EX-99.2 3 exhibit_99-2.htm EXHIBIT 99.2

Exhibit 99.2

Ellomay Capital Ltd. and its Subsidiaries Condensed Consolidated Interim Financial Statements As at June 30, 2016 (Unaudited)

Contents

| Page
Condensed Consolidated Interim Statements of Financial Position | F-2
Condensed Consolidated Interim Statements of Comprehensive Income (Loss) | F-3
Condensed Consolidated Interim Statements of Changes in Equity | F-4-5
Condensed Consolidated Interim Statements of Cash Flows | F-6
Notes to the Condensed Consolidated Interim Financial Statements | F-7

F - 1

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

|  |  |  |  | June 30 |  |  | December 31 |
|  |  |  |  | 2016 |  |  | 2015 |
|  |  |  |  | Unaudited |  |  | Audited |
|  | Note |  |  | US$ in thousands |
Assets |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  |  |  |  | 16,715 |  |  |  | 18,717 |
Marketable securities |  |  |  |  |  | 5,515 |  |  |  | 6,499 |
Restricted cash |  |  |  |  |  | 80 |  |  |  | 79 |
Trade receivables |  |  |  |  |  | 314 |  |  |  | 69 |
Other receivables and prepaid expenses |  | 5 |  |  |  | 14,471 |  |  |  | 8,149 |
|  |  |  |  |  | 37,095 |  |  |  | 33,513 |
Non-current assets |  |  |  |  |  |  |  |  |  |  |
Investment in equity accounted investee |  | 6 |  |  |  | 30,241 |  |  |  | 33,970 |
Financial assets |  |  |  |  |  | 4,813 |  |  |  | 4,865 |
Fixed assets |  |  |  |  |  | 78,321 |  |  |  | 78,975 |
Restricted cash and deposits |  |  |  |  |  | 5,380 |  |  |  | 5,317 |
Deferred tax |  |  |  |  |  | 2,852 |  |  |  | 2,840 |
Other assets |  |  |  |  |  | 985 |  |  |  | 847 |
|  |  |  |  |  | 122,592 |  |  |  | 126,814 |
Total assets |  |  |  |  |  | 159,687 |  |  |  | 160,327 |
Liabilities and Equity |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |  |
Loans and borrowings |  |  |  |  |  | 1,208 |  |  |  | 1,133 |
Debentures |  |  |  |  |  | 4,973 |  |  |  | 4,878 |
Trade payables |  |  |  |  |  | 1,013 |  |  |  | 869 |
Other payables |  |  |  |  |  | 3,348 |  |  |  | 3,223 |
|  |  |  |  |  | 10,542 |  |  |  | 10,103 |
Non-current liabilities |  |  |  |  |  |  |  |  |  |  |
Finance lease obligations |  |  |  |  |  | 4,658 |  |  |  | 4,724 |
Long-term loans |  |  |  |  |  | 12,946 |  |  |  | 13,043 |
Debentures |  |  |  |  |  | 35,629 |  |  |  | 35,074 |
Deferred tax |  |  |  |  |  | 903 |  |  |  | 823 |
Other long-term liabilities |  |  |  |  |  | 3,275 |  |  |  | 2,495 |
|  |  |  |  |  | 57,411 |  |  |  | 56,159 |
Total liabilities |  |  |  |  |  | 67,953 |  |  |  | 66,262 |
Equity |  |  |  |  |  |  |  |  |  |  |
Share capital |  |  |  |  |  | 26,597 |  |  |  | 26,597 |
Share premium |  |  |  |  |  | 77,724 |  |  |  | 77,723 |
Treasury shares |  |  |  |  |  | (1,980 | ) |  |  | (1,972 | )
Reserves |  |  |  |  |  | (13,464 | ) |  |  | (15,215 | )
Retained earnings |  |  |  |  |  | 3,320 |  |  |  | 7,200 |
Total equity attributed to shareholders of the Company |  |  |  |  |  | 92,197 |  |  |  | 94,333 |
Non-Controlling Interest |  |  |  |  |  | (463 | ) |  |  | (268 | )
Total equity |  |  |  |  |  | 91,734 |  |  |  | 94,065 |
Total liabilities and equity |  |  |  |  |  | 159,687 |  |  |  | 160,327 |

The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F - 2

Ellomay Capital Ltd. and its Subsidiaries
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

|  | For the six |  |  | For the six |  |  | For the year |
|  | months ended |  |  | months ended |  |  | ended December |
|  | June 30, 2016 |  |  | June 30, 2015 |  |  |  | 31, 2015 |
|  | Unaudited |  |  | Unaudited |  |  | Audited |
|  | US$ in thousands (except per share amounts) |
Revenues |  |  | 6,513 |  |  |  | 7,228 |  |  |  | 13,817 |
Operating expenses |  |  | (1,159 | ) |  |  | (1,472 | ) |  |  | (2,854 | )
Depreciation expenses |  |  | (2,518 | ) |  |  | (2,456 | ) |  |  | (4,912 | )
Gross profit |  |  | 2,836 |  |  |  | 3,300 |  |  |  | 6,051 |
General and administrative expenses |  |  | (1,840 | ) |  |  | (1,706 | ) |  |  | (3,745 | )
Share of profits of equity accounted investee |  |  | 312 |  |  |  | 217 |  |  |  | 2,446 |
Other income, net |  |  | 85 |  |  |  | 57 |  |  |  | 21 |
Operating Profit |  |  | 1,393 |  |  |  | 1,868 |  |  |  | 4,773 |
Financing income |  |  | 164 |  |  |  | 122 |  |  |  | 2,347 |
Financing income (expenses) in connection with derivatives, net |  |  | (1,024 | ) |  |  | 5,306 |  |  |  | 3,485 |
Financing expenses |  |  | (1,895 | ) |  |  | (4,101 | ) |  |  | (5,240 | )
Financing income (expenses), net |  |  | (2,755 | ) |  |  | 1,327 |  |  |  | 592 |
Profit (loss) before taxes on income |  |  | (1,362 | ) |  |  | 3,195 |  |  |  | 5,365 |
Tax benefit (taxes on income) |  |  | (309 | ) |  |  | (598 | ) |  |  | 1,933 |
Net income (loss) for the period |  |  | (1,671 | ) |  |  | 2,597 |  |  |  | 7,298 |
Income (loss) attributable to: |  |  |  |  |  |  |  |  |  |  |  |
Shareholders of the Company |  |  | (1,476 | ) |  |  | 2,716 |  |  |  | 7,553 |
Non-controlling interests |  |  | (195 | ) |  |  | (119 | ) |  |  | (255 | )
Net income (loss) for the period |  |  | (1,671 | ) |  |  | 2,597 |  |  |  | 7,298 |
Other comprehensive income (loss) |  |  |  |  |  |  |  |  |  |  |  |
Items that are or may be reclassified to profit or loss: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | (267 | ) |  |  | 699 |  |  |  | (141 | )
Items that would not be reclassified to profit or loss: |  |  |  |  |  |  |  |  |  |  |  |
Presentation currency translation adjustments |  |  | 2,018 |  |  |  | (5,459 | ) |  |  | (6,947 | )
Total other comprehensive income (loss) |  |  | 1,751 |  |  |  | (4,760 | ) |  |  | (7,088 | )
Total comprehensive income (loss) |  |  | 80 |  |  |  | (2,163 | ) |  |  | 210 |
Basic net earnings (loss) per share |  |  | (0.14 | ) |  |  | 0.26 |  |  |  | 0.7 |
Diluted net earnings (loss) per share |  |  | (0.14 | ) |  |  | 0.25 |  |  |  | 0.7 |

The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F - 3

Ellomay Capital Ltd. and its Subsidiaries
Condensed Consolidated Interim Statements of Changes in Equity

|  | Attributable to owners of the Company |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Translation |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | reserve |  |  | Presentation |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | from |  |  | currency |  |  |  |  |  | Non- |  |  |  |
|  | Share |  |  | Share |  |  | Retained |  |  | Treasury |  |  | foreign |  |  | translation |  |  |  |  |  | controlling |  |  | Total |
|  | capital |  |  | premium |  |  | earnings |  |  | shares |  |  | operations |  |  | reserve |  |  | Total |  |  | interests |  |  | Equity |
|  | US$ in thousands |
|  | Unaudited |
For the six months ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance as at |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
January 1, 2016 |  |  | 26,597 |  |  |  | 77,723 |  |  |  | 7,200 |  |  |  | (1,972 | ) |  |  | 814 |  |  |  | (16,029 | ) |  |  | 94,333 |  |  |  | (268 | ) |  |  | 94,065 |
Loss for the period |  |  | - |  |  |  | - |  |  |  | (1,476 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,476 | ) |  |  | (195 | ) |  |  | (1,671 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (267 | ) |  |  | 2,018 |  |  |  | 1,751 |  |  |  | - |  |  |  | 1,751 |
Total comprehensive loss |  |  | - |  |  |  | - |  |  |  | (1,476 | ) |  |  | - |  |  |  | (267 | ) |  |  | 2,018 |  |  |  | 275 |  |  |  | (195 | ) |  |  | 80 |
Dividend distribution |  |  | - |  |  |  | - |  |  |  | (2,404 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,404 | ) |  |  | - |  |  |  | (2,404 | )
Share-based payments |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | 1 |
Own shares acquired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (8 | ) |  |  | - |  |  |  | - |  |  |  | (8 | ) |  |  | - |  |  |  | (8 | )
Balance as at |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
June 30, 2016 |  |  | 26,597 |  |  |  | 77,724 |  |  |  | 3,320 |  |  |  | (1,980 | ) |  |  | 547 |  |  |  | (14,011 | ) |  |  | 92,197 |  |  |  | (463 | ) |  |  | 91,734 |

|  | Attributable to owners of the Company |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Translation |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Retained |  |  |  |  |  | reserve |  |  | Presentation |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | earnings |  |  |  |  |  | from |  |  | currency |  |  |  |  |  | Non- |  |  |  |
|  | Share |  |  | Share |  |  | (Accumulated |  |  | Treasury |  |  | foreign |  |  | translation |  |  |  |  |  | controlling |  |  | Total |
|  | capital |  |  | premium |  |  | Deficit) |  |  | shares |  |  | operations |  |  | reserve |  |  | Total |  |  | interests |  |  | Equity |
|  | US$ in thousands |
|  | Unaudited |
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 | )
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 |

F - 4

Ellomay Capital Ltd. and its Subsidiaries
Condensed Consolidated Interim Statements of Changes in Equity

|  | Attributable to owners of the Company |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  | Translation |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Retained |  |  |  |  |  | reserve |  |  | Presentation |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | earnings |  |  |  |  |  | from |  |  | currency |  |  |  |  |  | Non- |  |  |  |
|  | Share |  |  | Share |  |  | (Accumulated |  |  | Treasury |  |  | foreign |  |  | translation |  |  |  |  |  | controlling |  |  | Total |
|  | capital |  |  | premium |  |  | Deficit) |  |  | shares |  |  | operations |  |  | reserve |  |  | Total |  |  | interests |  |  | Equity |
|  | US$ in thousands |
|  | Audited |
For the year ended |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 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 |  |  | - |  |  |  | - |  |  |  | 7,553 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,553 |  |  |  | (255 | ) |  |  | 7,298 |
Acquisition of subsidiary |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (29 | ) |  |  | (29 | )
Other comprehensive loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (141 | ) |  |  | (6,947 | ) |  |  | (7,088 | ) |  |  | - |  |  |  | (7,088 | )
Total comprehensive loss |  |  | - |  |  |  | - |  |  |  | 7,553 |  |  |  | - |  |  |  | (141 | ) |  |  | (6,947 | ) |  |  | 465 |  |  |  | (284 | ) |  |  | 181 |
Exercise of share options and warrants |  |  | 417 |  |  |  | 784 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,201 |  |  |  | - |  |  |  | 1,201 |
Own shares acquired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,450 | ) |  |  | - |  |  |  | - |  |  |  | (1,450 | ) |  |  | - |  |  |  | (1,450 | )
Share-based payments |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | 7 |
Balance as at |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2015 |  |  | 26,597 |  |  |  | 77,723 |  |  |  | 7,200 |  |  |  | (1,972 | ) |  |  | 814 |  |  |  | (16,029 | ) |  |  | 94,333 |  |  |  | (268 | ) |  |  | 94,065 |

The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F - 5

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

|  | For the Six Months ended June 30, 2016 |  |  | For the Six Months ended June 30, 2015 |  |  | For the Year ended December 31, 2015 |
|  | US$ in thousands |
|  | Unaudited |  |  | Unaudited |  |  | Audited |
Cash flows from operating activities |  |  |  |  |  |  |  |  |
Income (loss) for the period |  |  | (1,671 | ) |  |  | 2,597 |  |  |  | 7,298 |
Adjustments for: |  |  |  |  |  |  |  |  |  |  |  |
Financing (income) expenses, net |  |  | 2,755 |  |  |  | (1,327 | ) |  |  | (592 | )
Depreciation |  |  | 2,518 |  |  |  | 2,456 |  |  |  | 4,912 |
Share-based payment |  |  | 1 |  |  |  | 24 |  |  |  | 7 |
Share of profits of equity accounted investees for |  |  | (312 | ) |  |  | (217 | ) |  |  | (2,446 | )
Change in trade receivables |  |  | (244 | ) |  |  | 95 |  |  |  | 125 |
Change in other receivables and prepaid expenses |  |  | (844 | ) |  |  | (2,196 | ) |  |  | 333 |
Change in other assets |  |  | (113 | ) |  |  | (4,370 | ) |  |  | (1,706 | )
Change in accrued severance pay, net |  |  | - |  |  |  | - |  |  |  | (1 | )
Change in trade payables |  |  | 124 |  |  |  | (49 | ) |  |  | (252 | )
Change in accrued expenses and other payables |  |  | (515 | ) |  |  | 5,536 |  |  |  | 2,311 |
Income tax expense (tax benefit) |  |  | 309 |  |  |  | 598 |  |  |  | (1,933 | )
Income taxes paid |  |  | - |  |  |  | (95 | ) |  |  | (241 | )
Interest received |  |  | 144 |  |  |  | 93 |  |  |  | 222 |
Interest paid |  |  | (1,595 | ) |  |  | (1,449 | ) |  |  | (3,126 | )
Net cash provided by operating activities |  |  | 557 |  |  |  | 1,696 |  |  |  | 4,911 |
Cash flows from investing activities |  |  |  |  |  |  |  |  |  |  |  |
Advances on account of Manara Pumped Storage Project |  |  | (146 | ) |  |  | - |  |  |  | - |
Investment in equity accounted investee |  |  | (803 | ) |  |  | (7,456 | ) |  |  | (7,582 | )
Investment in restricted cash |  |  | - |  |  |  | (550 | ) |  |  | (101 | )
Proceeds from marketable securities |  |  | 1,008 |  |  |  | - |  |  |  | - |
Investment in marketable securities |  |  | - |  |  |  | (1,350 | ) |  |  | (2,869 | )
Proceeds from settlement of derivatives, net |  |  | - |  |  |  | - |  |  |  | 2,087 |
Proceeds from deposits |  |  | - |  |  |  | 3,980 |  |  |  | 3,980 |
Net cash provided by (used in) investing activities |  |  | 59 |  |  |  | (5,376 | ) |  |  | (4,485 | )
Cash flows from financing activities |  |  |  |  |  |  |  |  |  |  |  |
Dividend distribution |  |  | (2,404 | ) |  |  | - |  |  |  | - |
Acquisition of non-controlling interests |  |  | - |  |  |  | - |  |  |  | (868 | )
Repayment of long-term loans and finance lease obligations |  |  | (645 | ) |  |  | (424 | ) |  |  | (1,020 | )
Repayment of Debentures |  |  | - |  |  |  | - |  |  |  | (5,134 | )
Long term loans received |  |  | 90 |  |  |  | 910 |  |  |  | 11,715 |
Proceeds from options and warrants exercised |  |  | - |  |  |  | 44 |  |  |  | 1,201 |
Repurchase of own shares |  |  | (8 | ) |  |  | - |  |  |  | (1,450 | )
Net cash provided by (used in) financing activities |  |  | (2,967 | ) |  |  | 530 |  |  |  | 4,444 |
Exchange differences on balance of cash and cash equivalents |  |  | 349 |  |  |  | (917 | ) |  |  | (1,911 | )
Increase (decrease) in cash and cash equivalents |  |  | (2,002 | ) |  |  | (4,067 | ) |  |  | 2,959 |
Cash and cash equivalents at the beginning of the period |  |  | 18,717 |  |  |  | 15,758 |  |  |  | 15,758 |
Cash and cash equivalents at the end of the period |  |  | 16,715 |  |  |  | 11,691 |  |  |  | 18,717 |

The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F - 6

Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 1 – General
Ellomay Capital Ltd. (hereinafter - the "Company"), is an Israeli Company operating in the business of energy and infrastructure, and its operations currently mainly include production of renewable and clean energy. As of June 30, 2016, the Company owns sixteen photovoltaic plants (each, a “PV Plant” and, together, the “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, the Company indirectly owns 9.375% of Dorad Energy Ltd. (hereinafter - “Dorad”) and owns 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 340 MW pumped storage hydro power plant in the Manara Cliff, Israel.
The ordinary shares of the Company are listed on the NYSE MKT 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.
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, 2015 (hereinafter – “the annual financial statements”).
These condensed consolidated interim financial statements were authorized for issue on September 18, 2016.
B. Use of estimates and judgments
The preparation of financial statements in conformity with IFRSs requires management to make judgments, 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.
Note 3 - Significant Accounting Policies
The accounting policies applied by the Company in these condensed consolidated interim financial statements are the same as those applied in the annual 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.
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 5 - Other receivables and prepaid expenses

|  | June 30, 2016 |  |  | December 31, 2015 |
|  | US$ in thousands |
|  | Unaudited |  |  | Audited |
Government authorities |  |  | 1,642 |  |  |  | 1,276 |
Income receivable |  |  | 2,636 |  |  |  | 2,875 |
Interest receivable |  |  | 19 |  |  |  | 29 |
Current tax |  |  | 276 |  |  |  | 270 |
Current Maturities of loan to an equity accounted investee |  |  | 8,450 |  |  |  | 3,061 |
Prepaid expenses and other |  |  | 1,448 |  |  |  | 638 |
|  |  | 14,471 |  |  |  | 8,149 |

Note 6 - Investee Companies and Other Investments
Information about investee companies and other investments
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.) ("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 "power plant").
Dorad holds production and supply licenses, both expiring in May 2034 and commenced commercial operation in May 2014.
During the six month period ended June 30, 2016, the Company extended approximately $ 173 thousand subordinated shareholder loans to Dori Energy. The shareholder loans are linked to the Israeli CPI and bear an annual interest rate of 3% higher than the annual interest Dorad is committed to pay to Dorad's financing consortium during the financial period in respect of the "senior debt" (5.5% as at June 30, 2016, i.e., the annual interest rate on the shareholder loans was 8.5% as at June 30, 2016).
Dorad provided, itself and through its shareholders at their proportionate holdings, certain guarantees in favor of the Public Utilities Authority - Electricity ("the Electricity Authority") in order to comply with its license conditions, and in favor of the Israel Electric Corporation (“the IEC”) as required by its agreement with the IEC. In February 2016, Dorad updated the amount of its guarantee in favor of the IEC’s system unit management to NIS 52 million (approximately $ 14 million) (December 31, 2015 –NIS 70 million, approximately $18 million). In June 2016, the guarantee was replaced by guarantees provided by Dorads’s shareholders. Dori Energy's share of this additional guarantee provided by Dorad amounts to approximately NIS 10 million (approximately $ 2.6 million). The Company’s share of the aggregate guarantees provided by Dorad amounts to approximately NIS 15 million (approximately $ 4 million).
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 6 - Investee Companies and Other Investments (cont’d)
Information about investee companies (cont’d)
U. Dori Energy Infrastructures Ltd. (“Dori Energy”) (cont’d)-
During May 2016, the Company exercised the second option to acquire additional share capital of Dori Energy. Following the exercise of this option, the Company’s holdings in Dori Energy increased from 49% to 50% and the Company’s indirect ownership of Dorad increased from 9.1875% to 9.375%. The aggregate amount paid by the Company in connection with the exercise of the option amounted to approximately NIS 2.8 million (approximately $0.74 million), including approximately NIS 0.4 million (approximately $ 0.1 million) required in order to realign the shareholders loans provided to Dori Energy by its shareholders with the new ownership structure.
Petition to Approve a Derivative Claim filed by Dori Energy and Hemi Raphael
As more fully described in Note 6 to the annual financial statements, Dori Energy and Dori Energy’s representative on Dorad’s board of directors previously filed a petition to approve a derivative action on behalf of Dorad against several shareholders and board members of Dorad (“the Dori Energy Petition”). At a hearing held on April 20, 2016, the request submitted in January 2016 to amend the Dori Energy Petition to add Ori Edelsburg (a director in Dorad) and affiliated companies as additional respondents was approved. Subsequent to the date of this report, at the end of July 2016, the respondents filed their responses to the amended Dori Energy Petition. Dori Energy currently has until September 18, 2016 to reply to the respondents’ response.
Petition to Approve a Derivative Claim filed by Edelcom
As more fully described in Note 6 to the annual financial statements, on February 25, 2016 the representatives of Edelcom Ltd., which holds 18.75% of Dorad (“Edelcom”) and Ori Edelsburg sent a letter to Dorad requesting that Dorad file a claim against the Company, the Luzon Group and Dori Energy referring to an entrepreneurship agreement that was signed on November 25, 2010 between Dorad and the Luzon Group, pursuant to which the Luzon Group received payment in the amount of approximately NIS 49.4 million (approximately $12.7 million) in consideration for management and entrepreneurship services. On July 25, 2016, Edelcom filed an application for approval of a derivative action against the Company, the Luzon Group, Dori Energy and Dorad. The Company’s management is examining the claims but based on its initial analysis believes that the application has no merit and intends to defend its position in court.
Statement of Claim filed by Edelcom
In July 2016, Edelcom filed a statement of claim (the “Claim”) with the Tel Aviv District Court against Dori Energy, Ellomay Clean Energy Ltd. (“Ellomay Energy”), the Luzon Group, Dorad and the remaining shareholders of Dorad. In the Claim, Edelcom contends that a certain section of the shareholders agreement among Dorad’s shareholders (the “Dorad SHA”) contains several mistakes and does not correctly reflect the agreement of the parties. Edelcom claims that these purported mistakes were used in bad faith by the Luzon Group, Ellomay Energy and Dori Energy during 2010 in connection with the issuance of Dori Energy’s shares to Ellomay Energy and that, in effect, such issuance was allegedly in breach of the restriction placed on Dorad’s shares and the right of first refusal granted to Dorad’s shareholders in the Dorad SHA. The Claim requests the court to: (i) issue an order compelling the Luzon Group, Ellomay Energy and Dori Energy to act in accordance with the right of first refusal mechanism included in the Dorad SHA and to offer to the other shareholders of Dorad, including Edelcom, a right of first refusal in connection with 50% of Dori Energy’s shares (which are currently held by Ellomay Energy, a wholly-owned subsidiary of the Company), under the same terms agreed upon by the Luzon Group, Ellomay Energy and Dori Energy in 2010, (ii) issue an order instructing Dorad to delay all payment due to Dori Energy as a shareholder of Dorad, including dividends or repayment of shareholders’ loans, for a period as set forth in the Claim, (iii) issue an order instructing Dorad to remove Dori Energy’s representative from Dorad’s board of directors (currently Mr. Hemi Raphael, who also serves on the Board of the Company) and to prohibit his presence and voting at the Dorad board of directors’ meetings, for a period as set forth in the Claim, and (iv) grant any other orders as the court may deem appropriate under the circumstances. The Company is reviewing and assessing the Claim and will prepare its defense with legal counsel. Based on the Company’s initial review of the Claim and related documents, the Company believes that there is no merit or basis to the allegations made in the Claim.
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 7 - Details of General and administrative expenses

|  | For the six |  |  | For the six |  |  | For the |
|  | months ended |  |  | months ended |  |  | year ended |
|  | June 30, 2016 |  |  | June 30, 2015 |  |  | December 31, 2015 |
|  | Unaudited |  |  | Unaudited |  |  | Audited |
|  | US$ in thousands |
Salaries and related compensation |  |  | 566 |  |  |  | 784 |  |  |  | 1,458 |
Professional services |  |  | 987 |  |  |  | 985 |  |  |  | 1,747 |
Expenses in connection with Manara project (*) |  |  | 632 |  |  |  | 397 |  |  |  | 1,027 |
Other |  |  | (345 | ) |  |  | (460 | ) |  |  | (487 | )
Total general and administrative expenses |  |  | 1,840 |  |  |  | 1,706 |  |  |  | 3,745 |

(*) 75% owned by the Company
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.
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

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, 2016
|  |  |  |  | Fair value |  |  |  |
|  | Carrying |  |  |  |  |  |  |  |  |  |  | Valuation techniques for |  | Inputs used to
|  | amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  | determining fair value |  | determine fair value
|  | US$ in thousands |  |  |  |
Non-current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debentures |  |  | 40,602 |  |  |  | 43,769 |  |  |  | - |  |  |  | - |  |  |  |
Loans from banks and others (including current maturities) |  |  | 13,804 |  |  |  | - |  |  |  | 14,845 |  |  |  | - |  | Future cash flows by the market interest rate on the date of measurement. |  | Discount rate of Euribor+ 2.85%
Finance lease obligations (including current maturities) |  |  | 5,008 |  |  |  | - |  |  |  | 4,990 |  |  |  | - |  | Future cash flows by the market interest rate on the date of measurement. |  | Discount rate of Euribor+ 2.85%
|  |  | 59,414 |  |  |  | 48,643 |  |  |  | 19,835 |  |  |  | - |  |  |  |

|  | December 31, 2015
|  |  |  |  | Fair value |  |  |  |
|  | Carrying |  |  |  |  |  |  |  |  |  |  | Valuation techniques for |  | Inputs used to
|  | amount |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  | determining fair value |  | determine fair value
|  | US$ in thousands |  |  |  |
Non-current liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debentures |  |  | 39,952 |  |  |  | 42,639 |  |  |  | - |  |  |  | - |  |  |  |
Loans from banks and others (including current maturities) |  |  | 13,840 |  |  |  | - |  |  |  | 14,905 |  |  |  | - |  | Future cash flows by the market interest rate on the date of measurement. |  | Discount rate of Euribor+ 2.85%
Finance lease obligations (including current maturities) |  |  | 5,060 |  |  |  | - |  |  |  | 5,041 |  |  |  | - |  | Future cash flows by the market interest rate on the date of measurement. |  | Discount rate of Euribor+ 2.85%
|  |  | 58,852 |  |  |  | 42,639 |  |  |  | 19,946 |  |  |  | - |  |  |  |

(2) Fair value hierarchy of financial instruments measured at fair value
The table below presents an analysis of financial instruments measured at fair value on the temporal basis using valuation methodology in accordance with hierarchy fair value levels. The various levels are defined as follows:

| — | Level 1: quoted prices (unadjusted) in active markets for identical instruments.

| — | Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.

| — | Level 3: inputs that are not based on observable market data (unobservable inputs).

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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 8 - Financial Instruments (cont’d)
Fair value (cont’d)
(2) Fair value hierarchy of financial instruments measured at fair value (cont’d)

|  | June 30, 2016 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | US$ in thousands |
Income receivable in connection with the Gilboa pumped storage project (“PSP Gilboa”) |  |  | - |  |  |  | - |  |  |  | 1,316 |  |  |  | 1,316 |
Marketable securities |  |  | - |  |  |  | 5,515 |  |  |  | - |  |  |  | 5,515 |
Forward contracts |  |  | - |  |  |  | 3,497 |  |  |  | - |  |  |  | 3,497 |
Swap contracts |  |  | - |  |  |  | (3,720 | ) |  |  | - |  |  |  | (3,720 | )

|  | December 31, 2015 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | US$ in thousands |
PSP Gilboa |  |  | - |  |  |  | - |  |  |  | 1,249 |  |  |  | 1,249 |
Option to require additional shares in investee |  |  | - |  |  |  | - |  |  |  | * |  |  |  | - |
Marketable securities |  |  | - |  |  |  | 6,499 |  |  |  | - |  |  |  | 6,499 |
Forward contracts |  |  | - |  |  |  | 3,615 |  |  |  | - |  |  |  | 3,615 |
Swap contracts |  |  | - |  |  |  | (2,830 | ) |  |  | - |  |  |  | (2,830 | )

* Less than $ 1 thousand
There have been no transfers from any Level to another Level during the six months ended June 30, 2016.
(3) Details regarding fair value measurement at Levels 2 and 3
Swap contracts – fair value is measured by discounting the future cash flows, over the period of the contract and using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
Forward contracts – fair value measured on the basis of discounting the difference between the forward price in the contract and the current forward price for the residual period until redemption using market interest rates appropriate for similar instruments, including the adjustment required for the parties’ credit risks.
Income receivable in connection with PSP Gilboa - the fair value is estimated according to the cash flows expected to be received 4.5 years following the financial closing of PSP Gilboa, discounted at a weighted interest rate reflecting the credit risk of the debtor.
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 8 - Financial Instruments (cont’d)
Fair value (cont’d)
(4) Level 3 financial instruments carried at fair value
The table hereunder presents reconciliation from the opening balance to the closing balance of financial instruments carried at fair value that are included in level 3 of the fair value hierarchy:

|  | Financial assets |
|  | Option to purchase Additional shares in investee |  |  | Income receivable in connection with PSP Gilboa |
|  | US$ in thousands |
Balance as at December 31, 2014 |  |  | 17 |  |  |  | 1,238 |
Exercise |  |  | (17 | ) |  |  | - |
Total income recognized in profit or loss |  |  | - |  |  |  | 144 |
Foreign Currency translation adjustments |  |  | (* | ) |  |  | (132 | )
Balance as at December 31, 2015 |  |  | (* | ) |  |  | 1,250 |
Exercise |  |  | (* | ) |  |  | - |
Total income recognized in profit or loss |  |  | - |  |  |  | 37 |
Foreign Currency translation adjustments |  |  | - |  |  |  | 29 |
Balance as at June 30, 2016 |  |  | - |  |  |  | 1,316 |

* Less than $1 thousand
Note 9 - Subsequent Events

| A. | Execution of Agreement with Ludan

In August 2016, the Company entered into a strategic agreement (the “Agreement”) with Ludan Energy Overseas B.V. (“Ludan”) (a wholly-owned subsidiary of Ludan Engineering Co. Ltd. (TASE: LUDN) in connection with Waste-to-Energy (specifically Gasification and Bio-Gas (anaerobic digestion)) projects in the Netherlands. Pursuant to the Agreement, subject to the fulfillment of certain conditions (including the financial closing of each project and receipt of a valid Sustainable Energy Production Incentive subsidy from the Dutch authorities and applicable licenses), the Company will acquire at least 51% of each project company and Ludan will own the remaining 49% (each project that meets the conditions is referred to as an “Approved Project”). In the event additional entities will invest in an Approved Project, their holdings will not dilute the Company’s 51% share. The amount invested by the Company in each Approved Project will be comprised of: (i) the Company’s share of the equity based on its holdings in the Approved Project and (ii) an additional amount up to an aggregate investment that will reflect a pre-determined minimal internal rate of return to the Company, up to a certain maximum percentage of the aggregate investment by Ludan and the Company. Ludan will provide the remaining required equity. The expected overall cost of the projects is approximately EUR 200 million (including project financing). The Agreement may be terminated, inter alia, in the event the parties do not reach an understanding as to the contents of the EPC and O&M contracts within sixty days following the financial closing of the first project.
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Ellomay Capital Ltd. and its Subsidiaries
Notes to the Condensed Consolidated Financial Statements as at June 30, 2016

Note 9 - Subsequent Events

| B. | Manara Pumped Storage Project

In August 2016, Ellomay Pumped Storage (2014) Ltd. (“Ellomay PS”), a 75% owned subsidiary of the Company, received a conditional license for the Manara Cliff pumped-storage project (“the Conditional License”) from the Israeli Minister of National Infrastructures, Energy and Water Resources (the “Minister”). The Conditional License regulates the construction of a pumped storage plant in the Manara Cliff with a capacity of 340 MW. The Conditional License includes several conditions precedent to the entitlement of the holder of the Conditional License to receive an electricity production license. The Conditional License is valid for a period of seventy two (72) months commencing from the date of its approval by the Minister, subject to compliance by Ellomay PS with the milestones set forth therein and subject to the other provisions set forth therein (including a financial closing, the provision of guarantees and the construction of the pumped storage hydro power plant).
In September 2016, Ellomay PS filed a petition (the “Petition”) with the Israeli High Court of Justice against the Minister, the Electricity Authority and the owner of the Kochav Hayarden pumped storage project. The Petition was filed in connection with the decision of the Electricity Authority to extend the financial closing milestone deadline of the Kochav Hayarden pumped storage project, which received a conditional license for a pumped storage plant with a capacity of 340 MW in 2014. In the Petition, Ellomay PS requests the High Court to order the Electricity Authority to explain why the extension should not be canceled, due to, among other reasons, the lack of authority of the Electricity Authority to extend this milestone deadline. Should the extension decision be revoked, the conditional license provided to Kochav Hayarden is expected to terminate as the original financial closing milestone deadline has passed. Among its other claims, Ellomay PS claims that as the current quota for pumped storage projects determined by the Electricity Authority is 800 MW, and there is one 300 MW project that is already in the construction phase, the extension approved by the Electricity Authority could irreparably harm Ellomay PS’s chances of receiving a permanent license if the Kochav Hayarden project receives its permanent license first.
The Company may, for various reasons including changes in the applicable regulation and adverse economic conditions, resolve not to continue the advancement of the Manara Project.
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