 | ) |
| Depreciation                                                  |   |                           | 4,884  |   |   |   | 4,912 |   |   |   | 5,452 |   |
| Share-based payment transactions                              |   |                           | 4      |   |   |   | 7 |   |   |   | * |   |
| Share of profits of equity accounted investees                |   |                           | (1,505 | ) |   |   | (2,446 | ) |   |   | (1,819 | ) |
| Payment of interest on loan from an equity accounted investee |   |                           | 5,134  |   |   |   | - |   |   |   | - |   |
| Change in trade receivables and other receivables             |   |                           | (1,798 | ) |   |   | 458 |   |   |   | (1,536 | ) |
| Change in other assets                                        |   |                           | (805   | ) |   |   | (1,706 | ) |   |   | (797 | ) |
| Change in accrued severance pay, net                          |   |                           | (18    | ) |   |   | (1 | ) |   |   | (29 | ) |
| Change in trade payables                                      |   |                           | 850    |   |   |   | (252 | ) |   |   | (498 | ) |
| Change in other payables                                      |   |                           | 1,955  |   |   |   | 2,311 |   |   |   | 498 |   |
| Income tax expense (tax benefit)                              |   |                           | 625    |   |   |   | (1,933 | ) |   |   | 201 |   |
| Income taxes paid                                             |   |                           | (54    | ) |   |   | (241 | ) |   |   | (461 | ) |
| Interest received                                             |   |                           | 251    |   |   |   | 222 |   |   |   | 212 |   |
| Interest paid                                                 |   |                           | (3,300 | ) |   |   | (3,126 | ) |   |   | (3,933 | ) |
|                                                          |   |                           | 9,279  |   |   |   | (2,387 | ) |   |   | (3,310 | ) |
|                                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net cash from operating activities                            |   |                           | 8,206  |   |   |   | 4,911 |   |   |   | 3,336 |   |

----

----

|                                                                   |   | For the year ended December 31 |   |
|------------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                   |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                                                   |   | US$ in thousands               |   |
| Cash flows from investing activities:                                  |   |                           |   |   |   |   |   |   |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |
| Acquisition of fixed assets                                            |   |                           | (5,388 | ) |   |   | - |   |   |   | (709 | ) |
| Acquisition of subsidiary, net of cash acquired (see Note 6C)          |   |                           | -      |   |   |   | - |   |   |   | (13,126 | ) |
| Investment in equity accounted investee                                |   |                           | (803   | ) |   |   | (7,582 | ) |   |   | (4,058 | ) |
| Advances on account of investments                                     |   |                           | (905   | ) |   |   | - |   |   |   | - |   |
| Repayment of loan from an equity accounted investee                    |   |                           | 2,638  |   |   |   | - |   |   |   | - |   |
| Decrease in deposits, net                                              |   |                           | -      |   |   |   | 3,980 |   |   |   | 1,173 |   |
| Acquisition of marketable securities                                   |   |                           | (1,022 | ) |   |   | (2,869 | ) |   |   | (3,687 | ) |
| Proceeds from marketable securities                                    |   |                           | 6,511  |   |   |   | - |   |   |   | - |   |
| Proceeds from settlement of derivatives, net                           |   |                           | -      |   |   |   | 2,087 |   |   |   | - |   |
| Decrease (increase) in restricted cash, net                            |   |                           | (31    | ) |   |   | (101 | ) |   |   | 4,342 |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net cash from (used in) investing activities                           |   |                           | 1,000  |   |   |   | (4,485 | ) |   |   | (16,065 | ) |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                  |   |                           |   |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Short-term loans, net                                                  |   |                           | -      |   |   |   | - |   |   |   | (18,550 | ) |
| Acquisition of non-controlling interests                               |   |                           | -      |   |   |   | (868 | ) |   |   | - |   |
| Dividends paid                                                         |   |                           | (2,404 | ) |   |   | - |   |   |   | - |   |
| Repayment of long-term loans and finance lease obligations             |   |                           | (1,169 | ) |   |   | (1,020 | ) |   |   | (7,152 | ) |
| Repayment of Debentures                                                |   |                           | (5,210 | ) |   |   | (5,134 | ) |   |   | (5,151 | ) |
| Proceeds from exercise of share options and warrants                   |   |                           | -      |   |   |   | 1,201 |   |   |   | - |   |
| Repurchase of own shares                                               |   |                           | (13    | ) |   |   | (1,450 | ) |   |   | - |   |
| Proceeds from long term loans                                          |   |                           | 6,001  |   |   |   | 11,715 |   |   |   | - |   |
| Proceeds from issuance of debentures, net                              |   |                           | -      |   |   |   | - |   |   |   | 55,791 |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Net cash from (used in) financing activities                           |   |                           | (2,795 | ) |   |   | 4,444 |   |   |   | 24,938 |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate fluctuations on cash and cash equivalents |   |                           | (1,478 | ) |   |   | (1,911 | ) |   |   | (3,689 | ) |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Increase in cash and cash equivalents                                  |   |                           | 4,933  |   |   |   | 2,959 |   |   |   | 8,520 |   |
| Cash and cash equivalents at the beginning of year                     |   |                           | 18,717 |   |   |   | 15,758 |   |   |   | 7,238 |   |
|                                                                   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at the end of the year                       |   |                           | 23,650 |   |   |   | 18,717 |   |   |   | 15,758 |   |

----

----

|  | A. | Ellomay Capital Ltd. (hereinafter - the "Company"), is an Israeli Company operating in the business of energy and infrastructure, and its operations currently mainly include the production of renewable and clean energy. The Company owns sixteen photovoltaic plants (each, a "PV Plant" and, together, the "PV Plants") that are connected to their respective national grids and operating as follows: (i) twelve photovoltaic plants in Italy with an aggregate installed capacity of approximately 22.6 MWp and (ii) four photovoltaic plants in Spain with an aggregate installed capacity of approximately 7.9 MWp. In addition, the Company indirectly owns 9.375% of Dorad |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | B. | Definitions: |
|--|----|--------------|

|  | A. | Basis of preparation of the financial statements |
|--|----|--------------------------------------------------|

|  | 1. | The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. The operating cycle of the Company is one year. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | Consistent accounting policies |
|--|----|--------------------------------|

----

----

|  | A. | Basis of preparation of the financial statements (cont'd) |
|--|----|-----------------------------------------------------------|

|  | 3. | Basis of measurement - The consolidated financial statements have been prepared on the historical cost basis, except for the following: |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | (i) | Investment in investee accounted for using the equity method; |
|--|-----|---------------------------------------------------------------|

|  | (ii) | Marketable securities; |
|--|------|------------------------|

|  | (iii) | Deferred tax assets and liabilities; |
|--|-------|--------------------------------------|

|  | (iv) | Derivative financial instruments and other receivables measured at fair value through profit or loss; and |
|--|------|-----------------------------------------------------------------------------------------------------------|

|  | (v) | Provisions |
|--|-----|------------|

|  | B. | Significant accounting judgments, estimates and assumptions used in the preparation of the financial statements |
|--|----|-----------------------------------------------------------------------------------------------------------------|

----

----

|  | C. | Functional and presentation currency |
|--|----|--------------------------------------|

----

----

|  | C. | Functional and presentation currency (cont'd) |
|--|----|-----------------------------------------------|

|  | · | Assets and liabilities are translated and  presented at the exchange rate at the date of each reporting period; |
|--|--------|----------------------------------------------------------------------------------------------------------------------|

|  | · | Income and expenses are translated at the average exchange rate of the period. |
|--|--------|--------------------------------------------------------------------------------|

|  | D. | Basis of consolidation and equity method accounting |
|--|----|-----------------------------------------------------|

|  | 1. | Subsidiaries |
|--|----|--------------|

|  | 2. | Transactions eliminated upon consolidation |
|--|----|--------------------------------------------|

|  | 3. | Investment in associates and joint ventures (equity accounted investees) |
|--|----|-------------------------------------------------------------------------------|

----

----

|  | D. | Basis of consolidation and equity method accounting (cont'd) |
|--|----|--------------------------------------------------------------|

|  | 4. | Business combinations |
|--|----|-----------------------|

|  | 5. | Non-controlling interests |
|--|----|---------------------------|

----

----

|  | E. | Cash and cash equivalents |
|--|----|---------------------------|

|  | F. | Available-for-sale financial assets |
|--|----|-------------------------------------|

|  | (1) | Recognition and measurement |
|--|-----|-----------------------------|

|  | (2) | Depreciation |
|--|-----|--------------|

|                           | %                                                             |   | Mainly % |
|--------------------------------|---------------------------------------------------------------|--------|----------|
| Office furniture and equipment | 6-33                                                          |   | 33       |
| Photovoltaic plants in Spain   | 4                                                             |   | 4        |
| Photovoltaic plants in Italy   | 5                                                             |   | 5        |
| Leasehold improvements         | Over the shorter of the lease period or the life of the asset |   | 7        |

----

----

|  | H. | Financial instruments |
|--|----|-----------------------|

----

----

|  | H. | Financial instruments (cont’d) |
|--|----|--------------------------------------|

|  | I. | Impairment |
|--|----|------------|

|  | • | Default by a debtor; |
|--|---------|----------------------|

|  | • | Indications that a debtor or issuer will enter bankruptcy; |
|--|---------|------------------------------------------------------------|

|  | • | Changes in the economic environment that correlate with insolvency of issuers or the disappearance of an active market for a security; |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Observable data indicating a measurable decrease in the cash flow expected from financial assets. |
|--|---------|---------------------------------------------------------------------------------------------------|

----

----

|  | I. | Impairment (cont'd) |
|--|----|---------------------|

----

----

|  | J. | Share-based payment transactions |
|--|----|----------------------------------|

|  | K. | Employee benefits |
|--|----|-------------------|

|  | 1. | Short-term employee benefits: |
|--|----|-------------------------------|

|  | 2. | Post-employment benefits: |
|--|----|---------------------------|

----

----

|  | L. | Leases |
|--|----|--------|

|  | M. | Revenue recognition |
|--|----|---------------------|

|  | N. | Income tax |
|--|----|------------|

----

----

|  | N. | Income tax (cont'd) |
|--|----|---------------------|

|  | • | The initial recognition of goodwill, |
|--|---------|--------------------------------------|

|  | • | The initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Differences relating to investments in subsidiaries, joint arrangements and associates, to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future, either by way of selling the investment or by way of distributing dividends in respect of the investment. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | O. | Earnings (loss) per share |
|--|----|---------------------------|

----

----

|  | P. | Financing income and expenses |
|--|----|-------------------------------|

|  | Q. | Provisions |
|--|----|------------|

|  | R. | Standards issued but not yet effective |
|--|----|----------------------------------------|

|  | (1). | IFRS 9 (2014), Financial Instruments (hereinafter – “IFRS 9 (2014)”) |
|--|------|---------------------------------------------------------------------------------------------|

----

----

|  | R. | Standards issued but not yet effective (cont’d) |
|--|----|-------------------------------------------------------|

|  | (1). | IFRS 9 (2014), Financial Instruments (hereinafter – “IFRS 9 (2014)”) (cont'd) |
|--|------|-------------------------------------------------------------------------------------------------|

|  | (2). | IFRS 15, Revenue from Contracts with Customers  (hereinafter – “IFRS 15”) |
|--|------|--------------------------------------------------------------------------------------------------|

|  | (3). | IFRS 16 International Financial Reporting Standard 16, Leases (hereinafter – “IFRS 16”) |
|--|------|-----------------------------------------------------------------------------------------------------------|

----

----

|                 |   | December 31      |   |
|----------------------|--------|------------------|--------|
|                 |   | 2016             |   |   | 2015 |   |
|                 |   | US$ in thousands |   |
| Cash                 |   |             | 11,825 |   |   |   | 6,244 |   |
| On Call deposits (*) |   |             | 11,825 |   |   |   | 12,473 |   |
|                 |   |             | 23,650 |   |   |   | 18,717 |   |

|  | (*) | The annual interest rate for deposits as of December 31, 2016 is 0.75%-1.25% (0.35%-0.8186% as of December 31, 2015). |
|--|-----|-----------------------------------------------------------------------------------------------------------------------|

|                                                        |   | December 31      |   |
|-------------------------------------------------------------|--------|------------------|--------|
|                                                        |   | 2016             |   |   | 2015 |   |
|                                                        |   | US$ in thousands |   |
| Marketable securities (1)                                   |   |             | 1,023  |   |   |   | 6,499 |   |
| Short-term restricted cash (2)                              |   |             | 16     |   |   |   | 79 |   |
| Long-term restricted non-interest bearing bank deposits (3) |   |             | 1,145  |   |   |   | 1,100 |   |
| Restricted cash and long-term bank deposits (4)             |   |             | 4,254  |   |   |   | 4,217 |   |
| Long-term restricted cash and deposits                      |   |             | 5,399  |   |   |   | 5,317 |   |

|  | (1) | During 2015, the  Company invested in a traded Corporate Bond (rated Baa3 by Moody's) with a coupon rate of 2.803% and the bonds were repaid during the fourth quarter of 2016. During 2016, the  Company invested in a traded Corporate Bond (rated Baa3 by Moody's) with a coupon rate of 3.389% and a maturity date of December 30, 2018. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | Current accounts and bank deposits securing short term obligations. |
|--|-----|---------------------------------------------------------------------|

|  | (3) | Deposits used to secure obligations towards the land owners and to secure obligations under financial leasing agreements and loan agreements (see Notes 10 and 11). |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Bank deposits securing the Company's swap and Forward contracts The annual interest rate as of December 31, 2016 is 0.35% - 0.4%. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                       |   | December 31      |   |
|------------------------------------------------------------|--------|------------------|--------|
|                                                       |   | 2016             |   |   | 2015 |   |
|                                                       |   | US$ in thousands |   |
| Current Assets:                                            |   |             |   |   |   |   |
| Other receivables                                          |   |             |   |   |   |   |
|                                                       |   |             |   |   |   |   |
| Government authorities                                     |   |             | 2,303  |   |   |   | 1,276 |   |
| Income receivable                                          |   |             | 2,895  |   |   |   | 2,875 |   |
| Interest receivable                                        |   |             | 41     |   |   |   | 29 |   |
| Current tax                                                |   |             | 181    |   |   |   | 270 |   |
| Current Maturities of loan to an equity accounted investee |   |             | 1,300  |   |   |   | 3,061 |   |
| Trade receivable                                           |   |             | 345    |   |   |   | 69 |   |
| Forward contracts (1)                                      |   |             | 2,133  |   |   |   | - |   |
| Prepaid expenses and other                                 |   |             | 754    |   |   |   | 638 |   |
|                                                       |   |             | 9,952  |   |   |   | 8,218 |   |
|                                                       |   |             |   |   |   |   |   |   |
| Non current Assets:                                        |   |             |   |   |   |   |   |   |
| Long term receivables                                      |   |             |   |   |   |   |   |   |
| Advance tax payment                                        |   |             | 952    |   |   |   | 803 |   |
| Forward contracts (1)                                      |   |             | 2,341  |   |   |   | - |   |
| Annual rent deposits                                       |   |             | 37     |   |   |   | 44 |   |
| Other                                                      |   |             | 101    |   |   |   | - |   |
|                                                       |   |             | 3,431  |   |   |   | 847 |   |

|  | (1) | In November 2016, the Company closed Euro/USD forward contracts with an accumulated profit of approximately $4,474 thousand. The cash proceeds of these transactions are expected to be received between October 2017 and March 2019 (depending on the relevant dates of the forward positions). |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | A. | Equity accounted investees |
|--|----|----------------------------|

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

|                                      |   | December 31      |   |
|-------------------------------------------|--------|------------------|--------|
|                                      |   | 2016             |   |   | 2015 |   |
|                                      |   | US$ in thousands |   |
|                                      |   |             |   |   |   |   |
| Investment in shares                      |   |             | 19,774 |   |   |   | 18,742 |   |
| Long-term loans                           |   |             | 12,119 |   |   |   | 16,321 |   |
| Deferred interest                         |   |             | (1,105 | ) |   |   | (1,093 | ) |
|                                      |   |             | 30,788 |   |   |   | 33,970 |   |
| Current Maturities of the long-term loans |   |             | 1,300  |   |   |   | 3,061 |   |
|                                      |   |             | 32,088 |   |   |   | 37,031 |   |

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

|                                                  |   | 2016             |   |   | 2015   |   |
|-------------------------------------------------------|--------|------------------|--------|--------|--------|--------|
| Changes in equity and loans:                          |   | US$ in thousands |   |
| Balance as at January 1                               |   |             | 37,031 |   |   |   | 27,237 |   |
| Exercise of the option to acquire additional shares   |   |             | 630    |   |   |   | 5,656 |   |
| Grant of long term loans                              |   |             | 173    |   |   |   | 1,926 |   |
| Repayment of long term loans                          |   |             | (7,772 | )      |   |   | - |   |
| Interest on long term loans                           |   |             | 1,327  |   |   |   | 1,323 |   |
| Deferred interest                                     |   |             | 57     |   |   |   | 56 |   |
| Elimination of interest on loan from related party    |   |             | (1,383 | )      |   |   | (1,378 | ) |
| The Company’s share of income                   |   |             | 1,505  |   |   |   | 2,446 |   |
| Foreign currency translation adjustments              |   |             | 520    |   |   |   | (235 | ) |
| Balance as at December 31                             |   |             | 32,088 |   |   |   | 37,031 |   |
| Changes in option to acquire additional shares:       |   |             |   |   |   |   |   |   |
| Balance as at January 1                               |   |             | *      |   |   |   | 17 |   |
| Foreign currency translation adjustments              |   |             | -      |   |   |   | (* | ) |
| Exercise of first option to acquire additional shares |   |             | (*     | )      |   |   | (17 | ) |
| Balance as at December 31                             |   |             | -      |   |   |   | * |   |

----

----

|  | A. | Equity accounted investees (cont'd) |
|--|----|-------------------------------------|

|  | (a) | Summary information on financial position |
|--|-----|-------------------------------------------|

|        |   |      |   |   |             |   |   |        |   |   |   |   |   |        |   |   |        |   |   |        |   |   |                             |   |   |            |    |   |             |   |   |
|-------------|--------|-----------|--------|--------|------------------|--------|--------|-------------|--------|--------|--------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|--------|----------------------------------|--------|--------|-----------------|---------|--------|------------------|--------|--------|
|        |   |      |   |   |             |   |   |        |   |   |   |   |   |        |   |   |        | Equity |   |        |   |   |                             |   |   |            |    |   |             |   |   |
|        |   | Rate of   |   |   | Current          |   |   | Non-current |   |   | Total  |   |   | Current     |   |   | Non-current |   |   | Total       |   |   | attributable tothe owners of the |   |   | Company’s |    |   | SurplusCosts and |   |   | Other |   |   | CarryingAmount of |   |
|        |   | ownership |   |   | Assets           |   |   | assets      |   |   | assets |   |   | liabilities |   |   | liabilities |   |   | liabilities |   |   | Company                          |   |   | share           |    |   | goodwill         |   |   | Adjustments |   |   | investment |   |
|        |   | %         |   |   | US$ in thousands |   |
| 2016        |   |      |   |   |             |   |   |        |   |   |   |   |   |        |   |   |        |   |   |        |   |   |                             |   |   |            |    |   |             |   |   |   |   |   |   |   |
| Dori Energy |   |      | 50     |   |             |   | 4,744  |        |   |   | 52,623 |   |   |        | 57,367 |   |        |   | (2,857 | )           |   |   | (24,050                          | )      |   |            | (26,907 | )      |             |   | 30,459 |   |   |   | 15,230 |   |   |   | 4,713 |   |   |   | (169 | ) |   |   | 19,774 |   |
|        |   |      |   |   |             |   |   |        |   |   |   |   |   |        |   |   |        |   |   |        |   |   |                             |   |   |            |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2015        |   |      |   |   |             |   |   |        |   |   |   |   |   |        |   |   |        |   |   |        |   |   |                             |   |   |            |    |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dori Energy |   |      | 49     |   |             |   | 6,255  |        |   |   | 62,455 |   |   |        | 68,710 |   |        |   | (269   | )           |   |   | (39,576                          | )      |   |            | (39,845 | )      |             |   | 28,865 |   |   |   | 14,144 |   |   |   | 4,449 |   |   |   | 149 |   |   |   | 18,742 |   |

|  | (b) | Summary information on operating results |
|--|-----|------------------------------------------|

|        |   | Rate of ownership as of December 31, |   |   | Income           |   |   | Company’s |   |   | Elimination of interest on loan from related |   |   | Other       |   |   | Company’sshare of income |   |
|-------------|--------|--------------------------------------|--------|--------|------------------|--------|--------|-----------------|--------|--------|----------------------------------------------|--------|--------|-------------|--------|--------|--------------------------------|--------|
|        |   | 2016                                 |   |   | for the year     |   |   | share           |   |   | party                                        |   |   | Adjustments |   |   | of investee                    |   |
|        |   | %                                    |   |   | US$ in thousands |   |
| 2016        |   |                                 |   |   |             |   |   |            |   |   |                                         |   |   |        |   |   |                           |   |
|        |   |                                 |   |   |             |   |   |            |   |   |                                         |   |   |        |   |   |                           |   |
| Dori Energy |   |                                 | 50     |   |             |   | 542    |            |   |   | 271                                          |   |   |        | 1,383  |   |                           |   | (149 | ) |   |   | 1,505 |   |
| 2015        |   |                                 |   |   |             |   |   |            |   |   |                                         |   |   |        |   |   |                           |   |   |   |   |   |   |   |
|        |   |                                 |   |   |             |   |   |            |   |   |                                         |   |   |        |   |   |                           |   |   |   |   |   |   |   |
| Dori Energy |   |                                 | 49     |   |             |   | 3,136  |            |   |   | 1,537                                        |   |   |        | 1,378  |   |                           |   | (469 | ) |   |   | 2,446 |   |

----

----

|  | B. | Pumped Storage Projects (“PSP”) |
|--|----|---------------------------------------------|

----

----

|  | B. | Pumped Storage Projects (“PSP”) |
|--|----|---------------------------------------------|

----

----

|  | B. | Pumped Storage Projects (“PSP”) |
|--|----|---------------------------------------------|

|                             |   | December 31      |   |
|----------------------------------|--------|------------------|--------|
|                             |   | 2016             |   |   | 2015 |   |
|                             |   | US$ in thousands |   |
| On account of the Manara Project |   |             | 905    |   |   |   | - |   |
|                             |   |             | 905    |   |   |   | - |   |

|                                                          |   | December 31      |   |
|---------------------------------------------------------------|--------|------------------|--------|
|                                                          |   | 2016             |   |   | 2015 |   |
|                                                          |   | US$ in thousands |   |
| Option to acquire additional shares in Dori Energy            |   |             | -      |   |   |   | * |   |
| Income receivable in connection with the Erez Electricity PSP |   |             | 1,330  |   |   |   | 1,250 |   |
| Forward contracts (see Note 21)                               |   |             | -      |   |   |   | 3,615 |   |
|                                                          |   |             | 1,330  |   |   |   | 4,865 |   |

|  | C. | Subsidiaries - Business combinations |
|--|----|--------------------------------------|

|  | 1. | In July 2015, the Company acquired an additional 15% interest in Ellomay Spain S.L., the owner of a photovoltaic plant in Spain with an installed capacity of approximately 2.3 MWp, for approximately EUR 775 thousand (approximately $868 thousand), increasing its ownership in Ellomay Spain S.L. from 85% to 100%. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | On July 17, 2014, the Company consummated the acquisition of three photovoltaic (solar) plants with an aggregate installed capacity of approximately 5.6 MWp (the "Spanish PV Plants"). |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | C. | Subsidiaries - Business combinations (cont’d) |
|--|----|-----------------------------------------------------|

|  | 3. | The Spanish PV Plants were already constructed and operating and were connected to the Spanish national grid in 2011. The Spanish PV Plants were acquired from a Spanish company whose German parent company has entered into insolvency proceedings. The Spanish PV Plants and all associated assets and rights were purchased by the Company for an aggregate purchase price of Euro 9.5 million (approximately $13,000 thousand). The final consideration paid for the Spanish PV Plants and the related licenses was approximately Euro 9.8 million (approximately $13,300 thousand). |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | Acquisition date |   |
|------------------------------------------------------------|--------|------------------|--------|
|                                                       |   | US$ in thousands |   |
|                                                       |   |             |   |
| Fixed assets                                               |   |             | 17,866 |   |
| Working Capital, net (excluding cash and cash equivalents) |   |             | 146    |   |
| Deferred tax                                               |   |             | (891   | ) |
| Gain on bargain purchase                                   |   |             | (3,995 | ) |
| Total net identifiable assets                              |   |             | 13,126 |   |
|                                               |   | US$ in thousands |   |
|----------------------------------------------------|--------|------------------|--------|
| Cash and cash equivalents paid                     |   |             | 13,327 |   |
| Less - cash and cash equivalents of the subsidiary |   |             | 201    |   |
|                                               |   |             | 13,126 |   |
|                                         |   | US$ in thousands |    |
|----------------------------------------------|--------|------------------|---------|
| Consideration transferred                    |   |             | 13,126  |   |
| Less fair value of identifiable net assets   |   |             | (17,121 | ) |
| Gain on bargain purchase (negative goodwill) |   |             | (3,995  | ) |

----

----

|  | C. | Subsidiaries - Business combinations (cont’d) |
|--|----|-----------------------------------------------------|

|  | 3. | Waste-to-energy (“WtE”) Projects in the Netherlands |
|--|----|-----------------------------------------------------------------|

----

----

|  | C. | Subsidiaries - Business combinations (cont’d) |
|--|----|-----------------------------------------------------|

|  | D. | Subsidiaries – Regulatory updates |
|--|----|-----------------------------------------|

|  | · | Following the approval by the Italian parliament in August 2014, a decree executed by the Italian president in June was converted into law (“Law 116/2014”) providing for a decrease in the FiT guaranteed to existing photovoltaic plants with installed capacity of more than 200 kW. Pursuant to Law 116/2014, operators of existing photovoltaic plants, such as the Company, which received a guaranteed 20-year FiT under Italian legislation, were required to choose between the following four alternatives: (i) a reduction of 6%-8% in the FiT (depending on the installed capacity of the relevant plant); (ii) extending the 20-year term of the FiT to 24 years with a reduction in the FiT in a range of 17%-25%, depending on the time remaining on the term of the FiT  for the relevant photovoltaic plant, with higher reductions applicable to photovoltaic plants that commenced operations earlier ; (iii) a rescheduling in the FiT so that during an initial period the FiT is reduced and during the second period the FiT is increased in the same amount of the reduction; or (iv) the sale of up to 80% of the revenues deriving from the incentives generated by the photovoltaic plant to a selected buyer to be identified among the top EU banks (with the selected buyer becoming eligible to receive the original FiT and not subject to the changes set forth in alternatives (i) through (iii) above). The Company chose the first option for all its Italian PV Plants. Therefore, the FiT for eight of its Italian PV Plants has been cut by 8% and the FiT for the remaining four Italian PV Plants has been cut by 7%, all effective as of January 1, 2015. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | As part of the implementation of legislative decree 49/2014, in December 2015 the GSE published the guidelines regarding disposal of PV plants that benefit from incentives. In particular, the decree had established that GSE was entitled to retain a certain amount from payment of incentives as a guarantee for the cost of disposal of the panels installed on PV plants and GSE set out the determination of such retention. The guidelines provide that the retention shall start from the 11th year of incentive. The retention will be held by GSE in an interest-bearing escrow account and is to be returned to producers after evidence is provided to GSE that the panels have been disposed of correctly. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | D. | Subsidiaries – Regulatory updates |
|--|----|-----------------------------------------|

|  | · | Art. 21 of Law 208/2015 (the 2016 Italian Budget Law) set out new criteria concerning the determination of the cadastral value of immovable assets. PV plants fall within the scope of such provision. Following the issuance of the law, on February 1, 2016, the Italian Tax Office published official clarifications to the scope of said provision. With specific reference to ground PV plants, the Italian Tax Office pointed out that on the basis of the new provision modules and inverters shall not be accounted in the determination of the associated cadastral value, which should entail a significant reduction in the calculation of the related municipal tax burden. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | During 2015, the Company applied a tax incentive as per Article 6 paras. 13-19 of Law 23 December 2000, no. 388 (“ʺTremonti- ambienteʺ”). Article 19 of Decree 5 July 2012 provides an explanation of instances in which the tax incentive may be granted in connection with investments in photovoltaic plants  and combined with feed-in-tariffs to the extent that the Tremonti-ambiente does not exceed 20% of the amount eligible for taxation. Such incentive consists of a reduction of the taxable profit for a fiscal year equal to the amount of investments in tangible fixed assets in the same year, which are necessary to prevent, reduce and repair environmental damages, providing these investments exceed the average environmental investments made in the two previous years. The procedure to claim the tax incentive requires that the relevant approved balance sheet or its explanatory notes show the amount of the environmental investments. Additionally, within one month from the approval of the balance sheet a specific communication concerning the amount of the eligible Tremonti‐ambiente must be made to the relevant public authority. The Tremonti‐ambiente is claimable upon filing the relevant tax return by reducing the amount of taxable profit. The Company engaged a tax consultant to determine the specific amount of environmental investments and filed the required communications with the tax authorities. The Company recorded tax benefit in the amount of approximately $2,800 thousand. (See note 19). |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | A new resolution (no. 444 of 2016) was adopted by AEEGSI in July 2016 partly amending the previously applying modalities of payment of imbalancing. Such resolution has established that, commencing January 2017 (for PV plants with a capacity lower than 10 MWp), the discrepancy between planned and effective energy input/withdrawn shall not exceed 7.5% (+/-). In the case that such threshold is exceeded, the price paid for positive imbalancing will be reduced in such measure as not to allow any profit to the producer in relation to the forecast in question. Prior to this resolution distortive practices were often used by intentionally providing energy production forecasts materially different from the actual production in order to maximize revenues deriving from positive imbalancing payments. The provisions of resolution 444/2016 aim at incentivizing producers to keep imbalancing within said limits (+/- 7.5%). This new resolution is not expected to have a material effect on the Company’s revenues. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                |   |             |    |   |         |   |   | Office        |   |   |         |   |   |   |   |
|-------------------------------------|--------|------------------|---------|--------|--------------|--------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|
|                                |   | Photovoltaic     |    |   | Biogas       |   |   | furniture and |   |   | Leasehold    |   |   |   |   |
|                                |   | Plants           |    |   | installation |   |   | equipment     |   |   | Improvements |   |   | Total  |   |
|                                |   | US$ in thousands |    |
| Cost                                |   |             |    |   |         |   |   |          |   |   |         |   |   |   |   |
| Balance as at January 1, 2015       |   |             | 106,765 |   |         |   | -      |          |   |   | 136          |   |   |   | 64     |   |   |   | 106,965 |   |
| Effect of changes in exchange rates |   |             | (11,119 | )      |         |   | -      |          |   |   | (9           | )      |   |   | (7     | ) |   |   | (11,135 | ) |
| Balance as at December 31, 2015     |   |             | 95,646  |   |         |   | -      |          |   |   | 127          |   |   |   | 57     |   |   |   | 95,830 |   |
|                                |   |             |    |   |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |
| Balance as at January 1, 2016       |   |             | 95,646  |   |         |   | -      |          |   |   | 127          |   |   |   | 57     |   |   |   | 95,830 |   |
| Additions                           |   |             | 44      |   |         |   | 5,344  |          |   |   | -            |   |   |   | -      |   |   |   | 5,388 |   |
| Effect of changes in exchange rates |   |             | (3,221  | )      |         |   | -      |          |   |   | (4           | )      |   |   | (2     | ) |   |   | (3,227 | ) |
| Balance as at December 31, 2016     |   |             | 92,469  |   |         |   | 5,344  |          |   |   | 123          |   |   |   | 55     |   |   |   | 97,991 |   |
| Depreciation                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Balance as at January 1, 2015       |   |   | 13,340 |   |   |   | -      |   |   |   | 65     |   |   |   | 47     |   |   |   | 13,452 |   |
| Depreciation for the year           |   |   | 4,879  |   |   |   | -      |   |   |   | 23     |   |   |   | 10     |   |   |   | 4,912 |   |
| Effect of changes in exchange rates |   |   | (1,497 | )      |   |   | -      |   |   |   | (7     | )      |   |   | (5     | ) |   |   | (1,509 | ) |
| Balance as at December 31, 2015     |   |   | 16,722 |   |   |   | -      |   |   |   | 81     |   |   |   | 52     |   |   |   | 16,855 |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as at January 1, 2016       |   |   | 16,722 |   |   |   | -      |   |   |   | 81     |   |   |   | 52     |   |   |   | 16,855 |   |
| Depreciation for the year           |   |   | 4,866  |   |   |   | -      |   |   |   | 11     |   |   |   | 7      |   |   |   | 4,884 |   |
| Effect of changes in exchange rates |   |   | (809   | )      |   |   | -      |   |   |   | (1     | )      |   |   | (4     | ) |   |   | (814 | ) |
| Balance as at December 31, 2016     |   |   | 20,779 |   |   |   | -      |   |   |   | 91     |   |   |   | 55     |   |   |   | 20,925 |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Carrying amounts                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As at January 1, 2015               |   |   | 93,425 |   |   |   | -      |   |   |   | 71     |   |   |   | 17     |   |   |   | 93,513 |   |
| As at December 31, 2015             |   |   | 78,924 |   |   |   | -      |   |   |   | 46     |   |   |   | 5      |   |   |   | 78,975 |   |
| As at December 31, 2016             |   |   | 71,690 |   |   |   | 5,344  |   |   |   | 32     |   |   |   | -      |   |   |   | 77,066 |   |

----

----

|                                             |   |             |   |               |   | Cost included in the |
|--------------------------------------------------|--------|------------------|--------|--------------------|--------|----------------------|
| PV Plant Title                                   |   | Nominal Capacity |   | Connection to Grid |   | Book value as at     |
|                                             |   |             |   |               |   | December 31, 2016    |
|                                             |   |             |   |               |   | US$ in thousands     |
| “Troia 8”                            |   | 995.67 kWp       |   | January 2011       |   | 3,683                |
| “Troia 9”                            |   | 995.67 kWp       |   | January 2011       |   | 3,658                |
| “Del Bianco”                         |   | 734.40 kWp       |   | April 2011         |   | 2,204                |
| “Giaché”                        |   | 730.01 kWp       |   | April 2011         |   | 2,911                |
| “Costantini”                         |   | 734.40 kWp       |   | April 2011         |   | 2,225                |
| “Massaccesi”                         |   | 749.7 kWp        |   | April 2011         |   | 2,891                |
| “Galatina”                           |   | 994.43 kWp       |   | May 2011           |   | 4,345                |
| “Pedale                                    |   | 2,993 kWp        |   | May 2011           |   | 11,836               |
| “Acquafresca”                        |   | 947.6 kWp        |   | June 2011          |   | 3,329                |
| “D‘Angella”                    |   | 930.5 kWp        |   | June 2011          |   | 3,281                |
| “Soleco”                             |   | 5,924 kWp        |   | August 2011        |   | 16,128               |
| “Technoenergy”                       |   | 5,900 kWp        |   | August 2011        |   | 15,982               |
| “Ellomay Spain – Rinconada II” |   | 2,275 kWp        |   | June 2010          |   | 5,793                |
| “Rodríguez I”                   |   | 1,675 kWp        |   | November 2011      |   | 3,851                |
| “Rodríguez II”                  |   | 2,691 kWp        |   | November 2011      |   | 6,974                |
| “Fuente Librilla”                    |   | 1,248 kWp        |   | June 2011          |   | 3,378                |

----

----

|                              |   | December 31      |   |
|-----------------------------------|--------|------------------|--------|
|                              |   | 2016             |   |   | 2015 |   |
|                              |   | US$ in thousands |   |
| Employees and payroll accruals    |   |             | 261    |   |   |   | 193 |   |
| Government authorities            |   |             | 177    |   |   |   | 144 |   |
| SWAP and forward related balances |   |             | 503    |   |   |   | 486 |   |
| Current tax                       |   |             | 1,314  |   |   |   | 1,578 |   |
| Accrued expenses                  |   |             | 1,024  |   |   |   | 822 |   |
|                              |   |             |   |   |   |   |   |   |
|                              |   |             | 3,279  |   |   |   | 3,223 |   |

|                                                                                                                                     | Linkage |   | Interest rate |    |   | December 31      |   |   | December 31 |   |
|------------------------------------------------------------------------------------------------------------------------------------------|---------|--------|---------------|---------|--------|------------------|--------|--------|-------------|--------|
|                                                                                                                                          | terms   |   | 2015 and 2016 |    |   | 2016             |   |   | 2015        |   |
|                                                                                                                                     |    |   | %             |    |   | US$ in thousands |   |
|             Current maturities of long term loans (refer to Notes 10 and 11) | EURIBOR |   |          | 1.6-3.5 |   |             |   | 1,150  |        |   |   | 1,133 |   |
|                                                                                                                                     |    |   |          |    |   |             |   |   |        |   |   |   |   |
|                                                                                                                                     |    |   |          |    |   |             |   | 1,150  |        |   |   | 1,133 |   |

|  | A. | Composed as follows: |
|--|----|----------------------|

|                                | Linkage |   | Interest rate |   |   | December 31      |   |   | December 31 |   |
|-------------------------------------|---------|--------|---------------|--------|--------|------------------|--------|--------|-------------|--------|
|                                | Terms   |   | 2015 and 2016 |   |   | 2016             |   |   | 2015        |   |
|                                |    |   | %             |   |   | US$ in thousands |   |
| Leasing institution                 | EURIBOR |   |          | 3.5    |   |             |   | 4,562  |        |   |   | 5,060 |   |
|  Current maturities            |    |   |          |   |   |             |   | 334    |        |   |   | 336 |   |
|  Leasing institution-long term |    |   |          |   |   |             |   | 4,228  |        |   |   | 4,724 |   |

|  | 1. | On December 31, 2010, two wholly-owned Italian subsidiaries of the Company entered into financial leasing agreements, (the “Leasing Agreements”) in the amount of Euro 3,000 thousand each (Euro 6,000 thousand in total) for the financing of the subsidiaries, with a nominal annual interest rate of 3.43%. The Company is required to make monthly payments in the amount of Euro 20 thousand each, commencing 210 days after issuance, for the duration of the Leasing Agreements (17 years) which are linked to the 3 months EURIBOR. As of December 31, 2011, the first two drawdowns under the Leasing  Agreements were received in the aggregate amount of approximately Euro 5 million (approximately $6,483 thousand) net of expenses capitalized in the amount of approximately Euro 1.142 million (approximately $1,476 thousand) comprised mainly of Cadastral tax and VAT paid in connection with the Leasing Agreements. In March 2012, the final drawdown under the Leasing Agreements was received in the amount of approximately Euro 818.5 thousand (approximately $1,080 thousand). |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Composed as follows: (cont'd) |
|--|----|-------------------------------|

|  | 2. | The Leasing Agreements include the following covenants: |
|--|----|---------------------------------------------------------|

|  | a. | A declaration that the shareholders credit towards the two Italian wholly-owned subsidiaries will be subordinated to the leasing company’s credit; |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | The Company undertook not to transfer the entire holdings in two wholly-owned Italian subsidiaries and shares not exceeding 20% of its holdings in the wholly-owned Luxembourgian subsidiary that wholly-owns the two Italian subsidiaries; |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | c. | The Company undertook to assign (as guarantee) the receivables from GSE; and |
|--|----|------------------------------------------------------------------------------|

|  | d. | The Company undertook to encumber in favor of the leasing company the rights in connection with the guarantees provided under the EPC Contracts and the Operation and Maintenance agreements. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The Company accounted for the transaction as a sale and a finance leaseback as the Company retained the significant risks and benefits of ownership related to its relevant PV Plants. The carrying value of the photovoltaic plants was left unchanged, with the sales proceeds recorded as a finance lease obligation. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | B. | The aggregate annual maturities are as follows: |
|--|----|-------------------------------------------------|

|                      |   | December 31      |   |   | December 31 |   |
|---------------------------|--------|------------------|--------|--------|-------------|--------|
|                      |   | 2016             |   |   | 2015        |   |
|                      |   | US$ in thousands |   |
| Second year               |   |             | 347    |   |        |   | 347 |   |
| Third year                |   |             | 359    |   |        |   | 359 |   |
| Fourth year               |   |             | 372    |   |        |   | 372 |   |
| Fifth year                |   |             | 385    |   |        |   | 385 |   |
| Sixth year and thereafter |   |             | 2,765  |   |        |   | 3,261 |   |
|                      |   |             | 4,228  |   |        |   | 4,724 |   |
| Current maturities        |   |             | 334    |   |        |   | 336 |   |
| Finance lease obligation  |   |             | 4,562  |   |        |   | 5,060 |   |

----

----

|  | A. | Composed as follows: |
|--|----|----------------------|

|                  |    |   | Interest |   |   |             |   |
|-----------------------|---------|--------|----------|--------|--------|------------------|--------|
|                  | Linkage |   | rate     |   |   | December 31      |   |
|                  | terms   |   | 2016     |   |   | 2016             |   |
|                  |    |   | %        |   |   | US$ in thousands |   |
| Bank loans            | EURIBOR |   |     | 1.6-3  |   |             |   | 15,702 |   |
| Other long-term loans |    |   |     | 2.5-3  |   |             |   | 2,135 |   |
|                  |    |   |     |   |   |             |   | 17,837 |   |

|                  |    |   | Interest |     |   |             |   |
|-----------------------|---------|--------|----------|----------|--------|------------------|--------|
|                  | Linkage |   | rate     |     |   | December 31      |   |
|                  | terms   |   | 2015     |     |   | 2015             |   |
|                  |    |   | %        |     |   | US$ in thousands |   |
| Bank loans            | EURIBOR |   |     | 1.6-2.85 |   |             |   | 12,851 |   |
| Other long-term loans |    |   |     | 3.05     |   |             |   | 192 |   |
|                  |    |   |     |     |   |             |   | 13,043 |   |

|  | 1. | On February 17, 2011, one of the Company's Italian subsidiaries entered into a project finance facilities credit agreement (the “Finance Agreement”) with an Italian bank (Centrobanca – Banca di Credito Finanziario e Mobiliare S.p.A., acquired by UBI in 2013). Pursuant to the Finance Agreement a Senior Loan was provided with respect to the costs of construction of the PV Plants (up to 80% of the relevant amount), in the amount of Euro 4.1 million, accruing interest at the EURIBOR rate, increased by a margin of 200 basis points per annum, to be repaid in six-monthly installments with a maturity date of December 31, 2027. On November 30, 2011, an amount of approximately Euro 3.8 million (approximately $4,900 thousand) was drawn down on account of this Senior Loan. Related expenses capitalized to the loan comprised mainly of related notary fee and bank charges amount to approximately Euro 170 thousand (approximately $220 thousand). |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Composed as follows: (cont’d) |
|--|----|-------------------------------------|

|  | 2. | On June 29, 2015, the Company entered into a loan agreement with UBI Banca S.c.p.a., in connection with the financing of one of its PV Plants, pursuant to which the Company received financing amounting to approximately Euro 10,271 thousand (approximately $11,522 thousand), net of expenses capitalized in the amount of approximately Euro 409 thousand (approximately $459 thousand) bearing an interest at the Euribor 6 month rate plus 2.85% per annum. The interest on the loan and the principal are to be repaid semi-annually. The final maturity date of this loan is December 31, 2029. Draw down of the loan occurred in September 2015. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The Company's 75% owned Israeli subsidiary promoting the Manara Project, entered into a loan agreement with the owner of the remaining 25% of its outstanding shares, Sheva Mizrakot Ltd. The unpaid balance (principal and interest) of the loan will bear interest at an annual rate in accordance with the interest rate for the purpose of Section 3(j) of the Israeli Income Tax Ordinance in accordance with the provisions of Regulation 2(a) of the Income Tax Regulations (Determination of Interest Rate for the Purpose of Section 3(j)) And 1986. The maturity date of this loan is December 31, 2020. As of December 31, 2016, the amount of the loan is $418 thousand. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 4. | Groen Goor, Independent Power Plant B.V. (“IPP”) (the entity that holds the permits and subsidies in connection with the Goor Project and is wholly-owned by Groen Goor), Ludan, and Ellomay Luxembourg entered into a senior project finance agreement (“the Goor Loan Agreement”), with Coöperatieve Rabobank U.A. (“Rabobank”), that includes the following tranches: (i) two loans with principal amounts of Euro 3,510 thousand (with a fixed interest rate of 3% for the first five years) and Euro 2,090 thousand, (with a fixed interest rate of 2.5% for the first five years), for a period of 12.25 years, repayable in equal monthly installments commencing three months following the connection of the Goor Project’s facility to the grid and (ii) an on-call credit facility of Euro 370 thousand with variable interest. As of December 31, 2016 an amount of Euro 3,900 thousand (approximately $4,102 thousand) was withdrawn on account of these loans. In connection with the Goor Loan Agreement, the following securities are to be provided to Rabobank: (i) pledge on the present and future rights arising from the feedstock purchase agreement, the EPC agreement, the O&M agreement, the SDE subsidy, the various power and green gas purchase agreements, and the green gas certification supply agreement, (ii) pledge on all present and future (a) receivables arising from business and trade, and (b) stock and inventory including machinery and transport vehicles of Groen Goor and IPP; (iii) all rights/claims of Groen Goor and IPP against third parties existing at the time of the execution of the Loan Agreement, including rights from insurance agreements. It is also currently expected that Groen Goor will grant Rabobank a negative pledge and a mortgage up to an amount of Euro 6.5 million (to be increased with 35% (thirty five percent) of the said amount for interest and costs) on real estate or other assets subject to public registration. |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Composed as follows: (cont’d) |
|--|----|-------------------------------------|

|  | B. | The aggregate annual maturities are as follows: |
|--|----|-------------------------------------------------|

|                      |   | December 31      |   |   | December 31 |   |
|---------------------------|--------|------------------|--------|--------|-------------|--------|
|                      |   | 2016             |   |   | 2015        |   |
|                      |   | US$ in thousands |   |
| Second year               |   |             | 1,266  |   |        |   | 844 |   |
| Third year                |   |             | 1,268  |   |        |   | 883 |   |
| Fourth year               |   |             | 1,298  |   |        |   | 915 |   |
| Fifth year                |   |             | 1,728  |   |        |   | 1,137 |   |
| Sixth year and thereafter |   |             | 12,277 |   |        |   | 9,264 |   |
|                      |   |             |   |   |        |   |   |   |
|                      |   |             | 17,837 |   |        |   | 13,043 |   |
| Current maturities        |   |             | 816    |   |        |   | 797 |   |
| Long-term loans           |   |             | 18,653 |   |        |   | 13,840 |   |

|  | C. | In order to minimize the interest-rate risk resulting from liabilities to banks and financing institutions in Italy linked to the Euribor, the Company executed swap transactions. See Note 21. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Composed as follows: |
|--|----|----------------------|

|                       |   | December 31, 2016 |   |   | December 31, 2015 |   |
|----------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                       |   | Face value        |   |   | Carrying amount   |   |   | Face value |   |   | Carrying amount |   |
|                       |   | US$ in thousands  |   |   | US$ in thousands  |   |
| Debentures                 |   |              | 36,474 |   |              |   | 35,537 |   |   |   | 41,123 |   |   |   | 39,952 |   |
|                       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Less current maturities    |   |              | 5,210  |   |              |   | 4,989 |   |   |   | 5,127 |   |   |   | 4,878 |   |
|                       |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Total long-term debentures |   |              | 31,264 |   |              |   | 30,548 |   |   |   | 35,996 |   |   |   | 35,074 |   |

|  | B. | Series A Debentures – Details |
|--|----|-------------------------------------|

----

----

|  | B. | Series A Debentures – Details (cont'd) |
|--|----|----------------------------------------------|

|  | C. | The aggregate annual maturities are as follows: |
|--|----|-------------------------------------------------|

|                      |   | December 31      |   |   | December 31 |   |
|---------------------------|--------|------------------|--------|--------|-------------|--------|
|                      |   | 2016             |   |   | 2015        |   |
|                      |   | US$ in thousands |   |
| Second year               |   |             | 5,016  |   |        |   | 4,924 |   |
| Third year                |   |             | 5,044  |   |        |   | 4,949 |   |
| Fourth year               |   |             | 5,071  |   |        |   | 4,977 |   |
| Fifth year                |   |             | 5,105  |   |        |   | 5,004 |   |
| Sixth year and thereafter |   |             | 10,312 |   |        |   | 15,220 |   |
|                      |   |             |   |   |        |   |   |   |
|                      |   |             | 30,548 |   |        |   | 35,074 |   |
| Current maturities        |   |             | 4,989  |   |        |   | 4,878 |   |
| Long-term loans           |   |             | 35,537 |   |        |   | 39,952 |   |

|                               |   | December 31      |   |   | December 31 |   |
|------------------------------------|--------|------------------|--------|--------|-------------|--------|
|                               |   | 2016             |   |   | 2015        |   |
|                               |   | US$ in thousands |   |
| Government authorities             |   |             | 315    |   |        |   | 131 |   |
| Derivatives                        |   |             | 2,447  |   |        |   | 2,344 |   |
| Liabilities for employees benefits |   |             | 2      |   |        |   | 20 |   |
|                               |   |             |   |   |        |   |   |   |
|                               |   |             | 2,764  |   |        |   | 2,495 |   |

----

----

|  | A. | Lease commitments |
|--|----|-------------------|

|                         |   | Operating        |   |
|------------------------------|--------|------------------|--------|
|                         |   | lease            |   |
|                         |   | US$ in thousands |   |
| Year ended December 31       |   |             |   |
| 2017                         |   |             | 288    |   |
| 2018                         |   |             | 222    |   |
| 2019                         |   |             | 222    |   |
| 2020                         |   |             | 222    |   |
| 2021 and thereafter          |   |             | 2,879  |   |
|                         |   |             |   |   |
| Total minimum lease payments |   |             | 3,833  |   |

|  | B. | Legal proceedings: |
|--|----|--------------------|

|  | C. | Pledges: |
|--|----|----------|

|  | · | A fixed pledge and mortgage on the Company's holdings of Ellomay Clean Energy, Limited Partnership, the holdings of such partnership in U. Dori Energy Infrastructures Ltd. and the holdings of the Company in the general partner of said partnership, Ellomay Clean Energy Ltd as well as on the rights (including shareholders loans) of said general partner in and/or towards the partnership. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | A fixed pledge on Ellomay Clean Energy, Limited Partnership and Ellomay Clean Energy Ltd's bank accounts. |
|--|--------|-----------------------------------------------------------------------------------------------------------|

|  | · | A floating lien on Ellomay Clean Energy Ltd.'s rights,  assets, registered and non-issued capital and goodwill. |
|--|--------|----------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | On December 30, 2008, the Company's shareholders approved the terms of a management services agreement entered into among the Company, Kanir Joint Investments (2005) Limited Partnership ("Kanir") and Meisaf Blue & White Holdings Ltd. ("Meisaf"), a company controlled by the Company's chairman of the board and controlling shareholder,  effective as of March 31, 2008 (the "Management Agreement"). According to the Management Agreement, Kanir and Meisaf, through their employees, officers and directors, provide assistance to the Company in all aspects of the new operations process, including but not limited to, any activities to be conducted in connection with identification and evaluation of the business opportunities, the negotiations and the integration and management of any new operations and including discussions with the Company's  management to assist and advise them on such matters and on any matters concerning the Company's affairs and business. In consideration of the performance of the management services and the board services pursuant to the Management Agreement, the Company initially agreed to pay Kanir and Meisaf an aggregate annual management services fee in the amount of $250 thousand. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | B. |  Compensation to key management personnel and interested parties (including directors) |
|--|----|---------------------------------------------------------------------------------------------|

|                              |   | Year ended December 31 |   |
|-----------------------------------|--------|------------------------|--------|
|                              |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                              |   | Number of              |   |   |   |   |   | Number of |   |   |   |   |   | Number of |   |   |   |   |
|                              |   | People                 |   |   | Amount |   |   | People (**) |   |   | Amount |   |   | people |   |   | Amount |   |
|                              |   |                   |   |   | US$ thousands |   |   |   |   |   | US$ thousands |   |   |   |   |   | US$ thousands |   |
|                                   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term employee Benefits |   |                   | 2      |   |   |   | 407 |   |   |   | 4 |   |   |   | 618 |   |   |   | 3 |   |   |   | 617 |   |
| Post-employment Benefits     |   |                   | 2      |   |   |   | 99 |   |   |   | 4 |   |   |   | 75 |   |   |   | 3 |   |   |   | 53 |   |
| Share-based payments              |   |                   | 2      |   |   |   | * |   |   |   | 2 |   |   |   | * |   |   |   | 1 |   |   |   | * |   |

----

----

|  | B. | Compensation to key management personnel and interested parties (including directors) (cont’d) |
|--|----|------------------------------------------------------------------------------------------------------|

|                         |   | Year ended December 31 |   |
|------------------------------|--------|------------------------|--------|
|                         |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                         |   | Number of              |   |   |   |   |   | Number of |   |   |   |   |   | Number of |   |   |   |   |
|                         |   | people                 |   |   | Amount |   |   | people |   |   | Amount |   |   | People (**) |   |   | Amount |   |
|                         |   |                   |   |   | US$ thousands |   |   |   |   |   | US$ thousands |   |   |   |   |   | US$ thousands |   |
| Total compensation to        |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  directors not employed |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   by the Company        |   |                   | 3      |   |   |   | 70 |   |   |   | 3 |   |   |   | 68 |   |   |   | 3 |   |   |   | 76 |   |
|  share-based payments   |   |                   | 3      |   |   |   | 3 |   |   |   | 3 |   |   |   | 7 |   |   |   | 3 |   |   |   | * |   |

|  | C. | Debts and loans to related and interested parties |
|--|----|---------------------------------------------------|

|        |   | The terms of the loan   |   | Balance as at December 31    |    |          | Interest income recognized in statement ofincome for the year ended December 31       |   |
|-------------|--------|-----------------------------------|--------|---------------------------------------------|---------|---------------|---------------------------------------------------------------------------------------------------------------------|--------|
|        |   | Interest                          |   | Linkage                                     |    |          |                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|        |   | rate                              |   | base                                        |    | 2016          |                                                                                                                |   | 2015 |   |   | 2016 |   |   | 2015 |   |   | 2014 |   |
|        |   | %                                 |   |                                        |    | US$ thousands |                                                                                                                |
| Dori Energy |   |                              | 8.5 (* | )                                           | NIS+CPI |          |                                                                                                                | 13,419 |   |   |   | 19,382 |   |   |   | 1,384 |   |   |   | 1,378 |   |   |   | 1,158 |   |

----

----

|  | A. | Composition of share capital |
|--|----|------------------------------|

|   |                          |  |        |
|--------|--------------------------|--|--------|
|   |      |  |   |  |   |  |
|                                   |   | December 31, 2016    |       |   | December 31, 2015    |   |       | December 31, 2014    |   |
|----------------------------------------|--------|-------------------------------------|------------|--------|-------------------------------------|--------|------------|-------------------------------------|--------|
|                                   |   | Authorized                          |       |   | Issued andOutstanding(1)            |   |       | Authorized                          |   |   | Issued andoutstanding(1) |   |   | Authorized |   |   | Issued andOutstanding |   |
|                                   |   | Number of shares                    |       |
| Ordinary shares                        |   |                                |       |   |                                |   |       |                                |   |   |   |   |   |   |   |   |   |   |
|  of NIS 10.00 par value each |   |                                | 17,000,000 |   |                                |   | 10,677,370 | (1)                                 |   |   | 17,000,000 |   |   |   | 10,678,888(1 | ) |   |   | 17,000,000 |   |   |   | 10,692,371(1 | ) |

|  | B. | Rights attached to shares: |
|--|----|----------------------------|

|  | 1. | Voting rights at the general meeting, right to dividend and rights upon liquidation of the Company. |
|--|----|-----------------------------------------------------------------------------------------------------|

|  | 2. | The Ordinary shares of the Company were traded until May 2005 on the NASDAQ Capital Market. From May 19, 2005, the Company's Ordinary shares have been quoted over-the-counter in the "pink sheets" and, commencing August 22, 2011, have been listed on the NYSE MKT (formerly the NYSE Amex). On October 27, 2013, the Company's ordinary shares were also listed for trading on the Tel Aviv Stock Exchange in Israel. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | C. | Warrants and share options |
|--|----|----------------------------|

|  | D. | Translation reserve from foreign operation |
|--|----|--------------------------------------------|

----

----

|  | E. | Capital management in the Company |
|--|----|-----------------------------------|

|  | 1. | To preserve the Company's ability to ensure business continuity thereby creating a return for the shareholders, investors and other interested parties. |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | To ensure adequate return for the shareholders by making reasonable investment decisions based on the level of internal rate of return that is in line with the Company's business activity. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | To maintain healthy capital ratios in order to support business activity and maximize shareholders value. |
|--|----|-----------------------------------------------------------------------------------------------------------|

|  | F. | Dividend distribution and buyback program |
|--|----|-------------------------------------------|

----

----

|  | A. | Expenses recognized in the financial statements |
|--|----|-------------------------------------------------|

|                                      |   | Year ended December 31 |   |
|-------------------------------------------|--------|------------------------|--------|
|                                      |   | 2016                   |   |   | 2015 |   |   | 2014 |   |
|                                      |   | US$ thousand           |   |
| Expenses arising from share-based payment |   |                   |   |   |   |   |   |   |   |
|  Transactions                        |   |                   | 4      |   |   |   | 7 |   |   |   | * |   |

|                     |   | Year ended December 31 |   |
|--------------------------|--------|------------------------|--------|
|                     |   | 2016                   |   |   | 2015 |   |
| Dividend yield           |   |                   | 0      | % |   |   | 0 | % |
| Expected volatility      |   |                   | 0.332  |   |   |   | 0.332 |   |
| Risk-free interest       |   |                   | 0. 67  | % |   |   | 0. 68 | % |
| Expected life (in years) |   |                   | 2-3    |   |   |   | 2-3 |   |

|  | A. | Expenses recognized in the financial statements (cont'd) |
|--|----|----------------------------------------------------------|

|                                      |   | Equal market price |   |
|-------------------------------------------|--------|--------------------|--------|
|                                      |   | 2016               |   |   | 2015 |   |
|                                      |   | US$                |   |
| Weighted average exercise prices          |   |               | 8.3    |   |   |   | 8.96 |   |
|                                      |   |               |   |   |   |   |   |   |
| Weighted average fair value on grant date |   |               | 1.6    |   |   |   | 1.7 |   |

|  | B. | Stock Option Plans |
|--|----|--------------------|

----

----

|  | C. | Changes during the year: |
|--|----|--------------------------|

|                    |   | 2016      |   |   | 2015     |   |   | 2014      |   |
|-------------------------|--------|-----------|--------|--------|----------|--------|--------|-----------|--------|
|                    |   |      |   |   | Weighted |   |   |      |   |   | Weighted |   |   |   |   |   | Weighted |   |
|                    |   |      |   |   | Average  |   |   |      |   |   | average |   |   |   |   |   | Average |   |
|                    |   | Number of |   |   | Exercise |   |   | Number of |   |   | exercise |   |   | Number of |   |   | Exercise |   |
|                    |   | options   |   |   | Price    |   |   | options   |   |   | price |   |   | options |   |   | Price |   |
|                    |   |      |   |   | US$      |   |   |      |   |   | US$ |   |   |   |   |   | US$ |   |
| Outstanding at          |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |
|  beginning of year |   |      | 19,502 |   |     |   | 8.26   |      |   |   | 157,821 |   |   |   | 8.26 |   |   |   | 155,787 |   |   |   | 8.24 |   |
| Granted during          |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  the year          |   |      | 3,000  |   |     |   | 8.3    |      |   |   | 3,000 |   |   |   | 8.96 |   |   |   | 3,034 |   |   |   | 9.37 |   |
| Exercised during        |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  the year          |   |      | -      |   |     |   | -      |      |   |   | (140,193 | ) |   |   | 8.33 |   |   |   | - |   |   |   | - |   |
| Expired during          |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  the year          |   |      | -      |   |     |   | -      |      |   |   | (1,126 | ) |   |   | 8.4 |   |   |   | (1,000 | ) |   |   | 8.48 |   |
|                    |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding at          |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  end of year       |   |      | 22,502 |   |     |   | 7.34   |      |   |   | 19,502 |   |   |   | 7.19 |   |   |   | 157,821 |   |   |   | 8.26 |   |
|                    |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable at          |   |      |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  end of year       |   |      | 18,502 |   |     |   | 7.19   |      |   |   | 18,502 |   |   |   | 7.1 |   |   |   | 156,745 |   |   |   | 8.32 |   |

----

----

|  | D. | The weighted average remaining contractual life for the share options outstanding as of December 31, 2016 was 4.1- 8.1 years (as of December 31, 2015: 4.95-8.59. years and as of December 31, 2014: 2.56-4.15 years). |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | E. | The range of exercise prices for share options outstanding as of December 31, 2016 was $4.7- $9.37 (as of December 31, 2015: $4.7- $9.37 and as of December 31, 2014: $3.1- $9.37). |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | A. | Financing income and expenses: |
|--|----|--------------------------------|

|  | 1. | Financing income |
|--|----|------------------|

|                                     |   | For the year ended December 31 |   |
|------------------------------------------|--------|--------------------------------|--------|
|                                     |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                     |   | US$ in thousands               |   |
| Interest income                          |   |                           | 290    |   |   |   | 260 |   |   |   | 230 |   |
| Change in fair value of derivatives      |   |                           | 704    |   |   |   | 3,485 |   |   |   | - |   |
| Forward gain                             |   |                           | -      |   |   |   | 2,087 |   |   |   | - |   |
| Gain from exchange rate differences, net |   |                           | -      |   |   |   | - |   |   |   | 2,015 |   |
| Total financing income                   |   |                           | 994    |   |   |   | 5,832 |   |   |   | 2,245 |   |

|  | 2. | Financing expenses |
|--|----|--------------------|

|                                     |   | For the year ended December 31 |   |
|------------------------------------------|--------|--------------------------------|--------|
|                                     |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                     |   | US$ in thousands               |   |
| Change in fair value of derivatives      |   |                           | -      |   |   |   | - |   |   |   | 1,048 |   |
| Swap interest                            |   |                           | 672    |   |   |   | 446 |   |   |   | 1,383 |   |
| Debentures interest and related expenses |   |                           | 2,203  |   |   |   | 2,450 |   |   |   | 2,336 |   |
| Interest on loans                        |   |                           | 560    |   |   |   | 360 |   |   |   | 782 |   |
| Loss from exchange rate differences, net |   |                           | 454    |   |   |   | 1,820 |   |   |   | - |   |
| Bank charges and other commissions       |   |                           | 161    |   |   |   | 164 |   |   |   | 91 |   |
| Total financing expenses                 |   |                           | 4,050  |   |   |   | 5,240 |   |   |   | 5,640 |   |

|  | B. | Operating Costs and Depreciation |
|--|----|----------------------------------|

|                               |   | For the year ended December 31 |   |
|------------------------------------|--------|--------------------------------|--------|
|                               |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                               |   | US$ in thousands               |   |
| Depreciation                       |   |                           | 4,884  |   |   |   | 4,912 |   |   |   | 5,452 |   |
| Professional services              |   |                           | 117    |   |   |   | 119 |   |   |   | 163 |   |
| Annual rent                        |   |                           | 259    |   |   |   | 261 |   |   |   | 263 |   |
| Operating and maintenance services |   |                           | 1,424  |   |   |   | 1,498 |   |   |   | 1,708 |   |
| Insurance                          |   |                           | 217    |   |   |   | 221 |   |   |   | 261 |   |
| Other                              |   |                           | 288    |   |   |   | 755 |   |   |   | 692 |   |
| Total operating costs              |   |                           | 7,189  |   |   |   | 7,766 |   |   |   | 8,539 |   |

----

----

|  | C. | General and administrative expenses |
|--|----|-------------------------------------|

|                                       |   | For the year ended December 31 |   |
|--------------------------------------------|--------|--------------------------------|--------|
|                                       |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                       |   | US$ in thousands               |   |
| Salaries and related compensation          |   |                           | 1,137  |   |   |   | 1,458 |   |   |   | 1,503 |   |
| Professional services                      |   |                           | 2,239  |   |   |   | 1,747 |   |   |   | 2,709 |   |
| Expenses in connection with Manara Project |   |                           | 1,800  |   |   |   | 1,027 |   |   |   | - |   |
| Other                                      |   |                           | (497   | ) |   |   | (487 | ) |   |   | 41 |   |
| Total general and administrative expenses  |   |                           | 4,679  |   |   |   | 3,745 |   |   |   | 4,253 |   |

|  | D. | Other income (expense), net |
|--|----|-----------------------------|

|                                                                                     |   | For the year ended December 31 |   |
|------------------------------------------------------------------------------------------|--------|--------------------------------|--------|
|                                                                                     |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                                                                     |   | US$ in thousands               |   |
| Other income in connection with the Erez electricity pumped storage project (see Note 6) |   |                           | 62     |   |   |   | 16 |   |   |   | 1,704 |   |
| Reevaluation of option to acquire additional shares                                      |   |                           | -      |   |   |   | 5 |   |   |   | (372 | ) |
| Other                                                                                    |   |                           | 37     |   |   |   | - |   |   |   | 106 |   |
| Total other income, net                                                                  |   |                           | 99     |   |   |   | 21 |   |   |   | 1,438 |   |

|  | A. | Regional Taxation |
|--|----|-------------------|

----

----

|  | B. | Composition of income tax benefit (taxes on income): |
|--|----|------------------------------------------------------|

|                                                 |   | For the year ended December 31 |   |
|------------------------------------------------------|--------|--------------------------------|--------|
|                                                 |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                                                 |   | US$ in thousands               |   |
| Current tax income (expense)                         |   |                           |   |   |   |   |   |   |   |
| Current year                                         |   |                           | (281   | ) |   |   | (417 | ) |   |   | (806 | ) |
| Previous years                                       |   |                           | 10     |   |   |   | 970 |   |   |   | 40 |   |
| Reversal and changes in uncertain tax positions |   |                           | (86    | ) |   |   | (86 | ) |   |   | 469 |   |
|                                                 |   |                           | (357   | ) |   |   | 467 |   |   |   | (297 | ) |
| Deferred tax income                                  |   |                           |   |   |   |   |   |   |   |   |   |   |
| Creation and reversal of temporary differences       |   |                           | (268   | ) |   |   | 1,466 |   |   |   | 96 |   |
|                                                 |   |                           |   |   |   |   |   |   |   |   |   |   |
| Tax benefit (taxes on income)                        |   |                           | (625   | ) |   |   | 1,933 |   |   |   | (201 | ) |

|  | C. | Theoretical tax: |
|--|----|------------------|

|                                                                                                                             |   | 2016             |   |   | 2015   |   |   | 2014   |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                             |   | US$ in thousands |   |
|                                                                                                                             |   |             |   |   |   |   |   |   |   |
| Profit (loss) before taxes on income                                                                                             |   |             | (448   | )      |   |   | 5,365  |   |   |   | 6,847 |   |
| Primary tax rate of the Company                                                                                                  |   |             | 25     | %      |   |   | 26.5   | %      |   |   | 26.5 | % |
| Tax on income                                                                                                                    |   |             | 112    |   |   |   | (1,422 | )      |   |   | (1,814 | ) |
|                                                                                                                             |   |             |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) subject to different tax rate                                                                                      |   |             | (17    | )      |   |   | (292   | )      |   |   | 94 |   |
| Foreign exchange differences                                                                                                     |   |             | -      |   |   |   | 2      |   |   |   | (142 | ) |
| Differences in connection with gain on bargain purchases                                                                         |   |             | -      |   |   |   | -      |   |   |   | 999 |   |
| Creation of deferred taxes for tax losses and benefits from previous years for which deferred taxes were not created in the past |   |             | -      |   |   |   | 2,710  |   |   |   | 357 |   |
| Neutralization of tax calculated in respect of the Company’s share in profits of equity accounted investees                |   |             | 376    |   |   |   | 648    |   |   |   | 482 |   |
| Change in temporary differences for which deferred tax were not recognized                                                       |   |             | (379   | )      |   |   | 283    |   |   |   | (482 | ) |
| Current year tax losses and benefits for which deferred taxes were not created, reserve of uncertain tax position and others     |   |             | (717   | )      |   |   | 4      |   |   |   | 305 |   |
|                                                                                                                             |   |             |   |   |   |   |   |   |   |   |   |   |
| Actual tax benefit (tax on income)                                                                                               |   |             | (625   | )      |   |   | 1,933  |   |   |   | (201 | ) |

----

----

|  | D. | Carry forward tax losses: |
|--|----|---------------------------|

|  | E | Deferred taxes: |
|--|---|-----------------|

|                                             |   |             |   |   |   |   |   | Finance lease   |   |          |     |   |   | Losses |   |   |   |   |
|--------------------------------------------------|--------|------------------|--------|--------|--------|--------|--------|-----------------|--------|---------------|----------|--------|--------|--------|--------|--------|--------|--------|
|                                             |   | Financial        |   |   | Fixed  |   |   | obligations and |   |          | Swap     |   |   | on     |   |   |   |   |
|                                             |   | assets           |   |   | assets |   |   | long term loans |   |          | contract |   |   | income |   |   | Total  |   |
|                                             |   | US$ in thousands |   |
| Balance of deferred tax asset                    |   |             |   |   |   |   |   |            |   |          |     |   |   |   |   |   |   |   |
| (liability) as at January 1, 2015                |   |             | (1,276 | )      |   |   | (3,771 | )               |   |          | 3,239    |   |   |   | 153    |   |   |   | 2,072 |   |   |   | 417 |   |
| Changes recognized in profit or loss             |   |             | (13    | )      |   |   | 95     |            |   |          | (535     | )      |   |   | 15     |   |   |   | 1,904 |   |   |   | 1,466 |   |
| Changes recognized in other comprehensive income |   |             | -      |   |   |   | 390    |            |   |          | (367     | )      |   |   | (16    | )      |   |   | 127 |   |   |   | 134 |   |
| Balance of deferred tax asset                    |   |             |   |   |   |   |   |            |   |          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (liability) as at December 31, 2015              |   |             | (1,289 | )      |   |   | (3,286 | )               |   |          | 2,337    |   |   |   | 152    |   |   |   | 4,103 |   |   |   | 2,017 |   |
|                                             |   |             |   |   |   |   |   |            |   |          |     |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |             |   |   |   |   |   |            |   | Finance lease |     |   |   |   |   |   | Losses |   |   |   |   |   |
|                                             |   | Financial        |   |   | Fixed  |   |   | obligations and |   |          | Swap     |   |   | on     |   |   |   |   |   |
|                                             |   | assets           |   |   | assets |   |   | long term loans |   |          | contract |   |   | income |   |   | Total  |   |
|                                             |   | US$ in thousands |   |
| Balance of deferred tax asset                    |   |             |   |   |   |   |   |            |   |          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (liability) as at January 1, 2016                |   |             | (1,289 | )      |   |   | (3,286 | )               |   |          | 2,337    |   |   |   | 152    |   |   |   | 4,103 |   |   |   | 2,017 |   |
| Changes recognized in profit or loss             |   |             | (56    | )      |   |   | (46    | )               |   |          | (87      | )      |   |   | 42     |   |   |   | (121 | ) |   |   | (268 | ) |
| Changes recognized in other comprehensive income |   |             | -      |   |   |   | 114    |            |   |          | (37      | )      |   |   | (6     | )      |   |   | (131 | ) |   |   | (60 | ) |
| Balance of deferred tax asset                    |   |             |   |   |   |   |   |            |   |          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (liability) as at December 31, 2016              |   |             | (1,345 | )      |   |   | (3,218 | )               |   |          | 2,213    |   |   |   | 188    |   |   |   | 3,851 |   |   |   | 1,689 |   |

----

----

|  | F. | Provision for tax uncertainties: |
|--|----|----------------------------------|

|                                                        |   | For the year ended December 31                         |       |
|-------------------------------------------------------------|--------|--------------------------------------------------------|------------|
|                                                        |   | 2016                                                   |       |   | 2015 |   |   | 2014 |   |
|                                                        |   | US$ in thousands (other than share and per share data) |       |
| Net  income (loss) attributed to owners of the Company |   |                                                   | (605       | ) |   |   | 7,553 |   |   |   | 6,658 |   |
|                                                        |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Weighted average ordinary shares outstanding (1)            |   |                                                   | 10,677,700 |   |   |   | 10,715,634 |   |   |   | 10,692,371 |   |
|                                                        |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Dilutive effect:                                            |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Stock options and warrants                                  |   |                                                   | -          |   |   |   | 42,736 |   |   |   | 115,917 |   |
|                                                             |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Diluted weighted average ordinary shares Outstanding   |   |                                                   | 10,677,700 |   |   |   | 10,758,370 |   |   |   | 10,808,288 |   |
|                                                        |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Basic profit (loss) per share from continuing operations    |   |                                                   | (0.6       | ) |   |   | 0.7 |   |   |   | 0.62 |   |
|                                                        |   |                                                   |       |   |   |   |   |   |   |   |   |   |
| Diluted profit (loss) per share from continuing operations  |   |                                                   | (0.6       | ) |   |   | 0.7 |   |   |   | 0.62 |   |

----

----

|  | A. | Overview |
|--|----|----------|

|  | ● | Credit risk |
|--|---------|-------------|

|  | ● | Liquidity risk |
|--|---------|----------------|

|  | ● | Market risk |
|--|---------|-------------|

|                                                |   | For the year ended December |   |
|-----------------------------------------------------|--------|-----------------------------|--------|
|                                                |   | 2016                        |   |   | 2015 |   |
|                                                |   | US$ in thousands            |   |
| Derivatives presented under non-current assets      |   |                        |   |   |   |   |
| Forward contracts                                   |   |                        | -      |   |   |   | 3,615 |   |
|                                                |   |                        |   |   |   |   |   |   |
| Derivatives presented under current liabilities     |   |                        |   |   |   |   |   |   |
| SWAP contracts                                      |   |                        | (503   | ) |   |   | (486 | ) |
| Derivatives presented under non-current liabilities |   |                        |   |   |   |   |   |   |
| Forward contracts                                   |   |                        | (50    | ) |   |   | - |   |
| SWAP contracts                                      |   |                        | (2,397 | ) |   |   | (2,344 | ) |
|                                                |   |                        | (2,447 | ) |   |   | (2,344 | ) |

|                                                                                      | December 31, 2016                                |
|-------------------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                                      | Currency/                                        |   | Currency/ |   |   |   | Fair value - |
|                                                                                      | linkage/interest rate                            |   | Linkage/interest rate |   | Date of |   | US$ in |
|                                                                                      | receivable                                       |   | Payable |   | expiration |   | thousand |
| EUR 8 million interest swap transaction for a period of 17 years, amortized semi-annually | Euribor 6 months                                 |   | Fixed 2.67% |   | September 7, 2027 |   | (776) |
| Euro 10 million interest swap transaction for a period of 17 years, amortized quarterly   | Euribor 3 months                                 |   | Fixed 3.595% |   | April 3, 2028 |   | (1,417) |
| Euro 3.75 million interest swap transaction for a period of 15 years, semi-annually.      | Euribor 6 months                                 |   | Fixed 2.53% |   | June 30, 2027 |   | (365) |
| Euro 7.5 million interest rate swap transaction for a period of 12 years, semi-annually.  | Euribor 6 months                                 |   | Fixed 1.17% |   | December 31, 2027 |   | (342) |
| Forward EUR/USD contracts with an aggregate EUR denominated principal of EUR 25 million.  | weighted average rate of approximately 1.18 |   | November 2021 |   | (50) |

----

----

|  | B. | Risk management framework |
|--|----|---------------------------|

|  | C. | Credit Risk |
|--|----|-------------|

----

----

|  | D. | Liquidity risk |
|--|----|----------------|

|                                                  |   | December 31, 2016 |   |
|-------------------------------------------------------|--------|-------------------|--------|
|                                                  |   | Carrying          |   |   | Contractual |   |   | Less than |   |   |   |   |   |   |   |   | More than |   |
|                                                  |   | amount            |   |   | cash flows |   |   | 1 year |   |   | 2 years |   |   | 3-5 years |   |   | 5 years |   |
|                                                  |   | US$ in thousands  |   |
| Non-derivative financial liabilities                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long term loans, including current maturities         |   |              | 18,653 |   |   |   | 22,256 |   |   |   | 1,309 |   |   |   | 1,727 |   |   |   | 5,466 |   |   |   | 13,754 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance lease obligation including current maturities |   |              | 4,562  |   |   |   | 5,753 |   |   |   | 508 |   |   |   | 508 |   |   |   | 1,524 |   |   |   | 3,213 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debentures                                            |   |              | 35,537 |   |   |   | 43,184 |   |   |   | 6,888 |   |   |   | 6,648 |   |   |   | 18,508 |   |   |   | 11,140 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade payables and other accounts payable             |   |              | 2,533  |   |   |   | 2,533 |   |   |   | 2,533 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | 61,285 |   |   |   | 73,726 |   |   |   | 11,238 |   |   |   | 8,883 |   |   |   | 25,498 |   |   |   | 28,107 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative finance liabilities                        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Swap contracts*                                       |   |              | 2,900  |   |   |   | 2,900 |   |   |   | 503 |   |   |   | 718 |   |   |   | 689 |   |   |   | 990 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | 2,900  |   |   |   | 2,900 |   |   |   | 503 |   |   |   | 718 |   |   |   | 689 |   |   |   | 990 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative finance Assets                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward contracts                                     |   |              | (50    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (50 | ) |   |   | - |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | (50    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (50 | ) |   |   | - |   |

----

----

|  | D. | Liquidity risk (cont’d) |
|--|----|-------------------------------|

|                                                  |   | December 31, 2015 |   |
|-------------------------------------------------------|--------|-------------------|--------|
|                                                  |   | Carrying          |   |   | Contractual |   |   | Less than |   |   |   |   |   |   |   |   | More than |   |
|                                                  |   | Amount            |   |   | cash flows |   |   | 1 year |   |   | 2 years |   |   | 3-5 years |   |   | 5 years |   |
|                                                  |   | US$ in thousands  |   |
| Non-derivative financial liabilities                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long term loans, including current maturities         |   |              | 13,840 |   |   |   | 17,253 |   |   |   | 1,212 |   |   |   | 1,237 |   |   |   | 3,970 |   |   |   | 10,834 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance lease obligation including current maturities |   |              | 5,060  |   |   |   | 6,481 |   |   |   | 526 |   |   |   | 526 |   |   |   | 1,578 |   |   |   | 3,851 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debentures                                            |   |              | 39,952 |   |   |   | 49,578 |   |   |   | 7,024 |   |   |   | 6,788 |   |   |   | 18,946 |   |   |   | 16,820 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Trade payables and other accounts payable             |   |              | 1,559  |   |   |   | 1,559 |   |   |   | 1,559 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | 60,411 |   |   |   | 74,871 |   |   |   | 10,321 |   |   |   | 8,551 |   |   |   | 24,494 |   |   |   | 31,505 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative finance liabilities                        |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Swap contracts                                        |   |              | 2,830  |   |   |   | 2,830 |   |   |   | 486 |   |   |   | 823 |   |   |   | 623 |   |   |   | 898 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | 2,830  |   |   |   | 2,830 |   |   |   | 486 |   |   |   | 823 |   |   |   | 623 |   |   |   | 898 |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative finance Assets                             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward contracts                                     |   |              | 3,615  |   |   |   | 3,615 |   |   |   | - |   |   |   | 3,325 |   |   |   | 290 |   |   |   | - |   |
|                                                  |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |              | 3,615  |   |   |   | 3,615 |   |   |   | - |   |   |   | 3,325 |   |   |   | 290 |   |   |   | - |   |

----

----

|  | E. | Market risk |
|--|----|-------------|

|  | (1) | Foreign currency risk |
|--|-----|-----------------------|

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk |
|--|-----|---------------------------------------------------|

|                              |   | December 31, 2016 |   |
|-----------------------------------|--------|-------------------|--------|
|                              |   | Non-monetary      |   |   | NIS |   |   | Unlinked |   |   | EURO |   |   | Total |   |
|                              |   | US$ in thousands  |   |
|                              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents         |   |              | -      |   |   |   | 107 |   |   |   | 17,582 |   |   |   | 5,961 |   |   |   | 23,650 |   |
| Marketable securities             |   |              | -      |   |   |   | - |   |   |   | 1,023 |   |   |   | - |   |   |   | 1,023 |   |
| ST restricted cash                |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | 16 |   |   |   | 16 |   |
| Other accounts receivables        |   |              | 532    |   |   |   | 1,635 |   |   |   | 2,172 |   |   |   | 5,613 |   |   |   | 9,952 |   |
| Non-current assets:               |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments in equity             |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  accounted investees         |   |              | 18,669 |   |   |   | 12,119 |   |   |   | - |   |   |   | - |   |   |   | 30,788 |   |
| Advances on account of            |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  investments in process      |   |              | 905    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 905 |   |
| Financial asset                   |   |              | -      |   |   |   | 1,330 |   |   |   | - |   |   |   | - |   |   |   | 1,330 |   |
| Fixed assets                      |   |              | 77,066 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 77,066 |   |
| LT restricted cash                |   |              | -      |   |   |   | - |   |   |   | 3,807 |   |   |   | 1,592 |   |   |   | 5,399 |   |
| Deferred tax                      |   |              | 2,614  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,614 |   |
| Other assets                      |   |              | 952    |   |   |   | 101 |   |   |   | 2,341 |   |   |   | 37 |   |   |   | 3,431 |   |
| Current liabilities:              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans and borrowings              |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | (1,150 | ) |   |   | (1,150 | ) |
| ST Debentures                     |   |              | -      |   |   |   | (4,989 | ) |   |   | - |   |   |   | - |   |   |   | (4,989 | ) |
| Accounts payable                  |   |              | -      |   |   |   | (158 | ) |   |   | - |   |   |   | (1,526 | ) |   |   | (1,684 | ) |
| Accrued expenses and              |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other payables              |   |              | (1,237 | ) |   |   | (923 | ) |   |   | (376 | ) |   |   | (743 | ) |   |   | (3,279 | ) |
| Non-current liabilities:          |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance lease obligations         |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | (4,228 | ) |   |   | (4,228 | ) |
| Long-term loans                   |   |              | -      |   |   |   | (418 | ) |   |   | - |   |   |   | (17,419 | ) |   |   | (17,837 | ) |
| LT Debentures                     |   |              | -      |   |   |   | (30,548 | ) |   |   | - |   |   |   | - |   |   |   | (30,548 | ) |
| Deferred tax                      |   |              | (925   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (925 | ) |
| Other long-term liabilities       |   |              | -      |   |   |   | (2 | ) |   |   | - |   |   |   | (2,762 | ) |   |   | (2,764 | ) |
| Total exposure in statement       |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of financial position in    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  respect of financial assets |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and financial liabilities   |   |              | 98,576 |   |   |   | (21,746 | ) |   |   | 26,549 |   |   |   | (14,609 | ) |   |   | 88,770 |   |

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk (cont’d) |
|--|-----|------------------------------------------------------------------|

|                              |   | December 31, 2015 |    |
|-----------------------------------|--------|-------------------|---------|
|                              |   | Non-monetary      |    |   | NIS |   |   | Unlinked |   |   | EURO |   |   | Total |   |
|                              |   | US$ in thousands  |    |
|                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents         |   |              | -       |   |   |   | 160 |   |   |   | 16,355 |   |   |   | 2,202 |   |   |   | 18,717 |   |
| Marketable securities             |   |              | -       |   |   |   | - |   |   |   | 6,499 |   |   |   | - |   |   |   | 6,499 |   |
| ST deposits                       |   |              | -       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| ST restricted cash                |   |              | -       |   |   |   | - |   |   |   | - |   |   |   | 79 |   |   |   | 79 |   |
| Other accounts receivables        |   |              | 3,090   |   |   |   | 290 |   |   |   | 30 |   |   |   | 4,808 |   |   |   | 8,218 |   |
| Non-current assets:               |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investments in equity             |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  accounted investees         |   |              | 17,649  |   |   |   | 16,321 |   |   |   | - |   |   |   | - |   |   |   | 33,970 |   |
| Financial asset                   |   |              | -       |   |   |   | 1,250 |   |   |   | - |   |   |   | 3,615 |   |   |   | 4,865 |   |
| Fixed assets                      |   |              | 78,975  |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 78,975 |   |
| LT restricted cash                |   |              | -       |   |   |   | - |   |   |   | 4,217 |   |   |   | 1,100 |   |   |   | 5,317 |   |
| Deferred tax                      |   |              | 2,840   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,840 |   |
| Other assets                      |   |              | 847     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 847 |   |
| Current liabilities:              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans and borrowings              |   |              | -       |   |   |   | - |   |   |   | - |   |   |   | (1,133 | ) |   |   | (1,133 | ) |
| ST Debentures                     |   |              | -       |   |   |   | (4,878 | ) |   |   | - |   |   |   | - |   |   |   | (4,878 | ) |
| Accounts payable                  |   |              | -       |   |   |   | (28 | ) |   |   | - |   |   |   | (841 | ) |   |   | (869 | ) |
| Accrued expenses and              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  other payables              |   |              | -       |   |   |   | (592 | ) |   |   | (1,444 | ) |   |   | (1,187 | ) |   |   | (3,223 | ) |
| Non-current liabilities:          |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance lease obligations         |   |              | -       |   |   |   | - |   |   |   | - |   |   |   | (4,724 | ) |   |   | (4,724 | ) |
| Long-term loans                   |   |              | -       |   |   |   | (192 | ) |   |   | - |   |   |   | (12,851 | ) |   |   | (13,043 | ) |
| LT Debentures                     |   |              | -       |   |   |   | (35,074 | ) |   |   | - |   |   |   | - |   |   |   | (35,074 | ) |
| Deferred tax                      |   |              | (823    | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (823 | ) |
| Other long-term liabilities       |   |              | -       |   |   |   | (20 | ) |   |   | (2,183 | ) |   |   | (292 | ) |   |   | (2,495 | ) |
| Total exposure in statement       |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of financial position in    |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  respect of financial assets |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and financial liabilities   |   |              | 118,899 |   |   |   | (39,084 | ) |   |   | 23,474 |   |   |   | (9,224 | ) |   |   | 94,065 |   |

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk (cont’d) |
|--|-----|------------------------------------------------------------------|

|           |   | For the year ended December 31 |   |
|----------------|--------|--------------------------------|--------|
|           |   | Rate of                        |   |   |   |   |   | Rate of |   |   |   |   |
|           |   | Change                         |   |   |   |   |   | Change |   |   |   |   |
|           |   | %                              |   |   | Dollar |   |   | % |   |   | NIS |   |
| 1 Euro in 2016 |   |                           | (3.4   | ) |   |   | 1.052 |   |   |   | (4.8 | ) |   |   | 4.044 |   |
| 1 Euro in 2015 |   |                           | (10.4  | ) |   |   | 1.088 |   |   |   | (10.1 | ) |   |   | 4.247 |   |

|  | (b) | Sensitivity analysis |
|--|-----|----------------------|

|                            |   | December 31, 2016 |   |
|---------------------------------|--------|-------------------|--------|
|                            |   | Increase          |   |   | Decrease |   |
|                            |   | Equity            |   |   | Equity |   |
|                            |   | US$ thousands     |   |
| Change in the exchange rate of: |   |              |   |   |   |   |
| 5% in the Euro                  |   |              | (768   | ) |   |   | 768 |   |
| 5% in NIS                       |   |              | (4,181 | ) |   |   | 4,181 |   |

|                            |   | December 31, 2015 |   |
|---------------------------------|--------|-------------------|--------|
|                            |   | Increase          |   |   | Decrease |   |
|                            |   | Equity            |   |   | Equity |   |
|                            |   | US$ thousands     |   |
| Change in the exchange rate of: |   |              |   |   |   |   |
| 5% in the Euro                  |   |              | (465   | ) |   |   | 465 |   |
| 5% in NIS                       |   |              | (7,625 | ) |   |   | 7,625 |   |

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|           |   | December 31,     |   |
|----------------|--------|------------------|--------|
|           |   | 2016             |   |   | 2015 |   |
|           |   | Profit or loss   |   |   | Profit or loss |   |
|           |   | US$ in thousands |   |
| Increase of 1% |   |             | 1,005  |   |   |   | 864 |   |
| Increase of 3% |   |             | 3,053  |   |   |   | 2,587 |   |
| Decrease of 1% |   |             | (1,043 | ) |   |   | (857 | ) |
| Decrease of 3% |   |             | (3,091 | ) |   |   | (2,581 | ) |

|  | F. | Fair value |
|--|----|------------|

|  | (1) | Fair values versus carrying amounts |
|--|-----|-------------------------------------|

|                                                             |   | December 31, 2016 |
|------------------------------------------------------------------|--------|-------------------|
|                                                             |   |              |   |   | Fair value |   |   |   |    |
|                                                             |   | Carrying          |   |   |   |   |   |   |   |   |   |   | Valuation techniques for |   | Inputs used to |
|                                                             |   | amount            |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   | determining fair value |   | determine fair value |
|                                                             |   | US$ in thousands  |   |   |   |    |
| Non-current liabilities:                                         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |        |
| Debentures                                                       |   |              | 35,537 |   |   |   | 38,432 |   |   |   |   |   |   |   |   |   |      |
|  Loans from banks and others (including current maturities) |   |              | 18,653 |   |   |   | - |   |   |   | 19,794 |   |   |   | - |   | Future cash flows by the market interest rate on the date of measurement. |   | Discount rate of Euribor+ 2.53% |
| Finance lease obligations (including current maturities)         |   |              | 4,562 |   |   |   | - |   |   |   | 4,615 |   |   |   | - |   | Future cash flows by the market interest rate on the date of measurement. |   | Discount rate of Euribor+ 2.85% |
|                                                             |   |              | 58,752 |   |   |   | 38,432 |   |   |   | 24,409 |   |   |   | - |   |   |   |    |

----

----

|  | F. | Fair value (cont'd) |
|--|----|---------------------|

|  | (1) | Fair values versus carrying amounts (Cont'd) |
|--|-----|----------------------------------------------|

|                                                             |   | December 31, 2015 |
|------------------------------------------------------------------|--------|-------------------|
|                                                             |   |              |   |   | Fair value |   |   |   |    |
|                                                             |   | Carrying          |   |   |   |   |   |   |   |   |   |   | Valuation techniques for |   | Inputs used to |
|                                                             |   | amount            |   |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   | determining fair value |   | determine fair value |
|                                                             |   | US$ in thousands  |   |   |   |    |
| Non-current liabilities:                                         |   |              |   |   |   |   |   |   |   |   |   |   |   |   |        |
| Debentures                                                       |   |              | 39,952 |   |   |   | 42,639 |   |   |   |   |   |   |   |   |   |      |
|  Loans from banks and others (including current maturities) |   |              | 13,840 |   |   |   | - |   |   |   | 14,905 |   |   |   | - |   | Future cash flows by the market interest rate on the date of measurement. |   | Discount rate of Euribor+ 2.53% |
| Finance lease obligations (including current maturities)         |   |              | 5,060 |   |   |   | - |   |   |   | 5,041 |   |   |   | - |   | Future cash flows by the market interest rate on the date of measurement. |   | Discount rate of Euribor+ 2.85% |
|                                                             |   |              | 58,852 |   |   |   | 42,639 |   |   |   | 19,946 |   |   |   | - |   |   |   |    |

|  | (2) | Interest rates used for determining fair value |
|--|-----|------------------------------------------------|

|                      | December 31    |
|---------------------------|----------------|
|                      | 2016           |   | 2015 |
|                      | %              |
| Non-current liabilities:  |           |   |   |
| Loans from banks          | Euribor+ 2.53% |   | Euribor+ 2.53% |
| Finance lease obligations | Euribor+ 2.85% |   | Euribor+ 2.85% |

|  | (3) | Fair values hierarchy |
|--|-----|-----------------------|

| Level 1 | - | Quoted prices (unadjusted) in active markets for identical assets or liabilities.                          |
|---------|---|------------------------------------------------------------------------------------------------------------|
| 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).                                 |

----

----

|  | F. | Fair value (cont'd) |
|--|----|---------------------|

|  | (3) | Fair values hierarchy (Cont'd) |
|--|-----|--------------------------------|

|                                                                                          |   | December 31, 2016 |
|-----------------------------------------------------------------------------------------------|--------|-------------------|
|                                                                                          |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   | Valuation techniques for |
|                                                                                          |   | US$ in thousands  |   | determining fair value |
| Income receivable in connection with the Erez electricity pumped storage project (see Note 6) |   |              | - |   |   |   | - |   |   |   | 1,330 |   |   |   | 1,330 |   | The fair value of the income receivable in connection with the Erez electricity pumped storage project was calculated according to the cash flows expected to be received in 4.5 years following the financial closing of the project, discounted at a weighted interest rate of 2.36% reflecting the credit risk of the debtor. |
| Marketable securities                                                                         |   |              | - |   |   |   | 1,023 |   |   |   | - |   |   |   | 1,023 |   | Market price |
| Forward contracts                                                                             |   |              | - |   |   |   | (50 | ) |   |   | - |   |   |   | (50 | ) | Fair value measured on the basis of discounting the difference between the forward price in the contract and the current forward price for the residual period until redemption using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. |
| Swap contracts                                                                                |   |              | - |   |   |   | (2,900 | ) |   |   | - |   |   |   | (2,900 | ) | Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. |

|                                                                                          |   | December 31, 2015 |
|-----------------------------------------------------------------------------------------------|--------|-------------------|
|                                                                                          |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   | Valuation techniques for |
|                                                                                          |   | US$ in thousands  |   | determining fair value |
| Income receivable in connection with the Erez electricity pumped storage project (see Note 6) |   |              | - |   |   |   | - |   |   |   | 1,249 |   |   |   | 1,249 |   | The fair value of the income receivable in connection with the Erez electricity pumped storage project was calculated according to the cash flows expected to be received in 4.5 years following the financial closing of the project, discounted at a weighted interest rate of 2.36% reflecting the credit risk of the debtor. |
| Option to require additional shares in investee                                               |   |              | - |   |   |   | - |   |   |   | * |   |   |   | - |   |   |
| Marketable securities                                                                         |   |              | - |   |   |   | 6,499 |   |   |   | - |   |   |   | 6,499 |   | Market price |
| Forward contracts                                                                             |   |              | - |   |   |   | 3,615 |   |   |   | - |   |   |   | 3,615 |   | Fair value measured on the basis of discounting the difference between the forward price in the contract and the current forward price for the residual period until redemption using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. |
| Swap contracts                                                                                |   |              | - |   |   |   | (2,830 | ) |   |   | - |   |   |   | (2,830 | ) | Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. |

----

----

|  | F. | Fair value (cont'd) |
|--|----|---------------------|

|  | (4) | Level 3 financial instruments carried at fair value |
|--|-----|-----------------------------------------------------|

|                                                   |   | Financial assets                                      |   |
|--------------------------------------------------------|--------|-------------------------------------------------------|--------|
|                                                   |   |  Option to purchase Additional shares inInvestee |   |   | Income receivable in connection with the Erez electricitypumped storage project  |   |
|                                                   |   |                                                  |   |   |
|                                                   |   |                                                  |   |   |
|                                                   |   | US$ in thousands                                      |   |
| Balance as at December 31, 2014                        |   |                                                  | 17     |   |   |   | 1,238 |   |
|                                                   |   |                                                  |   |   |   |   |   |   |
| Total income recognized in profit or loss              |   |                                                  | -      |   |   |   | 144 |   |
| Exercise of first option to acquire additional shares  |   |                                                  | (17    | ) |   |   | - |   |
| Foreign Currency translation adjustments               |   |                                                  | (*     | ) |   |   | (132 | ) |
|                                                   |   |                                                  |   |   |   |   |   |   |
| Balance as at December 31, 2015                        |   |                                                  | (*     | ) |   |   | 1,250 |   |
|                                                   |   |                                                  |   |   |   |   |   |   |
| Total income recognized in profit or loss              |   |                                                  | -      |   |   |   | 130 |   |
| Exercise of second option to acquire additional shares |   |                                                  | (*     | ) |   |   | - |   |
| Foreign Currency translation adjustments               |   |                                                  | -      |   |   |   | (50 | ) |
|                                                   |   |                                                  |   |   |   |   |   |   |
| Balance as at December 31, 2016                        |   |                                                  | -      |   |   |   | 1,330 |   |

----

----

|         |   | For the year ended December 31 |   |
|--------------|--------|--------------------------------|--------|
|         |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|         |   | US$ in thousands               |   |
| Italy        |   |                           | 9,870  |   |   |   | 10,620 |   |   |   | 13,259 |   |
| Spain        |   |                           | 3,002  |   |   |   | 3,197 |   |   |   | 2,523 |   |
| Total income |   |                           | 12,872 |   |   |   | 13,817 |   |   |   | 15,782 |   |

|                    |   | For the year ended December 31 |   |
|-------------------------|--------|--------------------------------|--------|
|                    |   | 2016                           |   |   | 2015 |   |
|                    |   | US$ in thousands               |   |
| Israel                  |   |                           | 32     |   |   |   | 51 |   |
| Netherland              |   |                           | 5,344  |   |   |   | - |   |
| Italy                   |   |                           | 54,824 |   |   |   | 60,565 |   |
| Spain                   |   |                           | 16,866 |   |   |   | 18,359 |   |
| Total fixed assets, net |   |                           | 77,066 |   |   |   | 78,975 |   |

|  | A. | Series B Debentures |
|--|----|---------------------|

----

----

|  | A. | Series B Debentures (cont'd) |
|--|----|------------------------------|

|  | 1. | The Company’s equity, on a consolidated basis, shall not be less than $55 million; |
|--|----|------------------------------------------------------------------------------------------|

|  | 2. | The ratio of (a) the short-term and long-term debt from banks, in addition to the debt to holders of debentures issued by the Company and any other interest-bearing financial obligations, net of cash and cash equivalents and short-term investments and net of financing of projects, including hedging transactions in connection with such financing, of the subsidiaries of the Company, or, together, the Net Financial Debt, to (b) the equity of the Company, on a consolidated basis, plus the Net Financial Debt: |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | a. | Until and including the financial results for June 30, 2018 – shall not exceed the rate of 65% for purposes of the immediate repayment provision and shall not exceed the rate of 60% for purposes of the interest increase provision (due to failure to meet financial covenants as noted above); and |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b. | Commencing from the financial results for September 30, 2018 – shall not exceed the rate of 60% for purposes of the immediate repayment provision and shall not exceed the rate of 55% for purposes of the interest increase provision; and |
|--|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | The ratio of (a) the Company’s equity, on a consolidated basis, to (b) the Company’s balance sheet, on a consolidated basis: |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------|

|  | a. | Until and including the financial results for June 30, 2018 – shall not be less than a rate of 20% for purposes of the immediate repayment provision and shall not be less than a rate of 25% for purposes of the interest increase provision; and |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Series B Debentures (cont'd) |
|--|----|------------------------------|

|  | b. | Commencing from the financial results for September 30, 2018 – shall not be less than a rate of 25% for purposes of the immediate repayment provision and shall not be less than a rate of 30% for purposes of the interest increase provision. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | B. | Interest swap transactions |
|--|----|----------------------------|

|  | C. | Forward contracts |
|--|----|-------------------|

----

----

----

|                              | Page             |
|-----------------------------------|------------------|
|                              |             |
| Auditors' Report                  | FD - 2           |
|                              |             |
| Statements of Financial Position  | FD - 3           |
|                              |             |
| Statements of Profit or Loss      | FD - 4           |
|                              |             |
| Statements of Changes in Equity   | FD - 5           |
|                              |             |
| Statements of Cash Flows          | FD - 6           |
|                              |             |
| Notes to the Financial Statements | FD - 7 - FD - 45 |

----

----

----

|                                                         |   |   |       |   | December 31   |   |      | December 31   |   |
|--------------------------------------------------------------|--------|--------|------------|--------|---------------|--------|-----------|---------------|--------|
|                                                         |   |   |       |   | 2016          |   |      | 2015          |   |
|                                                         |   | Note   |       |   | NIS thousands |   |      | NIS thousands |   |
| Current assets                                               |   |   |       |   |          |   |      |          |   |
| Cash and cash equivalents                                    |   |   | 4          |   |          |   | 80,967    |          |   |   | 51,894 |   |
| Trade receivables                                            |   |   |       |   |          |   | 294,351   |          |   |   | 278,982 |   |
| Other receivables                                            |   |   | 5          |   |          |   | 37,174    |          |   |   | 31,994 |   |
| Pledged deposit                                              |   |   | 6          |   |          |   | -         |          |   |   | 29,485 |   |
| Financial derivatives                                        |   |   |       |   |          |   | -         |          |   |   | 646 |   |
| Total current assets                                         |   |   |       |   |          |   | 412,492   |          |   |   | 393,001 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Non-current assets                                           |   |   |       |   |          |   |      |          |   |   |   |   |
| Restricted deposit                                           |   |   | 12A1B      |        |          |   | 411,574   |          |   |   | 335,085 |   |
| Prepaid expenses                                             |   |   | 12A2, 12A5 |   |          |   | 45,938    |          |   |   | 46,918 |   |
| Fixed assets                                                 |   |   | 7          |   |          |   | 4,170,151 |          |   |   | 4,386,971 |   |
| Intangible assets                                            |   |   |       |   |          |   | 8,551     |          |   |   | 8,391 |   |
| Total non-current assets                                     |   |   |       |   |          |   | 4,636,214 |          |   |   | 4,777,365 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Total assets                                                 |   |   |       |   |          |   | 5,048,706 |          |   |   | 5,170,366 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Current liabilities                                          |   |   |       |   |          |   |      |          |   |   |   |   |
| Current maturities of loans from banks                       |   |   | 8          |   |          |   | 197,389   |          |   |   | 170,722 |   |
| Current maturity of loans from related parties               |   |   | 10         |   |          |   | 80,000    |          |   |   | 130,000 |   |
| Trade payables                                               |   |   |       |   |          |   | 293,613   |          |   |   | 247,129 |   |
| Other payables                                               |   |   | 9          |   |          |   | 9,152     |          |   |   | 16,906 |   |
| Total current liabilities                                    |   |   |       |   |          |   | 580,154   |          |   |   | 564,757 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Non-current liabilities                                      |   |   |       |   |          |   |      |          |   |   |   |   |
| Loans from banks                                             |   |   | 8          |   |          |   | 3,367,832 |          |   |   | 3,316,740 |   |
| Loans from related parties                                   |   |   | 10         |   |          |   | 151,638   |          |   |   | 396,259 |   |
| Provision for dismantling and restoration                    |   |   |       |   |          |   | 35,700    |          |   |   | 35,170 |   |
| Deferred tax liabilities                                     |   |   | 11         |   |          |   | 65,618    |          |   |   | 60,882 |   |
| Liabilities for employee benefits, net                       |   |   |       |   |          |   | 160       |          |   |   | 160 |   |
| Total non-current liabilities                                |   |   |       |   |          |   | 3,620,948 |          |   |   | 3,809,211 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| 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                                            |   |   |       |   |          |   | 201,646   |          |   |   | 150,440 |   |
| Total equity                                                 |   |   |       |   |          |   | 847,604   |          |   |   | 796,398 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Total liabilities and equity                                 |   |   |       |   |          |   | 5,048,706 |          |   |   | 5,170,366 |   |
| /s/ Erez Halfon    |   | /s/ Eli Asulin          |   | /s/ David Bitton        |
|--------------------|--------|-------------------------|--------|-------------------------|
| Erez Halfon        |   | Eli Asulin              |   | David Bitton            |
| Chairman of the    |   | Chief Executive Officer |   | Chief Financial Officer |
| Board of Directors |   |                    |   |                    |

----

----

|                                             |   |   |   |   | Year ended December 31, |      |
|--------------------------------------------------|--------|--------|--------|--------|-------------------------|-----------|
|                                             |   |   |   |   | 2016                    |      |   | 2015 |   |   | 2014 |   |
|                                             |   | Note   |   |   | NIS thousands           |      |   | NIS thousands |   |   | NIS thousands |   |
| Revenues                                         |   |   |   |   |                    | 2,299,565 |   |   |   | 2,356,832 |   |   |   | 1,484,176 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Operating costs of the power plant               |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Energy costs                                     |   |   |   |   |                    | 550,401   |   |   |   | 613,689 |   |   |   | 343,647 |   |
| Electricity purchase and infrastructure services |   |   |   |   |                    | 1,104,826 |   |   |   | 1,000,947 |   |   |   | 690,827 |   |
| Depreciation and amortization                    |   |   |   |   |                    | 209,057   |   |   |   | 209,953 |   |   |   | 124,339 |   |
| Other operating costs                            |   |   |   |   |                    | 141,132   |   |   |   | 149,808 |   |   |   | 92,618 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Total cost of power plant                        |   |   |   |   |                    | 2,005,416 |   |   |   | 1,974,397 |   |   |   | 1,251,431 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Profit from operating the power plant            |   |   |   |   |                    | 294,149   |   |   |   | 382,435 |   |   |   | 232,745 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| General and administrative expenses              |   |   | 14     |   |                    |      | 19,178 |   |   |   | 25,681 |   |   |   | 14,022 |   |
| Other expenses                                   |   |   | 12A8   |   |                    |      | - |   |   |   |   |   |   |   | 5,771 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |                    |      | 19,178 |   |   |   | 25,681 |   |   |   | 19,793 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Operating profit                                 |   |   |   |   |                    |      | 274,971 |   |   |   | 356,754 |   |   |   | 212,952 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Financing income                                 |   |   |   |   |                    |      | 7,025 |   |   |   | 476 |   |   |   | 46,964 |   |
| Financing expenses                               |   |   |   |   |                    |      | 226,054 |   |   |   | 216,808 |   |   |   | 156,990 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Financing expenses, net                          |   |   | 15     |   |                    |      | (219,029 | ) |   |   | (216,332 | ) |   |   | (110,026 | ) |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Profit before taxes on income                    |   |   |   |   |                    |      | 55,942 |   |   |   | 140,422 |   |   |   | 102,926 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Taxes on income                                  |   |   | 11     |   |                    |      | 4,736 |   |   |   | 37,607 |   |   |   | 23,275 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Profit for the year                              |   |   |   |   |                    |      | 51,206 |   |   |   | 102,815 |   |   |   | 79,651 |   |

----

----

|                                 |   |          |   |   |          |   |    | Capital         |   |   |          |   |   |          |    |
|--------------------------------------|--------|---------------|--------|--------|---------------|--------|---------|-----------------|--------|--------|---------------|--------|--------|---------------|---------|
|                                 |   |          |   |   |          |   |    | reserve for     |   |   | Retained      |   |   |          |    |
|                                 |   |          |   |   |          |   |    | activities with |   |   | earnings      |   |   |          |    |
|                                      |   |          |   |   | Share         |   |    | controlling     |   |   | (accumulated  |   |   |          |    |
|                                 |   | Share capital |   |   | premium       |   |    | shareholders    |   |   | loss)         |   |   | Total equity  |    |
|                                 |   | NIS thousands |   |   | NIS thousands |   |    | NIS thousands   |   |   | NIS thousands |   |   | NIS thousands |    |
| For the year ended December 31, 2016 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |
| Balance as at January 1, 2016   |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | 150,440 |   |   |   | 796,398 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Profit for the year                  |   |          | -      |   |          |   | -       |            |   |   | -             |   |   |          | 51,206  |   |   |   | 51,206 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at December 31, 2016 |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | 201,646 |   |   |   | 847,604 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| For the year ended December 31, 2015 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at January 1, 2015   |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | 47,625  |   |   |   | 693,583 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Profit for the year                  |   |          | -      |   |          |   | -       |            |   |   | -             |   |   |          | 102,815 |   |   |   | 102,815 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at December 31, 2015 |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | 150,440 |   |   |   | 796,398 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| For the year ended December 31, 2014 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at January 1, 2014   |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | (32,026 | ) |   |   | 613,932 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Profit for the year                  |   |          | -      |   |          |   | -       |            |   |   | -             |   |   |          | 79,651  |   |   |   | 79,651 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at December 31, 2014 |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | 47,625  |   |   |   | 693,583 |   |

----

----

|                                                            |   | Year ended December 31, |     |
|-----------------------------------------------------------------|--------|-------------------------|----------|
|                                                            |   | 2016                    |     |   | 2015 |   |   | 2014 |   |
|                                                            |   | NIS thousands           |     |   | NIS thousands |   |   | NIS thousands |   |
| Cash flows from operating activities:                           |   |                    |     |   |   |   |   |   |   |
| Profit for the year                                             |   |                    | 51,206   |   |   |   | 102,815 |   |   |   | 79,651 |   |
| Adjustments:                                                    |   |                    |     |   |   |   |   |   |   |   |   |   |
| Depreciation, amortization and fuel consumption                 |   |                    | 238,484  |   |   |   | 237,295 |   |   |   | 124,764 |   |
| Taxes on income                                                 |   |                    | 4,736    |   |   |   | 37,607 |   |   |   | 23,275 |   |
| Financing expenses, net                                         |   |                    | 219,029  |   |   |   | 216,332 |   |   |   | 110,026 |   |
|                                                            |   |                    | 462,249  |   |   |   | 491,234 |   |   |   | 258,065 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Change in trade receivables                                     |   |                    | (14,761  | ) |   |   | 49,693 |   |   |   | (328,438 | ) |
| Change in other receivables                                     |   |                    | (5,179   | ) |   |   | (20,876 | ) |   |   | (10,886 | ) |
| Change in trade payables                                        |   |                    | 48,807   |   |   |   | (129,385 | ) |   |   | 376,515 |   |
| Change in other payables                                        |   |                    | 677      |   |   |   | (6,842 | ) |   |   | (3,909 | ) |
| Change in employee benefits, net                                |   |                    | -        |   |   |   | 55 |   |   |   | 49 |   |
|                                                            |   |                    | 29,544   |   |   |   | (107,355 | ) |   |   | 33,331 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                       |   |                    | 542,999  |   |   |   | 486,694 |   |   |   | 371,047 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                           |   |                    |     |   |   |   |   |   |   |   |   |   |
| Proceeds from (payment for) settlement of financial derivatives |   |                    | (2,017   | ) |   |   | 9,609 |   |   |   | 27,679 |   |
| Payment of pledged deposits                                     |   |                    | 29,486   |   |   |   | 38,679 |   |   |   | 44,627 |   |
| Investment in pledged deposits                                  |   |                    | -        |   |   |   | - |   |   |   | (33,716 | ) |
| Investment in long-term restricted deposits                     |   |                    | (143,891 | ) |   |   | (135,000 | ) |   |   | (200,000 | ) |
| Release of long-term restricted deposit                         |   |                    | 70,000   |   |   |   | - |   |   |   | - |   |
| Long-term prepaid expenses                                      |   |                    | (1,056   | ) |   |   | - |   |   |   | - |   |
| Investment in fixed assets                                      |   |                    | (25,415  | ) |   |   | (447,338 | ) |   |   | (267,824 | ) |
| Investment in intangible assets                                 |   |                    | (2,804   | ) |   |   | (1,767 | ) |   |   | (2,086 | ) |
| Interest received                                               |   |                    | 624      |   |   |   | 115 |   |   |   | 275 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                           |   |                    | (75,073  | ) |   |   | (535,702 | ) |   |   | (431,045 | ) |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                           |   |                    |     |   |   |   |   |   |   |   |   |   |
| Receipt of long-term loans from related parties                 |   |                    | 16,689   |   |   |   | 23,208 |   |   |   | 60,491 |   |
| Receipt of long-term loans from banks                           |   |                    | 242,772  |   |   |   | 318,100 |   |   |   | 174,764 |   |
| Repayment of loans from related parties                         |   |                    | (147,219 | ) |   |   | - |   |   |   | - |   |
| Repayment of loans from banks                                   |   |                    | (143,896 | ) |   |   | (105,121 | ) |   |   | (12,791 | ) |
| Interest paid                                                   |   |                    | (408,071 | ) |   |   | (206,032 | ) |   |   | (96,031 | ) |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by (used in) financing activities             |   |                    | (439,725 | ) |   |   | 30,155 |   |   |   | 126,433 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents            |   |                    | 28,201   |   |   |   | (18,853 | ) |   |   | 66,435 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate fluctuations on cash and                |   |                    |     |   |   |   |   |   |   |   |   |   |
|  cash equivalents                                          |   |                    | 872      |   |   |   | (1,031 | ) |   |   | 1,144 |   |
| Cash and cash equivalents at beginning of year                  |   |                    | 51,894   |   |   |   | 71,778 |   |   |   | 4,199 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of year                        |   |                    | 80,967   |   |   |   | 51,894 |   |   |   | 71,778 |   |

----

----

|  | A. | Reporting entity |
|--|----|------------------|

|  | B. | 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). |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2. | On July 9, 2014 and on June 1 2015, the company submitted to the High Court two petitions against the Public Utilities Authority - Electricity (“PUA”) and the Israeli Electric Corporation Ltd. ("IEC") in view of the PUA’s intention to make a decision which includes, inter alia, to require the private electricity producers to pay IEC a general tariff which referred to by the PUA as “system costs”. The Company’s claims which were raised in the petitions were, inter alia, that the decision is contrary to the explicit instructions of the Electricity Sector Law, 1996, with respect to the manner of determining tariffs by the PUA, also, it has the potential to change the rules of the game established by the PUA and in addition severely undermines the principle of reliance of the Company, the financing entities and other third parties who relied on the information and activities of the PUA. In addition the company claimed that the PUA did not provide the Company data, information and calculations that were in its possession when determining the rate of system cost, without which the Company is not able to fully and completely examine the proposed decision and the tariffs proposed therein, and it is not able to raise all of its contentions in connection therewith. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | B. | Licenses and legal environment (cont’d) |
|--|----|-----------------------------------------------|

|  | 2. | (cont’d) |
|--|----|----------------|

|  | 3. | On January 21, 2015 PUA published a summary decision regarding “Electricity Rates for Customers of IEC in 2015” which includes a reduction of the rates for the Company’s customers. Pursuant to the decision the rates of the manufacturing component which serves as the basis for charging the Company’s customers and to which the gas price is linked, were reduced by about 9% as from February 1, 2015. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | A. | Declaration of compliance with international financial reporting standards. |
|--|----|-----------------------------------------------------------------------------|

|  | B. | Functional and presentation currency |
|--|----|--------------------------------------|

|  | C. | Basis of measurement |
|--|----|----------------------|

|  | · | Derivative financial instruments at fair value through profit or loss; |
|--|--------|------------------------------------------------------------------------|

|  | · | Deferred tax liabilities |
|--|--------|--------------------------|

|  | · | Provisions |
|--|--------|------------|

|  | D. | Use of estimates and judgments |
|--|----|--------------------------------|

----

----

|  | D. | Use of estimates and judgments (cont’d) |
|--|----|-----------------------------------------------|

|  | E. | Operating cycle period |
|--|----|------------------------|

----

----

|  | A. | Foreign currency |
|--|----|------------------|

|  | B. | Financial instruments |
|--|----|-----------------------|

|  | 1. | Non-derivative financial assets |
|--|----|---------------------------------|

----

----

|  | B. | Financial instruments (cont’d) |
|--|----|--------------------------------------|

|  | 1. | Non-derivative financial assets (cont’d) |
|--|----|------------------------------------------------|

|  | 2. | Non-derivative financial liabilities |
|--|----|--------------------------------------|

|  | 3. | Derivative financial instruments |
|--|----|----------------------------------|

|  | 4. | CPI-linked assets and liabilities that are not measured at fair value |
|--|----|-----------------------------------------------------------------------|

|  | 5. | Share capital |
|--|----|---------------|

----

----

|  | C. | Fixed assets |
|--|----|--------------|

|  | 1. | Recognition and measurement |
|--|----|-----------------------------|

|  | 2. | Subsequent costs |
|--|----|------------------|

|  | 3. | Depreciation |
|--|----|--------------|

----

----

|  | C. | Fixed assets (cont’d) |
|--|----|-----------------------------|

|  | 3. | Depreciation (cont’d) |
|--|----|-----------------------------|

|                                |                    | Depreciation       |
|-------------------------------------|-------------------------|--------------------|
|                                |                    | rate               |
|                                |                    |  (percentage) |
| 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         |

|  | D. | Intangible assets |
|--|----|-------------------|

|  | 1. | Recognition and measurement |
|--|----|-----------------------------|

|  | 2. | Subsequent expenditure |
|--|----|------------------------|

|  | 3. | Amortization |
|--|----|--------------|

----

----

|  | E. | Impairment |
|--|----|------------|

|  | 1) | Non derivative financial assets |
|--|----|---------------------------------|

|  | 2) | Non-financial assets |
|--|----|----------------------|

|  | F. | Capitalization of borrowing costs |
|--|----|-----------------------------------|

----

----

|  | G. | Provisions |
|--|----|------------|

|  | H. | Revenues |
|--|----|----------|

|  | I. | Taxes on Income |
|--|----|-----------------|

----

----

|  | J. | Employee benefits |
|--|----|-------------------|

|  | K. | Leased assets |
|--|----|---------------|

|  | L. | Financing income and expenses |
|--|----|-------------------------------|

|  | M. | Transactions with controlling shareholder |
|--|----|-------------------------------------------|

----

----

|  | N. | New standards and interpretations not yet adopted |
|--|----|---------------------------------------------------|

|  | (1) | IFRS 9 (2014), Financial Instruments |
|--|-----|--------------------------------------|

|  | (2) | IFRS 15, Revenue from Contracts with Customers |
|--|-----|------------------------------------------------|

|  | (3) | IFRS 16, Leases |
|--|-----|-----------------|

----

----

|                   |   | December 31   |   |
|------------------------|--------|---------------|--------|
|                   |   | 2016          |   |   | 2015 |   |
|                   |   | NIS thousands |   |   | NIS thousands |   |
| Balance in banks       |   |          | 6      |   |   |   | 8 |   |
| Deposits on demand (*) |   |          | 80,961 |   |   |   | 51,886 |   |
|                   |   |          |   |   |   |   |   |   |
|                   |   |          | 80,967 |   |   |   | 51,894 |   |

|                                       |   | December 31   |   |
|--------------------------------------------|--------|---------------|--------|
|                                       |   | 2016          |   |   | 2015 |   |
|                                       |   | NIS thousands |   |   | NIS thousands |   |
| Government institutions                    |   |          | 262    |   |   |   | 14,908 |   |
| Receivables for warranty and insurance     |   |          | 25,751 |   |   |   | 3,952 |   |
| Advances to suppliers and prepaid expenses |   |          | 11,161 |   |   |   | 13,134 |   |
|                                       |   |          |   |   |   |   |   |   |
|                                       |   |          | 37,174 |   |   |   | 31,994 |   |

----

----

|  | A. | Composition |
|--|----|-------------|

|                            |   |          |      |   | Furniture     |   |   | Leasehold    |   |   |   |   |
|---------------------------------|--------|---------------|-----------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|
|                                 |   | Power plant   |      |   | and equipment |   |   | improvements |   |   | Total  |   |
|                            |   | NIS thousands |      |
| Cost                            |   |          |      |   |          |   |   |         |   |   |   |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |
| Balance as at January 1, 2015   |   |          | 4,707,706 |   |          |   | 2,280  |         |   |   | 728    |   |   |   | 4,710,714 |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Additions                       |   |          | 31,829    |   |          |   | 113    |         |   |   | 8      |   |   |   | 31,950 |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2015 |   |          | 4,739,535 |   |          |   | 2,393  |         |   |   | 736    |   |   |   | 4,742,664 |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Additions                       |   |          | 16,882    |   |          |   | 103    |         |   |   | -      |   |   |   | 16,985 |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Disposals                       |   |          | (26,174   | )      |          |   | -      |         |   |   | -      |   |   |   | (26,174 | ) |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2016 |   |          | 4,730,243 |   |          |   | 2,496  |         |   |   | 736    |   |   |   | 4,733,475 |   |

| Depreciation                    |   |   |      |   |   |   |   |   |   |   |   |   |
|---------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                            |   |   |      |   |   |   |   |   |   |   |   |   |
| Balance as at January 1, 2015   |   |   | 121,932   |   |   |   | 381    |   |   |   | 45     |   |   |   | 122,358 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions                       |   |   | 232,623   |   |   |   | 639    |   |   |   | 73     |   |   |   | 233,335 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2015 |   |   | 354,555   |   |   |   | 1,020  |   |   |   | 118    |   |   |   | 355,693 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions                       |   |   | 233,050   |   |   |   | 682    |   |   |   | 73     |   |   |   | 233,805 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Disposals                       |   |   | (26,174   | )      |   |   | -      |   |   |   | -      |   |   |   | (26,174 | ) |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance as at December 31, 2016 |   |   | 561,431   |   |   |   | 1,702  |   |   |   | 191    |   |   |   | 563,324 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Carrying amounts                |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As at January 1, 2015           |   |   | 4,585,774 |   |   |   | 1,899  |   |   |   | 683    |   |   |   | 4,588,356 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As at December 31, 2015         |   |   | 4,384,980 |   |   |   | 1,373  |   |   |   | 618    |   |   |   | 4,386,971 |   |
|                            |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As at December 31, 2016         |   |   | 4,168,812 |   |   |   | 794    |   |   |   | 545    |   |   |   | 4,170,151 |   |

|  | B. | Security |
|--|----|----------|

|  | C. | Acquisition of fixed assets on credit |
|--|----|---------------------------------------|

|  | D. | Provision for restoration and dismantling |
|--|----|-------------------------------------------|

----

----

|                               |         |   |               |       |   | Carrying amount as at December 31 |   |
|------------------------------------|--------------|--------|--------------------|------------|--------|-----------------------------------|--------|
|                                    | Currency and |   |               |       |   |                              |   |   |   |   |
|                                    | linkage base |   | Effective interest |       |   | 2016                              |   |   | 2015 |   |
|                               |         |   | %                  |       |   | NIS thousands                     |   |   | NIS thousands |   |
| Loans from banks                   | CPI-linked   |   |               | 5.58%-5.77 | %      |                              |   | 3,565,221 |   |   |   | 3,487,462 |   |
| Less current maturities (including | NIS          |   |               |       |   |                              |   |   |   |   |   |   |   |
|  interest as at December 31)  |         |   |               |       |   |                              |   | (197,389 | ) |   |   | (170,722 | ) |
|                               |         |   |               |       |   |                              |   |   |   |   |   |   |   |
|                               |         |   |               |       |   |                              |   | 3,367,832 |   |   |   | 3,316,740 |   |

|                                                                                                                          |   | December 31   |   |
|-------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|
|                                                                                                                          |   | 2016          |   |   | 2015 |   |
|                                                                                                                          |   | NIS thousands |   |   | NIS thousands |   |
| Governmental institutes                                                                                                       |   |          | 72     |   |   |   | - |   |
| Accrued expenses (*)                                                                                                          |   |          | 5,790  |   |   |   | 13,731 |   |
| Other payables                                                                                                                |   |          | 3,290  |   |   |   | 3,175 |   |
|                                                                                                                          |   |          |   |   |   |   |   |   |
|                                                                                                                          |   |          | 9,152  |   |   |   | 16,906 |   |
|                                                                                                                          |   |          |   |   |   |   |   |   |
| (*)          Including other payables due to related and interested parties |   |          | 4,140  |   |   |   | 12,405 |   |

|                                        |   | December 31   |    |
|---------------------------------------------|--------|---------------|---------|
|                                        |   | 2016          |    |   | 2015 |   |
|                                        |   | NIS thousands |    |   | NIS thousands |   |
| Shareholders(1)                             |   |          |    |   |   |   |
| Eilat-Ashkelon Infrastructure Services Ltd. |   |          | 85,680  |   |   |   | 186,952 |   |
| Zorlu Enerji Elektrik Uretim A.S. (2)       |   |          | 59,344  |   |   |   | 133,817 |   |
| U. Dori Energy Infrastructure Ltd. (2)      |   |          | 42,663  |   |   |   | 102,153 |   |
| Edelcom Ltd. (2)                            |   |          | 43,951  |   |   |   | 103,337 |   |
|                                        |   |          | 231,638 |   |   |   | 526,259 |   |
| Less current maturities (3)                 |   |          | (80,000 | ) |   |   | (130,000 | ) |
|                                        |   |          |    |   |   |   |   |   |
|                                        |   |          | 151,638 |   |   |   | 396,259 |   |

|  | 1. | In accordance with the agreement regarding the subordinated shareholders’ loans, the loans bear interest at the rate of 10% and are linked to the CPI. As at December 31, 2015, the amount of loans received including accrued interest is NIS 1,168,469 thousand, of which an amount of NIS 642 million was converted to equity during 2011-2013, an amount of NIS 350 million was repaid during 2016 and the remaining balance is expected to be repaid in the future subject to compliance with financial covenants as specified in the financing agreements. See Note 12A(1)(a). |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | 2. | The loan balances as of December 31 2015 include certain amounts paid in advance and were pledged as a short term deposits, see Note 6. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | 3. | According to the financing agreements, two years after the date of commercial operation, and subject to the Company’s compliance with financial covenants and other commitments as specified in the agreement, it will be possible to repay shareholders’ loans. During 2016 the Company repaid amount of NIS 346 million out of approved amount of NIS 350 million and the remaining balance was repaid subsequent to the date of the report (out of the approved amount  NIS 204 million is repayment of interest and linkage differentials and the remaining balance of NIS 146 millions is principle repayment). The Company expects to comply with the financial covenants and commitments provided in the financing agreements, and that it will be able to repay shareholders’ loans in an estimated amount of NIS 80 million during 2017. According to these assessments, the Company has classified this amount as a current maturity in its financial statements as at December 31, 2016. Subsequent to the date of the report the Company repaid an amount of NIS 50 million. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | A. | Details regarding the tax environment of the Company |
|--|----|------------------------------------------------------|

|  | (1) | Presented hereunder are the tax rates relevant to the Company in the years 2014-2016: |
|--|-----|---------------------------------------------------------------------------------------|

|  | (2) | On January 12, 2012 Amendment 188 to the Ordinance was issued, by which the Temporary Order was amended so that Standard 29 shall not apply also when determining the taxable income for 2007-2011. On July 31, 2014 Amendment 202 to the Income Tax Ordinance was published. The Amendment extended the temporary order for the tax years 2012 and 2013. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | The Company is an “Industrial Company” as defined in the Encouragement of Industry (Taxes) – 1969 and accordingly is entitled to benefits which the primarily one is accelerated depreciation. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | B. | Composition of income tax expense |
|--|----|-----------------------------------|

|                 |   | Year ended    |   |   | Year ended    |   |   | Year ended    |   |
|----------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
|                 |   | December 31,  |   |   | December 31,  |   |   | December 31,  |   |
|                 |   | 2016          |   |   | 2015          |   |   | 2014          |   |
|                 |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Current tax          |   |          | -      |   |          |   | -      |          |   |   | - |   |
| Deferred tax expense |   |          | 4,736  |   |          |   | 37,607 |          |   |   | 23,275 |   |
|                 |   |          |   |   |          |   |   |          |   |   |   |   |
|                 |   |          | 4,736  |   |          |   | 37,607 |          |   |   | 23,275 |   |

|  | C. | Deferred tax liabilities and assets recognized |
|--|----|------------------------------------------------|

|                                                      |   |          |     |   | Provisions  |   |    |            |   |   |    |   |
|-----------------------------------------------------------|--------|---------------|----------|--------|-------------|--------|---------|-----------------|--------|--------|---------|--------|
|                                                      |   |          |     |   | and other   |   |    |            |   |   |    |   |
|                                                      |   |          |     |   | timing      |   |    | Tax losses      |   |   |    |   |
|                                                           |   | Fixed assets  |     |   | differences |   |    | carried forward |   |   | Total   |   |
|                                                      |   | NIS thousands |     |
| Balance of deferred tax asset (liability) as at      |   |          |     |   |        |   |    |            |   |   |    |   |
|  January 1, 2015                                     |   |          | (99,502  | )      |        |   | 39,117  |            |   |   | 37,110  |   |   |   | (23,275 | ) |
|                                                      |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
| Changes recognized in the                                 |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
|  profit and loss statements                          |   |          | (151,915 | )      |        |   | (25,666 | )               |   |   | 139,974 |   |   |   | (37,607 | ) |
|                                                      |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
| Balance of deferred tax asset (liability) as at      |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
|  December 31, 2015                                   |   |          | (251,417 | )      |        |   | 13,451  |            |   |   | 177,084 |   |   |   | (60,882 | ) |
|                                                      |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
| Changes recognized in the profit and loss statements |   |          | (146,564 | )      |        |   | (3,096  | )               |   |   | 135,768 |   |   |   | (13,890 | ) |
| impact of decrease in tax rate                       |   |          | 44,931   |   |        |   | (1,525  | )               |   |   | (34,250 | )      |   |   | 9,154 |   |
|                                                      |   |          | (101,633 | )      |        |   | (4,621  | )               |   |   | 101,518 |   |   |   | (4,736 | ) |
| Balance of deferred tax asset (liability) as at      |   |          |     |   |        |   |    |            |   |   |    |   |   |   |   |   |
|  December 31, 2016                                   |   |          | (353,050 | )      |        |   | 8,830   |            |   |   | 278,602 |   |   |   | (65,618 | ) |

----

----

|  | 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,  |   |
|                                                                                |   | 2016          |   |   | 2015          |   |    | 2014          |   |
|                                                                                |   | NIS thousands |   |   | NIS thousands |   |    | NIS thousands |   |
| Profit before taxes on income                                                       |   |          | 55,942 |   |          |   | 140,422 |          |   |   | 102,926 |   |
|                                                                                |   |          |   |   |          |   |    |          |   |   |   |   |
| Statutory tax rate of the company                                                   |   |          | 25     | %      |          |   | 26.5    | %             |   |   | 26.5 | % |
|                                                                                |   |          |   |   |          |   |    |          |   |   |   |   |
| Tax calculated according to the Company’s statutory tax rate                  |   |          | 13,985 |   |          |   | 37,212  |          |   |   | 27,275 |   |
|                                                                                |   |          |   |   |          |   |    |          |   |   |   |   |
| Creation of deferred taxes for tax losses and benefits from previous years for |   |          |   |   |          |   |    |          |   |   |   |   |
|  which deferred taxes were not created in the past                        |   |          | -      |   |          |   | -       |          |   |   | (4,782 | ) |
| Impact of decrease in tax rate                                                      |   |          | (9,154 | )      |          |   | -       |          |   |   | - |   |
|                                                                                |   |          |   |   |          |   |    |          |   |   |   |   |
| Non-deductible expenses and others                                                  |   |          | (95    | )      |          |   | 395     |          |   |   | 782 |   |
|                                                                                |   |          |   |   |          |   |    |          |   |   |   |   |
| Income tax expense                                                                  |   |          | 4,736  |   |          |   | 37,607  |          |   |   | 23,275 |   |

|  | E. | Tax losses carried forward |
|--|----|----------------------------|

|  | F. | Tax assessments |
|--|----|-----------------|

----

----

|  | A. | Commitments |
|--|----|-------------|

|  | 1. | Financing agreements |
|--|----|----------------------|

|  | 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. |
|--|----|-----------------------------------------------------------------------------------|

|  | a. | Capital Injection Agreement and a Subordinated Loan Agreement |
|--|----|---------------------------------------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 1. | Financing agreements (cont’d) |
|--|----|-------------------------------------|

|  | a. | Capital Injection Agreement and a Subordinated Loan Agreement (cont’d) |
|--|----|------------------------------------------------------------------------------|

|  | b. | Bank accounts agreement |
|--|----|-------------------------|

|  | 2. | Agreement to lease land under operating lease |
|--|----|-----------------------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 3. | The EPC Agreement |
|--|----|-------------------|

|  | 4. | O&M Agreement |
|--|----|-------------------|

|  | 5. | Gas Pipeline Agreement |
|--|----|------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 6. | Petrol Storage agreement |
|--|----|--------------------------|

|  | 7. | Agreement to purchase natural gas |
|--|----|-----------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 8. | Agreement to sell electricity |
|--|----|-------------------------------|

|  | 9. | Property tax assessments in respect of the station |
|--|----|----------------------------------------------------|

|  | 10. | Claim between the construction contractor and subcontractor |
|--|-----|-------------------------------------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 10. | Claim between the construction contractor and subcontractor (cont’d) |
|--|-----|----------------------------------------------------------------------------|

|  | 11. | Claims by Dori Energy, Zorlu and Edelcom |
|--|-----|------------------------------------------|

|  | a) | Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael |
|--|----|------------------------------------------------------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 11. | Claims by Dori Energy, Zorlu and Edelcom (cont’d) |
|--|-----|---------------------------------------------------------|

|  | a) | Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael (cont’d) |
|--|----|---------------------------------------------------------------------------------------------|

|  | b) | A letter from Zorlu |
|--|----|---------------------|

|  | c) | Petition to Approve a Derivative Claim filed by Edelcom |
|--|----|---------------------------------------------------------|

----

----

|  | A. | Commitments (cont’d) |
|--|----|----------------------------|

|  | 11. | Claims by Dori Energy, Zorlu and Edelcom (cont’d) |
|--|-----|---------------------------------------------------------|

|  | c) | Petition to Approve a Derivative Claim filed by Edelcom (cont’d) |
|--|----|------------------------------------------------------------------------|

|  | d) | Statement of Claim filed by Edelcom |
|--|----|-------------------------------------|

|  | B. | Bank guarantees |
|--|----|-----------------|

----

----

|  | C. | Liens |
|--|----|-------|

|  | 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. In addition during 2015, deposited NIS 70 million to guarantees to third parties account. During 2016, following the cancellation of the guarantee the lien was removed and the deposit was released. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 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. |
|--|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | Number of shares |    |
|------------------------------------|--------|------------------|---------|
|                               |   | December 31      |    |
|                               |   |             |    |   | Issued and |   |   | Issued and |   |
|                               |   | Authorized       |    |   | paid-in |   |   | paid-in |   |
|                               |   |             |         |   |   |   | 2016 |   |   |   | 2015 |   |
| Ordinary shares of NIS 1 par value |   |             | 500,000 |   |   |   | 10,640 |   |   |   | 10,640 |   |

----

----

|                          |   | For the year ended December 31 |   |
|-------------------------------|--------|--------------------------------|--------|
|                          |   | 2016                           |   |   | 2015 |   |   | 2014 |   |
|                          |   | NIS thousands                  |   |
| Wages and related expenses    |   |                           | 9,407  |   |   |   | 13,347 |   |   |   | 4,637 |   |
| Rental and office maintenance |   |                           | 2,233  |   |   |   | 2,553 |   |   |   | 1,242 |   |
| Profession services           |   |                           | 6,592  |   |   |   | 8,927 |   |   |   | 7,689 |   |
| Depreciation                  |   |                           | 755    |   |   |   | 712 |   |   |   | 426 |   |
| Other                         |   |                           | 191    |   |   |   | 142 |   |   |   | 28 |   |
|                          |   |                           |   |   |   |   |   |   |   |   |   |   |
|                          |   |                           | 19,178 |   |   |   | 25,681 |   |   |   | 14,022 |   |

|                                           |   | Year ended December 31 |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   | 2016                   |    |   | 2015 |   |   | 2014 |   |
|                                           |   | NIS thousands          |    |
| Financing income                               |   |                   |    |   |   |   |   |   |   |
| Revaluation of derivatives                     |   |                   | -       |   |   |   | - |   |   |   | 46,662 |   |
| Net foreign exchange                           |   |                   | 3,944   |   |   |   | 124 |   |   |   | - |   |
| Other                                          |   |                   | 3,081   |   |   |   | 352 |   |   |   | 302 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                           |   |                   | 7,025   |   |   |   | 476 |   |   |   | 46,964 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
| Financing expenses                             |   |                   |    |   |   |   |   |   |   |   |   |   |
| Revaluation of derivatives                     |   |                   | 2,663   |   |   |   | 835 |   |   |   | - |   |
| Interest expense on bank loans                 |   |                   | 186,139 |   |   |   | 168,887 |   |   |   | 118,322 |   |
| Interest expense on loans from related parties |   |                   | 35,267  |   |   |   | 40,791 |   |   |   | 22,708 |   |
| Net foreign exchange loss                      |   |                   | -       |   |   |   | - |   |   |   | 12,012 |   |
| Bank commissions                               |   |                   | 1,455   |   |   |   | 2,858 |   |   |   | 3,369 |   |
| Other financing expenses                       |   |                   | 530     |   |   |   | 3,437 |   |   |   | 579 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                           |   |                   | 226,054 |   |   |   | 216,808 |   |   |   | 156,990 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net financing expenses                         |   |                   | 219,029 |   |   |   | 216,332 |   |   |   | 110,026 |   |

----

----

|  | A. | Overview |
|--|----|----------|

|  | ● | Credit risk |
|--|---------|-------------|

|  | ● | Liquidity risk |
|--|---------|----------------|

|  | ● | Market risk |
|--|---------|-------------|

|                                               |   | December 31   |   |
|----------------------------------------------------|--------|---------------|--------|
|                                               |   | 2016          |   |   | 2015 |   |
|                                               |   | NIS thousands |   |
| Derivatives presented under current assets         |   |          |   |   |   |   |
| Forward exchange contracts used for economic hedge |   |          | -      |   |   |   | 646 |   |

|  | B. | Risk management framework |
|--|----|---------------------------|

|  | C. | Credit Risk |
|--|----|-------------|

----

----

|  | C. | Credit Risk (cont’d) |
|--|----|----------------------------|

|  | D. | Liquidity risk |
|--|----|----------------|

----

----

|  | D. | Liquidity risk (cont’d) |
|--|----|-------------------------------|

|                                 |   | December 31, 2016 |      |
|--------------------------------------|--------|-------------------|-----------|
|                                 |   | 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                       |   |              | 293,613   |   |   |   | 293,613 |   |   |   | 293,613 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other payables                       |   |              | 6,410     |   |   |   | 6,410 |   |   |   | 6,410 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from banks                     |   |              | 3,565,221 |   |   |   | 5,054,106 |   |   |   | 188,000 |   |   |   | 176,066 |   |   |   | 366,521 |   |   |   | 1,106,546 |   |   |   | 3,216,973 |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from related parties           |   |              | 231,638   |   |   |   | 278,237 |   |   |   | 50,000 |   |   |   | 30,000 |   |   |   | 80,000 |   |   |   | 118,237 |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   |              | 4,096,882 |   |   |   | 5,632,366 |   |   |   | 538,023 |   |   |   | 206,066 |   |   |   | 446,521 |   |   |   | 1,224,783 |   |   |   | 3,216,973 |   |

----

----

|  | D. | Liquidity risk (cont’d) |
|--|----|-------------------------------|

|                                 |   | December 31, 2015 |      |
|--------------------------------------|--------|-------------------|-----------|
|                                 |   | 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                       |   |              | 247,129   |   |   |   | 247,129 |   |   |   | 247,129 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other payables                       |   |              | 13,731    |   |   |   | 13,731 |   |   |   | 13,731 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from banks                     |   |              | 3,487,462 |   |   |   | 5,128,178 |   |   |   | 176,647 |   |   |   | 165,014 |   |   |   | 344,767 |   |   |   | 1,046,281 |   |   |   | 3,395,469 |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from related parties           |   |              | 526,259   |   |   |   | 547,820 |   |   |   | 130,000 |   |   |   | - |   |   |   | 139,273 |   |   |   | 278,547 |   |   |   | - |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                 |   |              | 4,274,581 |   |   |   | 5,936,858 |   |   |   | 567,507 |   |   |   | 165,014 |   |   |   | 484,040 |   |   |   | 1,324,828 |   |   |   | 3,395,469 |   |

----

----

|  | E. | Market risk |
|--|----|-------------|

|  | (1) | Linkage and foreign currency risk |
|--|-----|-----------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk |
|--|-----|---------------------------------------------------|

|                                                                |   | December 31, 2016 |      |
|---------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                |   | Non-financial     |      |   | Unlinked |   |   | CPI-linked |   |   | US Dollar |   |   | Total |   |
|                                                                |   | NIS thousand      |      |
| Financial assets and financial liabilities:                    |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                                     |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                           |   |              | -         |   |   |   | 74,973 |   |   |   | - |   |   |   | 5,994 |   |   |   | 80,967 |   |
| Trade receivables                                                   |   |              | -         |   |   |   | 294,351 |   |   |   | - |   |   |   | - |   |   |   | 294,351 |   |
| Other receivables                                                   |   |              | 37,174    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 37,174 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current assets:                                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restricted deposits                                                 |   |              | -         |   |   |   | 272,280 |   |   |   | - |   |   |   | 139,294 |   |   |   | 411,574 |   |
| Prepaid expenses                                                    |   |              | 45,938    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 45,938 |   |
| Fixed assets                                                        |   |              | 4,170,151 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,170,151 |   |
| Intangible assets                                                   |   |              | 8,551     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,551 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current maturities of loans from banks                         |   |              | -         |   |   |   | - |   |   |   | 197,389 |   |   |   | - |   |   |   | 197,389 |   |
| Current maturities of loans from related parties               |   |              | -         |   |   |   | - |   |   |   | 80,000 |   |   |   | - |   |   |   | 80,000 |   |
| Trade payables                                                      |   |              | -         |   |   |   | 241,469 |   |   |   | - |   |   |   | 52,144 |   |   |   | 293,613 |   |
| Other accounts payable                                              |   |              | 2,742     |   |   |   | 1,610 |   |   |   | - |   |   |   | 4,800 |   |   |   | 9,152 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current liabilities:                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred tax liabilities                                            |   |              | 65,618    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 65,618 |   |
| Provisions for dismantling and restoration                     |   |              | 35,700    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 35,700 |   |
| Loans from banks                                                    |   |              | -         |   |   |   | - |   |   |   | 3,367,832 |   |   |   | - |   |   |   | 3,367,832 |   |
| Long-term loans from related parties                           |   |              | -         |   |   |   | - |   |   |   | 151,638 |   |   |   | - |   |   |   | 151,638 |   |
| Liabilities for employee benefits, net                         |   |              | 160       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 160 |   |
| Total exposure in statement of financial position              |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  in respect of financial assets and financial liabilities |   |              | 4,157,594 |   |   |   | 398,525 |   |   |   | (3,796,859 | ) |   |   | 88,344 |   |   |   | 847,604 |   |

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk (cont’d) |
|--|-----|------------------------------------------------------------------|

|                                                                |   | December 31, 2015 |      |
|---------------------------------------------------------------------|--------|-------------------|-----------|
|                                                                |   | Non-financial     |      |   | Unlinked |   |   | CPI-linked |   |   | US Dollar |   |   | Total |   |
|                                                                |   | NIS thousand      |      |
| Financial assets and financial liabilities:                    |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                                     |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                           |   |              | -         |   |   |   | 42,827 |   |   |   | - |   |   |   | 9,067 |   |   |   | 51,894 |   |
| Trade receivables                                                   |   |              | -         |   |   |   | 278,982 |   |   |   | - |   |   |   | - |   |   |   | 278,982 |   |
| Pledged deposits                                                    |   |              | -         |   |   |   | 29,485 |   |   |   | - |   |   |   | - |   |   |   | 29,485 |   |
| Accounts receivable                                                 |   |              | 31,994    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 31,994 |   |
| Derivative financial instruments                                    |   |              | -         |   |   |   | - |   |   |   | - |   |   |   | 646 |   |   |   | 646 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current assets:                                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses                                                    |   |              | 46,918    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 46,918 |   |
| Fixed assets                                                        |   |              | 4,386,971 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,386,971 |   |
| Intangible assets                                                   |   |              | 8,391     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,391 |   |
| Restricted deposits                                                 |   |              | -         |   |   |   | 335,085 |   |   |   | - |   |   |   | - |   |   |   | 335,085 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current maturities of loans from banks                         |   |              | -         |   |   |   | - |   |   |   | 170,722 |   |   |   | - |   |   |   | 170,722 |   |
| Current maturities of loans from related parties               |   |              | -         |   |   |   | - |   |   |   | 130,000 |   |   |   | - |   |   |   | 130,000 |   |
| Other accounts payable                                              |   |              | 3,175     |   |   |   | 1,326 |   |   |   | - |   |   |   | 12,405 |   |   |   | 16,906 |   |
| Trade payables                                                      |   |              | -         |   |   |   | 218,143 |   |   |   | - |   |   |   | 28,986 |   |   |   | 247,129 |   |
|                                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current liabilities:                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred tax liabilities                                            |   |              | 60,882    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 60,882 |   |
| Provisions for dismantling and restoration                     |   |              | 35,170    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 35,170 |   |
| Loans from banks                                                    |   |              | -         |   |   |   | - |   |   |   | 3,316,740 |   |   |   | - |   |   |   | 3,316,740 |   |
| Long-term loans from related parties                           |   |              | -         |   |   |   | - |   |   |   | 396,259 |   |   |   | - |   |   |   | 396,259 |   |
| Liabilities for employee benefits, net                         |   |              | 160       |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 160 |   |
| Total exposure in statement of financial position              |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  in respect of financial assets and financial liabilities |   |              | 4,374,887 |   |   |   | 466,910 |   |   |   | (4,013,721 | ) |   |   | (31,678 | ) |   |   | 796,398 |   |

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (a) | The exposure to linkage and foreign currency risk (cont’d) |
|--|-----|------------------------------------------------------------------|

|                                          |   | December 31, 2016 |   |
|-----------------------------------------------|--------|-------------------|--------|
|                                          |   | Currency/         |   |   | Currency/ |   |   | Principal |   |   |   |   |   |   |   |
|                                          |   | linkage           |   |   | linkage |   |   | amount in |   |   | Dates of |   |   |   |   |
|                                          |   | receivable        |   |   | payable |   |   | $ millions |   |   | expiration |   |   | Fair value |   |
|                                          |   |                   |   |   |   |   |  |   |   |   |  |   |   |   |  |   | NIS thousands |   |
| Instruments used  for hedging:      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward foreign  currency contracts |   | US dollars        |   |   | NIS |   |   |   | - |   |   |   | - |   |   |   | - |   |

|                                    |   | December 31, 2015 |   |
|-----------------------------------------|--------|-------------------|--------|
|                                    |   | Currency/         |   |   | Currency/ |   |   | Principal |   |   |   |   |   |   |   |
|                                    |   | linkage           |   |   | linkage |   |   | amount in |   |   | Dates of |   |   |   |   |
|                                         |   | receivable        |   |   | payable |   |   | $ millions |   |   | expiration |   |   | Fair value |   |
|                                    |   |                   |   |   |  |   |   |  |   |   |  |   |   | NIS thousands |   |
|                                         |   |              |        |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |
| Instruments used for hedging:      |   |              |        |   |   |   |  |   |   |   |  |   |   | Jan. 29, 2016 up to |   |   |   |  |   |
| Forward foreign currency contracts |   | US dollars        |   |   | NIS |   |   |   | 20 |   |   |   | March 31, 2016 |   |   |   | 646 |   |

|  | (b) | Sensitivity analysis |
|--|-----|----------------------|

----

----

|  | E. | Market risk (cont’d) |
|--|----|----------------------------|

|  | (1) | Linkage and foreign currency risks (cont’d) |
|--|-----|---------------------------------------------------|

|  | (b) | Sensitivity analysis (cont’d) |
|--|-----|-------------------------------------|

|                            |   | December 31, 2016 |    |   | December 31, 2015 |   |
|---------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                            |   | 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)         |   |              | 4,417   |   |              |   | (4,417 | ) |   |   | 2,270 |   |   |   | (2,107 | ) |
| 10% in the U.S. dollar (1)      |   |              | 8,834   |   |              |   | (8,834 | ) |   |   | 4,458 |   |   |   | (4,295 | ) |
| 1% change in CPI (2)            |   |              | (37,969 | )      |              |   | 37,969 |   |   |   | (39,842 | ) |   |   | 39,842 |   |
| 2% change in CPI (2)            |   |              | (75,937 | )      |              |   | 75,937 |   |   |   | (79,685 | ) |   |   | 79,685 |   |

|  | (1) | The sensitivity derives mainly from balances of cash, restricted deposits, derivatives and balances of trade and other payables in foreign currency. Up to the date of the commercial operation of the power station, revaluation of the balances of the trade and other payables denominated in foreign currency and the balance of cash were capitalized to the construction cost of the power station. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The effect of the change on equity is the same as in profit or loss. |
|--|-----|----------------------------------------------------------------------|

|  | (2) | Interest rate risk |
|--|-----|--------------------|

----

----

|  | F. | Fair value |
|--|----|------------|

|  | (1) | Fair values versus carrying amounts |
|--|-----|-------------------------------------|

|                           |   | December 31    |      |
|--------------------------------|--------|-------------------------------|-----------|
|                           |   | 2016                          |      |   | 2015    |   |
|                           |   | Carrying                      |      |   | Fair |   |   | Carrying |   |   | Fair |   |
|                           |   | amount                        |      |   | value |   |   | amount |   |   | value |   |
|                                |   | NIS thousands                 |      |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Long-term loans from banks (*) |   |                          | 3,565,221 |   |   |   | 3,798,313 |   |   |   | 3,487,462 |   |   |   | 4,234,799 |   |

|  | (*) | Including current maturities. |
|--|-----|-------------------------------|

|  | (2) | Interest rates used for determining fair value |
|--|-----|------------------------------------------------|

|                       |   | December 31 |   |
|----------------------------|--------|-------------|--------|
|                       |   | 2016        |   |   | 2015 |   |
|                       |   | %           |   |   | % |   |
| Long-term loans from banks |   |        | 4.6    | % |   |   | 3.9 | % |

|  | (3) | Fair value hierarchy |
|--|-----|----------------------|

|  | ● | 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, 2016 |   |
|------------------------------------|--------|-------------------|--------|
|                               |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                                    |   | NIS thousands     |   |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Derivatives used for hedging:      |   |              |   |   |   |   |   |   |   |   |   |   |
| Forward foreign currency contracts |   |              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |

|                               |   | December 31, 2015 |   |
|------------------------------------|--------|-------------------|--------|
|                                    |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                               |   | NIS thousands     |   |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Derivatives used for hedging:      |   |              |   |   |   |   |   |   |   |   |   |   |
| Forward foreign currency contracts |   |              | -      |   |   |   | 646 |   |   |   | - |   |   |   | 646 |   |

----

----

|  | A. | Transactions with related and interested parties |
|--|----|--------------------------------------------------|

|                                 |   |                                                                                                                                                                                                                                                                                                                                     |   |   | Year ended December 31 |    |   | December 31         |   |
|--------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------|---------|--------|---------------------|--------|
|                                 |   |                                                                                                                                                                                                                                                                                                                                          |   |   | 2016                   |    |   | 2015                |   |   | 2014 |   |   | 2016 |   |   | 2015 |   |
| Related party/Interested party       |   | Nature of transaction                                                                                                                                                                                                                                                                                                                         |   |   | Transactions amounts   |    |   | Outstanding balance |   |
| Parties having significant influence |   | On February 2015, the Company entered into an agreement with Ezom to completion of works related to the constructions of the station.                                                                                                                                                                                                         |   |   |                   | -       |   |                |   | * 58,272 |   |   |   | - |   |   |   | 4,140 |   |   |   | 12,405 |   |
|                                 |   |                                                                                                                                                                                                                                                                                                                                          |   |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 as from November 2012. The payments will be made on a monthly basis throughout the period of the agreement. See Note 12A(4)) regarding a subcontracting agreement between EAPSS and Ezom Ltd. |   |   |                   | 128,147 |   |                |   | 126,205 |   |   |   | 87,956 |   |   |   | 32,680 |   |   |   | 27,918 |   |
|                                 |   |                                                                                                                                                                                                                                                                                                                                          |   |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Parties having significant influence |   | The Company entered into an agreement with Eilat Ashkelon Pipelene Company Ltd. (EAPC) regarding petrol storage services as of July 2013. The payments will be paid on a quarterly basis (see Note 12A(6)).                                                                                                                                   |   |   |                   | 3,596   |   |                |   | 3,619 |   |   |   | 3,654 |   |   |   | - |   |   |   | - |   |
|                                 |   |                                                                                                                                                                                                                                                                                                                                          |   |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Parties having significant influence |   | The Company entered into a lease agreement of the land for the power plant (see Note 12A(2)).                                                                                                                                                                                                                                                 |   |   |                   | 3,892   |   |                |   | 3,928 |   |   |   | 5,035 |   |   |   | - |   |   |   | - |   |
|                                 |   |                                                                                                                                                                                                                                                                                                                                          |   |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Parties having significant influence |   | On March 2015, the Company entered into an agreement with EAPC for renting an operational areas near to the power station                                                                                                                                                                                                                     |   |   |                   | 151     |   |                |   | 251 |   |   |   | - |   |   |   | - |   |   |   | - |   |

----

----

|  | A. | Transactions with related and interested parties (cont’d) |
|--|----|-----------------------------------------------------------------|

|                                 |   |                                                                              |   |   | Year ended December 31 |   |   | December 31         |   |
|--------------------------------------|--------|----------------------------------------------------------------------------------------|--------|--------|------------------------|--------|--------|---------------------|--------|
|                                 |   |                                                                                   |   |   | 2016                   |   |   | 2015                |   |   | 2014 |   |   | 2016 |   |   | 2015 |   |
| Related party/Interested party       |   | Nature of transaction                                                                  |   |   | Transactions amounts   |   |   | Outstanding balance |   |
| Parties having significant influence |   | The Company has several agreements with related companies for the sale of electricity. |   |   |                   | 27,252 |   |                |   | 44,401 |   |   |   | 33,891 |   |   |   | 2,035 |   |   |   | 5,080 |   |
|                                 |   |                                                                                   |   |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Related Party                        |   | The Company engage with Ramat Negev Energy for purchase electricity.                   |   |   |                   | 86     |   |                |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                 |   |                                                                                   |   |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Key management personnel             |   | CEO benefits                                                                           |   |   |                   | 2,113  |   |                |   | **5,419 |  |   |   | 2,769 |   |   |   | 720 |   |   |   | 1,460 |   |

|  | B. | The liabilities of the Company to related and interested parties |
|--|----|------------------------------------------------------------------|

|                           |   | The terms of the loan          |    |   | Balance as at December 31    |   |
|--------------------------------|--------|-----------------------------------------------------------------------------|---------|--------|---------------------------------------------|--------|
|                           |   |                                                                        |    |   | Term of                                     |   |   | Interest |   |   | Linkage |   |   |   |   |   |   |   |
|                           |   | Face value                                                                  |    |   | repayment                                   |   |   | rate |   |   | base |   |   | 2016 |   |   | 2015 |   |
|                           |   | NIS thousands                                                               |    |   |                                        |   |   | % |   |   |   |   |   | NIS thousands |   |
|                                |   |                                                                        |         |   |                                        |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |   |   |
| Loans from related parties (*) |   |                                                                        | 231,638 |   |                                        |   | (* | ) |   |   | 10 | % |   | CPI |   |   |   | 231,638 |   |   |   | 526,259 |   |

----