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Kenon Holdings Ltd.
Quarterly Report • Apr 19, 2021
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Quarterly Report
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
April 19, 2021
Commission File Number 001-36761
Kenon Holdings Ltd.
1 Temasek Avenue #36-01 Millenia Tower Singapore 039192 (Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If ''Yes'' is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):
EXHIBITS 99.1 AND 99.2 TO THIS REPORT ON FORM 6-K ARE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-201716) OF KENON HOLDINGS LTD. AND IN THE PROSPECTUSES RELATING TO SUCH REGISTRATION STATEMENT.
Exhibits
- 99.1 Press Release, dated April 19, 2021: Kenon Holdings Reports Full Year 2020 Results and Additional Updates
- 99.2 Financial Information for the Year Ended December 31, 2020 of Kenon and OPC and Reconciliation of Certain non-IFRS Financial Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KENON HOLDINGS LTD.
Date: April 19, 2021 By: /s/ Robert L. Rosen Name: Robert L. Rosen
Title: Chief Executive Officer
Exhibit 99.1
Kenon Holdings Reports Full Year 2020 Results and Additional Updates
Agreement to sell remaining 12% of Qoros; Cash dividend of \$100 million
Singapore, April 19, 2021. Kenon Holdings Ltd. (NYSE: KEN, TASE: KEN) ("Kenon") announces its results for 2020 and updates to its businesses.
Recent Highlights
Qoros
• In April 2021, Kenon's subsidiary Quantum entered into an agreement to sell all of its remaining 12% interest in Qoros for a total purchase price of RMB1.56 billion (approximately \$238 million).
Kenon
- In April 2021, Kenon's board of directors approved an interim cash dividend of \$1.86 per share (approximately \$100 million in total) (the "Dividend").
- Kenon's net profit in 2020 was \$496 million, as compared to a net loss of \$22 million in 2019.
ZIM
- In February 2021, ZIM completed an initial public offering of its shares raising \$204 million in net proceeds.
- Financial results:
- ZIM's net profit in 2020 was \$524 million, as compared to a net loss of \$13 million in 2019.
OPC
- In January 2021, OPC completed the acquisition of Competitive Power Ventures group ("CPV").
- Financial results:
- OPC's revenues in 2020 increased to \$386 million, as compared to \$373 million in 2019.
- OPC's net loss in 2020 was \$13 million, as compared to net profit of \$34 million in 2019 (including the negative impact of \$12 million relating to non-recurring acquisition expenses in 2020 and \$4 million relating to non-recurring revenue in 2019).
- OPC's EBITDA1 in 2020 decreased to \$75 million, as compared to \$105 million in 2019.
1 EBITDA is a non-IFRS measure. See Exhibit 99.2 of Kenon's Form 6-K dated April 19, 2021 for the definition of OPC's EBITDA and a reconciliation to its net profit for the applicable period.
Discussion of Results for the Year ended December 31, 2020
Kenon's consolidated results of operations from its operating companies essentially comprise the consolidated results of OPC Energy Ltd ("OPC"). The results of Qoros Automotive Co., Ltd. ("Qoros") (for four months 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 April 19, 2021 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, as translated into US dollars.
Summary Financial Information of OPC
| 2020 | 2019 | |
|---|---|---|
| \$ millions | ||
| Revenue | 386 | 373 |
| Cost of sales (excluding depreciation and amortization) | 282 | 256 |
| Finance expenses, net | 50 | 26 |
| Net (loss)/profit | (13) | 34 |
| EBITDA1 | 75 | 105 |
1 Includes non-recurring acquisition expenses of \$12 million in 2020, and non-recurring revenue of \$4 million in 2019.
Revenue
| For the year ended December 31, | ||
|---|---|---|
| 2020 | 2019 | |
| \$ millions | ||
| Revenue from energy generated by OPC and sold to private customers | 246 | 261 |
| Revenue from energy purchased by OPC and sold to private customers | 29 | 16 |
| Revenue from private customers in respect of infrastructures services | 80 | 76 |
| Revenue from energy sold to the System Administrator | 15 | 3 |
| Revenue from sale of steam | 16 | 17 |
| Total | 386 | 373 |
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 2020, as published by the EA, was NIS 0.2678 per KW hour. In 2019, the weighted-average generation component tariff was approximately 8% higher at 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.
Set forth below is a discussion of the changes in revenues by category between 2020 and 2019.
- Revenue from energy generated by OPC and sold to private customers decreased by \$15 million in 2020, as compared to 2019. As OPC's revenue is denominated in NIS, translation of its revenue into US Dollars had a positive impact of \$10 million. Excluding the impact of exchange rate fluctuations, these revenues decreased by \$25 million primarily as a result of (i) a \$21 million decrease in revenues due to a decrease in the generation component tariff, (ii) a \$14 million decrease due to maintenance of the OPC-Rotem power plant and (iii) a \$4 million decrease due to lower consumption of OPC's customers, partially offset by an \$14 million increase in revenues due to the commercial operation of the OPC-Hadera power plant which started in July 2020.
- Revenue from energy purchased by OPC and sold to private customers – increased by \$13 million in 2020, as compared to 2019, primarily as a result of an increase in acquisition of energy for customers of the OPC-Hadera power plant and the OPC-Rotem power plant during maintenance periods for those plants.
- Revenue from private customers in respect of infrastructure services increased by \$4 million in 2020, as compared to 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, these revenues increased by \$1 million primarily as a result of a \$7 million increase due to the commercial operation of the OPC-Hadera power plant partially offset by (i) a \$3 million decrease due to lower consumption of OPC-Rotem's customers and (ii) a \$3 million decrease in infrastructure tariffs.
- Revenue from energy sold to the System Administrator increased by \$12 million in 2020, as compared to 2019, primarily as a result of increases in sale of energy by OPC-Rotem power plant and OPC-Hadera power plant to the System Administrator.
| For the year ended December 31, | |||
|---|---|---|---|
| 2020 | 2019 | ||
| \$ millions | |||
| Natural gas and diesel oil consumption | 135 | 138 | |
| Payment to IEC for infrastructure services and purchase of electricity | 116 | 92 | |
| Natural gas transmission | 10 | 9 | |
| Operating expenses | 21 | 17 | |
| Total | 282 | 256 |
- Natural gas and diesel oil consumption – decreased by \$3 million in 2020, as compared to 2019. As OPC's cost of sales is denominated in NIS, translation of its cost of sales into US Dollars had a negative impact of \$5 million. Excluding the impact of exchange rate fluctuations, OPC's cost of sales decreased by \$8 million primarily as a result of (i) a \$12 million decrease in electricity generation due to maintenance and load reduction at the OPC-Rotem power plant and (ii) a \$7 million decrease due to a decrease in the gas price as a result of the drop in generation component and USD-NIS exchange rate fluctuations, partially offset by an \$11 million increase in gas expenses due to the commencement of commercial operations of the OPC-Hadera power plant.
- Payment to IEC for infrastructures services and purchase of electricity – increased by \$24 million in 2020, as compared to 2019. As OPC's cost of sales is denominated in NIS, translation of its cost of sales into US Dollars had a negative impact of \$4 million. Excluding the impact of exchange rate fluctuations, OPC's cost of sales increased by \$20 million primarily as a result of (i) a \$13 million increase due to the commencement of commercial operation of the OPC-Hadera power plant and start of sales to customers and (ii) a \$10 million increase due to an increase in acquisition of energy as a result of maintenance and corresponding load reductions on the OPC-Rotem power plant, partially offset by a \$3 million decrease due to a decline in infrastructure tariffs.
Finance Expenses, net
Finance expenses, net increased by approximately \$24 million in 2020 as compared to 2019, primarily as a result of (i) a \$12 million one-off expense due to early repayment of Series A debentures, (ii) a \$6 million increase as a result of commercial operation of the OPC-Hadera power plant and the related discontinuance of capitalisation of financing expenses, and (iii) a \$5 million increase as a result of US Dollar – Israeli Shekel exchange rate fluctuations.
Liquidity and Capital Resources
As of December 31, 2020, OPC had cash and cash equivalents and short-term deposits of \$562 million, debt service reserves (out of restricted cash) of \$46 million, and total outstanding consolidated indebtedness of \$921 million, consisting of \$49 million of short-term indebtedness and \$872 million of long-term indebtedness. All of OPC's debt at December 31, 2020 was denominated in NIS.
Recent Business Developments
CPV transaction
On January 25, 2021, OPC announced that it has completed the acquisition of CPV. The details of the acquisition are discussed in more detail in Kenon's Form 6-K dated January 24, 2021.
Private Placement
In January 2021, OPC issued 10,300,000 new shares in a private placement for a purchase price of approximately \$107 million, at a per share price of NIS 34.0. The issuance of the shares resulted in Kenon's stake in OPC being diluted to 58.6%.
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. OPC expects that the total cost of completing the Tzomet project will be approximately NIS 1-1.5 billion (approximately \$0.3-0.5 billion). Construction of the Tzomet project began in 2020, and is expected to reach commercial operation in January 2023. As of December 31, 2020, OPC had invested an aggregate of NIS 694 million (approximately \$216 million) in the project.
ZIM
IPO
In February 2021, ZIM successfully completed an initial public offering of its shares raising \$204 million in net proceeds. The issuance of shares in the IPO resulted in Kenon's stake being diluted to 27.8%.
Discussion of ZIM's Results for 2020
For the year ended December 31, 2020, ZIM's net profit was \$524 million, as compared to a loss of \$13 million in 2019.
ZIM carried approximately 2,841 thousand TEUs in 2020 representing a 0.7% increase as compared to 2019, in which ZIM carried approximately 2,821 thousand TEUs. The average freight rate per TEU in 2020 was \$1,229 per TEU, as compared to \$1,009 per TEU in 2019.
ZIM's revenues increased by 21.0% in 2020 to approximately \$4.0 billion, as compared to approximately \$3.3 billion in 2019, primarily due to (i) an increase of \$645 million in revenues from containerized cargo due to an increase in average freight rate, (ii) an increase of \$33 million in income from related services, and (iii) an increase of \$22 million in income from slots and chartered vessels.
ZIM's operating expenses and cost of services increased by 0.9% to approximately \$2.84 billion, as compared to approximately \$2.81 billion in 2019, primarily due to (i) an increase in expenses of related service and sundry of \$39 million, (ii) an increase in cargo handling expenses of \$12 million, offset by (iii) a decrease in bunker expenses of \$25 million.
Qoros
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 in Qoros") to sell all of its remaining 12% interest in Qoros. The key terms of the agreement are set forth below.
The total purchase price is RMB1.56 billion (approximately \$238 million), which is the same valuation as the previous sales by Quantum to the Majority Shareholder in Qoros. The deal is subject to certain conditions, including a release of the share pledge over the shares to be sold (substantially all of which have been pledged to Qoros' lending banks), approval of the transaction by the National Development and Reform Commission and registration with the State Administration of Market Regulation.
An entity within the Baoneng Group has guaranteed the obligations of the Majority Shareholder in Qoros under this agreement.
The purchase price is to be paid over time pursuant to the following schedule:
| Installment | Amount (RMB) |
Percentage of the Aggregate Purchase Price |
Payment Date |
|---|---|---|---|
| Deposit | 78,000,000 | 5% | July 31, 2021, or earlier if certain conditions are met1 |
| First Payment | 312,000,000 | 20% | September 30, 20211 |
| Second Payment | 390,000,000 | 25% | March 31, 20221 |
| Third Payment | 390,000,000 | 25% | September 30, 2022 |
| Fourth Payment | 390,000,000 | 25% | March 31, 2023 |
1Payments to a designated account.
_______________________
The first and second payments, including the deposit, will be paid into a designated account set up in the name of the Majority Shareholder in Qoros over which Quantum has joint control. According to the agreement, the transfer of these payments to Quantum will occur by the end of Q2 2022, provided that the relevant conditions are met in connection with the registration of the shares to the purchaser subject to receipt by Quantum of collateral acceptable to it. The agreement provides that the third and fourth payments will be paid directly to Quantum.
Car Sales
Qoros sold approximately 12,600 cars in 2020 as compared to approximately 26,000 cars in 2019. Qoros sold approximately 700 cars in Q1 2021 as compared to approximately 500 cars in Q1 2020.
Additional Kenon Updates
Kenon's (Unconsolidated) Liquidity and Capital Resources
As of December 31, 2020, Kenon's unconsolidated cash balance was \$222 million. Following the payment of a dividend as described below, Kenon's unconsolidated cash balance will be approximately \$122 million. There is no material debt at the Kenon level.
Interim dividend for the year ending December 31, 2021
In April 2021, Kenon's board of directors approved an interim cash dividend of \$1.86 per share (an aggregate amount of approximately \$100 million) relating to the year ending December 31, 2021, payable to Kenon's shareholders of record as of the close of trading on April 29, 2021 (the "Record Date"), to be paid on or about May 6, 2021 (the "Payment Date").
In November 2020, Kenon paid a dividend of approximately \$120 million (\$2.23 per share).
These dividends are consistent with Kenon's strategy of realizing the value of its businesses for its shareholders.
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 28, 2021 (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 Tel Aviv Stock Exchange's ("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 29, 2021 (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 (58% interest) a leading owner, developer and operator of power generation facilities in the Israeli and US power markets;
- ZIM (28% interest) an international shipping company; and
- Qoros (12% interest2) 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.kenonholdings.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 Kenon's subsidiary Quantum's agreement to sell its remaining interest in Qoros and related statements, including statements relating to the terms of the transaction, the timing for payments and transfer of shares and conditions to the parties' obligations, statements about the Dividend, including the Payment Date, the Record Date, the NYSE Ex-Dividend Date, the TASE Ex-Dividend Date, the crediting of accounts with the Dividend, the amount of cash to be retained by Kenon following the Dividend and statements about the expected Singapore tax treatment of the Dividend, as well as statements relating to the Tzomet project, including expected installed capacity and expected cost and timing for completion of the project, 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 forwardlooking statements. Such risks include risks relating to completion of the transaction, including 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 risks relating to the payments to be made to Quantum and released from the designated account and the timing thereof and risks related to the payment of the Dividend and that the amounts retained by Kenon are not sufficient to meet its cash needs, statements relating to the expected tax treatment of the Dividend in Singapore, potential failure to complete the development and reach commercial operation of the Tzomet project as described or at all, including risks related to costs associated with delays or higher costs in reaching commercial operation 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 [email protected] Tel: +65 9726 8628
2 Kenon has agreed to sell its remaining 12% interest to the majority shareholder in Qoros; upon completion of this sale, Kenon will no longer be a shareholder of Qoros.
Exhibit 99.2
Financial Information for the Year Ended December 31, 2020 of Kenon and OPC and
Reconciliation of Certain non-IFRS Financial Information
Table of Contents
Appendix A: Summary of Kenon's consolidated financial information
Appendix B: Summary of OPC's consolidated financial information
Appendix C: Definition of OPC's EBITDA and non-IFRS reconciliation
Appendix D: Summary financial information of OPC's subsidiaries
Appendix E: Summary operational information of OPC
Summary Kenon consolidated financial information
Kenon Holdings Ltd. and subsidiaries
Consolidated Statements of Financial Position as at December 31, 2020 and 2019
| As at December 31 | ||
|---|---|---|
| 2020 | 2019 | |
| \$ millions | ||
| Current assets | ||
| Cash and cash equivalents | 286 | 147 |
| Short-term deposits and restricted cash | 564 | 33 |
| Trade receivables | 48 | 39 |
| Other current assets | 22 | 40 |
| Asset held for sale | - | 70 |
| Total current assets | 920 | 329 |
| Non-current assets | ||
| Investments in associated companies | 297 | 120 |
| Long-term investment | 235 | - |
| Long-term deposits and restricted cash | 72 | 77 |
| Long-term prepaid expenses | 45 | 30 |
| Long-term derivative instruments | - | 2 |
| Other non-current assets | - | 58 |
| Deferred payment receivable | - | 204 |
| Deferred taxes, net | 7 | 2 |
| Property, plant and equipment, net | 819 | 668 |
| Intangible assets, net | 1 | 1 |
| Right-of-use assets, net | 86 | 17 |
| Total non-current assets | 1,562 | 1,179 |
| Total assets | 2,482 | 1,508 |
| Current liabilities | ||
| Current maturities of loans from banks and others | 47 | 46 |
| Trade and other payables | 128 | 52 |
| Short-term derivative instruments | 39 | 6 |
| Current maturities of lease liabilities | 14 | 1 |
| Total current liabilities | 228 | 105 |
| Non-current liabilities | ||
| Long-term loans from banks and others | 576 | 504 |
| Debentures | 296 | 73 |
| Deferred taxes, net | 94 | 79 |
| Non-current tax liabilities | - | 29 |
| Other non-current liabilities | 1 | 1 |
| Long-term derivative instruments | 7 | - |
| Long-term lease liabilities | 4 | 5 |
| Total non-current liabilities | 978 | 691 |
| Total liabilities | 1,206 | 796 |
| Equity | ||
| Share capital | 602 | 602 |
| Translation reserve | 16 | 18 |
| Capital reserve | (11) | 14 |
| Accumulated profit/(loss) | 460 | (11) |
| Equity attributable to owners of the Company | 1,067 | 623 |
| Non-controlling interests | 209 | 89 |
| Total equity | 1,276 | 712 |
| Total liabilities and equity | 2,482 | 1,508 |
Kenon Holdings Ltd. and subsidiaries Consolidated Statements of Profit & Loss for the years ended December 31, 2020 and 2019
| For the year ended December 31, | |||
|---|---|---|---|
| 2020 | 2019 | ||
| \$ millions | |||
| Revenue | 386 | 373 | |
| Cost of sales and services (excluding depreciation and amortization) | (282) | (256) | |
| Depreciation and amortization | (33) | (31) | |
| Gross profit | 71 | 86 | |
| Selling, general and administrative expenses | (50) | (36) | |
| Write back of impairment of investment | 44 | - | |
| Other income | 2 | 6 | |
| Operating profit | 67 | 56 | |
| Financing expenses | (51) | (30) | |
| Financing income | 14 | 18 | |
| Financing expenses, net | (37) | (12) | |
| Net gains/(losses) related to Qoros | 310 | (8) | |
| Share in profit/(losses) of associated companies, net of tax | 161 | (41) | |
| Profit/(loss) before income taxes | 501 | (5) | |
| Income taxes | (5) | (17) | |
| Profit/(loss) for the year from continuing operations | 496 | (22) | |
| Gain/(loss) for the year from discontinued operations | |||
| -Recovery of retained claims, net | 8 | 25 | |
| -Other | - | (1) | |
| 8 | 24 | ||
| Profit for the year | 504 | 2 | |
| Attributable to: | |||
| Kenon's shareholders | 507 | (14) | |
| Non-controlling interests | (3) | 16 | |
| Profit for the year | 504 | 2 | |
| Basic/diluted profit/(loss) per share attributable to Kenon's shareholders (in dollars): | |||
| Basic/diluted profit/(loss) per share | 9.41 | (0.25) | |
| Basic/diluted profit/(loss) per share from continuing operations | 9.25 | (0.71) | |
| Basic/diluted profit per share from discontinued operations | 0.16 | 0.46 |
Kenon Holdings Ltd. and subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2020 and 2019
| For the year ended December 31 | |||
|---|---|---|---|
| 2020 | 2019 | ||
| \$ millions | |||
| Cash flows from operating activities | |||
| Profit for the year | 504 | 2 | |
| Adjustments: | |||
| Depreciation and amortization | 34 | 32 | |
| Write back of impairment of investment | (44) | - | |
| Financing expenses, net | 37 | 12 | |
| Share in (profit)/losses of associated companies, net | (161) | 41 | |
| (Gains)/losses on disposal of property, plant and equipment, net | (1) | - | |
| Net (gains)/losses related to changes of interest in Qoros | (310) | 8 | |
| Recovery of retained claims | (10) | (30) | |
| Share-based payments | 1 | 2 | |
| Income taxes | 7 | 22 | |
| 57 | 89 | ||
| Change in trade and other receivables | (10) | 4 | |
| Change in trade and other payables | 45 | (5) | |
| Cash generated from operating activities | 92 | 88 | |
| Income taxes paid, net | - | (2) | |
| Net cash provided by operating activities | 92 | 86 | |
Kenon Holdings Ltd. and subsidiaries Consolidated Statement of Cash Flows, continued For the years ended December 31, 2020 and 2019
| For the year ended December 31 | ||
|---|---|---|
| 2020 | 2019 | |
| \$ millions | ||
| Cash flows from investing activities | ||
| Short-term deposits and restricted cash, net | (503) | 20 |
| Investment in long-term deposits, net | 8 | (25) |
| Sale of subsidiary, net of cash disposed off | - | 1 |
| Income tax paid | (32) | (6) |
| Acquisition of property, plant and equipment | (74) | (34) |
| Payment of long-term deposits | - | (3) |
| Interest received | 1 | 2 |
| Deferred consideration in respect of acquisition of subsidiary | (14) | - |
| Long-term advance deposits and prepaid expenses | (58) | - |
| Payment of transactions in derivatives, net | (4) | (1) |
| Proceeds from sale of interest in Qoros | 220 | - |
| Proceeds from deferred payment | 218 | - |
| Receipt from recovery of financial guarantee | 6 | 11 |
| Recovery of retained claims | 10 | 30 |
| Net cash used in investing activities | (222) | (5) |
| Cash flows from financing activities | ||
| Dividends paid to holders of non-controlling interests | (12) | (33) |
| Dividends paid | (120) | (65) |
| Costs paid in advance in respect of taking out of loans | (9) | (2) |
| Payment of early redemption commission with respect to the debentures (Series A) | (11) | - |
| Proceeds from issuance of share capital by a subsidiary to non-controlling interests | 217 | 76 |
| Proceeds from long-term loans | 73 | - |
| Proceeds from issuance of debentures, less issuance expenses | 281 | - |
| Repayment of long-term loans and debentures, derivative financial instruments and lease liabilities | (130) | (28) |
| Acquisition of non-controlling interests | (8) | (1) |
| Interest paid | (25) | (21) |
| Net cash provided by/(used in) financing activities | 256 | (74) |
| Increase in cash and cash equivalents | 126 | 7 |
| Cash and cash equivalents at beginning of the year | 147 | 131 |
| Effect of exchange rate fluctuations on balances of cash and cash equivalents | 13 | 9 |
| Cash and cash equivalents at end of the year | 286 | 147 |
Information regarding reportable segments
Information regarding activities of the reportable segments are set forth in the following table.
| OPC | Quantum1 | ZIM | Other | Total | |
|---|---|---|---|---|---|
| \$ millions | |||||
| 2020 | |||||
| Revenue | 386 | - | - | - | 386 |
| Adjusted EBITDA2 | 75 | - | - | (18) | 57 |
| Depreciation and amortization | (34) | - | - | - | (34) |
| Financing income | - | - | - | 14 | 14 |
| Financing expenses | (50) | - | - | (1) | (51) |
| Other items: | |||||
| Net gains related to Qoros | - | 310 | - | - | 310 |
| Share in (losses)/profit of associated companies | - | (6) | 167 | - | 161 |
| Write back of impairment of investment | - | - | 44 | - | 44 |
| (Loss)/profit before taxes | (9) | 304 | 211 | (5) | 501 |
| Income Taxes | (4) | - | - | (1) | (5) |
| (Loss)/profit from continuing operations | (13) | 304 | 211 | (6) | 496 |
| Segment assets | 1,724 | 235 | - | 226 | 2,185 |
| Investments in associated companies | - | - | 297 | - | 297 |
| 2,482 | |||||
| Segment liabilities | 1,200 | - | - | 6 | 1,206 |
6
1Quantum (2007) LLC, which is wholly-owned by Kenon, owns our 12% interest in Qoros Automotive Ltd.
2Adjusted EBITDA is defined as EBITDA adjusted for net gains related to Qoros, share in (losses)/profit of associated companies and write back of impairment of investment.
| OPC | Quantum | ZIM | Other | Total | |
|---|---|---|---|---|---|
| \$ millions | |||||
| 2019 | |||||
| Revenue | 373 | - | - | - | 373 |
| Adjusted EBITDA1 | 105 | - | - | (18) | 87 |
| Depreciation and amortization | (31) | - | - | - | (31) |
| Financing income | 2 | - | - | 16 | 18 |
| Financing expenses | (28) | - | - | (2) | (30) |
| Other items: | |||||
| Net losses related to Qoros | - | (8) | - | - | (8) |
| Share in losses of associated companies | - | (37) | (4) | - | (41) |
| Profit /(loss) before taxes | 48 | (45) | (4) | (4) | (5) |
| Income Taxes | (14) | - | - | (3) | (17) |
| Profit/(loss) from continuing operations | 34 | (45) | (4) | (7) | (22) |
| Segment assets | 1,000 | 72 | - | 246 | 1,318 |
| Investments in associated companies | - | 106 | 84 | - | 190 |
| 1,508 | |||||
| Segment liabilities | 762 | - | - | 34 | 796 |
1Adjusted EBITDA is defined as EBITDA adjusted for net losses related to Qoros and share of losses of associated companies.
Information regarding associated companies
| Asset held for sale as at |
associated companies as at |
Carrying amounts of investment in | Equity in the net earnings / (losses) of associated companies for the year ended |
||
|---|---|---|---|---|---|
| December 31, 2019 |
December 31, 2020 |
December 31, 2019 |
December 30, 2020 |
December 31, 2019 |
|
| \$ millions | \$ millions | \$ millions | |||
| ZIM | - | 297 | 84 | 167 | (4) |
| Qoros* | 70 | - | 36 | (6) | (37) |
| 70 | 297 | 120 | 161 | (41) |
*Qoros was accounted for as an associated company until April 2020, when we reduced our interest in Qoros from 24% to 12%
Appendix B
Summary of OPC consolidated financial information
OPC's Consolidated Statement of Profit & Loss
| For the year ended December 31, | |||
|---|---|---|---|
| 2020 | 2019 \$ millions |
||
| \$ millions | |||
| Revenue | 386 | 373 | |
| Cost of sales (excluding depreciation and amortization) | (282 ) |
(256 ) |
|
| Depreciation and amortization | (33 ) |
(31 ) |
|
| Gross profit | 71 | 86 | |
| Selling, general and administrative expenses | (30 ) |
(18 ) |
|
| Other income | - | 6 | |
| Operating profit | 41 | 74 | |
| Financing expenses | (50 ) |
(28 ) |
|
| Financing income | - | 2 | |
| Financing expenses, net | (50 ) |
(26 ) |
|
| (Loss)/profit before income taxes | (9 ) |
48 | |
| Income taxes | (4 ) |
(14 ) |
|
| Net (loss)/profit for the period | (13 ) |
34 | |
| Attributable to: | |||
| Equity holders of the company | (17 ) |
25 | |
| Non -controlling interest |
4 | 9 | |
| Net (loss)/profit for the period | (13 ) |
34 |
Summary Data from OPC's Consolidated Statement of Cash Flows
| Year ended December 31, | |||
|---|---|---|---|
| 2020 | 2019 | ||
| \$ millions | |||
| Cash flows provided by operating activities | 105 | 109 | |
| Cash flows used in investing activities | (644) | (41) | |
| Cash flows provided by/(used in) financing activities | 478 | (54) | |
| (Decrease)/increase in cash and cash equivalents | (61) | 14 | |
| Cash and cash equivalents at end of the period | 62 | 111 |
Summary Data from OPC's Consolidated Statement of Financial Position
| As at | ||
|---|---|---|
| December 31, 2020 |
December 31, 2019 |
|
| \$ millions | ||
| Total financial liabilities1 | 921 | 622 |
| Total monetary assets2 | 608 | 152 |
| Total equity attributable to the owners | 520 | 228 |
| Total assets | 1,734 | 1,011 |
-
Including loans from banks and others and debentures
-
Including cash and cash equivalents, short-term deposits and debt service reserves (out of restricted cash)
Appendix C
Definition of OPC's EBITDA and non-IFRS reconciliation
This press release, including the financial tables, presents OPC's EBITDA, which is a non-IFRS financial measure.
OPC defines EBITDA as for each period as net profit before depreciation and amortization, financing expenses, net, and income tax expense. EBITDA is not recognized under IFRS or any other generally accepted accounting principles as a measure of financial performance and should not be considered as a substitute for net profit or loss, cash flow from operations or other measures of operating performance determined in accordance with IFRS. EBITDA is not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. There are limitations that impair the use of EBITDA as a measure of OPC's profitability since it does not take into consideration certain costs and expenses that result from OPC's business that could have a significant effect on net profit, such as financial expenses, taxes, and depreciation and amortization.
OPC believes that the disclosure of EBITDA provides transparent and useful information to investors and financial analysts in their review of the company's, or its subsidiaries' operating performance and in the comparison of such operating performance to the operating performance of other companies in the same industry or in other industries that have different capital structures, debt levels and/or income tax rates.
Set forth below is a reconciliation of OPC's net profit to EBITDA for the periods presented. Other companies may calculate EBITDA differently, and therefore this presentation of EBITDA may not be comparable to other similarly titled measures used by other companies.
| Year Ended December 31, |
|
|---|---|
| 2020 | |
| \$ millions | |
| Total | |
| Net loss for the period | (13) |
| Depreciation and amortization | 34 |
| Financing expenses, net | 50 |
| Income tax expense | 4 |
| EBITDA | 75 |
| Year Ended December 31, 2019 |
|
| \$ millions | |
| Total | |
| Net profit for the period | 34 |
| Depreciation and amortization | 31 |
| Financing expenses, net | 26 |
| Income tax expense | 14 |
| EBITDA | 105 |
Appendix D
Summary Financial Information of OPC's Subsidiaries
The tables below set forth debt, cash and cash equivalents, and debt service reserves for OPC's subsidiaries as at December 31, 2020 and 2019 (in \$ millions):
| OPC Energy | OPC-Rotem | OPC-Hadera | Other | Total |
|---|---|---|---|---|
| 305 | 341 | 217 | 58 | 921 |
| 511 | 38 | 1 | 12 | 562 |
| 8 | 24 | 14 | - | 46 |
| OPC Energy | OPC-Rotem | OPC-Hadera | Other | Total |
| 82 | 346 | 194 | - | 622 |
| 74 | 33 | 3 | 1 | 111 |
| 19 | 40 | - | - | 59 |
| 12 |
Appendix E
Summary Operational Information of OPC
The tables below set forth details of sales, generation and purchases of electricity by OPC and availability and net generation of OPC split by the OPC-Rotem plant and the Hadera energy center (kWh in millions):
| For the year ended December 31, |
|||
|---|---|---|---|
| 2020 | 2019 | ||
| Sales to private customers | 4,191 | 3,928 | |
| Sales to the system administrator | 153 | 102 | |
| Total sales | 4,344 | 4,030 | |
| For the year ended | |||
| December 31, | |||
| 2020 | 2019 | ||
| Net generation of electricity | 3,925 | 3,811 | |
| Purchase of electricity from the system administrator | 419 | 219 | |
| Total volume of electricity generated and purchases from the system administrator | 4,344 | 4,030 | |
| For the year ended | |||
| December 31, | |||
| 2020 | 2019 | ||
| Net generation of electricity and purchases during dispatch reduction – OPC Rotem | 3,494 | 3,727 | |
| Net generation – OPC Hadera (energy center) | 431 | 84 | |
| Total volume of electricity generated and purchases from the system administrator | 3,925 | 3,811 | |
| For the year ended | |||
| December 31, | |||
| 2020 | 2019 | ||
| In thousands of tonnes | |||
| Steam Generation | 720 | 745 | |
| 13 |