Business context and reporting period
Ellomay Capital Ltd. filed this audited annual report on Form 20-F for the fiscal year ended December 31, 2023. It is not a standalone fourth-quarter report; the filing text does not provide separate Q4 results. The company develops, constructs and operates renewable-energy assets in Europe, the United States and Israel, including solar PV, Dutch biogas and the Manara pumped-storage project. Its financial statements are prepared under IFRS and presented in euros.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Revenue | €48.8 million | €52.2 million |
| Gross profit | €10.0 million; 20.4% margin | €13.0 million; 24.9% margin |
| Operating profit | €4.5 million; 9.3% margin | €4.6 million; 8.7% margin |
| Profit from continuing operations | €2.4 million | Loss of €0.6 million |
| Net profit | €0.6 million | €0.1 million |
| EBITDA (non-IFRS) | €18.8 million; 38.4% of revenue | €20.8 million; 39.9% of revenue |
| Operating cash flow | €8.6 million | €11.3 million |
| Investing cash flow | (€55.6 million) | (€28.2 million) |
| Financing cash flow | €54.4 million | €26.5 million |
At year-end, cash and cash equivalents were €51.1 million (versus €46.5 million), working capital was positive €5.2 million (versus a €26.5 million deficit), total assets were €612.9 million, total liabilities €487.8 million and total equity €125.1 million. The company reported total indebtedness of approximately €442 million, using a measure that includes expected principal and interest repayments and financing-related swap transactions, and excludes certain capitalized costs. The balance sheet’s carrying amounts for bank loans, other loans and debentures total approximately €422.0 million. Ellomay said it was not in default on financial covenants at December 31, 2023.
Material changes versus the prior comparable period
- Revenue fell 7%, mainly as Spanish electricity prices declined and June grid-maintenance curtailments reduced revenue by about €1 million. Dutch biogas revenue rose 35% to €17.0 million, while Talasol revenue fell 24% to €25.0 million. Talasol contributed about 51.1% of company revenue.
- Operating costs declined modestly to €22.9 million, partly because lower Spanish electricity prices reduced regulatory payments; Dutch biogas costs increased with higher production and higher-quality feedstock. Project development costs rose to €4.5 million, principally for projects in the United States, Italy and Israel.
- Share of equity-accounted investee profits rose to €4.3 million from €1.2 million, mainly reflecting higher Dorad production and tariffs. Net financing expense was broadly similar at €3.6 million, as higher debt interest was partly offset by interest income and foreign-exchange gains.
- Other comprehensive income was €41.3 million versus a €35.3 million loss, primarily reflecting changes in cash-flow hedge fair values. These hedge-accounting movements did not affect net profit or cash flow. Comparative OCI figures were retrospectively reclassified; the filing says this had no effect on prior-period profit or total OCI.
- Investing outflows increased with construction and development spending, while Series E debenture proceeds contributed to financing inflows. The Talmei Yosef PV plant was classified as a discontinued operation and held for sale; a €2.6 million fair-value adjustment contributed to its 2023 discontinued-operation loss.
Outlook, risks, contingencies and unusual items
- Projects and outlook: No consolidated revenue or earnings guidance is provided. Management said current working capital and expected operating cash flows should fund ongoing operations for the next 12 months, but development plans require additional funding. Four Texas projects, totaling about 48.9 MW, were expected to connect to the grid during 2024; the filing describes tax equity as expected to cover approximately 36% of their estimated €58 million cost. The Italian portfolio’s estimated construction cost is €150–€200 million.
- Manara and Israel conflict: Construction at the 156 MW Manara pumped-storage project stopped in early October 2023 amid the war and hostilities near the Lebanon border. The original target was commercial operation in the first half of 2027, but the schedule is delayed and management said it could not estimate a new completion date. A 10-month schedule extension was approved; further extensions and remedies for qualifying overruns are anticipated, but timing and full recovery are uncertain. The company reported that its Talmei Yosef plant and Dorad remained operational without material war-related impact as of the report.
- Talmei Yosef sale: The December 31, 2023 agreement provides for NIS 44.75 million (about €11.2 million), plus up to NIS 4 million based on 2024 output. Closing depended on approvals, lender consent and war-related conditions. The deadline was extended to May 15, 2024, with closing then expected in Q2 2024; completion and final proceeds were not assured.
- Dorad arbitration: An arbitration award in June 2023 ordered defendants to pay Dorad $100 million plus interest from January 1, 2013, along with specified legal costs. Appeals by both sides were pending, and counsel said the outcome could not yet be estimated. Dorad did not include the award’s impact in its 2023 financial statements. Ellomay holds an indirect 9.375% interest and does not control Dorad.
- Debt and funding: Corporate debentures impose financial covenants, negative-pledge provisions and restrictions on distributions; breaches could increase interest or accelerate repayment. In January 2024, after year-end, Ellomay issued NIS 170 million of unsecured Series F debentures at 5.5% interest. It raised a further NIS 40 million par value in April 2024; the filing reports NIS 210 million aggregate Series F par value after that placement.
- Other principal risks: Revenue and cash flow depend substantially on Talasol; exposure includes electricity prices, regulation and subsidies, weather and grid availability, foreign exchange and interest rates, contractor and feedstock performance, refinancing access, and permits and construction execution. The Israel war also raises operational, access, currency and cybersecurity risks. Dutch biogas plants had prior operating losses and lower-than-forecast 2023 results, although management’s recoverability assessment found no impairment was needed.
- Audit and controls: The auditor issued an unqualified IFRS opinion and concluded internal control over financial reporting was effective. The valuation of the Talasol power purchase agreement was identified as a critical audit matter because it relies on projected electricity prices and other significant assumptions.
Important facts for investors to verify
- Review the audited statements and cash-flow outlook, including the distinction between approximately €442 million of disclosed indebtedness and €422.0 million of balance-sheet carrying amounts.
- Track Manara’s restart, revised schedule, additional funding needs and the extent and timing of any war-related remedies.
- Confirm whether the Talmei Yosef sale closed, whether its conditions were met and what final proceeds and debt transfers resulted.
- Follow the Dorad arbitration appeals, potential payments and costs, and the practical effect on Ellomay’s equity-accounted investment.
- Assess covenant headroom, debt maturities and restrictions on dividends, alongside funding and tax-equity availability for the development pipeline.