Exhibit 99.3
 
Operating and Financial Review and Prospects
 
The following discussion and analysis is based on and should be read in conjunction with our unaudited condensed consolidated interim financial statements for the six month period ended June 30, 2018 furnished herewith as Exhibit 99.2 and in conjunction with our consolidated financial statements, including the related notes, and the other financial information included in our annual report on Form 20-F for the year ended December 31, 2017, or the Annual Report, filed with the Securities and Exchange Commission, or SEC, on March 29, 2018. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and in the Annual Report.

IFRS

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

Overview

We are involved in the production of renewable and clean energy. We own 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., or 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 operating 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) Talasol Solar S.L., or 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, or 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, or the Manara Project.


 

The following table includes information concerning our revenues per facility:

Plant Title
 
Installed/ production Capacity1
 
Location
 
Technology of Panels
 
Connection to Grid
 
FiT (€/kWh)2
 
Revenue in the six months ended June 30, 2017 (in thousands)3
 
Revenue in the six months ended June 30, 2018 (in thousands)3
 
“Troia 8”
995.67 kWp
Province of Foggia, Municipality of Troia, Puglia region, Italy
Fix
January 14, 2011
 
0.318
290
€255
“Troia 9”
995.67 kWp
Province of Foggia, Municipality of Troia, Puglia region, Italy
Fix
January 14, 2011
 
0.318
€296
€262
“Del Bianco”
734.40 kWp
Province of Macerata, Municipality of Cingoli, Marche region, Italy
Fix
April 1, 2011
 
0.322
€197
€175
“Giaché”
730.01 kWp
Province of Ancona, Municipality of Filotrano, Marche region, Italy
Duel Axes Tracker
April 14, 2011
 
0.322
249
€223
“Costantini”
734.40 kWp
Province of Ancona, Municipality of Senigallia, Marche region, Italy
Fix
April 27, 2011
 
0.322
€204
€189
“Massaccesi”
749.7 kWp
Province of Ancona, Municipality of Arcevia,  Marche region, Italy
Duel Axes Tracker
April 29, 2011
 
0.322
€233
€214
“Galatina”
994.43 kWp
Province of Lecce, Municipality of Galatina, Puglia region, Italy
Fix
May 25, 2011
0.318
254
€198
 
2

 
Plant Title
Installed/ production Capacity1
Location
Technology of Panels
Connection to Grid
FiT (€/kWh)2
Revenue in the six months ended June 30, 2017 (in thousands)3
 
Revenue in the six months ended June 30, 2018 (in thousands)3
 
“Pedale (Corato)”
2,993 kWp
Province of Bari, Municipality of Corato, Puglia region, Italy
Single Axes Tracker
May 31, 2011
0.266
€900
€801
“Acquafresca”
947.6 kWp
Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy
Fix
June 2011
0.268
225
€204
“D‘Angella”
930.5 kWp
Province of Barletta-Andria-Trani, Municipality of Minervino Murge, Puglia region, Italy
Fix
June 2011
0.268
223
€204
“Soleco”
5,923.5 kWp
Province of Rovigo, Municipality of Canaro, Veneto region, Italy
Fix
August 2011
0.219
€1,083
€1,067
“Tecnoenergy”
5,899.5 kWp
Province of Rovigo, Municipality of Canaro, Veneto region, Italy
Fix
August 2011
0.219
€1,100
€1,038
“Rinconada II”
2,275 kWp
Municipality of Córdoba, Andalusia, Spain
Fix
July 2010
N/A
€436
€414
“Rodríguez I”
1,675 kWp
Province of Murcia, Spain
Fix
November 2011
N/A
€313
€306
“Rodríguez II”
2,691 kWp
Province of Murcia, Spain
Fix
November 2011
N/A
€516
€508
“Fuente Librilla”
1,248 kWp
Province of Murcia, Spain
Fix
June 2011
N/A
€249
€244
 
3

 
 
Plant Title
Installed/ production Capacity1
Location
Technology of Panels
Connection to Grid
FiT (€/kWh)2
Revenue in the six months ended June 30, 2017 (in thousands)3
 
Revenue in the six months ended June 30, 2018 (in thousands)3
 
“Talmei Yosef”4
9,400 kWp
Talmei Yosef, Israel
Fix
November 2013
0.98575 (NIS/kWh)
N/A
€4586
“Groen Gas Goor”
475 Nm3/h
Goor, the Netherlands
N/A
November 2017
N/A
N/A
€1,2037
“Goren Gas Oude-Tonge”
375 Nm3/h
Oude-Tonge, the Netherlands
N/A
June 2018
N/A
N/A
€1888
_________________________________
1. The actual capacity of a photovoltaic plant is generally subject to a degradation of 0.5%-0.7% per year, depending on climate conditions and quality of the solar panels.
 
2. In addition to the FiT payment, our Italian PV Plants have entered into agreements with energy brokers who purchase the electricity generated by our Italian PV Plants in consideration for the contractually agreed prices.
 
3.  These results are not indicative of future results due to various factors, including, as applicable, changes in the climate, the degradation of the solar panels and availability and quality of feedstock.
 
4. The acquisition of this PV Plant was consummated on October 18, 2017 and therefore revenues for the period prior to consummation of the acquisition are not reflected herein.
 
5. The tariff of NIS 0.9631/kWh is fixed for a period of 20 years and is updated once a year based on changes to the Israeli CPI of October 2011. The tariff increased from NIS 0.976/kWh in November 2013 to NIS 0.9857/kWh in 2017.
 
6. As a result of the accounting treatment of the Talmei Yosef project as a financial asset, out of total proceeds from the sale of electricity of approximately €2 million for the six months ended June 30, 2018, only revenues related to the ongoing operation of the plant in the amount of approximately €0.5 million are recognized as revenues.
 
7. This Facility has been operational since December 2017 and therefore revenues for the prior periods are not reflected herein.
 
8. This Facility has been operational since June 2018 and therefore revenues for the prior periods are not reflected herein.
 
Our ordinary shares are listed on the NYSE American and on the Tel Aviv Stock Exchange under the symbol ELLO. The address of our registered office is 9 Rothschild Blvd., Tel Aviv, Israel.

Presentation Currency

Effective December 31, 2017, we changed the presentation currency of our consolidated financial statements from the US dollar to the euro to better reflect the profile of our assets, revenues, costs and cash flows, which are primarily generated in euro, and hence, to better present our financial performance. All comparative financial information has been restated into euro in this Report.
 
4


Certain Critical Accounting Policies and Estimates

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

The critical accounting policies described in Item 5 of our Annual Report and in notes 2 and 3 of our unaudited condensed consolidated interim financial statements as at June 30, 2018, are those that require management’s more significant judgments and estimates used in the preparation of our condensed consolidated interim financial statements.

Our reportable segments, which form our strategic business units, are as follows: Photovoltaic power plants presented per geographical areas (Italy, Spain and Israel), 9.375% indirect interest in Dorad, anaerobic digestion plants (Bio Gas) in the Netherlands and pumped storage hydro power plant in Manara, Israel. For more information see note 8 of our unaudited condensed consolidated interim financial statements as at June 30, 2018.

Results of Operations

Six Months Ended June 30, 2018 Compared with Six Months Ended June 30, 2017

Revenues were approximately €8.2 million for the six months ended June 30, 2018, compared to approximately €6.8 million for the six months ended June 30, 2017. The increase in revenues for the first half of 2018 reflects the commencement of operations at our two waste-to-energy projects in the Netherlands and the results of the Talmei Yosef project, acquired in October 2017, partially offset by lower revenues in Italy due to relatively lower radiation levels compared to the first half of 2017.

Italian PV Segment.  Revenues from our Italian PV segment were approximately €4.8 million for the six months ended June 30, 2018, compared to approximately €5.3 million for the six months ended June 30, 2017. The decrease is mainly due to relatively lower radiation levels compared to the first half of 2017.

Spanish PV Segment.  Revenues from our Spanish PV segment were approximately €1.5 million for each of the six month periods ended June 30, 2018 and 2017.

Israeli PV Segment.  The segment results for our PV Plant located in Israel are presented under the fixed asset model and not under the IFRIC 12 financial asset model as applied in our financial statements. Proceeds for electricity produced by our Israeli PV segment were approximately €2 million for the six months ended June 30, 2018, compared to 0 for the six months ended June 30, 2017, as the Talmei Yosef project was acquired in October 2017.
 
5


Dorad Segment.  Our share in the revenues of Dorad was approximately €27.7 million (approximately NIS 118.1 million) for the six months ended June 30, 2018, compared to approximately €28.7 million (approximately NIS 113.6 million) for the six months ended June 30, 2017. The increase in Dorad’s NIS denominated revenues is mainly due to increased electricity production sold to Dorad’s customers for the six months ended June 30, 2018. The decrease in Dorad’s revenues translated into euro is a result of the increase of the euro/NIS exchange rate during the six months ended June 30, 2018 (average euro/NIS exchange rate of 4.2592) compared to the six months ended June 30, 2017 (average euro/NIS exchange rate of 3.9554).

Netherlands Biogas Segment.  Revenues from our Netherlands biogas segment were approximately €1.4 million for the six months ended June 30, 2018, compared to 0 for the six months ended June 30, 2017. The increase is due to the commencement of operations of our two waste-to-energy projects in the Netherlands during December 2017 and June 2018.

Operating expenses were approximately €2.6 million for the six months ended June 30, 2018, compared to approximately €0.9 million for the six months ended June 30, 2017. The increase in operating expenses is mainly attributable to additional operating expenses resulting from the commencement of operations at our two waste-to-energy projects in the Netherlands and from the Talmei Yosef project. Depreciation expenses were approximately €2.8 million for the six months ended June 30, 2018, compared to approximately €2.2 million for the six months ended June 30, 2017.

Italian PV Segment.  Operating expenses in connection with our Italian PV segment were approximately €0.8 million for the six months ended June 30, 2018, compared to approximately €0.6 million for the six months ended June 30, 2017. The increase is mainly due to insurance indemnification received in 2017 by one of our Italian subsidiaries that partially offset the operating expenses.

Spanish PV Segment.  Operating expenses in connection with our Spanish PV segment were approximately €0.3 million for each of the six month periods ended June 30, 2018 and 2017.

Israeli PV Segment.  Operating expenses in connection with our Israeli PV segment were approximately €0.3 million for the six months ended June 30, 2018, compared to 0 for the six months ended June 30, 2017. The increase is due to the acquisition of the Talmei Yosef project in October 2017.

Dorad Segment.  Operating expenses in connection with our Dorad segment were approximately €21.7 million (approximately NIS 92.6 million) for the six months ended June 30, 2018, compared to approximately €22.6 million (approximately NIS 89.4 million)  for the six months ended June 30, 2017. The increase in Dorad’s NIS denominated operating expenses is mainly due to increased production and an increase in the price of natural gas resulting from an increase in the USD/NIS exchange rate during the six months ended June 30, 2018 (USD/NIS exchange rate as of June 30, 2018 was 3.65 compared to 3.496 as of June 30, 2017). The decrease in Dorad’s operating expenses translated into euro is a result of the increase of the euro/NIS exchange rate during the six months ended June 30, 2018 (average euro/NIS exchange rate of 4.2592) compared to the six months ended June 30, 2017 (average euro/NIS exchange rate of 3.9554).
 
6


Netherlands Biogas Segment.  Operating expenses in connection with our Netherlands biogas segment were approximately €1.3 million for the six months ended June 30, 2018, compared to 0 for the six months ended June 30, 2017. The increase is due to the commencement of operations of our two waste-to-energy projects in the Netherlands during December 2017 and June 2018.

Project development costs were approximately €1.8 million for the six months ended June 30, 2018, compared to approximately €1.4 million for the six months ended June 30, 2017. The increase in project development costs is mainly attributable to consultancy expenses in connection with the Talasol Project.

General and administrative expenses were approximately €2 million for the six months ended June 30, 2018, compared to approximately €1.2 million for the six months ended June 30, 2017. The increase in general and administrative expenses resulted mainly from payment of approximately €0.4 million pursuant to a VAT assessment agreement from previous years in Israel and related expenses and from increased expenses resulting from the commencement of operations of our two waste-to-energy projects in the Netherlands and from the Talmei Yosef project.

Our share of profits of equity accounted investee, after elimination of intercompany transactions, was approximately €0.5 million for the six months ended June 30, 2018, compared to a loss of approximately €0.07 million in the six months ended June 30, 2017. The increase in the Company’s share of profit of equity accounted investee is mainly attributable to an increase in sales of electricity by Dorad due to increased production and lower financing expenses incurred by Dorad for the six months ended June 30, 2018 as a result of the CPI indexation of loans from banks and related parties.

Financing expenses, net was approximately €0.9 million for the six months ended June 30, 2018, compared to approximately €5.8 million for the six months ended June 30, 2017. The decrease in financing expenses was mainly due to: (i) a profit of approximately €0.3 million for the six months ended June 30, 2018 in connection with the reevaluation of derivatives, compared to a loss of approximately €1.6 million for the six months ended June 30, 2017, and (ii) income in connection with exchange rate differences amounting to approximately €0.7 million in the six months ended June 30, 2018, mainly in connection with our NIS denominated Debentures and the loan to an equity accounted investee, caused by the 2.5% revaluation of the euro against the NIS during this period, compared to expenses in connection with the exchange rate differences amounting to approximately €2.8 million caused by the 1.4% devaluation of the euro against the NIS during the six months ended June 30, 2017.

Tax benefit was approximately €0.2 million for the six months ended June 30, 2018, compared to taxes on income of approximately €0.6 million for the six months ended June 30, 2017. The tax benefit for the six months ended June 30, 2018 resulted mainly from deferred tax income included in connection with the application of a tax incentive in the Netherlands claimable upon filing the relevant tax return by reducing the amount of taxable profit.
 
7


Net loss was approximately €1.1 million for the six months ended June 30, 2018, compared to approximately €5.4 million for the six months ended June 30, 2017.

Total other comprehensive loss was approximately €1 million for the six months ended June 30, 2018, compared to a profit of approximately €0.7 million for the six months ended June 30, 2017. The change was mainly due to changes in fair value of cash flow hedges and from foreign currency translation differences on New Israeli Shekel denominated operations, as a result of fluctuations in the euro/NIS exchange rates.

Total comprehensive loss was approximately €2.2 million for the six months ended June 30, 2018, compared to approximately €4.7 million for the six months ended June 30, 2017.

Impact of Inflation and Fluctuation of Currencies

We hold cash and cash equivalents, marketable securities and restricted cash in various currencies, mainly in euro and NIS. Our investments in our Italian and Spanish PV Plants, in the Waste-to-Energy projects in the Netherlands and in the Talasol Project are denominated in euro and our investments in Dori Energy, in the Talmei Yosef PV Plant and in the Manara Project are denominated in NIS. Our Debentures are denominated in NIS and the interest and principal payments are made in NIS, the financing of the Talmei Yosef PV Plant is denominated in NIS and the financing we have obtained in connection with five of our PV Plants is denominated in euro and bears interest that is based on EURIBOR rate. Due to the change in our presentation currency, effective December 31, 2017, from the U.S. dollar to the euro, we translated past financial results into euro as more fully described in note 2 to our unaudited condensed consolidated interim financial statements as at June 30, 2018. We therefore are affected by changes in the prevailing euro/NIS exchange rates. We cannot predict the rate of appreciation/depreciation of the NIS against the euro in the future, and whether these changes will have a material adverse effect on our finances and operations.

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

   
Year ended December 31,
   
Six months ended June 30,
 
   
2017
   
2016
   
2018
   
2017
 
Appreciation (Depreciation)  of the NIS against the Euro
   
2.7
%
   
(4.8
)%
   
2.5
%
   
(1.4
)%

The semi-annual rate of inflation in Israel was 0.9% in the six months ended June 30, 2018, compared to an inflation rate of approximately 0% in the six months ended June 30, 2017.

The representative NIS/euro exchange rate was NIS 4.255 for one euro on June 30, 2018 and NIS 3.986 for one euro on June 30, 2017. The average exchange rates for converting NIS to euro during the six-month periods ended June 30, 2018 and 2017 were NIS 4.259 and 3.965 for one euro, respectively. The exchange rate as of September 1, 2018 was NIS 4.212 for one euro.
 
8


Governmental Economic, Fiscal, Monetary or Political Policies or Factors that have or could Materially Affect our Operations or Investments by U.S. Shareholders

Governmental Regulations Affecting the Operations of our PV Plants and Waste-to-Energy facilities

Our PV Plants and Waste-to-Energy facilities are subject to comprehensive regulation and the revenue from the sale of energy produced includes mainly the incentives in the form of governmental subsidies. Any change in the legislation that affects our facilities could materially adversely affect our results of operations. A continued economic crisis in Europe and specifically in Italy, Spain and the Netherlands could cause the applicable legislature to reduce benefits provided to operators of electricity or energy manufacturing facilities or to revise the incentive regimes that currently governs the sale of electricity in the relevant countries.

For more information see “Item 3.D: Risk Factors - Risks Related to or Renewable Energy Operations,” “Item 3.D: Risk Factors - Risks Related to our Investment in Dori Energy,” “Item 3.D: Risk Factors - Risks Related to our Other Operations” and “Item 4.B: Material Effects of Government Regulations on the PV Plants” of our Annual Report.

Effective Israeli Corporate Tax Rate

Israeli companies are generally subject to company tax on their taxable income. The Israeli corporate tax rate was reduced from 26.5% to 25% as of January 1, 2016. On December 22, 2016, the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016, by which, inter alia, the corporate tax rate would be reduced from 25% to 23% in two steps. The first step was a rate of 24% as from January 2017 and the second step was a rate of 23% as from January 2018.
 
Liquidity and Capital Resources

As of September 1, 2018, we held approximately €47.5 million in cash and cash equivalents, approximately €5.4 million in marketable securities and approximately €2.2 million in restricted short-term and long-term cash and marketable securities.

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

We entered into various financing agreements in connection with the financing of our PV Plants and in January and June 2014 we issued the Series A Debentures and in March 2017 we issued the Series B Debentures.  The Talmei Yosef PV Plant has project financing as well. For more information concerning the various financing agreements we entered into and our Debentures, please refer to Item 5 of our Annual Report. In addition, in May 2018 five of our Italian subsidiaries entered into a €35.9 million project finance facility agreement, and a portion of the proceeds was used to repay certain outstanding project finance debts.  For more information see note 1.B. and note 9 of our unaudited condensed consolidated interim financial statements as at June 30, 2018.
 
9


We currently have no agreements, commitments or understandings for additional financing, however we intend to finance the remainder of our PV Plants by bank loans or other means of financing and will require additional funds in order to advance the Talasol Project and the Manara Project.

As of June 30, 2018, we had working capital of approximately €50 million.  In our opinion, our working capital is sufficient for our present requirements.

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

As of June 30, 2018, we held approximately €45.6 million in cash and cash equivalents, approximately €2.2 million in marketable securities and approximately €5.4 million in restricted marketable securities, short-term and long-term restricted cash and deposits, compared with approximately €24 million in cash and cash equivalents, approximately €2.2 million in  marketable securities and approximately €6.9 million in restricted marketable securities, short-term and long-term restricted cash and deposits we held at December 31, 2017.  The increase in cash and cash equivalents mainly resulted from the financing of five of our Italian PV Plants in May 2018.

From 2015 through September 1, 2018, we made capital expenditures of an aggregate amount of approximately NIS 48.6 million (approximately €11.4, based on the NIS/euro exchange rate as of June 30, 2018) in connection with the acquisition of the Talmei Yosef PV Plant. Our aggregate capital expenditure in connection with the acquisition of shares in U. Dori Energy Infrastructure Ltd., including the exercise of options to acquire additional shares of U. Dori Energy during 2015 and 2016, which increased our percentage holding to 50%, before principal loan repayments from Dori Energy, is approximately NIS 135.6 million (approximately 31.9 million, based on the NIS/euro exchange rate as of June 30, 2018). The aggregate capital expenditures in connection with the Manara Project, including amounts recorded in the general and administrative expenses, through September 1, 2018 were approximately NIS 19.9 million (approximately €4.7 million).From 2016 through September 1, 2018, capital expenditures incurred by the project companies in connection with the Waste-to-Energy projects in the Netherlands was approximately €18.3 million.

10


Cash flows

The following table summarizes our cash flows for the periods presented:

   
Six months ended June 30,
 
   
2017
   
2018
 
   
(euro in thousands)
 
Net cash from operating activities
   
593
     
2,267
 
Net cash used in investing activities
   
(18,933
)
   
(289
)
Net cash from financing activities
   
35,834
     
19,774
 
Exchange differences on balances of cash and cash equivalents
   
(1,836
)
   
(104
)
Increase in cash and cash equivalents
   
15,658
     
21,648
 
Cash and cash equivalents at beginning of period
   
22,486
     
23,962
 
Cash and cash equivalents at end of period
   
38,144
     
45,610
 

Operating activities

In the six months ended June 30, 2018, we had a net loss of approximately €1.1 million. Net cash from operating activities was approximately €2.3 million.

In the six months ended June 30, 2017, we had a net loss of approximately €5.4 million. Net cash from operating activities was approximately €0.6 million.

Investing activities

Net cash used in investing activities was approximately €0.3 million in the six months ended June 30, 2018, primarily due to the acquisition of fixed assets in connection with the Waste-to-Energy projects in the Netherlands partially offset by proceeds from restricted cash, settlement of derivatives and the repayment of loan from an equity accounted investee.

Net cash used in investing activities was approximately €18.9 million in the six months ended June 30, 2017, primarily due to the acquisition of fixed assets in connection with the Waste-to-Energy projects in the Netherlands and advances on account of investments in the Talmei Yosef Project and the Talasol Project.

Financing activities

Net cash from financing activities in the six months ended June 30, 2018 was approximately €19.8 million, resulting mainly from an amout of €33.7 million withdrawn on account of the facility agreement executed by five of our Italian subsidiaries, partially offset by the termination and early repayment of leasing agreements in the amount of approximately euro €4.2 million by two of our Italian subsidiaries and the termination and early repayment of a bank loan in the amount of approximately euro €9.2 million by an additional Italian subsidiary.
 
11


Net cash from financing activities in the six months ended June 30, 2017 was approximately €35.8 million, resulting mainly from the proceeds received in connection with the issuance of our Series B Debentures during March 2017 in the aggregate amount of approximately €31.2 million (based on the euro/NIS exchange rate at the time of issuance) and bank loans received in connection with the financing of the Waste-to-Energy projects in the Netherlands.

As of June 30, 2018, we were not in default of any financial covenants under the various financing agreements we executed or under the Deeds of Trust for our Debentures.

As of June 30, 2018, our total current assets amounted to approximately €64.4 million, of which approximately €45.6 million was in cash and cash equivalents and approximately €2.2 million was in marketable securities, compared with total current liabilities of approximately €14.4 million. Our assets held in cash equivalents are held in money market accounts and short-term deposits, substantially all of which are highly liquid investments readily convertible to cash with original maturities of three months or less at the date acquired.

As of June 30, 2017, our total current assets amounted to approximately €42.6 million, of which approximately €24 million was in cash and cash equivalents and approximately €2.2 million was in marketable securities, compared with total current liabilities of approximately €11.3  million.

The increase in our cash balance is mainly attributable to the proceeds received in connection with the facility agreement executed by five of our Italian subsidiaries.

Contractual Obligations

As of June 30, 2018, except as detailed above there have been no material changes to the contractual obligations we disclosed in our Annual Report.

Disclosure about Market Risk

We are exposed to a variety of risks, including foreign currency fluctuations and changes in interest rates. We regularly assess currency and interest rate risks to minimize any adverse effects on our business as a result of those factors and periodically use hedging transactions in order to attempt to limit the impact of such changes.
 
We hold cash and cash equivalents, marketable securities and restricted cash in various currencies, including euro and NIS. Our holdings in the Italian and Spanish PV Plants and in the Netherlands WtE Projects are denominated in euro and our holdings in the Talmei Yosef PV Plant and in Dori Energy are denominated in NIS. The financing we have in connection with our PV Plants and the WtE Projects is denominated in euro and the financing we have in connection with our PV Plants bears interest that is based on EURIBOR rate. Our Debentures and the project finance debt of the Talmei Yosef PV Plant are denominated in NIS and are to be repaid (principal and interest) in NIS.

Inflation and Fluctuation of Currencies

As detailed in our Annual Report, we previously utilized forward transactions to manage the foreign exchange risk resulting from our euro based operations and we entered into two Cross Currency Swap transactions in connection with the issuance of our Series B Debentures.
 
12


Interest Rate

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

For more information concerning hedging transaction, including transactions entered into in connection with the facility agreement executed by five of our Italian subsidiaries, see note 1.B and note 7 of our unaudited condensed consolidated interim financial statements as at June 30, 2018.

Forward-Looking Statements

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

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

We warn you that forward-looking statements are only predictions. Actual events or results may differ as a result of risks that we face. Forward-looking statements speak only as of the date they were made and we undertake no obligation to update them.
 
13