SINGAPORE, April 19, 2021 /PRNewswire/ -- Kenon Holdings
Ltd. (NYSE: KEN) (TASE: KEN) ("Kenon") announces
its results for 2020 and updates to its businesses.
Recent Highlights
Qoros
- Kenon's subsidiary Quantum has entered into an agreement to
sell all of its remaining 12% interest in Qoros for a total
purchase price of RMB1.56 billion
(approximately $238 million).
Kenon
- In April 2021, Kenon's board of
directors approved an interim cash dividend of $1.86 per share (approximately $100 million in total) (the
"Dividend").
- Kenon's net profit in 2020 was $496
million, as compared to a net loss of $22 million in 2019.
ZIM
- In February 2021, ZIM completed
an initial public offering of its shares raising $204 million in net proceeds.
- Financial results:
-
- ZIM's net profit in 2020 was $524
million, as compared to a net loss of $13 million in 2019.
OPC
- In January 2021, OPC completed
the acquisition of Competitive Power Ventures group
("CPV").
- Financial results:
-
- OPC's revenues in 2020 increased to $386
million, as compared to $373
million in 2019.
- OPC's net loss in 2020 was $13
million, as compared to net profit of $34 million in 2019 (including the negative
impact of $12 million relating to
non-recurring acquisition expenses in 2020 and $4 million relating to non-recurring revenue in
2019).
- OPC's EBITDA[1] in 2020 decreased to $75 million, as compared to $105 million in 2019.
Discussion of Results for the Year ended December 31, 2020
Kenon's consolidated results of operations from its operating
companies essentially comprise the consolidated results of OPC
Energy Ltd ("OPC"). The results of Qoros Automotive Co.,
Ltd. ("Qoros") (for four months until we reduced our stake
in Qoros to 12% on April 29, 2020)
and ZIM Integrated Shipping Ltd. ("ZIM") are reflected under
results from associates.
See Exhibit 99.2 of Kenon's Form 6-K dated April 19, 2021 for summary Kenon consolidated
financial information; summary OPC consolidated financial
information; a reconciliation of OPC's EBITDA (which is a non-IFRS
measure) to net profit and summary operational information of each
of OPC's generation businesses.
OPC
The following discussion of OPC's results of operations is
derived from OPC's consolidated financial statements, as translated
into US dollars.
Summary Financial Information of OPC
|
2020
|
2019
|
|
$
millions
|
Revenue
|
386
|
373
|
Cost of sales
(excluding depreciation and amortization)
|
282
|
256
|
Finance expenses,
net
|
50
|
26
|
Net
(loss)/profit
|
(13)
|
34
|
EBITDA1
|
75
|
105
|
|
|
|
1
Includes non-recurring acquisition expenses of $12 million in 2020,
and non-recurring revenue of $4 million in 2019.
|
Revenue
|
|
For the year
ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
millions
|
|
Revenue from energy
generated by OPC and sold to private customers
|
|
|
246
|
|
|
|
261
|
|
Revenue from energy
purchased by OPC and sold to private customers
|
|
|
29
|
|
|
|
16
|
|
Revenue from private
customers in respect of infrastructures services
|
|
|
80
|
|
|
|
76
|
|
Revenue from energy
sold to the System Administrator
|
|
|
15
|
|
|
|
3
|
|
Revenue from sale of
steam
|
|
|
16
|
|
|
|
17
|
|
Total
|
|
|
386
|
|
|
|
373
|
|
OPC's revenue from the sale of electricity to private customers
derives from electricity sold at the generation component tariffs,
as published by the Israeli Electricity Authority ("EA"),
with some discount. Accordingly, changes in the generation
component tariffs generally affect the prices paid under PPAs by
customers of OPC-Rotem and OPC-Hadera. The weighted-average
generation component tariff for 2020, as published by the EA, was
NIS 0.2678 per KW hour. In 2019, the
weighted-average generation component tariff was approximately 8%
higher at NIS 0.2909 per KW hour.
OPC's revenues from sale of steam are linked partly to the price of
gas and partly to the Israeli Consumer Price Index.
Set forth below is a discussion of the changes in revenues by
category between 2020 and 2019.
- Revenue from energy generated by OPC and sold to private
customers – decreased by $15
million in 2020, as compared to 2019. As OPC's revenue is
denominated in NIS, translation of its revenue into US Dollars had
a positive impact of $10 million.
Excluding the impact of exchange rate fluctuations, these revenues
decreased by $25 million primarily as
a result of (i) a $21 million
decrease in revenues due to a decrease in the generation component
tariff, (ii) a $14 million decrease
due to maintenance of the OPC-Rotem power plant and (iii) a
$4 million decrease due to lower
consumption of OPC's customers, partially offset by an $14 million increase in revenues due to the
commercial operation of the OPC-Hadera power plant which started in
July 2020.
- Revenue from energy purchased by OPC and sold to private
customers – increased by $13
million in 2020, as compared to 2019, primarily as a result
of an increase in acquisition of energy for customers of the
OPC-Hadera power plant and the OPC-Rotem power plant during
maintenance periods for those plants.
- Revenue from private customers in respect of infrastructure
services – increased by $4
million in 2020, as compared to 2019. As OPC's revenue is
denominated in NIS, translation of its revenue into US Dollars had
a positive impact of $3 million.
Excluding the impact of exchange rate fluctuations, these revenues
increased by $1 million primarily as
a result of a $7 million increase due
to the commercial operation of the OPC-Hadera power plant partially
offset by (i) a $3 million decrease
due to lower consumption of OPC-Rotem's customers and (ii) a
$3 million decrease in infrastructure
tariffs.
- Revenue from energy sold to the System Administrator –
increased by $12 million in 2020, as
compared to 2019, primarily as a result of increases in sale of
energy by OPC-Rotem power plant and OPC-Hadera power plant to the
System Administrator.
Cost of Sales (Excluding Depreciation and
Amortization)
|
|
For the year
ended
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
$
millions
|
|
Natural gas and
diesel oil consumption
|
|
|
135
|
|
|
|
138
|
|
Payment to IEC for
infrastructure services and purchase of electricity
|
|
|
116
|
|
|
|
92
|
|
Natural gas
transmission
|
|
|
10
|
|
|
|
9
|
|
Operating
expenses
|
|
|
21
|
|
|
|
17
|
|
Total
|
|
|
282
|
|
|
|
256
|
|
- Natural gas and diesel oil consumption – decreased by
$3 million in 2020, as compared to
2019. As OPC's cost of sales is denominated in NIS, translation of
its cost of sales into US Dollars had a negative impact of
$5 million. Excluding the impact of
exchange rate fluctuations, OPC's cost of sales decreased by
$8 million primarily as a result of
(i) a $12 million decrease in
electricity generation due to maintenance and load reduction at the
OPC-Rotem power plant and (ii) a $7
million decrease due to a decrease in the gas price as a
result of the drop in generation component and USD-NIS exchange
rate fluctuations, partially offset by an $11 million increase in gas expenses due to the
commencement of commercial operations of the OPC-Hadera power
plant.
- Payment to IEC for infrastructures services and purchase of
electricity – increased by $24
million in 2020, as compared to 2019. As OPC's cost of sales
is denominated in NIS, translation of its cost of sales into US
Dollars had a negative impact of $4
million. Excluding the impact of exchange rate fluctuations,
OPC's cost of sales increased by $20
million primarily as a result of (i) a $13 million increase due to the commencement of
commercial operation of the OPC-Hadera power plant and start of
sales to customers and (ii) a $10
million increase due to an increase in acquisition of energy
as a result of maintenance and corresponding load reductions on the
OPC-Rotem power plant, partially offset by a $3 million decrease due to a decline in
infrastructure tariffs.
Finance Expenses, net
Finance expenses, net increased by approximately $24 million in 2020 as compared to 2019,
primarily as a result of (i) a $12
million one-off expense due to early repayment of Series A
debentures, (ii) a $6 million
increase as a result of commercial operation of the OPC-Hadera
power plant and the related discontinuance of capitalisation of
financing expenses, and (iii) a $5
million increase as a result of US Dollar – Israeli Shekel
exchange rate fluctuations.
Liquidity and Capital Resources
As of December 31, 2020, OPC had
cash and cash equivalents and short-term deposits of $562 million, debt service reserves (out of
restricted cash) of $46 million, and
total outstanding consolidated indebtedness of $921 million, consisting of $49 million of short-term indebtedness and
$872 million of long-term
indebtedness. All of OPC's debt at December
31, 2020 was denominated in NIS.
Recent Business Developments
CPV transaction
On January 25, 2021, OPC announced
that it has completed the acquisition of CPV. The details of the
acquisition are discussed in more detail in Kenon's Form 6-K dated
January 24, 2021.
Private Placement
In January 2021, OPC issued
10,300,000 new shares in a private placement for a purchase price
of approximately $107 million, at a
per share price of NIS 34.0. The
issuance of the shares resulted in Kenon's stake in OPC being
diluted to 58.6%.
Update on Tzomet Project
Tzomet Energy Ltd. ("Tzomet") is developing an open-cycle
natural gas-fired power station with capacity of approximately 396
MW in Israel. OPC expects that the
total cost of completing the Tzomet project will be approximately
NIS 1-1.5 billion (approximately
$0.3-0.5 billion). Construction of
the Tzomet project began in 2020, and is expected to reach
commercial operation in January 2023.
As of December 31, 2020, OPC had
invested an aggregate of NIS 694
million (approximately $216
million) in the project.
ZIM
IPO
In February 2021, ZIM successfully
completed an initial public offering of its shares raising
$204 million in net
proceeds. The issuance of shares in the IPO resulted in
Kenon's stake being diluted to 27.8%.
Discussion of ZIM's Results for 2020
For the year ended December 31,
2020, ZIM's net profit was $524
million, as compared to a loss of $13
million in 2019.
ZIM carried approximately 2,841 thousand TEUs in 2020
representing a 0.7% increase as compared to 2019, in which ZIM
carried approximately 2,821 thousand TEUs. The average freight rate
per TEU in 2020 was $1,229 per TEU,
as compared to $1,009 per TEU in
2019.
ZIM's revenues increased by 21.0% in 2020 to approximately
$4.0 billion, as compared to
approximately $3.3 billion in 2019,
primarily due to (i) an increase of $645
million in revenues from containerized cargo due to an
increase in average freight rate, (ii) an increase of $33 million in income from related services, and
(iii) an increase of $22 million in
income from slots and chartered vessels.
ZIM's operating expenses and cost of services increased by 0.9%
to approximately $2.84 billion, as
compared to approximately $2.81
billion in 2019, primarily due to (i) an increase in
expenses of related service and sundry of $39 million, (ii) an increase in cargo handling
expenses of $12 million, offset by
(iii) a decrease in bunker expenses of $25
million.
Qoros
Kenon's subsidiary Quantum (2007) LLC ("Quantum")
has entered into an agreement with the China-based investor related to the Baoneng
Group that holds 63% of Qoros (the "Majority Shareholder in
Qoros") to sell all of its remaining 12% interest in Qoros. The
key terms of the agreement are set forth below.
The total purchase price is RMB1.56
billion (approximately $238
million), which is the same valuation as the previous sales
by Quantum to the Majority Shareholder in Qoros. The deal is
subject to certain conditions, including a release of the share
pledge over the shares to be sold (substantially all of which have
been pledged to Qoros' lending banks), approval of the transaction
by the National Development and Reform Commission and registration
with the State Administration of Market Regulation.
An entity within the Baoneng Group has guaranteed the
obligations of the Majority Shareholder in Qoros under this
agreement.
The purchase price is to be paid over time pursuant to the
following schedule:
Installment
|
Amount
(RMB)
|
Percentage of
the
Aggregate Purchase
Price
|
Payment
Date
|
Deposit
|
78,000,000
|
5%
|
July 31, 2021, or
earlier if certain
conditions are met1
|
First
Payment
|
312,000,000
|
20%
|
September 30,
20211
|
Second
Payment
|
390,000,000
|
25%
|
March 31,
20221
|
Third
Payment
|
390,000,000
|
25%
|
September 30,
2022
|
Fourth
Payment
|
390,000,000
|
25%
|
March 31,
2023
|
|
1 Payments
to a designated account.
|
The first and second payments, including the deposit, will be
paid into a designated account set up in the name of the Majority
Shareholder in Qoros over which Quantum has joint control.
According to the agreement, the transfer of these payments to
Quantum will occur by the end of Q2 2022, provided that the
relevant conditions are met in connection with the registration of
the shares to the purchaser subject to receipt by Quantum of
collateral acceptable to it. The agreement provides that the third
and fourth payments will be paid directly to Quantum.
Car Sales
Qoros sold approximately 12,600 cars in 2020 as compared to
approximately 26,000 cars in 2019. Qoros sold approximately 700
cars in Q1 2021 as compared to approximately 500 cars in Q1
2020.
Additional Kenon Updates
Kenon's (Unconsolidated) Liquidity and Capital
Resources
As of December 31, 2020, Kenon's
unconsolidated cash balance was $222
million. Following the payment of a dividend as described
below, Kenon's unconsolidated cash balance will be approximately
$122 million. There is no material
debt at the Kenon level.
Interim dividend for the year ending December 31, 2021
In April 2021, Kenon's board of
directors approved an interim cash dividend of $1.86 per share (an aggregate amount of
approximately $100 million) relating
to the year ending December 31, 2021,
payable to Kenon's shareholders of record as of the close of
trading on April 29, 2021 (the
"Record Date"), to be paid on or about May 6, 2021 (the "Payment Date").
In November 2020, Kenon paid a
dividend of approximately $120
million ($2.23 per share).
These dividends are consistent with Kenon's strategy of
realizing the value of its businesses for its shareholders.
The New York Stock Exchange's (the "NYSE") ex-dividend
date, which is the date on which Kenon's shares will begin trading
on the NYSE without the entitlement to the Dividend, is
April 28, 2021 (the "NYSE
Ex-Dividend Date"). The NYSE will adjust the price of Kenon's
shares on the NYSE Ex-Dividend Date to reflect the Dividend.
The Tel Aviv Stock Exchange's ("TASE") ex-dividend date,
which is the date on which Kenon's shares will begin trading on the
TASE without the entitlement to the Dividend, is April 29, 2021 (the "TASE Ex-Dividend
Date"). The TASE will adjust the price of Kenon's shares on the
TASE Ex-Dividend Date to reflect the Dividend.
We encourage you to contact your bank, broker, nominee or other
institution if you have any questions regarding the mechanics and
timing of having the Dividend attributable to your shares credited
to your account.
Singapore tax is not expected
to be imposed on Kenon's shareholders in connection with the
Dividend. Nevertheless, the Dividend may constitute a taxable event
to Kenon's shareholders according to their jurisdiction and the
relevant tax law applicable (including for the purpose of
withholding tax in accordance with applicable law and/or
regulation). Kenon's shareholders should consult their tax advisors
with respect to the federal, state, and/or any other applicable tax
consequences of the Dividend, and the potential imposition of
withholding taxes in connection with the Dividend.
About Kenon
Kenon is a holding company that operates dynamic, primarily
growth-oriented businesses. The companies it owns, in whole or in
part, are at various stages of development:
- OPC (58% interest) – a leading owner, developer and operator of
power generation facilities in the Israeli and US power
markets;
- ZIM (28% interest) – an international shipping company;
and
- Qoros (12% interest[2]) – a China-based automotive company.
For further information on Kenon's businesses and strategy, see
Kenon's publicly available filings, which can be found on the SEC's
website at www.sec.gov. Please also see
http://www.kenon-holdings.com for additional information.
[1] EBITDA is a non-IFRS measure. See Exhibit 99.2 of
Kenon's Form 6-K dated April 19, 2021
for the definition of OPC's EBITDA and a reconciliation to its net
profit for the applicable period.
[2] Kenon has agreed to sell its remaining 12%
interest to the majority shareholder in Qoros; upon completion of
this sale, Kenon will no longer be a shareholder of Qoros.
Caution Concerning Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to,
statements relating to Kenon's subsidiary Quantum's agreement to
sell its remaining interest in Qoros and related statements,
including statements relating to the terms of the transaction, the
timing for payments and transfer of shares and conditions to the
parties' obligations, statements about the
Dividend, including the Payment Date, the Record Date, the NYSE
Ex-Dividend Date, the TASE Ex-Dividend Date, the crediting of
accounts with the Dividend, the amount of cash to be retained
by Kenon following the Dividend and statements about the
expected Singapore tax treatment
of the Dividend, as well as statements relating to the
Tzomet project, including expected installed capacity and expected
cost and timing for completion of the project, and other
non-historical matters. These statements are based on current
expectations or beliefs and are subject to uncertainty and changes
in circumstances. These forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond Kenon's
control, which could cause the actual results to differ materially
from those indicated in such forward-looking statements. Such risks
include risks relating to completion of the transaction,
including risks relating to meeting the conditions to the
obligations under the transaction including risks relating to
regulatory approvals and the condition that the pledge over the
shares to be sold be released, and risks relating to the payments
to be made to Quantum and released from the designated account and
the timing thereof and risks related to the payment of the
Dividend and that the amounts retained by Kenon are not
sufficient to meet its cash needs, statements relating to the
expected tax treatment of the Dividend in Singapore, potential failure to
complete the development and reach commercial operation of the
Tzomet project as described or at all, including risks related to
costs associated with delays or higher costs in reaching commercial
operation and other risks and factors
including those risks set forth under the heading
"Risk Factors" in Kenon's Annual Report on Form 20-F filed with the
SEC and other filings. Except as required by law, Kenon undertakes
no obligation to update these forward-looking statements, whether
as a result of new information, future events, or
otherwise.
Contact Info
|
|
Kenon Holdings
Ltd.
|
|
Mark
Hasson
Chief Financial
Officer
markh@kenon-holdings.com
Tel: +65 9726
8628
|
|
|
|
|
|
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SOURCE Kenon Holdings Ltd.