Exhibit 99.2
 
Operating and Financial Review and Prospects
 
The following discussion and analysis is based on and should be read in conjunction with our unaudited condensed consolidated interim financial statements for the six month period ended June 30, 2015 furnished herewith as Exhibit 99.2 and in conjunction with our consolidated financial statements, including the related notes, and the other financial information included in our annual report on Form 20-F for the year ended December 31, 2014, or the Annual Report, filed with the Securities and Exchange Commission, or SEC, on April 30, 2015. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and in the Annual Report.

IFRS
 
Our financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the IASB, which differ in certain respects from U.S. Generally Accepted Accounting Principles, or U.S. GAAP.

Overview

We are in the business of energy and infrastructure and our operations mainly include production of renewable and clean energy. We own sixteen photovoltaic plants, or PV Plants, that are connected to their respective national grids and operating as follows: (i) twelve photovoltaic plants in Italy with an aggregate installed capacity of approximately 22.6 MWp and (ii) four photovoltaic plants in Spain with an aggregate installed capacity of approximately 7.9 MWp. In addition, we indirectly own approximately 9.2% of Dorad Energy Ltd., or Dorad, which owns an approximate 850 MWp bi-fuel operated power plant in the vicinity of Ashkelon, Israel (and an option to increase our indirect holdings in Dorad under certain conditions to 9.375%).

The following table includes information concerning our PV Plants:

 
PV Plant Title
Installed
Capacity1
Location
Technology
of Panels
Connection
to Grid
FiT
(€/kWh) 2
Revenue in the six months ended June 30, 2014 (in thousands)3
Revenue in the six months ended June 30, 2015 (in thousands)3
“Troia 8”
995.67 kWp
Province of Foggia, Municipality of Troia, Puglia region, Italy
Fix
January 14, 2011
 
0.318
$369
(269)
 
$292
 ( 261)
“Troia 9”
995.67 kWp
Province of Foggia, Municipality of Troia, Puglia region, Italy
Fix
January 14, 2011
 
0.318
$377
(275)
 
$299
( 267)
 
 
 

 
 
PV Plant Title
Installed
Capacity1
Location
Technology
of Panels
Connection
to Grid
FiT
(€/kWh) 2
Revenue in the six months ended June 30, 2014 (in thousands)3
Revenue in the six months ended June 30, 2015 (in thousands)3
“Del Bianco”
734.40 kWp
Province of Macerata, Municipality of Cingoli, Marche region, Italy
Fix
April 1, 2011
 
0.322
$259
(189)
 
$200
(179)
“Giaché”
730.01 kWp
Province of Ancona, Municipality of Filotrano, Marche region, Italy
Duel Axes Tracker
April 14, 2011
 
0.322
$306
(223)
 
$223
(199)
“Costantini”
734.40 kWp
Province of Ancona, Municipality of Senigallia, Marche region, Italy
Fix
April 27, 2011
 
0.322
$275
(201)
 
$215
(193)
 
“Massaccesi”
749.7 kWp
Province of Ancona, Municipality of Arcevia,  Marche region, Italy
Duel Axes Tracker
April 29, 2011
 
0.322
$323
(236)
 
$230
(205)
 
“Galatina”
994.43 kWp
Province of Lecce, Municipality of Galatina, Puglia region, Italy
Fix
May 25, 2011
0.318
$344
(251)
 
$287
(257)
 
“Pedale (Corato)”
2,993 kWp
Province of Bari, Municipality of Corato, Puglia region, Italy
Single Axes Tracker
May 31, 2011
0.266
$1,173
(856)
 
$921
(824)
 
“Acquafresca”
947.6 kWp
Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy
Fix
June 2011
0.268
$295
(215)
 
$229
(205)
 
 
 
 

 
 
PV Plant Title
Installed
Capacity1
Location
Technology
of Panels
Connection
to Grid
FiT
(€/kWh) 2
Revenue in the six months ended June 30, 2014 (in thousands)3
Revenue in the six months ended June 30, 2015 (in thousands)3
“D‘Angella”
930.5 kWp
Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy
Fix
June 2011
0.268
$292
(213)
 
 
$228
(204)
 
“Soleco”
5,923.5 kWp
Province of Rovigo, Municipality of Canaro, Veneto region, Italy
Fix
August 2011
0.219
$1,570
(1,146)
 
$1,301
(1,164)
 
“Tecnoenergy”
5,899.5 kWp
Province of Rovigo, Municipality of Canaro, Veneto region, Italy
Fix
August 2011
0.219
$1,508
(1,101)
 
$1,216
(1,088)
 
“Rinconada II”4
2,275 kWp
Municipality of Córdoba, Andalusia, Spain
Fix
July 2010
N/A
$4404
(321)
 
$449
(402)
 
“Rodríguez I”
1,675 kWp
Province of Murcia, Spain
Fix
November 2011
N/A
$-5
$331
(296)
 
“Rodríguez II”
2,691 kWp
Province of Murcia, Spain
Fix
November 2011
N/A
$-5
$543
(486)
 
“Fuente Librilla”
1,248 kWp
Province of Murcia, Spain
Fix
June 2011
N/A
$-5
$264
(236)
 
_________________________________
1. The actual capacity of a photovoltaic plant is generally subject to a degradation of 0.5%-0.7% per year, depending on climate conditions and quality of the solar panels.
 
2. In addition to the Feed-in-Tariff, or FiT, payment, our Italian PV Plants are eligible to receive the price paid for the electricity generated by the plant (“ritiro dedicato”) equal to the applicable electricity market price. Until December 31, 2013, Italian PV plants with a capacity under 1 MW were eligible to receive a minimum market price guarantee, as a function of supply and demand, on an hourly basis for different zones within Italy. Resolution no. 618/2013/R/EFR dated December 19, 2013 set a replacement, starting January 1, 2014, of the minimum guaranteed prices with the zonal hourly prices set out for each specific area (so called prezzi zonali orari, i.e. the average monthly price, correspondent to each hour, as resulting from the electric market price on the area where the PV plant is located). In addition, in connection with the regulatory changes in Italy, principally Law 116/2014, which generally provides for a decrease in the FiT guaranteed to existing photovoltaic plants commencing January 1, 2015, we elected to implement the option that entails a decrease of approximately 8% in the FiT. The FiT set forth in the table above represents the updated FiT after this decrease.
 
3.  Due to the decrease in the FiT in future years commencing on January 1, 2015 as described in footnote (2) above, these results are not necessarily indicative of our results in future periods. These results are also not indicative of future results due to other various factors, including changes in the climate and the degradation of the solar panels. For more information concerning the recent regulatory changes see note 6 to our financial statements included in the Annual Report.
 
 
 

 

4.  This PV Plant was 85% owned by us. In July 2015 we increased our holdings to 100%.

5.   The acquisition of these PV Plants was consummated on July 1, 2014 and therefore revenues for the period prior to consummation of the acquisition are not reflected herein.

Our ordinary shares are listed on the NYSE MKT under the symbol ELLO and on the Tel Aviv Stock Exchange under the symbol ELOM. The address of our registered office is 9 Rothschild Blvd., Tel Aviv, Israel.

Certain Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated interim financial statements, which have been prepared in accordance with IFRS. While all the accounting policies impact the financial statements, certain policies may be viewed to be critical. These policies are most important for the fair portrayal of our financial condition and results of operations and are those that require our management to make difficult, subjective and complex judgments, estimates and assumptions, based upon information available at the time that they are made, historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated interim financial statements, as well as the reported amounts of expenses during the periods presented. Actual results could differ from those estimates.

The critical accounting policies described in Item 5 of our Annual Report and in notes 2 and 3 of our unaudited condensed consolidated interim financial statements as at June 30, 2015, are those that require management’s more significant judgments and estimates used in the preparation of our condensed consolidated interim financial statements.

Results of Operations

Six Months Ended June 30, 2015 Compared with Six Months Ended June 30, 2014

Revenues were approximately $7.2 million for the six months ended June 30, 2015, compared to approximately $7.5 million for the six months ended June 30, 2014. Excluding unfavorable currency effects, revenues were up approximately 18% to €6.5 million from €5.5 million in the corresponding period last year. The change in revenues is mainly a result of an increase in revenues due to the acquisition of three photovoltaic plants in Murcia, Spain, or the Murcia PV Plants, on July 1, 2014. The decrease in the amount of reported revenues is due to the presentation of results in U.S. dollars and the devaluation of the Euro against the U.S. dollar during the period.

Operating expenses were approximately $1.4 million (€1.3 million) for the six months ended June 30, 2015, compared to approximately $1.5 million (€1.1 million) for the six months ended June 30, 2014. Depreciation expenses were approximately $2.5 million (€2.2 million) for the six months ended June 30, 2015, compared to approximately $2.6 million (€1.9 million) for the six months ended June 30, 2014. These changes resulted from an increase in expenses due to the addition of the Murcia PV Plants’ operations acquired on July 1, 2014, offset by the devaluation of the Euro against the U.S. dollar.

Impairment charges were $0 for the six months ended June 30, 2015, compared to approximately $0.6 million for the six months ended June 30, 2014. Due to regulatory changes in Italy, principally Law 116/2014 providing for a decrease in the FiT guaranteed to existing photovoltaic plants, we examined the recoverability of our photovoltaic plants in Italy. As the book value as at June 30, 2014 of some of the photovoltaic plants exceeded their recoverable amount, we recognized in those cases impairment charges. During the fourth quarter of 2014, we reexamined the impairment charges recorded and determined to reverse the impairment charges due to changes in market conditions. For more information see note 5 to our unaudited condensed consolidated interim financial statements as at June 30, 2015.

 
 

 
General and administrative expenses were approximately $1.7 million for the six months ended June 30, 2015, compared to approximately $2.3 million for the six months ended June 30, 2014. The decrease in general and administrative expenses mainly resulted from inclusion of bonuses paid to employees and expenses in connection with a pre-bid agreement executed with respect to a joint offer to acquire participating interests in two explorations and drilling licenses off-shore Israel in the general and administrative expenses for the six months ended June 30, 2014.

Company’s share of income of investee accounted for at equity, after elimination of intercompany transactions, was approximately $0.2 million for the six months ended June 30, 2015, compared to losses of approximately $0.2 million in the six months ended June 30, 2014. This increase is due to the commencement of the commercial operations of the power plant operated by Dorad in May 2014.

Other income was approximately $0.1 million for the six months ended June 30, 2015, compared to approximately $1.8 million for the six months ended June 30, 2014. Other income was primarily attributable to compensation to be received in connection with a pumped storage project in the Gilboa, Israel initially recognized in 2014. The revaluation of such financial asset is recognized as other income for the six months ended June 30, 2015.

Financing income, net was approximately $1.3 million for the six months ended June 30, 2015, compared to financing expenses, net of approximately $2.5 million for the six months ended June 30, 2014.

The change in financing income was mainly due to the reevaluation of our EUR/USD forward transactions, currency interest rate swap transactions and interest rate swap transactions in the aggregate amount of approximately $5.3 million, partially offset by expenses resulting from exchange rate differences in the amount of approximately $2.5 million, approximately $0.3 interest on loans and interest rate swap transactions and approximately $1.2 million of interest and other costs in connection with our Series A Debentures.

Taxes on income were approximately $0.7 million for the six months ended June 30, 2015, compared to approximately $0.1 million for the six months ended June 30, 2014. This increase in taxes on income compared to the corresponding period in 2014 resulted mainly from deferred tax income included for the six months ended June 30, 2014 in connection with impairment charges and the reevaluation of interest rate swap transactions.

Net income was approximately $2.6 million for the six months ended June 30, 2015, compared to a net loss of approximately $0.5 million for the six months ended June 30, 2014.

Total other comprehensive loss was approximately $4.8 million for the six months ended June 30, 2015, compared to approximately $1.1 million for the six months ended June 30, 2014. The change was mainly due to presentation currency translation adjustments as a result of fluctuations in the Euro/USD exchange rates. Such loss is a result of the devaluation in the Euro against the U.S. Dollar of approximately 7.8%.

Total comprehensive loss was approximately $2.2 million for the six months ended June 30, 2015, compared to approximately $1.6 million for the six months ended June 30, 2014.

 
 

 

Impact of Inflation, Devaluation and Fluctuation of Currencies

We hold cash and cash equivalents, restricted cash and short-term deposits in various currencies, including US Dollar, Euro and NIS. Our investments in the Italian and Spanish PV Plants and in U. Dori Energy Infrastructures Ltd., or Dori Energy, are denominated in Euro and NIS. Our Series A Debentures are denominated in NIS and the interest and principal payments are made in NIS and the financing we have obtained in connection with three of our PV Plants bears interest that is based on EURIBOR rate. In addition, as we changed our functional currency from the US Dollar to Euro as of January 1, 2014, our balance sheet is exposed to changes due to fluctuations in the exchange rates. We therefore are affected by changes in the prevailing Euro/U.S. dollar and Euro/NIS exchange rates. We entered into various swap transactions in order to minimize our currency risks. We cannot predict the rate of appreciation/depreciation of the NIS or the U.S. dollar against the Euro in the future, and whether these changes will have a material adverse effect on our finances and operations.

The table below sets forth the annual and semi-annual rates of appreciation (or depreciation) of the NIS against the Euro and of the Euro against the US Dollar.

   
Year ended December 31,
   
Six months ended June 30,
 
   
2014
   
2013
   
2015
   
2014
 
Appreciation (Depreciation)  of the NIS against the Euro 
    (1.2 )%     (2.9 )%     (10.7 )%     (1.8 )%
Appreciation (Depreciation) of the Euro against the U.S. Dollar 
    (11.8 )%     4.5 %     (7.8 )%     (0.9 )%

The semi-annual rate of inflation in Israel was 0% in the six months ended June 30, 2014 compared to a disinflation of approximately 0.2% in the six months ended June 30, 2015.

The representative Euro exchange rate was NIS 4.694 for one Euro on June 30, 2014 and NIS 4.219 for one Euro on June 30, 2015. The average exchange rates for converting NIS to Euro during the six-month periods ended June 30, 2014 and 2015 were NIS 4.771 and 4.368 for one Euro, respectively. The exchange rate as of September 1, 2015 was NIS 4.42 for one Euro.

The representative Euro exchange rate was U.S. Dollar 1.365 for one Euro on June 30, 2014 and U.S. Dollar 1.12 for one Euro on June 30, 2015. The average exchange rates for converting the U.S. Dollar to Euro during the six-month periods ended June 30, 2014 and 2015 were U.S. Dollar 1.37 and 1.118 for one Euro, respectively. The exchange rate as of September 1, 2015 was U.S. Dollar 1.127 for one Euro.
 
Governmental Economic, Fiscal, Monetary or Political Policies or Factors that have or could Materially Affect our Operations or Investments by U.S. Shareholders

Governmental Regulations Affecting the Operations of our PV Plants

Our PV Plants are subject to comprehensive regulation and we sell the electricity produced by our PV Plants for rates determined by governmental legislation and to local governmental entities. Any change in the legislation that affects PV plants such as our PV Plants could materially adversely affect our results of operations.  The economic crisis in Europe and specifically in Italy and Spain could cause the applicable legislature to reduce benefits provided to operators of PV plants or to revise the Feed-in-Tariff system that currently governs the sale of electricity in Italy and Spain.

 
 

 
For more information see “Item 3.D: Risk Factors - Risks Related to the PV Plants” and “Item 4.B: Material Effects of Government Regulations on the PV Plants” of our Annual Report.

Effective Israeli Corporate Tax Rate
 
Israeli companies are generally subject to company tax on their taxable income. The applicable rate was 25% in 2012, 25% in 2013 and 26.5% in 2014.

On August 5, 2013, the Knesset passed the Law for Changes in National Priorities (Legislative Amendments for Achieving Budget Objectives in the Years 2013 and 2014), 2013, by which, inter alia, the corporate tax rate was set at a rate of 26.5% as from 2014 .
 
Liquidity and Capital Resources

As of September 30, 2015, we held approximately $24.6 million in cash and cash equivalents, approximately $0.5 million in short-term restricted cash, approximately $5 in marketable securities and approximately $5.5 million in long-term restricted cash.

Although we now hold the aforementioned funds, we may need additional funds if we seek to acquire certain new businesses and operations. If we are unable to raise funds through public or private financing of debt or equity, we will be unable to fund certain business combinations that could ultimately improve our financial results. We cannot ensure that additional financing will be available on commercially reasonable terms or at all.

We entered into various financing agreements in connection with the financing of six of our PV Plants (of which a loan from Unicredit S.p.A with respect to two of our PV Plants was repaid in 2014).. We also secured short term bank financing in connection with the financing of our PV operations from Leumi USA (that was repaid during 2013). In addition, during 2013 we entered into a loan agreement with Israel Discount Bank Ltd. or the Discount Loan Agreement (that was repaid as of June 30, 2014), and in January and June 2014 we issued the Series A Debentures. For more information concerning the various financing agreements we entered into and our Series A Debentures, please refer to Item 5 of our Annual Report.

On June 29, 2015, we entered into a loan agreement with UBI Banca S.c.p.a., or UBI, in connection with the financing of one of our PV Plants, pursuant to which we shall receive financing amounting to approximately Euro 10.7 million bearing an interest at the Euribor 6 month rate plus a range of 2.85% per annum. The interest on the loan and principle are to be repaid semi-annually. The final maturity date of this loan is December 31, 2029. Draw down of the loan has not yet occurred. For more information, please refer to note 8 to our unaudited condensed consolidated interim financial statements as at June 30, 2015.

We currently have no commitments for additional financing, however we intend to finance the remainder of our PV Plants by bank loans or other means of financing.

As of June 30, 2015 we had working capital of approximately $12.8 million. In our opinion, our working capital is sufficient for our present requirements.

We currently invest our excess cash in cash and cash equivalents that are highly liquid and in marketable securities.
 
 
 

 
At June 30, 2015, we held approximately $11.7 million in cash and cash equivalents, approximately $0.3 million in short-term restricted cash, approximately $5 million in marketable securities and approximately $5.6 million in long-term restricted cash, compared with approximately $15.8 million in cash and cash equivalents, approximately $0.3 million in short-term restricted cash, approximately $4.0 million in short-term deposits, approximately $3.7 million in marketable securities and approximately $5.1 million in long-term restricted cash we held at December 31, 2014. The decrease in cash and cash equivalents mainly results from the exercise of an option to acquire additional share capital of Dori Energy. For more information, please refer to note 6 to our unaudited condensed consolidated interim financial statements as at June 30, 2015.

During 2012, 2013, 2014 and up to September 30, 2015, we made or expect to make capital expenditures of an aggregate amount of approximately Euro 76.4 million (approximately $85.7 million, based on the U.S. Dollar/NIS exchange rate as at September 30, 2015) in connection with our Italian and Spanish PV Plants, net of penalties due to delay in connection to the national grid of some of the PV Plants and net of approximately assets disposed. Our aggregate capital expenditure in connection with the acquisition of shares in U. Dori Energy Infrastructure Ltd., including the exercise of an option to acquire additional shares of Dori Energy, increasing our percentage holding to 49%, is approximately $33.6 million, as of September 30, 2015. We anticipate using our cash assets and financing from third party financing entities (especially in connection with the financing of our Italian PV Plants) in order to meet such commitments.
 
Cash flows

The following table summarizes our cash flows for the periods presented:
 
   
Six months ended June 30,
 
   
2015
   
2014
 
   
(U.S. dollars in thousands)
 
Net cash provided by operating activities
    1,696       91  
Net cash (used in) provided by investing activities
    (5,376 )     5,916  
Net cash provided by financing activities
    530       30,285  
Exchange differences on balances of cash and cash equivalents
    (917 )     (637 )
Increase (decrease) in cash and cash equivalents
    (4,067 )     35,655  
Cash and cash equivalents at beginning of period
    15,758       7,238  
Cash and cash equivalents at end of period
    11,691       42,893  

Operating activities

In the six months ended June 30, 2015, we had net income of approximately $2.6 million. Net cash provided by operating activities was approximately $1.7 million.

In the six months ended June 30, 2014, we had a net loss of approximately $0.5 million. Net cash provided by operating activities was approximately $0.1 million.

Investing activities

Net cash used in investing activities was approximately $5.4 million in the six months ended June 30, 2015, primarily due to the exercise of an option to acquire additional shares of Dori Energy.

Net cash provided by investing activities was approximately $5.9 million in the six months ended June 30, 2014, primarily due to restricted cash that was released following the repayment of loans and release of short term deposits, partially offset by the grant of long-term loans to an investee.

 
 

 
Financing activities

Net cash provided by financing activities in the six months ended June 30, 2015 was approximately $0.5 million, primarily due to a short term bank loan that was repaid in August 2015.

Net cash provided by financing activities in the six months ended June 30, 2014 was approximately $30.3 million, primarily due to funds raised in connection with issuances of our Series A Debentures in January 2014 and June 2014, net of repayments of long-term bank loans and financial lease obligations.

In January 2014, we issued NIS 120 million (approximately $34.4 million, as of the issuance date) of unsecured non-convertible Series A Debentures through a public offering that was limited to residents of Israel. In June 2014 we issued an additional NIS 80.341 million (approximately $23.3 million, as of the issuance date) Series A Debentures to Israeli classified investors in a private placement. The aggregate net proceeds received in connection with the offering of our Series A Debentures during the six months ended June 30, 2014 were approximately NIS 193.6 million (approximately $55.8 million).

As of June 30, 2015, we were not in default of any financial covenants under the agreements with Centrobanca and Leasint, or under the Deed of Trust for our Series A Debentures.

As of June 30, 2015, our total current assets amounted to approximately $24.1 million, out of which approximately $11.7 million was in cash and cash equivalents and approximately $5 million was in marketable securities, compared with total current liabilities of approximately $11.3 million. Our assets held in cash equivalents are held in money market accounts and short-term deposits, substantially all of which are highly liquid investments that are readily convertible to cash with original maturities of three months or less at the date acquired.

As of June 30, 2014, our total current assets amounted to approximately $49.5 million, out of which approximately $42.9 million was in cash and cash equivalents, compared with total current liabilities of approximately $13.2 million. Our assets held in cash equivalents are held in money market accounts and short-term deposits, substantially all of which are highly liquid investments that are readily convertible to cash with original maturities of three months or less at the date acquired.

The decrease in our cash balance is mainly attributable to the exercise of an option to acquire additional share capital of Dori Energy.

Contractual Obligations
 
As of June 30, 2015, except for the short-term and long-term financing obtained through June 30, 2015 and the loan agreement entered into with UBI in July 2015, as described above, there have been no material changes to the contractual obligations we disclosed in our Annual Report.

Disclosure about Market Risk

We are exposed to a variety of risks, including foreign currency fluctuations and changes in interest rates. We regularly assess currency and interest rate risks to minimize any adverse effects on our business as a result of those factors and periodically use hedging transactions in order to attempt to limit the impact of such changes.

We hold cash and cash equivalents, restricted cash, short-term deposits and marketable securities in various currencies, including US$, Euro and NIS. Our investments in the Italian and Spanish PV Plants are denominated in Euro and in Dori Energy are denominated in NIS. The financing we obtained in connection with four of our PV Plants bears interest that is based on EURIBOR rate and our Series A Debentures are denominated in NIS and are to be repaid (principal and interest) in NIS. In addition, the functional currency of us and a majority of our subsidiaries is the Euro but our presentation currency is the US$, exposing our balance sheet to the effects of presentation currency translation adjustments.

 
 

 
Inflation and Fluctuation of Currencies
 
As detailed in our Annual Report, we utilized certain foreign currency interest rate swap contracts and several forward transactions to manage the foreign exchange risk resulting from Series A Debentures denominated in NIS and our Euro based PV operations. In the future, we may enter into additional forward foreign currency exchange or other derivatives contracts to further hedge our exposure to foreign currency exchange rates.

Interest Rate

As detailed in our Annual Report, we utilize interest rate swap derivatives to convert certain floating-rate debt to fixed-rate debt. Our interest rate swap derivatives involve an agreement to pay a fixed-rate interest and receive a floating-rate interest, at specified intervals, calculated on an agreed notional amount that matches the amount of the original loan and paid on the same installments and maturity dates. In the future, we may enter into additional interest rate swaps or other derivatives contracts to further hedge our exposure to fluctuations in interest rates.

For more information concerning hedging transaction see note 7 of our unaudited condensed consolidated interim financial statements as at June 30, 2015.

Forward-Looking Statements

With the exception of historical facts, the matters discussed in this report and the financial statements attached hereto are forward-looking statements. Forward-looking statements may relate to, among other things, future actions, future performance generally, business development activities, future capital expenditures, strategies, the outcome of contingencies such as legal proceedings, future financial results, financing sources and availability and the effects of regulation and competition. When we use the words “believe,” “intend,” “expect,” “may,” “will,” “should,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project,” or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe strategy that involves risks or uncertainties or include statements that do not relate strictly to historical or current facts, we are making forward-looking statements.

Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Please see Item 3.D. “Risk Factors” in our Annual Report, in which we have identified important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by us; any such statement is qualified by reference to the following cautionary statements. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider the said section to be a complete discussion of all potential risks or uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements.

We warn you that forward-looking statements are only predictions. Actual events or results may differ as a result of risks that we face. Forward-looking statements speak only as of the date they were made and we undertake no obligation to update them.

 
 

 

Ellomay Capital Ltd. and its Subsidiaries
 
Condensed Consolidated Interim Statements of Financial Position (Unaudited)

 
         
June 30
   
December 31
 
         
2015
   
2014
 
   
Note
   
US$ in thousands
 
Assets
                 
Current assets
                 
Cash and cash equivalents
          11,691       15,758  
Marketable securities
          5,038       3,650  
Short-term deposits
          -       3,980  
Restricted cash
          262       283  
Trade receivables
          102       214  
Other receivables and prepaid expenses
          7,027       5,929  
            24,120       29,814  
Non-current assets
                     
Investment in equity accounted investee
  6       35,922       27,237  
Financial assets
          5,972       1,912  
Property, plant and equipment, net
  5       83,711       93,513  
Restricted cash and deposits
          5,620       5,134  
Other assets
          1,274       1,477  
            132,499       129,273  
Total assets
          156,619       159,087  
Liabilities and Equity
                     
Current liabilities
                     
Loans and borrowings
          1,462       677  
Debentures
          5,044       4,884  
Accounts payable
          1,097       1,229  
Accrued expenses and other payables
          3,672       4,134  
            11,275       10,924  
Non-current liabilities
                     
Finance lease obligations
          5,032       5,646  
Long-term loans
          3,602       4,039  
Debentures
          41,486       40,042  
Other long-term liabilities
          3,193       4,310  
            53,313       54,037  
Total liabilities
          64,588       64,961  
Equity
                     
Share capital
          26,240       26,180  
Share premium
          76,940       76,932  
Treasury shares
          (522 )     (522 )
Reserves
          (12,887 )     (8,127 )
Retained earnings (Accumulated deficit)
          2,363       (353 )
Total equity attributed to shareholders of the Company
          92,134       94,110  
Non-Controlling Interest
          (103 )     16  
                       
Total equity
          92,031       94,126  
                       
Total liabilities and equity
          156,619       159,087  

 
 

 
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income (Loss) (Unaudited)


         
For the six months ended June 30
 
         
2015
   
2014
 
   
Note
   
US$ in thousands (except per share data)
 
Revenues
          7,228       7,531  
Operating expenses
          1,362       1,529  
Depreciation expenses
          2,456       2,615  
Impairment charges
  5       -       574  
Gross profit
          3,410       2,813  
                       
General and administrative expenses
          1,706       2,348  
Company’s share of gain (losses) of investee accounted for at equity
          217       (230 )
Other income, net
  6       57       1,843  
Operating Profit
          1,978       2,078  
                       
Financing income
          122       736  
Financing income (expenses) in connection with derivatives reevaluation , net
          5,306       (343 )
Financing expenses
          (4,101 )     (2,915 )
Financing income (expenses), net
          1,327       (2,522 )
                       
Profit (loss) before taxes on income
          3,305       (444 )
                       
Taxes on income
          708       78  
                       
Net income (loss) for the period
          2,597       (522 )
                       
Income (Loss) attributable to:
                     
Shareholders of the Company
          2,716       (516 )
Non-controlling interests
          (119 )     (6 )
                       
Net income (loss) for the period
          2,597       (522 )
                       
Other comprehensive income (loss)
                     
Items that are or may be reclassified to profit or loss:
                     
Foreign currency translation adjustments
          699       (303 )
                       
Items that would not be reclassified to profit or loss:
                     
Presentation currency translation adjustments
          (5,459 )     (769 )
                       
Total other comprehensive loss
          (4,760 )     (1,072 )
                       
Total comprehensive loss
          (2,163 )     (1,594 )
                       
Basic net earnings (loss) per share
          0.26       (0.05 )
Diluted net earnings (loss) per share
          0.25       (0.05 )

 
 

 
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity (Unaudited)


         
Attributable to owners of the Company
   
 
Non- controlling
interests
   
 
Total
Equity
 
                           
Translation
                         
               
Retained
         
reserve
   
Presentation
                   
               
earnings
         
from
   
currency
                   
   
Share
   
Share
   
(Accumulated
   
Treasury
   
foreign
   
translation
                   
   
capital
   
premium
   
Deficit)
   
shares
   
operations
   
reserve
   
Total
             
    US$ in thousands  
For the six months ended
                                                     
June 30, 2015
                                                     
                                                       
Balance as at
                                                     
January 1, 2015
    26,180       76,932       (353 )     (522 )     955       (9,082 )     94,110       16       94,126  
Income for the period
    -       -       2,716       -       -       -       2,716       (119 )     2,597  
Other comprehensive loss
    -       -       -       -       699       (5,459 )     (4,760 )     -       (4,760 )
Total comprehensive loss
    -       -       2,716       -       699       (5,459 )     (2,044 )     (119 )     (2,163 )
Cost of share-based payments
    -       24       -       -       -       -       24       -       24  
Warrants and options exercise
    60       (16 )     -       -       -       -       44       -       44  
Balance as at
                                                                       
June 30, 2015
    26,240       76,940       2,363       (522 )     1,654       (14,541 )     92,134       (103 )     92,031  
 
          Attributable to owners of the Company    
Non- controlling
interests
   
Total
Equity
 
                           
Translation
                         
                           
reserve
   
Presentation
                   
                           
from
   
currency
                   
   
Share
   
Share
   
Accumulated
   
Treasury
   
foreign
   
translation
                   
   
capital
   
premium
   
deficit
   
shares
   
operations
   
reserve
   
Total
             
    US$ in thousands  
For the six months ended
                                                     
June 30, 2014
                                                     
                                                       
Balance as at
                                                     
January 1, 2014
    26,180       76,932       (7,011 )     (522 )     4,154       -       99,733       28       99,761  
Loss for the period
    -       -       (516 )     -       -               (516 )     (6 )     (522 )
Other comprehensive loss
    -       -       -       -       (303 )     (769 )     (1,072 )     -       (1,072 )
Total comprehensive loss
    -       -       (516 )     -       (303 )     (769 )     (1,588 )     (6 )     (1,594 )
                                                                         
Balance as at
                                                                       
June 30, 2014
    26,180       76,932       (7,527 )     (522 )     3,851       (769 )     98,145       22       98,167  

 
 

 
Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

 
   
Six months ended June 30
 
   
2015
   
2014
 
   
US$ thousands
 
Cash flows from operating activities
           
Income (loss) for the period
    2,597       (522 )
Adjustments for:
               
Financing (income) expenses, net
    (1,327 )     2,522  
Impairment charges
    -       574  
Depreciation
    2,456       2,615  
Share-based payment
    24       -  
Company’s share of losses (income) of investees accounted for at equity
    (217 )     230  
Decrease (increase) in trade receivables
    95       (74 )
Increase in other receivables and prepaid expenses
    (2,306 )     (2,259 )
Increase in other assets
    (4,370 )     (1,478 )
Decrease in accrued severance  pay, net
    -       (27 )
(Decrease) increase  in trade payables
    (49 )     177  
Increase in accrued expenses and other payables
    5,536       541  
Tax expenses
    708       78  
Tax (paid) received
    (95 )     181  
Interest received
    93       58  
Interest paid
    (1,449 )     (2,525 )
                 
Net cash provided by operating activities
    1,696       91  
                 
Cash flows from investing activities
               
Purchase of property and equipment
    -       (92 )
Advance payment on account of investment
    -       (408 )
Investment in equity accounted investees
    (7,456 )     (4,058 )
(Investment in) proceeds from restricted cash
    (550 )     5,321  
Investment in Marketable Securities
    (1,350 )     -  
Proceeds from deposits
    3,980       5,153  
                 
Net cash (used in) provided by investing activities
    (5,376 )     5,916  
                 
Cash flows from financing activities
               
Repayment of loans
    (424 )     (25,506 )
Short-term loans, net
    910       -  
Proceeds from options and warrants exercised
    44       -  
Proceeds from loans and Debentures, net
    -       55,791  
                 
Net cash provided by financing activities
    530       30,285  

 
 

 
Ellomay Capital Ltd. and its Subsidiaries
 
Condensed Consolidated Interim Statements of Cash Flows (Unaudited)

 
   
Six months ended June 30
 
   
2015
   
2014
 
   
US$ thousands
 
Exchange differences on balance of  cash and cash equivalents
    (917 )     (637 )
                 
Increase (decrease) in cash and cash equivalents
    (4,067 )     35,655  
Cash and cash equivalents at the beginning of the period
    15,758       7,238  
                 
Cash and cash equivalents at the end of the period
    11,691       42,893  

 
 

 
Ellomay Capital Ltd. and its Subsidiaries

Reconciliation of Net income to Adjusted EBITDA (in US$ thousands) (Unaudited)


   
For the Six Months ended June 30,
    For the Six Months ended June 30,  
   
2015
   
2014
 
   
Unaudited
   
Unaudited
 
Net income (loss) for the period
    2,597       (522 )
Financing expenses, net
    (1,327 )     2,522  
Taxes on income (benefit)
    708       78  
Depreciation
    2,456       2,615  
EBITDA from continuing operations
    4,434       4,693