Enlight Renewable Energy Ltd. — FY2022 Form 20-F
Period note: This filing is the audited annual report for the fiscal year ended December 31, 2022, not a standalone fourth-quarter report. It does not provide a clear set of Q4-only financial results. Figures are in U.S. dollars unless noted; the statements use IFRS. The company’s functional currency is the Israeli shekel.
Business context and reporting period
Enlight develops, finances, constructs, owns and operates utility-scale renewable-energy projects, primarily earning revenue from electricity sales under long-term power purchase agreements (PPAs), with some merchant-market exposure. It operates across solar, wind and storage markets. The company listed on Nasdaq in February 2023 and remained listed on the Tel Aviv Stock Exchange.
As of March 15, 2023, its portfolio totaled approximately 19.0 GW of generation capacity and 20.6 GWh of storage capacity, including 4.5 GW and 2.7 GWh, respectively, of Mature Projects. These are post-year-end portfolio figures, not December 31, 2022 balances.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $192.2 million | $102.5 million |
| Gross profit / margin | $111.2 million / 57.8% | $61.2 million / 59.8% |
| Operating profit / margin | $90.6 million / 47.2% | $34.4 million / 33.6% |
| Net profit | $38.1 million | $21.7 million |
| Net profit attributable to company shareholders | $24.7 million | $11.2 million |
| Adjusted EBITDA (non-IFRS) | $129.9 million | $66.2 million |
| Cash from operating activities | $90.4 million | $52.0 million |
Revenue rose 88%, driven mainly by new projects reaching operation, including Gecama, Emek Habacha and Selac. Electricity and facility-operation revenue increased 92% to $181.1 million; construction and management-services revenue increased 36% to $11.1 million. PPA revenue represented about 68% of total revenue in 2022, down from 86% in 2021, while merchant revenue increased to about 26% from 6%.
Gross margin declined about 2 percentage points as depreciation and amortization rose with the expansion of operating assets. Operating profit included $13.8 million of other income, principally from a downward revision to Clēnera acquisition earn-out and put-option estimates. Adjusted EBITDA is a management-defined non-IFRS measure; its reconciliation excludes, among other items, finance income and expenses, taxes, depreciation and amortization, share-based compensation and other income.
Cash flow, balance sheet and liquidity
- Operating cash flow was $90.4 million. Investing activities used $820.0 million, primarily for project development and construction; financing activities provided $684.7 million. Cash and cash equivalents fell by $44.9 million, to $193.9 million, before exchange-rate effects; the year-end balance was $193.9 million versus $265.9 million a year earlier.
- At December 31, 2022, total assets were $3.53 billion, liabilities $2.48 billion and equity $1.05 billion. Current assets were $423.7 million and current liabilities $385.3 million (current ratio approximately 1.10). Current assets included $92.1 million of restricted cash; another $38.7 million of restricted cash was non-current.
- The filing reports approximately $2.0 billion of consolidated indebtedness, net of deferred financing costs. The balance sheet separately shows $1.585 billion of bank and other financial-institution loans, $385.7 million of debentures and convertible debentures, and $90.9 million of loans from non-controlling interests. Lease liabilities were $99.6 million.
- At December 31, 2022, variable-rate debt was approximately $163.1 million net of deferred financing costs; fixed-rate debt was approximately $1.8 billion. Management estimated that a 2% rate change, assuming unchanged variable debt, would affect annual interest expense by approximately $895,000. Project finance debt was largely non-recourse and subject to covenants and distribution restrictions.
- Management stated that cash, cash equivalents, short-term deposits and operating cash flow were expected to support liquidity needs for at least 12 months. After year-end, the February 2023 Nasdaq IPO generated approximately $270.7 million in net proceeds.
Material changes and unusual items
- Revenue growth reflected new projects entering commercial operation and the April 2022 reclassification of Halutziot from a financial asset to a fixed asset. That change increased reported 2022 revenue by approximately $14.6 million and changed the presentation of related proceeds and finance income.
- New operating projects drove higher operating and maintenance costs and depreciation. The company also reported $5.5 million of Spanish windfall taxes within Gecama operating costs, in addition to balancing costs on merchant electricity sales.
- Finance expenses rose to $62.6 million from $37.2 million; finance income declined to $23.3 million from $30.3 million. The company cited project additions, Israeli CPI indexation and the Halutziot accounting change as factors.
- Investment spending increased to $820.0 million from $644.6 million, while financing cash inflows declined to $684.7 million from $752.3 million. The August 2022 private share placement raised approximately $123.6 million according to the narrative; the audited cash-flow statement records $206.6 million of share issuance for the year, so the full-period issuance includes other share activity.
- The company reported $38.1 million of 2022 net profit in the audited statements. A summary table in the supplied filing text appears to reverse the 2021 and 2022 net-profit figures; investors should rely on, and verify against, the audited statements and original filing.
Outlook, risks and contingencies
The filing gives no formal numerical earnings or revenue guidance. Management expects revenue to grow as projects under construction, in pre-construction or in development reach operation, and through inflation-linked PPAs and merchant sales. It also said costs may rise as the operating portfolio expands. As of March 15, 2023, approximately 63% of Mature Project capacity was contracted, with an average remaining PPA term of 16 years; approximately 18% was exposed to merchant risk. These are management disclosures and forward-looking expectations, not guaranteed outcomes.
Key risks include project permitting, interconnection and transmission access, construction delays and cost inflation, equipment availability and trade restrictions, counterparty and supplier performance, weather-dependent generation, curtailment, electricity-price volatility, and the availability and cost of project and tax-equity financing. Additional exposures include debt covenants and refinancing, interest and currency movements, European energy price caps and taxes, regulatory or incentive changes, and geopolitical conditions in Israel. The company disclosed a 2021 cyberattack on a small Israeli facility that caused no material damage and a 2022 email-account compromise that led to a payment to a fraudulent third party.
The company said it was not party to litigation or proceedings expected to materially adversely affect its financial position, results or liquidity. It reported that disclosure controls were effective at the reasonable-assurance level as of year-end; management’s internal-control assessment and the auditor’s attestation were omitted under the transition rules for newly public companies. The financial statements received an unmodified audit opinion.
Important facts for investors to verify
- Confirm annual versus Q4 scope: the filing reports FY2022 results and does not clearly provide standalone Q4 financial statements or metrics.
- Check the audited statements for net profit and shareholder-attributable profit, given the apparent reversal of annual net-profit figures in one summary table.
- Reconcile the debt definition and maturity schedule, including project debt, convertible debentures, non-controlling-interest loans, lease liabilities, restricted cash and covenant terms.
- Assess how much of operating cash flow and reported profit depends on financial-asset accounting, the Halutziot reclassification, the Clēnera earn-out adjustment and merchant-market revenues.
- Track project execution, PPA amendments, interconnection milestones, storage procurement, financing commitments and the company’s ability to deliver its stated pipeline.
- Monitor merchant hedges, price-cap and windfall-tax exposure, currency and interest-rate sensitivity, and the impact of project concentration; Gecama accounted for 23% of 2022 revenue and Blacksmith 15%.
- Review post-year-end changes, including IPO proceeds, share-count dilution, the reverse share split and the status of Clēnera and Parasol earn-outs.