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Ellomay Capital Ltd.
Quarterly Report • Mar 31, 2023
6770_rns_2023-03-31_18d3db9d-dec2-4f42-928a-4ee417ed290d.pdf
Quarterly Report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2023 Commission File Number: 001-35284
Ellomay Capital Ltd. (Translation of registrant's name into English)
18 Rothschild Blvd., Tel Aviv 6688121, Israel (Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
$$\begin{array}{ccc} \text{Yes} & \begin{bmatrix} \end{bmatrix} & \begin{array}{c} \end{array} & \begin{array}{c} \text{No} \end{array} \begin{array}{c} \text{[X]} \end{array} \end{array}$$
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
THE IFRS FINANCIAL RESULTS INCLUDED IN EXHIBIT 99.1 OF THIS FORM 6-K ARE HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRANT'S REGISTRATION STATEMENTS ON FORM F-3 (NOS. 333-199696 AND 333-144171) AND FORM S-8 (NOS. 333-187533, 333-102288 AND 333-92491), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
This Report on Form 6-K of Ellomay Capital Ltd. consists of the following document, which is attached hereto and incorporated by reference herein:
Exhibit 99.1 Press Release: "Ellomay Capital Reports Results for the Fourth Quarter and Full Year of 2022," dated March 31, 2023.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Ellomay Capital Ltd.
By: /s/ Ran Fridrich Ran Fridrich Chief Executive Officer and Director
Dated: March 31, 2023
Ellomay Capital Reports Results for the Fourth Quarter and Full Year of 2022
Tel-Aviv, Israel, March 31, 2023 – Ellomay Capital Ltd. (NYSE American; TASE: ELLO) ("Ellomay" or the "Company"), a renewable energy and power generator and developer of renewable energy and power projects in Europe and Israel, today reported its unaudited financial results for the fourth quarter and year ended December 31, 2022.
Financial Highlights for the Year Ended December 31, 2022
- Revenues were approximately €53.41 million for the year ended December 31, 2022, compared to approximately €45.7 million for the year ended December 31, 2021. This increase mainly results from the substantial increase in electricity prices in Spain and the connection to the grid of Ellomay Solar, a 28 MW photovoltaic facility in Spain ("Ellomay Solar") during June 2022, upon which the Company commenced recognition of revenues.
- Operating expenses were approximately €24.1 million for the year ended December 31, 2022, compared to approximately €17.6 million for the year ended December 31, 2021. The increase in operating expenses mainly results from the implementation of the Spanish RDL 17/2021, commencing September 16, 2021 and currently in effect until December 31, 2023, that established the reduction of returns on the electricity generating activity of Spanish production facilities that do not emit greenhouse gases accomplished through payments of a portion of the revenues by the production facilities to the Spanish government. The increase in operating expenses also resulted from the Company's biogas operations in the Netherlands that were impacted by the military conflict between Russia and Ukraine causing shortages in certain raw materials and an increase in delivery prices, and from the connection to the grid of Ellomay Solar during June 2022, upon which the Company commenced recognition of expenses. Depreciation expenses were approximately €16.1 million for the year ended December 31, 2022, compared to approximately €15.1 million for the year ended December 31, 2021. The increase in depreciation and amortization expenses is mainly attributable to the commencement of recognition of results of Ellomay Solar upon connection to the Spanish grid in June 2022.
- Project development costs were approximately €3.8 million for the year ended December 31, 2022, compared to approximately €2.5 million for the year ended December 31, 2021. The increase in project development costs is mainly due to development expenses in connection with photovoltaic projects in Italy and Israel.
- General and administrative expenses were approximately €5.9 million for the year ended December 31, 2022, compared to approximately €5.7 million for the year ended December 31, 2021. The increase is mostly due to an increase in the management fee
1 The revenues are based on IFRS and do not take into account the adjustments included in the Company's investor presentation.
paid pursuant to the new Management Services Agreement effective July 1, 2021, and an increase in salaries paid to employees.
- The Company's share of profits of equity accounted investee, after elimination of intercompany transactions, was approximately €1.2 million for the year ended December 31, 2022, compared to approximately €0.12 million for the year ended December 31, 2021. The increase in share of profits of equity accounted investee was mainly due to the increase in revenues of Dorad Energy Ltd. ("Dorad") due to higher quantities produced and a higher electricity tariff, partially offset by an increase in operating expenses in connection with the increased production and higher tariff.
- Financing expenses, net were approximately €2.5 million for the year ended December 31, 2022, compared to approximately €26.9 million for the year ended December 31, 2021. The decrease in financing expenses, net, was mainly attributable to income resulting from exchange rate differences amounting to approximately €6 million in the year ended December 31, 2022, mainly in connection with the New Israeli Shekel ("NIS") cash and cash equivalents and the Company's NIS denominated debentures, compared to expenses in the amount of approximately €5.4 million for the year ended December 31, 2021, caused by (i) the 6.6% devaluation of the NIS against the euro during the year ended December 31, 2022, compared to the 10.8% revaluation of the NIS against the euro during the year ended December 31, 2021, and (ii) expenses recorded in 2021 of approximately €0.8 million in connection with the early repayment of the Company's Series B Debentures. In addition, during the year ended December 31, 2021, we recorded financing expenses in the amount of approximately €12.2 million in connection with the amortization of the outstanding balance of expenses that were capitalized to the previous financing of Talasol Solar S.L.U ("Talasol"), our majority owned subsidiary (51%) that owns a photovoltaic plant with a peak capacity of 300 MW in the municipality of Talaván, Cáceres, Spain ("Talasol PV Plant") in connection with a refinancing of its debt and approximately €3.3 million recorded in connection with the termination of an interest rate swap contract.
- Taxes on income were approximately €2.1 million in the year ended December 31, 2022, compared to a tax benefit of approximately €2.3 million in the year ended December 31, 2021. The tax increase is mainly due to the substantial increase in electricity prices in Spain, resulting in higher taxable income of the Company's Spanish subsidiaries.
- Net profit was approximately €0.1 million in the year ended December 31, 2022, compared to net loss of approximately €19.6 million for the year ended December 31, 2021.
- Total other comprehensive loss was approximately €35.3 million for the year ended December 31, 2022, compared to total other comprehensive loss of approximately €4.5 million in the year ended December 31, 2021. The increase in total other comprehensive loss mainly resulted from foreign currency translation differences on NIS denominated operations, as a result of fluctuations in the euro/NIS exchange rates and from changes in fair value of cash flow hedges, including a material increase in the fair value of the liability resulting from the financial power swap that covers approximately 80% of the output of the Talasol PV Plant (the "Talasol PPA").
The Talasol PPA experienced a high volatility due to the substantial increase in electricity prices in Europe since the commencement of the military conflict between Russia and Ukraine. In accordance with hedge accounting standards, the changes in the Talasol PPA's fair value are recorded in the Company's shareholders' equity through a hedging reserve and not through the accumulated deficit/retained earnings. The changes do not impact the Company's consolidated net profit/loss or the Company's consolidated cash flows. As the Company controls Talasol, the total impact of the changes in fair value of the Talasol PPA (including the minority share) is consolidated into the Company's financial statements and total equity. Alongside the increase in fair value of the liability in connection with the Talasol PPA, the increase in the electricity prices had, and is expected to continue to have for as long as the prices remain relatively high, a positive impact on Talasol's revenues from the sale of the capacity that is not subject to the Talasol PPA, resulting in an expected increase in Talasol's net income and cash flows.
- Total comprehensive loss was approximately €35.2 million in the year ended December 31, 2022, compared to total comprehensive loss of approximately €24.1 million in the year ended December 31, 2021.
- EBITDA was approximately €20.8 million for the year ended December 31, 2022, compared to approximately €20.1 million for the year ended December 31, 2021.
- Net cash from operating activities was approximately €11.3 million for the year ended December 31, 2022, compared to net cash from operating activities of approximately €16.1 million for the year ended December 31, 2021.
- As required under an amendment to IAS 16, "Property, Plant and Equipment" (the "IAS 16 Amendment"), the Company retrospectively applied the IAS 16 Amendment and revised the financial results as of and for the year ended December 31, 2021. The IAS 16 Amendment required the Company to recognize the results of the Talasol PV Plant commencing connection to the grid (December 2020) instead of recognizing results commencing achievement of PAC (Preliminary Acceptance Certificate), which occurred on January 27, 2021. The revisions mainly included an increase in the balance of fixed assets against a corresponding increase in retained earnings and deferred tax as of December 31, 2021, and an increase in revenues and expenses, with a corresponding decrease in tax benefit and in the net loss for the year ended December 31, 2021.
CEO Review for 2022
The Company's activities are divided into two main fields:
- Development and Construction the development of a backlog of projects in the PV field in Italy, Spain, USA and Israel, the construction of a pumped hydro storage project in the Manara Cliff in Israel and the construction of PV in Italy; and
- Operations and Improvements the Company manages, operates and improves its generating projects in Israel, Spain and the Netherlands (bio-gas).
The Company's revenues for 2022 were approximately €53.3, an increase of approximately 17% in revenues compared to the same period last year. These revenues are slightly lower than the anticipated revenues for the period, mainly as during the fourth quarter of 2022 there was a decrease in electricity prices in Spain (even though such prices increased overall during 2022) and lower radiation. The average electricity price in Spain during the fourth quarter of 2022 was approximately €0.11/kWh, compared to an average price of €0.20/kWh during 2021. Due to existing regulation in Spain that effectively reduces returns on electricity generating activity to no more than approximately €0.11/kWh, the decrease in revenues did not impact the Company's operating profit. Due to lower radiation during the fourth quarter of 2022, the electricity produced by the Talasol PV Plant was lower by approximately 24,000 MW compared to the fourth quarter of 2021. The lower production impacted the electricity that is not subject to the Talasol PPA and would have been sold in market prices (approximately €0.11/kWh).
As a result of the lower radiation during 2022, Talasol produced approximately 33,000 MW less than its expected average annual production. Due to the existing Spanish regulation, these 33,000 MW would have been sold at an effective price of €0.11/kWh and therefore caused a decrease in gross profit of approximately €3.6 million.
Due to the military conflict in Ukraine, the prices of the energy, transportation and raw materials used by the biogas operations in the Netherlands increased by approximately €2.74 million compared to 2021 and the Company expects that the increase in expenses will be mitigated by higher gas and green certificate prices during 2023.
The cash flow from operations for 2022 was approximately €11.3 million, which includes a deduction of approximately €3.3 million due to a non-recurring advance payment of income tax as per a tax assessment agreement (timing differences of payable income tax) to the Israeli Tax Authority in connection with the Talmei Yosef PV Plant and increased project development costs mainly due to the advanced development of the photovoltaic portfolio in Italy and in Israel.
Activity in Spain: The Ellomay Solar PV plant in Spain (28 MW PV) was connected to the electricity grid towards the end of the second quarter of 2022. Commencing the third quarter of 2022, this PV plant operated at full capacity and generated revenues of approximately €3.6 million during 2022.
The Talasol PV plant in Spain (300 MW PV), 51% held by the Company, generated revenues in the amount of approximately €33 million for 2022 .
Talasol is a party to a financial hedge of its electricity capture price (PPA) in connection with approximately 80% of its production (75% based on P-50) and the remaining electricity produced by Talasol is sold directly to the grid, currently at an average price of €0.11/kWh.
Activity in Italy: The Company has approximately 600 MW PV projects under advanced development stages, of which licenses have been obtained for approximately 200 MW. Of these 200 MW PV projects, 20 MW are under advanced construction and the remainder (approximately 180 MW) are expected to commence construction during 2023.
The Company has additional projects in earlier development stages and the intention is to reach a portfolio of approximately 1,000 MW PV in various degrees of development and operations by 2025.
The Company is negotiating a financing agreement for the financing of 600 MW PV projects that are in advanced development stages with a leading European bank in the field.
Activity in Israel:
The Manara Pumped Storage Project (Company's share is 83.34%): The Manara Cliff pumped storage project, with a capacity of 156 MW, is in advanced construction stages and expected to reach commercial operation during the second half of 2026. The Company and the project's other shareholder, Ampa, invested the equity required for the projects, and the remainder of the funding is from a consortium of lenders led by Mizrahi Bank, at a scope of approximately NIS 1.18 billion.
Development of PV licenses combined with storage:
-
- The Komemiyut project, intended for 21 MW PV and 47 MW / hour batteries. The project obtained an approval for connection to the grid and is in the process of receiving a building permit. Construction is planned to commence in the third quarter of 2023.
-
- The Qelahim project, intended for 15 MW PV and 33 MW / hour batteries. The project obtained an approval for connection to the grid, and is in the final stages of the zoning approval.
These projects are based on a tender the Company won and there is an option of transition to regulation that enables sale to end customers.
-
- The Talmei Yosef project, an expansion of the existing project (as of today 9 MW PV) to 104 dunams, intended for 10 MW PV and 22 MW / hour batteries. The request for zoning approval has been filed and approval is expected to be received in the second quarter of 2023.
-
- The Talmei Yosef storage project in batteries, which obtained zoning approval for 30 dunam, intended for approximately 400 MW / hour. The project is designed for the regulation of the high voltage storage.
-
- The Sharsheret project, intended for 20 MW PV and 44 MW / hour batteries. The zoning request for was submitted.
-
- Additional 250 dunams under advanced planning stages.
Dorad Power Station (Company's share is approximately 9.4%): the gas flow from the Karish reservoir began during November 2022. The gas from the Karish reservoir is expected to reduce the gas costs of Dorad. In addition, the change in the electricity tariff, which entered into force in January 2023, means an increase in the "PISGA"/ peak (high consumption) hours, and the elimination of the "GEVA" (average consumption) hours, is expected to reduce the operating expenses of the power station without decreasing the revenues.
Activity in the Netherlands: In connection with the military conflict in Ukraine and the stoppage of Russian gas supply to Europe, there are substantial changes in the field of biogas in the Netherlands and Europe. Europe in general and the Netherlands specifically have set ambitious goals for increasing gas production from waste. Various incentives are being considered, the main one is increasing the price of the green certificates and as of today the market price of these certificates has increased from an average of 13–15 euro cents per cubic meter to around 30-45 euro cents per cubic meter and future increases are currently projected.
The gas price for 2023, which is determined based on the 2022 average, was set at €1.13 per cubic meter, a price that is higher than the cap of the subsidy granted to the Company's Dutch subsidiaries (approximately €0.75 per cubic meter). Therefore, in 2023 and possibly also in 2024, the Dutch subsidiaries will temporarily exit the subsidy regime. Not using the subsidy during 2023 and 2024 will enable the Dutch subsidiaries to postpone the termination of the subsidy period (originally 12 years) by two years.
On the other hand, due to the military conflict in Ukraine, during 2022 there was an increase in the price of feedstock, which is based on agricultural residues, and in the cost of transportation and the price of electricity (which increased tenfold). These circumstances caused an increase in expenses. As of the beginning of 2023, the feedstock prices and transportation costs are in decline and there is no shortage of raw material of any kind.
The increase in electricity prices in the Netherlands did not substantially impact two of the three biogas facilities owned by the Company, which produce the electricity and heat they consume for themselves. However, the Gelderland project, which was acquired in December 2020, was not equipped with the means to self-generate electricity and heat during 2022 and was required to pay expensive prices for the electricity it consumes and to purchase expensive gas for heating, which caused an increase in expenses of approximately €1 million compared to forecasts. In May 2022, Gelderland received notification of approval for a subsidy for generation of electricity and heat in its facility, in August 2022 a generator (CHP) was ordered, which is being installed and expected to commence operating during the coming days.
The expected increase in revenues during 2023, caused by the increase in green certificate and gas prices, combined with the expected decrease in feedstock and transportation costs and the reduction of the energy costs in the Gelderland facility are expected to improve the operating results of the biogas facilities.
The Company estimates that with the increasing importance of the biogas field, this field entered into a new era. In the Netherlands, new legislation was adopted that obliges the gas suppliers commencing January 1, 2024 to gradually incorporate green gas in a scope of up to 20% of the amount supplied by them. This legislation, and the growing demand for green certificates from the biogas industry, is expected to add and improve the expected results of the biogas segment of the Company.
Use of NON-IFRS Financial Measures
EBITDA is a non-IFRS measure and is defined as earnings before financial expenses, net, taxes, depreciation and amortization. The Company presents this measure in order to enhance the understanding of the Company's operating performance and to enable comparability between periods. While the Company considers EBITDA to be an important measure of comparative operating performance, EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account the Company's commitments, including capital expenditures and restricted cash and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. Not all companies calculate EBITDA in the same manner, and the measure as presented may not be comparable to similarly titled measure presented by other companies. The Company's EBITDA may not be indicative of the Company's historic operating results; nor is it meant to be predictive of potential future results. The Company uses this measure internally as performance measure and believes that when this measure is combined with IFRS measure it add useful information concerning the Company's operating performance. A reconciliation between results on an IFRS and non-IFRS basis is provided on page 16 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 35.9 MW 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 owns a photovoltaic plant with a peak capacity of 300MW in the municipality of Talaván, Cáceres, Spain;
- Groen Gas Goor B.V., Groen Gas Oude-Tonge B.V. and Groen Gas Gelderland B.V., project companies operating anaerobic digestion plants in the Netherlands, with a green gas production capacity of approximately 3 million, 3.8 million and 9.5 million Nm3 per year, respectively;
- 83.333% of Ellomay Pumped Storage (2014) Ltd., which is involved in a project to construct a 156 MW pumped storage hydro power plant in the Manara Cliff, Israel;
- Ellomay Solar Italy One SRL and Ellomay Solar Italy Two SRL that are constructing photovoltaic plants with installed capacity of 14.8 MW and 4.95 MW respectively, in the Lazio Region, Italy; and
- Ellomay Solar Italy Four SRL, Ellomay Solar Italy Five SRL and Ellomay Solar Italy Ten SRL that are developing photovoltaic projects with installed capacity of 15.06 MW, 87.2 MW and 18 MW respectively, in the Lazio Region, Italy that have reached "ready to build" status.
For more information about Ellomay, visit http://www.ellomay.com.
Information Relating to Forward-Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties, including statements that are based on the current expectations and assumptions of the Company's management. All statements, other than statements of historical facts, included in this press release regarding the Company's plans and objectives, expectations and assumptions of management are forward-looking statements. The use of certain words, including the words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements and you should not place undue reliance on the Company's forward-looking statements. Various important factors could cause actual results or events to differ materially from those that may be expressed or implied by the Company's forward-looking statements, including the impact of continued military conflict between Russia and Ukraine, including its impact on electricity prices, availability of raw materials and disruptions in supply changes, the impact of the Covid-19 pandemic on the Company's operations and projects, including in connection with steps taken by authorities in countries in which the Company operates, changes in the market price of electricity and in demand, regulatory changes, including extension of current or approval of new rules and regulations increasing the operating expenses of manufacturers of renewable energy in Spain, increases in interest rates and inflation, changes in the supply and prices of resources required for the operation of the Company's facilities (such as waste and natural gas) and in the price of oil, and technical and other disruptions in the operations or construction of the power plants owned by the Company. These and other risks and uncertainties associated with the Company's business are described in greater detail in the filings the Company makes from time to time with Securities and Exchange Commission, including its Annual Report on Form 20-F. The forward-looking statements are made as of this date and the Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
Kalia Rubenbach (Weintraub) CFO Tel: +972 (3) 797-1111 Email: [email protected]
Condensed Consolidated Statements of Financial Position
| December 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 2021 |
2022 | |||||
| Unaudited | Audited | Unaudited | ||||
| € in thousands | Convenience Translation into US\$ in thousands* |
|||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 46,458 | 41,229 | 49,547 | |||
| Marketable securities | 2,836 | 1,946 | 3,025 | |||
| Short term deposits Restricted cash |
- 900 |
28,410 1,000 |
- 960 |
|||
| Receivable from concession project | 1,799 | 1,784 | 1,919 | |||
| Trade and other receivables | 12,682 | 9,487 | 13,525 | |||
| 64,675 | 83,856 | 68,976 | ||||
| Non-current assets | ||||||
| Investment in equity accounted investee | 30,029 | 34,029 | 32,026 | |||
| Advances on account of investments | 2,328 | 1,554 | 2,483 | |||
| Receivable from concession project | 24,795 | 26,909 | 26,444 | |||
| Fixed assets | 365,756 | **340,897 | 390,077 | |||
| Right-of-use asset | 30,020 | 23,367 | 32,016 | |||
| Intangible asset | 4,094 | 4,762 | 4,366 | |||
| Restricted cash and deposits | 20,192 | 15,630 | 21,535 | |||
| Deferred tax | 23,510 | 12,952 | 25,073 | |||
| Long term receivables | 9,270 | 5,388 | 9,886 | |||
| Derivatives | 1,488 | 2,635 | 1,587 | |||
| 511,482 | 468,123 | 545,493 | ||||
| Total assets | 576,157 | 551,979 | 614,469 | |||
| Liabilities and Equity Current liabilities |
||||||
| Current maturities of long term bank loans | 12,815 | 126,180 | 13,667 | |||
| Current maturities of long term loans | 10,000 | 16,401 | 10,665 | |||
| Current maturities of debentures | 18,714 | 19,806 | 19,958 | |||
| Trade payables | 4,504 | 2,904 | 4,803 | |||
| Other payables | 11,207 | 20,806 | 11,952 | |||
| Current maturities of derivatives | 33,183 | 14,783 | 35,390 | |||
| Current maturities of lease liabilities | 745 | 4,329 | 795 | |||
| 91,168 | 205,209 | 97,230 | ||||
| Non-current liabilities | ||||||
| Long-term lease liabilities | 22,005 | 15,800 | 23,468 | |||
| Long-term loans | 229,466 | 39,093 | 244,725 | |||
| Other long-term bank loans | 21,582 | 37,221 | 23,017 | |||
| Debentures | 91,714 | 117,493 | 97,813 | |||
| Deferred tax | 6,770 | **9,044 | 7,220 | |||
| Other long-term liabilities | 2,021 | 3,905 | 2,155 | |||
| Derivatives | 28,354 | 10,107 | 30,239 | |||
| Total liabilities | 401,912 | 232,663 | 428,637 | |||
| 493,080 | 437,872 | 525,867 | ||||
| Equity Share capital |
25,633 | 25,605 | 27,337 | |||
| Share premium | 86,018 | 85,883 | 91,738 | |||
| Treasury shares | (1,736) | (1,736) | (1,851) | |||
| Transaction reserve with non-controlling Interests | 5,697 | 5,697 | 6,076 | |||
| Reserves | (12,632) | 7,288 | (13,472) | |||
| Retained earnings (accumulated deficit) | (7,256) | **(6,899) | (7,738) | |||
| Total equity attributed to shareholders of the Company Non-Controlling Interest |
95,724 (12,647) |
115,838 **(1,731) |
102,090 (13,488) |
|||
| Total equity | 83,077 | 114,107 | 88,602 | |||
| Total liabilities and equity | 576,157 | 551,979 | 614,469 | |||
* Convenience translation into US\$ (exchange rate as at December 31, 2022: euro 1 = US\$ 1.066)
** Restatement in connection with the retrospective application of an amendment to IAS 16 as required under the amendment.
Ellomay Capital Ltd. and its Subsidiaries Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income (Loss)
| For the three months ended December 31, |
For the year ended December 31, |
For the three months ended December 31, |
For the year ended December 31, |
|||
|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | 2022 | 2022 | |
| Unaudited | Unaudited | Audited | Unaudited | Unaudited Convenience Translation into US\$* |
||
| Revenues | 8,635 | **12,017 | € in thousands (except per share data) 53,360 |
**45,721 | 9,209 | 56,908 |
| Operating expenses | (5,660) | **(5,873) | (24,089) | **(17,590) | (6,036) | (25,691) |
| Depreciation and amortization expenses | (4,241) | **(4,038) | (16,092) | **(15,116) | (4,523) | (17,162) |
| Gross profit (loss) | (1,266) | 2,106 | 13,179 | 13,015 | (1,350) | 14,055 |
| Project development costs | (1,104) | (663) | (3,784) | (2,508) | (1,177) | (4,036) |
| General and administrative expenses | (926) | (1,712) | (5,892) | (5,661) | (988) | (6,284) |
| Share of profits of equity accounted investee | 650 | (167) | 1,206 | 117 | 693 | 1,286 |
| Operating profit (loss) | (2,646) | (436) | 4,709 | 4,963 | (2,822) | 5,021 |
| Financing income | 8,933 | 585 | 9,565 | 2,931 | 9,527 | 10,201 |
| Financing income (expenses) in connection with derivatives and warrants, net |
(410) | (438) | 605 | (841) | (437) | 645 |
| Financing expenses in connection with projects | ||||||
| finance | (1,919) | (12,276) | (7,765) | (17,800) | (2,047) | (8,281) |
| Financing expenses in connection with debentures | (799) | (420) | (2,130) | (3,220) | (852) | (2,272) |
| Interest expenses on minority shareholder loan | (306) | (551) | (1,529) | (2,055) | (326) | (1,631) |
| Other financing expenses | (224) | (3,346) | (1,212) | (5,899) | (239) | (1,293) |
| Financing income (expenses), net | 5,275 | (16,446) | (2,466) | (26,884) | 5,626 | (2,631) |
| Profit (loss) before taxes on income | 2,629 | (16,882) | 2,243 | (21,921) | 2,804 | 2,390 |
| Tax benefit (taxes on income) | (153) | **3,043 | (2,103) | **2,281 | (163) | (2,243) |
| Profit (loss) for the period | 2,476 | (13,839) | 140 | (19,640) | 2,641 | 147 |
| Profit (loss) attributable to: | ||||||
| Owners of the Company | 3,429 | **(8,351) | (357) | **(15,090) | 3,657 | (381) |
| Non-controlling interests | (953) | **(5,488) | 497 | **(4,550) | (1,016) | 528 |
| Profit (loss) for the period | 2,476 | (13,839) | 140 | (19,640) | 2,641 | 147 |
| 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 | (9,035) | 6,696 | (7,829) | 12,284 | (9,635) | (8,350) |
| Effective portion of change in fair value of cash flow | ||||||
| hedges Net change in fair value of cash flow hedges |
35,538 | (783) | (28,283) | (13,429) | 37,902 | (30,163) |
| transferred to profit or loss | - | (1,481) | 821 | (3,353) | - | 876 |
| Total other comprehensive income (loss) | 26,503 | 4,432 | (35,291) | (4,498) | 28,267 | (37,637) |
| Total other comprehensive income (loss) attributable to: |
||||||
| Owners of the Company | 9,582 | 5,260 | (19,920) | 3,124 | 10,220 | (21,244) |
| Non-controlling interests | 16,921 | (828) | (15,371) | (7,622) | 18,047 | (16,393) |
| Total other comprehensive income (loss) | 26,503 | 4,432 | (35,291) | (4,498) | 28,267 | (37,637) |
| 28,979 | (9,407) | (35,151) | (24,138) | 30,908 | (37,490) | |
| Total comprehensive income (loss) for the year | ||||||
| Total comprehensive income (loss) for the year attributable to: |
||||||
| Owners of the Company | 13,011 | (3,091) | (20,277) | (11,966) | 13,877 | (21,625) |
| Non-controlling interests | 15,968 | (6,316) | (14,874) | (12,172) | 17,031 | (15,865) |
| Total comprehensive income (loss) for the year | 28,979 | (9,407) | (35,151) | (24,138) | 30,908 | (37,490) |
| Basic profit (loss) per share | 0.27 | **(0.62) | (0.03) | **(1.18) | 0.29 | (0.03) |
| Diluted profit (loss) per share | 0.27 | ** (0.62) | (0.03) | **(1.18) | 0.29 | (0.03) |
* Convenience translation into US\$ (exchange rate as at December 31, 2022: euro 1 = US\$ 1.066)
** Restatement in connection with the retrospective application of an amendment to IAS 16 as required under the amendment.
Condensed Consolidated Interim Statements of Changes in Equity
| Non controlling |
Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share Share capital premium |
Accumulated Deficit |
Treasury shares |
Attributable to shareholders of the Company Translation reserve from foreign operations |
Hedging Reserve € in thousands |
Interests Transaction reserve with non-controlling Interests |
Total | Interests | Equity | ||
| For the year ended | ||||||||||
| December 31, 2022 (Unaudited): Balance as at January 1, 2022 Profit (loss) for the year |
25,605 - |
85,883 - |
(6,899) (357) |
(1,736) - |
15,365 - |
(8,077) - |
5,697 - |
115,838 (357) |
(1,731) 497 |
114,107 140 |
| Other comprehensive loss for the year | - | - | - | - | (7,395) | (12,525) | - | (19,920) | (15,371) | (35,291) |
| Total comprehensive loss for the year Transactions with owners of the Company, recognized directly in equity: |
- | - | (357) | - | (7,395) | (12,525) | - | (20,277) | (14,874) | (35,151) |
| Issuance of Capital note to non-controlling | ||||||||||
| interest | - | - | - | - | - | - | - | - | 3,958 | 3,958 |
| Options exercise | 28 - |
8 127 |
- - |
- - |
- - |
- - |
- - |
36 127 |
- - |
36 127 |
| Share-based payments | 25,633 | 86,018 | (7,256) | (1,736) | 7,970 | (20,602) | 5,697 | 95,724 | (12,647) | 83,077 |
| Balance as at December 31, 2022 | ||||||||||
| For the three months ended December 31, 2022 (Unaudited): |
||||||||||
| Balance as at September 30, 2022 |
25,605 | 85,973 | (10,685) | (1,736) | 16,517 | (38,731) | 5,697 | 82,640 | (28,615) | 54,025 |
| Profit (loss) for the year | - | - | 3,429 | - | - | - | - | 3,429 | (953) | 2,476 |
| Other comprehensive income (loss) for the year |
- | - | - | - | (8,547) | 18,129 | - | 9,582 | 16,921 | 26,503 |
| Total comprehensive income (loss) for the year Transactions with owners of the Company, recognized directly in equity: |
- | - | 3,429 | - | (8,547) | 18,129 | - | 13,011 | 15,968 | 28,979 |
| Options exercise | 28 | 8 | - | - | - | - | - | 36 | - | 36 |
| Share-based payments | - | 37 | - | - | - | - | - | 37 | - | 37 |
| Balance as at December 31, 2022 | 25,633 | 86,018 | (7,256) | (1,736) | 7,970 | (20,602) | 5,697 | 95,724 | (12,647) | 83,077 |
Condensed Consolidated Interim Statements of Changes in Equity (cont'd)
| Attributable to shareholders of the Company | Non controlling |
Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 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 | |||
| For the year ended | € in thousands | |||||||||
| December 31, 2021 (Audited): Balance as at |
||||||||||
| January 1, 2021 | 25,102 | 82,401 | 8,191 | (1,736) | 3,823 | 341 | 6,106 | 124,228 | 798 | 125,026 |
| Loss for the year | - | - | *(15,090) | - | - | - | - | (15,090) | (4,550) | (19,640) |
| Other comprehensive income (loss) for the year |
- | - | - | - | 11,542 | (8,418) | - | 3,124 | (7,622) | (4,498) |
| Total comprehensive income (loss) for the year Transactions with owners of the Company, recognized directly in equity: |
- | - | (15,090) | - | 11,542 | (8,418) | - | (11,966) | (12,172) | (24,138) |
| Issuance of ordinary shares Acquisition of shares in subsidiaries from non |
- | - | - | - | - | - | - | - | 8,682 | 8,682 |
| controlling interests | (409) | (409) | 961 | 552 | ||||||
| Warrants exercise | 454 | 3,419 | 3,873 | - | 3,873 | |||||
| Options exercise | 49 | - | - | - | - | - | - | 49 | - | 49 |
| Share-based payments | - | 63 | - | - | - | - | - | 63 | - | 63 |
| Balance as at December 31, 2021 | 25,605 | 85,883 | (6,899) | (1,736) | 15,365 | (8,077) | 5,697 | 115,838 | (1,731) | 114,107 |
| For the three months ended December 31, 2021 (Unaudited): |
||||||||||
| Balance as at | ||||||||||
| September 30, 2021 | 25,578 | 85,774 | 1,452 | (1,736) | 9,093 | (7,065) | 5,145 | 118,241 | 4,585 | 122,826 |
| Loss for the year | - | - | * (8,351) |
- | - | - | - | (8,351) | (5,488) | (13,839) |
| Other comprehensive income (loss) for the year | - | - | - | - | 6,272 | (1,012) | - | 5,260 | (828) | 4,432 |
| Total comprehensive income (loss) for the period Transactions with owners of the Company, recognized directly in equity: |
- | - | (8,351) | - | 6,272 | (1,012) | - | (3,091) | (6,316) | (9,407) |
| Acquisition of shares in subsidiaries from non | ||||||||||
| controlling interests Issuance of ordinary shares |
- - |
- 71 |
- - |
- - |
- - |
- - |
552 - |
552 71 |
- - |
552 71 |
| Options exercise | 27 | - | - | - | - | - | - | 27 | - | 27 |
| Share-based payments | - | 38 | - | - | - | - | - | 38 | - | 38 |
| Balance as at December 31, 2021 | 25,605 | 85,883 | (6,899) | (1,736) | 15,365 | )8,077( | 5,697 | 115,838 | (1,731) | 114,107 |
* Restatement in connection with the retrospective application of an amendment to IAS 16 as required under the amendment.
Condensed Consolidated Interim Statements of Changes in Equity (cont'd)
| Attributable to shareholders of the Company | Non controlling Interests |
Total Equity |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium |
Accumulated Deficit |
Treasury shares |
Translation reserve from foreign operations |
Hedging Reserve |
Interests Transaction reserve with non-controlling Interests |
Total | |||
| Convenience translation into US\$ (exchange rate as at December 31, 2021: euro 1 = US\$ 1.066) | ||||||||||
| For the year ended December 31, 2022 (Unaudited): |
||||||||||
| Balance as at January 1, 2022 | 27,307 | 91,594 | (7,357) | (1,851) | 16,386 | (8,614) | 6,076 | 123,541 | (1,844) | 121,697 |
| Profit (loss) for the year | - | - | (381) | - | - | - | - | (381) | 528 | 147 |
| Other comprehensive loss for the year | - | - | - | - | (7,887) | (13,357) | - | (21,244) | (16,393) | (37,637) |
| Total comprehensive loss for the year |
- | - | (381) | - | (7,887) | (13,357) | - | (21,625) | (15,865) | (37,490) |
| Transactions with owners of the Company, recognized directly in equity: |
||||||||||
| Issuance of Capital note to non-controlling | ||||||||||
| interest | - | - | - | - | - | - | - | - | 4,221 | 4,221 |
| Options exercise | 30 | 9 | - | - | - | - | - | 39 | - | 39 |
| Share-based payments | - | 135 | - | - | - | - | - | 135 | - | 135 |
| Balance as at December 31, 2022 | 27,337 | 91,738 | (7,738) | (1,851) | 8,499 | (21,971) | 6,076 | 102,090 | (13,488) | 88,602 |
| For the three months ended December 31, 2022 (Unaudited): |
||||||||||
| Balance as at September 30, 2022 | 27,307 | 91,690 | (11,395) | (1,851) | 17,614 | (41,306) | 6,076 | 88,135 | (30,519) | 57,616 |
| Profit (loss) for the year | - | - | 3,657 | - | - | - | - | 3,657 | (1,016) | 2,641 |
| Other comprehensive income (loss) for the year |
- | - | - | - | (9,115) | 19,335 | - | 10,220 | 18,047 | 28,267 |
| Total comprehensive income (loss) for the year |
- | - | 3,657 | - | (9,115) | 19,335 | - | 13,877 | 17,031 | 30,908 |
| Transactions with owners of the Company, recognized directly in equity: |
||||||||||
| Options exercise | 30 | 9 | - | - | - | - | - | 39 | - | 39 |
| Share-based payments | - | 39 | - | - | - | - | - | 39 | - | 39 |
| Balance as at December 31, 2022 | 27,337 | 91,738 | (7,738) | (1,851) | 8,499 | (21,971) | 6,076 | 102,090 | (13,488) | 88,602 |
Condensed Consolidated Interim Statements of Cash Flow
Ellomay Capital Ltd. and its Subsidiaries
| For the three months ended December 31, |
December 31, | For the year ended | For the three months ended December 31, |
For the year ended December 31, |
|||
|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | 2022 | 2022 | ||
| Unaudited | Unaudited | Audited | Unaudited | Unaudited | |||
| € in thousands | Convenience Translation into US\$* |
||||||
| Cash flows from operating activities | |||||||
| Profit for the period | 2,476 | **(13,839) | 140 | **(19,640) | 2,641 | 147 | |
| Adjustments for: | |||||||
| Financing expenses, net | (5,275) | 16,446 | 2,466 | 26,884 | (5,626) | 2,631 | |
| Profit from settlement of derivatives contract | - | - | - | (407) | - | - | |
| Depreciation and amortization | 4,241 | **4,038 | 16,092 | **15,116 | 4,523 | 17,162 | |
| Share-based payment transactions | 37 | 38 | 127 | 63 | 39 | 135 | |
| Share of profits of equity accounted investees | (650) | 167 | (1,206) | (117) | (693) | (1,286) | |
| Payment of interest on loan from an equity accounted investee | - | - | - | 859 | - | - | |
| Change in trade receivables and other receivables | 441 | 4,542 | 724 | (1,883) | 470 | 772 | |
| Change in other assets | (99) | (345) | (209) | (545) | (106) | (223) | |
| Change in receivables from concessions project | (48) | 267 | (521) | 1,580 | (51) | (556) | |
| Change in trade payables | 2,451 | 166 | 1,697 | 154 | 2,614 | 1,810 | |
| Change in other payables | (591) | (4,834) | 3,807 | 2,380 | (630) | 4,060 | |
| Tax benefit | 153 | **(3,043) | 2,103 | **(2,281) | 163 | 2,243 | |
| Income taxes paid | (1,938) | (79) | (6,337) | (94) | (2,067) | (6,758) | |
| Interest received | 493 | 517 | 1,896 | 1,844 | 526 | 2,022 | |
| Interest paid | (4,275) | (1,701) | (9,459) | (7,801) | (4,559) | (10,088) | |
| (5,060) | 16,179 | 11,180 | 35,752 | (5,397) | 11,924 | ||
| Net cash from (used in) operating activities | (2,584) | 2,340 | 11,320 | 16,112 | (2,756) | 12,071 | |
| Cash flows from investing activities | |||||||
| Acquisition of fixed assets | (9,543) | (7,435) | (48,610) | (80,885) | (10,178) | (51,842) | |
| VAT associated with the acquisition of fixed assets | - | (2,310) | - | - | - | - | |
| Repayment of loan from an equity accounted investee | - | - | 149 | 1,400 | - | 159 | |
| Loan to an equity accounted investee | |||||||
| (68) | (39) | (128) | (335) | (73) | (137) | ||
| Advances on account of investments | (774) | 8 | (774) | - | (825) | (825) | |
| Proceeds from marketable securities | (1,062) | (1,897) | (1,062) | (112) | (1,133) | (1,133) | |
| Proceeds from settlement of derivatives, net | - | )724( | 3,272 | (976) | - | 3,490 | |
| Proceed (investment) in restricted cash, net | 4,007 | (5,786) | (4,873) | (5,990) | 4,273 | (5,197) | |
| Investment in short term deposit | - | )27,132( | 27,645 | (18,599) | - | 29,483 | |
| Net cash used in investing activities | (7,440) | (45,315) | (24,381) | (105,497) | (7,936) | (26,002) | |
| Cash flows from financing activities | |||||||
| Sale of shares in subsidiaries to non-controlling interests | - | 32,130 | - | 1,400 | - | - | |
| Proceeds from options | 36 | 10,799 | 36 | 49 | 38 | 38 | |
| Cost associated with long term loans | 3 | (35,311) | (9,988) | (2,796) | 3 | (10,652) | |
| Payment of principal of lease liabilities | 18,853 | (8,478) | (5,703) | (4,803) | 20,107 | (6,082) | |
| Proceeds from long-term loans | - | 37,033 | 215,170 | 32,947 | - | 229,478 | |
| Repayment of long-term loans | (5,308) | (18,927) | (153,751) | (18,905) | (5,661) | (163,975) | |
| Repayment of Debentures | - | (29,411) | (19,764) | (30,730) | - | (21,078) | |
| Repayment of SWAP instrument associated with long term | |||||||
| loans | - | - | (3,290) | - | - | (3,509) | |
| Proceeds from issue of convertible debentures | - | - | - | 15,571 | - | - | |
| Proceeds from issuance of Debentures, net | - | 32,252 | - | 57,717 | - | - | |
| Issuance / exercise of warrants | - | 2,346 | - | 3,746 | - | - | |
| Net cash from financing activities | 13,584 | 22,433 | 22,710 | 54,196 | 14,487 | 24,220 | |
| Effect of exchange rate fluctuations on cash and cash | |||||||
| equivalents | (5,589) | 3,718 | (4,420) | 9,573 | (5,959) | (4,713) | |
| Increase (decrease) in cash and cash equivalents | (2,029) | )16,824( | 5,229 | )25,616( | (2,164) | 5,576 | |
| Cash and cash equivalents at the beginning of the period | 48,487 | 58,053 | 41,229 | 66,845 | 51,711 | 43,971 | |
| Cash and cash equivalents at the end of the period | 46,458 | 41,229 | 46,458 | 41,229 | 49,547 | 49,547 |
* Convenience translation into US\$ (exchange rate as at December 31, 2022: euro 1 = US\$ 1.066)
** Restatement in connection with the retrospective application of an amendment to IAS 16 as required under the amendment.
Operating Segments
| PV | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ellomay | Bio | reportable | Total | ||||||||
| Italy | Spain | Solar | Talasol | Israel | Gas | Dorad | Manara | segments | Reconciliations | consolidated | |
| For the year ended December 31, 2022 | |||||||||||
| € in thousands | |||||||||||
| Revenues | - | 3,264 | 3,597 | 32,740 | 1,119 | 12,640 | 62,813 | - | 116,173 | (62,813) | 53,360 |
| Operating expenses | - | (322) | (1,399) | (8,764) | (418) | (13,186) | (47,442) | - | (71,531) | 47,442 | (24,089) |
| Depreciation expenses | - | (908) | (427) | (11,400) | (512) | (2,824) | (6,339) | - | (22,410) | 6,318 | (16,092) |
| Gross profit (loss) | - | 2,034 | 1,771 | 12,576 | 189 | (3,370) | 9,032 | - | 22,232 | (9,053) | 13,179 |
| Adjusted Gross profit (loss) | - | 2,034 | 1,771 | 12,576 | 2 1,565 |
(3,370) | 9,032 | - | 23,608 | (10,429) | 13,179 |
| Project development costs General and administrative expenses |
(3,784) (5,892) |
||||||||||
| Share of loss of equity accounted investee |
1,206 | ||||||||||
| Operating profit | 4,709 | ||||||||||
| Financing income | 9,565 | ||||||||||
| Financing expenses in connection |
|||||||||||
| and warrants, net with derivatives |
605 | ||||||||||
| Financing expenses, net | (12,636) | ||||||||||
| Profit before taxes on Income |
2,243 | ||||||||||
| Segment assets as at | |||||||||||
| December 31, 2022 | 22,608 | 14,577 | 20,090 | 244,584 | 34,750 | 32,002 | 107,079 | 137,432 | 613,122 | (36,965) | 576,157 |
2 The gross profit of the Talmei Yosef PV Plant located in Israel is adjusted to include income from the sale of electricity (approximately €3,427 thousand) and depreciation expenses (approximately €2,051 thousand) under the fixed asset model, which were not recognized as revenues and depreciation expenses, respectively, under the financial asset model as per IFRIC 12.
Reconciliation of Profit (Loss) to EBITDA
| For the three months ended December 31, |
For the year ended December 31, |
For the three months ended December 31, |
For the year ended December 31, |
|||
|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | 2022 | 2022 | |
| € in thousands | Convenience Translation into US\$* |
|||||
| Net (profit) loss for the period | 2,476 | **(13,839) | 140 | **(19,640) | 2,641 | 147 |
| Financing expenses, net | (5,275) | 16,446 | 2,466 | 26,884 | (5,626) | 2,631 |
| Tax benefit | 153 | **(3,043) | 2,103 | **(2,281) | 163 | 2,243 |
| Depreciation and amortization | 4,241 | **4,038 | 16,092 | **15,116 | 4,523 | 17,162 |
| EBITDA | 1,595 | 3,602 | 20,801 | 20,079 | 1,701 | 22,183 |
* Convenience translation into US\$ (exchange rate as at December 31, 2022: euro 1 = US\$ 1.066)
** Restatement in connection with the retrospective application of an amendment to IAS 16 as required under the amendment.
Potential Warning Signs
As of December 31, 2022, we had working capital deficiency of approximately €29.2 million. The working capital deficiency as of December 31, 2022, resulted from the recording of current maturities of derivatives in the amount of approximately €33.2 million as a result of the increase in the fair value of the liability resulting from the Talasol PPA. These current maturities do not impact our cash flows. Taking into account the nature of the current maturities, in our opinion our working capital is sufficient for our present requirements .
Upon the issuance of our Debentures, we undertook to comply with the "hybrid model disclosure requirements" as determined by the Israeli Securities Authority and as described in the Israeli prospectuses published in connection with the public offering of our Debentures. This model provides that in the event certain financial "warning signs" exist in our consolidated financial results or statements, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Debentures . One possible "warning sign" is the existence of a working capital deficiency (if the board of directors of the company does not determine that the working capital deficiency is not an indication of a liquidity problem). In examining the existence of warning signs as of December 31, 2022, our Board of Directors noted the working capital deficiency as of December 31, 2022. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of a working capital deficiency as of December 31, 2022 does not indicate a liquidity problem. In making such determination, our board of directors noted the following: (i) the deficiency in working capital resulted from the recording of current maturities of derivatives in the amount of approximately €33.2 million as a result of the increase in the fair value of the liability resulting from the Talasol PPA, which does not impact our cash flow in the next 12 months as Talasol's revenues from the sale of electricity during the same period are expected to exceed its liability and payments to the PPA provider, (ii) pursuant to the applicable accounting rules, we are required to recognize the fair value of expected future payments to the PPA provider as a liability but do not recognize the expected revenues from the Talasol PV Plant as assets, as these expected revenues cannot be recorded as an asset under accounting rules, resulting in an increase in current liabilities and a working capital deficiency, and (iii) our operating subsidiaries generated a positive cash flow during the year ended December 31, 2022.
Financial Covenants
Pursuant to the Deeds of Trust governing the Company's Series C, Series D and Series E 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 submitted to the Securities and Exchange Commission on March 31, 2022, and below.
Net Financial Debt
As of December 31, 2022, the Company's Net Financial Debt, (as such term is defined in the Deeds of Trust of the Company's Debentures), was approximately €62.6 million (consisting of approximately €2783 million of short-term and long-term debt from banks and other interest bearing financial obligations, approximately €111.94 million in connection with the Series C Debentures issuances (in July 2019, October 2020, February 2021 and October 2021) and Series D Debentures issuance (in February 2021), net of approximately €49.3 million of cash and cash equivalents, short-term deposits and marketable securities and net of approximately €2785 million of project finance and related hedging transactions of the Company's subsidiaries).
3 Short-term and long-term debt from banks and other interest-bearing financial obligations amount provided above, includes an amount of approximately €4.1 million costs associated with such debt, which was capitalized and therefore offset from the debt amount that is recorded in the Company's balance sheet.
4 Debentures amount provided above includes an amount of approximately €1.5 million associated costs, which was capitalized and therefore offset from the debentures amount that is recorded in the Company's balance sheet.
5 The project finance amount deducted from the calculation of Net Financial Debt includes project finance obtained from various sources, including financing entities and the minority shareholders in project companies held by the Company (provided in the form of shareholders' loans to the project companies).
Information for the Company's Series C Debenture Holders.
The Deed of Trust governing the Company's Series C Debentures (as amended on June 6, 2022, the "Series C Deed of Trust"), includes an undertaking by the Company to maintain certain financial covenants, whereby a breach of such financial covenants for two consecutive quarters is a cause for immediate repayment. As of December 31, 2022, the Company was in compliance with the financial covenants set forth in the Series C Deed of Trust as follows: (i) the Company's Adjusted Shareholders' Equity (as defined in the Series C Deed of Trust) was approximately €129.2 million, (ii) the ratio of the Company's Net Financial Debt (as set forth above) to the Company's CAP, Net (defined as the Company's Adjusted Shareholders' Equity plus the Net Financial Debt) was 32.6%, and (iii) the ratio of the Company's Net Financial Debt to the Company's Adjusted EBITDA6 , was 2.6.
The following is a reconciliation between the Company's profit and the Adjusted EBITDA (as defined in the Series C Deed of Trust) for the four-quarter period ended December 31, 2022:
| For the four-quarter period ended December 31, 2022 |
||
|---|---|---|
| Unaudited | ||
| € in thousands | ||
| Profit for the period |
140 | |
| Financing expenses, net | 2,466 | |
| Taxes on income | 2,103 | |
| Depreciation | 16,092 | |
| Share-based payments | 127 | |
| Adjustment to revenues of the Talmei Yosef PV Plant due to | ||
| calculation based on the fixed asset model | 3,427 | |
| Adjusted EBITDA as defined the Series C Deed of Trust | 24,355 |
6 The term "Adjusted EBITDA" is defined in the Series C Deed of Trust as earnings before financial expenses, net, taxes, depreciation and amortization, where the revenues from the Company's operations, such as the Talmei Yosef PV Plant, are calculated based on the fixed asset model and not based on the financial asset model (IFRIC 12), and before share-based payments. The Series C Deed of Trust provides that for purposes of the financial covenant, the Adjusted EBITDA will be calculated based on the four preceding quarters, in the aggregate. The Adjusted EBITDA is presented in this press release as part of the Company's undertakings towards the holders of its Series C Debentures. For a general discussion of the use of non-IFRS measures, such as EBITDA and Adjusted EBITDA see above under "Use of NON-IFRS Financial Measures."
Information for the Company's Series D Debenture Holders
The Deed of Trust governing the Company's Series D Debentures includes an undertaking by the Company to maintain certain financial covenants, whereby a breach of such financial covenants for the periods set forth in the Series D Deed of Trust is a cause for immediate repayment. As of December 31, 2022, the Company was in compliance with the financial covenants set forth in the Series D Deed of Trust as follows: (i) the Company's Adjusted Shareholders' Equity (as defined in the Series D Deed of Trust) was approximately €129.2 million, (ii) the ratio of the Company's Net Financial Debt (as set forth above) to the Company's CAP, Net (defined as the Company's Adjusted Shareholders' Equity plus the Net Financial Debt) was 32.6%, and (iii) the ratio of the Company's Net Financial Debt to the Company's Adjusted EBITDA7 was 2.3.
The following is a reconciliation between the Company's profit and the Adjusted EBITDA (as defined in the Series D Deed of Trust) for the four-quarter period ended December 31, 2022:
| For the four quarter period ended December 31, 2022 |
||
|---|---|---|
| Unaudited | ||
| € in thousands | ||
| Profit for the period |
140 | |
| Financing expenses, net | 2,466 | |
| Taxes on income | 2,103 | |
| Depreciation and amortization expenses |
16,092 | |
| Adjustment to revenues of the Talmei Yosef PV Plant due to | ||
| calculation based on the fixed asset model | 3,427 | |
| Share-based payments | 127 | |
| Adjustment to data relating to projects with a Commercial Operation | ||
| Date during the four preceding quarters8 | 2,328 | |
| Adjusted EBITDA as defined the Series D Deed of Trust | 26,683 |
7 The term "Adjusted EBITDA" is defined in the Series D Deed of Trust as earnings before financial expenses, net, taxes, depreciation and amortization, where the revenues from the Company's operations, such as the Talmei Yosef PV Plant, are calculated based on the fixed asset model and not based on the financial asset model (IFRIC 12), and before share-based payments, when the data of assets or projects whose Commercial Operation Date (as such term is defined in the Series D Deed of Trust) occurred in the four quarters that preceded the relevant date will be calculated based on Annual Gross Up (as such term is defined in the Series D Deed of Trust). The Series D Deed of Trust provides that for purposes of the financial covenant, the Adjusted EBITDA will be calculated based on the four preceding quarters, in the aggregate. The Adjusted EBITDA is presented in this press release as part of the Company's undertakings towards the holders of its Series D Debentures. For a general discussion of the use of non-IFRS measures, such as EBITDA and Adjusted EBITDA see above under "Use of NON-IFRS Financial Measures."
8 The adjustment is based on the results of Ellomay Solar since June 2022.
Information for the Company's Series E Debenture Holders
The Deed of Trust governing the Company's Series E Debentures includes an undertaking by the Company to maintain certain financial covenants, whereby a breach of such financial covenants for the periods set forth in the Series E Deed of Trust is a cause for immediate repayment. As of December 31, 2022, the Company was in compliance with the financial covenants set forth in the Series E Deed of Trust as follows: (i) the Company's Adjusted Shareholders' Equity (as defined in the Series E Deed of Trust) was approximately €129.2 million, (ii) the ratio of the Company's Net Financial Debt (as set forth above) to the Company's CAP, Net (defined as the Company's Adjusted Shareholders' Equity plus the Net Financial Debt) was 32.6%, and (iii) the ratio of the Company's Net Financial Debt to the Company's Adjusted EBITDA9 was 2.3.
The following is a reconciliation between the Company's profit and the Adjusted EBITDA (as defined in the Series E Deed of Trust) for the four-quarter period ended December 31, 2022:
| For the four-quarter period ended December 31, 2022 |
||
|---|---|---|
| Unaudited | ||
| € in thousands | ||
| Profit for the period |
140 | |
| Financing expenses, net | 2,466 | |
| Taxes on income | 2,103 | |
| Depreciation and amortization expenses |
16,092 | |
| Adjustment to revenues of the Talmei Yosef PV Plant due to | ||
| calculation based on the fixed asset model | 3,427 | |
| Share-based payments | 127 | |
| Adjustment to data relating to projects with a Commercial Operation | ||
| Date during the four preceding quarters10 | 2,328 | |
| Adjusted EBITDA as defined the Series E Deed of Trust |
26,683 |
9 The term "Adjusted EBITDA" is defined in the Series E Deed of Trust as earnings before financial expenses, net, taxes, depreciation and amortization, where the revenues from the Company's operations, such as the Talmei Yosef PV Plant, are calculated based on the fixed asset model and not based on the financial asset model (IFRIC 12), and before share-based payments, when the data of assets or projects whose Commercial Operation Date (as such term is defined in the Series E Deed of Trust) occurred in the four quarters that preceded the relevant date will be calculated based on Annual Gross Up (as such term is defined in the Series E Deed of Trust). The Series E Deed of Trust provides that for purposes of the financial covenant, the Adjusted EBITDA will be calculated based on the four preceding quarters, in the aggregate. The Adjusted EBITDA is presented in this press release as part of the Company's undertakings towards the holders of its Series E Debentures. For a general discussion of the use of non-IFRS measures, such as EBITDA and Adjusted EBITDA see above under "Use of NON-IFRS Financial Measures."
10 The adjustment is based on the results of Ellomay Solar since June 2022.