SINGAPORE, April 30, 2020 /PRNewswire/ -- Kenon Holdings
Ltd. (NYSE: KEN) (TASE: KEN) ("Kenon") announces
its results for 2019 and additional updates to its businesses.
Key Highlights
Qoros
- In April 2020, Kenon completed
the sale of half of its remaining interest in Qoros (i.e. 12%) to
the majority shareholder in Qoros Automotive Co., Ltd.
("Qoros") and received full payment of RMB1,560 million (approximately $220 million). As a result, Kenon now holds a 12%
interest in Qoros, the majority shareholder holds 63% and Chery
owns 25%.
- In addition, in December 2019 and
April 2020, Kenon received aggregate
cash payments of $17 million from
Chery in connection with reductions in Chery's guarantee
obligations resulting from repayments under Qoros' bank loans.
OPC
- OPC Energy Ltd.'s ("OPC") financial results for
2019:
- OPC's revenues in 2019 increased to
$373 million, as compared to
$363 million in 2018.
- OPC's net profit in 2019 increased to
$34 million, as compared to
$26 million in 2018.
- OPC's EBITDA[1] in 2019 increased
to $105 million, as compared to
$91 million in 2018.
- In April 2020, OPC issued
NIS400 million (approximately
$113 million) of Series B bonds.
Discussion of Results for the Year ended December 31, 2019
Kenon's consolidated results include the consolidated results of
OPC which are described below. The results of Qoros and ZIM
Integrated Shipping Ltd. ("ZIM") are reflected under results
from associates.
See Exhibit 99.2 of Kenon's Form 6-K dated April 30, 2020 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.
Summary Financial Information of OPC
|
2019
|
2018
|
|
$
millions
|
Revenue
|
373
|
363
|
Cost of
sales
|
256
|
258
|
Finance expenses,
net
|
26
|
25
|
Net profit
|
34
|
26
|
EBITDA[1].........................................
|
105
|
91
|
From September 25, 2018 until
November 10, 2018, OPC performed
major overhaul maintenance of the OPC-Rotem power plant, during
which time the operation of the power plant was paused. Such
maintenance is performed once every six years. OPC's 2018 financial
results were negatively impacted by the maintenance, as OPC-Rotem
had to purchase energy to meet its obligations under PPAs during
this maintenance and therefore did not earn margins that it would
have earned using electricity that it generates.
Revenue
The table below sets forth our revenue for 2019 and 2018, broken
down by category.
|
|
For the year
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
$
millions
|
|
Revenue from energy
generated by OPC and sold to private customers
|
|
|
261
|
|
|
|
225
|
|
Revenue from energy
purchased by OPC and sold to private customers
|
|
|
16
|
|
|
|
39
|
|
Revenue from private
customers in respect of infrastructures services
|
|
|
76
|
|
|
|
79
|
|
Revenue from energy
sold to the System Administrator
|
|
|
3
|
|
|
|
4
|
|
Revenue from sale of
steam
|
|
|
17
|
|
|
|
16
|
|
Total
|
|
|
373
|
|
|
|
363
|
|
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 generally affect the prices paid under PPAs by customers
of OPC-Rotem and OPC-Hadera. The weighted-average generation
component tariff for 2019, as published by the EA in January 2019, was NIS
0.2909 per KW hour. In 2018, the weighted-average generation
component tariff was NIS 0.2816 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
(CPI).
Set forth below is a discussion of the changes in revenues by
category between 2019 and 2018.
- Revenue from energy generated by OPC and sold to private
customers –increased by $36
million in 2019, as compared to 2018, primarily as a result
of (i) a $24 million increase in
revenues due to the higher availability of the OPC-Rotem power
plant in 2019, (ii) a $9 million
increase in revenues due to the increase in electricity prices in
2019, and (iii) a $3 million increase
due to higher electricity consumption of OPC's customers.
- Revenue from energy purchased by OPC and sold to private
customers – decreased by $23
million in 2019, as compared to 2018, primarily as a result
of a $26 million decrease as a result
of higher availability of the OPC-Rotem power plant in 2019,
partially offset by a $3 million
increase in revenue due to higher electricity consumption of OPC's
customers.
Cost of Sales (Excluding Depreciation and
Amortization)
|
|
For the year
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
$
millions
|
|
Natural gas and
diesel oil consumption
|
|
|
138
|
|
|
|
118
|
|
Payment to IEC for
infrastructure services and purchase of electricity
|
|
|
92
|
|
|
|
118
|
|
Natural gas
transmission
|
|
|
9
|
|
|
|
7
|
|
Operating
expenses
|
|
|
17
|
|
|
|
15
|
|
Total
|
|
|
256
|
|
|
|
258
|
|
- Natural gas and diesel oil consumption – increased by
$20 million in 2019, as compared to
2018, primarily as a result of (i) a $14
million increase in gas consumption as a result of higher
availability of the OPC-Rotem power plant, (ii) a $3 million increase due to an increase in the gas
price, as a result of the indexation of the gas price to the
electricity tariffs, and (iii) a $3
million increase due to a one-off refund from IEC in
2018.
- Payment to IEC for infrastructures services and purchase of
electricity – decreased by $26
million in 2019, as compared to 2018, primarily as a result
of (i) a $26 million decrease in
purchases of electricity from IEC due to the higher availability of
the OPC-Rotem power plant in 2019, partially offset by $3 million due to increase in OPC's customers
electricity consumption and increase of electricity prices, and
(ii) a $7 million decrease in
infrastructure services as a result of lower infrastructure tariffs
in 2019, partially offset by $4
million of increase due to OPC's customers higher
electricity consumption.
Financing Expenses, net
OPC's financing expenses, net increased by approximately
$1 million in 2019 as compared to
2018, primarily as a result of US Dollar – Israeli Shekel exchange
rate fluctuations and indexation of OPC-Rotem facility to the
CPI.
Net profit
OPC's net profit increased by $8
million to $34 million in
2019, as compared to $26 million in
2018, primarily for the reasons set out above.
EBITDA
OPC's EBITDA increased by $14 million in 2019, as compared
to 2018, primarily for the reasons specified above.
Liquidity and Capital Resources
As of December 31, 2019, OPC had
cash and cash equivalents and short-term deposits of $111 million, debt service reserves (out of
restricted cash) of $41 million, and
total outstanding consolidated indebtedness of $622 million, consisting of $45 million of short-term indebtedness, including
the current portion of long-term indebtedness, and $577 million of long-term indebtedness. All of
OPC's debt is denominated in NIS.
Business Developments
Update on the Construction of the OPC-Hadera
Plant
OPC-Hadera is constructing a 148 MW co-generation power plant in
Israel. OPC expects that the total
cost of completing the OPC-Hadera plant will be approximately
NIS 1 billion (approximately
$289 million).
Construction of the Hadera Power Plant has been completed and it
is currently in the commissioning stage. In March 2020 OPC announced that the EPC contractor
of the OPC-Hadera power plant notified OPC that, due to the
quarantine procedures and limitations imposed on entry into
Israel as a result of the spread
of Covid-19, the EPC contractor expects a delay in the arrival of a
foreign technical team required for the completion of the
acceptance tests of the OPC-Hadera power plant, and as a result,
expects a delay in the completion of such tests. OPC indicated in
its announcement that at this stage it cannot estimate the duration
of the delay, if any, in the commercial operation of the OPC-Hadera
power plant which was previously estimated by OPC as occurring
during Q2 2020.
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. In April 2019, Tzomet was granted a conditional
licence for the construction of the power plant. In February 2020, the EA notified OPC that Tzomet
met the milestone for financial close. In addition, as a result of
reaching financial close, the conditions for the purchase of the
remaining 5% in Tzomet which OPC did not already own were met and
OPC now owns 100% of Tzomet.
Series B Bonds Issuance
In April 2020, OPC issued
NIS400 million (approximately
$113 million) of bonds (Series B),
which were listed on the Tel Aviv Stock Exchange. The bonds bear
annual interest at the rate of 2.75% and are repayable every six
months, commencing on September 30,
2020 (on March 31 and
September 30 of every calendar year)
through September 30, 2028. In
addition, an unequal portion of principal is repayable every six
months. The principal and interest are linked to an increase in the
Israeli consumer product index of March
2020 (as published on April 15,
2020). The bonds have received a rating of A3 from Midroog
and A- from S&P Global Ratings Maalot Ltd.
Qoros
Sale of 12% of Qoros
As previously reported, in January
2019, Kenon entered into an agreement to sell half (12%) of
its remaining interest (24%) in Qoros to the majority shareholder
in Qoros. In April 2020, Kenon
completed the sale and received full payment of RMB1,560 million (approximately $220 million). As a result, Kenon currently holds
a 12% interest in Qoros.
Cash Received from Chery
Kenon received aggregate cash payments of $17 million from Chery in December 2019 and April
2020 as a result of repayments on Qoros' bank loans and
corresponding reductions of Chery's obligations under its
guarantees. These cash receipts are in connection with cash
collateral previously provided by Kenon to reduce Kenon's
back-to-back guarantee obligations to Chery. The relevant
agreements provided that Kenon is entitled to a proportionate
return of this cash collateral to the extent that Chery's guarantee
obligations are reduced. In addition, as a result of the completion
of the sale, Kenon expects to receive the remaining RMB5 million (approximately $1 million) previously provided to Chery
resulting in full reimbursement of the RMB244 million (approximately $36 million) cash collateral.
Business Updates
Car Sales
Qoros sold approximately 26,000 cars in 2019, as compared
to approximately 62,000 cars in 2018. A substantial number of sales
in 2018 and 2019 reflect purchases by an entity introduced by the
majority shareholder in Qoros.
ZIM
Discussion of ZIM's Results for 2019
ZIM carried approximately 2,821 thousand TEUs in 2019,
representing an 3.2% decrease as compared to 2018, in which ZIM
carried approximately 2,914 thousand TEUs. The average freight rate
per TEU in 2019 was $1,009 per TEU,
as compared to $973 per TEU in 2018.
ZIM's revenues increased by 1.6% in 2019 to approximately
$3.3 billion, as compared to
approximately $3.2 billion in 2018,
mainly due to the increase in average freight rates, which offset
the decrease in carried quantities. ZIM's operating expenses and
cost of services decreased by 6% to approximately $2.8 billion, as compared to approximately
$3.0 billion in 2018, primarily as a
result of (i) a $150 million decrease
in bunker expense, (ii) a $73 million
decrease in port expenses, (iii) an $11
million decrease in agent commissions, offset by (iv) a
$42 million increase in cargo
handling and (iv) a $15 million
increase in slot purchase and lease expenses of vessels and
containers.
Primus
In light of market conditions, Kenon's subsidiary Primus will
significantly reduce its operations and is considering alternatives
for utilizing its proprietary technology and its demonstration
plant.
Additional Kenon Updates
Kenon's (Unconsolidated) Liquidity and Capital
Resources
As of December 31, 2019, Kenon's
cash balance was $33 million. As
stated above, since January 1, 2020,
Kenon has received $220 million in
connection with the sale of its interest in Qoros and $6 million from Chery in connection with the
reduction of certain guarantees. There is no material debt at the
Kenon level.
Kenon is the beneficiary of a four-year deferred payment
agreement, effective December 28,
2017, reflecting deferred consideration from the sale of its
Inkia power businesses, accruing 8% interest, payable in kind
(total receivable as at December 31,
2019 including principal and accrued interest is
$204 million). The deferred payment
is subject to tax.
Investors' Conference Call
Kenon's management will host a conference call for investors and
analysts on April 30, 2020, starting
at 9:00 am Eastern Time. Kenon's and
OPC's management teams will host the call and will be available to
answer questions after presenting the results. To participate,
please call one of the following teleconferencing numbers:
Singapore: 31583851
US: 888-407-2553
Israel: 03-9180644
UK: 0800-917-5108
International: +65-31583851
At: 9:00 am Eastern Time,
6:00 am Pacific Time, 2:00 pm UK Time, 4:00
pm Israel Time and 9:00 pm
Singapore Time.
For those unable to participate, the teleconference will be
available for replay on Kenon's website at
http://www.kenon-holdings.com beginning 24 hours after the
call.
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, ranging from
established, cash-generating businesses to early stage development
companies. Kenon's businesses consist of:
- OPC (70% interest) – a leading owner, developer and operator of
power generation facilities in the Israeli power market;
- Qoros (12% interest) – a China-based automotive company;
- ZIM (32% interest) – an international shipping company;
and
- Primus Green Energy, Inc. (91% interest) – an early stage
developer of alternative fuel technology.
Kenon remains committed to its strategy to realize the value of
its businesses for its shareholders. In connection with this
strategy, Kenon may provide its shareholders with direct access to
its businesses, which may include spin-offs, listings, offerings,
distributions or monetization of its businesses. Kenon is actively
exploring various ways to materialize this strategy in a rational
and expeditious manner. 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
about (i) with respect to OPC, statements with respect to the
OPC-Hadera and Tzomet projects, including status of completion
tests for OPC-Hadera and milestones and financial close for Tzomet,
expected installed capacity, cost, and timing of the completion for
the projects and (ii) other non-historical matters. These
statements are based on Kenon's management's 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 (i) with respect to OPC, risks relating to a failure to
complete the development of the OPC-Hadera and Tzomet projects on a
timely basis, within the expected budget, or at all, including
risks relating to the completion test for Hadera and timing thereof
risks related to achieving milestones and financial close
(including as a result of, among others, the Covid-19 outbreak) and
other approvals required to proceed with the Tzomet project and
(ii) other risks and factors, including the impact of the Covid-19
outbreak and 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.
[1] EBITDA is a non-IFRS measure. See Exhibit 99.2 of Kenon's
Form 6-K dated April 30, 2020 for the
definition of OPC's EBITDA and a reconciliation to its net profit
for the applicable period
Contact Info
Kenon Holdings Ltd.
Jonathan Fisch
Director, Investor Relations
jonathanf@kenon-holdings.com
Tel: +44(0)20-7659-4186
View original
content:http://www.prnewswire.com/news-releases/kenon-holdings-reports-full-year-2019-results-and-additional-updates-301050116.html
SOURCE Kenon Holdings Ltd.