Q2 2022

Tel-Aviv, Israel, September 22, 2022 – 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 and Israel, today reported unaudited financial results for the three month period ended June 30, 2022.
Financial Highlights
• Revenues were approximately €29.2 million for the six months ended June 30, 2022, compared to approximately €20.4 million for the six months ended June 30, 2021. This increase mainly
results from the substantial increase in electricity prices in Spain.
• Operating expenses were approximately €13.1 million for the six months ended June 30, 2022, compared to approximately €7.6 million for the six months ended June 30, 2021. Depreciation
expenses were approximately €8 million for the six months ended June 30, 2022, compared to approximately €7.1 million for the six months ended June 30, 2021. The increase in operating
expenses mainly results from the introduction of the Spanish RDL 17/2021 that established the reduction, until June 30, 2022, 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
increase in operating expenses also resulted from the Company’s biogas operations in the Netherlands that were impacted by the war in Ukraine causing shortages in certain raw
materials and an increase in delivery prices. The increase in depreciation and amortization expenses is mainly attributable to the recognition of results of the Talasol PV Plant for the
entire first half of 2022, compared to a partial recognition (commencing upon the achievement of PAC of the Talasol PV Plant on January 27, 2021) in 2021.
• Project development costs were approximately €1.6 million for the six months ended June 30, 2022, compared to approximately €1.1 million for the six months ended June 30, 2021. The
increase in project development costs is mainly due to the advancing development of photovoltaic projects in Italy.
• General and administrative expenses were approximately €3.3 million for the six months ended June 30, 2022, compared to approximately €2.6 million for the six months ended June 30,

  1. The increase is mostly due to increased D&O liability insurance costs, increase in management fee paid pursuant to the new Management Services Agreement effective July 1,
    2021, and an increase in salaries paid to employees.
    • Share of losses of equity accounted investee, after elimination of intercompany transactions, was approximately €0.6 million for the six months ended June 30, 2022, compared to
    approximately €0.8 million for the six months ended June 30, 2021.
    • Financing expenses, net was approximately €2.2 million for the six months ended June 30, 2022, compared to approximately €6.1 million for the six months ended June 30, 2021. The
    decrease in financing expenses, net, was mainly attributable to income resulting from exchange rate differences amounting to approximately €2.6 million in six months ended June 30,
    2022, mainly in connection with the New Israeli Shekel (“NIS”) cash and cash equivalents and the Company’s NIS denominated debentures, compared to expenses in the amount of
    approximately €0.2 million for the six months ended June 30, 2021, caused by the 3.3% appreciation of the euro against the NIS during the six months ended June 30, 2022, compared to
    the 0.8% devaluation of the euro against the NIS during the six months ended June 30, 2021, income resulting from indexation to the increasing Israeli consumer price index (CPI) and
    expenses recorded in 2021 amounting to approximately €0.8 million in connection with the early repayment of the Company’s Series B Debentures.
    • Taxes on income were approximately €1.1 million for the six months ended June 30, 2022, compared to approximately €0.3 million for the six months ended June 30, 2021. The increase is
    mainly due to the substantial increase in electricity prices in Spain, resulting in higher taxable income of the Company’s Spanish subsidiaries.
    • Loss for the six months ended June 30, 2022 was approximately €0.6 million, compared to a loss of approximately €5.2 million for the six months ended June 30, 2021.
    CEO Review Second Quarter 2022
    In the first half and the second quarter of 2022, the Company met the goals it set for itself. Compared to the corresponding period last year, the Company recorded an increase of approximately
    43% in its revenues, which were higher than the projected revenues for the period. The cash flow from operations for the first half of 2022 was approximately €8 million, after deduction of a nonrecurring advance payment of income tax as per a tax assessment agreement (timing differences of payable income tax) to the Israeli Tax Authority in connection with the Talmei Yosef PV Plant in
    the amount of approximately €3.2 million.
    The profit for the second quarter of 2022 almost doubled compared to the corresponding period last year, and the net profit for the quarter was approximately €2.8 million, compared to a loss of
    approximately €2.5 million in the corresponding quarter last year.
    Based on the preliminary results of the third quarter of 2022 currently available to the Company, it is expected that the Company will meet the goals it set for itself for the first nine months of 2022.
    • Total other comprehensive loss was approximately €34.8 million for the six months ended June 30, 2022, compared to approximately €4.7 million for the six months ended June 30, 2021.
    The increase in total other comprehensive loss mainly resulted from changes in fair value of cash flow hedges, including a material reduction in the fair value of the financial power swap
    (the “Talasol PPA”) that covers approximately 80% of the output of the Talasol PV Plant. The Talasol PPA experienced a high volatility due to the substantial increase in electricity
    prices in Europe since the commencement of the military conflict between Russia and Ukraine. 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. As the Company controls Talasol, the total impact of the changes in fair value of the Talasol PPA
    (including the minority share) is consolidated into the Company’s financial statements and total equity. Alongside the decrease in fair value of the Talasol PPA, the increase in the
    electricity prices is expected to have a positive impact on Talasol’s revenues from the sale of the capacity that is not subject to the Talasol PPA, resulting in an expected increase in
    Talasol’s net income and cash flows.
    • Total comprehensive loss was approximately €35.4 million for the six months ended June 30, 2022, compared to approximately €9.9 million for the six months ended June 30, 2021.
    • The Company’s current liabilities as of June 30, 2022 include a liability in the amount of approximately €39 million in connection with current maturities of the Talasol PPA resulting from
    the decrease in the fair value of the Talasol PPA. The decrease in the fair value of the Talasol PPA does not impact the Company’s cash flow as Talasol’s revenues from the sale of
    electricity are expected to exceed its liability and payments to the Talasol PPA provider. Pursuant to the applicable accounting rules, the Company is required to recognize the fair value
    of expected future payments to the Talasol PPA provider as a liability but it does not recognize the expected revenues from the Talasol PV Plant as assets.
    • EBITDA was approximately €10.6 million for the six months ended June 30, 2022, compared to approximately €8.4 million for the six months ended June 30, 2021. See the table on page 12
    of this press release for a reconciliation of these numbers to profit and loss.
    • Net cash provided by operating activities was approximately €8 million for the six months ended June 30, 2022, compared to approximately €7.3 million for the six months ended June 30,
  2. The net cash provided by operating activities for the six months ended June 30, 2022, included a nonrecurring advance payment of income tax as per a tax assessment agreement
    (timing differences of payable income tax) to the Israeli Tax Authority in connection with the Talmei Yosef PV Plant in the amount of approximately €3.2 million.
    • As required under an amendment to IAS 16, “Property, Plant and Equipment” (the “Amendment”), the Company retrospectively applied the Amendment and revised the financial
    results as of and for the year ended December 31, 2021, and for the six months ended June 30, 2021. The Amendment required the Company to recognize the results of the Talasol PV
    Plant commencing connection to the grid (December 2020) instead of recognizing results commencing achievement of PAC (Preliminary Acceptance Certificate), which occurred on
    January 27, 2021. The revisions mainly included recognizing an increase in the balance of fixed assets against a corresponding increase in retained earnings and deferred tax as of
    December 31, 2021, and an increase in revenues and expenses, with a corresponding decrease in tax benefit and in the net loss for the six months ended June 30, 2021 and the year ended
    December 31, 2021.
    The Company operates on two main levels: the development of a backlog of projects in the PV field in Italy, Spain and Israel, and the construction and operation of projects. Currently, a pumped
    hydro storage project in the Manara Cliff in Israel, which is a mega project in scope, is under construction. In addition, 20 MV PV plants are also under advanced construction in Italy.
    Activity in Spain: The Ellomay Solar project (28 MW PV) was connected to the electricity grid towards the end of the second quarter of 2022, therefore its effect on the quarter was negligible.
    During the third quarter of 2022 this PV plant operated at full capacity and the expected revenues from it for the third quarter of 2022 are approximately €2.5-3 million. The Talasol PV plant (300
    MW PV), 51% held by the Company, met all expectations and in the first half of 2022 generated revenues in the amount of approximately €20.4 million.
    Activity in Italy: The Company has approximately 600 MW PV projects under advanced development stages, of which licenses have been obtained for approximately 200 MW. Of these 200 MW
    PV projects, 20 MW are under advanced construction and the remainder (approximately 180 MW) are awaiting the results of a contractor tender which is expected to be finalized at the end of
    September 2022. The construction agreements are expected to be signed following the decision with respect to the contractor, and construction work will commence thereafter.
    The Company has additional projects in earlier development stages and the intention is to reach a portfolio of approximately 1,000 MW PV in various degrees of development and operations by
    the year 2025.
    The Company is negotiating a financing agreement for the financing of 600 MW PV projects that are in advanced development stages with a leading European bank in the field.
    Activity in Israel: The Company is engaged in the construction and management of the Manara Cliff pumped storage project, which is in advanced construction.
    The development of the licenses for the construction of 40 MW PV + 80 MW/hour storage in batteries is in advanced stages. A connection to the electricity grid was guaranteed for a large part
    of the project, the tender for contractors was concluded and a winning contractor was selected. The Company is in negotiations with financing entities for the purpose of obtaining financing for
    the project.
    The Company continues to develop a portfolio of land for future projects in the field of PV and battery storage, including the potential expansion of the Talmei Yosef project.
    Activity in the Netherlands: In connection with the war in Ukraine and the stoppage of Russian gas supply to Europe, there are substantial changes in the field of biogas in the Netherlands and
    Europe. Europe in general and the Netherlands specifically have set ambitious goals for increasing gas production from waste. Various incentives are being considered, the main of which is
    pushing the price of the green certificates upwards and as of today the price of the aforementioned certificates has increased from 13–15-euro cents per certificate to around 45-euro cents per
    certificate. The gas price for 2023, which is determined on the basis of the 2022 average, is also expected to be above 90-euro cents per cubic meter, a price that is higher than the cap of the
    subsidy (75-euro cents per cubic meter). Therefore, in 2023 and possibly also in 2024 the Company will examine the possibility of temporarily exiting the subsidy regime. Not using the subsidy
    during 2023 and 2024 will enable the Company to postpone the termination of the subsidy period (originally 12 years) by two years.
    Green certificates are issued according to the amount of green gas supplied by the Company’s plants, whereby for every cubic meter supplied, the Company receives one green certificate. The
    Company currently expects to produce approximately 14 million cubic meters of green gas during 2023, which are expected to be sold at an average price of 45 Eurocents per certificate. The
    expected income to the Company is therefore approximately €6 million for 2023, compared to an average income from the sale of green certificates of approximately €2 million in previous years.
    On the other hand, due to the war in Ukraine, there was an increase in the price of feedstock, which is based on agricultural residues, and in the cost of transportation and the price of electricity
    (which increased tenfold). These circumstances caused an increase in expenses, however the Company expects that the increase in income will exceed the increase in expenses. The increase in
    income is already partially reflected in the high prices of the green certificates and is expected to continue to be reflected next year as prices of green certificates are expected to continue to
    increase, and in addition gas prices are also expected to be high.
    The increase in electricity prices in the Netherlands did not substantially affect 2 of the 3 biogas facilities owned by the Company, which produce the electricity and heat they consume for
    themselves. However, the Gelderland project, which was acquired in December 2020, is not equipped with the means to self-generate electricity and heat and is required to pay for the electricity,
    and therefore was negatively affected by the increase in the price of electricity. In May 2022, the Company received notification of approval for a subsidy for generation of electricity and heat in
    Gelderland and, in August 2022, a generator (CHP) was ordered and is expected to start producing electricity for the Gelderland facility this December or January.
    The Company estimates that with the increasing importance of the biogas field, this field will enter a new period which is expected to substantially improve the results of the Company’s biogas
    facilities.
    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 similarlytitled 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 12 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 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 and Spain, including:
    For more information about Ellomay, visit http://www.ellomay.com.
    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 the impact of continued war between Russia and Ukraine, including its impact on
    electricity prices, availability of raw materials and disruptions in supply changes, the impact of the Covid-19 pandemic on the Company’s operations and projects, including in connection with
    steps taken by authorities in countries in which the Company operates, changes in the market price of electricity and in demand, regulatory changes, including extension of current or approval of
    new rules and regulations increasing the operating expenses of manufacturers of renewable energy in Spain, 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, and technical and other disruptions in the operations or construction of the
    power plants owned by the Company. 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: hilai@ellomay.com