Ellomay Capital Reports Results for the Three and Nine Months Ended September 30, 2019

TEL-AVIV, Israel, Dec. 31, 2019 /PRNewswire/ -- Ellomay Capital Ltd. (NYSE American: ELLO) (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 and nine months ended September 30, 2019.

Ran Fridrich, CEO and a board member of Ellomay commented: "During the nine month period ended September 30, 2019 the Company operated in accordance with its business plan, while executing an extensive development and investment plan. Project development expenses increased by approximately 32% compared to the same period last year. Equity attributed to shareholders of the Company increased by approximately 26% during the period. The Talasol project (300 MW) in Spain is progressing according to plan and construction of more than 50% was already completed. The project is currently expected to commence commercial operation in Q4 of 2020. In addition, the Company is promoting the development of 550 MW PV in Spain and Italy."

Financial Highlights

• Revenues were approximately €15.4 million for the nine months ended September 30, 2019, compared to approximately €13.9 million for the nine months ended September 30, 2018. The increase in revenues is mainly a result of the commencement of operations of the Company's waste-to-energy project in Oude Tonge, the Netherlands, in June 2018 and relatively higher levels of radiation in Italy during 2019 compared to 2018.
• Operating expenses were approximately €5 million for the nine months ended September 30, 2019, compared to approximately €4.6 million for the nine months ended September 30, 2018. The increase in operating expenses is mainly attributable to additional operating expenses resulting from the commencement of operations at the Company's waste-to-energy project in Oude Tonge, the Netherlands. Depreciation expenses were approximately €4.7 million for the nine months ended September 30, 2019, compared to approximately €4.4 million for the nine months ended September 30, 2018.
• Project development costs were approximately €3.5 million for the nine months ended September 30, 2019, compared to approximately €2.6 million for the nine months ended September 30, 2018. The increase in project development costs is mainly attributable to consultancy expenses in connection with the project to construct a 156 MW pumped storage hydro power plant in the Manara Cliff, Israel.
• General and administrative expenses were approximately €2.9 million for the nine months ended September 30, 2019, compared to approximately €2.8 million for the nine months ended September 30, 2018.
• Company's share of profits of equity accounted investee, after elimination of intercompany transactions, was approximately €2.4 million for the nine months ended September 30, 2019, compared to approximately €2.2 million in the nine months ended September 30, 2018.
• Financing expenses, net was approximately €4.6 million for the nine months ended September 30, 2019, compared to approximately €1.8 million for the nine months ended September 30, 2018. The increase in financing expenses was mainly due to expenses in connection with exchange rate differences amounting to approximately €2.1 million in the nine months ended September 30, 2019, mainly in connection with the Company's NIS denominated Debentures, the loan to an equity accounted investee and cash and cash equivalents, caused by the 11.3% devaluation of the euro against the NIS during this period, compared to income in connection with exchange rate differences amounting to approximately €0.5 million in the nine months ended September 30, 2018, caused by the 1.5% revaluation of the euro against the NIS during this period.
• Taxes on income was approximately €0.9 million for the nine months ended September 30, 2019, compared to taxes on income of approximately €0.1 million for the nine months ended September 30, 2018. The lower taxes on income for the nine months ended September 30, 2018 resulted mainly from deferred tax income included in connection with the application of a tax incentive in the Netherlands claimable upon filing the relevant tax return by reducing the amount of taxable profit.
• Net loss was approximately €3.8 million for the nine months ended September 30, 2019, compared to approximately €0.1 million for the nine months ended September 30, 2018.
• Total other comprehensive income was approximately €13.8 million for the nine months ended September 30, 2019, compared to a loss of approximately €0.8 million for the nine months ended September 30, 2018. The change was mainly due to changes in fair value of cash flow hedges and from foreign currency translation differences on New Israeli Shekel denominated operations, as a result of fluctuations in the euro/NIS exchange rates.
• Total comprehensive income was approximately €10 million for the nine months ended September 30, 2019, compared to a loss of approximately €0.9 million for the nine months ended September 30, 2018.
• EBITDA was approximately €6.4 million for the nine months ended September 30, 2019, compared to approximately €6.2 million for the nine months ended September 30, 2018.
• Net cash from operating activities was approximately €4.3 million for the nine months ended September 30, 2019, compared to approximately €4.6 million for the nine months ended September 30, 2018.
• On July 17, 2019, the Company issued 800,000 ordinary shares to several Israeli classified investors in a private placement. The price per share in the Private Placement was set at NIS 39.20 (approximately $11) and the gross proceeds to the Company were approximately NIS 31.3 million (approximately €7.8 million).
• On July 25, 2019, the Company issued NIS 89,065,000 (approximately €22.7 million) Series C Debentures in a public offering in Israel at a fixed annual interest rate of 3.3%. The net proceeds of the offering, net of related expenses such as consultancy fee and commissions were approximately NIS 87.8 million (approximately €22.3 million).
• During July 2019, the Company completed the purchase of 49% of the companies that own the anaerobic digestion plans in Goor and Oude-Tonge, both in the Netherlands from Ludan and several entities affiliated with Ludan for an acquisition price of approximately €3 million.
• On December 16, 2019, the Company announced its intention to redeem the entire outstanding principal of the Company's Series A Debentures. The redemption is scheduled for January 5, 2020. Pursuant to the terms of the deed of trust governing the Series A Debentures, the early redemption amount will be the sum of approximately NIS 80.1 million (approximately €20.7 million) in principal, the sum of approximately NIS 0.05 million (approximately €0.01 million) in accrued interest and a prepayment charge of approximately NIS 5.7 million (approximately €1.5 million), amounting to an aggregate redemption amount of approximately NIS 85.9 million (approximately €22.2 million, based on the exchange rate as of December 30, 2019).
• On December 23, 2019, the Company reported the sale of ten Italian indirect wholly-owned subsidiaries (the "Italian Subsidiaries"), which own twelve photovoltaic plants with an aggregate nominal capacity of approximately 22.6 MW. The agreed purchase price was €41 million for the cutoff date of December 31, 2018 and adjusted in connection with funds received by the Company from the Italian Subsidiaries during 2019 (approximately €2.3 million), resulting in a cash purchase price of approximately €38.7 million. Based on the information currently available, the Company estimates that it will record a profit of approximately €19 million in connection with the sale of the Italian Subsidiaries in its financial results for the fourth quarter of 2019. The profit currently expected to be recorded is an unaudited and unreviewed estimate and the actual results may be different from this estimation. The financial results of the Company included in this release do not reflect the sale of the Italian Subsidiaries and therefore are not indicative of future results of the Company.
• As of December 1, 2019, the Company held approximately €59.1 million in cash and cash equivalents, approximately €6.5 million in Short-term deposits, approximately €2.3 million in marketable securities and approximately €11.2 million in restricted short-term and long-term cash and marketable securities.

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:

• 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 850MW, 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 Chashgal Elyon Ltd., Agira Sheuva Electra, L.P. and Ellomay Pumped Storage (2014) Ltd., all of which are 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 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 weather conditions, 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), 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: [email protected]

* Convenience translation into US$ (exchange rate as at September 30, 2019: euro 1 = US$ 1.093)

* Convenience translation into US$ (exchange rate as at September 30, 2019: euro 1 = US$ 1.093)

Information for the Company's Debenture Holders

Pursuant to the Deeds of Trust governing the Company's Series A, B and C Debentures (together, the "Debentures"), the Company is required to maintain certain financial covenants. For more information, see Item 5.B of the Company's Annual Report on Form 20-F and "Liquidity and Capital Resources" under Exhibit 99.3 of a Form 6-K submitted to the Securities and Exchange Commission on September 25, 2019.

Net Financial Debt

As of September 30, 2019, the Company's Net Financial Debt (as such term is defined in the Deeds of Trust of the Company's Debentures) was approximately €43.8 million (consisting of approximately €135.4 million of short-term and long-term debt from banks and other interest bearing financial obligations and approximately €76.5 million in connection with the Series A Debentures issuances (in January and September 2014), the Series B Debentures issuance (in March 2017) and the Series C Debentures issuance (in July 2019), net of approximately €79.7 million of cash and cash equivalents, short-term deposits and marketable securities and net of approximately €88.7 million of project finance and related hedging transactions of the Company's subsidiaries).

Information for the Company's Series B Debenture Holders

The following is an internal pro forma consolidated statement of financial position of the Company as at September 30, 2019. This information is required under the Series B Deed of Trust in connection with the adoption of IFRS 16 "Leases" by the Company and provides the consolidated statement of financial position of the Company as of the date set forth below after elimination of the effects of adoption of IFRS 16. Based on the pro forma statement of financial position, the ratio of the Company's equity (which the Company calculated in line with the definition of Balance Sheet Equity in the Series B Deed of Trust)  to balance sheet as at June 30, 2019 was 29.2%, triggering a right of the holders of our Series B Debentures to an increase in the annual interest rate applicable to the Series B Debentures of 0.5% until such time as we publish financial results reflecting an increase in such ratio to a minimum of 30%. Based on the pro forma statement of financial position, the ratio of the Company's equity, as set forth above, to balance sheet as of September 30, 2019 was 31.6%, triggering a decrease in the annual interest rate applicable to the Series B Debentures of 0.5% to its original rate of 3.69%. The Company will provide further information concerning the updated interest rate in a Form 6-K to be furnished to the Securities and Exchange Commission.

Unaudited Internal Pro Forma Statement of Financial Position