SINGAPORE, Nov. 30, 2021 /PRNewswire/ -- Kenon Holdings
Ltd. (NYSE: KEN) (TASE: KEN) ("Kenon") announces
its results for Q3 2021 and additional updates.
Q3 and Recent Highlights
Kenon
- In November 2021, Kenon's board
of directors approved an interim cash dividend of $3.50 per share (approximately $189 million in total) payable in January 2022.
- Kenon's profit for the third quarter of 2021 of $170 million was primarily impacted by ZIM's
results and a reduction in the carrying amount of Qoros.
ZIM
- ZIM announced an interim dividend to be paid in December 2021 of $2.50 per share, or approximately $296 million in the aggregate, of which
approximately $77 million is payable
to Kenon.
- Financial results[1]:
-
- ZIM reported net profit in Q3 2021 of $1,463 million, as compared to net profit of
$144 million in Q3 2020.
- ZIM reported Adjusted EBITDA[2] in Q3 2021 of $2,080 million, as compared to $262 million in Q3 2020.
OPC
- Financial results:
-
- OPC's revenues in Q3 2021 increased to $133 million (including $17 million contributed by CPV), as compared to
$117 million in Q3 2020.
- OPC's net loss in Q3 2021 was approximately $33 million (including the negative impact of
$75 million relating to a
non-recurring early repayment of project financing debt, partially
offset by net profit of $15 million
contributed by CPV), as compared to net profit of $5 million in Q3 2020.
- OPC's Adjusted EBITDA2 in Q3 2021 was $38 million, as compared to Adjusted EBITDA in Q3
2020 of $28 million. Also, in Q3 2021
OPC's proportionate share of profit and EBITDA of CPV associated
companies were $23 million and
$29 million, respectively.
- In September and October 2021, as
part of a rights offering, OPC raised proceeds of NIS329 million (approximately $102 million). Kenon participated in the offering
for total consideration of approximately NIS206 million (approximately $64 million).
Discussion of Results for the Three Months ended September 30, 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 November 30, 2021 for summary of Kenon's
consolidated financial information; summary of OPC's consolidated
financial information; a reconciliation of OPC's Adjusted EBITDA
(which is a non-IFRS measure) to net profit; summary of financial
information of OPC's subsidiaries; and a reconciliation of ZIM's
Adjusted 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.
Summary Financial
Information of OPC
|
|
OPC
|
OPC
|
|
Israel
|
U.S.
|
Total
|
|
Q3
2021
|
Q3
2020
|
|
$
millions
|
Revenue
|
116
|
17
|
133
|
117
|
Cost of sales
(excluding depreciation and amortization)
|
75
|
6
|
81
|
84
|
Finance expenses,
net
|
86
|
2
|
88
|
11
|
Share in profit of
associated companies, net
|
-
|
23
|
23
|
-
|
(Loss)/profit for the
period
|
(48)
|
15
|
(33)
|
5
|
Attributable
to:
|
|
|
|
|
Equity holders of
OPC
|
(38)
|
10
|
(28)
|
3
|
Non-controlling
interest
|
(10)
|
5
|
(5)
|
2
|
|
|
|
|
|
Adjusted
EBITDA2
|
36
|
2
|
38
|
28
|
Proportionate share
of EBITDA of associated companies
|
-
|
29
|
29
|
-
|
Revenue
|
|
|
|
For the three
months ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
$
millions
|
|
Israel
|
|
|
|
Revenue from energy
generated by OPC (and/or purchased from other generators) and sold
to private customers
|
|
|
73
|
|
|
|
68
|
|
Revenue from energy
purchased by OPC at the TAOZ rate and sold to private
customers
|
|
|
2
|
|
|
|
14
|
|
Revenue from private
customers in respect of infrastructure services
|
|
|
24
|
|
|
|
25
|
|
Revenue from energy
sold to the System Administrator
|
|
|
8
|
|
|
|
6
|
|
Revenue from sale of
steam
|
|
|
4
|
|
|
|
4
|
|
Revenue from virtual
supply
|
|
|
5
|
|
|
|
-
|
|
|
|
|
116
|
|
|
|
117
|
|
U.S.
|
|
|
|
|
|
|
|
|
Revenue from sale of
electricity and provision of services in the U.S.
|
|
|
17
|
|
|
|
-
|
|
Total
|
|
|
133
|
|
|
|
117
|
|
|
|
|
|
|
|
|
|
|
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 changes in revenues by
category between Q3 2021 and Q3 2020.
- Revenue from energy generated by OPC (and/or purchase from
other generators) and sold to private customers –
increased by $5 million in Q3 2021,
as compared to Q3 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, OPC's revenues increased by
$1 million primarily as a result of a
$5 million increase due to an
increase in availability of the OPC-Rotem power plant, partially
offset by a $4 million decrease due
to a decline in the generation component tariff.
- Revenue from energy purchased by OPC at the TAOZ rate and
sold to private customers – decreased by
$12 million in Q3 2021, as compared
to Q3 2020, primarily as a result of (i) an $11 million decrease in sale of energy purchased
for OPC-Rotem's customers due to an increase in availability of the
OPC-Rotem power plant and (ii) a $1
million decrease in sale of energy purchased for
OPC-Hadera's customers.
- Revenue from private customers in respect of infrastructure
services – decreased by $1
million in Q3 2021, as compared to Q3 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
decreased by $2
million primarily as a result of (i) a $1 million decrease due to a decline in
infrastructure tariffs for 2021 and (ii) a $1 million decrease in sale of energy purchased
for OPC-Rotem's customers.
- Revenue from energy sold to the System Administrator –
increased by $2 million in Q3 2021,
as compared to Q3 2020, primarily as a result of an increase in
sale of energy to the System Administrator from (i) the OPC-Hadera
power plant of $1 million and (ii)
from the OPC-Rotem power plant of $1
million.
- Revenue from virtual supply – increased due to the
supply of electricity to customers through the purchase of energy
from the System Administrator from September
2021. Since July 2021, OPC has
a license for the provision of "virtual supply" of energy purchased
from the System Administrator for consumers. Commencing
September 2021, the Company has
customers in the scope of about 110 MW for virtual supply.
- Revenue from sale of electricity and provision of services
in the U.S. – increased due to the completion of the
acquisition of CPV in January
2021.
Cost of Sales
(Excluding Depreciation and Amortization)
|
|
|
|
For the three
months ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
$
millions
|
|
Israel
|
|
|
|
Natural gas and
diesel oil consumption
|
|
|
35
|
|
|
|
36
|
|
Payment to IEC for
infrastructure services and purchase of electricity
|
|
|
26
|
|
|
|
39
|
|
Natural gas
transmission
|
|
|
3
|
|
|
|
3
|
|
Operating
expenses
|
|
|
6
|
|
|
|
6
|
|
Expenses for purchase
of electricity virtual supply
|
|
|
5
|
|
|
|
-
|
|
|
|
|
75
|
|
|
|
84
|
|
U.S.
|
|
|
|
|
|
|
|
|
Operating costs and
cost of services
|
|
|
6
|
|
|
|
-
|
|
Total
|
|
|
81
|
|
|
|
84
|
|
- Natural gas and diesel oil consumption – decreased
by $1 million in Q3 2021, as compared
to Q3 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 $2 million. Excluding the
impact of exchange rate fluctuations, OPC's cost of sales decreased
by $3 million primarily as a result
of (i) a $2 million decrease due to
the decline in gas price as a result of a decline in foreign
exchange rate of the dollar, and (ii) a $5
million decrease due to the receipt of compensation in
respect of a delay in the commercial operation of Energean,
partially offset by a $4 million
increase due to an increase in the gas consumption by the OPC-Rotem
plant due to an increase in capacity.
- Payment to IEC for infrastructures services and purchase of
electricity – decreased by $13
million in Q3 2021, as compared to Q3 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 $2
million. Excluding the impact of exchange rate fluctuations,
OPC's cost of sales decreased by $15
million primarily as a result of (i) a $10 million decrease due to load reductions and
increase in capacity of the OPC-Rotem power plant, (ii) a
$2 million decrease in energy
purchases due to increased availability of the OPC-Hadera power
plant, and (iii) a $3 million
decrease due to a decline in infrastructure tariffs and decline in
energy consumption by OPC-Rotem's customers.
- Expenses for purchase of electricity virtual supply –
increased due to the supply of electricity to customers through the
purchase of energy from the System Administrator from September 2021.
- Operating costs and cost of services in the U.S. –
increased due to the completion of the acquisition of CPV in
January 2021.
Finance Expenses, net
Finance expenses, net increased by approximately $77 million in Q3 2021 primarily as a result of a
$75 million expense due to an early
repayment of the OPC-Rotem project financing debt in
October 2021 as described below.
Share of Profit of Associated Companies, net
The table below sets forth OPC's share of profit of associated
companies, net, which consists of five of the six operating plants
in which CPV has interests which are accounted for as associated
companies.
|
|
For the three
months ended September 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
$
millions
|
|
|
|
|
|
Share of profit of
associated companies, net
|
|
|
23
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
The result for the period includes gains on changes in fair
value of derivative financial instruments totaling $13 million.
As at September 30, 2021, OPC's
proportionate share of debt (including interest payable) of CPV
associated companies was $953 million
and proportionate share of cash and cash equivalents and deposits
was $7 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 November
28, 2021 and the convenience English translations furnished
by Kenon on Form 6-K on November 29,
2021.
Liquidity and Capital Resources
As of September 30, 2021, OPC had
cash and cash equivalents and short-term deposits of $485 million, restricted cash of $60 million (including debt service reserves of
$38 million), and total outstanding
consolidated indebtedness of $1,524
million, consisting of $430
million of short-term indebtedness and $1,094 million of long-term indebtedness. As of
September 30, 2021, a substantial
portion of OPC's debt was denominated in NIS.
Business Developments
Series C Bonds Issuance
As previously reported, in September
2021, OPC issued Series C debentures at a par value of
NIS 851 million (approximately $266
million), bearing annual interest of 2.5%. The Series C
bonds are repayable over 12 semi-annual payments (which repayment
amounts vary, and range from 5% up to 16% of the total issued
amount) commencing in February 2024
with the final payment in August
2030. OPC used the proceeds from the Series C bonds for the
early repayment of project financing debt of OPC-Rotem as described
below.
Rights Issuance
In September 2021, OPC issued
rights to purchase approximately 13 million OPC shares to fund the
development and expansion of OPC's activity in the USA, with investors purchasing approximately
99.7% of the total shares offered in the rights offering. The gross
proceeds from the offering amounted to approximately NIS 329
million (approximately $102 million).
Kenon exercised rights for the purchase of approximately 8 million
shares for total consideration of approximately NIS 206 million (approximately $64 million), which included its pro rata share
and additional rights it purchased during the rights trading period
plus the cost to purchase these additional rights. As a result,
Kenon now holds approximately 58.8% of the outstanding shares of
OPC.
Early repayment of OPC-Rotem loan
In October 2021, OPC-Rotem repaid
early a project financing debt in the amount NIS 1,292 million (approximately $400 million) (including early repayment fees).
As part of the early repayment, OPC-Rotem recognized a one-off
expense totaling NIS 244 million
(approximately $75 million), in
respect of an early repayment fee of approximately NIS 188 million (approximately $58 million), net of tax. OPC and the minority
investor in OPC-Rotem extended to OPC-Rotem loans (pro rata to
their ownership) to finance the early repayment totaling
(principal) NIS 1,130 million (approximately $350 million). A significant portion of OPC's
portion of NIS 904 million
(approximately $280 million) was
funded by the issuance of Series C debentures as described
above.
Belltown PSA
In October 2021, CPV entered into
agreements to acquire the rights in two solar projects under
development in the PJM market in the
United States, one in Kentucky (approximately 98 MW) and one in
Illinois (approximately 360 MW)
for approximately $9 million plus
contingent consideration, which together with the amount paid on
completion date, may reach approximately $46
million. The contingent consideration is payable in
installments, subject to meeting the Projects' development
milestones.
ZIM
Discussion of ZIM's Results for Q3 2021
For the quarter ended September 30,
2021, ZIM's net profit was $1,463
million, as compared to net profit of $144 million in Q3 2020. ZIM's Adjusted
EBITDA2 in Q3 2021 was $2,080 million, as compared to $262 million in Q3 2020.
ZIM carried approximately 884 thousand TEUs in Q3 2021
representing a 16% increase as compared to Q3 2020, in which ZIM
carried approximately 762 thousand TEUs. The average freight rate
in Q3 2021 was $3,226 per TEU, as
compared to $1,176 per TEU in Q3
2020.
ZIM's revenues increased by approximately 210% in Q3 2021 to
approximately $3.1 billion, as
compared to approximately $1.0
billion in Q3 2020, primarily due to an increase in revenues
from containerized cargo, reflecting increases in both freight
rates and carried volume.
Qoros
Updates to Sale of remaining 12% interest
In April 2021, Kenon's subsidiary
Quantum (2007) LLC ("Quantum") entered into an agreement
with the China-based investor
related to the Baoneng Group that holds 63% of Qoros (the
"Majority Shareholder") to sell its remaining 12% interest
in Qoros for RMB 1.56 billion
(approximately $241 million). The
agreement provides that a deposit of 5% was due by July 30, 2021 and that the purchase price is
payable in installments: the initial payment was due on
September 30, 2021 and the final
installment is payable on March 31,
2023. However, while the Majority Shareholder has
transferred RMB 1 million
(approximately $0.2 million) to an
escrow account, the Majority Shareholder has failed to make any of
the required payments under this agreement. The Majority
Shareholder had previously requested Quantum to agree to a revised
payment plan, but no agreement has been reached, and the payments
due under the agreement remain unpaid. We are pursuing various
options with respect to the payments that were not made as
required.
The agreement provides that any payment delayed for more than 30
days is subject to interest. In addition, as a result of the
payment delay, Quantum currently has the right to exercise the Put
Option it has over its remaining shares.
Substantially all of Quantum's shares in Qoros remain pledged to
Qoros' lenders and completion of the sale (including pursuant to
the put option) requires a release of the pledge over Kenon's
shares in Qoros as well as obtaining necessary regulatory approvals
and registrations.
Update on Qoros' Loan Facilities
As previously disclosed, Qoros, which is controlled and has been
supported by the Majority Shareholder, had been in discussions with
lenders on rescheduling loan repayments on its long term loans.
Such a rescheduling has not been agreed, and to date, Qoros did not
make payments totaling approximately RMB 455
million ($71 million) which
were due in respect of its RMB 3
billion, RMB 1.2 billion and
RMB 0.7 billion loan facilities, and
as a result, the lenders under these facilities accelerated the
RMB 3 billion and RMB 0.7 billion loans. In the fourth
quarter of 2021, Chery Automobile Co. Ltd. ("Chery") paid
the full amount of its guarantee obligations under these loans.
Kenon has total outstanding back-to-back guarantees to Chery of
approximately $16 million in respect
of these loan facilities (representing 12% of the amount Chery
paid), and Chery has issued to Kenon demand notices to pay these
guaranteed amounts and Kenon plans to pay to Chery the amounts
demanded in satisfaction of its back-to-back guarantee obligations.
Following this payment, Kenon will have no additional credit
guarantee obligations with respect to Qoros debt.
Qoros continues to engage in discussions with the lenders and
other relevant stakeholders relating to its other outstanding bank
loans and resumption of manufacturing production which was
shut down earlier this year. As previously disclosed, substantially
all of Quantum's shares in Qoros are pledged to secure Qoros'
RMB 1.2 billion loan. The Majority
Shareholder has provided Kenon with a guarantee in respect of its
pro rata share, and up to all, of Quantum's pledge obligations.
For more information on our agreement to sell our remaining
interest in Qoros, and on Qoros' loan agreements and our pledges
and guarantees, see our most recent annual report on Form 20-F.
Kenon's results for the third quarter are impacted by a
reduction in the carrying amount of Qoros to zero.
Additional Kenon Updates
Sales of ZIM shares
Between September and November
2021, Kenon sold approximately 1.2 million ZIM shares at an
average price of $58 per share for a
total consideration of approximately $67
million. As a result of the sales, Kenon now holds a 26.0%
interest in ZIM (25.6% on a fully diluted basis).
Kenon's (Unconsolidated) Liquidity and Capital
Resources
As of September 30, 2021, Kenon's
unconsolidated cash balance was $238
million. Following payment for Kenon's participation in
OPC's rights issuance and receipt of proceeds from the sale of ZIM
shares subsequent to the balance sheet date as described above,
Kenon's unconsolidated cash balance is currently approximately
$174 million. There is no material
debt at the Kenon level.
Interim dividend for the year ending December 31, 2021
In November 2021, Kenon's board of
directors approved an interim cash dividend of $3.50 per share (an aggregate amount of
approximately $189 million) (the
"Dividend") relating to the year ending December 31, 2021, payable to Kenon's
shareholders of record as of the close of trading on January 19, 2022 (the "Record Date"), to
be paid on or about January 27, 2022
(the "Payment Date"). A significant portion of this dividend
is expected to be funded by the receipt of the ZIM dividend which
ZIM has announced will be paid in December
2021 as discussed above.
In April 2021, Kenon paid a
dividend of approximately $100
million ($1.86 per share).
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
January 18, 2022 (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 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 January 19, 2022
(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 (59% interest) – a leading owner, operator and developer of
power generation facilities in the Israeli and U.S. power
markets;
- ZIM (26% interest) – an international shipping company;
and
- Qoros (12% interest[3]) – 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.
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 OPC, including the Belltown development
project, ZIM and Qoros and Kenon's agreement to sell its
remaining interest in Qoros and the put option, statements relating
to Qoros loan facilities and Kenon's intention to pay amounts
demanded by Chery, statements about the Dividend, including
the plan to pay the Dividend, the Payment Date, the Record Date,
the NYSE Ex-Dividend Date, the TASE Ex-Dividend Date, the crediting
of accounts with the Dividend, the sources of funds to be used to
pay the Dividend and statements about the expected Singapore tax treatment of the
Dividend 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 OPC
including risks relating to the potential
failure to complete the development and reach commercial operation
of projects as expected or at all and the timing and ultimate costs
of any project reaching commercial operation, including risks
related to costs associated with delays or higher costs in reaching
commercial operation, risks relating to Qoros including risks
relating to Qoros' debt and Kenon's pledges and guarantees relating
to Qoros' debt and risks relating to Kenon's
agreement to sell its remaining interest in Qoros, including
risks relating to purchase price payments required to be made to
Quantum, payment delays, the timing of payments of the purchase
price and whether such payments will be received at all, 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 the release of any such payments from the designated
account, risks related to the Dividend, including
whether the Dividend will be paid at all and the timing of payment,
risks relating to having sufficient liquidity and capacity to make
the Dividend including risks relating to the dividend which ZIM has
announced will be paid in December
2021 (including the timing and amount of that dividend) and
that the amounts retained by Kenon are not sufficient to meet its
cash needs or meet legal requirements, statements relating to the
expected tax treatment of the Dividend in Singapore 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
|
|
[1] Represents 100% of ZIM's results. Kenon's share of ZIM's
results for the three months ended September
30, 2021 was approximately 26% (32% for three months ended
September 30, 2020).
[2] Adjusted EBITDA is a non-IFRS measure. See Exhibit 99.2 of
Kenon's Form 6-K dated November 30,
2021 for the definition of ZIM's Adjusted EBITDA and OPC's
and CPV's Adjusted EBITDA and a reconciliation to their respective
net profit for the applicable period.
[3] Kenon has agreed to sell its remaining 12% interest to the
Majority Shareholder in Qoros.
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SOURCE Kenon Holdings Ltd.