Financial Instruments

6 Months Ended

Jun. 30, 2021

Disclosure of detailed information about financial instruments [abstract]

Note 7 - Financial Instruments

Fair value

(1) Financial instruments - the composition of the derivatives

	June 30,			December 31,
	2021			2020
	€ in thousands
	Unaudited			Audited
Derivatives presented under current assets
Currency swap		42			12
Forward contracts		-			66
		42			78

Derivatives presented under non-current assets
Financial power swap		1,592			10,238
Currency swap		684			-
		2,276			10,238

Derivatives presented under current liabilities
Swap contracts		(1,336	)		(1,378	)
Financial power swap		(1,195	)		-
		(2,531	)		(1,378	)

Derivatives presented under non-current liabilities
Currency swap		-			(144	)
Swap contracts		(6,297	)		(8,192	)
		(6,297	)		(8,336	)

(2) Financial instruments measured at fair value for disclosure purposes only

The carrying amounts of certain financial assets and liabilities, including cash and cash equivalents, trade receivables, other receivables, other short-term investments, deposits, derivatives, bank overdraft, short-term loans and borrowings, trade payables and other payables are the same or proximate to their fair value.

The fair values of the other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

June 30, 2021

Fair value

Carrying

Valuation techniques for

Inputs used to

amount

Level 1

Level 2

Level 3

determining fair value

determine fair value

€ in thousands

Non-current liabilities:

Debentures

93,476

95,992

Loans from banks and others (including current maturities)

218,413

220,045

Discounting future cash flows by the market interest rate on the date of measurement.

Discount rate of Euribor+ 1.76%- 2.75% with a zero floor, Euribor+ 5.27%, fix rate for 5 years 2.9%-3.55% and 4.65% Linkage to Consumer price index in Israel.

311,889

95,992

220,045

	December 31, 2020
			Fair value
	Carrying								Valuation techniques for	Inputs used to
	amount		Level 1		Level 2		Level 3		determining fair value	determine fair value
	€ in thousands
Non-current liabilities:
Debentures		82,724		84,814		-		-
Loans from banks and others (including current maturities)		198,169		-		209,005		-	Discounting future cash flows by the market interest rate on the date of measurement.	Discount rate of Euribor+ 1.76%- 2.75% with a zero floor, Euribor+ 5.27%, fix rate for 5 years 2.9%-3.55% and 4.65% Linkage to Consumer price index in Israel
		280,893		84,814		209,005		-

(3) Fair value hierarchy of financial instruments measured at fair value

The table below presents an analysis of financial instruments measured at fair value on the temporal basis using valuation methodology in accordance with hierarchy fair value levels. The various levels are defined as follows:

—

Level 1: quoted prices (unadjusted) in active markets for identical instruments.

—

Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

—

Level 3: inputs that are not based on observable market data (unobservable inputs).

June 30, 2021

Level 1

Level 2

Level 3

Total

Valuation techniques for

€ in thousands

determining fair value

Swap contracts

(7,633

)

(7,633

)

Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.

Currency swap

726

Dori Energy loan

7,408

The fair value is measured by discounting the expected future loan repayments and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. The discounting rate was estimated at approximately 10% and the expected yearly change of Israeli Consumer Price Index, during the expected lifetime of the loan, was estimated at approximately 1%.

Financial power swap

397

Fair value is measured by discounting the future fixed and assessed cash flows, over the period of the contract and using market interest rates appropriate for similar instruments. The value is adjusted for the parties’ credit risks.

There have been no transfers from any Level to another Level during the six months ended June 30, 2021.

	December 31, 2020
	Level 1		Level 2			Level 3		Total			Valuation techniques for
	€ in thousands										determining fair value
Marketable securities		-		1,761			-		1,761		Market price
Forward contracts		-		66			-		66		Fair value measured on the basis of discounting the difference between the forward price in the contract and the current forward price for the residual period until redemption using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
Swap contracts		-		(9,570	)		-		(9,570	)	Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
Currency swap		-		(132	)		-		(132	)	Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
Dori Energy loan		-		-			8,745		8,745		The fair value is measured by discounting the expected future loan repayments and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. The discounting rate was estimated at approximately 10% and the expected yearly change of Israeli Consumer Price Index, during the expected lifetime of the loan, was estimated at approximately 1%.
Financial power swap		-		-			10,238		10,238		Fair value is measured by discounting the future fixed and assessed cash flows, over the period of the contract and using market interest rates appropriate for similar instruments. The value is adjusted for the parties’ credit risks.

(4) Level 3 financial instruments carried at fair value

The table hereunder presents a reconciliation from the beginning balance to the ending balance of financial instruments carried at fair value in level 3 of the fair value hierarchy:

	Financial assets
	Dori Energy loan
	€ in thousands

Balance as at December 31, 2020		8,745

Repayment of loan to an equity accounted investee		(2,259	)
Loan to an equity accounted investee		244
Total income recognized in profit or loss		125
Interest		450
Foreign Currency translation adjustments		103

Balance as at June 30, 2021		7,408

	Financial assets
	Financial power
	swap
	€ in thousands

Balance as at December 31, 2020		10,238

Total loss is recognized in other comprehensive income		(9,841	)

Balance as at June 30, 2021		397