Consolidated Financial Statements
As of December 31, 2022
ICL Group Ltd
Consolidated Financial Statements as of December 31, 2022
Contents
The accompanying notes are an integral part of these consolidated financial statements.
Net income
Foreign currency translation differences
ICL Group Ltd. (hereinafter – the Company), is a company incorporated and domiciled in Israel. The Company's shares are traded on both the Tel-Aviv Stock Exchange (TASE) and the New York Stock Exchange (NYSE) under the ticker: ICL. The address of the Company’s registered headquarters is 23 Aranha St., Tel Aviv, Israel. The Company is a subsidiary of Israel Corporation Ltd., a public company traded on the TASE under the ticker: ILCO:TA. The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to safeguard the State of Israel vital interests. For additional information, see Note 19 - Equity.
B.
Note 2 - Basis of Preparation of the Financial Statements
Non‑monetary items denominated in foreign currency measured at historical cost are translated using the exchange rate at the date of the transaction.
The value of index-linked financial assets and liabilities, which are not measured at fair value, is re‑measured every period in accordance with the actual increase/ decrease in the CPI.
Concessions and mining rights – over the remaining duration of the rights granted
Note 3 - Significant Accounting Policies (cont'd)
Growing Solutions – The Growing Solutions segment aims to achieve global leadership in plant nutrition markets by enhancing its positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, targeting high-growth markets such as Brazil, India and China, by leveraging its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash, phosphate and polysulphate and chemistry know-how, while integrating and generating synergies from acquired businesses.
ICL is continuously working to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF), organic fertilizers, water soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.
The Growing Solutions segment develops, manufactures, markets and sells its products globally, mainly in South America, Europe, Asia, North America and Israel. It produces water soluble specialty fertilizers in Belgium, Israel and Spain, organic, ornamental horticulture, turf and landscaping products in the UK and the Netherlands, liquid fertilizers in Israel, Spain and China, straights soluble fertilizers in China and Israel, controlled-release fertilizers in the Netherlands, Brazil and the United States, as well as secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants in Brazil.
Note 5 - Operating Segments (cont'd)
Capital expenditures
Capital expenditures as part of business combination
Netherlands
As part of the Company's strategy to divest low synergy businesses and non-core business activities, in March 2022, the Company completed the sale of its 50% share in its joint venture, Novetide Ltd., for a consideration of $33 million, of which $8 million represents an estimate for the fair value of a contingent consideration. As a result, the Company recognized a capital gain of $22 million.
Further to the acquisition of Nobian’s holding in Sal Vesta (51%) in 2021, which was part of the partnership termination agreement between the Company and Nobian, on February 3, 2023, the Company signed an agreement for the sale of its 100% shares in Sal Vesta to Salins Group for a consideration of $13 million. As part of the transaction, the Company engaged in a long-term take-or-pay supply agreement for all the vacuum salt produced at ICL Iberia. The closing date is expected in the first quarter of 2023. No significant impact is expected on the Company’s financial statements.
(2)
See Note 8B(1).
A. Composition
A. Composition (cont'd)
Additions in respect of business combinations
Exit from consolidation
Reversal of impairment
Adjustment to PPA (1)
(1) In July 2022, the Company completed the ADS’s Purchase Price Allocation (PPA).
Additions
Goodwill and intangible assets having an indefinite lifespan are not amortized on a systematic basis but, rather, are examined at least once a year for impairment.
The goodwill is not monitored for internal reporting purposes and, accordingly, it is allocated to the Company’s operating segments and not to the cash-generating units, the level of which is lower than the operating segment, as long as the acquired unit is presented in the Company's reportable segments. The examination of impairment of the carrying amount of the goodwill is made accordingly.
For impairment testing purpose, the trademarks with indefinite useful life were allocated to the cash-generating units, which represent the lowest level within the Company.
Growing Solutions
The Company conducted its annual impairment test of goodwill and did not identify any impairment. The recoverable amount of the operating segments was determined based on their value in use, which is based on an internal valuation of the discounted future cash flows generated from the continuing operations of the operating segments.
The future cash flow of each operating segment was based on the segment approved five-year plan, which includes segment estimations for revenues, operating income and other factors, such as working capital and capital expenditures. The segments' projections were based, among other things, on the assumed sales volume growth rates according to long-term expectations, internal selling prices and raw materials prices based on external data sources, when applicable and relevant.
Additions in respect of business combination
In March 2022, the Company repaid, as scheduled, NIS 392 million (approx. $123 million) of Series E Bond. In December 2022, the Company repaid NIS 15 million (approx. $4 million) of Series G Bond, as scheduled.
In April 2022, the Company prepaid its MUFG credit facility loan of BRL180 million and terminated its BRL 230 million (about $48 million) credit facility in Brazil.
As of July 5, 2022, the S&P credit rating agency reaffirmed the Company’s international credit rating and senior unsecured rating of 'BBB-'. In addition, the S&P Maalot credit rating agency reaffirmed the Company’s credit rating of 'ilAA' with a stable rating outlook.
In June 2022, Fitch Ratings reaffirmed the Company’s long-term issuer default rating and senior unsecured rating at 'BBB-'. The outlook on the long-term issuer default rating is stable.
The loan includes three sustainability performance targets: (1) an annual 4% to 5% reduction in direct and indirect Scope 1 and Scope 2 CO2 emissions resulting from ICL global operations. (2) Through 2025, the Company is committed to adding a significant number of Tfs (Together for Sustainability) qualified vendors each year who meet criteria of management, environment, health and safety, labor and human rights, ethics, and governance and (3) for female to hold at least 25% of senior management roles, by the end of 2024. As of December 31, 2022, the Company is in compliance with the relevant sustainability performance targets.
In July 2022, the long-term credit facility decreased by $100 million following an agreement on early termination with one of the banks, a few months prior to the official termination date. The updated total credit facility is $1,100 million. most banks signed on to continue the credit facility agreement, and from March 2023 to March 2025, the total credit facility will amount to $1,000 million.
The examination of compliance with the financial covenants is based on the Company’s consolidated financial statements. As of December 31, 2022, the Company complies with all of its financial covenants.
Income received in advance
41
33
Under the “Ireland” track, the Company paid a reduced tax rate of 11.5% as of 2008 on parts of its income. The benefit deriving from the "Ireland" track ended in 2017, excluding a single entity in Israel for which the entitlement ended in 2021.
The part of taxable income entitled to benefits at reduced tax rates is calculated based on the ratio of the “Beneficiary Enterprise” turnover to a company’s total turnover. The turnover attributed to the “Beneficiary Enterprise” is generally calculated according to the increase in the turnover compared to a “base” turnover, which is the average turnover in the three years prior to the election year of the “Beneficiary Enterprise”.
A company having a “Beneficiary Enterprise” that distributes a dividend out of exempt income, will be subject to corporate tax in the year in which the dividend was distributed on the amount distributed (including corporate tax applicable amount due to the distribution) at the tax rate applicable under the Encouragement Law in the year in which the income was generated, had it not been exempt from tax.
Taxation of Profits Natural Resources (cont'd)
Amendment number 3 to the Law
In November 2021, Amendment number 3 to the Law was approved by the Israeli Kneset, according to which the arrangement of tax collection will be altered so that companies will be required to pay 75% of the disputed tax, after objecting to a tax assessment by appeal to the district court, and prior to a Court ruling. Prior to this amendment, the full payment of the Surplus Profit Levy in dispute was not required until a Court ruling is rendered.
Assessment agreement - Surplus Profit Levy
In March 2021, the ITA issued an assessment for the years 2016-2017, which includes a demand for payment of Surplus Profit Levy, in the amount of approximately $77 million, plus interest and linkage. The amount represents, in essence, the different interpretation regarding the measurement of operational property, plant and equipment.
In June 2022, a settlement agreement was signed with the Israeli Tax Authority, which entered into force on July 26, 2022. The settlement agreement provides final assessments for the tax years 2016-2020, as well as outlines understandings for the calculation of the surplus profit levy for the years from 2021 onwards.
In the second quarter of 2022, the Company recorded tax expenses for prior years in the amount of $188 million, including interest and linkage and net of corporate income tax, of which $124 million was in connection with the understandings reached regarding the measurement of fixed assets in the said final assessments (for 2016-2020).
Note 15 - Taxes on Income (cont'd)
Taxation of companies in Israel (cont'd)
As of December 31, 2022, the balances of the carryforward tax losses of subsidiaries for which deferred taxes were recorded, is about $384 million (December 31, 2021 – about $286 million).
As of December 31, 2022, the balances of the carryforward tax losses to future years of subsidiaries for which deferred taxes were not recorded, is about $109 million (December 31, 2021 – about $338 million).
As of December 31, 2022, the capital losses for tax purposes available for carryforward to future years for which deferred taxes were not recorded is about $142 million (December 31, 2021 – about $161 million).
* For 2022, included $275 million relating to Surplus Profit Levy, of which $188 in respect of the settlement agreement as mentioned above.
Actuarial profits (losses) deriving from changes in financial assumptions
The assumptions regarding the future mortality rates are based on published statistics and accepted mortality tables.
Payments during the year
(17)
(3)
(1)
(21)
(10)
A.
Commitments (cont'd)
Dead Sea Works Ltd. (hereinafter – DSW)
DSW (cont'd)
Concessions (cont'd)
DSW granted a sub‑concession to Dead Sea Bromine Ltd. to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with the DSW concession. The royalties in respect of the products manufactured by Dead Sea Bromine are received by DSW, which then pays them to the State of Israel. Royalties are also paid by Dead Sea Magnesium on the basis of carnallite used for production of magnesium.
Rotem Amfert Israel (hereinafter – “Rotem Israel”)
Rotem Israel has been mining phosphates in the Negev in Israel for more than sixty years. Mining is conducted in accordance with phosphate mining concessions, which are granted as required by the Ministry of Energy under the Mines Ordinance, by the Supervisor of Mines, as well as mining authorizations issued by the Israel Lands Authority (hereinafter – the Authority). The concessions relate to quarries (phosphate rock), whereas the authorizations cover the use of land as active mining areas.
Mining Concessions
Lease Agreements
Rotem Israel has two lease agreements in effect until 2024 and 2041 as well as an additional lease agreement for the Oron plant, which expired in 2017. As of the reporting date, the Company has an agreement in principle, with the Israel Land Authority - Southern Region, regarding the receipt of a license agreement for Oron plant until the end of 2025. The license agreement is subject to the approval of the Israel Land Authority management.
Rotem Israel (cont'd)
Planning and Building
In 2018 and 2019, petitions were submitted to the Israeli Supreme Court of Justice by the municipality of Arad and by residents of Bedouin community in the "Arad Valley" against the National Council, the Government of Israel and Rotem Israel, to revoke the approval of NOP 14B and to order the National Council to discuss the NOP directives, while giving proper weight to the health risk.
•
Emissions permit under the Israeli Clean Air Act (hereinafter - the Law) - In 2021, the Company's emission permit was renewed until September 2023. The permit reflects an updated outline of requirements by the Israeli Ministry of Environmental Protection (MoEP). Postponement of the execution of a limited number of projects was granted within the framework of an administrative order under Section 45 of the Law. The Company is experiencing difficulties meeting the execution schedules of a limited number of projects, and, accordingly, continues to work with the MoEP to find satisfactory solutions, while considering the uncertainty surrounding Rotem Israel's activity as far as the implementation of long-term projects is concerned.
Phosphogypsum storage - In 2021, a new Urban Building Plan was approved, the main objectives of which are to regulate areas for phosphogypsum storage reservoirs. Following the ambiguity of the guidelines regarding the calculation of the building permit fees, in April 2022, Israel’s Planning Administration stated its position that the Company should pay insignificant fees. Following Tamar Regional Council’s rejection of the position, in January 2023, the Company reached principal understandings with the Regional Council regarding the fee amounts, subject to a signed agreement. No material impact on the Company's financial results is expected.
Finding economically feasible alternatives to continue phosphate operations in Rotem Israel – According to the Company's assessment, the estimated useful life of Rotem's phosphate rock reserves in its existing mining areas is limited to a few years. The Company is working to promote economic alternatives for future phosphate operations at Rotem Israel and to obtain required permits and approvals, including by conducting pilots to adapt various potential types of phosphate rock for the Company’s products as part of an effort to utilize and increase existing phosphate reserves.
The Company estimates that it is more likely than not that it will be able to continue its phosphate operations at Rotem Israel, by obtaining the approvals and permits required to ensure its future phosphate operations within a time frame that is not expected to materially impact the Company's results. Nevertheless, there is no certainty as to the success of receiving such approvals and permits, nor is there certainty regarding future phosphate rock resources and/or by what date they will be received. Failure to obtain them, or a significant delay in obtaining them, can lead to a material impact on the Company's business, financial position and results of operations.
ICL Iberia – a subsidiary in Spain
ICL Iberia was granted mining rights based on legislation of Spain’s Government from 1973 and the regulations accompanying this legislation. Pursuant to the special mining regulations, ICL Iberia received individual licenses for each of the 126 different sites that are relevant to current and future mining activities. Some of the licenses are valid until 2037 and the remainder are effective until 2067.
United Kingdom
In December 2021, the North York Moors Park Authority Planning Committee approved ICL Boulby's application for the continuation of polyhalite and salt production for an additional 25 years commencing 2023 (until 2048). On May 27, 2022, an official Notice was served under Regulation 63 of the Conservation of Habitats and Species Regulations 2017, which concluded that the development would not have any Likely Significant Effects on the North York Moors Special Area of Conservation and Special Protection Area.
With respect to the mining royalties, ICL Boulby pays royalties of 2.3% which in 2022 amounted to $4.2 million.
YPH - China
YPH, ICL's subsidiary in China, which is equally owned with Yunnan Phosphate Chemicals Group Corporation Ltd. ("YYTH"), holds two phosphate mining licenses that were issued in 2015 by the Division of Land and Resources of the Yunnan district in China: (1) a mining license for the Haikou Mine (hereinafter – Haikou) which the Company operates and which is valid until January 2043; and (2) a mining license for the Baitacun Mine, which is valid until April 2023. With respect to Baitacun Mine, in 2022, the Company completed a risk survey to assess the feasibility and profitability of the mining site, and it is currently working to renew its license for an additional ten years.
Grant of Mining Rights to Lindu
YPC has undertaken that YPH’s mining right in the Haikou mine will not be adversely affected by the above-mentioned arrangements. It was decided that YPH should conduct further communications with YPC and Lindu Company for the purpose of protecting its legal rights and to urge the parties to reach a fair, just, and reasonable solution to this issue as soon as possible.
Natural Resources Royalties
With respect to the mining rights, in accordance with China "Natural Resources Tax Law", YPH pays royalties of 8% on the selling price based on the market price of the rock prior to its processing. The total royalties for 2022 are about $1.5 million.
Ecology
In conjunction with the aforesaid application, the NPA filed a motion to strike the three applications mentioned above and to prefer the approval application on its behalf, as it argues that it is the most suitable to serve as the representative plaintiff in a class action in this regard, as its application is detailed and well-established as well as the special status conferred upon it under the Class Actions Law, which allows for specific benefits.
Ecology (cont'd)
In November 2018, the Company was notified that all four applicants had agreed to join efforts and manage the class actions in a joint and coordinated manner.
In December 2022, following a mediation process between Rotem Israel and the Israeli Nature and Parks Authority, as well as all other applicants in the aforesaid proceedings, a settlement agreement was signed between the parties. In January 2023, the settlement agreement was submitted to the Israeli court for approval that will conclude the proceedings.
According to the settlement agreement, the total amount of compensation for, among other things, the restoration of the Ashalim Stream and its surroundings, is NIS 115 million (approximately $33.5 million), including past restoration expenses, legal expenses and other expenses.
In May 2018, the Company was served with a motion for discovery and pursual of documents (hereinafter – the Motion), filed with the Tel Aviv District Court, by a shareholder of the Company (hereinafter – the Movant), as a preliminary proceeding in preparation for the possible filing of an application for certification of a multiple derivative action against officers of the Company and Rotem Israel who, according to the Movant, caused the alleged damages incurred and to be incurred by the Company as a result of the Ashalim incident. In 2018, the parties reached an arrangement, according to which, the legal proceedings will be delayed until the relevant investigation's materials are provided to the Company by the investigating authority. As of the reporting date, such investigative materials have not yet been received. Considering the proceedings are in an early stage and even suspended, there is a difficulty in estimating their outcome.
Considering the preliminary stage of the event, it is a difficult to estimate its outcome. Nevertheless, in the Company’s estimation, no material impact on the Company’s financial statements is expected.
In 2017, the Israeli Water Law was amended, according to which saline water of the kind produced for Dead Sea plants by the Company's own water drilling is charged with water fees. In light of the Company’s objection to the charges relating to water drilling within the concession area, in October 2021, the Water Authority informed the Company that water fees will not be charged for water production within the concession area. This decision was based on the opinion of the Ministry of Justice, according to which the royalties arrangement established in the Dead Sea Concession Law, 5771-1961, is the sole arrangement for collecting payment for the right to extract water in the concession area, and, therefore, it is not legally possible to impose additional charges for water fees in addition to the royalties (hereinafter – the Opinion). In September 2022, the Company was presented with two petitions filed in Israel’s Supreme Court, one by Adam Teva V’Din, and the second by Lobby 99 Ltd., against the Water Authority, Israel’s Attorney General, the Ministry of Justice, Mekorot Water Company Ltd. and the Company.
As part of the petitions, the petitioners requested that the Supreme Court rule that the said opinion is incorrect and, therefore, the Company should be obliged to pay water fees for water extracted from wells in the concession area in addition to the payment of royalties beginning from the date of the amendment to the Water Law enacted in 2018. Accordingly, the petitioners requested that the Supreme Court order the Water Authority to collect water fees from the Company for the period between 2018-2020, which according to one of the petitioners, allegedly amounts to $24 million. In October 2022, a decision was made to hold a consolidated hearing regarding both petitions in April 2023. The Company rejects the claims made in the petitions and believes it is more likely than not that its position will be accepted.
In November 2022, the parties signed a procedural arrangement to resort to a mediation process, in an attempt to settle the dispute outside of court. The Nature and Parks Authority (hereafter - NPA), which was not a party to the original application, also signed the agreement, and by virtue of it, it joined the mediation process. As a result, all proceedings before the court, including requests for temporary relief, were suspended. As part of the procedural arrangement, the transfer of approximately 3 million NIS from the Company to NPA was made, for funding NPA’s rescue operations for palm trees at Neot Zin and Akrabim.
The Company rejects all the said allegations. Considering the preliminary stage of the proceeding and lack of precedents of such cases in Israel, and in light of the transition to a mediation procedure, it is difficult to estimate its outcome. No provision has been recorded in the Company's financial statements.
According to the claim, the Respondents have allegedly caused continuous, severe and extreme environmental hazards through pollution of the “Judea group – Zafit formation” groundwater aquifer (hereinafter – the Aquifer) and the Ein Bokek spring with industrial wastewater, and, in doing so, the Respondents have violated various provisions of property law and environmental protection law, including the provisions of the Law for Prevention of Environmental Hazards and the Water Law, as well as violations relating to the Torts Ordinance – breach of statutory duty, negligence and unjust profits. The leakage began in the 1970’s during which time the Company was government-owned and ended by 2000.
As a result, the Court was requested to order the Respondents to eliminate the proprietary violation in reference to the Aquifer and Bokek stream by restoration thereof and to pay the public compensation in an estimated amount of NIS 1.4 billion (about $435 million).
In 2019, the Respondents filed their response, together with three expert opinions, in which they denied all the Applicant's claims. In April 2022, the Be'er Sheva District Court dismiss in limine the application due to statute of limitations and property rights. In June 2022, the plaintiffs filed an appeal to Israel’s Supreme Court against the district court’s decision. It is difficult to estimate the outcome of the appeal at this preliminary stage. No provision has been recorded in the Company's financial statements.
In 2015, a request was filed for certification of a claim as a class action, in the Tel Aviv-Jaffa District Court, against eleven defendants, including a subsidiary, Fertilizers and Chemical Ltd., in respect of claims relating to air pollution in Haifa Bay and for the harm allegedly caused by it to residents of the Haifa Bay area. The amount of the claim is about NIS 13.4 billion (about $4.2 billion). Evidence hearings were scheduled for February and March 2024. In the Company’s estimation, based on the factual material provided to it and the relevant court decision, it is more likely than not that the plaintiffs’ contentions will be rejected.
Increase in the level of the evaporation Pond in Sodom (hereinafter – Pond 5)
Minerals from the Dead Sea are extracted by way of solar evaporation, whereby salt precipitates onto the bed of Pond 5, located at one of DSW's sites. The precipitated salt creates a layer on the Pond 5 bed of approximately 16 million cubic meters per year.
The production process of the raw material requires that a fixed brine volume is preserved in Pond 5. Failure to maintain a constant volume of brine in Pond 5 could result in a reduction of production capacity. Since the solutions' level maximum height (15.1 meters) was reached at the end of 2021, from 2022 onwards, the solutions' volume in Pond 5 is preserved by way of harvesting the salt ("the Permanent Solution" and/or "the Salt Harvesting Project" as described below).
Rising of the water level of Pond 5 above a certain point may cause structural damage to the foundations of hotel buildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructure located along the western shoreline of the Pond.
Until the end of 2020, the preservation of the water level in Pond 5 at its maximum height was conducted through a joint project of the Dead Sea Preservation Government Company Ltd. and DSW (which financed 39.5% of the project's cost) for construction of coastline defenses, as part of which the dike along the western beachfront of Pond 5 across from the hotels was raised together with a system for lowering subterranean water. The construction work with respect to the hotels' coastline was completed, and currently the Dead Sea Preservation Government Company Ltd. is conducting elevation work in the intermediate area between two hotel complexes.
The "Permanent Solution" was established in the agreement with the Government of Israel in 2012, aiming to provide a defense at least until the end of the current concession period in 2030. The purpose of the agreement was, among others, to provide a permanent solution for raising the water level in Pond 5 and stabilizing at a fixed level by harvesting salt from the pond and transferring it to the Northern Basin of the Dead Sea. According to the agreement, the planning and execution of the Permanent Solution will be performed through the Salt Harvesting Project by DSW. In addition, the agreement stipulates that from January 1, 2017, the water level in the pond will not rise above 15.1 meters. Nevertheless, in the event of a material deviation from the project's timetables, without the Company having violated its obligations, the Company will be permitted to request raising of the water level above 15.1 meters.
The Company and the State of Israel bear 80% and 20%, respectively, of the cost of the Salt Harvesting Project. However, the State's share will not exceed NIS 1.4 billion.
In 2015 and 2016, the National Infrastructures Committee and the Israeli Government, respectively, approved National Infrastructures Plan 35A (hereinafter – the Plan), which includes the statutory basis for establishing the Salt Harvesting Project in Pond 5, and construction of the P-9 pumping station in the Northern Basin of the Dead Sea. As of the reporting date, the water level in pond 5 remains stable due to the implementation of the salt harvesting project. In addition, in 2022 the P-9 pumping station commenced operation.
Spain
(cont'd)
In March 2019, IBM filed its statement of defense, together with a counterclaim against the Company, according to which IBM claims that ICL allegedly refrained from making certain payments, conducted negotiations in bad faith, and terminated the project unilaterally, in a way that harmed IBM's reputation and goodwill and therefore claims an amount of about $53 million (about ILS 170 million), including VAT and interest. In June 2019, the Company filed a statement of defense with respect to the counterclaim in which the Company rejected all of IBM's claims. In January 2021, IBM filed a request for dismissal including the deletion of the remedies claimed by the Company arising from the termination of the agreement between the parties. In August 2021, the Company filed a request to delete IBM's statements of claim, on the grounds that IBM acted in order to delay, burden and disrupt a professional expert's work, and thus to impair the documents discovery process. Considering the early stage of the proceedings and the complexity of the claims, it is difficult to estimate their outcome. Nevertheless, the Company believes it is more likely than not that IBM's claims in its counterclaim will be rejected.
In December 2018, an application for certification of a class action was filed with the Tel Aviv District Court against the Company, Israel Corporation, and office holders, including directors who held office during the said dates which are stated in the application, with respect to the manner in which the IT (the Harmonization) project was managed and terminated. According to the allegations made in the Application, the Company failed to properly report negative developments which occurred on certain dates during the said IT project, and such failure caused the company immense financial damages.
The represented class was defined in the application as all those who acquired the Company's shares at any time during the period commencing June 11, 2015, and who did not sell them until September 29, 2016 (hereinafter – the Applicants).
In July 2018, an application for certification of a class action was filed with the Central District Court against the Company and its subsidiaries, Rotem Israel and Fertilizers and Chemicals Ltd. (jointly hereinafter – the Defendants). The causes of action are the alleged exploitation of the Defendants' monopolistic position to charge consumers in Israel excessive and unfair prices for products classified as "solid phosphate fertilizer" between 2011 and 2018, contrary to the provisions of the Restrictive Trade Practices Law, and unjust profits at the expense of the plaintiff and the represented group. The representative plaintiff is a Kibbutz member who grows various plants and trees in his yard and in a nearby orchard.
The represented group includes all the consumers who purchased, directly or indirectly, solid phosphate fertilizer products manufactured by the Defendants, or farming produce fertilized with solid phosphate fertilizer or food products that include such farming produce as stated above, in the years 2011-2018 (hereinafter – the Represented Group).
According to the statement of claim, the plaintiff requests, among other things, that the Court rules in his favor and in favor of the Represented Group, awarding them compensation for the damages allegedly caused to them, in the total amount of NIS 56 million (about $17 million), based on a calculation pursuant to the "difference test", measuring the difference between the price of a product and its cost, as described in the statement of claim, or in the amount of about NIS 73 million (about $23 million), based on the "comparison test", comparing the price of a product to its price in other markets, as described in the statement of claim. It should be noted that the Company's total sales of solid phosphate fertilizers in Israel during 2017 were negligible. Following the Central District Court’s decision in March 2020 to grant the Company a motion for delay in proceedings, in September 2022 the proceedings were renewed, at the request of the applicants. In December 2022, the court appointed an expert on its behalf to examine the excessive price argument. The Company denies the allegations, and believes it is more likely than not that its position will be accepted.
In addition to the contingent liabilities, as stated above, as of the reporting date the contingent liabilities regarding the matters of environmental protection and legal claims which are pending against the Group are in immaterial amounts. It is noted that part of the above claims is covered by insurance. According to the Company’s estimation, the provisions recognized in its financial statements are sufficient.
June 30, 2016
June 30, 2023
September 5, 2016
Former chairman of BOD
February 14, 2017
Former CEO
February 14, 2024
June 20, 2017
Officers and senior employees
June 20, 2024
August 2, 2017
March 6, 2018
5,554
March 6, 2025
An issuance of non-marketable and non-transferrable options, for no consideration, under the amended 2014 Equity Compensation Plan.
May 29, 2019 *
Chairman of BOD
June 30, 2021
Senior employees
647
February 8, 2022
9,294
3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date
March 30, 2022
CEO
1,941
1,055
2014 Plan
Granted 2014
Granted 2022
8.2
6.8
10.0
8.4
7.1
10.1
29.40%
31.70%
31.80%
30.88%
40.80%
30.52%
4.3
4.4
3.2
5.3
3.8
6.3
4.0
(0.17)%
0.43%
(1.46)%
0.05%
(1.29)%
0.24
(1.21)%
24.9
1.9
2.0
Non-marketable options (cont'd)
Subsequent to the date of the report
In February 2023, the Company’s HR & Compensation Committee and the Board of Directors, approved a new biennial equity grant for the years 2023-2024 in the form of about $461 thousand non-marketable and non-transferable options for no consideration, under the amended 2014 Equity Compensation Plan, to two senior managers. The vesting period of the options will be in three equal tranches, upon the lapse of 12 months, 24 months and 36 months from the grant date (February 14, 2023). The fair value at the grant date is about $903 thousand.
Granted in 2022
The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the approval date of the BOD and/or the approval date of the General Meeting).
(*)
Vesting of the Restricted Shares granted to directors would fully accelerate, if the holder ceases to serve as a director of the Company, unless he/she ceased to hold office due to those certain circumstances regarding early termination of office or imposition of enforcement measures, as set forth in Sections 231-232a and 233(2) of the Israeli Companies Law.
February 11, 2020
May 10, 2020
July 27, 2020
November 10, 2020
February 10, 2021
May 5, 2021
July 27, 2021
November 3, 2021
May 10, 2022
307
0.24%
July 26, 2022
376
0.29
November 8, 2022
314
Total 2022
1,166
0.9
178
0.14
The capital reserves include expenses for share‑based compensation to employees against a corresponding increase in equity (See item C above) and change in investment at fair value through other comprehensive income.
Energy and fuel
433
343
316
Profit from divestment
15
-
9
16
Reversal of early retirement provision of employees
2
12
11
Reversal of provision for legal claims
Reversal of Impairment of fixed assets
Provision for legal claims
17
Provision for historical waste removal and site closure costs
6
14
83
Transaction costs
Impairment and disposal of assets
Provision for early retirement and dismissal of employees
Net gain from changes in exchange rates
139
Financing income in relation to employee benefits
44
Interest income from banks and others
31
7
Net gain from change in fair value of derivative designated as economic hedge
Net gain from change in fair value of derivative designated as cash flow hedge
Net loss from change in fair value of derivative designated as economic hedge
98
23
Net loss from change in fair value of derivative designated as cash flow hedge
Banks and finance institutions commissions (mainly commission on early repayment of loans)
Net loss from changes in exchange rates
Foreign currency and interest derivative instruments designated as cash flow hedge
(16)
Marine transport derivative designated as economic hedge
Asia
Europe
South America
North America
Foreign currency and interest derivative designated as economic hedge
The Company has loans bearing variable interests and therefore its financial results and cash flows are exposed to fluctuations in the market interest rates.
From time to time, the Company uses financial instruments including derivatives in order to hedge this exposure. The Company uses interest rate swap and cross currency swaps contracts mainly in order to reduce the exposure to cash flow risk in respect of changes in interest rates.
As part of the global reform in interest rate benchmarks, the Libor GBP settings ceased from January 1, 2022, and replaced by SONIA (GBP) Benchmark. Most US dollar LIBOR settings will continue to be calculated using panel bank submissions until mid-2023.
As of December 31, 2022, USD LIBOR continues to be used as a reference rate and in valuation of instruments with maturities that exceed the expected end date for LIBOR. the Company has USD 30 million Libor Based Debt that exceed the expected end date for LIBOR.
As of December 31, 2022, we have not finalized an agreement with the banks regarding the Libor transition effects on loans and derivatives.
Note 21 - Financial Instruments and Risk Management (cont'd)
(a) Sensitivity analysis (cont'd)
US Dollar/Brazilian Real
10
5
(6)
(12)
(31)
18
38
US Dollar/British Pound
Forward transactions
1
Options
Euro/ US Dollar
Other
exchange rate
111
5.2
1.2
Forward contracts hedge accounting
US Dollar/Israeli Shekel
(14)
360
3.4
37
5.4
Forward transactions hedge accounting
The fair value of the Shekel, Euro, Brazilian Real and Yuan loans issued bearing fixed interest is based on calculation of the present value of the cash flows in respect of the principal and the interest and is discounted at the market interest rates on the measurement date for similar loans having similar characteristics and is classified as Level 2 in the fair value hierarchy. The average discount interest as of December 31, 2022 for the Israeli Shekel, Euro, Brazilian Real and Yuan loans was 5.2%, 4.9%, 16.3% and 4.3%, respectively (December 31, 2021 for the Israeli Shekel, Euro Brazilian Real and Yuan loans 1.5%, 1.2%, 13% and 4%, respectively).
Weighted-average number of ordinary shares in thousands:
ICL America do Sul
Brazil
100.00%
ICL Aditivos E Ingredientes LTDA
Qualyquímica Industria e Comercio de Produtos Quimicos Ltda