Israel Electric Corp.

Investor

Presentation

Business update as of 12/31/2019

April 2020

Disclaimer

Investor Relations 2

The Company is a public company, with all it entails, and this information provided to you, all or part of it, may constitute “Inside Information” in

accordance with Israel’s Securities Law, 1968 (hereinafter: “Securities Law”), and making use of this information (including, but not only, by way of

carrying out a transaction in a security of IEC, and/or delivering this information, or an opinion regarding a security of IEC, to any third party who

may use this information for purposes of such transaction) may constitute a criminal offence pursuant to Securities Law.

Please treat this information as CONFIDENTIAL and do not disclose, publish or deliver all or any part of this information, directly or indirectly, to

any third party, except for your employees, officers and any person acting for you or on your behalf, strictly on a “need to know” basis, and only

after you have notified the person receiving any of this information that the information is confidential and that making use of this information may

constitute a criminal offence as specified above

This Presentation does not constitute or form part of and should not be construed as an offer to sell or issue, or the solicitation of an offer to buy or

acquire, securities of the Company. This Presentation is solely for informational purposes. The information contained in this presentation regarding

the Company's operations is concise and presented for convenience purposes only. To get a complete picture of the Company's operations, please

refer to the immediate and timely reports of the Company to the Israeli Securities authority and the Tel-Aviv Stock Exchange.

This presentation includes forward-looking information, as per its definition in the Securities Law, including forecasts and other information whose

realization is uncertain and depends on factors that are not under the control of the Company. These factors are based, among other things, on

data that is in the possession of the Company as of this date, internal estimates and expectations of the Company regarding trends in the

Company's fields of activity and regarding the implementation of the company's plans. The Company's forecast and expectations included in this

presentation may not be realized, in whole or in part, or may be realized in a different manner than expected, inter alia due to factors that some of

them are not under the control of the Company, including changes in the market conditions and the Company's business environment, regulatory

changes, or the realization of any of the risk factors of the Company.

The information contained in this presentation is provided as of the date of this presentation. The Company is not under any obligation to

update the information in this presentation or to update the forward-looking statements contained in it.

Executive Summary

3

Gas turbine (internal

combustion) /

Combined-cycle

(internal combustion

and steam)

Steam (dual

purpose)

400 kV lines

161 kV lines

Israel Electric Corp. at a Glance

IEC Power Grid Established in 1923, 97 years of operation, the Israel Electric Corporation Limited (“IEC”) is the

sole vertically integrated electric utility company in Israel and generates, transmits, distributes and

supplies the majority of the electricity used in Israel

IEC is appx. 99.85% owned by the State of Israel

IEC had total assets of NIS 87.5 billion and 11,391 employees as of December 31, 2019

As of December 31, 2019, IEC serves 2.9 million residential, commercial, agricultural and industrial

customers throughout the State of Israel, including East Jerusalem and the Palestinian Authority

Total electricity sales of 53,119 GWh for the period ended December 31, 2019

12.8 GWInstalled capacity

16Power stations

Generation (1)

5,661 kmHigh and ultra-high voltage

transmission grid

215 (2)

Switching stations &sub-stations

Transmission (1)

66,670 kmMedium and low

voltage lines

2.9 mnCustomers

Distribution (1)

2019FY Key Financials Credit Ratings as of December 31, 2019

Revenues

NIS 24.7 billion

EBITDA

NIS 8.1 billion

IEC GlobalBaa2 / BBB

Positive / Stable(Moody’s / S&P)

IEC Local Aa2 / AA+

Positive / Stable(Midroog / Maalot S&P)

State of Israel (3)

A1 / AA- / A+Positive / Stable / Stable

(Moody’s / S&P / Fitch)

Source: IEC Financial Statements for 2019FY1) As of December 31, 2019.2) 57 substations are privately owned.3) A State of Israel guarantee for the existing loans of IEC are negligible compared to the company’s overall financial debt.

Denotes USD figures USD/NIS exchange rate of 3.46 as of December 31, 2019.

Investor Relations

$7.1 $2.3

4

Israel - a Modern Economy

Source: The Israeli Central Bureau of Statistics, Bank of Israel.1) Credit rating refers to long-term foreign currency debt only. A State of Israel guarantee for the existing securities of IEC are negligible compared to the company’s overall Financial debt 2) The Israeli Ministry of Finance and Bank of Israel.

Denotes USD figures USD/NIS exchange rate of 3.46 as of December 31, 2019.

Israel Public Debt to GDP(2)

Israel Rating History(1)

Inflation Environment

1

2

3

2011 2013 2015 2017 2019Moody's S&P Fitch

Nov 2016

Fitch upgrade

Israel to A+

Sep 2011

S&P upgrade

Israel to A+

A2 / A

A1 / A+

Aa3 / AA-

68.567.1

65.863.7

62.160.5 61.0 60.0

50

55

60

65

70

75

80

2012 2013 2014 2015 2016 2017 2018 2019

(% of GDP)

1.6% 1.8%

-0.2%-1.0%

-0.2%

0.4%

0.8% 0.6%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2012 2013 2014 2015 2016 2017 2018 2019

(YoY Inflation %)

1%-3%

Government

Inflation Target

1.1%

Average inflation in

the last decade

Investor Relations

Key Figures

5

$376 bn

$42,508

Aug 2018

S&P upgrade

Israel to AA-

Area 22,072 km2

Population (December 2019) 9.1 million

GDP (2019) NIS 1.3 trillion

GDP per Capita (2019) NIS 147,078

Avg. GDP Growth (2012-2019) 3.6%

Unemployment (December 2019) 3.4%

Foreign Currency LT Debt Ratings

(Moody’s / S&P / Fitch) (1)A1 / AA- / A+

Essential

Service Provider

Owned by the

State of Israel

Robust Growth in

Electricity Demand

Fully Regulated

Across all Segments

Efficiency and

Reliability

Financial

Robustness

Natural Gas

Fuel

Independence

IEC is an essential service

provider of electricity in Israel

and the sole vertically

integrated provider in the

electricity chain

Appx. 99.85% owned

by the State of Israel

(A1/AA-/A+)

Strong electricity demand

growth in the Israeli market

Tariff is based on costs and

return on equity

Set by the Electricity Authority

Continuous improvement of

efficiency & reliability

IEC has over 97 years of experience in

developing and managing the electricity

sector in Israel

Rated investment grade by both

S&P (BBB) and Moody’s (Baa2)

IEC total liquidity(1) of NIS 5.6 bn

as of December 31, 2019

Natural gas from Tamar,

Leviathan and other significant

natural gas discoveries in

Israel have paved the way

towards potential fuel

independence

Key Investment Highlights

Investor Relations

1) Source: IEC Financial Statements for 2019FY.IEC defines “Liquidity” as cash and equivalents, short term investments and available credit facilities.

6

Key Strategic Targets

Investor Relations 7

Israel's

Electricity Supplier•Continuing to guarantee reliability of the

electricity supply and maintaining

adequate electricity reserves

Operational Overview

8

Source:1) IEC Financial Statements for 2016FY-2019FY, IEC Statistical Report for 2009FY.2) The Israeli Central Bureau of Statistics.

Denotes USD figures at USD/NIS exchange rate of 3.85, 3.47, 3.75 & 3.46 for the end of period of 2016FY, 2017FY, 2018FY & 2019FY, respectively.

Historical Performance

Comparison of Key Metrics

22.723.4 23.6

24.7

0

10

20

2016 2017 2018 2019

NISbn

$6.7 $7.1

IEC Revenues

IEC continues to provide most of Israel’s energy requirements

as the sole vertically integrated electric utility in Israel

Investor Relations

$5.9

9

$6.312/31/2009 12/31/2019%

Change

Population (mn) (2) 7.6 9.1 19.7%

Number of

Customers (mn)2.5 2.9 16.0%

Electricity Sales

(GWh)48,947 53,119 8.5%

National Peak

Demand (MW)10,280 13,568 32.0%

IEC Installed

Capacity (MW)11,824 12,752 7.8%

Israel Generation Capacity and Demand

Israel Generation Capacity and Demand

Source: IEC’s Financial Statements (2016FY-2019FY) 1) Installed Generation Capacity of Independent Power Producers (“IPPs”)

13,617 13,617 13,335 12,752

3,060 3,199 3,334 4,148

911 946 1,303 2,023

17,588 17,762 17,972

18,923

12,624 12,746 12,921 13,568

5,000

8,000

11,000

14,000

17,000

20,000

2016 2017 2018 2019

(MW)

IEC's Installed Generating Capacity Gas Fired IPPs Renewable Energy IPPs National Peak Demand

Investor Relations 10

(1) (1)

Demand for Electricity

National Electricity Peak Demand & Total Electricity Produced in the Entire Sector

Trends

Source: IEC’s Annual Financial Statements (1990FY-2019FY), IEC’s Statistical data.

Investor Relations

The demand for electricity in

Israel is growing at a fast and

steady pace

Demand is driven by both

population growth and the

increase in electricity

consumption per household

IEC’s demand forecast,

which is used for long term

planning of the generation

segment, anticipates an

average annual increase of

3.0% in peak demand in the

years 2020 to 2050

11

Seasonality in Electricity Demand - Average Consumption of Households

0

200

400

600

800

1,000

Q1-2014

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Q2-2018

Q3-2018

Q4-2018

Q1-2019

Q2-2019

Q3-2019

Q4-2019

(KWh)

Base Heating Cooling

54 54 53

58 6064

62 6165

67 68 7073

40

45

50

55

60

65

70

75

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

(TWh)(MW)

Total Electricity Produced in the Sector National Electricity Peak Demand

Multiplied by 3.6 in 29 years

The IEC Electricity Chain

Source: IEC Financial Statements for 2019FY

Notes

1) 57 substations are privately owned.

Investor Relations 12

Generation DistributionTransmission

2.9Million

Customers

37,981 kmLow Voltage

Lines

28,689 kmMedium

Voltage Lines

204Substations(1)

5,661 kmUltra-High & High

Voltage lines

11Switching Stations

58 Generation Units in 16

Power Stations

The IEC Generation Segment

IEC Generation Facilities

Fuel Mix by Electricity Generated(4)

Source: IEC’s Financial Statements for 2019FY1) As of December 31, 20192) Units 1-4 at the Orot Rabin Power Station will be transferred to preservation by June 1, 2022.3) In accordance with the Minister of Energy's policy principles, which was published on the Ministry of Energy’s website on November 24,2019, it was decided that units 5-6 at Orot Rabin Power Station and units 1-4 at Rutenberg Power

Station will gradually converse using natural gas in order to stop routine coal use until 2025 and no later than 2026.4) As of December 31, 2019, 24.55% of IEC revenues are associated with IEC's coal fired units located in 2 sites.

Electricity Generation Sites(1)

January 1 - December 31, 2018

Coal45.8%

Diesel oil & Fuel oil1.1%

Natural gas & LNG 53.1%

January 1 - December 31, 2019

Investor Relations

No. of

units

Installed

Capacity (MW)

Steam (dual purpose) (coal and fuel oil) (1;2;3) 10 4,840

Steam (dual-purpose) (natural gas and fuel / diesel oil) 6 1,340

Gas turbine (internal combustion) (industrial gas) 13 1,350

Gas turbine (internal combustion) (jet engine) 16 504

Combined cycle (internal combustion and steam) 13 4,718

Total 58 12,752

13

16Power stations

sites

12,752Megawatts of

generation

Orot Rabin(2)

7 units / 2,605 MW

Rutenberg

6 units / 2,290 MW

Eshkol

7 units / 1,693 MW

Haifa

4 units / 828 MW

Gezer

6 units / 1,336 MW

Hagit

4 units / 1,394 MW

- Mainly powered by coal

- Mainly powered by gas

Gas turbine (internal

combustion) /

Combined-cycle

(internal combustion

and steam)

Steam (dual purpose)

Coal43.0%

Diesel oil & Fuel oil0.5%

Natural gas & LNG

56.5%

The IEC Transmission and Distribution Segments(1)

Total Electricity Consumption by Customer Type

Transformation

System

11Switching stations

Power Lines

147Substations

Transmission

57Private substations

769 km400 kV lines

4,850 km161 kV line (includes

underground lines)

42 km115 kV lines

66,670 kmMedium and low

voltage lines

51,203Distribution

Transformers

2.9 mnCustomers

Distribution

Source: IEC’s Financial Statements for 2019FY

Notes

1) As of December 31, 2019

Residential38%

Industrial17%

Public, commercial, East-Jerusalem &

Palestinaian Authority39%

Water pumping

4%

Agriculture2%

(kWh)

Investor Relations

Diversified Customer Base

14

IEC’s Human Capital

Streamlining of IEC’s Workforce

Source: IEC’s Financial Statements for 2014FY-2019FY

12,754

12,371

11,908 11,902

11,476 11,391

11,000

11,500

12,000

12,500

13,000

2014 2015 2016 2017 2018 2019

IEC’s employees’

Investor Relations 15

As part of the reform in the electricity sector, an efficiency program is resuming

for the years 2020-2025

The Sector Reform

16

Source : IEC ‘s Financial Statements for 2019FY

Notes:1. In accordance with the IEC’s undertakings adopted by the IEC's BOD on May 10, 2018, to the extent that the Government resolutions and/or the legislative amendments and/or the administrative decisions and/or the arrangements of the

Electricity Authority and/or the aforesaid licenses given by the State of Israel, that will correspond to the (insofar as these are needed according to the State of Israel position), or that the collective agreement IEC and the employeesrepresentatives will not be in force, then all IEC’s undertakings, according to the IEC’s undertaking document, will not be in force and the State of Israel will not be able to file claims and/or complain against IEC with respect to thoseundertakings. On June 3, 2018, the required Government Decision was received, on July 19, 2018 the Knesset approved the Amendment to the Law, and on May 17, 2018, the Principles of the policy of the Minister and the ElectricityAuthority’s Regulation as aforesaid were published. In addition, on November 4, 2018, the Collective Agreement came into effect after all the contingent conditions detailed therein were fulfilled. For the purpose of implementing the fullstructural change outline, it will be required the approval of the regulatory agencies, decisions and regulations of the Electricity Authority and granting licenses which as of date of approval of the Financial statements have not yet beenreceived and there is no certainty regarding the date of determining the agreements or the granting of such licenses and their final terms. As of the date of the publication of the Financial statements, IEC is unable to reliable estimate theexact implications of the additional regulations and approvals that have not yet been formulated or received on its financial position and results.

2. Except of the above, IEC or its generation subsidiary will not construct, replace, operate, plan, strengthen or engage in development of power stations in Israel, whether by itself or as a contractor for a third party, nor will it engage inelectricity generation, including in the framework of micro-generation or renewable energies in Israel, during the years of the reform and afterwards. IEC has undertaken to the State of Israel not to act to obtain new generation licenses or toconstruct new electricity generation stations and replace existing stations, and not to act to obtain permits for the operation of power stations for other parties in Israel.

Investor Relations

Sale of generation sites

and increased

competition in the

generation segment

Transfer of the system

Management and

additional units to a

separate Government

company

Opening the supply

segment market to

competition from other

entities

Essential service

provider in the

transmission and

distribution segments

Organizational change,

efficiency plan and

administrative flexibility

Construction &

operation of two

combined cycle gas

turbines at the ‘Orot

Rabin’ site (2)

Assets arrangement Compliance with

financial targets

Strengthening the

financial stability of IEC

Value added services,

installation of smart

meters, construction

and operation of

storage facilities

Main points of the reform (1)

The Sector Reform Timeline(1)

17

Source : IEC ‘s Financial Statements for 2019FY

Notes:1. In accordance with the IEC’s undertakings adopted by the IEC's BOD on May 10, 2018, to the extent that the Government resolutions and/or the legislative amendments and/or the administrative decisions and/or the arrangements of

the Electricity Authority and/or the aforesaid licenses given by the State of Israel, that will correspond to the (insofar as these are needed according to the State of Israel position), or that the collective agreement IEC and the employeesrepresentatives will not be in force, then all IEC’s undertakings, according to the IEC’s undertaking document, will not be in force and the State of Israel will not be able to file claims and/or complain against IEC with respect to thoseundertakings. On June 3, 2018, the required Government Decision was received, on July 19, 2018 the Knesset approved the Amendment to the Law, and on May 17, 2018, the Principles of the policy of the Minister and the ElectricityAuthority’s Regulation as aforesaid were published. In addition, on November 4, 2018, the Collective Agreement came into effect after all the contingent conditions detailed therein were fulfilled. For the purpose of implementing the fullstructural change outline, it will be required the approval of the regulatory agencies, decisions and regulations of the Electricity Authority and granting licenses which as of date of approval of the Financial statements have not yet beenreceived and there is no certainty regarding the date of determining the agreements or the granting of such licenses and their final terms. As of the date of the publication of the Financial statements, IEC is unable to reliable estimatethe exact implications of the additional regulations and approvals that have not yet been formulated or received on its financial position and results.

2. Part of the area at the Rutenberg power station (that was designated for Project D) will be transferred pursuant to the arrangement agreements as defined in Note 1f in the FY2019 Financial Statements’, by December 3, 2019. Thearea has not yet been transferred, and it is noted that the Ministry of Energy, and Electricity Authority, and the Israel Land Authority intend to make decisions concerning the manner of the area’s transfer, while noting its future intendeduse, clearing various infrastructures from the site, and manner of financing the vacation costs, which the Company is entitled to receive. Following this, an appropriate agreement will be signed between the Company and the State, forthe purpose of transferring the area in accordance with the resolutions made, as aforesaid.

3. The Company is working in coordination with relevant government entities to complete all the activities required to separate and remove the system management activity to the responsibility of the System Management Company. At thesame time, in discussions held with the relevant parties and regulators, it was decided to postpone the separation implementation date and therefore, on December 3, 2019, the Electricity Sector Order (Postponement of SystemManagement Licensing Date) - 2019 was published, according to which the date for issuing the system management licensing to the System Management Company Ltd. was postponed to no later than June 3, 2020 (instead ofDecember 3, 2019, as decided originally). The Company shall be prepared in accordance with the implementation of the said separation at the date set. However, due to the complexity of the process and the need for the activities anddecisions of many Government Agencies, together with the management of the System Management Company, there may be further postponements of this date, although they have not yet been decided upon.

4. On March 31, 2020, an Environmental Impact Report was submitted to the Ministry of Environmental Protection and on April 1, 2020, the program documents were submitted to the Planning Administration and to the Ministry of Energy.

Investor Relations

Israeli Electricity Sector

18

The Israeli Electricity Sector

Investor Relations

Nearly 100% of the Switching

Stations and the Ultra-High & High

Voltage lines are owned & operated

by IEC

As of 12/31/2019,

67% of total generating

capacity

Expected to reach

54.7% by the end of

2020

Generation, Transmission and Distribution

IEC’s Main Regulators IEC’s Fuel Suppliers

The Electricity Authority (EA)

Government Companies Authority (GCA)

Antitrust Authority

Israel Securities Authority

Ministry of Energy

Ministry of Finance

Ministry of Interior

Ministry of Environmental Protection (MoEP)

The Concentration Committee

TASE

Natural Gas - Currently from the Tamar & Leviathan Reservoirs.

More reservoirs in the Israeli waters have been discovered

Liquid Natural Gas - Imported from international suppliers

Coal - Imported from international suppliers

IPPs

Source : IEC’s Financial Statements for 2019FY

IEC reached 2.9 million customers

(as of December 31, 2019)

TransmissionGeneration Distribution

19

As of 12/31/2019,

33% of total generating

capacity

Expected to reach

45.3% by the end of

2020

158 of 204 Substations are owned &

operated by IEC

(as of December 31, 2019)

The Electricity Tariff

In accordance with the Electricity Sector Law, the electricity tariff is set by the Electricity Authority (EA) and reformulated from time to time. The outline of the

formula is as follows:

Actual costs are examined every 2 weeks by

the EA (at the time of CPI and fuel prices

changes)

Discrepancies between forecasted costs and

actual cost are reconciled on the earlier of:

A difference of 3.5%, provided that 3

months

have passed since the last update

A difference of 5.5%

The Annual Update

Once a year, The current year's

costs are updated based on

forecasts as well as on previous

years' reckoning - the gap

between the previous year's

forecast components and the

actual costs of the previous year

On November 23, 2019, the EA issued a hearing regarding the

annual 2020 tariff update. According the EA’s decision, the average

household electricity tariff will fall by approximately 4%, as of 1/1/20,

mainly due to:

Decline in the coal prices

Decline of NG price following future entry of Leviathan reservoir

The sale of Alon Tavor Power Station

Egyptian Gas Agreement

The above was partially offset by:

Increased renewable energy consumption

Past cost refunds

Offsetting the excise tax reduction on coal last year

Investor Relations

Recognized costs per segment (e.g. fuel costs, operational

costs, depreciation costs and financial costs). Some of the

recognized costs are also attributed to funding the reform costs+ Fair rate of return on equity

per segment

Electricity Tariff

Ongoing Update Annual Update Tariff update as of November 23, 2019

Tariff Structure

Source: IEC’s Financial Statements for 2019FY, Electricity Authority's decision No. 7 (57207) from meeting no. 572 on November 23, 2019 - Annual Update 2020 electricity tariff to IEC’s consumers

20

The Electricity Tariff - Cont’d

Source:

1) World Bank Commodity Price Data (Pink Sheet), March 2020; Calculated as average price of Australia and South Africa coal. Russia is not included in World Bank information, even though it is a significant source of

coal for IEC. The general and Residential Tariffs do not include VAT.

2) The Electricity Authority - Report on State of Electricity Economy Year of 2018.

Tariff vs. Coal Price Development(1)

Investor Relations

0.40

0.45

0.50

0.55

0.60

40

60

80

100

120

140

($/t)

Coal Average General Tariff Residential Tariff

NIS

21

Structure of the Residential Tariff as Divided into Segments(2)

Production and fuel

67%

Transmission 5%

Distribution17%

Electricity Grid Administrator + returns to IEC customers 12%

Financial Overview

22

1.7 1.8 1.3 2.9

0.5 0.7 0.9

1.1 1.3 1.3 1.5

1.8 3.49

3.88 3.73

5.94

0

1

2

3

4

5

6

7

2016 2017 2018 2019

NISbn

Generation Transmission System Manager Distribution Supply

$0.9 $1.7

Financial Highlights

Revenues EBITDA(1)

Historical Investments by segments (CAPEX) Net Financial Debt/EBITDA(2)

7.7 8.1 8.0 8.1

0

3

6

9

12

2016 2017 2018 2019

NISbn $2.0 $2.3

22.7 23.4 23.6 24.7

0

10

20

30

2016 2017 2018 2019

NISbn $6.7 $6.3 $7.1

Source: IEC’s Financial Statements for 2016FY-2019FY1) IEC defines “EBITDA” as profit (loss) before income taxes, financial expenses, depreciation and amortization.2) IEC defines “net financial debt” as credit from banks and other credit providers, total long-term debt (including debentures, long-term liabilities to banks, including hedge transactions, lease liabilities, debentures to the State of

Israel and liabilities to the State of Israel), less cash and cash equivalents, short-term investments and other receivables (including receivables for forward contracts and swap transactions, MTM and long-term deposits andregulatory deferral account assets with respect to linkage differentials).

Denotes USD figures at USD/NIS exchange rate of 3.85, 3.47, 3.75 & 3.46 for the end of period of 2016FY, 2017FY, 2018FY & 2019FY, respectively

5.1x 5.2x 4.8x 4.4x

0.2x

5.3x 5.2x 4.8x4.4x

0

2

4

6

8

2016 2017 2018 2019State guaranteed Net Financial Debt / EBITDA without State guarantees

Investor Relations

$2.3 $2.1

$1.1 $1.0

23

$5.9

Historical Cash Flow

Source: IEC’s Financial Statements for 2016FY-2019FY

1) Investment activities excluding repayment (or deposits) of bank deposits. Total cash from investment activities figures as reported for 2016FY, 2017FY, 2018FY & 2019FY are NIS (2.8) bn, NIS (2.2) bn, NIS (3.1) bn

and NIS (1.3) bn, respectively.

2) IEC defines “liquidity” as cash and cash equivalents, short term investments and available credit facilities.

Denotes USD figures at USD/NIS exchange rate of 3.85, 3.47, 3.75 & 3.46 for the end of period of 2016FY, 2017FY, 2018FY & 2019FY, respectively

6.55.8 5.8

6.5

(2.2) (2.7) (3.1)

(1.3)

(2.7)(3.7) (3.3)

(4.8)

5.76.3

5.6 5.6

(12)

(8)

(4)

0

4

8

12

2016 2017 2018 2019

NIS bn

Operating activities Investment activities, net Financing activities Total Liquidity

$1.7

($1.1)

$1.7

($0.7)

$1.5

($0.8)($1.4)

($0.4)

($0.9)

$1.9

Generating sufficient cash flow from operations enables IEC to decrease debt

Investor Relations

(1)

($0.6) ($0.8)

24

(2)

51.8

50.0

46.9

44.6

43.2

42.1

38.3

36.1

32

37

42

47

52

2012 2013 2014 2015 2016 2017 2018 2019

NIS, bn

$11.3

$12.1

$11.6

$12.0

$14.4

$10.2

(2)

$10.4

Net Financial Debt (1) Over Time

Source: IEC’s Financial Statements for 2012FY-2019FY

1) IEC defines “net financial debt” as credit from banks and other credit providers, total long-term debt (including debentures, long-term liabilities to banks, including hedge transactions, lease liabilities, debentures to the

State of Israel and liabilities to the State of Israel), less cash and cash equivalents, short-term investments and other receivables (including receivables for forward contracts and swap transactions, MTM and long-term

deposits and regulatory deferral account assets with respect to linkage differentials).

2) As from 01/01/2019, “net financial debt” also includes lease liabilities.

Denotes USD figures at USD/NIS exchange rate of 3.85, 3.47, 3.75 & 3.46 for the end of period of 2016FY, 2017FY, 2018FY & 2019FY, respectively.

Investor Relations

Prepared According to

Government Companies

Regulations

IFRS

25

$13.9

Fixed93.8%

Floating6.2%

Consolidated Debt Breakdownas of December 31, 2019

Note: The “fifth year and thereafter” blue bar is off the chart.

Source:1) IEC immediate report on the Corporate Liabilities Status.2) IEC Financial data and Bloomberg.3) IEC Financial data, IEC immediate report on the Corporate Liabilities.

Annual Debt Maturities (Principal in NIS billions)(1)

1.56

0.09 0.09 0.09 0.22

3.48

2.522.03

3.63

21.41

5.04

2.612.12

3.72

0

2

4

6

First year Second year Third year Forth year Fifth year and thereafter

(NIS bn)

Loans from local and foreign banks Local bonds, private bonds and non-bank loans

Debt by Currency(3) Type of Instrument(3) Debt by linkage(3)

NIS52.1%

Euro2.0%

USD40.9%

Other5.0%

NIS CPI linked41.1%

NIS non-linked11.1%

Foreign currency47.9%

21.63

Interest Rate Exposure(3)

Investor Relations

Local public bonds29.1%

Private bonds and non-bank

loans 65.1%

Local bank loans 2.2%

Foreign bank loans

3.6%

26

Coupon Outstanding

Amount ($mn) Maturity

9.375%500$Jan-20

(paid)

6.875%650$Jun-23

5.000%1,250$Nov-24

7.875%125$Dec-26

7.750%300$Dec-27

4.250%$1,000Aug-28

8.940%40$Mar-30

8.100%125$Dec-96

Profile of International IEC $ Bonds(2)

Income Statement(NIS millions)

Source: IEC’s Financial Statements for 2019FY

Investor Relations 27

(NIS millions)

12/31/2017 31/12/2018 31/12/2019

Revenues 23,370 23,584 24,660

Cost of operating the electricity system

Fuels 8,414 8,540 8,302

Purchases of electricity 3,487 3,591 4,193

Operation of the generation system 4,378 4,375 4,352

Operation of the transmission and distribution system and others 3,056 3,018 2,524

Total costs 19,335 19,524 19,371

Profit from operating the electricity system 4,035 4,060 5,289

Other expenses (revenues), net (54) 23 (2,477)

Sales and marketing expenses 999 935 869

Administrative and general expenses 619 734 638

Income from liabilities to pensioners (49) (100) (39)

Reform agreement's results - 4,249 761

Profit (loss) from current operations 2,520 (1,781) 5,537

Assets arrangement's results, net - (2,627) -

Financial expenses, net 1,530 1,792 1,368

Income (loss) before income taxes 990 (946) 4,169

Expenses (income) from taxes on income 199 (597) 917

Income (loss) after income taxes 791 (349) 3,252

Company's share of the loss of asociated companies (18) (5) (15)

Income (loss) before regulatory deferral accounts 773 (354) 3,237

Movement in regulatory deferral accounts balances, net of tax 3,967 4,424 (1,421)

Profit for the year 4,740 4,070 1,816

Profit (loss) with respect to cash flow hedging, net of tax (82) 123 (148)

Remeasurement of a defined benefit plan, net of tax (1,415) (143) (1,939)

Movement in balances of regulatory deferral accounts balances, net of tax - 78

Other Comprehensive loss for the year, net of tax (1,497) (20) (2,009)

Comprehensive income (loss) for the year 3,243 4,050 (193)

For the years:

Balance Sheet(NIS millions)

Source: IEC’s Financial Statements for 2019FY

Investor Relations 28

(NIS millions)

Assets 31/12/2018 31/12/2019 Liabilities and Equity 31/12/2018 31/12/2019

Current assets Current liabilities

Cash and cash equivalents 2,806 3,190 Credit from banks and other credit providers 2,626 6,110

Short term investments 477 427 Trade payables 2,256 2,127

Trade receivables for sales of electricity 4,364 4,384 Other current liabilities 1,432 1,157

Other current assets 526 702 Customer advances, net of work in progress 437 440

Inventory - fuel 1,241 671 Provisions 681 658

Inventory - stores 142 151 Liabillities of disposal groups classified as held for sale 307 340

Assets of disposal groups classified as held for sale 947 1,903 Total current liabilities 7,739 10,832

Total current assets 10,503 11,428

Non-current liabilities

Debentures 33,673 28,469

Non-current assets Liabilities to banks 4,668 3,887

Inventory - fuel 1,463 1,753 Liabilities with respect to other benefits after employment

termination

5,097 6,354

Long-term receivables 1,228 2,315 Deferred taxes, net 5,769 6,003

Investment in associates 34 19 Liability to the State of Israel 1,788 1,783

Assets with respect to benefits after employment

termination

5,968 4,825Lease liabilities

- 845

Fixed assets, net 57,667 57,620 Other liabilities 635 588

Intangible assets, net 1,200 1,241 Total non current liabilities 51,630 47,929

Total non-current assets 67,560 67,773 Equity 24,843 24,650

Debit balance of regulatory deferral accounts 7,873 8,338

Credit balances of regulatory deferral accounts and

deferred taxes with respect to regulatory deferral

accounts 1,724 4,128

Total assets and debit balance of regulatory

deferral accounts85,936 87,539

Total liabilities, equity and credit balance of

regulatory deferral accounts85,936 87,539

Thank youFor questions or additional information, please contact us:

29

Israel Electric Corp. Investor Relations: ir@iec.co.il

Appendices

30

IEC has taken significant steps to reduce emissions

Nitrogen Oxides NOX Sulfur Dioxide SO2

Carbon Dioxide CO2 Particulate Matter PM

1.80

0.88

0.0

0.5

1.0

1.5

2.0

2012 2018

Gra

m /

KW

h p

rod

uced

Source: IEC Environmental report for the years 2017 – 2018 and IEC Financial Statements for 2019FY1) The emissions reduction cost does not include interest during the construction period

Investor Relations 31

-51%1.68

0.63

0.0

0.5

1.0

1.5

2.0

2012 2018G

ram

/ K

Wh

pro

du

ced -63%

754

605

0

200

400

600

800

2012 2018

Gra

m /

KW

h p

rod

uced

0.056

0.032

0.00

0.03

0.06

2012 2018

Gra

m /

KW

h p

rod

uced

-20% -43%

The State of Israel signed the Paris Agreement in

2016 and has significantly limited the usage of coal

for electricity generation

An emissions reduction project in the larger coal

units was executed at a significant cost of NIS 7.1

billion (1)

Older coal units will be mothballed

Newer and larger coal units are expected to be

converted to Natural gas

Government target of Israel is to be “coal free” by

2030. Minister of Energy expect target to move

forward to 2025

IEC is financially protected from change in fuel mix

by the electricity tariff

Implementing Government policies

The Reform in the Generation Segment(Selected generation sites)

Investor Relations 32

Steam - dual purpose: coal and fuel oil

Steam - dual purpose: natural gas and fuel / diesel oil

Gas turbine (internal combustion)

Combined cycle (internal combustion and steam)

A power station planned to

be sold during the reform

A power station which was

sold during the reform

Hagit: will be sold units with a

capacity of 670 megawatts

Source: IEC ‘s Financial Statements for 2019FYNote:1. In accordance with the IEC’s undertakings adopted by the IEC's BOD on May 10, 2018, to the extent that the Government resolutions and/or the legislative amendments and/or the administrative decisions and/or the arrangements of

the Electricity Authority and/or the aforesaid licenses given by the State of Israel, that will correspond to the (insofar as these are needed according to the State of Israel position), or that the collective agreement IEC and the employeesrepresentatives will not be in force, then all IEC’s undertakings, according to the IEC’s undertaking document, will not be in force and the State of Israel will not be able to file claims and/or complain against IEC with respect to thoseundertakings. On June 3, 2018, the required Government Decision was received, on July 19, 2018 the Knesset approved the Amendment to the Law, and on May 17, 2018, the Principles of the policy of the Minister and the ElectricityAuthority’s Regulation as aforesaid were published. In addition, on November 4, 2018, the Collective Agreement came into effect after all the contingent conditions detailed therein were fulfilled. For the purpose of implementing the fullstructural change outline, it will be required the approval of the regulatory agencies, decisions and regulations of the Electricity Authority and granting licenses which as of date of approval of the Financial statements have not yet beenreceived and there is no certainty regarding the date of determining the agreements or the granting of such licenses and their final terms. As of the date of the publication of the Financial statements, IEC is unable to reliable estimatethe exact implications of the additional regulations and approvals that have not yet been formulated or received on its financial position and results.

Environment, sustainability and corporate governance (ESG) (1)

Investor Relations

1) Source: IEC's Corporate Sustainability Report for 2018, Maala's rating for IEC for 2019.

2) Maala is the non-profit CSR standards-setting organization in Israel who serves the needs of some 110 members, comprised of Israel’s large and mid-size companies, committed to

excellence in corporate citizenship. The criteria in the rankings are determined by an independent public committee composed of content experts, academics, heads of social

environmental organizations and representatives of the business sector.

33

IEC earned the highest ranking in the Maala(2) 2019 Index: Platinum+ (for the fifth consecutive year)

Ethical Aspects

of Business

Conduct

Responsible

Supply Chain

Implementation of Corporate

Governance Code

Effectiveness of the work of

the Board of Directors policy

Prevention of conflicts of

interests, corruption and

embezzlement

A published code of ethics

adapted to IEC’s fields of

operations

Reference to ethical

aspects with stakeholders

Internal communications

on ethics issues

Organizational culture that

respects employee rights

Promotion of health and

ensuring worker safety

Retention and development

of human resources

Work-life balance and

fostering an open culture

Engagements mainly through public tenders or

other competitive procedures. Setting fair rules

and providing equal opportunity to suppliers

Improving dialogue and deepening cooperation

with Israeli industrial enterprises

Securing subcontracted workers' payment terms

and conditions

Diversity of suppliers

Diversified and

humanitarian employment

Diversified employees in

managerial positions

Women in managerial roles

Accessibility for people with

disabilities

Social activity policy

Promotion of regular and

one-off volunteering by

workers and pensioners

in the community

Environmental violations

screening

Environmental policy &

management system

Measurement and setting

objectives: air, energy, waste,

water and sewage

Employee health,

Wellbeing and

working relations

EnvironmentEmployee

Volunteering

Diversity &

Inclusion

Corporate

Governance

Sources of Natural Gas in Israeli Waters

Introduction of LNG by

a regasification ship

34

As of the Financial

Statements'

publication date,

Tamar & Leviathan

reservoirs are the

only active sites

Tariff Comparison to European Countries

Source:Eurostat, Electricity prices for domestic consumers – bi-annual data, as of 02/24/2020. Israel rate is based on the last tariff update that does not include VAT (01/01/2020) and converted EUR/NIS exchange rate of 3.72 as of 02/24/2020.1) Average national price in Euro per kWh without taxes for medium size household consumers (annual consumption between 2,500 and 5,000 kWh).

Average Price per KWh(1)

Investor Relations

20.319.5

18.9

17.6

14.7 14.5 14.3 14.313.6 13.6 13.2 13.0

12.1 11.7 11.4 11.4 11.4 11.3 11.0 10.810.3 9.8 9.8 9.6 9.5

8.8 8.88.3

6.8

0

5

10

15

20

25

Irela

nd

Be

lgiu

m

Sp

ain

Cyp

rus

Germ

any

Unite

d K

ingdom

Cze

chia

Italy

Norw

ay

Neth

erla

nds

Au

stria

Sw

eden

Isra

el (J

anuary

2020)

Fin

lan

d

Gre

ece

Fra

nce

Latv

ia

Slo

venia

Po

rtuga

l

Denm

ark

Cro

atia

Rom

ania

Esto

nia

Slo

vakia

Lith

uania

Po

lan

d

Hungary

Bu

lga

ria

Tu

rkey

(€ cents equivalent)

35