SINGAPORE, March 30,
2023 /PRNewswire/ -- Kenon Holdings Ltd. (NYSE:
KEN) (TASE: KEN) ("Kenon") announces its results for
2022 and additional updates.
Q4 and Recent Highlights
Kenon
- In March 2023, Kenon's
board of directors approved a cash dividend of approximately
$150 million ($2.79 per share) payable in April 2023.
- In March 2023, Kenon's
board of directors also authorized a share repurchase plan of up to
$50 million (as further described
below).
OPC
- Financial results:
- OPC's net profit in 2022 was $65
million, as compared to a net loss of $94 million in 2021, which included OPC's
proportionate share in profit of CPV of $85
million in 2022 as compared to a proportionate share of loss
of $11 million in 2021.
- OPC's Adjusted EBITDA2 in 2022 was $77 million, as compared to $91 million in 2021.In addition, OPC's
proportionate share in EBITDA of CPV associated companies in 2022
was $168 million compared to
$106 million in 2021.
ZIM
- ZIM announced a cash dividend to be paid on April 3, 2023 of $6.40 per share, or approximately $769 million in aggregate, of which approximately
$159 million ($151 million net of tax) is payable to
Kenon.
- Financial results[1]:
- ZIM reported net profit in 2022 of $4.6
billion, which is largely in line with 2021.
- ZIM reported Adjusted EBITDA[2] in 2022 of $7.5 billion, as compared to $6.6 billion in 2021.
Discussion of Results for the Year ended December 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. In addition, Kenon's results for
the year ended December 31, 2022 were
impacted by an impairment of the carrying value of ZIM to its
market value as at December 31,
2022.
See Exhibit 99.2 of Kenon's Form 6-K dated March 30, 2023 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. See
note 9 of Kenon's consolidated financial statements on its annual
report on Form 20-F dated March 30,
2023 for further details regarding the impairment of the
carrying value of ZIM.
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
|
|
For the year ended
December 31,
|
|
|
2022
|
2021
|
|
|
$
millions
|
|
Revenue
|
574
|
488
|
Cost of sales
(excluding depreciation and amortization)
|
417
|
337
|
|
Finance expenses,
net
|
14
|
141
|
|
Share in
profit/(losses) of associated companies, net
|
85
|
(11)
|
|
Profit/(loss) for the
period
|
65
|
(94)
|
|
Attributable
to:
|
|
|
|
Equity holders of
OPC
|
50
|
(68)
|
|
Non-controlling
interest
|
15
|
(26)
|
|
|
|
|
|
Adjusted
EBITDA[3]
|
77
|
91
|
|
Proportionate share of
EBITDA of associated companies3
|
168
|
106
|
|
|
|
|
For details of OPC's results by segment please refer to Exhibit
99.2 of Kenon's Form 6-K dated March 30,
2023.
Analysis of Results
Revenue
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|
For the year ended
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
$
millions
|
|
|
|
|
|
Israel
|
|
|
517
|
|
|
|
437
|
|
U.S.
|
|
|
57
|
|
|
|
51
|
|
Total
|
|
|
574
|
|
|
|
488
|
|
|
|
|
|
|
|
|
|
|
OPC's revenue increased by $86
million in 2022, as compared to 2021. As OPC's revenue is
denominated in NIS, translation of its revenue into US Dollars had
a negative impact of $4 million. Set
forth below is a discussion of significant changes in revenue
between 2022 and 2021.
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. In August 2022, as a result of rising energy cost
exacerbated by the conflict in Ukraine, the EA published a new weighted
average generation component tariff effective August 1, 2022 of NIS
0.314 per KW hour, which is an increase of approximately
13.6% as compared to the rate effected on May 1, 2022.
- Revenue from sale of energy to private customers in
Israel – Excluding the
impact of exchange rate fluctuations, such revenues increased by
$73 million primarily as a result of
(i) a $49 million increase in the
generation component tariff and (ii) a $24
million increase in customer consumption mainly due to
virtual supply activities that commenced in September 2021.
- Other revenue in Israel
– Revenue from Gnrgy Ltd ("Gnrgy") amounted to $12 million in 2022 and reflects the commencement
of operations of Gnrgy, which is engaged in the business of
charging services for electric vehicles.
Cost of Sales (Excluding Depreciation and
Amortization)
|
|
For the year ended
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
$
millions
|
|
|
|
|
|
Israel
|
|
|
385
|
|
|
|
312
|
|
U.S.
|
|
|
32
|
|
|
|
25
|
|
Total
|
|
|
417
|
|
|
|
337
|
|
OPC's cost of sales (excluding depreciation and amortization)
increased by $80 million in 2022, as
compared to 2021. As OPC's cost of sales is denominated in NIS,
translation of its cost of sales into US Dollars had a positive
impact of $4 million. Set forth below
is a discussion of significant changes in cost of sales between
2022 and 2021.
- Natural gas and diesel oil consumption in Israel – Excluding the impact of
exchange rate fluctuations, such costs increased by $11 million primarily as a result of (i) an
$18 million increase due to the
increase in gas prices as a result of an increase in the generation
component tariff and movements in the USD/NIS exchange rate and
(ii) compensation paid in 2021 (reducing costs in that year) to
OPC-Rotem and OPC-Hadera of $5
million due to the delay in the commercial operation of the
Karish reservoir. These increases were partially offset by a
decrease of $11 million due to lower
consumption of natural gas as a result of maintenance at the
OPC-Rotem power plant.
- Expenses for acquisition of energy in Israel – Excluding the impact of exchange
rate fluctuations, such costs increased by $57 million primarily as a result of (i) a
$37 million increase reflecting the
commencement of virtual supply in 2021 and (ii) a $20 million increase due to maintenance at the
OPC-Rotem power plant.
- Other expenses in Israel
– Cost from the commencement of operations of Gnrgy amounted to
$9 million in 2022.
Finance Expenses, net
Finance expenses, net decreased by $127
million in 2022, as compared to 2021 primarily due to (i) a
non-recurring interest expense in 2021 of $75 million as a result of early repayment of
OPC-Rotem's project financing debt in October 2021, (ii) a $16
million decrease in interest expense in respect of
OPC-Rotem's senior debt, (ii) non-recurring interest expense in
2021 of $12 million due to the
purchase of the remaining minority stake in a CPV subsidiary and
(iv) an increase of about $30 million
from financing income from bank deposits.
Share of Profit of Associated Companies, net
OPC's share of profit of associated companies, net increased by
$96 million in 2022, as compared to
2021, primarily as a result of higher gas and electricity prices.
This, together with improved plant efficiency, contributed to an
increase in energy margins which was partially offset by the
realization of hedging losses.
As at December 31, 2022, OPC's
proportionate share of net debt (including interest payable) of CPV
associated companies was approximately $865
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 March 19,
2023 and the convenience English translations furnished by
Kenon on Form 6-K on March 19,
2023.
Liquidity and Capital Resources
As of December 31, 2022, OPC had
cash and cash equivalents of $241
million, restricted cash (used for debt service reserves) of
$14 million, and total outstanding
consolidated indebtedness of $1,163
million, consisting of $39
million of short-term indebtedness and $1,124 million of long-term indebtedness. As of
December 31, 2022, a substantial
portion of OPC's debt was denominated in NIS.
Tariff Update
On January 1, 2023, the annual
update of the electricity tariffs of the EA for 2023 entered into
effect, decreasing the generation component by 0.6% to NIS 0.312 per KW hour. On February 1, 2023, due to an extension of Excise
Tax on Fuel Order, the EA published an additional update to the
generation component for 2023 of NIS
0.3081 per KW hour, which is approximately 1.2% lower than
the rate effected on January 1,
2023.
ZIM
Announcement of Q4 2022 Dividend and 2023
Guidance
On March 13, 2023, ZIM announced a
dividend for Q4 2022 of approximately $769
million, or $6.40 per ordinary
share, to be paid on April 3, 2023.
Kenon expects to receive $159 million
($151 million net of tax). ZIM also
announced its full-year 2023 guidance.
Discussion of ZIM's Results for 2022
ZIM carried approximately 3,380 thousand TEUs in 2022
representing a 3% decrease as compared to 2021, in which ZIM
carried approximately 3,481 thousand TEUs. The average freight rate
in 2022 was $3,240 per TEU, as
compared to $2,786 per TEU in
2021.
ZIM's revenues increased by approximately 18% in 2022 to
approximately $12.6 billion, as
compared to approximately $10.7
billion in 2021, primarily due to an increase in revenues
from containerized cargo, reflecting the increase in freight
rates.
For the year ended December 31,
2022, ZIM's net profit was $4.6
billion which is largely in line with 2021. ZIM's Adjusted
EBITDA2 in 2022 was $7.5
billion, as compared to $6.6
billion in 2021.
Qoros
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 for
the sale of remaining 12% interest. The proceedings are
ongoing.
For information on our agreement to sell our remaining interest
in Qoros, and the ongoing proceedings relating to this agreement,
and on Qoros' loan agreements and our pledges in respect of Qoros
debt see Kenon's most recent quarterly report on Form 6-K and
annual report on Form 20-F filed with the SEC.
Additional Kenon Updates
Kenon's (stand-alone) Liquidity and Capital
Resources
As of December 31, 2022, Kenon's
stand-alone cash position was $638
million. As of March 30, 2023,
Kenon's stand-alone cash position was $642
million. Kenon expects to receive additional cash of
$151 million on April 3, 2023 as a result of payment of ZIM's Q4
2022 dividend. There is no material debt at the Kenon level.
Kenon's stand-alone cash position includes cash and cash
equivalents and other treasury management instruments.
Interim Dividend for the Year Ending December 31, 2023
In March 2023, Kenon's board of
directors approved an interim cash dividend of approximately
$150 million ($2.79 per share) (the "Dividend") relating
to the year ending December 31, 2023,
payable to Kenon's shareholders of record as of the close of
trading on April 10, 2023 (the
"Record Date"), to be paid on or about April 19, 2023 (the "Payment Date").
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 6, 2023 (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 April 10, 2023 (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.
Announcement of Share Repurchase Plan
In March 2023, Kenon's board of
directors authorized a share repurchase plan of up to $50 million. Repurchases may be made from time to
time through open market purchases on the TASE or the NYSE or by
way of off-market purchases in accordance with an equal access
scheme, or by other means that comply with applicable laws.
Repurchases may be made using trading plans intended to qualify
under Rule 10b5-1 under the Securities Exchange Act of 1934 and the
similar safe harbor under Israeli law and Israel Securities
Authority guidelines, in accordance with applicable securities laws
and other restrictions.
To implement the share repurchase plan, Kenon has entered into
an initial repurchase mandate for repurchases of up to $12 million of shares through open market
purchases on the TASE only, to be implemented by a broker who will
have discretion as to repurchases pursuant to irrevocable
instructions which include parameters as to price and volume
set by Kenon, within the safe harbor from insider trading liability
pursuant to the "Israel Securities Authority Opinion 199-8". Such
initial mandate will expire on May 25,
2023, shortly before the expected date of Kenon's
forthcoming Annual General Meeting ("AGM") ("2023
AGM"). Kenon will seek approval at the 2023 AGM to renew
its authority to enter into further mandates and, subject to such
shareholder approval, expects to enter into such further mandates
to make purchases to implement the share repurchase plan for up to
$50 million. Share repurchases under
the share repurchase plan will be funded through available cash.
The considerations for implementing the share repurchase plan
include enhancing shareholder value while taking into account
Kenon's available funds.
Pursuant to the terms of the share purchase authorization which
was renewed at the AGM held on May 19,
2022 ("2022 AGM"), the board of directors is
authorized to repurchase up to 5% of issued and outstanding shares
as at the date of that AGM (excluding any shares which were held as
treasury shares, or which were held by a subsidiary of the Company
under Sections 21(4B) or 21(6C) of
the Companies Act 1967 of Singapore (the "Companies Act"), as at
that date). Kenon intends to seek shareholder approval at the 2023
AGM to increase this limit (from the current 5%) to up to 10% of
its issued and outstanding shares as of that date (excluding any
shares which are held as treasury shares, or which are held by a
subsidiary of the Company under Sections 21(4B) or 21(6C) of the Companies Act, as at that
date).
The implementation of the share repurchase plan is subject to
the authority of the share purchase authorization which was renewed
by shareholders at the 2022 AGM (and which will, unless varied or
revoked by our shareholders at a general meeting, continue in force
until the earlier of the date of the 2023 AGM or the date by which
the 2023 AGM is required by law to be held) or, as the case may be,
any subsisting share purchase authorization in force at the time of
the share repurchases (including the share purchase authorization
which will be proposed for shareholder approval at the 2023 AGM).
The share repurchase plan may be suspended for periods,
modified or discontinued at any time and may not be completed up to
the full amount of the share repurchase plan. Any ordinary shares
acquired or purchased will be deemed cancelled immediately upon
purchase or acquisition, unless held as treasury shares.
AGM Resolution Regarding Share Dividend
Kenon intends to seek shareholder approval at the 2023 AGM to
alter its constitution to facilitate payment of its cash dividends
in the form of new shares, or a combination of cash and new shares,
at the election of shareholders, in accordance with such scheme as
may be adopted by Kenon from time to time.
PFIC Status for Taxable Year Ended December 31, 2022 and Future Taxable
Years
We believe that we were likely a passive foreign investment
company ("PFIC") for U.S. federal income tax purposes for
the taxable year ended December 31,
2022, and could continue to be treated as a PFIC for
foreseeable future taxable years. However, the application of the
PFIC rules is subject to uncertainty in several respects, and a
separate determination must be made after the close of each taxable
year as to whether we are a PFIC for such year. A PFIC information
statement for the year ended December 31,
2022 is available on Kenon's website under financial
results.
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 (55% 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[4]) – 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. All statements other than statements of historical facts are
forward-looking statements. You can identify these forward-looking
statements by words or phrases such as "may," "will," "expect,"
"anticipate," "aim," "estimate," "intend," "plan," "believe,"
"likely to" or other similar expressions. These statements include
(i) statements relating to OPC, including tariff rates, (ii)
statements relating to ZIM, including the dividend declared by ZIM
and 2023 guidance, (iii) statements relating to Kenon's agreement
to sell its remaining interest in Qoros, and legal disputes in
respect of the foregoing, (iv) statements relating to Kenon's
announced dividend and share repurchase plan, (v) statements
relating to Kenon's PFIC status for the year ended 2022 and future
taxable years, and (vi) 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 (i) tariff rates applicable to OPC, (ii) payment
of the dividend declared by ZIM, and future dividend payments and
results, (iii) Kenon's agreement and exercise of put option to sell
its remaining interest in Qoros, including risks relating to the
outcome of any related legal disputes and other risks, (iv) payment
of Kenon's announced dividend and the repurchase of Kenon's
ordinary shares, including possibility of suspension, modification
or discontinuation of the share repurchase plan, (v) Kenon's PFIC
status for future taxable years and (vi) 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. The
foregoing factors that could cause our actual results to differ
materially from those contemplated in any forward-looking statement
included in this press release should not be construed as
exhaustive. Any forward-looking statements that we make in this
press release speak only as of the date of such statements and we
caution readers of this press release not to place undue reliance
on these forward-looking statements. 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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[1] Represents 100% of ZIM's results. Kenon's share of ZIM's
results for the year ended December 31,
2022 was approximately 21% (26% for year ended December 31, 2021).
[2] Adjusted EBITDA is a non-IFRS measure. See Exhibit 99.2 of
Kenon's Form 6-K dated March 30, 2023
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] Adjusted EBITDA is a non-IFRS measure. See Exhibit 99.2 of
Kenon's Form 6-K dated March 30, 2023
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.
[4] Kenon has agreed to sell its remaining 12% interest to the
Majority Shareholder.
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SOURCE Kenon Holdings Ltd.