SINGAPORE, Sept. 2, 2020 /PRNewswire/ -- Kenon
Holdings Ltd. (NYSE: KEN), (TASE: KEN)
("Kenon") announces its results for Q2 2020 and
additional updates to its businesses.
Key Highlights
Kenon
- In September 2020, Kenon's Board
approved a cash dividend of approximately $120 million ($2.23
per share), subject to shareholder approval.
- Kenon's net profit was $278
million in Q2 2020, as compared to a net loss of
$7 million in Q2 2019.
OPC
- OPC's revenue was $76 million in
Q2 2020, as compared to revenue of $85
million in Q2 2019.
- OPC's net loss was $5 million in
Q2 2020, as compared to zero in Q2 2019.
- OPC's EBITDA[1] was $11
million in Q2 2020, as compared to $18 million in Q2 2019.
ZIM
- ZIM's net profit was $25 million
in Q2 2020, as compared to $5 million
in Q2 2019.
[1] EBITDA is a non-IFRS measure. See Exhibit
99.2 of Kenon's Form 6-K dated September 2,
2020 for the definition of OPC's EBITDA and a reconciliation
to its net profit for the applicable period.
Discussion of Results for the Three Months ended June 30, 2020
Kenon's consolidated results of operations from its operating
companies are essentially comprised of the consolidated results of
OPC Energy Ltd. ("OPC"). The results of Qoros Automotive
Co., Ltd. ("Qoros") (until we reduced our stake in Qoros to
12% on April 29, 2020) and ZIM
Integrated Shipping Ltd. ("ZIM") are reflected under results
from associates.
See Exhibit 99.2 of Kenon's Form 6-K dated September 2, 2020 for summary Kenon consolidated
financial information; summary OPC consolidated financial
information; a reconciliation of OPC's EBITDA (which is a non-IFRS
measure) to net profit; and summary operational and financial
information of OPC and its subsidiaries.
OPC
The following discussion of OPC's results of operations is based
on OPC's consolidated financial statements, as translated into US
dollars.
Summary Financial
Information of OPC
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Q2
2020
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Q2
2019
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$
millions
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Revenue
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76
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85
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Cost of sales
(excluding depreciation and amortization)
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59
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64
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Finance expenses,
net
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9
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10
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Net loss
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5
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-
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EBITDA
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11
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18
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Revenue
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For the three
months
ended June 30,
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2020
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2019
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$
millions
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Revenue from energy
generated by OPC and sold to private customers
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52
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56
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Revenue from energy
purchased by OPC and sold to private customers
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3
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5
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Revenue from private
customers in respect of infrastructures services
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17
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19
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Revenue from energy
sold to the System Administrator
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-
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1
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Revenue from sale of
steam
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4
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4
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Total
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76
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85
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OPC's revenue from the sale of electricity to private customers
derives from electricity sold at the generation component tariffs,
as published by the EA, with some discount. The weighted-average
generation component tariff for 2020, as published by the EA in
January 2020, is NIS 0.2678 per KW hour. In
2019, the weighted-average generation component tariff was
NIS 0.2909 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).
In Q2 2020, the System Administrator instructed OPC-Rotem to
lower its dispatch. In order to supply the full amount of
electricity to customers, OPC-Rotem purchased electricity from IEC
at the price of OPC-Rotem's generation cost.
- Revenue from energy generated by OPC and sold to private
customers – decreased by $4
million in Q2 2020, as compared to Q2 2019. As OPC's revenue
is denominated in NIS, translation of its revenue into US Dollars
had a positive impact of $3 million.
Excluding the impact of exchange rate fluctuations, such revenues
decreased by $7 million primarily as
a result of (i) a $5 million decrease
in revenues due to the decrease in electricity tariffs in
January 2020, and (ii) a $3 million decrease due to a declined in
availability as a result of technical inspection of the Rotem power
plant, partially offset by a $2
million increase in revenues due to an increase in the
average electricity selling price.
- Revenue from energy purchased by OPC and sold to private
customers – decreased by $2
million in Q2 2020, as compared to Q2 2019, primarily due to
lower energy consumption.
- Revenue from private customers in respect of infrastructures
services – decreased by $2
million in Q2 2020, as compared to Q2 2019, primarily as a
result of (i) a $1 million decrease
due to a decrease in infrastructure services tariffs in
January 2020, and (ii) a $1 million decrease due to lower energy
consumption.
Cost of Sales
(Excluding Depreciation and Amortization)
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For the three
months
ended June 30,
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2020
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2019
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$
millions
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Natural gas and
diesel oil consumption
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29
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34
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Payment to IEC for
infrastructure services and purchase of electricity
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24
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24
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Natural gas
transmission
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2
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2
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Operating
expenses
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4
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4
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Total
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59
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64
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- Natural gas and diesel oil consumption – decreased by
$5 million in Q2 2020, as compared to
Q2 2019, primarily as a result of (i) a $5
million decrease due to lower generation as a result of the
lower dispatch by the System Administrator as discussed above, and
technical inspection of the Rotem plant, and (ii) a $1 million decrease due to lower gas price as a
result of the decrease in the generation component tariffs and
exchange rate.
Liquidity and Capital Resources
As of June 30, 2020, OPC had cash
and cash equivalents and short-term deposits of $145 million (including debt service reserves of
$59 million), and total outstanding
consolidated indebtedness of $736
million, consisting of $48
million of short-term indebtedness, including the current
portion of long-term indebtedness, and $688
million of long-term indebtedness. All of OPC's debt is
denominated in NIS.
Business Developments
Update on the OPC-Hadera Plant
In July 2020, the Electricity
Authority granted OPC-Hadera a generation license and a supply
license with a capacity of 144MW, and the Hadera power plant began
commercial operations. The licenses are for a period of 20 years,
and can be extended by an additional 10 years. OPC-Hadera invested
a total approximately NIS 0.9 billion
(approximately $260 million) in the
construction of the Hadera power plant (including the energy
center).
During the upcoming year, the Hadera power plant's EPC
contractor is expected to replace or refurbish certain components
of the Hadera power plant's gas turbines, over a cumulative period
of approximately one month. During this period, the power plant is
expected to operate on a partial basis.
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.
As of June 30, 2020, OPC had
invested an aggregate of NIS 470
million (approximately $136
million) in the Tzomet project.
Due to the continued restrictions in Israel and worldwide as a result of the spread
of COVID-19, and the need for teams and equipment from overseas,
OPC estimates that the construction of the Tzomet power plant will
be completed in the first quarter of 2023.
Bond Issuance
In April 2020, OPC issued
NIS 400 million (approximately
$115 million) of debentures (Series
B).
Qoros
Qoros Sales
Qoros sold approximately 2,400 cars in Q2 2020, compared to
approximately 6,500 cars in Q2 2019.
ZIM
Discussion of ZIM's Results for Q2 2020
ZIM's revenue decreased by 5% in Q2 2020 to $795 million, as compared to $834 million in Q2 2019. ZIM carried
approximately 641 thousand TEUs in Q2 2020, representing a 12%
decrease as compared to Q2 2019, in which ZIM carried approximately
731 thousand TEUs. The average freight rate per TEU in Q2 2020 was
$1,071 per TEU, as compared to
$993 per TEU in Q2 2019, representing
an 8% increase. ZIM's operating expenses decreased by 13% to
$624 million in Q2 2020, as compared
to $719 million in Q2 2019, primarily
as a result of (i) a $38 million
decrease in cargo handling expenses, (ii) a $30 million decrease in bunker expenses and (iii)
a $25 million decrease in vessel
lease expenses and slot purchases. ZIM's net profit was
$25 million in Q2 2020, as compared
to $5 million in Q2 2019.
Additional Kenon Updates
Kenon's Net Profit
Kenon's net profit was $278
million in Q2 2020 largely as a result of gains following
completion of the sale of half of its remaining interest in Qoros
in April 2020.
Sale of Primus Green Energy Assets
On August 8, 2020 Primus Green
Energy Inc. ("PGE") sold substantially all of its assets to
Bluescape Clean Fuels LLC for $1.6
million.
Kenon's (Unconsolidated) Liquidity and Capital
Resources
As of June 30, 2020, Kenon's
unconsolidated cash balance was $251
million. There is no material debt at the Kenon level.
In September 2020, Kenon's Board
approved a cash dividend of approximately $120 million, or $2.23 per share, subject to shareholder approval.
Accordingly, Kenon will be convoking an extraordinary general
meeting ("EGM") at which Kenon's shareholders will be asked
to approve the distribution of the dividend to its shareholders. A
notice of EGM will be published, and a proxy solicitation will be
commenced, on or about September 22,
2020. The EGM will be held on or about October 21, 2020. Further information on the
proposed dividend will be included in a Proxy and Information
Statement. Following payment of the dividend, Kenon will retain
cash of approximately $131
million.
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 June 30, 2020
including principal and accrued interest is $212 million). The deferred payment is subject to
tax.
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 Energy (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; and
- ZIM (32% interest) – an international shipping
company.
For further information on Kenon's businesses, 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 the declaration of a dividend and about the convocation
of an EGM, as well as statements relating to the Tzomet project,
including expected installed capacity, cost, and expected timing
for completion of the project and the expected impact on the
project of the COVID-19 pandemic and measures taken to address the
pandemic 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 a
potential failure to complete the development and reach commercial
operation of the Tzomet project on a timely basis, within the
expected budget, or at all, including risks related to costs
associated with delays in reaching commercial operation and 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.
Contact Info
Kenon Holdings Ltd.
Jonathan Fisch
Director,
Investor Relations
jonathanf@kenon-holdings.com
Tel: +44 20 7659 4186
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SOURCE Kenon Holdings Ltd.