Ellomay Capital Ltd (ELLO) 2014 Q4 法說會逐字稿

Good day, everyone, welcome to today's Ellomay Capital full year call. Today's conference is being recorded. At this time I'd like to turn the conference over to Mr. [Matthew Selinger], Investor Relations. Please go ahead.

Thank you, operator. Hey, thank you very much, everyone, and good morning. We'd like to thank everyone for joining us today for Ellomay Capital's full-year 2014 update call.

Joining us on the call are Mr. [Rannie] Fridrich, CEO; Mrs. Kalia Weintraub, CFO. The press release detailing the full-year update crossed the wire earlier today and is available on the Company's website at www.Ellomay.com, where you can also find additional information on the Company's assets and management team. After management's prepared comments we will open the floor for your questions.

Before we begin we'd like to remind everyone that prepared remarks contain forward-looking statements that involve substantial risks and uncertainties, including statements that are based on the current expectations and assumptions of the Company's management.

All statements, other than statements of historical facts regarding the Company's plans and objectives, expectations and assumptions of management are forward-looking statements. The use of certain words including the words estimate, project, intend, expect, believe and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The Company may not actually achieve the plans, intentions or expectation disclosed in the forward-looking statements and you should not place undue reliance on the Company's forward-looking statement.

Various important factors could cause actual results or events to differ materially from those that may be expressed or implied by our forward-looking statements including changes in regulation, seasonality of the photovoltaic business and market conditions.

These and other risks and uncertainties associated with the Company's business are described in greater detail in the filings the Company makes from time to time with the Securities and Exchange Commission, including its annual report on Form 20F.

The forward-looking statements are made as of this date and the Company does not undertake any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Now with that I would like to turn the call over to CEO, Mr. Ran Fridrich of Ellomay Capital. Rannie?

Yes. Kalia, are you on the line?

Yes.

Good day, everybody. I am pleased to -- actually to present our results for the 2014 and after that to elaborate a little bit about what happened (inaudible), what are the changes, what are the challenges. And I would be more than happy to answer questions. So, Kalia, you want to go over the numbers first?

Certainly, no problem. So I'll start with the balance sheet for you (inaudible). Comparing to the full year ended 2013 we can see that the cash balances increased due to the issues of debentures. Since then we have already purchased -- acquired three new [photovoltaic plants] in Spain with approximate installed capacity about 5.6 megawatts. Also some repayments on debentures were made and a repayment of a loan of a subsidiary.

I'll go over the profits and losses, the main issue here. Compared to 2013 we can see the acquisition of the three new photovoltaic plants included in the revenues. Also this year we can see the latest acquisition we did in 2013 full year consolidated [once]. If you look at 2013 we only had six months of P&L results since they were acquired in -- July 1 and started being consolidated.

Then we can see the gain on [volume] purchase recorded in connection with the new acquisition in Spain which is approximately $4 million. Also we can see a significant increase in our EBITDA. And looking at the financing obviously we had some fluctuations of the euro versus the US dollar which were recorded in the reserves because this is a translation reserve.

Rannie, anything specific you would also like to add -- oh, we can see Dorad's gain on our investments in Dorad. We started recording an equity profit since they are a commercial operation that began in May 2014, (inaudible) showing profit there. Rannie, anything you would also like to add here? Rannie?

Perhaps -- this is Matthew, maybe we lost him for a moment, maybe he is dialing back in.

Okay. We can also look at -- in this quarter we re-examined the impairment charges recorded in the second quarter due to changes in market trends resulting in the decrease of the interest. And therefore we reversed (inaudible) impairment charges.

We can see the acquisition of the (inaudible) also being included in our property and equipment. And basically these are the main items that happened during the third quarter -- fourth quarter. Is he back on the line? Rannie?

I am not seeing him as of yet. Well, perhaps I can move in and I do see some questions from the webcast, Kalia, and maybe I can ask those while we wait for him.

Okay, sure.

What did Dorad contribute in Q4?

Looking at Q4 Dorad contributed -- looking at the full year we had a $1.8 million gain, equity gain from Dorad. And looking only at the fourth quarter it was an additional $150,000. But the full year it was $1.8 million.

Obviously it was a little bit offset because in the first quarter we had a loss before they had started their operations from the [delay penalties]. But obviously going forward I expect not to have (inaudible) penalties of the profits from this investment.

Okay, great. They also -- the other question is asking about obviously -- is sort of asking about the forward-looking transactions that we obviously put out in January. And how do we help -- how do we foresee those helping us in 2015?

So the four transactions we did (inaudible) stabilized the impact of the foreign exchange currencies on our balance sheet. Obviously we did not execute them at the beginning of the year; otherwise we would have had a more full hedge. They were executed somewhere in the third, fourth quarter. So looking at our exchange rate, if you look at December 31, 2013 the exchange rate was approximately 1.378. Looking at December 2014 it was 1.215.

We executed the hedge transaction (inaudible) was not hedged, those four transactions, somewhere at the average exchange rate of 1.26, 1.27. So obviously they did not completely offset the impact of the decrease in the rate. Going forward they would provide a much -- I expect them to provide a much better protection there.

And obviously we need to look at the reserve of one with the financing income. Because in the financing income we can find also the impact of those four transactions. And we need to remember that Ellomay Capital's functional currency is the euro.

So all the exchange differences between the shekel, for example, which is a Dorad investment is denominated in Israeli shekel. So the impacts of exchanges between the shekel and the euro are included in the financing income. So if -- I think (multiple speakers).

Kalia, I am on the line again. Kalia?

Hi, Rannie, yes, we were looking for you. Okay (multiple speakers). So we have financing income there -- it's okay. We have financing income there of approximately $1.7 million, $1.8 million.

So we need to look at the net impact of the exchange rate differences which is approximately [10 million], which is obviously mainly due to the (inaudible) approximate situations between the euro and the US dollar which was quite significant in 2014.

Yes, I would like to mention one thing. Without hedging --.

Yes, we have (multiple speakers).

Okay, you (multiple speakers) okay.

And we discussed the average transaction, the (inaudible) rate was around 1.26, 1.27. So we expect a better protection against fluctuations starting this year.

Yes. We actually expect that the cash flow mainly will be fully hedged this way and also the fluctuation on the -- I would say on the value of the asset, which we cannot [reach] perfectly because we have also exposure to shekel -- the Israeli shekel. But we have seen that we're actually well-positioned from a hedging perspective.

Great. Did you have any other sort of -- Rannie, did you have any other sort of commentary you wanted to give? Obviously we lost you there, (multiple speakers) the financials.

Yes, yes, the comments -- and maybe because I was out of the call maybe I will repeat the (inaudible) that Kalia, actually mentioned, is one that we sold this year in Italy and Spain actually. It decreased in [evaluation] and generally (inaudible) happens from time to time. We are talking about average numbers. So there was about 3% to 4% less (inaudible).

This last year, 2014, that reflects -- or actually even impact on the revenues. This is one important issue to understand this year. Until now it looks very good. The other thing I think is to elaborate that the G&A -- and we also have in the wording, we have other expenses from the new development of the pump storage and other project which is the (inaudible) project (inaudible).

Rannie, just another comment if you are going over -- Rannie, just I want to add to the G&A that I didn't mention before looking in comparison to 2013. In 2013 we had income from enforcement of a bond of a (inaudible) contractor that went on liquidation. So if you neutralize this impact the G&A was quite [high] in 2013, which is more comparable to 2014.

Yes, but still (multiple speakers).

The income was approximately $0.6 million.

Yes. But this is something to -- I think important to understand that in the G&A we have all the development -- all the business developing expenses and this includes all kinds of project that we are working and are not yet in the stages we can allocate the cost to the project itself, it's still in the G&A and this is a -- [not a] significant amount of money. But this is the business development that we are doing.

I think that the financing expense -- we'll see it going down mainly because we'll not have the onetime cost of closing a swap which was around $1 million this year. And we'll see actually all the hedging reflected in the financial income. So I will not be surprised we will see zero close to zero financing expense this year. So that's mainly what I have to say. Have you discussed the dividend policy, Kalia?

No (multiple speakers) no, no, I did not, I left that to you.

Okay. So we also declared today about a dividend policy. We intend in our next Board meeting, after checking [fuel] tax issues to declare the dividend amount.

And we think that this type of Company should be able to do a constant I would say a dividend policy and will also give us the -- I would say the freedom to that we think that if the share prices are presenting a real I would say opportunity price for the Company we will also be able to do a buyback.

So this is something that we probably should think is important for the investors to know. And if anyone has any questions I would be more than happy to answer.

Yes, operator, do any of the callers have questions?

(Operator Instructions).

Okay, operator, I have an email question from the webcast. Regarding the dividend policy, will this be then a one-time annually reviewed and voted on type of event?

I think we didn't decide about this yet, but we intend to do it usually after publishing the yearly results and then the Board will have a look at the results, we'll have a look at the future cash flow and we'll take the decision according to all these -- I would say all this information. But probably it will be one (inaudible) I guess. If there will be an unusual event [during] that will -- actually will allow to do more than one distribution we probably will do it.

Great.

(Operator Instructions).

Well, I have no other questions on the webcast. I know we answered a couple kind of in the middle there. So I guess with that we can wrap it up. If you have any other closing comments, Kalia, Rannie, please go ahead and with that we can close the call.

No, I have no other comments. What I can say is we are working hard on new projects and we are very optimistic about it. It is more long-term projects like the pump storage and we also are looking for new more bargain deals even though the market condition is to come I would say -- it is becoming a harder, tougher job to find deals in the bargain price, but we have some that we are working on. And I hope that very soon we can come with information about it. No, that is all.

Great. Great. Well, everyone, thank you for your time and we look forward to giving you an update then in the -- on the next call.

And, ladies and gentlemen, again, that does conclude today's conference. Thank you all for joining.