Ellomay Capital Reports Results for the Three and Nine Months Ended September 30, 2024

Tel-Aviv, Israel, Dec. 30, 2024 (GLOBE NEWSWIRE) — Ellomay Capital Ltd. (NYSE American; TASE: ELLO) (“Ellomay” or the “Company”),a renewable energy and power generator and developer of renewable energy and power projects in Europe, USA and Israel,today reported its unaudited consolidated financial results for the three and nine month periods ended September 30, 2024.

Financial Highlights

• Total assets as of September 30, 2024 amounted to approximately €640 million, compared to total assets as of December 31, 2023 of approximately €612.9 million.

• Revenues1 for the three months ended September 30, 2024 were approximately €12.3 million, compared to revenues of approximately €15.4 million for the three months ended September 30, 2023. Revenues for the nine months ended September 30, 2024 were approximately €31.8 million, compared to revenues of approximately €40.4 million for the nine months ended September 30, 2023.

• Profit from continuing operations for the three months ended September 30, 2024 was approximately €6.6 million, compared to profit from continuing operations of approximately €5.8 million for the three months ended September 30, 2023. Profit from continuing operations for the nine months ended September 30, 2024 was approximately €3.2 million, compared to profit from continuing operations of approximately €10.4 million for the nine months ended September 30, 2023.

• Profit for the three months ended September 30, 2024 was approximately €6.6 million, compared to profit of approximately €5.9 million for the three months ended September 30, 2023. Profit for the nine months ended September 30, 2024 was approximately €3.3 million, compared to profit of approximately €10.4 million for the nine months ended September 30, 2023.

• EBITDA for the three months ended September 30, 2024 was approximately €11 million, compared to EBITDA of approximately €11.6 million for the three months ended September 30, 2023. EBITDA for the nine months ended September 30, 2024 was approximately €17.6 million, compared to EBITDA of approximately €21.3 million for the nine months ended September 30, 2023. See below under “Use of Non-IFRS Financial Measures” for additional disclosure concerning EBITDA.

• On December 31, 2023, the Company executed an agreement to sell its holdings in the 9 MW solar plant located in Talmei Yosef. The sale was consummated on June 3, 2024, and the net consideration received at closing was approximately NIS 42.6 million (approximately €10.6 million). In connection with the sale, the Company presents the results of this solar plant as a discontinued operation and the results for the three and nine months ended September 30, 2023 were adjusted accordingly.

Financial Overview for the Nine Months Ended September 30, 2024

• Revenues1 were approximately €31.8 million for the nine months ended September 30, 2024, compared to approximately €40.4 million for the nine months ended September 30, 2023. This decrease mainly results from a reduction in electricity prices in Spain between February and May 2024, partially offset by income generated by our 20 MW solar power plants in Italy which were connected to the grid during 2024. The decrease is also due to loss of revenues in connection with the fire near the Talasol Solar S.L. (300 MV solar) (“Talasol”) and Ellomay Solar S.L. (28 MV solar) (“Ellomay Solar”) facilities in Spain in July 2024. In connection with such loss of revenues, the Company recorded an amount of approximately €1.2 million as ‘other income’ for the nine months ended September 30, 2024, based on compensation expected to be received from the insurance for loss of income.

• Operating expenses were approximately €14.5 million for the nine months ended September 30, 2024, compared to approximately €17.4 million for the nine months ended September 30, 2023. This decrease mainly results from a decrease in direct taxes on electricity production paid by the Company’s Spanish subsidiaries as a result of reduced electricity prices. The operating expenses of the Company’s Spanish subsidiaries for the 1 The revenues presented in the Company’s financial results included in this press release are based on IFRS and do not take into account the adjustments included in the Company’s investor presentation. 2 nine months ended September 30, 2023 were impacted by the Spanish RDL 17/2022, which established the reduction of returns on the electricity generating activity of Spanish production facilities that do not emit greenhouse gases, accomplished through payments of a portion of the revenues by the production facilities to the Spanish government. The increased expenses during the nine months ended September 30, 2023 resulting from this impact, were partially offset by lower costs in connection with the acquisition of feedstock by our Dutch biogas plants. Depreciation and amortization expenses were approximately €12.3 million for the nine months ended September 30, 2024, compared to approximately €11.7 million for the nine months ended September 30, 2023.

• Project development costs were approximately €3.3 million for the nine months ended September 30, 2024, compared to approximately €2.4 million for the nine months ended September 30, 2023. The increase in project development costs results mainly from increased consultancy expenses in connection with business development efforts.

• General and administrative expenses were approximately €4.7 million for the nine months ended September 30, 2024, compared to approximately €4 million for the nine months ended September 30, 2023. The increase in general and administrative expenses is mostly due to higher consultancy expenses.

• Share of profits of equity accounted investee, after elimination of intercompany transactions, was approximately €5.3 million for the nine months ended September 30, 2024, compared to approximately €4.6 million for the nine months ended September 30, 2023. The increase in share of profits of equity accounted investee was mainly due to the increase in revenues of Dorad Energy Ltd. due to higher quantities produced, partially offset by an increase in operating expenses in connection with the increased production.

• Other income, net was approximately €2.9 million for the nine months ended September 30, 2024, compared to €0 for the nine months ended September 30, 2023. The income was recognized based on compensation expected to be received from insurance in connection with the fire near the Talasol and Ellomay Solar facilities in Spain in July 2024, net of impairment expenses related to the damaged fixed assets. The amount to bereceived due to loss of income is approximately €1.2 million.

• Financing expense, net was approximately €2 million for the nine months ended September 30, 2024, compared to financing income, net of approximately €0.3 million for the nine months ended September 30, 2023. The increase in financing expenses, net, was mainly attributable to lower income resulting from exchange rate differences that amounted to approximately €5.2 million for the nine months ended September 30, 2024, compared to approximately €8 million for the nine months ended September 30, 2023, an aggregate change of approximately €2.8 million. The exchange rate differences were mainly recorded in connection with the New Israeli Shekel (“NIS”) cash and cash equivalents and the Company’s NIS denominated debentures and were caused by the 3.5% devaluation of the NIS against the euro during the nine months ended September 30, 2024, compared to a devaluation of 8% during the nine months ended September 30, 2023. The increase in financing expenses for the nine months ended September 30, 2024 was also due to increased interest expenses mainly resulting from the issuance of the Company’s Series F Debentures in January, April and August 2024.
These increases in financing expenses were partially offset by an increase in financing income of approximately €2.6 million in connection with derivatives and warrants in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

• Tax benefit was approximately €0.1 million for the nine months ended September 30, 2024, compared to a tax benefit of approximately €0.6 million for the nine months ended September 30, 2023.

• Profit from continuing operations for the nine months ended September 30, 2024 was approximately €3.2 million, compared to profit from continuing operations of approximately €10.4 million for the nine months ended September 30, 2023.

• Profit from discontinued operation (net of tax) for the nine months ended September 30, 2024 was approximately €80 thousand, compared to profit from discontinued operation of approximately €70 thousand for the nine months ended September 30, 2023.

• Profit for the nine months ended September 30, 2024 was approximately €3.3 million, compared to a profit of approximately €10.4 million for the nine months ended September 30, 2023.

• Total other comprehensive income was approximately €2.6 million for the nine months ended September 30, 2024, compared to total other comprehensive income of approximately €31.6 million for the nine months ended September 30, 2023. The change in total other comprehensive income mainly results from changes in fair value of cash flow hedges, including a material decrease in the fair value of the liability resulting from the financial power swap that covers approximately 80% of the output of the Talasol solar plant (the “Talasol PPA”). The3 Talasol PPA experienced a high volatility due to the substantial change in electricity prices in Europe. In accordance with hedge accounting standards, the changes in the Talasol PPA’s fair value are recorded in the Company’s shareholders’ equity through a hedging reserve and not through the accumulated deficit/retained earnings.
The changes do not impact the Company’s consolidated net profit/loss or the Company’s consolidated cash flows.

• Total comprehensive income was approximately €5.9 million for the nine months ended September 30, 2024, compared to total comprehensive income of approximately €42 million for the nine months ended September 30, 2023.

• Net cash provided by operating activities was approximately €5.5 million for the nine months ended September 30, 2024, compared to approximately €16.8 million for the nine months ended September 30, 2023. The decrease in net cash provided by operating activities for the nine months ended September 30, 2024, is mainly due to the decrease in electricity prices in Spain. In addition, during the year ended December 31, 2023, the Company’s Dutch biogas plants elected to temporarily exit the subsidy regime and sell the gas at market prices and during the year ended December 31, 2024 these plants returned to the subsidy regime. Under the subsidy regime, plants are entitled to monthly advances on subsidies based on the production during the previous year.
As no subsidies were paid to the Company’s Dutch biogas plants for 2023, these plants entitled to low advance payments for 2024 and the payment for gas produced by the plants during 2024 is expected to be received until July 2025 and reflected accordingly in the Company’s cash flow from operations.

CEO Review Third Quarter 2024 Revenues in the first nine months of 2024 were approximately €31.8 million, compared to revenues of approximately €41.5 million in the corresponding nine months last year. The decrease in revenues was mainly due to the electricity prices in Spain, which were low and even sometimes negative during the first half of 2024. A decrease of approximately €1.2 million in revenues was recorded due to fire damage that occurred in July 2024 in our projects in Spain. This amount is covered by income loss insurance and therefore recognized as other income during the period.
Operating expenses in the first nine months of 2024 decreased by approximately €3 million compared to the corresponding period last year. Project development expenses in the first nine months of 2024 increased by approximately €0.7 million compared to the corresponding period last year. Project development expenses for 2024 included non-recurring expenses of approximately €0.5 million in connection with the cancellation of a guarantee.

Activity in Spain:

The electricity prices in the third quarter of 2024 increased and stabilized on the projected seasonal price. The revenues from the sale of electricity in the first nine months of 2024 were approximately €18.7 million compared to approximately €27.5 million in the corresponding period last year. The decrease is primarily attributable to the low/negative electricity prices in the first half of 2024, as well as the fire damage.

Activity of Dorad:

In the first nine months of 2024, the Dorad power plant recorded an increase in profit, with net profit of approximately NIS 256 million, an increase of approximately NIS 40 million compared to the corresponding period last year. The Dorad power station received the approval of the National Infrastructures Committee and a positive connection survey to increase the capacity by an additional 650 MW.

Activity in the USA:

In the USA, the development and construction activities of solar projects are progressing at a rapid pace and the construction of the first four projects, with a total capacity of approximately 49 MW, began in early 2024. The construction of two projects (in an aggregate capacity of approximately 27 MW) is nearing completion and their connection to the electricity grid is expected in the near future. The additional two projects (in an aggregate capacity of approximately 22 MW) are under construction and are expected to connect by April 2025. Additional projects with an aggregate capacity of approximately 50 MW are under development and are intended for construction in 2025.
The Company executed an agreement to sell the tax credits of the first four projects for approximately $19 million.4

Activity in Italy:

The Company has a portfolio of 462 MW solar projects in Italy of which 20 MW are operating and 18 MW finished construction and are awaiting connection to the grid. 195 MW of additional projects are ready to build and 229 MW are under advanced development. Revenues from sale of electricity in Italy in the third quarter of 2024 were approximately €1.7 million, all from the 20 MW that are connected to the grid. The Company executed construction agreements with the EPC contractor for 160 MW that are ready to build, the commencement of construction is expected during the first quarter of 2025 and the construction is expected to take approximately 18 months. The EPC agreements are conditioned, among other things, on the execution of a financing agreement, and the financing agreement with a European institutional investor for the financing of the construction of 198 MW (including the connected projects, the project under construction and the projects for which the EPC agreements were executed) previously reported is expected to be executed during January 2025.
New legislation in Italy prohibits the establishment of new projects on agricultural land. This prohibition increases the value of the Company’s portfolio, which is not subject to the prohibition or located on agricultural land. The Company estimates that new possibilities are emerging for obtaining a PPA in Italy, therefore it expects that project financing will be possible more easily and at lower costs.

Activity in Israel:

The Manara Cliff Pumped Storage Project (Company’s share is 83.34%): A project with a capacity of 156 MW, which is in advanced construction stages. The Iron Swords War, which commenced on October 7, 2023, stopped the construction work on the project. The project has protection from the state for damages and losses due to the war within the framework of the tariff regulation (covenants that support financing). The project was expected to reach commercial operation during the first half of 2027 and the continuation of the Iron Swords war will cause a delay in the date of activation. The Israeli Electricity Authority currently approved a postponement of sixteen months of the dates for the project. The Company and its partner in the project, Ampa, invested the equity required for the project (other than linkage differences), and the remainder of the funding is from a consortium of lenders led by Mizrahi Bank, at a scope of approximately NIS 1.18 billion.

Development of Solar licenses combined with storage:

1. The Komemiyut and Qelahim Projects: each intended for 21 solar MW and 50 MW / hour batteries. The sale of electricity will be conducted through a private supplier. Commencement of construction is planned for the first quarter of 2025.
The Company waived the rights it won in a solar / battery tender process in connection with these projects and therefore paid a forfeiture of guarantee in the amount of NIS 1.8 million and is in advanced negotiations with a local supplier for the execution of a long-term PPA.

2. The Talmei Yosef Project : intended for 10 solar MW and 22 MW / hour batteries. The request for zoning approval was approved in the fourth quarter of 2023.

3. The Talmei Yosef Storage Project in Batteries: there is a zoning approval for approximately 400 MW / hour. The project is designed for the regulation of high voltage storage.
The Company also has approximately 46 solar MW under preliminary planning stages.

Activity in the Netherlands:

During the first nine months of 2024, high production levels were maintained in the Company’s three biogas plants. In addition, significant progress was made in the process of obtaining the licenses to increase production by about 50% in each of the Company’s plants. Increasing production will require relatively small investments and is expected to significantly increase income and EBITDA. Following the directive of the European Union to act to significantly increase the production of greed gas, the Dutch parliament approved the legislation mandating the obligation to mix green gas with fossil gas , which will become effective commencing January 1, 2026. This legislation is expected to have a positive effect on the prices of green gas and the price of the accompanying green certificates.

Use of Non-IFRS Financial Measures

EBITDA is a non-IFRS measure and is defined as earnings before financial expenses, net, taxes, depreciation and amortization. The Company presents this measure in order to enhance the understanding of the Company’s operating performance and to enable comparability between periods. While the Company considers EBITDA to be an important measure of comparative operating performance, EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account the Company’s commitments, including capital expenditures and restricted cash and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. Not all companies calculate EBITDA in the same manner, and the measure as presented may not be comparable to similarly-titled measure presented by other companies. The Company’s EBITDA may not be indicative of the Company’s historic operating results; nor is it meant to be predictive of potential future results. The Company uses this measure internally as performance measure and believes that when this measure is combined with IFRS measure it add useful information concerning the Company’s operating performance. A reconciliation between results on an IFRS and non-IFRS basis is provided on page 15 of this press release.

About Ellomay Capital Ltd.

Ellomay is an Israeli based company whose shares are registered with the NYSE American and with the Tel Aviv Stock Exchange under the trading symbol “ELLO”. Since 2009, Ellomay Capital focuses its business in the renewable energy and power sectors in Europe, USA and Israel.
To date, Ellomay has evaluated numerous opportunities and invested significant funds in the renewable, clean energy and natural resources industries in Israel, Italy, Spain, the Netherlands and Texas, USA, including:

• Approximately 335.9 MW of operating solar power plants in Spain (including a 300 MW solar plant in owned by Talasol, which is 51% owned by the Company) and approximately 20 MW of operating solar power plants in Italy;

• 9.375% indirect interest in Dorad Energy Ltd., which owns and operates one of Israel’s largest private power plants with production capacity of approximately 850MW, representing about 6%-8% of Israel’s total current electricity consumption;

• Groen Gas Goor B.V., Groen Gas Oude-Tonge B.V. and Groen Gas Gelderland B.V., project companies operating anaerobic digestion plants in the Netherlands, with a green gas production capacity of approximately 3 million, 3.8 million and 9.5 million Nm3 per year, respectively;

• 83.333% of Ellomay Pumped Storage (2014) Ltd., which is involved in a project to construct a 156 MW pumped storage hydro power plant in the Manara Cliff, Israel;

• A solar plant (18 MW) under construction in Italy;

• Solar projects in Italy with an aggregate capacity of 195 MW that have reached “ready to build” status; and

• Solar projects in the Dallas Metropolitan area, Texas, USA with an aggregate capacity of 49 MW that are under construction.

For more information about Ellomay, visit http://www.ellomay.com.6

Information Relating to Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties, including statements that are based on the current expectations and assumptions of the Company’s management. All statements, other than statements of historical facts, included in this press release regarding the Company’s plans and objectives, expectations and assumptions of management are forward-looking statements. The use of certain words, including the words “estimate,” “project,” “intend,” “expect,” “believe” and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements. Various important factors could cause actual results or events to differ materially from those that may be expressed or implied by the Company’s forward-looking statements, including changes in electricity prices and demand, regulatory changes increases in interest rates and inflation, changes in the supply and prices of resources required for the operation of the Company’s facilities (such as waste and natural gas) and in the price of oil, the impact of the war and hostilities in Israel and Gaza, the impact of the continued military conflict between Russia and Ukraine, technical and other disruptions in the operations or construction of the power plants owned by the Company and general market, political and economic conditions in the countries in which the Company operates, including Israel, Spain, Italy and the United States.
These and other risks and uncertainties associated with the Company’s business are described in greater detail in the filings the Company makes from time to time with Securities and Exchange Commission, including its Annual Report on Form 20-F. The forward-looking statements are made as of this date and the Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Kalia Rubenbach (Weintraub)

CFO

Tel: +972 (3) 797-1111

Email: [email protected]