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

Rhea-AI Summary

Ellomay Capital Ltd. (NYSE American: ELLO) reported unaudited financial results for Q1 2020, highlighting revenues of approximately €1.9 million, down from €4.7 million in Q1 2019, primarily due to the December 2019 sale of its Italian PV Portfolio. Operating expenses were reduced to €1.1 million, while project development costs rose to €1.8 million. A loss of €1.9 million was noted, compared to €1 million a year earlier. Despite challenges from COVID-19, the overall impact remained minor, though electricity prices in Spain decreased revenues slightly. Total comprehensive income increased to €12.2 million due to cash flow hedge valuation.

Positive

• Total comprehensive income rose to approximately €12.2 million, a significant increase from a loss of €0.4 million in Q1 2019.
• Financing expenses decreased by approximately €1.3 million due to exchange rate differences and reduced debt.
• Biogas operations in the Netherlands achieved stable operations, exceeding output expectations post-repair.
• Total equity increased by approximately 24% to €133 million.

Negative

• Revenues fell to approximately €1.9 million, a decrease of €2.8 million compared to Q1 2019, largely due to the sale of Italian PV Portfolio.
• Loss for Q1 2020 was approximately €1.9 million, worsening from a €1 million loss in Q1 2019.
• Project development costs rose significantly by €0.9 million, indicating increased expenses.

TEL-AVIV, Israel, June 23, 2020 /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 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, 2019. 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, 2019. 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.
• 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, 2019. 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.

First Quarter 2020 CEO Review

Ran Fridrich, CEO and a board member of the Company, provided the following CEO review:

• Impact of COVID - 19 on the Company's activities
  
  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.
  
  
• 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.
  
• 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.

 

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 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 http://www.ellomay.com.

Information Relating to Forward-Looking Statements

This press release contains forward-looking statements that involve substantial risks and uncertainties, including statements that are based on the current expectations and assumptions of the Company's management. All statements, other than statements of historical facts, included in this press release regarding the Company's plans and objectives, expectations and assumptions of management are forward-looking statements.  The use of certain words, including the words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements and you should not place undue reliance on the Company's forward-looking statements. Various important factors could cause actual results or events to differ materially from those that may be expressed or implied by the Company's forward-looking statements, including the impact of 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.

 

 

Ellomay Capital Ltd. and its Subsidiaries
Condensed Consolidated Interim Statements of Financial Position
	March 31	December 31,	March 31,
	2020	2019	2020
	Unaudited	Audited	Unaudited
	€ in thousands	Convenience Translation into US$ in thousands**
Assets
Current assets:
Cash and cash equivalents	57,765	44,509	63,198
Marketable securities	2,254	2,242	2,466
Short term deposits	6,410	6,446	7,013
Restricted cash	276	22,162	302
Receivable from concession project	1,486	1,463	1,626
Financial assets	1,410	1,418	1,543
Trade and other receivables	4,328	4,882	4,735
	73,929	83,122	80,883
Non-current assets
Investment in equity accounted investee	32,518	33,561	35,576
Advances on account of investments	878	883	961
Receivable from concession project	26,603	27,122	29,105
Fixed assets	175,424	114,389	191,923
Right-of-use asset	15,344	15,401	16,787
Intangible asset	4,924	5,042	5,387
Restricted cash and deposits	10,288	10,956	11,256
Deferred tax	839	2,285	918
Long term receivables	8,909	12,249	9,747
Derivatives	26,486	5,162	28,977
	302,213	227,050	330,637
Total assets	376,142	310,172	411,520
Liabilities and Equity
Current liabilities
Current maturities of long term loans	3,980	4,138	4,354
Debentures	4,592	26,773	5,024
Trade payables	22,278	1,765	24,376
Other payables	6,023	5,010	6,589
	36,873	37,686	40,343
Non-current liabilities
Lease liability	15,419	15,402	16,869
Long-term loans	126,021	89,182	137,874
Debentures	44,586	44,811	48,779
Deferred tax	9,786	6,467	10,706
Other long-term liabilities	1,840	1,795	2,013
Derivatives	8,698	7,263	9,516
	206,350	164,920	225,757
Total liabilities	243,223	202,606	266,100
Equity
Share capital	23,933	21,998	26,184
Share premium	75,427	64,160	82,521
Treasury shares	(1,736)	(1,736)	(1,899)
Transaction reserve with non-controlling Interests	6,106	6,106	6,680
Reserves	10,184	3,283	11,142
Retained earnings	11,401	12,818	12,473
Total equity attributed to shareholders of the Company	125,315	106,629	137,101
Non-Controlling Interest	7,604	937	8,319
Total equity	132,919	107,566	145,420
Total liabilities and equity	376,142	310,172	411,520
* Convenience translation into US$ (exchange rate as at March 31, 2020: euro 1 = US$ 1.094)

 

 

Ellomay Capital Ltd. and its Subsidiaries
Condensed Consolidated Interim Statements of Comprehensive Profit (Loss)
	For the three months ended March 31,	For the year ended December 31,	For the three months ended March 31,
	2019	2020	2019	2020
	Unaudited	Audited	Unaudited
			Convenience Translation into US$** in thousands*
€ in thousands*	€ in thousands*
Revenues	4,733	1,943	18,988	2,126
Operating expenses	(1,664)	(1,061)	(6,638)	(1,161)
Depreciation and amortization	(1,578)	(726)	(6,416)	(794)
Gross profit	1,491	156	5,934	171
Project development costs	(874)	(1,754)	(4,213)	(1,919)
General and administrative expenses	(897)	(1,081)	(3,827)	(1,183)
Share of profits of equity accounted investee	1,164	1,331	3,086	1,456
Other expenses, net	-	-	(2,100)	-
Capital gain	-	-	18,770	-
Operating profit (loss)	884	(1,348)	17,650	(1,475)
Financing income	390	425	1,827	465
Financing income in connection with derivatives, net	431	954	897	1,044
Financing expenses	(2,485)	(1,792)	(10,877)	(1,961)
Financing expenses, net	(1,664)	(413)	(8,153)	(452)
Profit (loss) before taxes on income	(780)	(1,761)	9,497	(1,927)
Tax benefit (Taxes on income)	(189)	(104)	287	(114)
Profit (loss) for the period	(969)	(1,865)	9,784	(2,041)
Profit (loss) attributable to:
Owners of the Company	(711)	(1,417)	12,060	(1,550)
Non-controlling interests	(258)	(448)	(2,276)	(491)
Profit (loss) for the period	(969)	(1,865)	9,784	(2,041)
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	1,232	(199)	2,103	(218)
Effective portion of change in fair value of cash flow hedges

FAQ

What were Ellomay's revenues for Q1 2020?

Ellomay reported revenues of approximately €1.9 million for the first quarter of 2020.

How did Ellomay's financial performance in Q1 2020 compare to Q1 2019?

In Q1 2020, Ellomay's revenues decreased by €2.8 million compared to €4.7 million in Q1 2019.

What was the net loss for Ellomay in Q1 2020?

Ellomay experienced a net loss of approximately €1.9 million in the first quarter of 2020.

How did COVID-19 impact Ellomay's operations?

The immediate impact of COVID-19 on Ellomay's operations was minor, primarily affecting electricity prices in Spain.

What is Ellomay's total equity as of Q1 2020?

As of Q1 2020, Ellomay's total equity increased to approximately €133 million.