EX-99.2 3 exhibit_99-2.htm EXHIBIT 99.2
Exhibit 99.2

 Ellomay Capital Ltd. and its
Subsidiaries
 
Condensed Consolidated Interim
Financial Statements
As at June 30, 2020
(Unaudited)

Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Financial Statements

Contents

 
Page
   
F-2
   
F-3
   
F-4 - F-7
   
F-8
   
F-9 - F-25

F - 1
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Financial Position

         
June 30,
    
December 31,
    
June 30,
  
         
2020
    
2019
    
2020
  
         
(Unaudited)
    
(Audited)
    
(Unaudited)
  
                     
Convenience Translation
  
   
Note
    
€ in thousands
    
into US$ in thousands*
  
Assets
                        
Current assets
                        
Cash and cash equivalents
          
51,232
      
44,509
      
57,393
  
Marketable securities
  
4
      
2,226
      
2,242
      
2,494
  
Short term deposits
  
4
      
6,439
      
6,446
      
7,213
  
Restricted cash
  
4
      
-
      
22,162
      
-
  
Receivable from concession project
          
1,486
      
1,463
      
1,665
  
Financial assets
          
-
      
1,418
      
-
  
Trade and other receivables
  
5
      
4,790
      
4,882
      
5,366
  
           
66,173
      
83,122
      
74,131
  
Non-current assets
                              
Investment in equity accounted investee
  
6
      
32,165
      
33,561
      
36,033
  
Advances on account of investments
          
882
      
883
      
988
  
Receivable from concession project
          
26,173
      
27,122
      
29,320
  
Fixed assets
  
8
      
194,521
      
114,389
      
217,913
  
Right-of-use asset
          
15,291
      
15,401
      
17,130
  
Intangible asset
          
4,857
      
5,042
      
5,441
  
Restricted cash and deposits
  
4
      
10,275
      
10,956
      
11,511
  
Deferred tax
          
5,777
      
2,285
      
6,472
  
Long term receivables
  
5
      
5,305
      
12,249
      
5,943
  
Derivatives
  
7
      
209
      
5,162
      
234
  
           
295,455
      
227,050
      
330,985
  
Total assets
          
361,628
      
310,172
      
405,116
  
Liabilities and Equity
                              
Current liabilities
                              
Current maturities of long term bank loans**
          
4,603
      
4,138
      
5,157
  
Current maturities of long term loans**
          
2,472
      
-
      
2,769
  
Debentures
          
4,592
      
26,773
      
5,144
  
Trade payables
          
1,730
      
1,765
      
1,940
  
Other payables
          
5,425
      
5,010
      
6,077
  
           
18,822
      
37,686
      
21,087
  
Non-current liabilities
                              
Lease liability
          
15,487
      
15,402
   
17,349
  
Liabilities to banks **
          
110,906
      
**40,805

   
124,243
  
Other long-term loans **
          
46,711
      
**48,377

   
52,328
  
Debentures
          
40,087
      
44,811
      
44,908
  
Deferred tax
          
6,854
      
6,467
      
7,678
  
Other long-term liabilities
          
1,289
      
1,795
      
1,444
  
Derivatives
  
7
      
14,152
      
7,263
      
15,854
  
           
235,486
      
164,920
      
263,804
  
Total liabilities
          
254,308
      
202,606
      
284,891
  
                               
Equity
                              
Share capital
          
23,933
      
21,998
      
26,811
  
Share premium
          
75,433
      
64,160
      
84,504
  
Treasury shares
          
(1,736
)
    
(1,736
)
    
(1,945
)
Transaction reserve with non-controlling Interests
          
6,106
      
6,106
      
6,840
  
Reserves
          
(1,454
)
    
3,283
      
(1,629
)
Retained earnings
          
9,346
      
12,818
      
10,470
  
Total equity attributed to shareholders of the Company
          
111,628
      
106,629
      
125,051
  
Non-Controlling Interest
          
(4,308
)
    
937
      
(4,826
)
Total equity
          
107,320
      
107,566
      
120,225
  
Total liabilities and equity
          
361,628
      
310,172
      
405,116
  

* Convenience translation into US$ (exchange rate as at June 30, 2020: EUR 1 = US$ 1.120)
**Reclassified

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 2
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Comprehensive Income (Loss)

   
For the six
    
For the six
    
For the year
    
For the six
  
   
months ended
    
months ended
    
ended December
    
months ended
  
   
June 30, 2020
    
June 30, 2019
    
31, 2019
    
June 30, 2020
  
   
(Unaudited)
    
(Unaudited)
    
(Audited)
    
(Unaudited)
  
         
Convenience
  
         
Translation
  
   
€ in thousands (except per share amounts)
    
into US$*
  
                           
Revenues
    
4,214
      
10,303
      
18,988
      
4,721
  
Operating expenses
    
(2,146
)
    
(3,455
)
    
(6,638
)
    
(2,404
)
Depreciation and amortization expenses
    
(1,447
)
    
(3,043
)
    
(6,416
)
    
(1,621
)
Gross profit
    
621
      
3,805
      
5,934
      
696
  
                                 
Project development costs
    
(2,338
)
    
(2,714
)
    
(4,213
)
    
(2,619
)
General and administrative expenses
    
(2,204
)
    
(1,879
)
    
(3,827
)
    
(2,469
)
Share of profits of equity accounted investee
    
850
      
31
      
3,086
      
952
  
Other income (expenses), net
    
-
      
-
      
(2,100
)
    
-
  
Capital gain
    
-
      
-
      
18,770
      
-
  
Operating profit (loss)
    
(3,071
)
    
(757
)
    
17,650
      
(3,440
)
                                 
Financing income
    
886
      
870
      
1,827
      
993
  
Financing income in connection with derivatives and warrants, net
    
1,099
      
460
      
897
      
1,231
  
Financing expenses
    
(3,095
)
    
(4,457
)
    
(10,877
)
    
(3,467
)
Financing expenses, net
    
(1,110
)
    
(3,127
)
    
(8,153
)
    
(1,243
)
                                 
Profit (loss) before taxes on income
    
(4,181
)
    
(3,884
)
    
9,497
      
(4,683
)
Tax benefit (Taxes on income)
    
(88
)
    
(514
)
    
287
      
(99
)
Profit (loss) for the period
    
(4,269
)
    
(4,398
)
    
9,784
      
(4,782
)
Profit (loss) attributable to:
                                
Owners of the Company
    
(3,472
)
    
(2,751
)
    
12,060
      
(3,890
)
Non-controlling interests
    
(797
)
    
(1,647
)
    
(2,276
)
    
(892
)
Profit (loss) for the period
    
(4,269
)
    
(4,398
)
    
9,784
      
(4,782
)
Other comprehensive income (loss) items that
                                
after initial recognition in comprehensive income
                                
(loss) were or will be transferred to profit or loss:
                                
Foreign currency translation differences for foreign Operations
    
(86
)
    
982
      
2,103
      
(97
)
Effective portion of change in fair value of cash flow hedges
    
(9,289
)
    
(368
)
    
1,076
      
(10,406
)
Net change in fair value of cash flow hedges transferred to profit or loss
    
190
      
(1,104
)
    
(1,922
)
    
213
  
Total other comprehensive income (loss)
    
(9,185
)
    
(490
)
    
1,257
      
(10,290
)
                                 
Total other comprehensive income (loss) attributable to:
                                
Owners of the Company
    
(4,737
)
    
(13
)
    
2,114
      
(5,307
)
Non-controlling interests
    
(4,448
)
    
(477
)
    
(857
)
    
(4,983
)
Total other comprehensive income (loss)
    
(9,185
)
    
(490
)
    
1,257
      
(10,290
)
                                 
Total comprehensive income (loss) for the period
    
(13,454
)
    
(4,888
)
    
11,041
      
(15,072
)
                                 
Total comprehensive income (loss) for the period attributable to:
                                
Owners of the Company
    
(8,209
)
    
(2,764
)
    
14,174
      
(9,197
)
Non-controlling interests
    
(5,245
)
    
(2,124
)
    
(3,133
)
    
(5,875
)
Total comprehensive income (loss) for the period
    
(13,454
)
    
(4,888
)
    
11,041
      
(15,072
)
                                 
Basic earnings (loss) per share
    
(0.29
)
    
(0.26
)
    
1.09
      
(0.32
)
Diluted earnings (loss) per share
    
(0.29
)
    
(0.26
)
    
1.09
      
(0.32
)

* Convenience translation into US$ (exchange rate as at June 30, 2020: EUR 1 = US$ 1.120)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 3
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity

                     
Non- controlling
    
Total
  
               
Attributable to shareholders of the Company
    
Interests
    
Equity
  
   
Share capital
    
Share premium
    
Retained earnings
    
Treasury shares
    
Translation reserve from
foreign operations
    
Hedging Reserve
    
Interests Transaction reserve with
non-controlling Interests
    
Total
              
   
€ in thousands
  
For the six months ended June 30, 2020 (unaudited):
                                                            
Balance as at January 1, 2020
    
21,998
      
64,160
      
12,818
      
(1,736
)
    
4,356
      
(1,073
)
    
6,106
      
106,629
      
937
      
107,566
  
Loss for the period
    
-
      
-
      
(3,472
)
    
-
      
-
      
-
      
-
      
(3,472
)
    
(797
)
    
(4,269
)
Other comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(98
)
    
(4,639
)
    
-
      
(4,737
)
    
(4,448
)
    
(9,185
)
Total comprehensive loss for the period
    
-
      
-
      
(3,472
)
    
-
      
(98
)
    
(4,639
)
    
-
      
(8,209
)
    
(5,245
)
    
(13,454
)
Transactions with owners of the Company,  recognized directly in equity:
                                                                                
Issuance of ordinary shares
    
1,935
      
11,253
      
-
      
-
      
-
      
-
      
-
      
13,188
      
-
      
13,188
  
Share-based payments
    
-
      
20
      
-
      
-
      
-
      
-
      
-
      
20
      
-
      
20
  
Balance as at June 30, 2020
    
23,933
      
75,433
      
9,346
      
(1,736
)
    
4,258
      
(5,712
)
    
6,106
      
111,628
      
(4,308
)
    
107,320
  

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 4

Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity (cont’d)

                                                   
Non-
        
                                                   
controlling
    
Total
  
   
Attributable to shareholders of the Company
    
Interests
    
Equity
  
               

         

         
Transaction
                    
               
Retained
          
Translation
reserve
         
reserve
with
                    
   
Share
    
Share
    
earnings
(accumulated
    
Treasury
    
from
foreign
    
Hedging
    
non-
controlling
                    
   
capital
    
Premium
    
deficit)
    
shares
    
operations
    
Reserve
    
Interests
    
Total
              
   
€ in thousands
  
For the six months ended June 30, 2019 (unaudited):
                                                            
Balance as at January 1, 2019
    
19,980
      
58,344
      
758
      
(1,736
)
    
1,396
      
(227
)
    
-
      
78,515
      
(1,558
)
    
76,957
  
Loss for the period
    
-
      
-
      
(2,751
)
    
-
      
-
      
-
      
-
      
(2,751
)
    
(1,647
)
    
(4,398
)
Other comprehensive loss for the period
    
-
      
-
      
-
      
-
      
1,459
      
(1,472
)
    
-
      
(13
)
    
(477
)
    
(490
)
Total comprehensive loss for the period
    
-
      
-
      
(2,751
)
    
-
      
1,459
      
(1,472
)
    
-
      
(2,764
)
    
(2,124
)
    
(4,888
)
Transactions with owners of the Company, recognized directly in equity:
                                                                                
Sale of shares in subsidiaries to
                                                                                
non-controlling interests
    
-
      
-
      
-
      
-
      
-
      
-
      
5,614
      
5,614
      
4,899
      
10,513
  
Options exercise
    
8
      
11
      
-
      
-
      
-
      
-
      
-
      
19
      
-
      
19
  
Share-based payments
    
-
      
3
      
-
      
-
      
-
      
-
      
-
      
3
      
-
      
3
  
Balance as at June 30, 2019
    
19,988
      
58,358
      
(1,993
)
    
(1,736
)
    
2,855
      
(1,699
)
    
5,614
      
81,387
      
1,217
      
82,604
  

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 5
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity (cont’d)

         
Non-
        
         
controlling
    
Total
  
   
Attributable to shareholders of the Company
    
Interests
    
Equity
  
                                       
Transaction
                    
                           
Translation
           reserve
                    
   
Share
    
Share
    
Retained
    
Treasury
    
Reserve
from
foreign
    
Hedging
    
with
non-
controlling
                    
   
capital
    
premium
    
earnings
    
shares
    
operations
    
Reserve
    
Interests
    
Total
              
   
€ in thousands
  
For the year ended December 31, 2019 (audited):
                                                            
Balance as at January 1, 2019
    
19,980
      
58,344
      
758
      
(1,736
)
    
1,396
      
(227
)
    
-
      
78,515
      
(1,558
)
    
76,957
  
Profit (loss) for the year
    
-
      
-
      
12,060
      
-
      
-
      
-
      
-
      
12,060
      
(2,276
)
    
9,784
  
Other comprehensive loss for the year
    
-
      
-
      
-
      
-
      
2,960
      
(846
)
    
-
      
2,114
      
(857
)
    
1,257
  
Total comprehensive loss for the year
    
-
      
-
      
12,060
      
-
      
2,960
      
(846
)
    
-
      
14,174
      
(3,133
)
    
11,041
  
Transactions with owners of the Company,  recognized directly in equity:
                                                                                
Sale of shares in subsidiaries to non-controlling interests
    
-
      
-
      
-
      
-
      
-
      
-
      
5,439
      
5,439
      
5,374
      
10,813
  
Purchase of shares in subsidiaries from non-controlling interests
    
-
      
-
      
-
      
-
      
-
      
-
      
667
      
667
      
254
      
921
  
Issuance of ordinary shares
    
2,010
      
5,797
      
-
      
-
      
-
      
-
      
-
      
7,807
      
-
      
7,807
  
Options exercise
    
8
      
11
      
-
      
-
      
-
      
-
      
-
      
19
      
-
      
19
  
Share-based payments
    
-
      
8
      
-
      
-
      
-
      
-
      
-
      
8
      
-
      
8
  
Balance as at December 31, 2019
    
21,998
      
64,160
      
12,818
      
(1,736
)
    
4,356
      
(1,073
)
    
6,106
      
106,629
      
937
      
107,566
  

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 6
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity (cont’d)

                     
Non- controlling
    
Total
  
               
Attributable to shareholders of the Company
    
Interests
    
Equity
  
   
Share capital
    
Share premium
    
Retained earnings
    
Treasury shares
    
Translation reserve from
foreign operations
    
Hedging Reserve
    
Interests Transaction reserve with
non-controlling Interests
    
Total
              
   
Convenience translation into US$*
  
For the six months ended June 30, 2020 (unaudited):
                                                            
Balance as at January 1, 2020
    
24,643
      
71,876
      
14,360
      
(1,945
)
    
4,880
      
(1,202
)
    
6,840
      
119,452
      
1,049
      
120,501
  
Loss for the period
    
-
      
-
      
(3,890
)
    
-
      
-
      
-
      
-
      
(3,890
)
    
(892
)
    
(4,782
)
Other comprehensive loss for the period
    
-
      
-
      
-
      
-
      
(110
)
    
(5,197
)
    
-
      
(5,307
)
    
(4,983
)
    
(10,290
)
Total comprehensive loss for the period
    
-
      
-
      
(3,890
)
    
-
      
(110
)
    
(5,197
)
    
-
      
(9,197
)
    
(5,875
)
    
(15,072
)
Transactions with owners of the Company,  recognized directly in equity:
                                                                                
Issuance of ordinary shares
    
2,168
      
12,606
      
-
      
-
      
-
      
-
      
-
      
14,774
      
-
      
14,774
  
Share-based payments
    
-
      
22
      
-
      
-
      
-
      
-
      
-
      
22
      
-
      
22
  
Balance as at June 30, 2020
    
26,811
      
84,504
      
10,470
      
(1,945
)
    
4,770
      
(6,399
)
    
6,840
      
125,051
      
(4,826
)
    
120,225
  

* Convenience translation into US$ (exchange rate as at June 30, 2020: EUR 1 = US$ 1.120)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 7
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Cash Flows

   
For the six
    
For the six
    
For the year
    
For the six
  
   
months ended
    
months ended
    
ended December
    
months ended
  
   
June 30, 2020
    
June 30, 2019
    
31, 2019
    
June 30, 2020
  
   
(Unaudited)
    
(Unaudited)
    
(Audited)
    
(Unaudited)
  
         
Convenience
  
         
Translation
  
   
€ in thousands
    
into US$*
  
Cash flows from operating activities
                          
Income (loss) for the period
    
(4,269
)
    
(4,398
)
    
9,784
      
(4,782
)
Adjustments for:
                                
Financing expenses, net
    
1,110
      
3,127
      
8,153
      
1,243
  
Capital gain
    
-
      
-
      
(18,770
)
    
-
  
Depreciation
    
1,447
      
3,043
      
6,416
      
1,621
  
Share-based payment transactions
    
20
      
3
      
8
      
22
  
Share of profits of equity accounted investees
    
(850
)
    
(31
)
    
(3,086
)
    
(952
)
Payment of interest on loan by an equity accounted investee
    
582
      
370
      
370
      
652
  
Change in trade receivables and other receivables
    
127
      
(1,744
)
    
403
      
142
  
Change in other assets
    
(234
)
    
(708
)
    
(1,950
)
    
(262
)
Change in receivables from concessions project
    
704
      
646
      
1,329
      
789
  
Change in accrued severance pay, net
    
-
      
8
      
9
      
-
  
Change in trade payables
    
(35
)
    
1,065
      
461
      
(39
)
Change in other payables
    
368
      
1,054
      
5,336
      
412
  
Income tax expense (tax benefit)
    
88
      
514
      
(287
)
    
99
  
Income taxes paid
    
-
      
-
      
(100
)
    
-
  
Interest received
    
869
      
835
      
1,719
      
974
  
Interest paid
    
(1,853
)
    
(2,655
)
    
(6,083
)
    
(2,076
)
Net cash provided by (used in) operating activities
    
(1,926
)
    
1,129
      
3,712
      
(2,157
)
                                 
Cash flows from investing activities
                                
Acquisition of fixed assets
    
(81,280
)
    
(44,519
)
    
(74,587
)
    
(91,054
)
Acquisition of subsidiary, net of cash acquired
    
-
      
(1,000
)
    
(1,000
)
    
-
  
Proceeds from sale of investments
    
-
      
-
      
34,586
      
-
  
Compensation as per agreement with Erez Electricity Ltd.
    
1,418
      
-
      
-
      
1,589
  
Repayment of loan by an equity accounted investee
    
1,923
      
-
      
-
      
2,154
  
Proceeds from settlement of derivatives, net
    
-
      
532
      
532
      
-
  
Proceeds (investment) in restricted cash, net
    
22,580
      
(5,219
)
    
(26,003
)
    
25,295
  
Investment in short term deposit
    
-
      
-
      
(6,302
)
    
-
  
Repayment of loan to others
    
-
      
3,500
      
3,912
      
-
  
Net cash used in investing activities
    
(55,359
)
    
(46,706
)
    
(68,862
)
    
(62,016
)
                                 
Cash flows from financing activities
                                
Repayment of long-term loans
    
(2,804
)
    
(4,158
)
    
(5,844
)
    
(3,141
)
Repayment of Debentures
    
(26,923
)
    
(4,532
)
    
(9,836
)
    
(30,161
)
Cost associated with long term loans
    
-
      
-
      
(12,218
)
    
-
  
Proceeds from options
    
-
      
19
      
19
      
-
  
Sale of shares in subsidiaries to non-controlling interests
    
-
      
14,062
      
13,936
      
-
  
Acquisition of shares in subsidiaries from non-controlling interests
    
-
      
-
      
(2,961
)
    
-
  
Issuance of warrants
    
320
      
-
      
-
      
358
  
Issuance of ordinary shares
    
13,188
      
-
      
7,807
      
14,774
  
Proceeds from long term loans, net
    
80,584
      
58,894
      
59,298
      
90,275
  
Proceeds from issuance of Debentures, net
    
-
      
-
      
22,317
      
-
  
Net cash from financing activities
    
64,365
      
64,285
      
72,518
      
72,105
  
                                 
Effect of exchange rate fluctuations on cash and cash equivalents
    
(357
)
    
(55
)
    
259
      
(400
)
Increase in cash and cash equivalents
    
6,723
      
18,653
      
7,627
      
7,532
  
Cash and cash equivalents at the beginning of the period
    
44,509
      
36,882
      
36,882
      
49,861
  
Cash and cash equivalents at the end of the period
    
51,232
      
55,535
      
44,509
      
57,393
  

* Convenience translation into US$ (exchange rate as at June 30, 2020: EUR 1 = US$ 1.120)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 8
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 1 - General

Ellomay Capital Ltd. (hereinafter - the “Company”), is an Israeli company operating in the business of renewable energy and a power generator and developer of renewable energy and power projects in Europe and Israel. As of June 30, 2020, the Company owns five photovoltaic plants (each, a “PV Plant” and, together, the “PV Plants”) that are connected to their respective national grids and operating as follows: (i) four photovoltaic plants in Spain with an aggregate installed capacity of approximately 7.9 MWp and (ii) one photovoltaic plant in Israel with an aggregate installed capacity of approximately 9 MWp. In addition, the Company indirectly owns: (i) 9.375% of Dorad Energy Ltd. (hereinafter - “Dorad”), (ii) 51% of Talasol Solar S.L.U which is constructing a photovoltaic plant with a peak capacity of 300 MW in the municipality of Talaván, Cáceres, Spain (hereinafter – the “Talasol Project), (iii) Groen Gas Goor B.V. and Groen Gas Oude-Tonge B.V., project companies operating 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, and (iv) 75% of Ellomay Pumped Storage (2014) Ltd. (including 6.67% that are held by a trustee in trust for the Company and other parties), which is promoting a project to construct a 156 MW pumped storage hydro power plant in the Manara Cliff, Israel.

The ordinary shares of the Company are listed on the NYSE American and on the Tel Aviv Stock Exchange under the trading symbol “ELLO”. The address of the Company’s registered office is 18 Rothschild Blvd., 1st Floor, Tel Aviv, Israel.

Effects of the spreading of the coronavirus

Following the outbreak of the coronavirus (Covid-19) in China in December 2019, and the spreading of Covid-19 to many other countries since the beginning of 2020, creating the current pandemic situation, there was a decrease in economic activity in many areas around the world, including Israel, Spain and Italy. The spread of the virus has led, inter alia, to a disruption in the supply chain, a decrease in global transportation, restrictions on travel and work that were announced by the State of Israel and other countries around the world and a decrease in the value of financial assets and commodities on the markets in Israel and the world. In recent months, Spain, Italy and Israel have experienced a resurgence in the number of Covid-19 cases, causing the local governments to renew restrictions and implement additional measures in order to attempt to curb the spread of the pandemic. Although the Company’s operations have not thus far been materially adversely affected by the restrictions imposed by local governments and authorities in the countries in which the Company operates, in the event the restrictions continue, or new restrictions are imposed, the operations of the Company, including the projects under construction and development, may be adversely affected. Also, as a result of the Covid-19 pandemic, the electricity prices in the European markets declined due to the decrease in demand, resulting in a slight decrease in the Company’s revenues in Spain.  The electricity prices in the European markets have since increased and are currently close to the electricity prices that were in effect prior to the pandemic. The spread of Covid-19 and its implications may also indirectly affect the operations of the Company, for example through changes in the prices of oil resulting in a decrease in the electricity prices, and through reduction in demand for electricity, delays in construction of projects due to curtailment of work, limited availability of components required in order to operate or construct new projects, regulatory changes by countries affected by the virus, including changes in subsidies, collection delays, delays in obtaining permits, limited availability or changes in terms of financing for future projects, limited availability of corporate financing and lower returns on potential future investments.  As a result, the Company's business and operating results could be negatively affected. The extent to which the Covid-19 pandemic impacts the business of the Company will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of Covid-19 and the actions to contain Covid-19 or treat its impact, among others. These potential affects could last until a vaccine or successful treatment plan are developed and implemented worldwide.

F - 9
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 2 - Basis of Preparation and Significant Accounting Policies

The accounting policies applied by the Company in these condensed consolidated unaudited interim financial statements are the same as those applied by the Company in its annual financial statements for 2019.

A.          Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the Company’s financial statements as at and for the year ended December 31, 2019 (hereinafter – “the annual financial statements”).

These condensed consolidated interim financial statements were authorized for issue on September 24, 2020.

B.          Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to exercise judgment when making assessments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.

The significant judgments made by management in applying the Company’s accounting policies and the principal assumptions used in the estimation of uncertainty were the same as those that applied to the annual financial statements.

C.          New standards, amendments to standards and interpretations not yet adopted

Amendments to IFRS 9, Financial Instruments, IAS 39, Financial Instruments: Recognition and Measurement, IFRS 7, Financial Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16, Leases, Interest Rate Benchmark Reform – Phase 2 ("the Amendments")

The Amendments include practical expedients regarding the accounting treatment of modifications in contractual terms that are a result of the interest rate benchmark reform (a reform that in the future will lead to the replacement of interest rates such as the Libor and Euribor). Thus for example:


 -
When certain modifications are made in the terms of financial assets or financial liabilities as a result of the reform, the entity shall update the effective interest rate of the financial instrument instead of recognizing a gain or loss.

-
Certain modifications in lease terms that are a result of the reform shall be accounted for as an update to lease payments that depend on an index or rate.

-
Certain modifications in terms of the hedging instrument or hedged item that are a result of the reform shall not lead to the discontinuance of hedge accounting.

The Amendments are applicable retrospectively as from January 1, 2021 with early application permitted. All the amendments are applicable retrospectively by amending the opening balance of equity for the annual reporting period in which the amendment was adopted without a restatement of comparative data. Restatement of comparative data is permitted if this is possible without using "hindsight".

In the opinion of the Company, application of the Amendments is not expected to have a material effect on the financial statements.

F - 10
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 3 - Seasonality

Solar power production has a seasonal cycle due to its dependency on the direct and indirect sunlight and the effect the amount of sunlight has on the output of energy produced. Thus, low radiation levels during the winter months decrease power production.

Note 4 - Restricted Cash, Deposits and Marketable Securities

   
June 30,
    
December 31,
  
   
2020
    
2019
  
   
€ in thousands
  
   
Unaudited
    
Audited
  
Marketable securities (1)
    
2,226
      
2,242
  
Short-term restricted cash (2)
    
-
      
22,162
  
Short-term deposits (3)
    
6,439
      
6,446
  
Long-term restricted non-interest bearing bank deposits (4)
    
2,399
      
3,094
  
Restricted cash, long-term bank deposits (4)
    
7,876
      
7,862
  
Long-term restricted cash and deposits
    
10,275
      
10,956
  


1.
The Company invested in a traded Corporate Bond (rated Baa3 by Moody's) with a coupon rate of 4.435% and a maturity date of December 30, 2020 and in 5.8% WACHOVIA Fixed Interest Float.

2.
On December 16, 2019, the Company announced its intention to repay the entire outstanding principal of the Company’s Series A Debentures on December 31, 2019. Due to technical issues related to the clearing system, the Company executed a regular principal repayment of NIS 20,034 thousand (approximately €5,160 thousand) and the repayment of the remaining outstanding principal balance repaid on January 5, 2020. On December 30, 2019, the funds designated for such repayment were transferred to the nominee company.

3.
Bank deposits with annual interest rate as of June 30, 2020 of 0.24%.

4.
Bank deposits used to secure obligations under loan agreements.

F - 11
 
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 5 - Trade and Other Receivables

   
June 30,
    
December 31,
  
   
2020
    
2019
  
   
€ in thousands
  
   
Unaudited
    
Audited
  
Current Assets:
            
Trade and other receivables:
            
Government authorities
    
621
      
781
  
Income receivable
    
1,321
      
1,075
  
Interest receivable
    
38
      
38
  
Trade receivable
    
69
      
805
  
Inventory
    
167
      
284
  
Derivatives
    
43
      
94
  
Prepaid expenses and other
    
2,531
      
1,805
  
     
4,790
      
4,882
  
Non-current Assets:
                
Long term receivables
                
Prepaid expenses associated with long term loans (1)
    
5,273
      
12,218
  
Annual rent deposits
    
30
      
30
  
Other
    
2
      
1
  
     
5,305
      
12,249
  


(1)
Prepaid commission expenses paid in connection with the Talasol project finance obtained from financing entities.

Note 6 - Investee Companies and Other Investments

Information about investee companies and other investments

A.          U. Dori Energy Infrastructures Ltd. (“Dori Energy”)-

The Company, through its wholly owned subsidiary, Ellomay Clean Energy Ltd. (“Ellomay Energy”), entered into an Investment Agreement (the “Dori Investment Agreement”) with Amos Luzon Entrepreneurship and Energy Group Ltd. (formerly - Dori Group Ltd.) (the “Luzon Group”), and Dori Energy, with respect to an investment in Dori Energy. Dori Energy holds 18.75% of the share capital of Dorad, which owns an approximate 860 MWp bi-fuel operated power plant in the vicinity of Ashkelon, Israel (the “Dorad Power Plant”). Dorad holds production and supply licenses, both expiring in May 2034 and commenced commercial operation in May 2014.

Dorad provided guarantees in favor of the Israeli Electricity Authority, the Israel Electric Corporation and Israel Natural Gas Lines Ltd. These guarantees were provided through Dorad’s shareholders at their proportionate holdings, as required by the financing agreements executed by Dorad. As of June 30, 2020 total performance guarantees provided by Dorad amounted to approximately NIS 172,000 thousand (approximately €44,300 thousand). The Company's indirect share of guarantees that Dorad provided through its shareholders is approximately NIS 16,000 thousand (approximately €4,100 thousand).

F - 12
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 6 - Investee Companies and Other Investments (cont’d)

Information about investee companies and other investments (cont’d)

A.          U. Dori Energy Infrastructures Ltd. (“Dori Energy”) (cont’d)-

Dorad and its shareholders are involved in several legal proceedings as follows:

Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael

In connection with the description of the petition to approve a derivative claim filed by Dory Energy and Hemi Raphael included in Note 6.A to the annual financial statements, evidentiary hearings were held during June, August and September 2020 and the parties filed several motions in connection with the discovery process, the evidentiary hearings and expert opinions. Additional evidentiary hearings are scheduled during the fourth quarter of 2020.

The Company estimates (after consulting with legal counsel), that at this early stage it is not yet possible to assess the outcome of the proceeding.

Petition to Approve a Derivative Claim filed by Edelcom

Please see above under “Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael” for updates in connection with the description of the petition to approve a derivative claim filed by Edelcom Ltd., one of the shareholders of Dorad (“Edelcom”), included in Note 6 to the annual financial statements. The Company estimates (after consulting with legal counsel), that at this early stage it is not yet possible to assess the outcome of the proceeding.

Opening Motion filed by Zorlu

In connection with the description of the opening motion filed by Zorlu Enerji Elektrik Uretim A.S., one of the shareholders of Dorad (“Zorlu”), with the District Court in Tel Aviv asking the court to instruct Dorad to convene a shareholders meeting of Dorad to discuss and vote on the planning and construction of an additional power plant adjacent to the existing power plant, the parties filed their summations in writing during June and July 2020. On August 27, 2020, Dorad informed the District Court that the National Infrastructure Committee resolved, inter alia, to approve the presentation of the plan submitted by Doard in connection with the additional power plant to the District Committee’s and the public’s comments, subject to amendments. On September 9, 2020, Eilat-Ashkelon Infrastructure Services Ltd., one of the shareholders of Dorad, and its representatives on the Dorad board of directors submitted a response to the notice, claiming that the information included in the notice supports a rejection of the opening motion. Zurlo and Edelcom each filed a response on September 13, 2020 asking to remove the notice provided by Dorad from the District Court’s file. On September 17, 2020, the District Court ruled that the notice will not be removed from the file.

F - 13
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 6 - Investee Companies and Other Investments (cont’d)

Information about investee companies and other investments (cont’d)

B.          Pumped Storage Projects (“PSP”) –

On July 17, 2013 the Company entered into a loan agreement with Erez Electricity Ltd. ("Erez Electricity") that owns, among its other holdings, 24% of the pumped storage project in the Gilboa, Israel ("PSP Gilboa") pursuant to which an amount of approximately NIS 770 thousand was loaned to Erez Electricity. In November 2013 in connection with the sale of Erez Electricity's holdings in PSP to third parties, the Company and Erez Electricity reached an agreement according to which the Company was entitled to the repayment of the amount loaned including accrued interest and linkage, amounting to approximately NIS 1,000 thousand and entitled to additional compensation in the aggregate amount of NIS 6,700 thousand (approximately EUR 1,678 thousand) linked to the Israeli CPI and paid in two installments of NIS 1,200 thousand (EUR 260 thousand), which was received in July 2014 and NIS 5,500 thousand (approximately EUR 1,418 thousand), which was received in June 2020 upon receipt of permanent licenses for generation of power and the approval of the technical advisor appointed by the financial institutions who have financed PSP Gilboa to the transfer from set up phase to operational phase.

Note 7 - Financial Instruments

Fair value

(1)          Financial instruments - the composition of the derivatives

   
June 30,
    
December 31,
  
   
2020
    
2019
  
   
€ in thousands
  
   
Unaudited
    
Audited
  
Derivatives presented under current assets
            
Currency swap
    
43
      
94
  
                 
Derivatives presented under non-current assets
                
Financial power swap
    
-
      
4,967
  
Currency swap
    
209
      
103
  
Forward contracts
    
-
      
92
  
     
209
      
5,162
  
                 
Derivatives presented under current liabilities
                
Swap contracts
    
(1,025
)
    
(766
)
                 
Derivatives presented under non-current liabilities
                
Forward contracts
    
-
      
(344
)
Financial power swap
    
(5,432
)
    
-
  
Swap contracts
    
(8,720
)
    
(6,919
)
     
(14,152
)
    
(7,263
)

F - 14
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Financial Instruments (cont’d)

Fair value (cont’d)

(2)          Financial instruments measured at fair value for disclosure purposes only

The carrying amounts of certain financial assets and liabilities, including cash and cash equivalents, trade receivables, other receivables, other short-term investments, deposits, derivatives, bank overdraft, short-term loans and borrowings, trade payables and other payables are the same or proximate to their fair value.

The fair values of the other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

   
June 30, 2020
         
Fair value
         
   
Carrying
                    
Valuation techniques for
  
Inputs used to
   
amount
    
Level 1
    
Level 2
    
Level 3
  
determining fair value
  
determine fair value
   
€ in thousands
         
Non-current liabilities:
                                   
Debentures
    
44,679
      
43,542
      
-
      
-
         
Loans from banks and others (including current maturities)
    
164,692
      
-
      
165,104
      
-
  
Future cash flows by the market interest rate on the date of measurement.
  
Discount rate of Euribor+ 2.53%, fix rate for 5 years 2.9%-3.1%, annual interest of Euribor with a margin (expected to be 1.76%), annual interest of 6 month Euribor with margin of 2%- 2.75% and 4.65% Linkage to Consumer Price Index in Israel.
     
209,371
      
43,542
      
165,104
      
-
         

   
December 31, 2019
         
Fair value
         
   
Carrying
                    
Valuation techniques for
  
Inputs used to
   
amount
    
Level 1
    
Level 2
    
Level 3
  
determining fair value
  
determine fair value
   
€ in thousands
         
Non-current liabilities:
                                   
Debentures
    
71,584
      
73,211
      
-
      
-
         
Loans from banks and others (including current maturities)
    
93,320
      
-
      
94,677
      
-
  
Discounting future cash flows by the market interest rate on the date of measurement.
  
Discount rate of Euribor+ 2.53%, fix rate for 5 years 2.9%-3.1% and 4.65% Linkage to Consumer price index in Israel.
     
164,904
      
73,211
      
94,677
      
-
         

F - 15
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Financial Instruments (cont’d)

Fair value (cont’d)

(3)          Fair value hierarchy of financial instruments measured at fair value

The table below presents an analysis of financial instruments measured at fair value on the temporal basis using valuation methodology in accordance with hierarchy fair value levels. The various levels are defined as follows:


 —
Level 1: quoted prices (unadjusted) in active markets for identical instruments.

—
Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

—
Level 3: inputs that are not based on observable market data (unobservable inputs).

   
June 30, 2020
   
Level 1
    
Level 2
    
Level 3
    
Total
  
Valuation techniques for
   
€ in thousands
  
determining fair value
Marketable securities
    
-
      
2,226
      
-
      
2,226
  
Market price
                                        
Swap contracts
    
-
      
(9,745
)
    
-
      
(9,745
)
Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
                                        
Currency swap
    
-
      
252
      
-
      
252
  
Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
                                        
Dori Energy loan
    
-
      
-
      
8,678
      
8,678
  
The fair value is measured by discounting the expected future loan repayments and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. The discounting rate was estimated at approximately 6.4% and the expected yearly change of Israeli Consumer Price Index, during the expected lifetime of the loan, was estimated at approximately 1%.
                                        
Financial power swap
    
-
      
-
      
(5,432
)
    
(5,432
)
Fair value is measured by discounting the future fixed and assessed cash flows, over the period of the contract and using market interest rates appropriate for similar instruments. The value is adjusted for the parties’ credit risks.

There have been no transfers from any Level to another Level during the six months ended June 30, 2020.

F - 16
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Financial Instruments (cont’d)

Fair value (cont’d)

(3)          Fair value hierarchy of financial instruments measured at fair value (cont’d)

   
December 31, 2019
   
Level 1
    
Level 2
    
Level 3
    
Total
  
Valuation techniques for
   
€ in thousands
  
determining fair value
Income receivable in connection with the A.R.Z. electricity pumped storage project
    
-
      
-
      
1,418
      
1,418
  
The fair value of the income receivable in connection with the A.R.Z. electricity pumped storage project was calculated according to the cash flows expected to be received in 4.5 years following the financial closing of the project, discounted at a weighted interest rate of 2.36% reflecting the credit risk of the debtor.
                                        
Marketable securities
    
-
      
2,242
      
-
      
2,242
  
 
Market price
                                        
Forward contracts
    
-
      
(252
)
    
-
      
(252
)
Fair value measured on the basis of discounting the difference between the forward price in the contract and the current forward price for the residual period until redemption using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
                                        
Swap contracts
    
-
      
(7,685
)
    
-
      
(7,685
)
Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
                                        
Currency swap
    
-
      
197
      
-
      
197
  
Fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
                                        
Dori Energy loan
    
-
      
-
      
10,595
      
10,595
  
The fair value is measured by discounting the expected future loan repayments and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks. The discounting rate was estimated at approximately 10% and the expected yearly change of Israeli Consumer Price Index, during the expected lifetime of the loan, was estimated at approximately 1%.
                                        
Financial power swap
    
-
      
-
      
4,967
      
4,967
  
Fair value is measured by discounting the future fixed and assessed cash flows, over the period of the contract and using market interest rates appropriate for similar instruments. The value is adjusted for the parties’ credit risks.

F - 17
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Financial Instruments (cont’d)

Fair value (cont’d)

(4)          Level 3 financial instruments carried at fair value

The table hereunder presents a reconciliation from the beginning balance to the ending balance of financial instruments carried at fair value in level 3 of the fair value hierarchy:

   
Financial assets
  
   
Income receivable in connection with the A.R.Z. electricity
  
   
pumped storage project
  
   
€ in thousands
  
Balance as at December 31, 2019
    
1,418
  
         
Compensation as per agreement with Erez Electricity Ltd.
    
(1,418
)
         
Balance as at June 30, 2020
    
-
  

   
Financial assets
  
   
Dori Energy loan
  
   
€ in thousands
  
       
Balance as at December 31, 2019
    
10,595
  
         
Repayment of loan to an equity accounted investee
    
(2,505
)
Total income recognized in profit or loss
    
386
  
Interest
    
294
  
Foreign Currency translation adjustments
    
(92
)
         
Balance as at June 30, 2020
    
8,678
  

   
Financial assets
  
   
Financial power swap
  
   
€ in thousands
  
       
Balance as at December 31, 2019
    
4,967
  
         
Total loss is recognized in other comprehensive income
    
(10,399
)
         
Balance as at June 30, 2020
    
(5,432
)

F - 18
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 8 - Fixed assets

               
Office
              
   
Photovoltaic
    
Biogas
    
furniture and
    
Leasehold
        
   
Plants
    
installations
    
equipment
    
Improvements
    
Total
  
   
€ in thousands
  
Cost
                              
Balance as at January 1, 2019
    
98,289
      
18,656
      
138
      
52
      
117,135
  
Additions
    
73,402
      
932
      
9
      
-
      
74,343
  
Disposals
    
(68,908
)
    
-
      
-
      
-
      
(68,908
)
Effect of changes in exchange rates
    
1
      
-
      
-
      
-
      
1
  
Balance as at December 31, 2019
    
102,784
      
19,588
      
147
      
52
      
122,571
  
                                         
Balance as at December 31, 2019
    
102,784
      
19,588
      
147
      
52
      
122,571
  
Additions
    
81,061
      
187
      
5
      
27
      
81,280
  
Disposals
    
-
      
-
      
-
      
(52
)
    
(52
)
Effect of changes in exchange rates
    
(1
)
    
-
      
1
      
-
      
-
  
Balance as at June 30, 2020
    
183,844
      
19,775
      
153
      
27
      
203,799
  
                               
Depreciation
                              
Balance as at January 1, 2019
    
28,550
      
1,192
      
121
      
52
      
29,915
  
 Depreciation for the year
    
4,383
      
1,353
      
8
      
-
      
5,744
  
 Disposals
    
(27,477
)
    
-
      
-
      
-
      
(27,477
)
Balance as at December 31, 2019
    
5,456
      
2,545
      
129
      
52
      
8,182
  
                                         
Balance as at December 31, 2019
    
5,456
      
2,545
      
129
      
52
      
8,182
  
 Depreciation for the year
    
416
      
726
      
4
      
1
      
1,147
  
 Disposals
    
-
      
-
      
-
      
(52
 )    
(52
 )
 Effect of changes in exchange rates
    
-
      
-
      
1
      
-
      
1
  
Balance as at June 30, 2020
    
5,872
      
3,271
      
134
      
1
      
9,278
  
                                         
Carrying amounts
                                        
As at January 1, 2019
    
69,739
      
17,464
      
17
      
-
      
87,220
  
As at December 31, 2019
    
97,328
      
17,043
      
18
      
-
      
114,389
  
As at June 30, 2020
    
177,972
      
16,504
      
19
      
26
      
194,521
  

F - 19

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 9 - Operating Segments

The basis of segmentation and the measurement basis for the segment profit or loss are the same as that presented in Note 22 regarding operating segments in the annual financial statements.

Segment assets consist of current assets, fixed assets and intangible assets, as included in reports provided regularly to the chief operating decision maker.

   
PV
                      
Total
              
                                             
reportable
          
Total
  
   
Italy
    
Spain
    
Israel
    
Talasol
    
Bio Gas
    
Dorad
    
Manara
    
segments
    
Reconciliations
    
consolidated
  
   
For the six months ended June 30, 2020
  
   
€ in thousands
  
                                                             
Revenues
    
-
      
1,241
      
2,060
      
-
      
2,437
      
28,836
      
-
      
34,574
      
(30,360
)
    
4,214
  
Operating expenses
    
-
      
(227
)
    
(154
)
    
-
      
(1,765
)
    
(22,841
)
    
-
      
(24,987
)
    
22,841
      
(2,146
)
Depreciation expenses
    
-
      
(453
)
    
(1,174
)
    
(28
)
    
(726
)
    
(2,600
)
    
-
      
(4,981
)
    
3,534
      
(1,447
)
Gross profit (loss)
    
-
      
561
      
732
      
(28
)
    
(54
)
    
3,395
      
-
      
4,606
      
(3,985
)
    
621
  
Project development costs
                                                                            
(2,338
)
General and
                                                                                
 administrative expenses
                                                                            
(2,204
)
Share of profits of equity
                                                                                
 accounted investee
                                                                            
850
  
Other income, net
                                                                            
-
  
Operating loss
                                                                            
(3,071
)
Financing income
                                                                            
886
  
Financing income in connection
                                                                                
 with derivatives and warrants, net
                                                                            
1,099
  
Financing expenses, net
                                                                            
(3,095
)
Loss before taxes
                                                                                
 on Income
                                                                            
(4,181
)
Segment assets as at
                                                                                
 June 30, 2020
    
518
      
15,841
      
37,096
      
190,768
      
18,395
      
110,970
      
2,318
      
375,906
      
(14,280
)
    
361,626
  

F - 20
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 9 - Operating Segments (cont’d)

   
PV
                      
Total
              
                                             
reportable
          
Total
  
   
Italy
    
Spain
    
Israel
    
Talasol
    
Bio Gas
    
Dorad
    
Manara
    
segments
    
Reconciliations
    
consolidated
  
   
For the six months ended June 30, 2019
  
   
€ in thousands
  
                                                             
Revenues
    
5,274
      
1,553
      
2,151
      
-
      
2,941
      
29,890
      
-
      
41,809
      
(31,506
)
    
10,303
  
Operating expenses
    
(582
)
    
(274
)
    
(169
)
    
-
      
(2,430
)
    
(23,755
)
    
-
      
(27,210
)
    
23,755
      
(3,455
)
Depreciation expenses
    
(1,710
)
    
(450
)
    
(1,107
)
    
-
      
(659
)
    
(2,414
)
    
-
      
(6,340
)
    
3,297
      
(3,043
)
Gross profit (loss)
    
2,982
      
829
      
875
      
-
      
(148
)
    
3,721
      
-
      
8,259
      
(4,454
)
    
3,805
  
Project development costs
                                                                            
(2,714
)
General and
                                                                                
 administrative expenses
                                                                            
(1,879
)
Share of profits of equity
                                                                                
 accounted investee
                                                                            
31
  
Other income, net
                                                                            
-
  
Operating loss
                                                                            
(757
)
Financing income
                                                                            
870
  
Financing income in connection
                                                                                
 with derivatives and warrants, net
                                                                            
460
  
Financing expenses, net
                                                                            
(4,457
)
Loss before taxes
                                                                                
 on Income
                                                                            
(3,884
)
Segment assets as at
                                                                                
 June 30, 2019
    
54,194
      
18,591
      
37,104
      
105,228
      
18,808
      
109,492
      
2,631
      
346,048
      
(57,967
)
    
288,081
  

F - 21
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 9 - Operating Segments (cont’d)

   
PV
                      
Total
              
                                             
reportable
          
Total
  
   
Italy
    
Spain
    
Israel
    
Talasol
    
Biogas
    
Dorad
    
Manara
    
segments
    
Reconciliations
    
consolidated
  
   
For the year ended December 31, 2019
  
   
€ in thousands
  
                                                             
Revenues
    
10,082
      
2,987
      
4,114
      
-
      
4,786
      
63,416
      
-
      
85,385
      
(66,397
)
    
18,988
  
Operating expenses
    
(1,422
)
    
(504
)
    
(325
)
    
-
      
(4,387
)
    
(48,558
)
    
-
      
(55,196
)
    
48,558
      
(6,638
)
Depreciation
    
(3,668
)
    
(903
)
    
(2,271
)
    
(30
)
    
(1,353
)
    
(5,031
)
    
-
      
(13,256
)
    
6,840
      
(6,416
)
Gross profit (loss)
    
4,992
      
1,580
      
1,518
      
(30
)
    
(954
)
    
9,827
      
-
      
16,933
      
(10,999
)
    
5,934
  
Project development costs
                                                                            
(4,213
)
General and
                                                                                
 administrative expenses
                                                                            
(3,827
)
Share of profits (loss) of
                                                                                
 equity accounted investee
                                                                            
3,086
  
Other income, net
                                                                            
(2,100
)
Capital gain (loss)
                                                                            
18,770
  
Operating profit
                                                                            
17,650
  
Financing income
                                                                            
1,827
  
Financing income in connection
                                                                                
 with derivatives and warrants, net
                                                                            
897
  
Financing expenses, net
                                                                            
(10,877
)
Profit before taxes on
                                                                                
 Income
                                                                            
9,497
  
Segment assets as at
                                                                                
 December 31, 2019
    
-
      
16,324
      
38,942
      
118,848
      
18,463
      
116,561
      
2,473
      
311,611
      
(1,439
)
    
310,172
  

F - 22

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 10 - Loans and Borrowings

The Talasol Project Finance –

                   
June 30, 2020
  
       
Original
  
Interest
  
Payment
  
Face
    
Carrying
  
Identity of
  
Loan
  
amount of
  
Mechanism
  
date of
  
value
    
amount
  
borrower
  
date
  
loan
  
and rate
  
principal
  
€ in thousands
  
Talasol Project Finance
  
February 2020
  
80.4 million EUR
  
Annual interest of Euribor with a margin (expected to be 1.76%) and annual interest of 6 month Euribor with margin of 2%- 2.75%.
  
March 31 and September 30 of each of the years 2021-2033
    
80,353
      
92,853
  
                                 
           
Less current maturities
        
727
      
1,906
  
                                 
           
Total material Company loans issued in the period
    
79,626
      
90,947
  

On April 30, 2019, the Talasol Project reached financial closing. The Talasol Project Finance includes the following facilities:

  a.
A term facility in the amount of approximately €65.9 million, with a term ending on September 30, 2033, repaid in unequal sculptured semi-annual installments. Loan amounts drawn from this facility will bear an annual interest of 6 month Euribor (with a zero floor and synchronous with the applicable interest period described below) plus a margin determined based on the stage of the Talasol Project. The applicable margins are: (i) 2.25% until technical completion, (ii) 2% from technical completion until the 5th anniversary of technical completion, (iii) 2.25% from the 5th anniversary of technical completion until the termination date of the power hedge agreement that Talasol entered into last June (the “PPA”, i.e., September 30, 2030), and (iv) 2.5% from the termination date of the PPA until the end of the term of the commercial term facility. Since February, 2020, an amount of approximately €40.4 million was drawn down on account of this Loan. Related expenses capitalized to the loan comprised mainly of related notary fee and bank charges amount to approximately €3.7 million;

  b.
A revolving debt service reserve facility in the amount of €4.45 million, with a term ending on the earlier of: (i) September 30, 2033 or (ii) the date on which the commercial term loan set forth under (a) above has been repaid in full. Loan amounts drawn from this facility will bear an annual interest of 6 month Euribor (with a zero floor) plus a margin determined based on the stage of the Talasol Project. The applicable margins are: (i) 2.5% until technical completion, (ii) 2.25% from technical completion until the 5th anniversary of technical completion, (iii) 2.50% from the 5th anniversary of technical completion until the termination date of the PPA, and (iv) 2.75% from the termination date of the PPA until the termination date;

  c.
A VAT facility in the amount of €6.67 million, with a term ending on June 30, 2021, repaid by using balances available in the VAT reimbursement account but in no event later than June 30, 2021. Loan amounts drawn from this facility will bear an annual interest of 1 month Euribor (with a zero floor) plus a margin of 2%. An amount of approximately €0.1 million was drawn down on account of this Loan;

  d.
A letter of credit facility in the initial amount of €12 million, with a term ending on September 30, 2030, to be repaid in full on its termination date and bearing an annual interest of (i) 1.25% for amounts cash covered, and (ii) 2% for any other amounts;

F - 23
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 10 - Loans and Borrowings (cont’d)

The Talasol Project Finance (cont’d) –

  e.
A term facility in the amount of €65 million from EIB, granted under the Investment Plan for Europe known as the Juncker Plan, with a term ending on September 30, 2033, repaid in unequal sculptured semi-annual installments. Loan amounts drawn from this facility will bear an annual interest of Euribor synchronous with the applicable interest period described below plus a margin (expected to be 1.76%). Since February, 2020, an amount of approximately €39.9 million was drawn down on account of this Loan. Related expenses capitalized to the loan comprised mainly of related notary fee and bank charges amount to approximately €3.7 million; and

  f.
A revolving debt service reserve facility from the EIB in the amount of €4.45 million granted by EIB under the Investment Plan for Europe, with a term ending on the earlier of: (i) September 30, 2033 or (ii) the date on which the commercial term loan set forth under (e) above has been repaid in full. Loans drawn from this facility will bear an annual interest of 6 month Euribor (with a zero floor) plus a margin, which is expected to be similar to the CFL Debt Service Reserve Facility under (b) above.

During the construction period, interest payments on the term, revolving debt and VAT facilities will be made on a monthly basis, and semi-annually thereafter (commencing March 31, 2021). The VAT facilities’ interest period, however, remains on a monthly basis. The agreements executed in connection with the Talasol Project Finance provide for mandatory prepayment upon the occurrence of certain events and various customary representations, warranties and covenants, including covenants to maintain a Historic and Projected DSCR not lower than 1.05:1, and not to make distributions in the event that: (i) the Historic and Projected DSCR will be lower than 1.15:1.0 and (ii) the Loan Life Cover Ratio will be lower than 1.20:1.0. The facilities provided by the EIB include certain other representations and undertakings mandated by applicable EU regulation.

The Talasol Project Finance documents require that security interests be provided in connection with the following: (i) Talasol’s shares (held by the Company’s wholly-owned subsidiary, Ellomay Luxemburg), (ii) pledges over accounts, (iii) pledges over Talasol Project’s documents, (iv) pledges over receivables under the shareholders loans, (v) security assignment of hedging claims and (vi) promissory equipment mortgage.

In connection with the Talasol Project Finance, Ellomay Luxemburg, our wholly-owned subsidiary and the parent company of Talasol and the Company undertook separately to (indirectly) retain at least 50.1% of the shares in Talasol and not to buy any debt of, or hedging claims against, Talasol from the entities providing the financing to the Talasol Project.

On April 30, 2019, Talasol entered into a swap agreement, replacing the Euribor 6 month rate with a fixed 6 month rate of approximately 0.9412%.

As the financing was structured for the term of the PPA signed in connection with the Talasol Project (ten years) plus additional three years beyond the term of the PPA, the Talasol Project Finance documentation requires Talasol to prepay the term loans via cash-sweeps to ensure that the term loans are repaid in full until the termination date of the PPA. Talasol has the option to place the relevant cash sweep amounts on a reserve account instead, and, in the event it enters into a satisfactory new power purchase agreement or power hedge agreement, the amounts on the reserve account may be transferred to the operating account of Talasol, to the extent they are not required in prepayment of the term loans to ensure that during the remainder of the term loans the base case ratios are complied with.

F - 24
Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 11 – Subsequent Events

  I.
On July 20, 2020, the Company issued 450,000 ordinary shares to several Israeli qualified investors in a private placement undertaken in accordance with Regulation S of the Securities Act of 1933, as amended. The price per share was set at NIS 70.5 (approximately €18.9). The gross proceeds to the Company in connection with the private placement were NIS 31.7 million (approximately €8.2 million).

  II.
In July 2020 the Company was one of the winners of a first-in-kind quota tender process published by the Israeli Electricity Authority (the “Authority”) for combined photovoltaic and electricity storage facilities in Israel. The Authority accepted bids in an aggregate quota of 168 MW from several entities, among them two bids of the Company in an aggregate quota of 20 MW. The tariff per kWh determined in the tender process is NIS 0.199. This tariff is linked to the Israeli CPI and is valid for a period of 23 years commencing on the commercial operation of each relevant facility. The tender process was for a quota and the Company is currently examining and expects to further examine potential sites for the construction of the facilities. With respect to each project, the Company shall be required to obtain approvals, if applicable, from the Israel Land Authority in connection with the site for such project, and to take all other actions necessary for the promotion of such project. Pursuant to the terms of the tender, the Company is further required to receive approvals for connection to the electricity grid and a grid synchronization approval from the Israeli Electric Company within up to 37 months. In addition, the Company provided a performance guarantee in an aggregate amount of NIS 12 million. The continued development and construction of the facilities depends upon various factors, including, but not limited to, the Company’s ability to locate sites for construction, enter into EPC agreements and obtain project finance and all other required approvals, all upon terms acceptable to the Company. Therefore, there is no assurance as to whether and when such process will be completed.

F - 25