Ellomay Capital Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. Although the request identifies 2021 Q4, this is an annual report, not a standalone fourth-quarter filing. Ellomay reports under IFRS in euros. Its renewable-energy portfolio includes solar PV in Spain and Israel, Dutch biogas plants, an indirect minority interest in Israeli power producer Dorad, and the 156 MW Manara pumped-storage project under construction.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | €44.8 million | €9.6 million |
| Gross profit | €12.2 million | €1.7 million |
| Gross margin | 27.2% | 17.8% |
| Operating profit (loss) | €4.1 million | (€2.7 million) |
| Net loss | (€20.3 million) | (€6.2 million) |
| EBITDA, non-IFRS | €19.2 million | €0.3 million |
| Net cash from (used in) operating activities | €15.2 million | (€5.8 million) |
| Net cash used in investing activities | (€107.4 million) | (€112.1 million) |
| Net cash from financing activities | €54.2 million | €141.6 million |
- Revenue growth primarily reflected Talasol’s first full year of recognized operations after receiving its Provisional Acceptance Certificate (PAC) in January 2021, plus the acquisition of the Gelderland biogas plant and improved biogas operations.
- Talasol contributed €28.5 million of reported revenue. Dutch biogas revenue was €12.7 million, up from €6.0 million; the Dorad segment’s reported share of revenue declined 10.2% to €51.6 million in segment reporting. Segment figures are not directly comparable to consolidated revenue because of accounting and consolidation adjustments.
- Net loss widened despite higher operating profit. Net financing expenses rose to €26.9 million from €3.6 million, including approximately €15.5 million of Talasol refinancing-related charges and €5.4 million of net foreign-exchange losses.
- Cash and cash equivalents were €41.2 million at year-end, down from €66.8 million. Short-term deposits were €28.4 million, marketable securities €1.9 million, and restricted cash and deposits totaled €16.6 million across current and non-current balances.
- Working capital was negative €121.4 million, versus positive €45.3 million in 2020. This largely reflected classification of approximately €121 million of Talasol debt and related refinancing amounts as current before the refinancing closed. The company said the Talasol refinancing was completed in January 2022 and that working capital was then sufficient for present requirements.
- Ellomay cited approximately €363 million of total corporate and project indebtedness, including expected principal and interest repayments and financing-related swaps, but excluding related capitalized costs. It reported no financial-covenant defaults at December 31, 2021.
Material changes and developments
- Talasol refinancing: A €175 million refinancing closed in January 2022, replacing approximately €121 million of previous project debt. It has a weighted-average life of about 11.5 years and a fixed weighted-average interest rate of approximately 3%. Planned uses also included debt-service and PPA-security reserves, costs, swap termination, and an expected approximately €30 million special distribution to Talasol shareholders.
- Manara: Construction of the 156 MW pumped-storage project began in April 2021. The project secured NIS 1.22 billion of project financing in February 2021; construction is expected to take approximately 62.5 months. Ellomay owns 83.333% of the project.
- Development pipeline: At year-end, the company reported advanced-stage PV development of 439 MW in Italy and 40 MW plus storage in Israel, and 850 MW in earlier-stage projects in Italy and Spain. EPC agreements for two Italian projects totaling approximately 20 MW were signed in February 2022; construction had commenced, with another adjacent 15 MW project expected to start in Q2 2022.
- Ellomay Solar: The 28 MW Spanish project was under construction and awaiting final permits; PAC was expected by the end of April 2022. This is a stated expectation, not a guarantee.
- Capital and distributions: Ellomay issued additional Series C debentures and Series D convertible debentures in 2021, and repaid its Series B debentures early. It has not paid a shareholder cash dividend or conducted a substantial share buyback since 2016.
Outlook, risks and unusual items
- The filing gives no specific company-wide earnings or revenue guidance. Management’s project milestones and expectations are subject to permits, financing, construction, grid connection, and other conditions.
- Key risks include project delays or cost overruns, permitting and license requirements, energy-price and subsidy changes, contractor and equipment performance, weather and feedstock availability, and the ability to secure financing and meet covenants.
- Currency, interest-rate and hedge valuation movements can materially affect results. The euro strengthened against the shekel in 2021; Ellomay reported a 10.8% shekel depreciation against the euro and €5.4 million of net exchange losses.
- Manara faces complex engineering and geological challenges, license milestones, and possible additional equity-support requirements. Its conditional license could be revoked if milestones are missed.
- Dutch biogas plants had prior operating losses and results below forecast. Management reported no impairment after a discounted-cash-flow assessment; the auditor identified this assessment as a critical audit matter, particularly assumptions for feedstock prices and discount rates.
- Ellomay’s 9.375% indirect interest in Dorad does not give it control over Dorad. Shareholder arbitration and other disputes include substantial claims, and the filing says outcomes cannot currently be assessed. A separate dispute concerns the proposed Dorad 2 expansion.
- Other risks include regulatory changes in Spain affecting Talasol’s unhedged output, Israeli security conditions near certain assets, COVID-19 effects, and geopolitical and capital-market uncertainty following Russia’s invasion of Ukraine in February 2022.
- The company reported effective disclosure controls and internal control over financial reporting; its auditor issued an unqualified opinion on the financial statements and internal controls.
Most important facts for investors to verify
- How much of the reported operating improvement translates into recurring cash generation, given the large financing charges and substantial development spending.
- Completion, use of proceeds, debt-service requirements, and distribution terms of the Talasol refinancing, including the actual shareholder distribution.
- Manara’s construction progress, remaining equity commitments, cost escalation, license milestones, and forecast coverage ratios.
- Whether the Italian and Spanish development pipeline reaches permits, financing, construction, and commercial operation on expected timelines.
- Biogas plant operating performance and the sensitivity of impairment conclusions to feedstock costs and other assumptions.
- Progress and potential financial consequences of the Dorad-related arbitrations, shareholder disputes, and Dorad 2 proceedings.
- Current liquidity and covenant headroom after the Talasol refinancing, including restricted cash and upcoming debt maturities.