SINGAPORE, June 1, 2022
/PRNewswire/ -- Kenon Holdings Ltd. (NYSE: KEN) (TASE:
KEN) ("Kenon") announces its results for Q1
2022 and additional updates.
Q1 and Recent Highlights
Kenon
- Kenon intends to distribute approximately $552 million ($10.25 per share) to shareholders in July 2022, subject to approval of a capital
reduction in the High Court of the Republic of Singapore.
ZIM
- In May 2022, ZIM announced
an interim dividend to be paid in June
2022 of $2.85 per share,
representing $342 million in
aggregate. Kenon expects to receive $71
million ($67 million net of
tax).
- Financial results[1]:
- ZIM reported net profit in Q1 2022 of $1.7 billion, as compared to $0.6 billion in Q1 2021.
- ZIM reported Adjusted EBITDA[2] in Q1 2022 of
$2.5 billion, as compared to
$0.8 billion in Q1 2021.
OPC
- In May 2022, OPC announced
an agreement with Veridis Power Plants Ltd. to reorganize the
holdings of its operations in Israel.
- Financial results:
- OPC's revenue in Q1 2022 increased to $146 million, as compared to $115 million in Q1 2021.
- OPC's net profit in Q1 2022 was $33 million, as compared to zero in Q1
2021.
- OPC's Adjusted EBITDA2 in Q1 2022 was
$32 million, as compared to
$28 million in Q1 2021. Additionally,
in Q1 2022, OPC's proportionate share in EBITDA of CPV associated
companies was $43 million as compared
to $18 million in Q1
2021.
Discussion of Results for the Three Months ended
March 31, 2022
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 1, 2022 for a summary of Kenon's
consolidated financial information; a summary of OPC's consolidated
financial information; a reconciliation of OPC's Adjusted EBITDA
(which is a non-IFRS measure) to net profit (loss); 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
|
|
Israel
|
U.S.
|
Total
|
Israel
|
U.S.
|
Total
|
|
Q1 2022
|
Q1 2021
|
|
|
$ millions
|
|
Revenue
|
134
|
12
|
146
|
107
|
8
|
115
|
Cost of sales
(excluding depreciation and amortization)
|
91
|
7
|
98
|
74
|
5
|
79
|
Finance
(expenses)/income, net
|
(7)
|
1
|
(6)
|
(7)
|
1
|
(6)
|
Share in
profit/(losses) of associated companies, net
|
-
|
30
|
30
|
-
|
(11)
|
(11)
|
Profit/(loss) for the
period
|
14
|
19
|
33
|
8
|
(8)
|
-
|
Attributable
to:
|
|
|
|
|
|
|
Equity holders of
OPC
|
12
|
13
|
25
|
7
|
(5)
|
2
|
Non-controlling
interest
|
2
|
6
|
8
|
1
|
(3)
|
(2)
|
|
|
|
|
|
|
|
Adjusted
EBITDA2
|
35
|
(3)
|
32
|
29
|
(1)
|
28
|
Proportionate share of
EBITDA of associated companies
|
-
|
43
|
43
|
-
|
18
|
18
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
For the period ended March 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
$ millions
|
|
Israel
|
|
|
|
Revenue from sale of
energy to private customers
|
|
|
91
|
|
|
|
76
|
|
Revenue from private
customers in respect of infrastructure services
|
|
|
23
|
|
|
|
21
|
|
Revenue from sale of
surplus energy
|
|
|
13
|
|
|
|
5
|
|
Revenue from sale of
steam
|
|
|
4
|
|
|
|
5
|
|
Revenue from activities
of Gnrgy
|
|
|
3
|
|
|
|
-
|
|
|
|
|
134
|
|
|
|
107
|
|
U.S.
|
|
|
|
|
|
|
|
|
Revenue from sale of
electricity and provision of services in the U.S.
|
|
|
12
|
|
|
|
8
|
|
Total
|
|
|
146
|
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
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 Power Purchase Agreements by customers of
OPC-Rotem and OPC-Hadera. The weighted-average
generation component tariff effective February 1, 2022, as published by the EA, was
NIS 0.2869 per KW hour, which was
approximately 13.6% higher than the weighted-average generation
component tariff in 2021 of NIS
0.2526 per KW hour. In April
2022, due to a reduction in excise tax on use of coal and to
combat the high cost of living, the EA published a new weighted
average generation component tariff effective May 1, 2022 of NIS
0.2764 per KW hour, which is approximately 3.7% lower than
the rate effected on February 1,
2022. OPC's revenue from sales 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 revenue by
category between Q1 2022 and Q1 2021.
- Revenue from sale of energy to private
customers – increased by $15 million in Q1 2022, as compared to Q1 2021.
As OPC's revenue is denominated in NIS, translation of its revenue
into US Dollars had a positive impact of $2
million. Excluding the impact of exchange rate fluctuations,
such revenue increased by $13 million
primarily as a result of (i) an $11
million increase reflecting the commencement of virtual
supply in September 2021 and (ii) a
$6 million increase due to an
increase in the generation component tariff, partially offset by a
$4 million decrease due to decline in
energy consumption by customers.
- Revenue from private customers in respect of
infrastructure services – increased by
$2 million in Q1 2022, as compared to
Q1 2021. 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, such revenue increased by $1 million primarily as a result of
a $3 million increase reflecting the
commencement of virtual supply in September
2021, partially offset by a $1
million decrease in sale of energy purchased for
OPC-Hadera's customers.
- Revenue from sale of surplus energy –
increased by $8 million in Q1 2022,
as compared to Q1 2021. 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, such revenue increased by $7 million primarily as a result of
(i) a $6 million increase due to an
increase in availability of the OPC-Hadera power plant and (ii) a
$1 million increase due to an
increase in sale of energy to OPC-Rotem's
customers.
- Revenue from activities of Gnrgy –
reflects the commencement of operations of Gnrgy, which is engaged
in the area of charging services for electric vehicles, which was
$3 million in Q1 2022 compared to nil
in Q1 2021.
- Revenue from sale of electricity and provision of
services in the U.S. – reflects three months of
results of CPV in Q1 2022, as compared to two months of results in
Q1 2021, with the completion of the acquisition of CPV on
January 25, 2021.
Cost of Sales
(Excluding Depreciation and Amortization)
|
|
|
|
For the period ended March 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
$ millions
|
|
Israel
|
|
|
|
Natural gas and diesel
oil consumption
|
|
|
39
|
|
|
|
39
|
|
Expenses for
infrastructure services
|
|
|
23
|
|
|
|
21
|
|
Expenses for
acquisition of energy
|
|
|
18
|
|
|
|
5
|
|
Natural gas
transmission
|
|
|
3
|
|
|
|
3
|
|
Operating
expenses
|
|
|
6
|
|
|
|
6
|
|
Costs from activities
of Gnrgy
|
|
|
2
|
|
|
|
-
|
|
|
|
|
91
|
|
|
|
74
|
|
U.S.
|
|
|
|
|
|
|
|
|
Operating costs and
cost of services in the U.S.
|
|
|
7
|
|
|
|
5
|
|
Total
|
|
|
98
|
|
|
|
79
|
|
- Natural gas and diesel oil consumption –
remained the same in Q1 2022, as compared to Q1 2021. 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, such cost of sales decreased by $1 million primarily as a result of a decrease of
$2 million due to maintenance at the
OPC-Rotem power plant partially offset by an increase of
$1 million due to an increase in
availability of the OPC-Hadera power plant.
- Expenses for infrastructure services –
increased by $2 million in Q1
2022, as compared to Q1 2021, primarily as a result of a
$3 million increase reflecting the
commencement of virtual supply in 2021, partially offset by a
$1 million decrease due to a decline
in energy consumption by OPC-Hadera's customers.
- Expenses for acquisition of energy –
decreased by $13 million in Q1
2022, as compared to Q1 2021. 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, such cost of
sales increased by $12 million
primarily as a result of (i) a $9
million increase reflecting the commencement of virtual
supply in 2021, (ii) a $6 million
increase due to maintenance at OPC-Rotem power plant, partially
offset by a $3 million decrease due
to an increase in availability of the OPC-Hadera power
plant.
- Costs from activities of Gnrgy –
reflects the commencement of operations of Gnrgy, which is engaged
in the area of charging services for electric vehicles.
- Operating costs and cost of services in the U.S.
– reflects three months of results of CPV in Q1
2022, as compared to two months of results in Q1 2021, with the
completion of the acquisition of CPV on January 25, 2021.
Finance Expenses, net
Finance expenses, net remained the same in Q1 2022 as
compared to Q1 2021. A decrease of $5
million on interest expenses due to the early repayment of
the OPC-Rotem's project financing debt in October 2021 was offset by (i) a $4 million increase in interest expenses due to
debentures issued in September 2021
and (ii) a $1 million increase in
interest expenses due to a non-controlling shareholder's loan to
OPC-Rotem issued in October
2021.
Share of Profit of Associated Companies,
net
The table below sets forth OPC's share of profit of
associated companies, net, consisting of five of the six operating
plants in which CPV has interests.
|
|
For the period ended March 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
$ millions
|
|
|
|
|
|
Share in
profit/(losses) of associated companies, net
|
|
|
30
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
As at March 31,
2022, OPC's proportionate share of debt (including interest
payable) of CPV associated companies was $933 million and proportionate share of cash and
cash equivalents was $8
million.
OPC's share in profit of associated companies, net
increased by $41 million primarily as
a result of (i) an improvement in the results of CPV Valley of
$25 million and (ii) an increase of
$22 million due to profit on changes
in fair value of derivative financial instruments. For further
details of the performance of associated companies of CPV, refer to
OPC's immediate report published on the Tel Aviv Stock Exchange on
May 25, 2022 and the convenience
English translations furnished by Kenon on Form 6-K on May 25, 2022.
Liquidity and Capital Resources
As of March 31, 2022, OPC
had cash and cash equivalents of $212
million (excluding restricted cash), restricted cash of
$29 million (including debt service
reserves of $14 million), and total
outstanding consolidated indebtedness of $1,234
million, consisting of $42 million of
short-term indebtedness and $1,192
million of long-term indebtedness. As of March 31, 2022, a substantial portion of OPC's
debt was denominated in NIS.
Business Developments
Veridis transaction
On May 9, 2022, OPC
announced that it had entered into an agreement with Veridis Power
Plants Ltd. to form OPC Holdings Israel Ltd., which will
hold and operate all of OPC's business activities in the
energy and electricity generation and supply sectors in
Israel. The details of the
transaction are discussed in more detail in Kenon's Form 6-K dated
May 9, 2022.
ZIM
Discussion of ZIM's results for Q1
2022
For the period ended March 31,
2022, ZIM's revenue increased by 113% in Q1
2022 to $3.7 billion, as compared to
$1.7 billion in Q1 2021, primarily
due to an increase in revenue from containerized cargo, reflecting
increases in both freight rates and carried volume.
ZIM's net profit was $1.7
billion, as compared to $0.6
billion in Q1 2021. ZIM's Adjusted
EBITDA2 in Q1 2022 was $2.5
billion, as compared to $0.8
billion in Q1 2021.
ZIM carried 859 thousand TEUs in Q1 2022 representing a 5%
increase as compared to Q1 2021, in which ZIM carried 818 thousand
TEUs. The average freight rate in Q1 2022 was $3,848 per TEU, as compared to $1,925 per TEU in Q1 2021.
Qoros
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, which holds 63% of Qoros
(the "Majority Shareholder"), to sell its
remaining 12% interest in Qoros for RMB 1.56
billion (approximately $245
million). The Majority Shareholder has failed to make
required payments under this agreement. In the fourth quarter of
2021, Quantum initiated arbitral proceedings against the Majority
Shareholder and Baoneng Group with China International Economic and
Trade Arbitration Commission. The proceedings are
ongoing.
For more information on our agreement to sell our
remaining interest in Qoros, and on Qoros' loan agreements and our
pledges and guarantees, see Kenon's most recent annual report on
Form 20-F filed with the SEC.
Additional Kenon Updates
Kenon's (unconsolidated) liquidity and capital
resources
As of March 31, 2022,
Kenon's unconsolidated cash balance was $503
million. As of May 31, 2022,
Kenon's total unconsolidated cash position, reflecting the receipt
of a ZIM dividend in April 2022 (net
of tax), was $978 million.
Kenon's cash position includes cash and cash equivalents,
fixed term bank deposits and fixed income and other treasury
management instruments.
Capital reduction and
distribution
At its 2022 Annual General Meeting on May 19, 2022, Kenon received the requisite
shareholder approval to return share capital amounting to
approximately $552 million to Kenon's
shareholders ($10.25 per share) (the
"Capital Reduction"), subject to the approval of the High
Court of the Republic of Singapore
(the "Court"). The Court hearing in respect of the Capital
Reduction application is scheduled for June
14, 2022 (the "Hearing"). Assuming the approval of
the Court in respect of the Capital Reduction is granted at the
Hearing, Kenon expects the distribution to be paid in July 2022. Further details including record and
payment dates will be provided in due course.
Following the completion of the Capital Reduction, Kenon's
share capital is expected to be approximately $50 million.
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 (21% 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 statements
relating to OPC, the dividend proposed by ZIM, statements relating
to Kenon's agreement to sell its remaining
interest in Qoros, statements relating to the Capital Reduction 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 Kenon's agreement to
sell its remaining interest in Qoros, including risks relating to
payments required to be made to Quantum which have not been made as
required 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 risks relating to the Capital
Reduction, including risks relating to the need to obtain approval
from the High Court of the Republic of
Singapore for
the Capital Reduction, whether the Capital Reduction will be paid
to shareholders when expected or at all and whether Kenon will have
sufficient liquidity and other risks and
factors including those
risks set forth under the heading "Risk Factors" in Kenon's most
recent 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
- Represents 100% of ZIM's results. Kenon's share of ZIM's
results for the three months ended March 31,
2022 was 21% (28% for three months ended March 31, 2021).
- Adjusted EBITDA is a non-IFRS measure. See Exhibit 99.2
of Kenon's Form 6-K dated June 1,
2022 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.
- Kenon has agreed to sell its remaining 12% interest to
the Majority Shareholder.
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SOURCE Kenon Holdings Ltd.