SINGAPORE, June 7, 2021 /PRNewswire/ -- Kenon Holdings
Ltd. (NYSE: KEN) (TASE: KEN) ("Kenon") announces
its results for Q1 2021 and additional updates.
Recent Highlights
ZIM
- ZIM announced a special dividend to be paid in September 2021 of $2.00 per share, or approximately $238 million in the aggregate, of which
$64 million is payable to Kenon.
- Financial results1:
- ZIM's net profit in Q1 2021 was $590 million, as compared to a net loss of
$12 million in Q1 2020.
- ZIM's EBITDA2 in Q1 2021 increased to
$817 million, as compared to
$97 million in Q1 2020.
- In April 2021, ZIM
announced the early redemption of 100% of its Series 1 and
Series 2 notes, in aggregate amount of $349
million, to be completed in June
2021.
OPC
- In January 2021 OPC completed the
acquisition of Competitive Power Ventures group ("CPV").
- In May 2021, a
commencement order in connection with the development of the CPV
Maple Hill project was issued – a 126 MW power plant in
the United States that uses solar
technology. CPV has a 100% interest in the Maple Hill project.
- Financial results:
- OPC's revenues in Q1 2021 increased to $115 million (including $8
million contributed by CPV), as compared to $89 million in Q1 2020.
- OPC's net profit in Q1 2021 was approximately
break-even (including a net loss of $8
million contributed by CPV, largely due to $14 million in losses on change in fair value of
derivative financial instruments), as compared to net profit of
$11 million in Q1 2020.
- OPC's Adjusted EBITDA2 in Q1 2021
increased to $28 million, as compared
to $27 million in Q1 2020. Also in Q1
2021, OPC's proportionate share of EBITDA of CPV associated
companies was $18 million.
- In May 2021, OPC completed the
acquisition of a 27% equity interest in Gnergy whose business
focuses on vehicle charging stations.
Discussion of Results for the Three Months ended March 31, 2021
Kenon's consolidated results of operations from its operating
companies essentially comprise the consolidated results of OPC
Energy Ltd ("OPC"). Our share of the results of ZIM
Integrated Shipping Ltd. ("ZIM") are reflected under results
from associated companies.
See Exhibit 99.2 of Kenon's Form 6-K dated June 7, 2021 for summary Kenon consolidated
financial information; summary OPC consolidated financial
information; a reconciliation of OPC's Adjusted EBITDA (which is a
non-IFRS measure) to net profit; summary financial information of
associated companies of CPV; and a reconciliation of ZIM's EBITDA
(which is a non-IFRS measure) to net profit.
OPC
The following discussion of OPC's results of operations is
derived from OPC's consolidated financial statements, as translated
into US dollars. OPC completed the acquisition of CPV on
January 25, 2021 and CPV's results
are therefore included from that date.
Summary Financial Information of OPC
|
OPC
|
OPC
|
|
Israel
|
U.S.
|
Total
|
|
Q1
2021
|
Q1
2020
|
|
$
millions
|
Revenue
|
107
|
8
|
115
|
89
|
Cost of sales
(excluding depreciation and amortization)
|
74
|
5
|
79
|
58
|
Finance
(expenses)/income, net
|
(7)
|
1
|
(6)
|
(5)
|
Share of losses of
associated companies, net
|
-
|
(11)
|
(11)
|
-
|
Net
profit/(loss)
|
8
|
(8)
|
-
|
11
|
Attributable
to:
|
|
|
|
|
Equity holders of
OPC
|
|
|
2
|
8
|
Non-controlling
interest
|
|
|
(2)
|
3
|
|
|
|
|
|
Adjusted
EBITDA
|
29
|
(1)
|
28
|
27
|
Proportionate share
of EBITDA of associated companies
|
-
|
18
|
18
|
-
|
Revenue
|
For the period
ended March 31,
|
|
2021
|
|
2020
|
|
$
millions
|
Israel
|
|
Revenue from energy
generated by OPC (and/or purchased from other generators) and sold
to private customers
|
|
73
|
|
64
|
Revenue from energy
purchased by OPC at the TAOZ rate and sold to private
customers
|
|
3
|
|
-
|
Revenue from private
customers in respect of infrastructures services
|
|
21
|
|
17
|
Revenue from energy
sold to the System Administrator
|
|
5
|
|
3
|
Revenue from sale of
steam
|
|
5
|
|
5
|
|
|
107
|
|
89
|
U.S.
|
|
|
|
|
Revenue from sale of
electricity and provision of services in the U.S.
|
|
8
|
|
-
|
Total
|
|
115
|
|
89
|
|
|
|
|
|
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 2021, as published by the EA, was
NIS 0.2526 per KW hour, which was
approximately 5.7% lower than the weighted-average generation
component tariff in 2020 of NIS
0.2678 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 Q1 2021 and Q1 2020.
- Revenue from energy generated by OPC (and/or purchase from
other generators) and sold to private customers – increased by
$9 million in Q1 2021, as compared to
Q1 2020. As OPC's revenue is denominated in NIS, translation of its
revenue into US Dollars had a positive impact of $4 million. Excluding the impact of exchange rate
fluctuations, these revenues increased by $5
million primarily as a result of (i) an increase of
$10 million due to the commercial
operation of the OPC-Hadera power plant (which commenced operations
in July 2020) and (ii) an increase of
$2 million due to an increase in
consumption by customers of the OPC-Rotem power plant, partially
offset by (i) a $4 million decrease
due to a decline in the generation component tariff and (ii) a
$3 million decrease due to unplanned
maintenance of the OPC-Rotem power plant.
- Revenue from energy purchased by OPC at the TAOZ rate and
sold to private customers – increased by $3 million in Q1 2021, as compared to Q1 2020,
primarily as a result of an increase in energy purchased
during plant maintenance for customers of the OPC-Rotem and
OPC-Hadera power plants.
- Revenue from private customers in respect of infrastructure
services – increased by $4
million in Q1 2021, as compared to Q1 2020. As OPC's revenue
is denominated in NIS, translation of its revenue into US Dollars
had a positive impact of $1 million.
Excluding the impact of exchange rate fluctuations, these revenues
increased by $3 million primarily as
a result of a $4 million increase due
to the commercial operation of the OPC-Hadera power plant partially
offset by a $1 million decrease due
to decline in infrastructure tariffs.
- Revenue from energy sold to the System Administrator –
increased by $2 million in Q1 2021,
as compared to Q1 2020, primarily as a result of an increase in
sale of energy at a cogeneration tariff of the OPC-Hadera power
plant of $3 million partially offset
by a decrease of $1 million due to a
decrease in sale of energy to the System Administrator from the
OPC-Rotem power plant.
- Revenue from sale of electricity and provision of services
in the U.S. – increase is due to the completion of the
acquisition of CPV in January
2021.
Cost of Sales (Excluding Depreciation and
Amortization)
|
|
For the period
ended March 31,
|
|
|
2021
|
|
2020
|
|
|
$
millions
|
Israel
|
|
|
Natural gas and
diesel oil consumption
|
|
|
39
|
|
35
|
Payment to IEC for
infrastructure services and purchase of electricity
|
|
|
26
|
|
17
|
Natural gas
transmission
|
|
|
3
|
|
2
|
Operating
expenses
|
|
|
6
|
|
4
|
|
|
|
74
|
|
58
|
U.S.
|
|
|
|
|
|
Operating costs and
cost of services
|
|
|
5
|
|
-
|
Total
|
|
|
79
|
|
58
|
- Natural gas and diesel oil consumption – increased by
$4 million in Q1 2021, as compared to
Q1 2020. As OPC's cost of sales is denominated in NIS, translation
of its cost of sales into US Dollars had a negative impact of
$3 million. Excluding the impact of
exchange rate fluctuations, OPC's cost of sales increased by
$1 million primarily as a result of a
$5 million increase due to the
commercial operation of the OPC-Hadera power plant, partially
offset by (i) a $2 million decrease
in electricity generation due to unplanned maintenance and
load reduction at the OPC-Rotem power plant and (ii) a
$2 million decrease due to a
reduction in the gas price as a result of a decline in foreign
exchange rate of the dollar.
- Payment to IEC for infrastructures services and purchase of
electricity – increased by $9
million in Q1 2021, as compared to Q1 2020. As OPC's cost of
sales is denominated in NIS, translation of its cost of sales into
US Dollars had a negative impact of $1
million. Excluding the impact of exchange rate fluctuations,
OPC's cost of sales increased by $8
million primarily as a result of (i) a $7 million increase due to the commercial
operation of the OPC-Hadera power plant and (ii) a $2 million increase in energy purchase due to
maintenance and load reductions on the OPC-Rotem power plant,
partially offset by a $1 million
decrease relating to infrastructure expenses in OPC-Rotem.
- Operating costs and cost of services in the U.S. –
increase is due to the completion of the acquisition of CPV in
January 2021.
Finance Expenses, net
Finance expenses, net increased by approximately $1 million in Q1 2021 as compared to Q1 2020,
primarily as a result of a $3 million
increase as a result of commercial operation of the OPC-Hadera
power plant and the related discontinuance of capitalisation of
financing expenses, partially offset by a $2
million decrease due to exchange rate gains.
Share of losses of associated companies, net
|
For the period
ended March 31,
|
|
2021
|
|
2020
|
|
$
millions
|
|
|
Share of losses of
associated companies, net
|
|
(11)
|
|
|
-
|
|
|
|
|
|
|
The result for the period includes losses on changes in fair
value of derivative financial instruments totaling $14 million.
The acquisition of CPV by OPC was completed on January 25, 2021 and CPV results are therefore
included above from that date.
As at March 31, 2021,
proportionate share of debt (including interest payable) of CPV
associated companies was $884 million
and proportionate share of cash and cash equivalents and deposits
was $11 million.
For further details of the performance of associated companies
of CPV refer to OPC's immediate report published on the Tel Aviv
Stock Exchange ("TASE") on May 30,
2021 and the convenience English translations furnished
by Kenon on Form 6-K on June 1,
2021.
Liquidity and Capital Resources
As of March 31, 2021, OPC had cash
and cash equivalents and short-term deposits of $240 million, debt service reserves (out of
restricted cash) of $37 million, and
total outstanding consolidated indebtedness of $1,051 million, consisting of $50 million of short-term indebtedness and
$1,001 million of long-term
indebtedness. As of March 31, 2021, a
substantial portion of OPC's debt was denominated in NIS.
Recent Business Developments
CPV Maple Hill
In May 2021, a commencement order
for the construction work for the Maple Hill project was issued. A
construction agreement was signed and the rights to the project's
lands were acquired. The US-based solar plant has a capacity of
approximately 126 megawatts MWdc (approximately 100 megawatts
MWac). CPV has a 100% interest in this project. The aggregate cost
of the investment in the project is estimated to be approximately
$158 million and the project's
commercial operation date is expected to be in the second or third
quarter of 2022.
Gnergy
In May 2021, OPC acquired a 27%
equity interest in Gnergy whose business focuses on vehicle
charging stations. OPC is expected to acquire an additional 24%
equity interest by December 2021.
ZIM
Discussion of ZIM's Results for Q1 2021
For the period ended March 31,
2021, ZIM's net profit was $590
million, as compared to a loss of $12
million in Q1 2020. ZIM's EBITDA2 in Q1 2021 was
$817 million, as compared to
$97 million in Q1 2020.
ZIM carried approximately 818 thousand TEUs in Q1 2021
representing a 28% increase as compared to Q1 2020, in which ZIM
carried approximately 638 thousand TEUs. The average freight rate
per TEU in Q1 2021 was $1,925 per
TEU, as compared to $1,091 per TEU in
Q1 2020.
ZIM's revenues increased by 112% in Q1 2021 to approximately
$1.7 billion, as compared to
approximately $0.8 billion in Q1
2020, primarily due to an increase in revenues from containerized
cargo, reflecting increases in both freight rates and carried
volume.
ZIM's net income for Q1 2021 was $589.6
million, compared to a net loss of $11.9 million for Q1 2020. Net income for Q1 2021
also reflected a tax expense of $54
million, of which $34 million
was deferred tax expenses, which offsets previously recorded
deferred tax assets.
Special Dividend
In May 2021, ZIM's board of
directors approved a special cash dividend of approximately
$2.00 per share (an aggregate amount
of approximately $238 million),
payable to ZIM's shareholders of record as of the close of trading
on August 25, 2021, for payment on
September 15, 2021. Of this dividend,
approximately $64 million is payable
to Kenon.
Notes Repurchase
In March 2021, ZIM made an early
repayment of $85 million of its
Series 1 notes (Tranche C). In April
2021, ZIM announced an additional early repayment in respect
of its Series 1 and Series 2 notes (Tranches C and D), of aggregate
amount $349 million, to be completed
in June 2021. This reflects a full
settlement of such notes and will result in the termination of
the provisions and limitations relating to such notes.
Qoros
Sale of remaining 12% interest
In April 2021, Kenon's subsidiary
Quantum (2007) LLC entered into an agreement with the China-based investor related to the Baoneng
Group, which holds 63% of Qoros, to sell all of its remaining 12%
interest in Qoros. For key terms of the agreement, refer to the
Form 6-K published by Kenon on April 19,
2021.
Additional Kenon Updates
Kenon's (Unconsolidated) Liquidity and Capital
Resources
As of March 31, 2021, Kenon's
unconsolidated cash balance was $220
million. Following payment of approximately $100 million in dividends in May 2021, Kenon's unconsolidated cash balance is
currently approximately $120 million.
There is no material debt at the Kenon level.
Kenon's 2020 Annual Report on Form 20-F
As a reminder, Kenon's 2020 Annual Report on Form 20-F was filed
with the U.S. Securities and Exchange Commission ("SEC") on
April 19, 2021 and can be downloaded
from the SEC's website (http://www.sec.gov). Our 2020 Annual Report
on Form 20-F is also available on our corporate website
(http://www.kenon-holdings.com). Hard copies of our complete 2020
audited financial statements can be ordered, free of charge, by
contacting us.
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, operator and developer of
power generation facilities in the Israeli and U.S. power
markets;
- ZIM (28% interest) – an international shipping company;
and
- Qoros (12% interest3) – 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 Represents 100% of ZIM's results. Kenon's share of
ZIM's results for the quarter ended March
31, 2021 was 28% (32% for quarter ended March 31, 2020).
2 Adjusted EBITDA and EBITDA are non-IFRS measures.
See Exhibit 99.2 of Kenon's Form 6-K dated June 7, 2021 for the definition of ZIM's EBITDA
and OPC's Adjusted EBITDA and a reconciliation to their net profit
for the applicable period.
3 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 statements about ZIM's declared dividend and note
repurchase, , as well as statements relating to OPC's development
projects including,the Tzomet and Maple Hill projects, including
expected installed capacity and expected cost and timing for
completion of the project, statements relating to Kenon's agreement
to sell its remaining interest in Qoros 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 related to ZIM and the payment of its announced
dividend, risks relating to the potential failure to complete
the development and reach commercial operation of the Tzomet and
Maple Hill projects as described or at all, including risks related
to costs associated with delays or higher costs in reaching
commercial operation, risks relating to completion of the Qoros
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 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.