Ellomay Capital Ltd. — FY2022 Form 20-F
Period: Fiscal year ended December 31, 2022. This is an annual report; it does not provide standalone fourth-quarter financial results. Financial statements are prepared under IFRS and presented primarily in euros.
Business context and financial performance
Ellomay develops and operates renewable-energy and power assets in Spain, Israel, Italy and the Netherlands. Its portfolio includes solar plants, Dutch biogas facilities, an indirect interest in Israel’s Dorad power plant, and the Manara pumped-storage project under construction. Ellomay owns 51% of the 300 MW Talasol solar plant and 83.333% of Manara.
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | €53.36 million | €45.72 million |
| Gross profit / margin | €13.18 million / 24.7% | €13.02 million / 28.5% |
| Operating profit / margin | €4.71 million / 8.8% | €4.96 million / 10.9% |
| Net profit (loss), consolidated | €0.14 million | (€19.64 million) |
| Net profit (loss) attributable to Ellomay shareholders | (€0.36 million) | (€15.09 million) |
| EBITDA (non-IFRS) | €20.80 million | €20.08 million |
| Net cash from operating activities | €11.32 million | €16.11 million |
| Net cash used in investing activities | (€28.18 million) | (€105.50 million) |
| Net cash from financing activities | €26.51 million | €54.20 million |
Year-end cash and cash equivalents were €46.46 million, versus €41.23 million a year earlier. Current assets were €64.68 million and current liabilities €91.17 million, a working-capital deficit of about €26.5 million. Total equity was €83.08 million and total liabilities €493.08 million. The balance sheet reports loans and debentures with carrying amounts totaling about €384.3 million, excluding lease liabilities. Separately, the filing cites approximately €390 million of total indebtedness using a different stated measure that includes expected principal and interest repayments and financing-related swaps.
Material changes and notable items
- Revenue increased 16.7%, primarily from higher Spanish electricity prices and the Ellomay Solar plant beginning operations in June 2022. Talasol generated €32.74 million of revenue and remains a major concentration: it represented about 61.4% of company revenue.
- Operating expenses rose to €24.09 million from €17.59 million, reflecting Spain’s revenue-reduction measure, the new Ellomay Solar plant, and higher Dutch biogas feedstock and transportation costs. Gross and operating margins declined.
- Net results improved from a substantial loss to near break-even. Net financing expense fell to €2.47 million from €26.88 million, helped by a €6.04 million foreign-exchange gain and the absence of substantial Talasol refinancing charges recorded in 2021. Taxes changed from a €2.28 million benefit to €2.10 million of expense.
- Other comprehensive loss widened to €35.29 million, largely from currency translation and the Talasol power-swap hedge valuation. The company says the hedge’s fair-value movements affect equity, not consolidated net profit or cash flow. Its current derivative liability of €33.18 million contributed to the working-capital deficit; management says it is not expected to require net cash outflow over the coming 12 months.
- Operating cash flow declined, including a €3.3 million non-recurring advance tax payment. Investment outflows fell substantially year over year but continued to fund Manara, Italian solar projects and Ellomay Solar.
Outlook, risks and contingencies
- No formal consolidated earnings or revenue guidance is provided. Management expects Manara, a 156 MW project, to reach commercial operation in 2026; construction began in 2021. The project is subject to licensing, construction, indexation and financing risks.
- Ellomay planned to begin construction of an Italian PV portfolio of approximately 150–200 MW in 2023, with estimated total construction costs of €150–200 million and estimated equity needs of €60–80 million, assuming no PPAs. Financing discussions were ongoing. These are forward-looking estimates, not completed commitments.
- In the Netherlands, high 2023 gas prices were above the subsidy cap, so subsidiaries expected to temporarily leave the subsidy regime and defer its end by one year. Higher electricity costs had added about €1 million to Gelderland’s 2022 expenses; a CHP generator was being installed.
- Spain’s measure reducing certain renewable generators’ returns was extended through December 31, 2023 and affects the portion of Talasol and Ellomay Solar output not covered by the Talasol PPA. Regulatory changes, electricity prices, weather, supply costs, and government incentives remain important risks.
- The company reported covenant compliance at year-end and said operating forecasts, existing working capital and expected operating cash flows should cover the next twelve months. It also reported issuing €58.5 million equivalent of secured Series E debentures in February 2023, after year-end; proceeds were secured by Ellomay’s Dori Energy holdings and related loan rights.
- Material risks include dependence on Talasol, significant debt and covenant restrictions, higher interest rates, currency exposure, development and construction execution, Dutch biogas operating performance, and political/security conditions in Israel. The auditor identified the Dutch biogas-plant impairment assessment as a critical audit matter: despite recent operating losses and below-forecast 2022 results, management concluded no impairment was required, using a 7.2% after-tax discount rate.
- Long-running arbitration involving Dorad shareholders includes substantial claims and counterclaims. The company and Dorad said the outcome could not yet be assessed; the arbitrator’s award was expected in the second quarter of 2023. Ellomay reported no cash dividend in 2020–2022 and none since 2016.
Most important facts for investors to verify
- Underlying cash generation and project-level cash availability, especially given lower operating cash flow, the working-capital deficit and debt maturities.
- The Talasol PPA’s valuation, settlement mechanics and cash-flow exposure, and the effect of Spanish revenue-reduction rules through 2023.
- Actual covenant headroom and the basis for reconciling the filing’s different debt measures; also the impact of the February 2023 Series E issuance and its Dori Energy security.
- Manara’s schedule, indexed construction costs, remaining equity commitments and continued compliance with its conditional license and financing covenants.
- Dutch biogas feedstock costs, operating performance and impairment assumptions, including subsidy treatment and Gelderland’s CHP start-up.
- Developments in the Dorad arbitration and any resulting financial, governance or liquidity consequences.