Ellomay Capital Reports Results for the Three Months Ended March 31, 2020

Ellomay Capital Reports Results for the Three Months Ended March 31, 2020
Tel-Aviv, Israel, June 23, 2020 – 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 its unaudited financial results for the three month period ended March 31, 2020.
Financial Highlights
• Revenues were approximately €1.9 million for the three months ended March 31, 2020, compared to approximately €4.7 million for the three months ended March 31, 2019. The decrease in
revenues is mainly due to the sale of ten Italian indirectly wholly-owned subsidiaries of the Company, which held twelve photovoltaic plants in Italy with an aggregate installed capacity of
approximately 22.6 MWp, during December 2019 (the “Italian PV Portfolio”).
• Operating expenses were approximately €1.1 million for the three months ended March 31, 2020, compared to approximately €1.7 million for the three months ended March 31, 2019. The
decrease in operating expenses is mainly attributable to the sale of the Italian PV Portfolio and to increased operational efficiency of the Company’s Waste-to-Energy projects in the
Netherlands. Depreciation expenses were approximately €0.7 million for the three months ended March 31, 2020, compared to approximately €1.6 million for the three months ended March 31,

  1. The decrease reflects the sale of the Italian PV Portfolio.
    • Project development costs were approximately €1.8 million for the three months ended March 31, 2020, compared to approximately €0.9 million for the three months ended March 31, 2019. The
    increase in project development expenses is mainly attributable to the development of photovoltaic projects in Italy.
    • General and administrative expenses were approximately €1.1 million for the three months ended March 31, 2020, compared to approximately €0.9 million for the three months ended March 31,
  2. There was no material change in the substance and composition of the expenses included in general and administrative expenses between the two periods.
    • Share of profits of equity accounted investee, after elimination of intercompany transactions, was approximately €1.3 million for the three months ended March 31, 2020, compared to
    approximately €1.2 million for the three months ended March 31, 2019. The increase in the Company’s share of profit of equity accounted investee is mainly attributable to lower financing
    expenses incurred by Dorad Energy Ltd. for the period as a result of the CPI indexation of loans from banks.
    • Financing expenses, net were approximately €0.4 million for the three months ended March 31, 2020, compared to approximately €1.7 million for the three months ended March 31, 2019. The
    decrease in financing expenses, net, was mainly due to: (i) income recorded in connection with the reevaluation of the Company’s euro/US$ forward transactions and revaluation of Dori
    Energy loan in the aggregate amount of approximately €1 million during the three months ended March 31, 2020, compared to approximately €0.4 million during the three months ended March
    31, 2019, (ii) decreased expenses resulting from exchange rate differences amounting to approximately €0.7 million in the three months ended March 31, 2020, compared to approximately €1.2
    million for the three months ended March 31, 2019, mainly in connection with the New Israeli Shekel cash and cash equivalents and with the New Israeli Shekel denominated Debentures,
    caused by the 0.6% appreciation of the euro against the NIS during the three months ended March 31, 2020, compared to the 5% devaluation of the euro against the NIS during the three
    months ended March 31, 2019 and (iii) a decrease in financing expenses of approximately €0.3 million compared to financing expenses in the three months ended March 31, 2019 resulting
    from the early repayment of the Company’s Series A Debentures and the sale of the Italian PV Portfolio, including all related project finance.
    First Quarter 2020 CEO Review
    Ran Fridrich, CEO and a board member of the Company, provided the following CEO review:
    The immediate impact of the pandemic on the Company’s activities has been minor thus far.
    Out of concern for its employees, the Company was prepared to enable its employees to work full-time from home. All employees currently have remote access and if additional
    quarantine is required, the Company’s work will not be affected.
    The effect is mainly reflected in the decrease of electricity prices in Spain, which impacts the revenues of the Company’s 4 currently active Spanish photovoltaic facilities. Approximately
    20% of the revenues of these facilities is derived from the sale of electricity to the grid at current electricity prices. As a result of the decrease in electricity prices, the revenues from
    these facilities in the first quarter of 2020 decreased by approximately €0.1 million compared to the revenues in the same period in 2019.
    The pandemic caused a cumulative delay of approximately 30 days in the completion of works in the Talasol project (300 MW photovoltaic plant) located in Spain. Despite this delay, we
    currently expect that the EPC contractor will meet the original delivery dates of the project.
    As for the long-term effects, the main influencing factor is the amount of time it will take for electricity prices to return to the pre-crisis price environment. In our opinion, based on the
    assessment of experts in the field, the process is expected to take approximately two years.
    The impact of electricity prices on the Talasol project is minimal, as we have a fixed rate agreement (PPA) for a period of 10 years from the date of commercial operation in connection
    with approximately 80% of the project output.
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    • Taxes on income were approximately €0.1 million for the three months ended March 31, 2020, compared to approximately €0.2 million for the three months ended March 31, 2019.
    • Loss for the three months ended March 31, 2020 was approximately €1.9 million, compared to a loss of approximately €1 million for the three months ended March 31, 2019.
    • Total other comprehensive income was approximately €14 million for the three months ended March 31, 2020, compared to approximately €0.6 million for the three months ended March 31,
  3. The increase in total other comprehensive income mainly resulted from changes in fair value of cash flow hedges.
    • Total comprehensive income was approximately €12.2 million for the three months ended March 31, 2020, compared to total comprehensive loss of approximately €0.4 million for the three
    months ended March 31, 2019.
    • EBITDA was approximately €(0.6) million for the three months ended March 31, 2020, compared to approximately €2.5 million for the three months ended March 31, 2019.
    • Net cash used in operating activities was approximately €0.5 million for the three months ended March 31, 2020, compared to net cash provided by operating activities of approximately €0.2
    million for the three months ended March 31, 2019. The decrease in net cash from operating activities is mainly attributable to the sale of Italian PV Portfolio.
    • As of June 1, 2020, the Company held approximately €56.7 million in cash and cash equivalents, approximately €6.4 million in short-term deposits, approximately €2.3 million in marketable
    securities and approximately €10.3 million in restricted short-term and long-term cash.
    • Impact of COVID – 19 on the Company’s activities
    • As for projects under development in Italy and Spain (an aggregate of up to 650 MW), we currently estimate that when these projects reach financial closing, the prevailing electricity prices
    will enable the signing of PPA transactions at prices that are in line with our financial model. In parallel, the panel prices and construction costs are expected to continue to decline and
    support the economic viability of the projects. We currently estimate that the return spreads to us will be around an 11%-13% leveraged return, with 60% financing coverage.
    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 historical financial 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 measures presented by other companies. The Company’s EBITDA may not be indicative of the historic operating results of the Company; nor is it
    meant to be predictive of potential future results. A reconciliation between results on an IFRS and non-IFRS basis is provided in the last table 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:
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    • The majority of the Company’s efforts today are focused on the successful completion of the Talasol project, the development of photovoltaic plants in Spain and Italy, and in bringing the
    pumped storage project in the Manara Cliff, Israel, to financial closing.
    • The first quarter of 2020 was characterized by a decrease in revenues, mainly as a result of the sale of our Italian PV portfolio. Financing expenses in the quarter decreased by approximately
    €1.3 million as a result of exchange rate differences, revaluation of a loan to an equity accounted investee and due to a significant reduction in the Company’s debt.
    • Project development expenses increased by more than €1 million in the quarter, as a result of increased volume of projects that are currently in the development pipeline.
    • The Company continues its attempts to reduce costs and increase operational efficiency of its operating photovoltaic facilities in Spain and Israel.
    • Biogas operations in the Netherlands reached a stable operating position and are fully in line with the planned budget. In February 2020, a very strong storm hit one of the facilities (GGOT),
    causing the facility to be partially deactivated. The damage repair and return of the facility to full activity took about 8 weeks, as the process of returning to full biological facility output is
    gradual. In May 2020, the facility returned to full operation and current production exceeds 100% of the originally planned output. Facility insurance and profit loss insurance are expected
    cover the majority of the damage.
    • The Company’s total equity increased by approximately 24% during the first quarter to approximately €133 million.
    • Approximately 7.9MW of photovoltaic power plants in Spain and a photovoltaic power plant of approximately 9 MW in Israel;
    • 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 860MW, representing
    about 6%-8% of Israel’s total current electricity consumption;
    • 51% of Talasol, which is involved in a project to construct a photovoltaic plant with a peak capacity of 300MW in the municipality of Talaván, Cáceres, Spain;
    • 100% of Groen Gas Goor B.V. and of Groen Gas Oude-Tonge B.V., project companies developing anaerobic digestion plants with a green gas production capacity of approximately 375
    Nm3/h, in Goor, the Netherlands and 475 Nm3/h, in Oude Tonge, the Netherlands, respectively;
    • 75% of Ellomay Pumped Storage (2014) Ltd. (including 6.67% that are held by a trustee in trust for us and other parties), which is involved in a project to construct a 156 MW pumped
    storage hydro power plant in the Manara Cliff, Israel.
    Ellomay Capital is controlled by Mr. Shlomo Nehama, Mr. Hemi Raphael and Mr. Ran Fridrich. Mr. Nehama is one of Israel’s prominent businessmen and the former Chairman of Israel’s
    leading bank, Bank Hapohalim, and Messrs. Raphael and Fridrich both have vast experience in financial and industrial businesses. These controlling shareholders, along with Ellomay’s
    dedicated professional management, accumulated extensive experience in recognizing suitable business opportunities worldwide. Ellomay believes the expertise of Ellomay’s controlling
    shareholders and management enables the Company to access the capital markets, as well as assemble global institutional investors and other potential partners. As a result, we believe
    Ellomay is capable of considering significant and complex transactions, beyond its immediate financial resources.
    For more information about Ellomay, visit https://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 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, regulatory changes, 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, changes in demand 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 Weintraub
    CFO
    Tel: +972 (3) 797-1111
    Email: kaliaw@ellomay.com