Industrial RankingsDun & Bradstreet (Israel) and Globes publish a yearly listing of Israel’s largest industrial companies. The companies are classified in the listing according to sales (NIS), calculated according to specific guidelines for the year ending December 31, 2013. Sales figures include subsidiary companies.

Company

Sales Exports/Overseas Sales Net Profit Equity Employees

Parent Company

MAIN RANK 2014

INduStRyNIS

MillionsChange

(%)NIS

MillionsChange

(%)% of Total

SalesNIS

MillionsProfitability

(%)NIS

Millions No.Sales per EmployeeNIS (000)

Electricity Producers & Infrastructures

1 the Israel Electric Corp. 27,656.0 -2.4 – – – -936.0 -3.4 14,811.0 12,968 2,132.6 State of Israel 3

2 Ormat 1,942.9 -2.1 1,942.9 -2.1 100.0 106.5 5.5 1,474.7 1,123 1,730.1 – 38

3 Afcon Holdings 1,056.8 8.6 59.1 -37.4 5.6 26.6 2.5 254.3 1,285 822.4 Shlomo Group 71

4 Elco Energy & Infrastructure 704.9 22.8 37.4 21.5 5.3 – – 209.1 700 1,007.0 Electra 96

5 C. Mer Industries 682.4 -12.1 450.8 -7.3 66.1 8.2 1.2 252.7 1,160 588.2 – 101

6 INGL 399.4 44.4 – – – – – 599.9 89 4,487.9 State of Israel 143

RAN

K 20

14

Company

Sales Exports/Overseas Sales Net Profit Equity Employees

Parent Company Sector

RANK

201

3

NIS Millions

Growth (%)

NIS Millions

Change (%)

% of Total Sales

NIS Millions

Profitability (%)

NIS Millions No.

Sales per Employee NIS (000)

Largest Industrial Companies By Sales Volume

1 teva Pharmaceutical Industries 73,347.8 -6.4 70,928.6 -6.6 96.7 4,582.0 6.2 78,323.1 44,945 1,631.9 – Pharmaceutical &

Cosmetics 1

2 ORL 36,090.3 -3.2 17,571.5 27.2 48.7 -602.5 -1.7 2,723.8 1,502 24,028.2 – Chemicals, Minerals, Refinery 2

3 the Israel Electric Corp. 27,656.0 -2.4 – – – -936.0 -3.4 14,811.0 12,968 2,132.6 State of Israel Electricity Producers & Infrastructures 3

4 ICL 22,644.7 -9.3 21,494.5 -9.3 94.9 2,955.6 13.1 12,682.8 12,152 1,863.5 Israel Corporation Chemicals, Minerals, Refinery 4

5 I.A.I 13,150.2 2.2 9,647.8 -1.2 73.4 263.6 2.0 3,509.2 16,092 817.2 State of Israel Producers of Electronic Security Sys. & Equip. 6

6 Iscar 12,900.0 – – – – – – – 10,000 1,290.0 IMC International Metalworking Metal Products 8

RAN

K 20

14

Company shares are traded in Israel | Company shares are traded abroad | Estimated figures

P.O.B. 10, Haifa 3100001 Tel: 972-4-8182222 Fax: 972-4-8186100 www.iec.co.ilThe Israel Electric Corporation Ltd.

to the system was completed and the first IPPs

were connected. IEC was awarded first place for

quality-of-service by a public institution for the

17th consecutive year, in 2013, according to the

“Test of the Nation” survey by the Geocartography

Research Institute.Structural Change, Organizational Change �Plan, and Efficiency Plan

Structural change in the electricity sector is a com-

plex issue and has been on the agenda for over a

decade, during which time the Electricity Sector

Law has undergone many amendments. Various

committees have discussed and provided many

recommendations for an appropriate structure of

the electricity sector and the Company. In July 2013,

a steering team was appointed to carry out the re-

form in the electricity sector and the IEC; headed

by Uri Yogev, Director of the Government Compa-

nies Authority, with participants of the Ministry

of National Infrastructure, Energy and Water, the

Treasury and others. In March 2014, the steering

team published a draft of its recommendations for

public consumption. In May 2014, the Company

submitted its initial position to the steering team,

which focused on two main subjects: the scope

of future development of the electricity sector,

and assurance of long-term and stable financial

strength for the Company. To date, a consensus

remains pending and the changes have not been

implemented. Since reaching an understanding,

the Company has been meeting with the relevant

factions, including government representatives,

Workers’ Histadrut, and the IEC Workers’ Union, to

reach an agreement for a fitting structure of the sec-

tor, organizational structure and its management,

financial strength, and a comprehensive efficiency

plan for the Company.Business Development �

The Business Development Unit operates to expand

the Company’s business and exploit its profes-

sional expertise, by-products, infrastructure, and

additional resources. The IEC regards the Unit’s

activity as a future source of income, contributing

to its financial strength and profitability, and an

alternative source of income which will be lost with

the introduction of competition to the generation

section in Israel. Most of the Unit’s activities are

overseas, the FSU, Eastern Europe, Africa, India,

and Asia. Furthermore, the Company sells its pro-

fessional services locally and to the Palestinian

Authority (PA). The Unit’s activities include: con-

struction and operation of power stations and

other renewable energy installations overseas as

a professional service provider; sale of expertise,

consulting services, and engineering service in

Israel and overseas (in 2013, projects in Russia,

Angola, South America, India, Papua New Guinea,

and Cyprus); commercialization of by-products

from electricity generation such as coal ash, plas-

ter, steam, gases, etc.; intelligent use and rent of

IEC infrastructure and other services; construction

of electricity infrastructure for the PA. The Company

began training and consulting for protection from

cyber-attack against critical infrastructure. In Israel,

business development concentrates on the follow-

ing: energy efficiency, professional services, and

consulting in transmission and distribution.

Income from these activities in 2013 totaled NIS

147M. The Company also promotes commercial

research and development with the Technological

Incubator (KARAT) and is involved with IBC, which

handles sale of fiber-optic-based communication

infrastructure, (40% owned by IEC).The Environment �

The IEC operates according to the environmental

conservation policies approved in 1997, updated

regularly. In 2008, the Company defined an envi-

ronmental vision: to operate responsibly towards

the environment, with a long-term sustainability

and forward-looking vision. The Company mini-

mizes the environmental consequences of its ac-

tivities that lead to prevention of obstacles and

decreases in environmental harm. Environmental

concern is an integral part of operating, maintaining

and planning, and development of the electricity

sector. Company activity is subject to broad regu-

lation. The Company learns legal environmental

consequences, operates to prevent or minimize the

environmental risks which may occur, prepares for

the economic, legal and operational consequences

resulting from the environmental laws, and allots

budgets to adhere to these environmental laws

that it may affect and those who may be affected.

In 2013, the Company invested some NIS 756M

in environmental protection in its generation in-

stallations and an additional NIS 83M to comply

with environmental-impact demands. To integrate

installations based on renewable energies, 9,700

small/wind-turbines PV installations, with a capac-

ity of 239 MW, and 90 medium PV producers with

a capacity of 93 MW, were connected by the end

of 2013. Community Involvement �

The IEC maintains a developed network of commu-

nity work, believing it is its obligation and respon-

sibility to the community. In 2013, the Company

focused on promoting energy efficiency, emphasiz-

ing the customer’s responsibility as an active part-

ner, alongside the Company’s duty as an essential

utility provider. Prominent activities in 2013 are the

following: breakthrough in corporate sustainability

– the first corporate sustainability report (A+ trans-

parency level) was published by IEC employees;

preserving the Company’s heritage to mark the 90th

anniversary; sustainability – community activity

in local councils and in the education system in

middle schools; senior company managers volun-

teer in the Ministry of Education program, “Man-

ager adopts Manager” and share their managerial

experience; activity in the three Visitors’ Centers in

Hadera, Heftziba, and Ashkelon.

1,550 schools in 170 local councils participated

in the Netiv Haor Program, which promotes safety

and sensible use of electricity via fun-educational

activities. Two thousand kindergardens joined the

program. This year, 280 company staff, 15 pen-

sioners, and parents of students from 25 towns

volunteered in this activity.Risk Management and Continued Business �Activity

Risks of all types – strategic, operational, financial,

regulatory, and compliance – form an integral part

of the business environment and business manage-

ment in the Company. The IEC Board of Directors

and Management adopted the Government Compa-

nies Authority Directives #2009/2 on Risk Manage-

ment at Company Level (ERM). In 2013, The Risk

Management Plan was completed and approved,

and included defining and characterizing risk for

the Company; developing risk indices; checking risk

mitigation auditing; risk management at the unit

level. The Company implemented a data system

for risk management and started risk surveys to

create the basis for mapping central processes and

grade the risks to prepare a multi-year work plan

for the internal audit. Simultaneously, to continue

providing service during extreme situations, the

Company promotes business continuity planning.Preparing for Emergencies/ Crises �

In 2013, the Company continued to reinforce its activities in preparing for emergencies and crises. The national exercise was based on an extreme winter scenario, together with events such as hos-tile terrorist activities, cyber-attacks and riots. In addition, the Company also participated in the National Emergency Week, and in the national exercises with government ministries, the Home Front Defense Ministry, The Ministry of National Infrastructure, Energy and Water, The Home Front Command, and the Police. During the year, the Company dealt with three crises/pre-crisis de-velopments; especially during the tension with Syria in September 2013 and while handling the consequences of the snow storm in Jerusalem and Safed in December. The Company continues to prepare for earthquakes, including maintaining the generation, transmission, and distribution systems and upkeep of the administration build-ings, to minimize destruction during earthquakes, reduce loss of lives, and minimize damage to the electricity supply system. A plan for establishing evacuation and rescue teams was implemented to provide an initial response in the event of an earth-quake, pending the arrival of the formal search and rescue teams.

P.O.B. 10, Haifa 3100001Tel: 972-4-8182222 Fax: 972-4-8186100

www.iec.co.il

The Israel Electric Corporation Ltd.

The Israel Electric Corporation (IEC) is a

public and government-owned company,

generating and supplying electricity to all

sectors in the economy. 99.85% is government-

owned. Company activities include generation,

transmission and transformation, distribution,

supply and sale of electricity. On March 29, 2013,

the IEC celebrated its 90th birthday, operating 17

power stations consisting of 63 generating units:

18 steam-driven and 45 gas turbines, of which 11

operate as combined-cycle units. IEC’s installed ca-

pacity stood at 13,483 MW. The Company supplies

reliable and high-quality electricity, complies with

leading service standards, maintaining economic,

commercial, and environmental principles. Some

13,000 workers are employed and the IEC provides

service to 2.58 million homes.

2013 – Development Activities �

Over the last decade, the IEC invested more than

USD 10 billion developing the Israeli electricity sec-

tor. Although the Company is government-owned,

the capital to finance these investments was raised

from independent sources in Israel and overseas.

During 2013, IEC’s generating capacity increased by

235 MW, with the synchronization of the combined-

cycles at Hagit (119 MW) and Ramat-Hovav (116

MW). The transmission system of 161 kV overhead

lines was expanded, 60 km. were added and a

number of uprating projects were completed. The

length of 161 kV super-high overhead and under-

ground lines totaled 4,550 km., and 115 kV lines,

114 km. The length of 400 kV extra-high totaled

741 km. The transformation system includes 10

switching stations and 193 substations, 42 private-

ly-owned. By years end, the transmission capacity

in 161/400 kV switching stations totaled 9,650

MVA. Transmission capacity from high to medium

voltage at Company-owned substations expanded

by 1.3% to 16,845 MVA, while the privately-owned

transmission capacity totaled 2,855 MVA.

The distribution system included 26,631 km. of

medium-voltage lines, 47,474 distribution trans-

formers of total capacity 22,871 MVA, and 21,768

km. low-voltage lines. The length of medium and

low-voltage underground lines reached 23,223 km.

(48% of the total distribution).

IPPs – High and Extra-High Voltage �

2013 saw a significant introduction of new IPPs

once the OPC Power Station at Mishor Rotem was

commissioned. Second power stations were started

up at the Ashdod Refineries and at Nesher Ramle.

To complete the picture, technical coordination be-

gan for the construction of 15 additional private

power stations, with an installed capacity of 3,281

MW, under the care of the National Dispatch Unit.

IPPs’ extra-high voltage installed capacity totaled

885 MW. In 2013, three IPPs with an installed ca-

pacity of 555 MW were added: Rotem OPC – 446

MW; Paz, Ashdod Refineries 2 – 60 MW; Nesher

Ramle 2 (gas turbines) – 49 MW.

Revenue, Capital Raising, and Company �Rating

In 2013, Company revenue decreased by 2.34% to

NIS 27,656M (USD 7,968M), a loss of NIS 936M.

Company rating overseas (correct to March 31, 2014): 1. Moody’s: Baa3/stable outlook.

2. S&P: BB+/stable outlook.

Company rating locally (correct to March 31, 2014): 1. Midroog: Bonds not backed by government guar-

antee are rated Aa3/stable outlook. Bonds backed

by government guaranteed are rated Aaa.

2. S&P Maalot: ilAA-/stable outlook.

Capital raising: during 2013, the Company raised

NIS 10.4B for investment in developing the electric-

ity sector and debt recycling, including financial

recycling of surplus fuel costs.

Debt redemption: during 2013, the Company paid

off a total of NIS 11.1B in loans and bonds.

Electricity Demand and Peak Load �

Peak demand occurred on Dec. 15, 2013 and

reached 11,640 MW – 2.8% less than the previ-

ous year. About 89% -10,365 MW – was supplied

by IEC. The overall generation capacity of the

Company’s units was 57,119M KWh, a decrease

of 6.5%. In 2013, about 56.3% of the total capac-

ity was generated by coal; 40.6% by natural gas;

2.5% by diesel oil; and 0.6% by fuel oil. Electricity

consumption was 53.3B KWh, a 6.3% decrease

compared with 2012. The decrease was a result of

the increase in IPPs, the mild winter and summer

weather, and from decreased economic activity.

Natural Gas (NG) in the Electricity Sector �

2013 was a turning point in regards to the avail-

ability of natural gas for the Company, with the

construction of the liquid natural gas (LNG) instal-

lation off the Hadera shore in January and the start

of gas flow from the Tamar field in April. Liquid gas

is stored on the LNG regasification ship, ready at

any given time, to flow via the marine buoy to the

transmission system. The marine LNG reserve acts

as backup in the event of a fault in the gas supply

from the Tamar field or as backup during peak de-

mand for which NG is required beyond the supply

from Tamar. IEC purchase of fuel totaled about NIS

11.1B (NIS 20B in 2012), a result of increased use

of 2.2MT NG and decreased use of 1.6MT of diesel

oil, 0.9MT fuel oil, and 2.2MT coal.

Promoting Intelligent Use of Electricity and �Energy Efficiency

In 2013, IEC continued to promote the national plan

for saving electricity, to prevent situations requir-

ing demand-side management, to minimize the

addition of generation units, and to instill sensible

electricity-usage habits. The client circle that joined

demand-side management expanded, and by the

end of 2013, 286 customers were integrated into

the activation of diesel-generators arrangement;

120 customers participated in the “moveable-

peak arrangement”; two customers participated

in another demand-side management arrangement

selection of a shedding time; and some 36 EHT

and HT customers participated in a frequency re-

sponse shedding agreement based on a predefined

frequency. The total load recruited totaled 1,075

MW. The Company continued its activity to direct

customers to energy efficiency and set up focused

activities with various bodies, such as the Local

Government Center, the Israeli Energy Forum, the

Kibbutz Movement, the Industrialists Association,

and the Ministry of Education, to instill the concept

into the younger generation. During the year of re-

view, 333 new automation units were installed in

the Distribution Management System (DMS) – a

total of 3,983 automated units were integrated.

At the same time, the feasibility checks to monitor

grids in real-time to identify unusual data security

events, development of end-units to connect IPPs

Eli GlickmanPresident & CEO

Yiftach Ron-TalChairman of the Board

E S T a b L I S h E D

1923

L I n E o F b u S I n E S S

Electricity Generation, Transmission, Distribution, and Supply