Exhibit 99.2

Ellomay Capital Ltd. and its
Subsidiaries
 
Condensed Consolidated Interim
Financial Statements
As at June 30, 2019
(Unaudited)
 


Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Financial Statements

Contents

Page

F-2

F-3

F-4 - F-7

F-8

F-9 - F-28




Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Financial Position

         
June 30,
   
December 31,
   
June 30,
 
         
2019
   
2018
   
2019
 
         
(Unaudited)
   
(Audited)
   
(Unaudited)
 
                     
Convenience
 
                     
Translation
 
                     
into US$ in
 
   
Note
   
€ in thousands
   
thousands*
 
                         
Assets
                       
Current assets
                       
Cash and cash equivalents
         
55,535
     
36,882
     
63,253
 
Marketable securities
   
5
     
2,204
     
2,132
     
2,510
 
Restricted cash and marketable securities
   
5
     
1,315
     
4,653
     
1,498
 
Receivable from concession project
           
1,390
     
1,292
     
1,583
 
Financial assets
           
1,354
     
1,282
     
1,542
 
Trade and other receivables
   
6
     
11,407
     
12,623
     
12,992
 
             
73,205
     
58,864
     
83,378
 
Non-current assets
                               
Investment in equity accounted investee
   
7
     
29,158
     
27,746
     
33,210
 
Advances on account of investments
   

     
843
     
798
     
960
 
Receivable from concession project
           
26,510
     
25,710
     
30,194
 
Fixed assets
           
128,766
     
87,220
     
146,662
 
Right-of-use asset
           
4,134
     
-
     
4,709
 
Intangible asset
           
4,987
     
4,882
     
5,680
 
Restricted cash and deposits
   
5
     
10,917
     
2,062
     
12,434
 
Deferred tax
           
2,903
     
2,423
     
3,306
 
Long term receivables
   
6
     
6,658
     
1,455
     
7,583
 
             
214,876
     
152,296
     
244,738
 
Total assets
           
288,081
     
211,160
     
328,116
 
                                 
Liabilities and Equity
                               
Current liabilities
                               
Current maturities of long term loans
           
6,932
     
5,864
     
7,895
 
Debentures
           
9,266
     
8,758
     
10,554
 
Trade payables
           
3,191
     
2,126
     
3,632
 
Other payables
           
2,985
     
3,103
     
3,400
 
             
22,374
     
19,851
     
25,481
 
Non-current liabilities
                               
Lease liability
           
3,940
     
-
     
4,488
 
Long-term loans
           
120,818
     
60,228
     
137,609
 
Debentures
           
40,542
     
42,585
     
46,176
 
Deferred tax
           
6,485
     
6,219
     
7,386
 
Other long-term liabilities
           
11,318
     
5,320
     
12,891
 
             
183,103
     
114,352
     
208,550
 
Total liabilities
           
205,477
     
134,203
     
234,031
 
                                 
Equity
                               
Share capital
           
19,988
     
19,980
     
22,766
 
Share premium
           
58,358
     
58,344
     
66,469
 
Treasury shares
           
(1,736
)
   
(1,736
)
   
(1,977
)
Transaction reserve with non-controlling Interests
           
5,614
     
-
     
6,394
 
Reserves
           
1,156
     
1,169
     
1,317
 
Retained earnings (accumulated deficit)
           
(1,993
)
   
758
     
(2,270
)
Total equity attributed to shareholders of the Company
           
81,387
     
78,515
     
92,699
 
Non-Controlling Interest
           
1,217
     
(1,558
)
   
1,386
 
Total equity
           
82,604
     
76,957
     
94,085
 
Total liabilities and equity
           
288,081
     
211,160
     
328,116
 

* Convenience translation into US$ (exchange rate as at June 30, 2019: EUR 1 = US$ 1.139)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 2


Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Comprehensive Income (Loss)

   
For the six
   
For the six
   
For the year
   
For the six
 
   
months ended
   
months ended
   
ended December
   
months ended
 
   
June 30, 2019
   
June 30, 2018
   
31, 2018
   
June 30, 2019
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
   
(Unaudited)
 
         
Convenience
 
         
Translation
 
   
€ in thousands (except per share amounts)
   
into US$*
 
                           
Revenues
   
10,303
     
8,151
     
18,117
     
11,735
 
Operating expenses
   
(3,455
)
   
(2,610
)
   
(6,342
)
   
(3,935
)
Depreciation and amortization expenses
   
(3,043
)
   
(2,767
)
   
(5,816
)
   
(3,466
)
Gross profit
   
3,805
     
2,774
     
5,959
     
4,334
 
                                 
Project development costs
   
(2,714
)
   
(1,771
)
   
(2,878
)
   
(3,091
)
General and administrative expenses
   
(1,879
)
   
(1,977
)
   
(3,600
)
   
(2,140
)
Share of profits of equity accounted investee
   
31
     
501
     
2,545
     
35
 
Other income, net
   
-
     
73
     
884
     
-
 
Operating profit (Loss)
   
(757
)
   
(400
)
   
2,910
     
(862
)
                                 
Financing income
   
870
     
1,588
     
2,936
     
991
 
Financing income in connection with derivatives, net
   
460
     
285
     
494
     
524
 
Financing expenses
   
(4,457
)
   
(2,789
)
   
(5,521
)
   
(5,076
)
Financing expenses, net
   
(3,127
)
   
(916
)
   
(2,091
)
   
(3,561
)
                                 
Profit (loss) before taxes on income
   
(3,884
)
   
(1,316
)
   
819
     
(4,423
)
Tax benefit (Taxes on income)
   
(514
)
   
182
     
(215
)
   
(585
)
Profit (loss) for the period
   
(4,398
)
   
(1,134
)
   
604
     
(5,008
)
Profit (loss) attributable to:
                               
Owners of the Company
   
(2,751
)
   
(898
)
   
1,057
     
(3,132
)
Non-controlling interests
   
(1,647
)
   
(236
)
   
(453
)
   
(1,876
)
Profit (loss) for the period
   
(4,398
)
   
(1,134
)
   
604
     
(5,008
)
                                 
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
   
982
     
(799
)
   
(787
)
   
1,119
 
Effective portion of change in fair value of cash flow
                               
 Hedges
   
(368
)
   
(724
)
   
(1,008
)
   
(419
)
Net change in fair value of cash flow hedges
                               
 transferred to profit or loss
   
(1,104
)
   
478
     
643
     
(1,257
)
Total other comprehensive loss
   
(490
)
   
(1,045
)
   
(1,152
)
   
(557
)
Total comprehensive loss for the period
   
(4,888
)
   
(2,179
)
   
(548
)
   
(5,565
)
                                 
Basic earnings (loss) per share
   
(0.26
)
   
(0.08
)
   
0.10
     
(0.29
)
Diluted earnings (loss) per share
   
(0.26
)
   
(0.08
)
   
0.10
     
(0.29
)

* Convenience translation into US$ (exchange rate as at June 30, 2019: EUR 1 = US$ 1.139)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 3


Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity

                                                   
Non-
       
                                                   
controlling
   
Total
 
   
Attributable to shareholders of the Company
   
Interests
   
Equity
 
   
Share
capital
   
Share
Premium
   
Retained
earnings
(accumulated
deficit)
   
Treasury
shares
   
Translation
reserve from
foreign
operations
   
Hedging
Reserve
   
Transaction
reserve with
non-controlling
Interests
   
Total
             
         
€ in thousands
 
For the six month ended June 30, 2019 (unaudited)
                                                           
Balance as at January 1, 2019
   
19,980
     
58,344
     
758
     
(1,736
)
   
1,396
     
(227
)
   
-
     
78,515
     
(1,558
)
   
76,957
 
Loss for the period
   
-
     
-
     
(2,751
)
   
-
     
-
     
-
     
-
     
(2,751
)
   
(1,647
)
   
(4,398
)
Other comprehensive loss for the period
   
-
     
-
     
-
     
-
     
1,459
     
(1,472
)
   
-
     
(13
)
   
(477
)
   
(490
)
Total comprehensive loss for the period
   
-
     
-
     
(2,751
)
   
-
     
1,459
     
(1,472
)
   
-
     
(2,764
)
   
(2,124
)
   
(4,888
)
                                                                                 
Transactions with owners of the
                                                                               
Company, recognized directly in equity:
                                                                               
Sale of shares in subsidiaries to
                                                                               
non-controlling interests (see Note 7)
   
-
     
-
     
-
     
-
     
-
     
-
     
5,614
     
5,614
     
4,899
     
10,513
 
Options exercise
   
8
     
11
     
-
     
-
     
-
     
-
     
-
     
19
     
-
     
19
 
Share-based payments
   
-
     
3
     
-
     
-
     
-
     
-
     
-
     
3
     
-
     
3
 
                                                                                 
Balance as at June 30, 2019
   
19,988
     
58,358
     
(1,993
)
   
(1,736
)
   
2,855
     
(1,699
)
   
5,614
     
81,387
     
1,217
     
82,604
 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 4

Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity

                                             
Non-
       
                                             
controlling
   
Total
 
   
Attributable to shareholders of the Company
   
Interests
   
Equity
 
               
Retained
earnings
         
Translation
reserve from
                         
   
Share
   
Share
   
(accumulated
   
Treasury
   
foreign
   
Hedging
                   
   
capital
   
Premium
   
deficit)
   
shares
   
operations
   
Reserve
   
Total
             
   
€ in thousands
 
                                                       
For the six month ended June 30, 2018 (unaudited)
                                                     
Balance as at January 1, 2018
   
19,980
     
58,339
     
(299
)
   
(1,736
)
   
2,219
     
138
     
78,641
     
(1,141
)
   
77,500
 
Loss for the period
   
-
     
-
     
(898
)
   
-
     
-
     
-
     
(898
)
   
(236
)
   
(1,134
)
Other comprehensive loss for the period
   
-
     
-
     
-
     
-
     
(822
)
   
(246
)
   
(1,068
)
   
23
     
(1,045
)
Total comprehensive loss for the period
   
-
     
-
     
(898
)
   
-
     
(822
)
   
(246
)
   
(1,966
)
   
(213
)
   
(2,179
)
                                                                         
Transactions with owners of the Company,
                                                                       
recognized directly in equity:
                                                                       
Share-based payments
   
-
     
2
     
-
     
-
     
-
     
-
     
2
     
-
     
2
 
                                                                         
Balance as at June 30, 2018
   
19,980
     
58,341
     
(1,197
)
   
(1,736
)
   
1,397
     
(108
)
   
76,677
     
(1,354
)
   
75,323
 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 5

Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity

                                             
Non-
       
                                             
controlling
   
Total
 
   
Attributable to shareholders of the Company
   
Interests
   
Equity
 
               
Retained
earnings
         
Translation
reserve from
                         
   
Share
   
Share
   
(accumulated
   
Treasury
   
foreign
   
Hedging
                   
   
capital
   
premium
   
deficit)
   
shares
   
operations
   
Reserve
   
Total
             
   
€ in thousands
 
                                                       
For the year ended December 31, 2018 (audited)
                                                     
Balance as at January 1, 2018
   
19,980
     
58,339
     
(299
)
   
(1,736
)
   
2,219
     
138
     
78,641
     
(1,141
)
   
77,500
 
Profit for the year
   
-
     
-
     
1,057
     
-
     
-
     
-
     
1,057
     
(453
)
   
604
 
Other comprehensive income (loss) for the year
   
-
     
-
     
-
     
-
     
(823
)
   
(365
)
   
(1,188
)
   
36
     
(1,152
)
Total comprehensive income (loss) for the year
   
-
     
-
     
1,057
     
-
     
(823
)
   
(365
)
   
(131
)
   
(417
)
   
(548
)
                                                                         
Transactions with owners of the
                                                                       
Company, recognized directly in equity:
                                                                       
Share-based payments
   
-
     
5
     
-
     
-
     
-
     
-
     
5
     
-
     
5
 
                                                                         
Balance as at December 31, 2018
   
19,980
     
58,344
     
758
     
(1,736
)
   
1,396
     
(227
)
   
78,515
     
(1,558
)
   
76,957
 

The accompanying notes are an integral part of the condensed consolidated interim financial statements

F - 6


Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Changes in Equity

                                                   
Non-
       
                                                   
controlling
   
Total
 
   
Attributable to shareholders of the Company
   
Interests
   
Equity
 
   
Share
   
Share
   
Retained
earnings
(accumulated
   
Treasury
   
Translation
reserve from
foreign
   
Hedging
   
Transaction
reserve with
non-controlling
                   
   
capital
   
Premium
   
deficit)
   
shares
   
operations
   
Reserve
   
Interests
   
Total
             
         
US$ in thousands*
 
For the six month ended June 30, 2019 (unaudited)
                                                           
Balance as at January 1, 2019
   
22,757
     
66,453
     
862
     
(1,977
)
   
1,590
     
(259
)
   
-
     
89,426
     
(1,775
)
   
87,651
 
Loss for the period
   
-
     
-
     
(3,132
)
   
-
     
-
     
-
     
-
     
(3,132
)
   
(1,876
)
   
(5,008
)
Other comprehensive loss for the period
   
-
     
-
     
-
     
-
     
1,662
     
(1,676
)
   
-
     
(14
)
   
(543
)
   
(557
)
Total comprehensive loss for the period
   
-
     
-
     
(3,132
)
   
-
     
1,662
     
(1,676
)
   
-
     
(3,146
)
   
(2,419
)
   
(5,565
)
                                                                                 
Transactions with owners of the
                                                                               
Company, recognized directly in equity:
                                                                               
Sale of shares in subsidiaries to
                                                                               
non-controlling interests (see Note 7)
   
-
     
-
     
-
     
-
     
-
     
-
     
6,394
     
6,394
     
5,580
     
11,974
 
Options exercise
   
9
     
13
     
-
     
-
     
-
     
-
     
-
     
22
     
-
     
22
 
Share-based payments
   
-
     
3
     
-
     
-
     
-
     
-
     
-
     
3
     
-
     
3
 
                                                                                 
Balance as at June 30, 2019
   
22,766
     
66,469
     
(2,270
)
   
(1,977
)
   
3,252
     
(1,935
)
   
6,394
     
92,699
     
1,386
     
94,085
 

* Convenience translation into US$ (exchange rate as at June 30, 2019: EUR 1 = US$ 1.139)

The accompanying notes are an integral part of the condensed consolidated interim financial statements

F - 7


Ellomay Capital Ltd. and its Subsidiaries

Condensed Consolidated Unaudited Interim Statements of Cash Flows

   
For the six
   
For the six
   
For the year
   
For the six
 
   
months ended
   
months ended
   
ended December
   
months ended
 
   
June 30, 2019
   
June 30, 2018
     
31, 2018
   
June 30, 2019
 
   
(Unaudited)
   
(Unaudited)
   
(Audited)
   
(Unaudited)
 
         
Convenience
 
         
Translation
 
   
€ in thousands
   
into US$*
 
Cash flows from operating activities
                         
Income (loss) for the period
   
(4,398
)
   
(1,134
)
   
604
     
(5,008
)
Adjustments for:
                               
Financing expenses, net
   
3,127
     
916
     
2,091
     
3,561
 
Depreciation
   
3,043
     
2,767
     
5,816
     
3,466
 
Share-based payment transactions
   
3
     
2
     
5
     
3
 
Share of losses (profits) of equity accounted investees
   
(31
)
   
(501
)
   
(2,545
)
   
(35
)
Payment of interest on loan from an equity
                               
 accounted investee
   
370
     
1,176
     
3,036
     
421
 
Change in trade receivables and other receivables
   
(1,744
)
   
156
     
(17
)
   
(1,986
)
Change in other assets
   
(708
)
   
135
     
37
     
(806
)
Change in receivables from concessions project
   
646
     
622
     
1,431
     
736
 
Change in accrued severance pay, net
   
8
     
17
     
15
     
9
 
Change in trade payables
   
1,065
     
328
     
633
     
1,212
 
Change in other payables
   
1,054
     
(310
)
   
(1,565
)
   
1,202
 
Income tax expense (tax benefit)
   
514
     
(182
)
   
215
     
585
 
Income taxes paid
   
-
     
(16
)
   
(77
)
   
-
 
Interest received
   
835
     
888
     
1,835
     
951
 
Interest paid
   
(2,655
)
   
(2,597
)
   
(4,924
)
   
(3,024
)
                                 
Net cash provided by operating activities
   
1,129
     
2,267
     
6,590
     
1,287
 
Cash flows from investing activities
                               
Acquisition of fixed assets
   
(44,519
)
   
(2,606
)
   
(3,708
)
   
(50,706
)
Acquisition of subsidiary, net of cash acquired
   
(1,000
)
   
-
     
(1,000
)
   
(1,139
)
Repayment of loan from an equity accounted investee
   
-
     
490
     
1,540
     
-
 
Proceeds from marketable securities
   
-
     
-
     
3,316
     
-
 
Proceeds from settlement of derivatives, net
   
532
     
223
     
664
     
606
 
Proceeds (investment) in restricted cash, net
   
(5,219
)
   
1,604
     
(3,107
)
   
(5,944
)
Repayment (grant) of loan to others
   
3,500
     
-
     
(3,500
)
   
3,986
 
                                 
Net cash used in investing activities
   
(46,706
)
   
(289
)
   
(5,795
)
   
(53,197
)
Cash flows from financing activities
                               
Repayment of long-term loans and finance lease
                               
 Obligations
   
(4,158
)
   
(14,727
)
   
(17,819
)
   
(4,736
)
Repayment of Debentures
   
(4,532
)
   
-
     
(4,668
)
   
(5,162
)
Proceeds from options
   
19
     
-
     
-
     
22
 
Sale of shares and shareholders loan in subsidiaries to non-controlling interests
   
14,062
     
-
     
-
     
16,016
 
Proceeds from long term loans, net
   
58,894
     
34,501
     
34,745
     
67,079
 
                                 
Net cash from financing activities
   
64,285
     
19,774
     
12,258
     
73,219
 
                                 
Effect of exchange rate fluctuations on cash and cash
                               
 equivalents
   
(55
)
   
(104
)
   
(133
)
   
(64
)
Increase in cash and cash equivalents
   
18,653
     
21,648
     
12,920
     
21,245
 
Cash and cash equivalents at the beginning
                               
 of the period
   
36,882
     
23,962
     
23,962
     
42,008
 
Cash and cash equivalents at the end of the period
   
55,535
     
45,610
     
36,882
     
63,253
 

* Convenience translation into US$ (exchange rate as at June 30, 2019: EUR 1 = US$ 1.139)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F - 8

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 1 - General

A.

Ellomay Capital Ltd. (hereinafter - the “Company”), is an Israeli Company involved in the production of renewable and clean energy. The Company owns seventeen PV Plants that are operating and connected to their respective national grids as follows: (i) twelve photovoltaic plants in Italy with an aggregate installed capacity of approximately 22.6 MWp, (ii) four photovoltaic plants in Spain with an aggregate installed capacity of approximately 7.9 MWp and (iii) one photovoltaic plant in Israel with an installed capacity of approximately 9 MWp. In addition, the Company owns: (i) 9.375% of Dorad Energy Ltd. (hereinafter - “Dorad”), which owns an approximate 850 MWp bi-fuel operated power plant in the vicinity of Ashkelon, Israel, (ii) 51% of Groen Gas Goor B.V and of Groen Gas Oude-Tonge B.V., project companies developing anaerobic digestion plants with a green gas production capacity of approximately 375 Nm3/h, in Goor, the Netherlands and 475 Nm3/h, in Oude Tonge, the Netherlands, respectively, (iii) 51% Talasol Solar S.L.U (hereinafter – “Talasol”), which is involved in a project to construct a photovoltaic plant with a peak capacity of 300 MW in the municipality of Talaván, Cáceres, Spain (hereinafter – the “Talasol Project”), and (iv) 75% of Chashgal Elyon Ltd., Agira Sheuva Electra, L.P. and Ellomay Pumped Storage (2014) Ltd., all of which are involved in a project to construct a 156 MW pumped storage hydro power plant in the Manara Cliff, Israel.

The ordinary shares of the Company are listed on the NYSE American and on the Tel Aviv Stock Exchange (under the symbol “ELLO”). The address of the Company’s registered office is 9 Rothschild Blvd., Tel Aviv, Israel.

B.          Material events in the reporting period

In April 2019, the Company, through its wholly-owned subsidiary, Ellomay Luxembourg Holdings, S.à.r.l. sold 49% of the outstanding shares of Talasol to GSE 3 UK Limited and Fond-ICO Infraestructuras II, FICC (24.5%, respectively) (together, the “Partners”) pursuant to a Credit Facilities Assignment and Sale and Purchase of Shares Agreement (the “SPA”). Following consummation of the transactions contemplated by the SPA, the Company indirectly owns 51% of Talasol’s shares. For further information see Note 7.

On April 30, 2019, the Talasol Project reached financial closing. Total CAPEX of the Talasol Project is expected to be approximately €228 million, of which an aggregate amount of approximately €131 million will be provided by a term loan under the project finance obtained by Talasol from Rabobank, ABN AMRO and Deutsche Bank (commercial tranche) and the European Investment Bank. For more information see Note 10.


F - 9

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 2 - Basis of Preparation

A.          Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the financial statements as at and for the year ended December 31, 2018 (hereinafter – “the annual financial statements”).

These condensed consolidated interim financial statements were authorized for issue on September 25, 2019.

B.          Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to exercise judgment when making assessments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.  Actual results may differ from these estimates.

Except as described below and that mentioned in Note 3.A, the significant judgments made by management in applying the Company’s accounting policies and the principal assumptions used in the estimation of uncertainty were the same as those that applied to the annual financial statements.

Estimate/judgment
 
Principal assumptions
 
Possible effects
         
Determining whether an arrangement contains a lease
 
 
In order to determine whether an arrangement contains a lease, the Company assesses whether the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration, while examining whether throughout the lease term it has the right to obtain substantially all the economic benefits from use of the identified asset and the right to direct the identified asset’s use.
 
Recognition of right-of-use asset and lease liabilities or recognition of current expenses.
         
Determining the lease term
 
In order to determine the lease term, the Company takes into consideration the period over which the lease is non-cancellable, including renewal options that it is reasonably certain it will exercise and/or termination options that it is reasonably certain it will not exercise.
 
An increase or decrease in the initial measurement of a right-of-use asset and lease liability and in depreciation and financing expenses in subsequent periods.


F - 10

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 3 - Significant Accounting Policies

Except as described below, the accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company in its annual financial statements. Presented hereunder is a description of the changes in accounting policies applied in these condensed consolidated interim financial statements and their effect:

A.          Initial application of new standards, amendments to standards and interpretations

As from January 1, 2019 the Company applies the new standards and amendments to standards described below:

(1)          IFRS 16, Leases (hereinafter in this section: “IFRS 16” or “the standard”)

As from January 1, 2019 (hereinafter: “the date of initial application”) the Company applies International Financial Reporting Standard 16, Leases (hereinafter: “IFRS 16” or “the standard”), which replaced International Accounting Standard 17, Leases (hereinafter: "IAS 17" or "the previous standard").

The main effect of the standard’s application is reflected in annulment of the existing requirement from lessees to classify leases as operating (off-balance sheet) or finance leases and the presentation of a unified model for lessees to account for all leases similarly to the accounting treatment of finance leases in the previous standard. Until the date of application, the Company classified most of the leases in which it is the lessee as operating leases, as it did not substantially bear all the risks and rewards from the assets.

In accordance with IFRS 16, for agreements in which the Company is the lessee, the Company recognizes a right-of-use asset and a lease liability at the inception of the lease contract for all the leases in which the Company has a right to control identified assets for a specified period of time, other than exceptions specified in the standard. Accordingly, the Company recognizes depreciation and amortization expenses in respect of a right-of-use asset, tests a right-of-use asset for impairment in accordance with IAS 36 and recognizes financing expenses on a lease liability. Therefore, as from the date of initial application, lease payments relating to assets leased under an operating lease, which were presented as part of general and administrative expenses in the income statement, are capitalized to assets and written down as depreciation and amortization expenses.

The Company elected to apply the standard using the modified retrospective approach, with an adjustment to the balance of retained earnings as at January 1, 2019 and without a restatement of comparative data. In respect of all the leases, the Company elected to apply the transitional provisions such that on the date of initial application it recognized a liability at the present value of the balance of future lease payments discounted at its incremental borrowing rate at that date calculated according to the average duration of the remaining lease period as from the date of initial application, and concurrently recognized a right-of-use asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments that were recognized as an asset or liability before the date of initial application. Therefore, application of the standard did not have an effect on the Company’s equity at the date of initial application.

F - 11

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 3 - Significant Accounting Policies (cont’d)


A.
Initial application of new standards, amendments to standards and interpretations (cont’d)

(1)          IFRS 16, Leases (cont'd)

Furthermore, as part of the initial application of the standard, the Company has chosen to apply the following expedients:


 (1)
Relying on a previous definition and/or assessment of whether an arrangement is a lease in accordance with current guidance with respect to agreements that exist at the date of initial application;


 (2)
Applying a single discount rate to a portfolio of leases with reasonably similar characteristics;


 (3)
Applying the practical expedient regarding the recognition and measurement of short-term leases, for both leases that end within 12 months from the date of initial application and leases for a period of up to 12 months from the date of their inception for all  groups of underlying assets to which the right-of-use relates;

The table below presents the cumulative effects of the items affected by the initial application on the statement of financial position as at January 1, 2019:

   
According to
         
According to
 
   
IAS 17
   
The change
   
IFRS 16
 
   
(Unaudited)
 
   
€ in thousands
 
Right-of-use asset
   
-
     
4,192
     
4,192
 
Deferred tax assets
   
-
     
1,040
     
1,040
 
Lease liabilities
   
-
     
4,192
     
4,192
 
Deferred tax liabilities
   
-
     
1,040
     
1,040
 

In measurement of the lease liabilities, the Company discounted lease payments using the nominal incremental borrowing rate at January 1, 2019. The discount rates used to measure the lease liability range between 2.56% and 4.57% (weighted average of 3.4%). This range is affected by differences in the lease term, differences between asset groups, and so forth.

As a result of applying IFRS 16, in relation to the leases that were classified as operating leases according to IAS 17, the Company recognized right-of-use assets and lease liabilities as at June 30, 2019 in the amount of EUR 4,134 thousand and EUR 4,167 thousand, respectively. Furthermore, instead of recognizing lease expenses in relation to those leases, during the six month period ended June 30, 2019 the Company recognized additional depreciation expenses in the amount of EUR 144 thousand, and additional financing expenses in the  amount of EUR 110 thousand.

Presented hereunder are the main changes in accounting policies following the application of IFRS 16 as from January 1, 2019.

(1)          Determining whether an arrangement contains a lease

On the inception date of the lease, the Company determines whether the arrangement is a lease or contains a lease, while examining if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, the Company assesses whether it has the following two rights throughout the lease term:

F - 12

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 3 - Significant Accounting Policies (cont’d)

A.          Initial application of new standards, amendments to standards and interpretations (cont’d)

(1)          IFRS 16, Leases (cont'd)

(1)          Determining whether an arrangement contains a lease (cont’d)


(a)
The right to obtain substantially all the economic benefits from use of the identified asset; and


(b)
The right to direct the identified asset’s use.
 
(2)          Leased assets and lease liabilities

Contracts that award the Company control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Company recognizes a liability at the present value of the balance of future lease payments (these payments do not include certain variable lease payments), and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments.
Since the interest rate implicit in the Company's leases is not readily determinable, the incremental borrowing rate of the lessee is used. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model, and depreciated over the shorter of the lease term or useful life of the asset.
The Company elected to apply the practical expedient by which short-term leases of up to one year and/or leases in which the underlying asset has a low value, are accounted for such that lease payments are recognized in profit or loss on a straight-line basis, over the lease term, without recognizing an asset and/or liability in the statement of financial position.

(3)          The lease term

The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively.

(4)          Variable lease payments

Variable lease payments that depend on an index or a rate, are initially measured using the index or rate existing at the commencement of the lease and are included in the measurement of the lease liability. When the cash flows of future lease payments change as the result of a change in an index or a rate, the balance of the liability is adjusted against the right-of-use asset.
Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the event or condition that triggers payment occurs.

(5)          Depreciation of right-of-use asset

After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, for Lands of PV sites- 20-25 years.


F - 13

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 3 - Significant Accounting Policies (cont’d)

(2)          IFRIC 23, Uncertainty Over Income Tax Treatments

IFRIC 23 clarifies how to apply the recognition and measurement requirements of IAS 12 for uncertainties in income taxes. According to IFRIC 23, when determining the taxable profit (loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments, the entity should assess whether it is probable that the tax authority will accept its tax position. Insofar as it is probable that the tax authority will accept the entity’s tax position, the entity will recognize the tax effects on the financial statements according to that tax position. On the other hand, if it is not probable that the tax authority will accept the entity’s tax position, the entity is required to reflect the uncertainty in its accounts by using one of the following methods: the most likely outcome or the expected value. IFRIC 23 clarifies that when the entity examines whether or not it is probable that the tax authority will accept the entity’s position, it is assumed that the tax authority with the right to examine any amounts reported to it will examine those amounts and that it has full knowledge of all relevant information when doing so. Furthermore, according to IFRIC 23 an entity has to consider changes in circumstances and new information that may change its assessment. IFRIC 23 also emphasizes the need to provide disclosures of the judgments and assumptions made by the entity regarding uncertain tax positions. IFRIC 23 is applied using the cumulative effect approach. The application of IFRIC 23 did not have a material effect on the financial statements.

(3)          Amendment to IAS 28, Investments in Associates and Joint Venture: Long-Term Interests in Associates or Joint Ventures (hereinafter – the “Amendment”)

The Amendment clarifies that for long-term interests that form part of the entity’s net investment in the associate or joint venture, the entity shall first apply the requirements of IFRS 9 and then apply the instructions of IAS 28 with respect to the remainder of those interests, so that the long-term interests are in the scope of both IFRS 9 and IAS 28. The Amendment clarifies that for long-term interests that form part of the entity’s net investment in the associate or joint venture, the entity shall first apply the requirements of IFRS 9 and then apply the instructions of IAS 28 with respect to the remainder of those interests, so that the long-term interests are in the scope of both IFRS 9 and IAS 28. The application of the Amendment did not have a material effect on the financial statements.

Note 4 - Seasonality

Solar power production has a seasonal cycle due to its dependency on the direct and indirect sunlight and the effect the amount of sunlight has on the output of energy produced. Thus, low radiation levels during the winter months decrease power production.

F - 14

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 5 - Restricted Cash, Deposits and Marketable Securities
   
June 30,
   
December 31,
 
   
2019
   
2018
 
   
€ in thousands
 
   
Unaudited
   
Audited
 
Marketable securities (1)
   
2,204
     
2,132
 
Short-term restricted cash (2)
   
1,315
     
4,653
 
Long-term restricted non-interest bearing bank deposits (3)
   
3,222
     
408
 
Restricted cash, long-term bank deposits (4)
   
7,695
     
1,654
 
Long-term restricted cash and deposits
   
10,917
     
2,062
 


1.
The Company invested in a traded Corporate Bond (rated Baa3 by Moody's) with a coupon rate of 4.435% and a maturity date of December 30, 2020 and in 5.8% WACHOVIA Fixed Interest Float.


2.
Current accounts securing short term obligations.


3.
Deposits used to secure obligations towards the Israeli Electricity Authority for the license for the pumped-storage project in the Manara Cliff in Israel and to secure obligations under loan agreements.


4.
Bank deposits used to secure obligations under loan agreements and to secure the Company's forward contracts.

Note 6 - Trade and Other Receivables

   
June 30,
   
December 31,
 
   
2019
   
2018
 
   
€ in thousands
 
   
Unaudited
   
Audited
 
Current Assets:
           
Other receivables
           
Government authorities
   
2,728
     
2,706
 
Income receivable
   
5,490
     
3,830
 
Interest receivable
   
19
     
6
 
Current tax
   
218
     
195
 
Current maturities of loan to an equity accounted investee
   
-
     
415
 
Trade receivable
   
451
     
156
 
Forward contracts
   
-
     
529
 
Inventory
   
351
     
-
 
Loan to others
   
-
     
3,500
 
Prepaid expenses and other
   
2,150
     
1,286
 
     
11,407
     
12,623
 
Non-current Assets:
Long term receivables
               
Advance tax payment
   
861
     
996
 
Financial asset (1)
   
5,326
     
-
 
Annual rent deposits
   
59
     
27
 
Other
   
412
     
432
 
     
6,658
     
1,455
 


(1)

Power financial hedge in respect of approximately 80% of the output of the Talasol Project for a period of 10 years. The power produced by the Talasol Project is expected to be sold in the open market for the then current market power price. The hedge transaction is expected to hedge the risks associated with fluctuating electricity market prices.


F - 15


Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Investee Companies and Other Investments

Information about investee companies and other investments

A.          U. Dori Energy Infrastructures Ltd. (“Dori Energy”)-

The Company, through its wholly owned subsidiary, Ellomay Clean Energy Ltd. (“Ellomay Energy”), entered into an Investment Agreement (the “Dori Investment Agreement”) with Amos Luzon Entrepreneurship and Energy Group Ltd. (formerly - Dori Group Ltd.) (the “Luzon Group”), and Dori Energy, with respect to an investment in Dori Energy. Dori Energy holds 18.75% of the share capital of Dorad, which owns an approximate 850 MWp bi-fuel operated power plant in the vicinity of Ashkelon, Israel (the “Dorad Power Plant”). Dorad holds production and supply licenses, both expiring in May 2034 and commenced commercial operation in May 2014.

Dorad provided guarantees in favor of the Israeli Electricity Authority, the Israeli Electric Company and the Israel Natural Gas Lines Ltd. These guarantees were provided through Dorad’s shareholders at their proportionate holdings, as required by the financing agreements executed by Dorad. Total performance guarantees provided by Dorad amounted to approximately NIS 172,000 thousand (approximately €40,400 thousand). The Company's indirect share of guarantees that Dorad provided through its shareholders is approximately NIS 16,000 thousand (approximately €3,800 thousand).

On February 14, 2018, Standard & Poor's Maalot announced that it had upgraded its rating of Dorad's senior debt. As a result of the increase in the rating and in accordance with Dorad's financing agreements with its financing corporations, the annual interest rate of Dorad's loans was reduced by 0.4% to 8.1% as from July 13, 2018.

Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael

In connection with the description of the petition to approve a derivative claim filed by Dory Energy and Hemi Raphael included in Note 6 to the annual financial statements, in January 2019, Dori Energy, Eilat Ashkelon Infrastructure Services Ltd. (“EAIS”), which holds 37.5% of Dorad’s shares, and Dori Energy’s representative on the Dorad board of directors filed their response to the request for permission to file an appeal submitted by Edelcom and Zorlu to the Israeli Supreme Court. On January 30, 2019, the arbitrator ruled to cancel the evidentiary hearings scheduled for March and April 2019 and determined that the parties are to immediately schedule new hearing dates. Following requests submitted by Zorlu and the Edelsburg Group in connection with discovery on behalf of Dori Energy and EAIS, on January 23, 2019 the parties filed a notice of an agreed-upon process in the matter pursuant to which Dori Energy and EAIS will submit updated discovery on January 24, 2019. In February 2019, the Edelsburg Group submitted a request to delete sections of EAIS response and EAIS and Dori Energy submitted a request to remove redactions from discovery. On February 12, 2019, the Israeli Supreme Court ruled by a majority ruling that the appeal submitted should be accepted by removing the arbitrator from her position and determined that the respondents in the proceedings will pay expenses to Zorlu in the amount of NIS 10,000. In May 2019, a new arbitrator was appointed and dates were set for the discovery process. The evidentiary hearings are scheduled during March-June 2020.

The Company estimates (after consulting with legal counsel), that at this early stage it is not yet possible to assess the outcome of the proceeding.

F - 16


Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Investee Companies and Other Investments (cont’d)

Information about investee companies and other investments (cont’d)

A.          U. Dori Energy Infrastructures Ltd. (“Dori Energy”) - (cont’d)

Petition to Approve a Derivative Claim filed by Edelcom

Please see above under “Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael” for updates in connection with the description of the petition to approve a derivative claim filed by Edelcom included in Note 6 to the annual financial statements. The Company estimates (after consulting with legal counsel), that at this early stage it is not yet possible to assess the outcome of the proceeding.

Statement of Claim filed by Edelcom

In connection with the description of the statement of claim filed by Edelcom included in Note 6 to the annual financial statements, on July 31, 2019, Edelcom (together with Edeltech and Mr. Edelsburg) submitted a notice of withdrawal of the statement of claim. On August 11, 2019, Dori Energy submitted its response to the notice requesting that the claim be rejected and expenses and legal fees will be determined for the benefit of Dori Energy. In light of the notice of withdrawal, the Company estimates (after consultation with its legal counsel) that the claim will be deleted or rejected.

Opening Motion filed by Zorlu

On April 8, 2019, Zorlu filed an opening motion with the District Court in Tel Aviv against Dorad and the directors serving on Dorad's board on behalf of Dori Energy and EAIS. In the opening motion, Zorlu asked the court to instruct Dorad to convene a shareholders meeting and to include a discussion and a vote on the planning and construction of an additional power plant adjacent to the existing power plant (the "Dorad 2 Project") on the agenda of this meeting. Zorlu claimed that while the articles of association of Dorad provides that the planning and construction of an additional power plant requires a unanimous consent of the Dorad shareholders, and while Zorlu and Edelcom Ltd. ("Edelcom"), which holds 18.75% of Dorad, are opposed to this project, including due to the current disagreements among Dorad's shareholders, Dorad continued taking actions to advance the project, which include spending substantial amounts our of Dorad's funds. Zorlu further claims that the representatives of Dori Energy and EAIS on the Dorad board have acted to prevent the convening of a shareholders meeting as requested by Zorlu. On April 16, 2019, Edelcom submitted a request to join the opening motion as an additional respondent as Edelcom claims that it is another shareholder in Dorad that opposes the advancement of the project at this stage. In addition, Edelcom joined Dori Energy and EAIS as additional respondents to its request, claiming that these entities are required to be part of the proceeding in order to reach a complete and efficient resolution. All parties agreed to the joining of Edelcom, Dori Energy and EAIS to the proceeding. On June 15, 2019, Edelcom filed its response to the petition, requesting that the court accept the petition. On August 13, 2019, Dorad, EAIC and the Dorad board members submitted their responses and requested that the petition be dismissed. The petition is scheduled for hearings during December 2019. The Company estimates (after consulting with legal counsel), that at this early stage it is not yet possible to assess the outcome of the proceeding. To the Company’s knowledge, the Dorad 2 Project is currently under internal examination by Dorad and there can be no assurance as to if, when and under what terms it will be advanced or promoted by Dorad.

F - 17

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 7 - Investee Companies and Other Investments (cont’d)

B.          Talasol Solar S.L.U (“Talasol”) -

In April 2019, the Company, through its wholly-owned subsidiary, Ellomay Luxembourg Holdings, S.à.r.l. sold 49% of the outstanding shares of Talasol to GSE 3 UK Limited and Fond-ICO Infraestructuras II, FICC (24.5%, respectively) (together, the “Partners”) pursuant to a Credit Facilities Assignment and Sale and Purchase of Shares Agreement (the “SPA”). The SPA provides that Ellomay Luxembourg will assign to the Partners, in equal parts, 49% of its rights and obligations under the agreements executed in connection with the project finance obtained for the Talasol Project. The SPA provides that the legal risks will be transferred to the Partners on the closing date and the economic yields and results of operations of Talasol’s business will be transferred to the Partners as from December 31, 2018. The aggregate purchase price of approximately EUR 16.1 million represents 49% of the amounts withdrawn and interests accrued from and by Talasol under its shareholder development costs credit facility in connection with the Talasol Project’s financing as of the closing date of the SPA (approximately EUR 4.9 million), plus a payment for 49% of Talasol’s shares (approximately EUR 4.9 million) plus a premium of approximately EUR 6.3 million. Of such aggregate purchase price, the payment of €1.4 million was deferred until the achievement of a preliminary acceptance certificate under the engineering, procurement and construction (“EPC”) agreement of the Talasol Project. Ellomay Luxembourg and the Partners also entered into a Partners’ Agreement (the “PA”) setting forth the relationship between the prospective shareholders of Talasol, the governance and management of Talasol, the funding and financing of Talasol and the mechanism for future transfers of Talasol’s shares. As these changes in the Company’s ownership interest in Talasol did not result in loss of control, they were accounted for as equity transactions and the Company therefore recognized in Equity an amount of approximately EUR 6.3 million, less associated expenses in the amount of approximately EUR 0.7 million.

In addition, following consummation of the transactions contemplated by the SPA in April 2019, the Partners also provided shareholder loans to finance the construction costs of the Talasol Project in the aggregate amount of approximately EUR 37.7 million and an additional aggregate amount of EUR 2.8 million as contingent equity intended to cover unexpected CAPEX should they occur.

Note 8 - Financial Instruments

Fair value

(1)          Financial instruments measured at fair value for disclosure purposes only

The carrying amounts of certain financial assets and liabilities, including cash and cash equivalents, trade receivables, other receivables, other short-term investments, deposits, derivatives, bank overdraft, short-term loans and borrowings, trade payables and other payables are the same or proximate to their fair value.

F - 18

Ellomay Capital Ltd. and its Subsidiaries

Notes to the Condensed Consolidated Unaudited Interim Financial Statements

Note 8 - Financial Instruments (cont’d)

Fair value (cont’d)

(1)          Financial instruments measured at fair value for disclosure purposes only (cont’d)

The fair values of the other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

    June 30, 2019
         
Fair value
        
   
Carrying
                   
Valuation techniques for
 
Inputs used to
   
amount
   
Level 1
   
Level 2
   
Level 3
 
determining fair value
 
determine fair value
   
€ in thousands
        
Non-current liabilities:
                                  
Debentures
   
49,808
     
51,619
     
-
     
-
        
Loans from banks and others (including current maturities)
   
127,750
     
-
     
130,512
     
-
 
Future cash flows by the market interest rate on the date of measurement.
 
Discount rate of Euribor+ 2.53%, fixed rate for 5 years 2.9%-3.1%, Discount rate of Euribor+ 2%,   and 4.65% Linkage to Consumer price index in Israel
     
177,558
     
51,619
     
130,512
     
-
        

   
December 31, 2018
         
Fair value
        
   
Carrying
                   
Valuation techniques for
 
Inputs used to
   
amount
   
Level 1
   
Level 2
   
Level 3
 
determining fair value
 
determine fair value
   
€ in thousands
        
Non-current liabilities:
                                  
Debentures
   
51,343