----

----

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

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

|   |  ̈ | 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 |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | 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                                  |

----

----

----

| 1 | Does not include a total of 85,655 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. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| 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  | Engineering Procurement & Construction Contract for the Construction of a Photovoltaic System in Cingoli, between Ellomay PV One S.R.L. and Ecoware S.p.A., dated March 4, 2010 (portions translated from Italian)(6)*    |
| 4.8  | Engineering Procurement & Construction Contract for the Construction of a Photovoltaic System in Senigallia, between Ellomay PV One S.R.L. and Ecoware S.p.A., dated March 4, 2010 (portions translated from Italian)(6)* |
| 4.9  | Side Agreement, between Ellomay PV One S.R.L. and Ecoware S.p.A., dated March 5, 2010(7)                                                                                                                                      |
| 4.10 | Giaché Building Right Agreement (summary of Italian version)(8)*                                                                                                                                                         |
| 4.11 | Massaccesi Building Right Agreement (summary of Italian version)(8)*                                                                                                                                                          |
| 4.12 | Settlement Agreement and Release, dated July 27, 2010, between Ellomay Capital Limited and Hewlett-Packard Company(8)                                                                                                         |

----

| Number | Description |
|--------|-------------|

| 4.13 | Troia 8 Building Right Agreement (summary of Italian version)(8)*                                                                                                                                                                                                              |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.14 | Troia 9 Building Right Agreement (summary of Italian version)(8)*                                                                                                                                                                                                              |
| 4.15 | Investment Agreement, among U. Dori Group Ltd., U. Dori Energy Infrastructures Ltd. and Ellomay Clean Energy Ltd. , dated November 25, 2010 (summary of Hebrew version)(8)*                                                                                                    |
| 4.16 | Shareholders Agreement, among U. Dori Group Ltd., Ellomay Clean Energy Ltd. and U. Dori Energy Infrastructures Ltd., dated November 25, 2010 (summary of Hebrew version)(8)*                                                                                                   |
| 4.17 | Agreement, between U. Dori Energy Infrastructures Ltd. and Israel Discount Bank Ltd., dated January 26, 2011 (summary of Hebrew version)(8)*                                                                                                                                   |
| 4.18 | Engineering Procurement & Construction Contract for the Construction of a Photovoltaic Plant, between Urbe Techno S.r.l. and Pedale S.r.l., dated March 25, 2011 (portions translated or summarized from Italian)(includes a summary of the Building Rights Agreement)(8)* |
| 4.19 | Acquafresca Building Right Agreement (summary of Italian version)(2)*                                                                                                                                                                                                          |
| 4.20 | D’Angella Building Right Agreement (summary of Italian version)(2)*                                                                                                                                                                                                      |
| 4.21 | Rinconada II Building Right Agreement (summary of Spanish version)(2)*                                                                                                                                                                                                         |
| 4.22 | Directors and Officers Compensation Policy, adopted June 2013(9)                                                                                                                                                                                                               |
| 4.23 | 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(10)                                                                           |
| 4.24 | Veneto PV Plants Framework Acquisition Agreement, dated March 28, 2013, as amended on May 2, 2013 (summary of German version)(10)*                                                                                                                                             |
| 4.25 | Soleco Building Right Agreement (summary of Italian version)(10)*                                                                                                                                                                                                              |
| 4.26 | Tecnoenergy Building Right Agreement (summary of Italian version)(10)*                                                                                                                                                                                                         |
| 4.27 | Warrant issued to Mr. Zohar Zisapel, dated August 7, 2013(10)                                                                                                                                                                                                                  |
| 4.28 | Deed of Trust between the Registrant and Hermetic Trust (1975) Ltd., dated December 30, 2013 (translation of Hebrew version)(10)*                                                                                                                                              |
| 4.29 | Rodríguez I Lease Agreements (summary of Spanish version)(3)*                                                                                                                                                                                                             |
| 4.30 | Rodríguez II Lease Agreements (summary of Spanish version)(3)*                                                                                                                                                                                                            |
| 4.31 | Fuente Librilla Lease Agreement (summary of Spanish version)(3)*                                                                                                                                                                                                               |
| 8    | List of Subsidiaries of the Registrant(3)                                                                                                                                                                                                                                      |
| 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(3)                                                                                                                        |
| 15.2 | Consent of  BDO with respect to the financial statements of Ellomay Spain S.L.(3)                                                                                                                                                                                    |

----

| Number | Description |
|--------|-------------|

| 15.3 | Consent of BDO with respect to the financial statements of Rodríguez I Parque Solar, S.L.(3)                                                                         |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 15.4 | Consent of BDO with respect to the financial statements of Rodríguez II Parque Solar, S.L.(3)                                                                        |
| 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 Amendment No. 2 to the Registrant’s Form 20-F for the year ended December 31, 2009 and incorporated by reference herein. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2009 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (8) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2010 and incorporated by reference herein. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------|

| (9) | Included in Exhibit 2 of the Registrant’s Form 6-K dated May 13, 2013 and incorporated by reference herein. |
|-----|-------------------------------------------------------------------------------------------------------------------|

| (10) | Previously filed with the Registrant’s Form 20-F for the year ended December 31, 2013 and incorporated by reference herein. |
|------|-----------------------------------------------------------------------------------------------------------------------------------|

----

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

----

----

----

| Auditors' Report                  |   F-2      |
|----------------------------------------|-----------------|
|                                   |            |
| Statements of Financial Position  |   F-4      |
|                                   |            |
| Statements of Profit or Loss      |   F-5      |
|                                   |            |
| Statements of Changes in Equity   |   F-6      |
|                                   |            |
| Statements of Cash Flows          | F-7             |
|                                   |            |
| Notes to the Financial Statements      |   F-8-F-46 |

----

or

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on

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on

----

|                                                         |   |   |       |   | December 31   |   |      | December 31   |   |
|--------------------------------------------------------------|--------|--------|------------|--------|---------------|--------|-----------|---------------|--------|
|                                                         |   |   |       |   | 2014          |   |      | 2013          |   |
|                                                         |   | Note   |       |   | NIS thousands |   |      | NIS thousands |   |
| Current assets                                               |   |   |       |   |          |   |      |          |   |
| Cash and cash equivalents                                    |   |   | 4          |   |          |   | 71,778    |          |   |   | 4,199 |   |
| Trade receivables                                            |   |   |       |   |          |   | 328,438   |          |   |   | - |   |
| Other receivables                                            |   |   | 5          |   |          |   | 11,118    |          |   |   | 36,529 |   |
| Pledged deposit                                              |   |   | 6          |   |          |   | 68,148    |          |   |   | 78,637 |   |
| Financial derivatives                                        |   |   | 7          |   |          |   | 11,090    |          |   |   | - |   |
| Firm commitment                                              |   |   | 7          |   |          |   | -         |          |   |   | 5,101 |   |
| Total current assets                                         |   |   |       |   |          |   | 490,572   |          |   |   | 124,466 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Non-current assets                                           |   |   |       |   |          |   |      |          |   |   |   |   |
| Restricted deposit                                           |   |   | 13A1B      |   |          |   | 200,027   |          |   |   | - |   |
| Prepaid expenses                                             |   |   | 13A2, 13A5 |   |          |   | 48,925    |          |   |   | 50,165 |   |
| Fixed assets                                                 |   |   | 8          |   |          |   | 4,588,356 |          |   |   | 3,939,647 |   |
| Advances to suppliers                                        |   |   |       |   |          |   | -         |          |   |   | 56,978 |   |
| Intangible assets                                            |   |   |       |   |          |   | 8,577     |          |   |   | 7,657 |   |
| Total non-current assets                                     |   |   |       |   |          |   | 4,845,885 |          |   |   | 4,054,447 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Total assets                                                 |   |   |       |   |          |   | 5,336,457 |          |   |   | 4,178,913 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Current liabilities                                          |   |   |       |   |          |   |      |          |   |   |   |   |
| Current maturities of long term loans from banks             |   |   | 9          |   |          |   | 122,358   |          |   |   | 145,926 |   |
| Trade payables                                               |   |   |       |   |          |   | 376,515   |          |   |   | - |   |
| Other payables                                               |   |   | 10         |   |          |   | 443,458   |          |   |   | 123,313 |   |
| Financial derivatives                                        |   |   | 7          |   |          |   | -         |          |   |   | 7,894 |   |
| Total current liabilities                                    |   |   |       |   |          |   | 942,331   |          |   |   | 277,133 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Non-current liabilities                                      |   |   |       |   |          |   |      |          |   |   |   |   |
| Loans from banks                                             |   |   | 9          |   |          |   | 3,186,412 |          |   |   | 2,918,579 |   |
| Long-term loans from related parties and others              |   |   | 11         |   |          |   | 462,244   |          |   |   | 369,212 |   |
| Provision for dismantling and restoration                    |   |   |       |   |          |   | 28,507    |          |   |   | - |   |
| Deferred tax liabilities                                     |   |   | 12         |   |          |   | 23,275    |          |   |   | - |   |
| Liabilities for employee benefits, net                       |   |   |       |   |          |   | 105       |          |   |   | 57 |   |
| Total non-current liabilities                                |   |   |       |   |          |   | 3,700,543 |          |   |   | 3,287,848 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Equity                                                       |   |   | 14         |   |          |   |      |          |   |   |   |   |
| Share capital                                                |   |   |       |   |          |   | 11        |          |   |   | 11 |   |
| Share premium                                                |   |   |       |   |          |   | 642,199   |          |   |   | 642,199 |   |
| Capital reserve for activities with controlling shareholders |   |   |       |   |          |   | 3,748     |          |   |   | 3,748 |   |
| Retained earnings (losses)                                   |   |   |       |   |          |   | 47,625    |          |   |   | (32,026 | ) |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Total equity                                                 |   |   |       |   |          |   | 693,583   |          |   |   | 613,932 |   |
|                                                         |   |   |       |   |          |   |      |          |   |   |   |   |
| Total liabilities and equity                                 |   |   |       |   |          |   | 5,336,457 |          |   |   | 4,178,913 |   |

----

s 

----

|                                             |   |   |   |   | Year ended December 31, |      |
|--------------------------------------------------|--------|--------|--------|--------|-------------------------|-----------|
|                                             |   |   |   |   | 2014                    |      |   | 2013 |   |   | 2012 |   |
|                                             |   | Note   |   |   | NIS thousands           |      |   | NIS thousands |   |   | NIS thousands |   |
| Revenues                                         |   |   |   |   |                    | 1,484,176 |   |   |   | - |   |   |   | - |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Operating costs of the power plant               |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Energy costs                                     |   |   |   |   |                    | 343,647   |   |   |   | - |   |   |   | - |   |
| Electricity purchase and infrastructure services |   |   |   |   |                    | 690,827   |   |   |   | - |   |   |   | - |   |
| Depreciation and amortization                    |   |   |   |   |                    | 124,339   |   |   |   | - |   |   |   | - |   |
| Other operating costs                            |   |   |   |   |                    | 92,618    |   |   |   | - |   |   |   | - |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Total cost of power plant                        |   |   |   |   |                    | 1,251,431 |   |   |   | - |   |   |   | - |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| Profit from operating the power plant            |   |   |   |   |                    | 232,745   |   |   |   | - |   |   |   | - |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |
| General and administrative expenses              |   |   | 15     |   |                    |      | 14,022 |   |   |   | - |   |   |   | - |   |
| Other expenses                                   |   |   | 16     |   |                    |      | 5,771 |   |   |   | 7,813 |   |   |   | 10,590 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
|                                             |   |   |   |   |                    |      | 19,793 |   |   |   | 7,813 |   |   |   | 10,590 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Operating profit (loss)                          |   |   |   |   |                    |      | 212,952 |   |   |   | (7,813 | ) |   |   | (10,590 | ) |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Financing income                                 |   |   |   |   |                    |      | 46,964 |   |   |   | - |   |   |   | - |   |
| Financing expenses                               |   |   |   |   |                    |      | 156,990 |   |   |   | 15,880 |   |   |   | 143 |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Financing expenses, net                          |   |   | 17     |   |                    |      | (110,026 | ) |   |   | (15,880 | ) |   |   | (143 | ) |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) before taxes on income             |   |   |   |   |                    |      | 102,926 |   |   |   | (23,693 | ) |   |   | (10,733 | ) |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Taxes on income                                  |   |   | 12     |   |                    |      | (23,275 | ) |   |   | - |   |   |   | - |   |
|                                             |   |   |   |   |                    |      |   |   |   |   |   |   |   |   |   |   |
| Profit (loss) for the period                     |   |   |   |   |                    |      | 79,651 |   |   |   | (23,693 | ) |   |   | (10,733 | ) |

----

y 

----

|                                 |   |          |   |   |          |   |    | 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, 2014 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |
| Balance as atJanuary 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 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| For the year ended December 31, 2013 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as atJanuary 1, 2013         |   |          | 6      |   |          |   | 373,731 |            |   |   | 3,748         |   |   |          | (8,333  | ) |   |   | 369,152 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Loss for the year                    |   |          | -      |   |          |   | -       |            |   |   | -             |   |   |          | (23,693 | ) |   |   | (23,693 | ) |
| Issuance of shares                   |   |          | 5      |   |          |   | 268,468 |            |   |   | -             |   |   |          | -       |   |   |   | 268,473 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as at December 31, 2013 |   |          | 11     |   |          |   | 642,199 |            |   |   | 3,748         |   |   |          | (32,026 | ) |   |   | 613,932 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| For the year ended December 31, 2012 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as atJanuary 1, 2012         |   |          | 3      |   |          |   | 196,041 |            |   |   | 3,748         |   |   |          | 2,400   |   |   |   | 202,192 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Loss for the year                    |   |          | -      |   |          |   | -       |            |   |   | -             |   |   |          | (10,733 | ) |   |   | (10,733 | ) |
| Issuance of shares                   |   |          | 3      |   |          |   | 177,690 |            |   |   | -             |   |   |          | -       |   |   |   | 177,693 |   |
|                                 |   |          |   |   |          |   |    |            |   |   |          |   |   |          |    |   |   |   |   |   |
| Balance as atDecember 31, 2012       |   |          | 6      |   |          |   | 373,731 |            |   |   | 3,748         |   |   |          | (8,333  | ) |   |   | 369,152 |   |

----

s 

----

|                                                            |   | Year ended December 31, |     |
|-----------------------------------------------------------------|--------|-------------------------|----------|
|                                                            |   | 2014                    |     |   | 2013 |   |   | 2012 |   |
|                                                            |   | NIS thousands           |     |   | NIS thousands |   |   | NIS thousands |   |
| Cash flows from operating activities:                           |   |                    |     |   |   |   |   |   |   |
| Profit (loss) for the year                                      |   |                    | 79,651   |   |   |   | (23,693 | ) |   |   | (10,733 | ) |
| Adjustments:                                                    |   |                    |     |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                   |   |                    | 124,764  |   |   |   | - |   |   |   | - |   |
| Taxes on income                                                 |   |                    | 23,275   |   |   |   | - |   |   |   | - |   |
| Impairment loss on advance to supplier                          |   |                    | -        |   |   |   | - |   |   |   | 10,232 |   |
| Loss on write-off of fixed assets                               |   |                    | -        |   |   |   | - |   |   |   | 358 |   |
| Compensation for customers                                      |   |                    | -        |   |   |   | 7,813 |   |   |   | - |   |
| Financing expenses, net                                         |   |                    | 110,026  |   |   |   | 15,880 |   |   |   | 143 |   |
|                                                            |   |                    | 258,065  |   |   |   | 23,693 |   |   |   | 10,733 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Change in trade receivables                                     |   |                    | (328,438 | ) |   |   | - |   |   |   | - |   |
| Change in other receivables                                     |   |                    | (10,886  | ) |   |   | - |   |   |   | - |   |
| Change in trade payables                                        |   |                    | 376,515  |   |   |   | - |   |   |   | - |   |
| Change in other payables                                        |   |                    | (3,909   | ) |   |   |   |   |   |   |   |   |
| Change in employee benefits, net                                |   |                    | 49       |   |   |   | - |   |   |   | - |   |
|                                                            |   |                    | 33,331   |   |   |   | - |   |   |   | - |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                       |   |                    | 371,047  |   |   |   | - |   |   |   | - |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                           |   |                    |     |   |   |   |   |   |   |   |   |   |
| Proceeds from (payment for) settlement of financial derivatives |   |                    | 27,679   |   |   |   | (83,496 | ) |   |   | 47,643 |   |
| Payment of pledged deposits                                     |   |                    | 44,627   |   |   |   | 89,263 |   |   |   | 130,107 |   |
| Investment in long-term restricted deposit                      |   |                    | (200,000 | ) |   |   | - |   |   |   | - |   |
| Investment in pledged deposit                                   |   |                    | (33,716  | ) |   |   | - |   |   |   | - |   |
| Long-term prepaid expenses                                      |   |                    | -        |   |   |   | (11,690 | ) |   |   | (33,216 | ) |
| Investment in fixed assets                                      |   |                    | (267,824 | ) |   |   | (782,557 | ) |   |   | (1,508,939 | ) |
| Investment in intangible assets                                 |   |                    | (2,086   | ) |   |   | (4,018 | ) |   |   | (3,639 | ) |
| Interest received                                               |   |                    | 275      |   |   |   | - |   |   |   | - |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                           |   |                    | (431,045 | ) |   |   | (792,498 | ) |   |   | (1,368,044 | ) |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                           |   |                    |     |   |   |   |   |   |   |   |   |   |
| Receipt of long-term loans from related parties                 |   |                    | 60,491   |   |   |   | 110,806 |   |   |   | 166,201 |   |
| Receipt of long-term loans from banks                           |   |                    | 174,764  |   |   |   | 676,882 |   |   |   | 1,206,722 |   |
| Repayment of loans                                              |   |                    | (12,791  | ) |   |   | - |   |   |   | - |   |
| Interest paid                                                   |   |                    | (96,031  | ) |   |   | - |   |   |   | - |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                       |   |                    | 126,433  |   |   |   | 787,688 |   |   |   | 1,372,923 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents            |   |                    | 66,435   |   |   |   | (4,810 | ) |   |   | 4,879 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate fluctuations on cash and                |   |                    |     |   |   |   |   |   |   |   |   |   |
|  cash equivalents                                          |   |                    | 1,144    |   |   |   | - |   |   |   | - |   |
| Cash and cash equivalents at beginning of year                  |   |                    | 4,199    |   |   |   | 9,009 |   |   |   | 4,130 |   |
|                                                            |   |                    |     |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents at end of year                        |   |                    | 71,778   |   |   |   | 4,199 |   |   |   | 9,009 |   |

----

4 

----

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

----

----

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

|   | 1. | cont’d |
|--------|----|--------------|

|   | 2. | In the middle of 2013 a steering committee was established for examining the Israeli electricity market, the Yogev committee, which published its recommendations in March 2014. The committee’s recommendations included, inter alia, recommendations regarding the structure of the electricity market and distribution of the market between private producers and the Electric Corp. and removal of the grid management unit from the Electric Corp. After examining the recommendations of the committee, the Company does not expect significant influence on its operations. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | On July 9, 2014, the company petitioned the High Court against the Public Utilities Authority - Electricity (“PUA”) and the Israeli Electric Corporation Ltd. 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 new rate, generally referred to by the PUA as “system costs”. The Company’s claims which were raised in the petition are, 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 Electricity Authority, also, it has the potential to change the rules of the game established by Electricity Authority 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 Electricity Authority. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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

|   | 3. | cont’d |
|--------|----|--------------|

|   | 4. | On December 22, 2014 PUA published a proposal decision which was followed by the publication of final decision on January 28, 2015 regarding “Electricity Rates for Customers of IEC in 2015” which includes a reduction of the rates for the Company’s customers. According to the decision the rates of the manufacturing component which serves as a basis for charging the company’s customers and to which the price of the gas is linked, will be 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; |
|--------|--------|------------------------------------------------------------------------|

|   | · | Firm commitment, measured as described in Note 3, regarding significant accounting policies. |
|--------|--------|----------------------------------------------------------------------------------------------|

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

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

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

----

----

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

----

----

|   | F.  | Changes in Accounting Policies |
|--------|----------|--------------------------------|

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

----

----

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

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

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

----

----

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

|   | 2.  | Non-derivative financial liabilities (cont’d) |
|--------|----------|-----------------------------------------------------|

|   | 3. | Derivative financial instruments, including hedge accounting |
|--------|----|--------------------------------------------------------------|

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

----

----

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

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

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

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

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

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

----

----

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

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

|                                |               | Depreciation |   |
|-------------------------------------|--------------------|--------------|--------|
|                                |               | rate         |   |
|                                |               | (percentage) |   |
| Buildings and permanent connections |               |         | 4      |   |
| Turbine components                  | by operating hours |         |
| Machinery, equipment and apparatus  |               |         | 4-33   |   |
| Monitoring station                  |               |         | 10     |   |
| Spare parts                         |               | upon usage   |   |

|   | 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 |
|--------|----------|------------|

|   | Provision for dismantling and restoration – The Company recognized a provision for removal and restoration costs regarding its commitment under long-term lease on which the power plant is located. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

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

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

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

----

----

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

|   | Note 4 - Cash and Cash Equivalents |
|--------|------------------------------------|

|                   |   | December 31   |   |
|------------------------|--------|---------------|--------|
|                   |   | 2014          |   |   | 2013 |   |
|                   |   | NIS thousands |   |   | NIS thousands |   |
| Balance in banks       |   |          | 7      |   |   |   | 7 |   |
| Deposits on demand (*) |   |          | 71,771 |   |   |   | 4,192 |   |
|                   |   |          |   |   |   |   |   |   |
|                   |   |          | 71,778 |   |   |   | 4,199 |   |

|                                       |   | December 31   |   |
|--------------------------------------------|--------|---------------|--------|
|                                       |   | 2014          |   |   | 2013 |   |
|                                       |   | NIS thousands |   |   | NIS thousands |   |
| Government institutions                    |   |          | 238    |   |   |   | 21,330 |   |
| Advances to suppliers and prepaid expenses |   |          | 10,880 |   |   |   | 15,199 |   |
|                                       |   |          |   |   |   |   |   |   |
|                                       |   |          | 11,118 |   |   |   | 36,529 |   |

----

----

----

----

|                                  |   | December 31   |   |
|---------------------------------------|--------|---------------|--------|
|                                  |   | 2014          |   |   | 2013 |   |
|                                  |   | NIS thousands |   |   | NIS thousands |   |
| Financial derivatives – current |   |          | -      |   |   |   | (7,894 | ) |
|                                  |   |          |   |   |   |   |   |   |
| Firm commitment – current       |   |          | -      |   |   |   | 5,101 |   |

|                                  |   | December 31   |   |
|---------------------------------------|--------|---------------|--------|
|                                  |   | 2014          |   |   | 2013 |   |
|                                  |   | NIS thousands |   |   | NIS thousands |   |
| Financial derivatives – current |   |          | 11,090 |   |   |   | - |   |

|                            |   | Capitalized   |      |   |          |   |   |         |   |   |   |   |
|---------------------------------|--------|---------------|-----------|--------|---------------|--------|--------|--------------|--------|--------|--------|--------|
|                            |   | power plant   |      |   |          |   |   |         |   |   |   |   |
|                            |   | construction  |      |   | Furniture     |   |   | Leasehold    |   |   |   |   |
|                            |   | expenses      |      |   | and equipment |   |   | improvements |   |   | Total  |   |
|                            |   | NIS thousands |      |
| Cost                            |   |          |      |   |          |   |   |         |   |   |   |   |
| Balance as at January 1, 2013   |   |          | 2,804,511 |   |          |   | 888    |         |   |   | 575    |   |   |   | 2,805,974 |   |
| Additions                       |   |          | 1,132,971 |   |          |   | 657    |         |   |   | 45     |   |   |   | 1,133,673 |   |
| Balance as at December 31, 2013 |   |          | 3,937,482 |   |          |   | 1,545  |         |   |   | 620    |   |   |   | 3,939,647 |   |
| Additions                       |   |          | 770,224   |   |          |   | 735    |         |   |   | 108    |   |   |   | 771,067 |   |
| Balance as at December 31, 2014 |   |          | 4,707,706 |   |          |   | 2,280  |         |   |   | 728    |   |   |   | 4,710,714 |   |
|                            |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Depreciation                    |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| Balance as at January 1, 2014   |   |          | -         |   |          |   | -      |         |   |   | -      |   |   |   | - |   |
| Additions                       |   |          | 121,932   |   |          |   | 381    |         |   |   | 45     |   |   |   | 122,358 |   |
| Balance as at December 31, 2014 |   |          | 121,932   |   |          |   | 381    |         |   |   | 45     |   |   |   | 122,358 |   |
| Carrying amounts                |   |          |      |   |          |   |   |         |   |   |   |   |   |   |   |   |
| As at January 1, 2013           |   |          | 2,804,511 |   |          |   | 888    |         |   |   | 575    |   |   |   | 2,805,974 |   |
| As at December 31, 2013         |   |          | 3,937,482 |   |          |   | 1,545  |         |   |   | 620    |   |   |   | 3,939,647 |   |
| As at December 31, 2014         |   |          | 4,585,774 |   |          |   | 1,899  |         |   |   | 683    |   |   |   | 4,588,356 |   |

----

----

|   | B.  | Composition of costs capitalized to the construction of the power plant: |
|--------|----------|--------------------------------------------------------------------------|

|                                           |   | Additions in the |    |   | Cumulative    |   |
|------------------------------------------------|--------|------------------|---------|--------|---------------|--------|
|                                           |   | year ended       |    |   | costs as at   |   |
|                                           |   | December 31      |    |   | December 31   |   |
|                                           |   | 2014             |    |   | 2014          |   |
|                                           |   | NIS thousands    |    |   | NIS thousands |   |
| Equipment and cost of constructing power plant |   |             | 662,141 |   |          |   | 3,794,166 |   |
| Initiation fees                                |   |             | -       |   |          |   | 98,800 |   |
| Rentals and maintenance                        |   |             | 922     |   |          |   | 6,554 |   |
| Professional services                          |   |             | 26,294  |   |          |   | 173,627 |   |
| Travel overseas                                |   |             | -       |   |          |   | 3,176 |   |
| Financing                                      |   |             | 73,787  |   |          |   | 592,398 |   |
| General and administrative                     |   |             | 7,080   |   |          |   | 38,985 |   |
|                                           |   |             |    |   |          |   |   |   |
|                                           |   |             | 770,224 |   |          |   | 4,707,706 |   |

|   | C.  | Security |
|--------|----------|----------|

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

|                                    |         |   |               |        |   | Carrying amount as at December 31 |   |
|-----------------------------------------|--------------|--------|--------------------|-------------|--------|-----------------------------------|--------|
|                                    | Currency and |   |               |        |   |                              |   |   |   |   |
|                                    | linkage base |   | Effective interest |        |   | 2014                              |   |   | 2013 |   |
|                                    |         |   | %                  |        |   | NIS thousands                     |   |   | NIS thousands |   |
| Loans from banks (*)                    | CPI-linked   |   |               | 5.58%-5.77% |   |                              |   | 3,308,770 |   |   |   | 3,064,505 |   |
| Less current maturities (including      | NIS          |   |               |        |   |                              |   |   |   |   |   |   |   |
|  interest as at December 31, 2014) |         |   |               |        |   |                              |   | (122,358 | ) |   |   | (145,926 | ) |
|                                    |         |   |               |        |   |                              |   |   |   |   |   |   |   |
|                                    |         |   |               |        |   |                              |   | 3,186,412 |   |   |   | 2,918,579 |   |

----

----

|                                                                         |   | December 31   |    |
|------------------------------------------------------------------------------|--------|---------------|---------|
|                                                                         |   | 2014          |    |   | 2013 |   |
|                                                                         |   | NIS thousands |    |   | NIS thousands |   |
| Other payables – Foreign currency                                      |   |          | -       |   |   |   | 101,083 |   |
| Other payables – NIS (*)                                               |   |          | -       |   |   |   | 11,112 |   |
| Accrued expenses (*)                                                         |   |          | 437,721 |   |   |   | 10,789 |   |
| Other                                                                        |   |          | 5,737   |   |   |   | 329 |   |
|                                                                         |   |          |    |   |   |   |   |   |
|                                                                         |   |          | 443,458 |   |   |   | 123,313 |   |
| (*)   Including accrued expenses and other payables due to related |   |          |    |   |   |   |   |   |
|         and interested parties            |   |          | 54,074  |   |   |   | 4,833 |   |

|                                        |   | December 31   |    |
|---------------------------------------------|--------|---------------|---------|
|                                        |   | 2014          |    |   | 2013 |   |
|                                        |   | NIS thousands |    |   | NIS thousands |   |
| Shareholders(1)                             |   |          |    |   |   |   |
| Eilat-Ashkelon Infrastructure Services Ltd. |   |          | 148,393 |   |   |   | 109,136 |   |
| Zorlu Enerji Elektrik Uretim A.S. (2)       |   |          | 123,792 |   |   |   | 115,507 |   |
| U. Dori Energy Infrastructure Ltd. (2)      |   |          | 94,486  |   |   |   | 54,432 |   |
| Edelcom Ltd. (2)                            |   |          | 95,573  |   |   |   | 89,115 |   |
| Others                                      |   |          | -       |   |   |   | 1,022 |   |
|                                        |   |          |    |   |   |   |   |   |
|                                        |   |          | 462,244 |   |   |   | 369,212 |   |

|   | 1. | In accordance with the agreement regarding the subordinated shareholders’ loans that was signed on November 29, 2010 commencing November 29, 2010, the loans bear interest at the rate of 10% and are linked to the CPI. As at December 31, 2014, the amount of loans received including accrued interest is NIS 1,104,454 thousand, some of which converted to equity in the amount of NIS 642,210 thousand. The remaining balance is expected to be repaid as of 2016, subject to compliance with financial covenants as specified in the financing agreements. See Note 13A(1)(a). |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

|   | (1) | Presented hereunder are the tax rates relevant to the Company in the years 2012-2014: |
|--------|-----|---------------------------------------------------------------------------------------|

|   | (2) | On February 4, 2010 Amendment 174 to the Income Tax Ordinance (New Version) – 1961 (hereinafter – “the Ordinance”) was published in the Official Gazette. The amendment added Section 87A to the Ordinance, which provides a temporary order whereby Accounting Standard No. 29 “Adoption of International Financial Reporting Standards (IFRS)” that was issued by the Israel Accounting Standards Board shall not apply when determining the taxable income for the 2007, 2008 and 2009 tax years even if this standard was applied when preparing the financial statements (hereinafter – “the Temporary Order”). 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 2010 and 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, it was effected retroactively from January 1, 2012. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                 |   | Year ended    |   |
|----------------------|--------|---------------|--------|
|                 |   | December 31,  |   |
|                 |   | 2014          |   |
|                 |   | NIS thousands |   |
| Current tax expense  |   |          | -      |   |
| Deferred tax expense |   |          | 23,275 |   |
|                 |   |          |   |   |
|                 |   |          | 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, 2014            |   |          | -       |   |        |   | -      |            |   |   | -      |   |   |   | - |   |
|                              |   |          |    |   |        |   |   |            |   |   |   |   |   |   |   |   |
| Changes recognized in the         |   |          |    |   |        |   |   |            |   |   |   |   |   |   |   |   |
|   profit and loss statements |   |          | (99,502 | )      |        |   | 39,117 |            |   |   | 37,110 |   |   |   | (23,275 | ) |
|                              |   |          |    |   |        |   |   |            |   |   |   |   |   |   |   |   |
| Balance of deferred tax           |   |          |    |   |        |   |   |            |   |   |   |   |   |   |   |   |
|   asset (liability) as at    |   |          |    |   |        |   |   |            |   |   |   |   |   |   |   |   |
|   December 31, 2014          |   |          | (99,502 | )      |        |   | 39,117 |            |   |   | 37,110 |   |   |   | (23,275 | ) |

|                                                     |   | Year ended    |    |
|----------------------------------------------------------|--------|---------------|---------|
|                                                     |   | December 31,  |    |
|                                                     |   | 2014          |    |
|                                                     |   | NIS thousands |    |
| Profit before taxes on income                            |   |          | 102,926 |   |
|                                                     |   |          |    |   |
| Primary tax rate of the company                          |   |          | 26.5    | %  |
|                                                     |   |          |    |   |
| Tax calculated according to the Company’s          |   |          |    |   |
| primary tax rate                                         |   |          | 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  | ) |
|                                                     |   |          |    |   |
| Non-deductible expenses and others                       |   |          | 782     |   |
|                                                     |   |          |    |   |
| Income tax expense                                       |   |          | 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 |
|--------|----|-------------------------|

|   | c. | Shareholders’ Commitment |
|--------|----|--------------------------------|

----

----

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

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

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

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

----

----

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

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

|   | 6. | Agreement to purchase natural gas |
|--------|----|-----------------------------------|

|   | 7.  | Agreement to sell electricity |
|--------|----------|-------------------------------|

----

----

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

|   | 8.  | Petrol Storage agreement |
|--------|----------|--------------------------|

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

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

----

----

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

|   | The Company provided by its shareholders, on a pro-rata basis, bank guarantees in favor of INGL, the Ministry of Defense and the “PUA” for compliance with the terms of the licenses granted to the company and as required in the agreement with IEC and other regulations that total to NIS 188 million as at December 31, 2014. Against these guarantees, the shareholders provided guarantees in accordance with their interest in the Company. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | 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 |   |
|                               |   |   |             |   |   |   | 2014 |   |   |   | 2013 |   |
|                               |   |   |             |   |   |   |   |   |   |   |   |   |
| Ordinary shares of NIS 1 par value |   |   |  500,000    |   |   |   |  10,640 |   |   |   |  10,640 |   |

----

----

|                          |   | For the year ended December 31 |   |
|-------------------------------|--------|--------------------------------|--------|
|                          |   | 2014                           |   |   | 2013 |   |   | 2012 |   |
|                          |   | NIS thousands                  |   |
| Wages and related expenses    |   |                           | 4,637  |   |   |   | - |   |   |   | - |   |
| Rental and office maintenance |   |                           | 1,242  |   |   |   | - |   |   |   | - |   |
| Depreciation                  |   |                           | 426    |   |   |   | - |   |   |   | - |   |
| Profession services           |   |                           | 7,689  |   |   |   | - |   |   |   | - |   |
| Other                         |   |                           | 28     |   |   |   | - |   |   |   | - |   |
|                          |   |                           |   |   |   |   |   |   |   |   |   |   |
|                          |   |                           | 14,022 |   |   |   | - |   |   |   | - |   |

|                                               |   | Year ended December 31 |   |
|----------------------------------------------------|--------|------------------------|--------|
|                                               |   | 2014                   |   |   | 2013 |   |   | 2012 |   |
|                                               |   | NIS thousands          |   |
| Compensation for clients due to delay in operating |   |                   | 5,771  |   |   |   | 7,813 |   |   |   | - |   |
| Impairment loss on advance to supplier             |   |                   | -      |   |   |   | - |   |   |   | 10,232 |   |
| Impairment loss on fixed assets                    |   |                   | -      |   |   |   | - |   |   |   | 358 |   |
|                                               |   |                   |   |   |   |   |   |   |   |   |   |   |
|                                               |   |                   | 5,771  |   |   |   | 7,813 |   |   |   | 10,590 |   |

|                                           |   | Year ended December 31 |    |
|------------------------------------------------|--------|------------------------|---------|
|                                           |   | 2014                   |    |   | 2013 |   |   | 2012 |   |
|                                           |   | NIS thousands          |    |
| Financing income                               |   |                   |    |   |   |   |   |   |   |
| Revaluation of derivatives                     |   |                   | 46,662  |   |   |   | - |   |   |   | - |   |
| Other                                          |   |                   | 302     |   |   |   | - |   |   |   | - |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                           |   |                   | 46,964  |   |   |   | - |   |   |   | - |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
| Financing expenses                             |   |                   |    |   |   |   |   |   |   |   |   |   |
| Ineffective portion of the accounting hedging  |   |                   | -       |   |   |   | 15,880 |   |   |   | 143 |   |
| Interest expense on bank loans                 |   |                   | 118,322 |   |   |   | - |   |   |   | - |   |
| Interest expense on loans from related parties |   |                   | 22,708  |   |   |   | - |   |   |   | - |   |
| Net foreign exchange loss                      |   |                   | 12,012  |   |   |   | - |   |   |   | - |   |
| Bank commissions                               |   |                   | 3,369   |   |   |   | - |   |   |   | - |   |
| Other                                          |   |                   | 579     |   |   |   | - |   |   |   | - |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
|                                           |   |                   | 156,990 |   |   |   | 15,880 |   |   |   | 143 |   |
|                                           |   |                   |    |   |   |   |   |   |   |   |   |   |
| Net financing expenses                         |   |                   | 110,026 |   |   |   | 15,880 |   |   |   | 143 |   |

----

----

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

|   | — | Credit risk |
|--------|---------|-------------|

|   | — | Liquidity risk |
|--------|---------|----------------|

|   | — | Market risk |
|--------|---------|-------------|

|                                                 |   | December 31   |   |
|------------------------------------------------------|--------|---------------|--------|
|                                                 |   | 2014          |   |   | 2013 |   |
|                                                 |   | NIS thousands |   |
| Derivatives presented under current liabilities      |   |          |   |   |   |   |
| Forward exchange contracts used for accounting hedge |   |          | -      |   |   |   | (7,894 | ) |
| Forward exchange contracts used for economic hedge   |   |          | 11,090 |   |   |   | - |   |

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

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

----

----

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

----

----

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

|                                            |   | December 31, 2014 |      |
|-------------------------------------------------|--------|-------------------|-----------|
|                                            |   | 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                                  |   |              | 376,515   |   |   |   | 376,515 |   |   |   | 376,515 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other payables                                  |   |              | 438,723   |   |   |   | 438,723 |   |   |   | 438,723 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from banks                                |   |              | 3,308,770 |   |   |   | 4,990,234 |   |   |   | 120,742 |   |   |   | 150,726 |   |   |   | 314,405 |   |   |   | 636,678 |   |   |   | 3,767,683 |   |
|                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term loans from related parties and others |   |              | 462,244   |   |   |   | 654,735 |   |   |   | - |   |   |   | - |   |   |   | 81,842 |   |   |   | 409,209 |   |   |   | 163,684 |   |
|                                            |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   |              | 4,586,252 |   |   |   | 6,460,207 |   |   |   | 935,980 |   |   |   | 150,726 |   |   |   | 396,247 |   |   |   | 1,045,887 |   |   |   | 3,931,367 |   |

----

----

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

|                                                |   | December 31, 2013 |      |
|-----------------------------------------------------|--------|-------------------|-----------|
|                                                |   | 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 and other accounts payable           |   |              | 123,118   |   |   |   | 123,118 |   |   |   | 123,118 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from banks                                    |   |              | 3,064,505 |   |   |   | 4,960,081 |   |   |   | - |   |   |   | 145,926 |   |   |   | 291,769 |   |   |   | 875,308 |   |   |   | 3,647,078 |   |
|                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term loans from related parties and others     |   |              | 369,212   |   |   |   | 529,709 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 529,709 |   |   |   | - |   |
|                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |              | 3,556,835 |   |   |   | 5,612,908 |   |   |   | 123,118 |   |   |   | 145,926 |   |   |   | 291,769 |   |   |   | 1,405,017 |   |   |   | 3,647,078 |   |
|                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative financial instruments                    |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward contract on exchange rates used for hedging |   |              | 7,894     |   |   |   | 7,894 |   |   |   | 7,894 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |

----

----

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

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

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

|                                        |   | December 31, 2014 |      |
|---------------------------------------------|--------|-------------------|-----------|
|                                        |   | Non-financial     |      |   | Unlinked |   |   | CPI-linked |   |   | US Dollar |   |   | Total |   |
|                                        |   | NIS thousand      |      |
| Financial assets and financial              |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
|  liabilities:                          |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                             |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                   |   |              | -         |   |   |   | 67,478 |   |   |   | - |   |   |   | 4,300 |   |   |   | 71,778 |   |
| Other accounts receivable                   |   |              | 11,118    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 11,118 |   |
| Pledged deposits                            |   |              | -         |   |   |   | 68,148 |   |   |   | - |   |   |   | - |   |   |   | 68,148 |   |
| Accounts receivable                         |   |              | -         |   |   |   | 328,438 |   |   |   | - |   |   |   | - |   |   |   | 328,438 |   |
| Derivative  financial instruments |   |              | -         |   |   |   | - |   |   |   | - |   |   |   | 11,090 |   |   |   | 11,090 |   |
|                                        |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current assets:                         |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses                            |   |              | 48,925    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 48,925 |   |
| Fixed assets                                |   |              | 4,588,356 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 4,588,356 |   |
| Intangible assets                           |   |              | 8,577     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,577 |   |
| Pledged deposits                            |   |              | -         |   |   |   | 200,027 |   |   |   | - |   |   |   | - |   |   |   | 200,027 |   |
|                                        |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                        |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Credit from banks                           |   |              | -         |   |   |   | - |   |   |   | (122,358 | ) |   |   | - |   |   |   | (122,358 | ) |
| Other accounts payable                      |   |              | (4,735    | ) |   |   | (5,500 | ) |   |   | - |   |   |   | (433,223 | ) |   |   | (443,458 | ) |
| Trade payables                              |   |              | -         |   |   |   | (337,065 | ) |   |   | - |   |   |   | (39,450 | ) |   |   | (376,515 | ) |
|                                        |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current liabilities:                    |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred tax liabilities                    |   |              | (23,275   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (23,275 | ) |
| Provisions for dismantling                  |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and restoration                       |   |              | (28,507   | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (28,507 | ) |
| Loans from banks                            |   |              | -         |   |   |   | - |   |   |   | (3,186,412 | ) |   |   | - |   |   |   | (3,186,412 | ) |
| Long-term loans from related                |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  parties and others                    |   |              | -         |   |   |   | - |   |   |   | (462,244 | ) |   |   | - |   |   |   | (462,244 | ) |
| Liabilities for employee                    |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  benefits, net                         |   |              | (105      | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (105 | ) |
| Total exposure in statement                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of financial position                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  in respect of financial assets        |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and financial liabilities             |   |              | 4,600,354 |   |   |   | 321,526 |   |   |   | (3,771,014 | ) |   |   | (457,283 | ) |   |   | 693,583 |   |

----

----

| 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, 2013 |      |
|--------------------------------------|--------|-------------------|-----------|
|                                 |   | Non-financial     |      |   | Unlinked |   |   | CPI-linked |   |   | US Dollar |   |   | Total |   |
|                                 |   | NIS thousand      |      |
| Financial assets and financial       |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
|  liabilities:                   |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Current assets:                      |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents            |   |              | -         |   |   |   | 3,992 |   |   |   | - |   |   |   | 207 |   |   |   | 4,199 |   |
| Other accounts receivable            |   |              | 1,435     |   |   |   | 35,094 |   |   |   | - |   |   |   | - |   |   |   | 36,529 |   |
| Pledged deposits                     |   |              | -         |   |   |   | 78,637 |   |   |   | - |   |   |   | - |   |   |   | 78,637 |   |
| Asset from firm commitment           |   |              | -         |   |   |   | - |   |   |   | - |   |   |   | 5,101 |   |   |   | 5,101 |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current assets:                  |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepaid expenses                     |   |              | 50,165    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 50,165 |   |
| Fixed assets                         |   |              | 3,939,647 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,939,647 |   |
| Advances to suppliers                |   |              | 56,978    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 56,978 |   |
| Intangible assets                    |   |              | 7,657     |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,657 |   |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Credit from banks                    |   |              | -         |   |   |   | - |   |   |   | (145,926 | ) |   |   | - |   |   |   | (145,926 | ) |
| Trade payables and other             |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  accounts payable               |   |              | (195      | ) |   |   | (22,035 | ) |   |   | - |   |   |   | (101,083 | ) |   |   | (123,313 | ) |
| Derivative  financial      |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  instruments                    |   |              | -         |   |   |   | - |   |   |   | - |   |   |   | (7,894 | ) |   |   | (7,894 | ) |
|                                 |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-current liabilities:             |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans from banks                     |   |              | -         |   |   |   | - |   |   |   | (2,918,579 | ) |   |   | - |   |   |   | (2,918,579 | ) |
| Long-term loans from related         |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  parties and others             |   |              | -         |   |   |   | - |   |   |   | (369,212 | ) |   |   | - |   |   |   | (369,212 | ) |
| Liabilities for employee             |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  benefits, net                  |   |              | (57       | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (57 | ) |
| Total exposure in statement          |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  of financial position          |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  in respect of financial assets |   |              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  and financial liabilities      |   |              | 4,055,630 |   |   |   | 95,688 |   |   |   | (3,433,717 | ) |   |   | (103,669 | ) |   |   | 613,932 |   |

----

----

|   | 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, 2014 |   |
|--------------------------|--------|-------------------|--------|
|                     |   | Currency/         |   |   | Currency/ |   |   | Principal |   |   |   |   |   |   |   |
|                     |   | linkage           |   |   | linkage |   |   | amount in |   |   | Date of |   |   |   |   |
|                     |   | receivable        |   |   | payable |   |   | $ millions |   |   | expiration |   |   | Fair value |   |
|                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   | NIS thousands |   |
| Instruments used         |   |              |   |   |   |   |   |   |   |   |   |   |   |   | Jan. 26, |   |   |   |   |
|  for hedging:       |   |              |   |   |   |   |   |   |   |   |   |   |   | 2015 up to |   |   |   |   |
| Forward foreign          |   |              |   |   |   |   |   |   |   |   |   |   |   | July 29, |   |   |   |   |
|  currency contracts |   | US dollars        |   |   | NIS |   |   |   | 111 |   |   |   | 2015 |   |   |  11,090  |   |

|                     |   | December 31, 2013 |   |
|--------------------------|--------|-------------------|--------|
|                     |   | Currency/         |   |   | Currency/ |   |   | Principal |   |   |   |   |   |   |   |
|                     |   | linkage           |   |   | linkage |   |   | amount in |   |   | Date of |   |   |   |   |
|                     |   | receivable        |   |   | payable |   |   | $ millions |   |   | expiration |   |   | Fair value |   |
|                     |   |              |   |   |   |   |   |   |   |   |   |   |   | NIS thousands |   |
| Instruments used         |   |              |   |   |   |   |   |   |   |   |   |   |   |   | Jan. 27, |   |   |   |   |
|  for hedging:       |   |              |   |   |   |   |   |   |   |   |   |   |   | 2014 up to |   |   |   |   |
| Forward foreign          |   |              |   |   |   |   |   |   |   |   |   |   |   | March 25, |   |   |   |   |
|  currency contracts |   | US dollars        |   |   | NIS |   |   |   | 107 |   |   |   | 2014 |   |   | (7,894) |   |

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

----

----

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

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

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

|                            |   | December 31, 2014 |    |   | December 31, 2013 |   |
|---------------------------------|--------|-------------------|---------|--------|-------------------|--------|
|                            |   | 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)         |   |              | (1,841  | )      |              |   | 1,841 |   |   |   | 144 |   |   |   | (144 | ) |
| 10% in the U.S. dollar (1)      |   |              | (3,682  | )      |              |   | 3,682 |   |   |   | 289 |   |   |   | (289 | ) |
| 1% change in CPI (2)            |   |              | (37,710 | )      |              |   | 37,710 |   |   |   | - |   |   |   | - |   |
| 2% change in CPI (2)            |   |              | (75,420 | )      |              |   | 75,420 |   |   |   | - |   |   |   | - |   |

|   | (1) | The sensitivity is mainly due to Forward foreign currency contracts and firm commitment. Revaluations of Cash and suppliers balances denominated in foreign currency are capitalized to the cost of construction of the power station and therefore are not expected to affect the Company's profit or loss or equity. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The Company capitalizes borrowing costs to the cost of construction of the power station and therefore a change in the CPI does not affect the Company's profit or loss or equity as at December 31, 2013. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)  | 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     |   |
|--------------------------------|--------|--------|-----------------|--------|
|                           |   |   | 2014            |   |   |   | 2013 |   |
|                           |   |   | Carrying        |   |   |   | Fair |   |   |   | Carrying |   |   |   | Fair |   |
|                           |   |   | amount          |   |   |   | value |   |   |   | amount |   |   |   | value |   |
|                           |   |   | NIS thousands   |   |   |   | NIS thousands |   |   |   | NIS thousands |   |   |   | NIS thousands |   |
|                           |   |   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term loans from banks (*) |   |   |  3,308,770 |   |   |   |  3,993,184 |   |   |   | 3,064,505 |   |   |   |  3,393,949 |   |

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

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

|                       |   | December 31 |   |
|----------------------------|--------|-------------|--------|
|                       |   | 2014        |   |   | 2013 |   |
|                       |   | %           |   |   | % |   |
|                       |   |        |   |   |   |   |
| Long-term loans from banks |   |        | 2.70   | % |   |   | 2.02 | % |

|   | (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, 2014 |   |
|------------------------------------|--------|-------------------|--------|
|                               |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                               |   | NIS thousands     |   |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Derivatives used for hedging:      |   |              |   |   |   |   |   |   |   |   |   |   |
| Forward foreign currency contracts |   |              | -      |   |   |   | 11,090 |   |   |   | - |   |   |   | 11,090 |   |

|                               |   | December 31, 2013 |   |
|------------------------------------|--------|-------------------|--------|
|                               |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                               |   | NIS thousands     |   |   | NIS thousands |   |   | NIS thousands |   |   | NIS thousands |   |
| Derivatives used for hedging:      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Forward foreign currency contracts |   |              | -      |   |   |   | (7,894 | ) |   |   | - |   |   |   | (7,894 | ) |

----

----

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

|                                   |   |                                                                                                                                                                                                                                                                                                  |   | Year ended December 31 |   |   | December 31         |   |
|----------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|--------|---------------------|--------|
|                                   |   |                                                                                                                                                                                                                                                                                                  |   | 2014                   |   |   | 2013                |   |   | 2012 |   |   | 2014 |   |   | 2013 |   |
| Related party/Interested party         |   | Nature of transaction                                                                                                                                                                                                                                                                                 |   | Transactions amounts   |   |   | Outstanding balance |   |
| Shareholder with significant influence |   | The Company entered into an office rent agreement with Edelcom Ltd. This agreement ended in February 2012 when the Company moved away from the offices of Edelcom Ltd.                                                                                                                                |   |                   | -      |   |                |   | - |   |   |   | 148 |   |   |   | - |   |   |   | - |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholder with significant influence |   | The Company entered into an agreement with EAPSS regarding operation and maintenance of the power plant as from November 2012. The payments will be made on a monthly basis throughout the period of the agreement. See Note 13A(4)) regarding a subcontracting agreement between EAPSS and Ezom Ltd. |   |                   | 87,956 |   |                |   | 35,183 |   |   |   | 4,736 |   |   |   | 22,173 |   |   |   | 2,665 |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholder with significant influence |   | The Company entered into an agreement with Zorlu O&M, regarding maintenance of the power plant as of January 2013. The payments was paid in 2 payments (see Note 13A(4)).                                                                                                                         |   |                   | -      |   |                |   | 5,226 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholder with significant influence |   | The Company entered into an agreement with Eilat Ashkelon Pipelene Company Ltd. regarding petrol storage services as of June 2013. The payments will be paid on a quarterly basis (see Note 13A(8)).                                                                                                  |   |                   | 3,654  |   |                |   | 676 |   |   |   | - |   |   |   | 281 |   |   |   | 266 |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Related companies                      |   | The Company has several agreements with related companies for the sale of electricity.                                                                                                                                                                                                                |   |                   | 33,891 |   |                |   | - |   |   |   | - |   |   |   | 4,511 |   |   |   | - |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Shareholder with significant influence |   | The Company entered into a lease agreement of the land for the power plant (see Note 13A(2)).                                                                                                                                                                                                         |   |                   | 5,035  |   |                |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                   |   |                                                                                                                                                                                                                                                                                                  |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Key management personnel               |   | CEO benefits                                                                                                                                                                                                                                                                                          |   |                   | 2,769  |   |                |   | 2,145 |   |   |   | 1,854 |   |   |   | 123 |   |   |   | - |   |

----

----

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

|                |   | The terms of the loan |   |   | Balance as at December 31 |           |
|---------------------|--------|-----------------------|--------|--------|---------------------------|----------------|
|                |   |                  |   |   |                      | Interest       |   |   | Linkage |   |   |   |   |   |   |   |
|                |   | Face value            |   |   |                      | rate           |   |   | base |   |   | 2014 |   |   | 2013 |   |
|                |   | NIS thousands         |   |   |                      | %              |   |   |   |   |   | NIS thousands |   |
|                |   |                  |   |   |                      |           |   |   |   |   |   |   |   |   |   |   |
| Long term loans (*) |   |  439,536         |   |   |                      |  10  |   |   | CPI |   |   |  462,244 |   |   |  368,190 |   |

| C.  | Other engagements between the Company and related and interested parties |
|----------|--------------------------------------------------------------------------|

| 1. | For further information regarding commitment of the shareholders to provide financing according to their relative share in the Company's shares - see Note 13(A)(1)(c). |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2  | For further information regarding commitment between the Company and an interested party to lease land - see Note 13A(2). |
|---------|---------------------------------------------------------------------------------------------------------------------------|

----

----

| A. | On April 12, 2015 the Company received two letters from representatives of U. Dori Energy Infrastructures Ltd. that were addressed to the Company’s Chairman of the Board. As part of these letters, the company is requested to take legal action in order to reveal the engagement between one of the shareholders of the Company, Zorlu Enerji Elektrik Uretim A.S., and the construction contractor of the Dorad power station, Wood Group. The aforesaid letters are advance notices to the Company regarding the intention of the representatives to file a derivative claim insofar as their requests are not accepted. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B. | On April 30, 2015 the Company received a notice from the gas supplier (hereinafter: “Tamar”) by which the “interim period” per its definition in the gas sale and purchase agreement will begin on May 5, 2015. According to the agreement, in the interim period the supply of gas to the Company will be subject to the amounts of natural gas that are available to Tamar at that time after natural gas is supplied to customers of Tamar with which natural gas supply agreements were signed before the agreement with the Company. The interim period will end after Tamar completes (insofar as it completes) a project for expanding the supply capacity of the system for processing and transmitting natural gas from the Tamar field upon fulfillment of the preconditions specified in the agreement. The Company is examining the effects of entering the interim period, if any, on its operations. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----