SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of registrant as specified in its charter)
Singapore | 4911 | Not Applicable |
(Jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
1 Temasek Avenue #36-01 Millenia Tower Singapore 039192 +65 6351 1780 |
Scott V. Simpson
James A. McDonald
Skadden, Arps, Slate, Meagher and Flom (UK) LLP
40 Bank Street
London E14 5DS
Telephone: +44 20 7519 7000
Facsimile: +44 20 7519 7070
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
Ordinary Shares, no par value | KEN | The New York Stock Exchange |
Large accelerated filer ☐ | Accelerated filer ☒ | Non-accelerated filer ☐ | Emerging growth company ☐ |
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
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A. | Directors and Senior Management | 1 |
B. | Advisers | 1 |
C. | Auditors | 1 |
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1 | ||
A. | Selected Financial Data | 1 |
B. | Capitalization and Indebtedness | 6 |
C. | Reasons for the Offer and Use of Proceeds | 6 |
D. | Risk Factors | 6 |
49 | ||
A. | History and Development of the Company | 49 |
B. | Business Overview | 50 |
C. | Organizational Structure | 95 |
D. | Property, Plants and Equipment | 96 |
96 | ||
96 | ||
A. | Operating Results | 103 |
B. | Liquidity and Capital Resources | 108 |
C. | Research and Development, Patents and Licenses, Etc. | 120 |
D. | Trend Information | 120 |
E. | Off-Balance Sheet Arrangements | 121 |
F. | Tabular Disclosure of Contractual Obligations | 121 |
G. | Safe Harbor | 122 |
122 | ||
A. | Directors and Senior Management | 122 |
B. | Compensation | 125 |
C. | Board Practices | 125 |
D. | Employees | 128 |
E. | Share Ownership | 128 |
129 | ||
A. | Major Shareholders | 129 |
B. | Related Party Transactions | 130 |
C. | Interests of Experts and Counsel | 130 |
131 | ||
A. | Consolidated Statements and Other Financial Information | 131 |
B. | Significant Changes | 131 |
131 | ||
A. | Offer and Listing Details. | 131 |
B. | Plan of Distribution | 131 |
C. | Markets | 131 |
D. | Selling Shareholders | 131 |
E. | Dilution. | 131 |
F. | Expenses of the Issue | 131 |
131 | ||
A. | Share Capital | 131 |
B. | Constitution | 131 |
C. | Material Contracts | 145 |
D. | Exchange Controls | 145 |
E. | Taxation | 145 |
F. | Dividends and Paying Agents | 150 |
G. | Statement by Experts | 150 |
H. | Documents on Display | 151 |
I. | Subsidiary Information | 151 |
151 | ||
152 | ||
A. | Debt Securities | 152 |
B. | Warrants and Rights | 152 |
C. | Other Securities | 152 |
D. | American Depositary Shares | 152 |
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156 |
• | OPC Energy Ltd. (“OPC”), an owner, developer and operator of power generation facilities in the Israeli power market, in which Kenon has a 70% interest; |
• | Qoros Automotive Co., Ltd. (“Qoros”), a Chinese automotive company based in China, in which Kenon, through its 100%-owned subsidiary Quantum (as defined below), has a 12% interest; |
• | ZIM Integrated Shipping Services, Ltd. (“ZIM”), an Israeli global container shipping company, in which Kenon has a 32% interest; |
• | Primus Green Energy, Inc. (“Primus”), a New Jersey corporation which is a developer of an alternative fuel technology, in which Kenon, through IC Green (as defined below), has a 91% interest. In light of market conditions, Primus has decided to significantly reduce its operations. |
• | I.C. Power Asia Development Ltd. (“ICP”), formerly I.C. Power Ltd., an Israeli company, in which Kenon has a direct 100% interest; |
• | IC Power Ltd. (“IC Power”), formerly IC Power Pte. Ltd, a Singaporean company, in which Kenon has a direct 100% interest; |
• | IC Power Distribution Holdings Pte. Ltd. (“ICPDH”), a Singaporean company, in which Kenon has an indirect 100% interest; and |
• | “Inkia” means Inkia Energy Limited, a Bermudian corporation and a wholly-owned subsidiary of Kenon, which was liquidated in July 2019. In December 2017, Inkia sold the Inkia Business (as defined below); |
• | “Ansonia” means Ansonia Holdings Singapore B.V., a company organized under the laws of Singapore, which owns approximately 58% of the outstanding shares of Kenon; |
• | “CDA” means Cerro del Águila S.A., a Peruvian corporation; |
• | “DEOCSA” means Distribuidora de Electricidad de Occidente, S.A., a Guatemalan corporation, which was owned by Inkia prior to the sale of the Inkia Business in December 2017; |
• | “DEORSA” means Distribuidora de Electricidad de Oriente, S.A., a Guatemalan corporation, which was owned by Inkia prior to the sale of the Inkia Business in December 2017; |
• | “Hadera Paper” means Hadera Paper Ltd., an Israeli corporation, which is owned by OPC; |
• | “HelioFocus” means HelioFocus Ltd., an Israeli corporation, in which Kenon, through IC Green, held a 70% interest, and which was liquidated on July 6, 2017; |
• | “IC” means Israel Corporation Ltd., an Israeli corporation traded on the Tel Aviv Stock Exchange, or the “TASE,” and Kenon’s former parent company; |
• | “IC Green” means IC Green Energy Ltd., an Israeli corporation and a wholly-owned subsidiary of Kenon, which holds Kenon’s equity interests in Primus and previously held Kenon’s equity interest in HelioFocus; |
• | “IEC” means Israel Electric Corporation, a government-owned entity, which generates and supplies the majority of electricity in Israel, transmits and distributes all of the electricity in Israel, acts as the system operator of Israel’s electricity system, determines the dispatch order of generation units, grants interconnection surveys, and sets spot prices, among other roles; |
• | “Inkia Business” means Inkia’s Latin American and Caribbean power generation and distribution businesses, which were sold in December 2017; |
• | “Kallpa” means Kallpa Generación SA, a company within the Inkia Business. In August 2017, Kallpa merged with CDA, with the surviving entity renamed Kallpa Generación SA. Kallpa was owned by Inkia until December 2017; |
• | “Majority Shareholder in Qoros” means the China-based investor related to the Baoneng Group that holds 63% of Qoros; |
• | “OPC-Hadera” is the trade name of Advanced Integrated Energy Ltd., an Israeli corporation, in which OPC has a 100% interest; |
• | “OPC-Rotem” means O.P.C. Rotem Ltd., an Israeli corporation, in which OPC has an 80% interest; |
• | “our businesses” shall refer to each of our subsidiaries and associated companies, collectively, as the context may require; |
• | “Quantum” means Quantum (2007) LLC, a Delaware limited liability company, is a wholly-owned subsidiary of Kenon and which is the direct owner of our interest in Qoros; |
• | “Samay I” means Samay I S.A., a Peruvian corporation; |
• | “spin-off” shall refer to (i) IC’s January 7, 2015 contribution to Kenon of its interests in each of IC Power, Qoros, ZIM, Tower, Primus, HelioFocus and the Renewable Energy Group, as well as other intermediate holding companies related to these entities, and (ii) IC’s January 9, 2015 distribution of Kenon’s issued and outstanding ordinary shares, via a dividend-in-kind, to IC’s shareholders; |
• | “Tower” means Tower Semiconductor Ltd., an Israeli specialty foundry semiconductor manufacturer, listed on the NASDAQ stock exchange, or “NASDAQ,” and the TASE, in which Kenon used to hold an interest until June 30, 2015; and |
• | “Tzomet” means Tzomet Energy Ltd., an Israeli corporation in which OPC has a 100% interest, following the acquisition of the remaining 5% interest in February 2020. |
• | “Availability factor” refers to the number of hours that a generation facility is available to produce electricity divided by the total number of hours in a year. |
• | “COD” means the commercial operation date of a development project; |
• | “cooperation arrangements” means one or more vessel sharing arrangements, swap agreements and slot sharing arrangements. |
• | “distribution” refers to the transfer of electricity from the transmission lines at grid supply points and its delivery to consumers at lower voltages through a distribution system; |
• | “EPC” means engineering, procurement and construction; |
• | “firm capacity” means the amount of energy available for production that, pursuant to applicable regulations, must be guaranteed to be available at a given time for injection to a certain power grid; |
• | “GWh” means gigawatt hours (one GWh is equal to 1,000 MWh); |
• | “Hadera Energy Center” means Hadera Paper’s existing gas consuming facilities; |
• | “installed capacity” means the intended full-load sustained output of energy that a generation unit is designed to produce (also referred to as name-plate capacity); |
• | “IPP” means independent power producer, excluding co-generators and generators for self-consumption; |
• | “kWh” means kilowatts per hour; |
• | “MW” means megawatts (one MW is equal to 1,000 kilowatts or kW); |
• | “MWh” means megawatt per hour; |
• | “OEM” means original equipment manufacturer; |
• | “OPC’s capacity” or “OPC’s installed capacity” means, with respect to each asset, 100% of the capacity of such asset, regardless of OPC’s ownership interest in the entity that owns such asset; |
• | “PPA” means power purchase agreement; |
• | “strategic alliance” means a more extensive type of cooperation arrangement and is longer-term than a strategic cooperation. It involves cooperation arrangements and usually includes all of ZIM’s East/West routes, such as Asia-Europe, Asia-Med, Cross Atlantic and Trans Pacific. The duration of a strategic alliance will typically be long-term, as long as 10 years; |
• | “strategic cooperation” means a more extensive type of cooperation arrangement, generally being longer term and involving more trade routes. It involves some joint planning mechanism, but joint planning is less extensive as compared to a strategic alliance. A strategic cooperation can take the form of one or a combination of cooperation arrangements; and |
• | “transmission” refers to the bulk transfer of electricity from generating facilities to the distribution system at load center station in which the electricity is stabilized by means of the transmission grid. |
• | our goals and strategies; |
• | our capital commitments and/or intentions with respect to each of our businesses; |
• | our capital allocation principles, as set forth in “Item 4.B Business Overview”; |
• | the funding requirements, strategies, and business plans of our businesses; |
• | the potential listing, offering, distribution or monetization of our businesses; |
• | expected trends in the industries and markets in which each of our businesses operate; |
• | our expected tax status and treatment; |
• | statements relating to litigation and/or regulatory proceedings, including expected settlement amounts; |
• | statements relating to the sale of the Inkia Business including the pledge of OPC’s shares, the deferred payment agreement and Kenon’s guarantee and risks related thereto, and statements with respect to claims relating to the Inkia Business sale retained by Kenon; |
• | the expected effect of new accounting standards on Kenon; |
• | the expected effects of the coronavirus, including the effect of any current or future force majeure notices, on our businesses; |
• | with respect to OPC: |
• | the expected cost and timing of commencement and completion of development and construction projects, as well as the anticipated installed capacities and expected performance (e.g., efficiency) of such projects, including: |
• | the Tzomet project, including the license and approvals for the development of the project, financing and the expected payment of the remaining consideration, and |
• | the OPC-Hadera project, including the expected financing, total cost of construction, expected capacity, COD date, expected level of energy utilization, efficiency, and energy source of the OPC-Hadera power plant; |
• | the OPC restructuring, including statements with respect to Kenon’s expectation in relation to future tax liability; |
• | expected macroeconomic trends in Israel, including the expected growth in energy demand; |
• | potential expansions (including new projects or existing projects); |
• | its gas supply agreements; |
• | its strategy; |
• | expected trends in energy consumption; |
• | regulatory trends; |
• | its anticipated capital expenditures, and the expected sources of funding for capital expenditures; |
• | projections and expected trends in the electricity market in Israel; and |
• | the price and volume of gas available to OPC and other IPPs in Israel; |
• | with respect to Qoros: |
• | Qoros’ expectation to renew or refinance its working capital facilities to support its continued operations and development; |
• | statements with respect to trends in the Chinese passenger vehicle market, particularly within the C-segment, C-segment SUV and New Energy Vehicle, or NEV, markets; |
• | Qoros’ expectation of pricing trends in the Chinese passenger vehicle market; |
• | Qoros’ liquidity position; |
• | Qoros’ ability to increase its production capacity; |
• | the investment by the Majority Shareholder in Qoros into Qoros, including the various elements of the investment and expected timing thereof, including, the commitment by the investor or an affiliate to introduce vehicle purchase orders to Qoros, the requirement that Chery make payments to Kenon in connection with guarantee releases, the put option and investor’s right to make further investments under the investment agreement, and the Majority Shareholder in Qoros’ commitment to assume its proportionate share of Kenon and Chery’s guarantee and pledge obligations; and |
• | Qoros’ expectation of the development of the NEV market in China, including expected trends regarding government subsidies for the purchase of NEVs and the growth of NEV infrastructure; |
• | with respect to ZIM: |
• | the assumptions used in Kenon’s and ZIM’s impairment analysis with respect to Kenon’s investment in ZIM, and ZIM’s assets, respectively, including with respect to expected fuel price, freight rates, demand trends; |
• | ZIM’s strategy with respect to its debt obligations; |
• | ZIM’s expectation of modifications with respect to its and other shipping companies’ operating fleet and lines, including the utilization of larger vessels within certain trade zones and modifications made in light of environmental regulations; |
• | International Maritime Organization, or IMO, regulations which came into effect in 2020 (“IMO 2020”) and other regulations, including the expected effects of such regulations; |
• | statements regarding the 2M Alliance and expected benefits of the alliance; and |
• | trends related to the global container shipping industry, including with respect to fluctuations in container supply, industry consolidation, demand, bunker prices and charter/freights rates; and |
• | with respect to Primus, statements regarding the decision to significantly reduce its operations, including related alternatives and opportunities sought. |
A. | Directors and Senior Management |
B. | Advisers |
C. | Auditors |
A. | Selected Financial Data |
Year Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | 20161 | 20151 | ||||||||||||||||
(in millions of USD, except share data) | ||||||||||||||||||||
Statements of Profit and Loss Data2 | ||||||||||||||||||||
Revenue | $ | 373 | $ | 364 | $ | 366 | $ | 324 | $ | 326 | ||||||||||
Cost of sales and services (excluding depreciation) | (256 | ) | (259 | ) | (267 | ) | (251 | ) | (245 | ) | ||||||||||
Depreciation | (31 | ) | (30 | ) | (31 | ) | (27 | ) | (25 | ) | ||||||||||
Gross profit | $ | 86 | $ | 75 | $ | 68 | $ | 46 | $ | 56 | ||||||||||
Selling, general and administrative expenses | (36 | ) | (34 | ) | (56 | ) | (47 | ) | (50 | ) | ||||||||||
Gain from distribution of dividend in kind | — | — | — | — | 210 | |||||||||||||||
Write-back / (impairment) of assets and investments | — | — | 29 | (72 | ) | (7 | ) | |||||||||||||
Dilution gains from reduction in equity interest held in associates | — | — | — | — | 33 | |||||||||||||||
Other expenses | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Other income | 6 | 2 | 1 | 1 | 4 | |||||||||||||||
Financing expenses | (30 | ) | (30 | ) | (70 | ) | (47 | ) | (36 | ) | ||||||||||
Financing income | 18 | 28 | 3 | 7 | 11 | |||||||||||||||
Financing expenses, net | $ | (12 | ) | $ | (2 | ) | $ | (67 | ) | $ | (40 | ) | $ | (25 | ) | |||||
Gain on third party investment in Qoros | — | 504 | — | — | — | |||||||||||||||
Fair value loss on put option | (19 | ) | (40 | ) | — | — | — | |||||||||||||
Recovery / (provision) of financial guarantee | 11 | 63 | — | (130 | ) | — | ||||||||||||||
Share in losses of associated companies, net of tax | (41 | ) | (105 | ) | (111 | ) | (186 | ) | (187 | ) | ||||||||||
(Loss) / profit from continuing operations before income taxes | $ | (5 | ) | $ | 462 | $ | (136 | ) | $ | (428 | ) | $ | 33 | |||||||
Income taxes | (17 | ) | (11 | ) | (73 | ) | (2 | ) | (9 | ) | ||||||||||
(Loss) / profit for the year from continuing operations | $ | (22 | ) | $ | 451 | $ | (209 | ) | $ | (430 | ) | $ | 24 | |||||||
Profit / (loss) from discontinued operations (after income taxes)3 | 24 | (6 | ) | 478 | 36 | 72 | ||||||||||||||
Profit / (loss) for the year | $ | 2 | $ | 445 | $ | 269 | $ | (394 | ) | $ | 96 | |||||||||
Attributable to: | ||||||||||||||||||||
Kenon’s shareholders | (14 | ) | 434 | 237 | (412 | ) | 73 | |||||||||||||
Non-controlling interests | 16 | 11 | 32 | 18 | 23 | |||||||||||||||
Basic/diluted profit/(loss) per share attributable to Kenon’s shareholders (in Dollars): | ||||||||||||||||||||
Basic/diluted (loss)/profit per share | (0.25 | ) | 8.07 | 4.40 | (7.67 | ) | 1.36 | |||||||||||||
Basic/diluted (loss)/profit per share from continuing operations | (0.71 | ) | 8.17 | (4.00 | ) | (8.08 | ) | 0.24 | ||||||||||||
Basic/diluted profit/(loss) per share from discontinued operations | 0.46 | (0.10 | ) | 8.40 | 0.41 | 1.12 | ||||||||||||||
Statements of Financial Position Data | ||||||||||||||||||||
Cash and cash equivalents | $ | 147 | $ | 131 | $ | 1,417 | $ | 327 | $ | 384 | ||||||||||
Short-term deposits and restricted cash | 33 | 50 | 7 | 90 | 309 | |||||||||||||||
Trade receivables | 39 | 36 | 44 | 284 | 123 | |||||||||||||||
Other current assets | 40 | 41 | 36 | 50 | 45 | |||||||||||||||
Income tax receivable | — | — | — | 11 | 4 | |||||||||||||||
Inventories | — | — | — | 92 | 51 | |||||||||||||||
Asset held for sale | 70 | 70 | — | — | — | |||||||||||||||
Total current assets | 329 | 328 | 1,504 | 854 | 916 | |||||||||||||||
Total non-current assets4 | 1,179 | 1,127 | 1,022 | 4,284 | 3,567 | |||||||||||||||
Total assets | $ | 1,508 | $ | 1,455 | $ | 2,526 | $ | 5,138 | $ | 4,483 | ||||||||||
Total current liabilities | 105 | 90 | 806 | 1,045 | 653 | |||||||||||||||
Total non-current liabilities | $ | 691 | $ | 649 | $ | 669 | $ | 3,199 | $ | 2,566 | ||||||||||
Equity attributable to the owners of the Company | 623 | 649 | 983 | 681 | 1,061 | |||||||||||||||
Share capital | $ | 602 | $ | 602 | $ | 1,267 | $ | 1,267 | $ | 1,267 | ||||||||||
Total equity | $ | 712 | $ | 716 | $ | 1,051 | $ | 894 | $ | 1,264 | ||||||||||
Total liabilities and equity | $ | 1,508 | $ | 1,455 | $ | 2,526 | $ | 5,138 | $ | 4,483 | ||||||||||
Basic/Diluted weighted average common shares outstanding used in calculating profit/(loss) per share (thousands) | 53,856 | 53,826 | 53,761 | 53,720 | 53,649 | |||||||||||||||
Statements of Cash Flow Data | ||||||||||||||||||||
Net cash provided by operating activities | $ | 86 | $ | 52 | $ | 392 | $ | 162 | $ | 290 | ||||||||||
Net cash (used in) / provided by investing activities | (5 | ) | (113 | ) | 585 | (400 | ) | (737 | ) | |||||||||||
Net cash (used in) / provided by financing activities | (74 | ) | (1,217 | ) | 97 | 175 | 233 | |||||||||||||
Increase / (decrease) in cash and cash equivalents | 7 | (1,278 | ) | 1,074 | (63 | ) | (214 | ) |
(1) | Results during these periods have been reclassified to reflect the Inkia Business as discontinued operations. For further information, see Note 29 to our financial statements included in this annual report. |
(2) | Includes the consolidated results of OPC and Primus and, until its liquidation in July 2017, the consolidated results of HelioFocus. |
(3) | Consists of the results of operations of the Inkia Business for 2015 through 2017. |
(4) | Includes Kenon’s associated companies: (i) Qoros, (ii) ZIM and (iii) Tower (until June 30, 2015). |
Year Ended December 31, 2019 | ||||||||||||||||
OPC | Quantum1 | Other2 | Consolidated Results | |||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||
Revenue | $ | 373 | $ | — | $ | — | $ | 373 | ||||||||
Depreciation and amortization | (31 | ) | — | — | (31 | ) | ||||||||||
Financing income | 2 | — | 16 | 18 | ||||||||||||
Financing expenses | (28 | ) | — | (2 | ) | (30 | ) | |||||||||
Fair value loss on put option | — | (19 | ) | — | (19 | ) | ||||||||||
Recovery of financial guarantee | — | 11 | — | 11 | ||||||||||||
Share in losses of associated companies | — | (37 | ) | (4 | ) | (41 | ) | |||||||||
Profit / (Loss) before taxes | $ | 48 | $ | (45 | ) | $ | (8 | ) | $ | (5 | ) | |||||
Income taxes | (14 | ) | — | (3 | ) | (17 | ) | |||||||||
Profit / (Loss) from continuing operations | $ | 34 | $ | (45 | ) | $ | (11 | ) | $ | (22 | ) | |||||
Segment assets3 | $ | 1,000 | $ | 72 | $ | 246 | 4 | $ | 1,318 | |||||||
Investments in associated companies | — | 106 | 84 | 190 | ||||||||||||
Segment liabilities | 762 | — | 34 | 5 | 796 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. In January 2018, our ownership in Qoros was reduced from 50% to 24% in connection with the investment in Qoros by the Majority Shareholder in Qoros. In April 2020, we sold half of our remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros and, as a result, Kenon currently has a 12% interest in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | Excludes investments in associates. |
(4) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities. |
Year Ended December 31, 2018 | ||||||||||||||||||||
OPC | Quantum1 | Other2 | Adjustments3 | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | $ | 363 | $ | — | $ | 1 | $ | — | $ | 364 | ||||||||||
Depreciation and amortization | (30 | ) | — | — | — | (30 | ) | |||||||||||||
Financing income | 2 | 10 | 48 | (32 | ) | 28 | ||||||||||||||
Financing expenses | (27 | ) | (2 | ) | (33 | ) | 32 | (30 | ) | |||||||||||
Gain on third party investment in Qoros | — | 504 | — | — | 504 | |||||||||||||||
Fair value loss on put option | — | (40 | ) | — | — | (40 | ) | |||||||||||||
Recovery of financial guarantee | — | 63 | — | — | 63 | |||||||||||||||
Share in losses of associated companies | — | (78 | ) | (27 | ) | — | (105 | ) | ||||||||||||
Profit / (Loss) before taxes | $ | 36 | $ | 457 | $ | (31 | ) | $ | — | $ | 462 | |||||||||
Income taxes | (10 | ) | — | (1 | ) | — | (11 | ) | ||||||||||||
Profit / (Loss) from continuing operations | $ | 26 | $ | 457 | $ | (32 | ) | $ | — | $ | 451 | |||||||||
Segment assets4 | $ | 893 | $ | 92 | $ | 239 | 5 | $ | — | $ | 1,224 | |||||||||
Investments in associated companies | — | 139 | 92 | — | 231 | |||||||||||||||
Segment liabilities | 700 | — | 39 | 6 | — | 739 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. In January 2018, our ownership in Qoros was reduced from 50% to 24% in connection with the investment in Qoros by the Majority Shareholder in Qoros. In April 2020, we sold half of our remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros and, as a result, Kenon currently has a 12% interest in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | “Adjustments” includes inter segment financing income and expense. |
(4) | Excludes investments in associates. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(6) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities |
Year Ended December 31, 20171 | ||||||||||||||||||||
OPC | Quantum2 | Other3 | Adjustments4 | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | $ | 365 | $ | — | $ | 1 | $ | — | $ | 366 | ||||||||||
Depreciation and amortization | (30 | ) | — | (1 | ) | — | (31 | ) | ||||||||||||
Impairment of assets and investments | — | — | 29 | — | 29 | |||||||||||||||
Financing income | 1 | — | 13 | (11 | ) | 3 | ||||||||||||||
Financing expenses | (34 | ) | (6 | ) | (41 | ) | 11 | (70 | ) | |||||||||||
Share in (losses)/income of associated companies | — | (121 | ) | 10 | — | (111 | ) | |||||||||||||
Profit / (Loss) before taxes | $ | 23 | $ | (127 | ) | $ | (32 | ) | $ | — | $ | (136 | ) | |||||||
Income taxes | (9 | ) | — | (64 | ) | — | (73 | ) | ||||||||||||
Profit / (Loss) from continuing operations | $ | 14 | $ | (127 | ) | $ | (96 | ) | $ | — | $ | (209 | ) | |||||||
Segment assets5 | $ | 940 | $ | 16 | $ | 1,448 | 6 | $ | — | $ | 2,404 | |||||||||
Investments in associated companies | — | 2 | 120 | — | 122 | |||||||||||||||
Segment liabilities | 743 | 75 | 657 | 7 | — | 1,475 |
(1) | Results for this period reflect the results of the Inkia Business as discontinued operations. For further information, see Note 29 to our financial statements included in this annual report. |
(2) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. In January 2018, our ownership in Qoros was reduced from 50% to 24% in connection with the investment in Qoros by the Majority Shareholder in Qoros. In April 2020, we sold half of our remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros and, as a result, Kenon currently has a 12% interest in Qoros. |
(3) | Includes the results of Primus and HelioFocus (which was liquidated in July 2017); the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(4) | “Adjustments” includes inter-segment financing income and expenses. |
(5) | Excludes investments in associates. |
(6) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(7) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities. |
2019 | 2018 | 2017 | ||||||||||
($ millions, except as otherwise indicated) | ||||||||||||
Net income for the period | 34 | 26 | 14 | |||||||||
EBITDA1 | 105 | 91 | 86 | |||||||||
Net Debt2 | 400 | 401 | 395 | |||||||||
Net energy generated (GWh) | 3,811 | 3,383 | 3,655 | |||||||||
Energy sales (GWh) | 4,030 | 3,965 | 3,988 |
(1) | OPC defines “EBITDA” for each period as net income for the period 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 income or loss, cash flow from operations or other measures of operating performance or liquidity 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. EBITDA presents limitations that impair its use as a measure of OPC’s profitability since it does not take into consideration certain costs and expenses that result from its business that could have a significant effect on OPC’s net income, such as finance expenses, taxes and depreciation. The following table sets forth a reconciliation of OPC’s net income to its 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, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in millions of USD) | ||||||||||||
Net income for the period | $ | 34 | $ | 26 | $ | 14 | ||||||
Depreciation and amortization | 31 | 30 | 30 | |||||||||
Finance expenses, net | 26 | 25 | 33 | |||||||||
Income tax expense | 14 | 10 | 9 | |||||||||
EBITDA | $ | 105 | $ | 91 | $ | 86 |
(2) | Net debt is calculated as total debt, minus cash (which includes short term deposits and restricted cash and long-term deposits and restricted cash). Net debt is not a measure recognized under IFRS. The tables below sets forth a reconciliation of OPC’s total debt to net debt. |
Year Ended December 31, 2019 | ||||||||||||||||
OPC-Rotem | OPC-Hadera | Energy & Others | Total OPC | |||||||||||||
(in millions of USD) | ||||||||||||||||
Total debt(i) | 346 | 194 | 82 | 622 | ||||||||||||
Cash(ii) | 55 | 3 | 94 | 152 | ||||||||||||
Net Debt | $ | 291 | $ | 191 | $ | (12 | ) | $ | 470 |
(i) | Total debt comprises loans from banks and third parties and debentures, and includes long-term and short-term debt. |
(ii) | Includes cash and cash equivalents and short-term deposits of $111 million; and includes debt service reserves (out of the restricted cash of $41 million). |
Year Ended December 31, 2018 | ||||||||||||||||
OPC-Rotem | OPC-Hadera | Energy & Others | Total OPC | |||||||||||||
(in millions of USD) | ||||||||||||||||
Total debt(i) | 336 | 172 | 79 | 587 | ||||||||||||
Cash(ii) | 72 | 14 | 100 | 186 | ||||||||||||
Net Debt | $ | 264 | $ | 158 | $ | (21 | ) | $ | 401 |
(i) | Total debt comprises loans from banks and third parties and debentures, and includes long-term and short-term debt. |
(ii) | Includes cash and cash equivalents and short-term deposits of $115 million; and includes debt service reserves (out of the restricted cash) of $26 million. |
Year Ended December 31, 2017 | ||||||||||||||||
OPC-Rotem | OPC-Hadera | Energy & Others | Total OPC | |||||||||||||
(in millions of USD) | ||||||||||||||||
Total debt(i) | 383 | 144 | 91 | 618 | ||||||||||||
Cash(ii) | 86 | 31 | 106 | 223 | ||||||||||||
Net Debt | $ | 297 | $ | 113 | $ | (15 | ) | $ | 395 |
(i) | Total debt comprises loans from banks and third parties and debentures, and includes long-term and short-term debt. |
(ii) | Includes short-term deposits and restricted cash of $0 million; and includes long-term deposits and restricted cash of $76 million including $22 million in cash that was deposited into an escrow account in connection with the Tamar gas dispute. For further information, see “Item 4.B Business Overview—Our Businesses—OPC—OPC’s Description of Operations —Legal Proceedings.” |
Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
($ millions, except as otherwise indicated) | ||||||||||||
Revenue | 373 | 363 | 365 | |||||||||
Cost of Sales | (256 | ) | (258 | ) | (266 | ) | ||||||
Operating income | 86 | 75 | 69 | |||||||||
Operating margins | 23 | % | 21 | % | 19 | % | ||||||
Financing expenses, net | 26 | 25 | 33 | |||||||||
Net income for the period | 34 | 26 | 14 | |||||||||
Net Energy sales (GWh) | 4,030 | 3,965 | 3,988 |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | leverage ratio; |
• | minimum equity; |
• | debt service coverage ratio; |
• | limits on the incurrence of liens or the pledging of certain assets; |
• | limits on the incurrence of subsidiary debt; |
• | limits on the ability to enter into transactions with affiliates, including us; |
• | minimum liquidity and fixed charge cover ratios; |
• | limits on the ability to pay dividends to shareholders, including us; |
• | limits on our ability to sell assets; and |
• | other non-financial covenants and limitations and various reporting obligations. |
• | Transaction Risk—exists where sales or purchases are denominated in overseas currencies and the exchange rate changes after our entry into a purchase or sale commitment but prior to the completion of the underlying transaction itself; |
• | Translation Risk—exists where the currency in which the results of a business are reported differs from the underlying currency in which the business’ operations are transacted; |
• | Economic Risk—exists where the manufacturing cost base of a business is denominated in a currency different from the currency of the market into which the business’ products are sold; and |
• | Reinvestment Risk—exists where our ability to reinvest earnings from operations in one country to fund the capital needs of operations in other countries becomes limited. |
• | heightened economic volatility; |
• | difficulty in enforcing agreements, collecting receivables and protecting assets; |
• | the possibility of encountering unfavorable circumstances from host country laws or regulations; |
• | fluctuations in revenues, operating margins and/or other financial measures due to currency exchange rate fluctuations and restrictions on currency and earnings repatriation; |
• | unfavorable changes in regulated electricity tariffs; |
• | trade protection measures, import or export restrictions, licensing requirements and local fire and security codes and standards; |
• | increased costs and risks of developing, staffing and simultaneously managing a number of operations across a number of countries as a result of language and cultural differences; |
• | issues related to occupational safety, work hazard, and adherence to local labor laws and regulations; |
• | adverse tax developments; |
• | changes in the general political, social and/or economic conditions in the countries where we operate; and |
• | the presence of corruption in certain countries. |
• | Minimum liquidity, loan life coverage ratios and debt service coverage ratios covenants; and |
• | Other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledges investments and incurrence of debt, as well as reporting obligations. |
• | delays in project completion, |
• | costs exceeding budget, |
• | risks associated with the construction contractor, |
• | supply and operation of key equipment, |
• | performance of works at the required specifications, |
• | receipt of services required from the IEC to establish the station and connect it to the grid (which may be affected by sanctions and IEC strikes), |
• | impact on PPAs from any delays in completing new projects, |
• | applicable regulations, and |
• | obtaining the required approvals and permits for the development and operation of the station, including obtaining permits required in connection with the environment, including emission permits, and compliance with their terms. |
• | the volume of vehicles purchased by customers introduced by the Majority Shareholder in Qoros; |
• | the development of the Qoros brand; |
• | successful development and launch of new vehicle models; |
• | expansion and enhanced sales performance of its dealer network; |
• | build-up of its aftersales and services infrastructure; |
• | managing its procurement, manufacturing and supply processes; |
• | establishing effective, and continuing to improve, customer service processes; and |
• | securing additional financing to support its operating and capital expenses and further its growth and development. |
• | Risks relating to the evolution of its vehicle models and brand and the achievement of broad customer acceptance — Qoros commenced commercial operations in the end of 2013 and has not achieved significant sales levels. Qoros’ future business and profitability depend, in large part, on its ability to sell vehicle models to its targeted customers in its targeted price range; |
• | Risks relating to Qoros’ network of independent dealers to sell its automobiles — Qoros sells vehicles through a network of dealers. Qoros does not directly employ, and therefore cannot control, the salespersons of its dealer network and as a result Qoros’ dealer network may not achieve the required standards of quality of service. Qoros’ dealer network will likely be affected by conditions in the Chinese passenger vehicle market and the Chinese economy (which may impact Qoros, as a relatively new company, more than other established companies), the financial resources available to existing and potential dealers, the decisions dealers make as a result of the current and future sales prospects of Qoros’ vehicle models, and the availability and cost of the capital necessary to acquire and hold inventories of Qoros’ vehicles for resale. Qoros has had and may continue to have difficulty in expanding its dealer network if existing dealers are not performing well in terms of sales. Qoros’ dealerships decreased to 106 points of sale as of December 31, 2019, from 160 points of sale as of December 31, 2018, in part reflecting the decline in Qoros’ sales in 2019, particularly as a significant portion of sales in 2019 and 2018 were made to leasing companies introduced by the Majority Shareholder in Qoros and not through the dealer network. If Qoros is unable to expand its dealer network (which may include direct stores owned and operated by the Majority Shareholder in Qoros), this could make it difficult for Qoros to significantly increase sales levels; |
• | Risks relating to the competitive industry in which Qoros operates — Qoros operates in the highly competitive Chinese passenger vehicle market with established automobile manufacturers that may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, pricing sale and support of their products, which could impair Qoros’ ability to operate within this market or adversely impact Qoros’ sales volumes or margins. Furthermore, additional competitors, both international and domestic, may seek to enter the Chinese market. Increased competition may impact Qoros’ margins and may also make it difficult for Qoros to increase sales. |
• | Risks relating to recent trends in the Chinese market. The growth rate in the Chinese vehicle market declined in recent years and sales declined in China in 2018 and 2019, after many years of growth. This trend has resulted in increased competition in China’s automotive market through price reductions, which has resulted in reduced margins. |
· | Risks relating to personnel. Qoros’ senior executives and personnel are important to Qoros’ success, and Qoros also requires qualified, competent and skilled employees to independently direct its day-to-day business operations. If Qoros fails to hire, train and retain the required number of qualified personnel to operate its business, or if it experiences excessive turnover, it may experience production/manufacturing delays or other inefficiencies, increased recruiting, training or relocation costs, or other difficulties. In recent years, Qoros has made several personnel changes at the executive management level and in the senior management structure. In early 2019, Qoros made several further changes at the executive management level, which have affected and any future changes may affect, Qoros’ ability to execute its business plan. |
• | Risks relating to suppliers. Qoros sources the component parts necessary for its vehicle models from over 100 suppliers. A number of Qoros’ component parts are currently obtained from a single source. Additionally, Qoros sources its engines and certain spare parts from Chery. Qoros is dependent upon the continued ability of its suppliers to deliver the materials, systems, components and parts needed to conduct its manufacturing operations in sufficient quantities and at such times that will allow Qoros to meet its production schedules. For example, the coronavirus outbreak in China caused disruptions to the supply chain in early 2020, including temporary closures, see “—The impact of the coronavirus on Qoros’ operations and the operations of its suppliers may harm its business.” In addition, qualifying alternate suppliers or developing replacements for certain highly customized components of its vehicles may be time consuming and costly or may force Qoros to make modifications to its vehicle models’ designs or schedules. If Qoros is unable to pay its suppliers on a timely basis, it may be unable to procure on favorable terms the parts, components and services it requires to continue operating and Qoros has been, and may continue to be, subject to suits or other claims in respect of outstanding payables. |
• | New Energy Vehicle (NEV) market strategy. Qoros is planning to launch an NEV model in 2020, which is expected to require significant capital expenditure, research and development expenses, raw material procurement costs and selling and distribution expenses. If Qoros is unable to cost efficiently design, manufacture, market, sell and distribute and service its NEVs, its financial condition and results of operation will be materially and adversely affected. Furthermore, the NEV industry is currently experiencing lower profit margins as compared with internal combustion vehicles due to the decrease in government subsidies, which could affect NEV manufacturers in China, including Qoros. |
• | Credit Risk. Qoros is subject to credit risks in connection with its accounts receivable for sales of vehicles on a wholesale basis. |
• | Minimum liquidity, fixed charge coverage ratio and total leverage covenants; and |
• | Other non-financial covenants and limitations such as restrictions on dividend distributions, asset sales, investments and incurrence of debt, as well as reporting obligations. |
• | global and regional economic and geopolitical trends, including armed conflicts, terrorist activities, embargoes, strikes and trade wars; |
• | the supply of and demand for commodities and industrial products globally and in certain key markets, such as China; |
• | developments in international trade, including the imposition of tariffs, the modification of trade agreements between states and other trade protectionism (mainly in the U.S. - China trade); |
• | the relocation of manufacturing capabilities to importers’ nearby locations/inland locations; |
• | currency exchange rates; |
• | prices of energy resources; |
• | environmental and other regulatory developments; |
• | changes in seaborne and other transportation patterns; |
• | changes in the shipping industry, including mergers and acquisitions, bankruptcies, restructurings and alliances; |
• | changes in the infrastructure and capabilities of ports and terminals; |
• | weather conditions; |
• | outbreak of diseases, including the coronavirus; and |
• | development of digital platforms to manage operations and customer relations, including billing and services. |
A. | History and Development of the Company |
• | a 70% interest in OPC, an owner, developer and operator of power generation facilities in the Israeli power market; |
• | a 12% interest in Qoros, a China-based automotive company; |
• | a 32% interest in ZIM, a large provider of global container shipping services; and |
• | a 91% interest in Primus, a developer and owner of a proprietary natural gas-to-liquids technology process. In light of market conditions, Primus has decided to significantly reduce its operations. |
B. | Business Overview |
• | OPC: |
• | In 2017, we completed an IPO and listing of our OPC business in Israel, resulting in net proceeds to OPC of approximately $100 million and Kenon retaining a 76% stake. |
• | In 2019, OPC issued a total of 11,028,240 new ordinary shares (representing approximately 8% of OPC’s issued and outstanding share capital at the time on a fully diluted basis) in two share issues, for total cash consideration net of issuance expenses of approximately NIS 272 million (approximately $76 million). As a result of these shares issuances, Kenon’s interest in OPC decreased from 75.8% to 69.8% (68.9% on a fully diluted basis). |
• | Qoros: |
• | In 2018, we entered into agreements to facilitate a new investment in Qoros, whereby the Majority Shareholder in Qoros acquired a 51% stake in Qoros, with Kenon and Chery retaining a 24% and 25% stake in Qoros, respectively. The investment resulted in significant equity investment in Qoros and ultimately led to net cash proceeds to Kenon’s subsidiary Quantum of RMB1.2 billion (approximately $175 million). In April 2020, we sold half of our remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros for a price of RMB1.56 billion (approximately $220 million), which is based on the same post-investment valuation as the initial investment by the Majority Shareholder in Qoros. As a result, Kenon holds a 12% interest in Qoros and retains a put option to sell this interest to the Majority Shareholder in Qoros for a price of RMB 1.56 billion (approximately $220 million). In connection with the investments, the Majority Shareholder in Qoros is required to assume its pro rata share of guarantee and pledge obligations in respect of Qoros bank debt. |
• | 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. |
• | IC Power: At the end of 2017, we sold IC Power’s power distribution and generation businesses in Latin America and the Caribbean for consideration of $1,322 million (including final closing adjustments), of which $175 million was deferred. The proceeds were used to repay debt and pay taxes and other expenses, and to fund a distribution to Kenon shareholders of $665 million. |
• | ZIM, a large provider of global container shipping services, which, as of December 31, 2019 operated 68 (owned and chartered) vessels with a total container capacity of 312,142 TEUs, and in which we have a 32% equity interest; and |
• | Primus, a developer and owner of a proprietary natural gas-to-liquid technology process, in which we have a 91% equity interest. In light of market conditions, Primus has decided to significantly reduce its operations. |
• | OPC-Rotem, in which OPC has an 80% equity interest, operates a conventional combined cycle power plant in Mishor Rotem, Israel, with an installed capacity of 466 MW (based on OPC-Rotem’s generation license). The power plant utilizes natural gas, with diesel oil and crude oil as backups. |
• | OPC-Hadera, a wholly-owned subsidiary of OPC, operates steam boilers and turbines with an installed capacity of up to 18 MW in Hadera. In June 2016, OPC-Hadera commenced construction of the OPC-Hadera plant, a cogeneration power station in Israel, which is expected to have a capacity of up to 148 MW, and is expected to reach its COD in Q2 2020. OPC expects that the total cost of completing the OPC-Hadera plant (including the consideration for the original acquisition of OPC-Hadera) will be approximately NIS 1 billion (approximately $289 million). As of December 31, 2019, OPC-Hadera had completed construction of the power plant’s generation units, and commenced the test‑run stage of the power plant. As of December 31, 2019, OPC-Hadera had invested approximately NIS 857 million (approximately $248 million) in the project. |
• | Tzomet, a wholly-owned subsidiary of OPC, is developing a natural gas-fired open-cycle power station in Israel with capacity of approximately 396 MW. In February 2020, OPC completed the acquisition of the remaining 5% of the shares of Tzomet from minority shareholders, following the EA’s notification in February 2020 that financial closing for the Tzomet project had been met. Tzomet’s conditional license remains subject to conditions set forth under the conditional license, including construction of the plant, as well as for the receipt of a permanent generation license upon expiration of the conditional license. In September 2018, Tzomet entered into an EPC contract in an amount equivalent to approximately $300 million for the design, engineering, procurement and construction of the Tzomet power plant. The aggregate consideration is payable based on the achievement of milestones. For more information, see “—OPC’s Description of Operations—Tzomet.” OPC expects that the Tzomet plant will reach its COD by the end of 2022 and that the total cost of completing the Tzomet plant will be approximately NIS 1.5 billion (approximately $434 million). As of December 31, 2019, OPC had invested approximately NIS 91 million (approximately $26 million) in the project. |
Country | Entity | Ownership Percentage (Rounded) | Fuel | Installed Capacity (MW) | Type of Asset | ||||||||
Israel | OPC—Rotem | 80 | % | Natural Gas and Diesel | 466 | Greenfield | |||||||
Israel | OPC—Hadera | 100 | % | Natural Gas and Diesel | 18 | Acquired | |||||||
Total Operating Capacity | 484 |
December 31, 2018 | December 31, 2017 | |||||||||||||||
Installed Capacity (MW) | % of Total Installed Capacity in the Market | Installed Capacity (MW) | % of Total Installed Capacity in the Market | |||||||||||||
IEC | 13,355 | 73 | % | 13,355 | 76 | % | ||||||||||
Private electricity producers (without renewable energy) | 3,439 | 19 | % | 3,217 | 18 | % | ||||||||||
Renewable energy (private electricity producers) | 1,424 | 8 | % | 1,037 | 6 | % | ||||||||||
Total in the market | 18,198 | 100 | % | 17,609 | 100 | % |
Energy generated (thousands of MWh) | % of total generated in the market | Energy generated (thousands of MWh) | % of total generated in the market | |||||||||||||
IEC | 47,900 | 69 | % | 48,833 | 72 | % | ||||||||||
Private electricity producers (without renewable energy) | 19,232 | 28 | % | 17,748 | 26 | % | ||||||||||
Renewable energy (private electricity producers) | 2,038 | 3 | % | 1,590 | 2 | % | ||||||||||
Total in the market | 69,170 | 100 | % | 68,171 | 100 | % |
Component | Megawatt |
Installed capacity (without renewable energy) as at December 31, 2017 | 16,500 |
Disposal of power plants of IEC up to 2030, whether by virtue of a Government decision or due to the age of the plants (Orot Rabin units 1—4 (1,440 MW), Reading (428 MW), Eshkol (912 MW), Ramat Hovav (335 MW) and additional units (621 MW)) | 3,800 |
Additional capacity through facilities under construction and quotas published by the EA | 2,850 |
Expected installed capacity in 2030 without additional quotas | 15,500 |
Forecasted peak demand in 2030 plus required reserve of 3,700 MW | 23,400 |
Contribution of renewable energy and integration of accumulation in the renewable energy facilities for savings on the conventional capacity required | 1,200 |
Additional installed capacity required (not including renewable energy) | 6,700 |
Additional installed capacity required (including renewable energy) | 7,500 |
Hours per Consumption Block1 | ||||||||||||
Winter | Transition | Summer | ||||||||||
(Hours) | ||||||||||||
Peak | 416 | 2,058 | 308 | |||||||||
Shoulder | 208 | 868 | 308 | |||||||||
Off-Peak | 1,560 | 2,186 | 872 |
(1) | The hours per consumption block may vary due to changes in the dates of weekdays, weekends and public holidays. |
Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
($ millions) | ||||||||||||
Revenue | 373 | 363 | 365 | |||||||||
Cost of Sales | (256 | ) | (258 | ) | (266 | ) | ||||||
Net Income | 34 | 26 | 14 | |||||||||
EBITDA1 | 105 | 91 | 86 | |||||||||
Outstanding Debt2 | 622 | 587 | 618 | |||||||||
Net Debt3 | 400 | 401 | 395 |
(1) | “EBITDA” is a non-IFRS measure. For a reconciliation of OPC’s net income (loss) to its EBITDA, see footnote 1 to the first table in “Item 3.A Selected Financial Data—Selected Reportable Segment Data—OPC” setting forth the selected financial data for the year ended December 31, 2019. |
(2) | Includes short-term and long-term debt. |
(3) | “Net debt” is a non-IFRS measure. For a reconciliation of total debt to net debt for OPC and its businesses as of December 31, 2019 see footnote 2 to the first table in “Item 3.A Selected Financial Data—Selected Reportable Segment Data—OPC” setting forth the selected financial data for the year ended December 31, 2019. |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,727 | 99 | % | ||||||||
OPC-Hadera | 18 | 84 | 94 | % | ||||||||
OPC Total | 484 | 3,811 |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,299 | 87 | % | ||||||||
OPC-Hadera | 18 | 84 | 94 | % | ||||||||
OPC Total | 484 | 3,383 |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,576 | 94 | % | ||||||||
OPC-Hadera | 18 | 79 | 89 | % | ||||||||
OPC Total | 484 | 3,655 |
• | Receipt of the conditional license—in April 2019, Tzomet was granted a conditional license for a 66-month term (which can be extended, subject to conditions). The conditional license is conditional on compliance with various milestones, including reaching commercial operation within 66 months from the date of the conditional license (which is currently expected to take place at the end of 2022). See “Item 3.D Risk Factors—Risks Related to OPC—OPC faces risks in connection with the expansion of its business.” |
• | Entry into financing agreement—in December 2019, Tzomet entered into a NIS 1.4 billion (approximately $405 million) senior facility agreement to finance the construction of the Tzomet plant, see “Item 5.B Liquidity and Capital Resources—OPC’s Liquidity and Capital Resources—OPC’s Material Indebtedness—Tzomet Financing.” |
• | Receipt of positive interconnection study and rate approval—in September 2019, Tzomet received the results of an interconnection study performed by the System Administrator. The study included a limitation on output of the power plant’s full capacity to the grid beyond a limited number of hours per year, up to completion of transmission projects by IEC, which are expected to be completed by the end of 2023. In December 2019, the EA approved Tzomet’s tariff rates, which will be applicable upon completion of the power plant and receipt of a permanent generation license. Given the limitation included in the interconnection study, Tzomet will be subject to a reduced availability tariff during 2023. |
• | Receipt of land approval and construction permit — In 2010, Tzomet entered into an option agreement with Kibbutz Netiv HLH for the lease of a plot of land for the construction of the power plant, located at the Plugot Intersection for 25 years (with an option to extend the lease for an additional 25 years). The exercise of the option required the approval of the Israeli Land Authority. In January 2020, the Israeli Land Authority notified Tzomet of a required payment in the amount of NIS 207 million (approximately $60 million), or Initial Assessment, for the lease of the land. In January 2020, Tzomet paid the Initial Assessment and received a construction permit for its plant. The Initial Assessment remains subject to change following completion of certain control procedures by the Israeli Land Authority. |
• | Receipt of EA approval that conditions for financial closing were met—the EA notified Tzomet that the conditions for financial closing had been met on February 10, 2020. |
Name | Power Station Technology | Approximate Capacity (MW) | Commercial Operating Date |
Dorad | Conventional | 860 | May 2014 |
Mashav | Conventional | 120 | April 2014 |
Dalia — Unit 11 | Conventional | 450 | July 2015 |
Dalia — Unit 21 | Conventional | 450 | September 2015 |
Ashdod Energy2 | Cogeneration | 60 | October 2015 |
Ramat Negev Energy2 | Cogeneration | 120 | January 2016 |
Sugat2 | Cogeneration | 75 | November 2019 |
IPP Alon Tabor2 | Cogeneration | 74 | September 2019 |
IPP Ramat Gabriel2 | Cogeneration | 74 | November 2019 |
Paz Ashdod2 | Cogeneration | 100 | July 2013 |
Delek Sorek2 | Conventional | 140 | August 2016 |
Dead Sea Works (DSW)2 | Cogeneration | 230 | August 2018 |
IPM Beer Tuvia2 | Conventional | 450 | Under construction |
OPD Delek Ashkelon2 | Cogeneration | 87 | February 2009 |
(1) | To OPC’s knowledge, part of Dalia’s total installed output (Unit 1 and Unit 2) is allocated to the IEC, and part of it is allocated to private customers. |
(2) | To OPC’s knowledge, part of the capacity generated by these entities is designated to a yard consumer or to independent consumption. |
Season | Demand Hours | Weighted production rate (AGOROT per kWh) |
Winter | Off-peak | 19.85 |
Shoulder | 38.51 | |
Peak | 67.23 | |
Transition | Off-peak | 16.96 |
Shoulder | 21.67 | |
Peak | 27.92 | |
Summer | Off-peak | 16.75 |
Shoulder | 27.18 | |
Peak | 70.50 | |
Weighted Average Rate | 26.78 |
2019 | 2018 | |
Summer (2 months) | 70 | 67 |
Winter (3 months) | 102 | 98 |
Transitional Seasons (7 months) | 184 | 182 |
Total for the year | 356 | 347 |
Company/Plant | Location | Installed Capacity | Fuel Type | ||||
(MW) | |||||||
Operating Companies | |||||||
OPC-Rotem | Mishor Rotem, Israel | 466 | Natural gas and diesel (combined cycle) | ||||
OPC-Hadera1 | Hadera, Israel | 18 | 2 | Natural gas and diesel |
(1) | OPC-Hadera also holds a conditional license for the construction of a cogeneration power station in Israel, based upon a plant with up to 148 MW of capacity. Construction commenced in June 2016 and, following delays in the plant’s construction and operation, COD is currently expected in Q2 2020. |
(2) | OPC-Hadera’s generation license refers to an installed capacity of 25 MW, representing an 18 MW and 7 MW unit. The 7 MW steam turbine reflected in OPC-Hadera’s license is not active, and therefore OPC-Hadera’s installed capacity is only 18 MW. |
As of December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Number of employees by category of activity: | ||||||||||||
Plant operation and maintenance | 56 | 55 | 51 | |||||||||
Corporate management, finance, commercial and other | 40 | 37 | 37 | |||||||||
OPC Total | 96 | 92 | 88 |
• | An entity may not hold more than 20% of the total planned installed capacity on the date of sale of all the sites being sold. The generation capacity of an entity’s related parties with generation licenses will be counted towards such entity’s capacity for purposes of this 20% limitation. In addition, the EA published proposed regulations in respect of maximum holdings in generation licenses which are not identical to the Competition Authority principles. The Competition Authority has stated that the relevant limit is 20% of 10,500 MW (which is the anticipated capacity in the market held by private players by 2023, excluding capacity of IEC), while, the EA has proposed regulation whereby the relevant limit is 20% of 14,000 MW (including capacity of IEC). We may be subject to more restrictive interpretation. The MW currently attributable to OPC, including Oil Refineries Ltd., or ORL, and Israel Chemicals Ltd. as parties with generation licenses that are related to OPC, is approximately 1,480 MW. |
• | An entity holding a right to a fuel venture may not acquire any of the sites being sold. |
• | Conventional technology – electricity generation using fossil fuel (natural gas or diesel oil). Exercise of the quota of IPPs using this technology amounts to approximately 2,540 MW out of a total quota of 3,640 MW assigned to generation using this technology. |
• | Cogeneration technology –electricity generation using facilities that simultaneously generate both electrical energy and useful thermal energy (steam) from a single source of energy. Exercise of the quota of generators using this technology amounts to approximately 990 MW out of a total quota of 1,000 MW assigned under the current regulation. Licenses issued beyond that shall be subject to different regulation. |
• | Renewable energy – generation of electric power the source of energy of which includes, inter alia, sun, wind, water or waste. The installed capacity of renewable energy generation facilities amounts to approximately 2,000 MW out of a quota of 4,489 MW assigned to generation using renewable energy. |
• | Pumped storage energy – generation of electricity using an electrical pump connected to the power grid in order to pump water from a lower water reservoir to an upper water reservoir, while taking advantage of the height differences between them in order to power an electric turbine. The installed capacity of production facilities using this technology amounts to 644 MW out of a total quota of 800 MW assigned to generation. |
1. | Capacity and Energy to IEC: according to the IEC PPA, OPC-Rotem is obligated to allocate its full capacity to IEC. In return, IEC shall pay OPC-Rotem a monthly payment for each available MW, net, that was available to IEC. |
2. | Sale of energy to end users: OPC-Rotem is allowed to inform IEC, subject to the provision of advanced notice, that it is releasing itself in whole or in part from the allocation of capacity to IEC, and extract (in whole or in part) the capacity allocated to IEC, in order to sell electricity to private customers pursuant to the Electricity Sector Law. OPC-Rotem may, subject to 12-months’ advanced notice, re-include the excluded capacity (in whole or in part) as capacity sold to IEC. |
1. | At peak and shoulder times, one of the following shall apply: |
a. | each year, the IPP may sell up to 70% of the total electrical energy, calculated annually, produced in its facility to IEC—for up to 12 years from the date of the grant of the license; or |
b. | each year, the IPP may sell up to 50% of the total electrical energy, calculated annually, produced in its facility to IEC—for up to 18 years from the date of the grant of the license. |
2. | At low demand times, IPPs with units with an installed capacity of up to 175 MW, may sell electrical energy produced by it with a capacity of up to 35 MW, calculated annually or up to 20% of the produced power, inasmuch as the installed output of the unit is higher than 175 MW, all calculated on an annual basis. |
• | Qoros’ dealerships included 106 points of sales, including 5 dealerships operated by the Majority Shareholder in Qoros (as compared to 160 as of December 31, 2018), no additional points of sales under construction and Memorandums of Understanding (as compared to 29 as of December 31, 2018); |
• | Qoros had 68 full-service dealerships (as compared to 96 as of December 31, 2018), providing Qoros’ customers with authorized salesmen, showrooms, and services and parts, under one roof; the remaining portion of Qoros’ dealership network comprises only showrooms; and |
• | Qoros operated 2 self-owned dealerships. |
Kenon’s Sale of Half of its Remaining Interest in Qoros to the Majority Shareholder in Qoros
We are party to a joint venture agreement, or the Joint Venture Agreement, entered into on February 16, 2007, which was amended to reflect the Majority Shareholder in Qoros’ 51% interest in Qoros, as a result of the 2018 investment, as well as certain terms agreed pursuant to the investment agreement. The Joint Venture Agreement is to be further amended to reflect the Majority Shareholder in Qoros’ 63% interest in Qoros, as a result of the 2020 sale. The Joint Venture Agreement sets forth certain rights and obligations of each of Quantum, the wholly-owned subsidiary through which we own our equity interest in Qoros, Wuhu Chery and the Majority Shareholder in Qoros with respect to Qoros.
Trade Zone | Description of Trade Zone | 2019 TEU Transported (%) | 2018 TEU Transported (%) | 2017 TEU Transported (%) | ||||||||||
Pacific | Consists of the Trans-Pacific trade zone, which covers trade between Asia (mainly China) and the east coast and west coast of the U.S., Canada, Central America and the Caribbean | 36.7 | 38.3 | 34.2 | ||||||||||
Cross Suez | Consists of the Asia-Europe trade zone, which covers trade between Asia and Europe through the Suez Canal, primarily through the Asia-Black Sea/Mediterranean Sea sub-trade zone | 13.6 | 14.7 | 15.9 | ||||||||||
Intra-Asia | Consists primarily of the Intra-Asia trade zone, which covers trade within regional ports in Asia, including India sub-continental, as well as trade between Asia and Africa | 21.7 | 21.4 | 21.1 | ||||||||||
Atlantic | Consists of the Trans-Atlantic trade zone, which covers the trade between the Mediterranean to U.S. east and west coasts and the Caribbean, as well as Intra trades which include the East Mediterranean | 21.2 | 18.5 | 21.3 | ||||||||||
Latin America | Consists of the Intra-America trade zone, which covers trade within regional ports in the Americas as well as trade between South American east coast and Asia and the Mediterranean to South America east coast via the Atlantic Ocean | 6.8 | 7.1 | 7.5 | ||||||||||
Total | 100.0 | 100.0 | 100.0 |
Container Vessels | ||||||||||||||||
Number | Capacity (TEU) | Other Vessels | Total | |||||||||||||
Vessels owned by ZIM | 1 | 4,992 | - | 1 | ||||||||||||
Vessels chartered from parties related to ZIM 1 | ||||||||||||||||
Periods up to 1 year (from December 31, 2019) | 2 | 5,993 | 2 | 2 | 4 | |||||||||||
Periods between 1 to 5 years (from December 31, 2019) | 2 | 8,442 | - | 2 | ||||||||||||
Periods over 5 years (from December 31, 2019) | - | - | - | - | ||||||||||||
Vessels chartered from third parties3 | ||||||||||||||||
Periods up to 1 year (from December 31, 2019) | 47 | 205,707 | - | 47 | ||||||||||||
Periods between 1 to 5 years (from December 31, 2019) | 11 | 64,332 | - | 11 | ||||||||||||
Periods over 5 years (from December 31, 2019) | 3 | 22,677 | - | 3 | ||||||||||||
Total | 66 | 312,143 | 2 | 1 | 68 |
(1) | Includes 3 vessels accounted as on-balance-sheet leases under the new accounting guidance of IFRS 16. |
(2) | Vehicle transport vessels. |
(3) | Includes 29 vessels accounted as on-balance-sheet leases under the new accounting guidance of IFRS 16 and 4 vessels accounted under sale and leaseback refinancing agreements. |
• | 62 vessels were chartered under a “time charter,” which consists of chartering the vessel capacity for a given period of time against a daily charter fee, with the crewing and technical operation of the vessel handled by its owner, including 6 vessels chartered under a time charter from parties related to ZIM; and |
• | 5 vessels were chartered under a “bareboat charter,” which consists of the chartering of a vessel for a given period of time against a charter fee, with the operation of the vessel handled by the charterer. |
• | ZIM must be, at all times, a company incorporated and registered in Israel, whose headquarters and registered main office are domiciled in Israel; |
• | at least a majority of the members of ZIM’s board of directors, including the Chairman of the board, as well as the Chief Executive Officer or the person serving as its Chief Business Officer, whatever his/her title may be, must be Israeli citizens; |
• | any transfer of vessels shall be invalid vis-à-vis ZIM, its shareholders and any third party if, as a result thereof, the minimum fleet target mandated by the State of Israel will not be maintained and the holder of the Special State Share has not given prior written consent thereto (the minimum fleet requirement is currently zero, as approved by the State of Israel); |
• | any holding and/or transfer of shares and/or allocation that confers possession of shares in ZIM at 35% or more of its issued share capital, or that vests the holder thereof with control over ZIM, including as a result of a voting agreement, shall be invalid vis-à-vis ZIM, its shareholders and any third party, if the holder of the Special State Share has not given prior written consent thereto; and |
• | any transfer of shares granting the owner a holding exceeding 24% but not exceeding 35%, shall require prior notice to the State of Israel, including full information regarding the transferor and the transferee, the percentage of the shares held by the transferee after the transaction will be completed, and the relevant information about the transaction, including voting agreements and agreements for the appointment of directors (if applicable). In any case, if the State of Israel determines that a transfer of such shares shall constitute potential harm to the State of Israel’s security, or any of its vital interests, or that it has not received the relevant information in order to decide, the State of Israel shall be entitled to notify the parties within 30 days that it opposes the transaction, and will be obligated to justify its opposition. In such a situation, the requestor of the transaction shall be entitled to transfer this matter to the competent court, which shall hear and rule on the subject in question. |
• | prior to their expiration in July 2019 (or December 2020 in the case of representations relating to environmental matters), a breach of any of the sellers’ representations and warranties (other than fundamental representations) up to a maximum amount of $176.55 million; |
• | prior to their expiration upon the expiration of the statute of limitations applicable to breach of contract claims in New York, a breach of any of the sellers’ covenants or agreements set forth in the share purchase agreement; |
• | prior to their expiration thirty days after the expiration of the applicable statute of limitations, certain tax liabilities for pre-closing periods and certain transfer taxes, breach of certain tax representations and the incurrence of certain capital gain taxes by the transferred companies in connection with the transaction; and |
• | without limitation with respect to time, a breach of any of the sellers’ fundamental representations (including representations relating to due authorization, ownership title, and capitalization). |
• | IC Power’s three-year pledge of OPC shares representing 25% of OPC shares as of December 31, 2017; |
• | to the extent any indemnification obligations remain outstanding after the exercise of the above-described pledge (or payments of amounts equal to the value of the pledge), a deferral of $175 million of the purchase price in the form of a four-year $175 million Deferred Payment Agreement, accruing interest at a rate of 8% per annum payable-in-kind accruing from the closing date, which the buyer may use to set-off any such indemnification obligations owed to it (see “—Nautilus Energy TopCo LLC Deferred Payment Agreement”); and |
• | to the extent any obligations remain outstanding after seeking recourse against of the Deferred Payment Agreement, a three-year corporate guarantee from Kenon. |
• | Kenon can withdraw dividends paid into that account as follows (i) in the first 365 days from November 24, 2017, if the 30-trading day volume weighted average price, or VWAP, prior to drawing such dividends exceeds NIS14.45, Kenon can draw an amount up to 50% of cumulative net income of OPC from January 1, 2017 (such amount is referred to as the “dividend cap”), (ii) during the following 365-day period, if the 30-trading day VWAP prior to drawing such dividends exceeds NIS14.82, Kenon can draw an amount up to the dividend cap and (iii) during the following 365-day period, if the 30-trading day VWAP prior to drawing such dividends exceeds NIS15.17, Kenon can draw an amount up to the dividend cap; and |
• | in addition, on one occasion over the life of the pledge Kenon can draw from the pledged account its pro rata share of OPC dividends up to $25 million paid in respect of all of the pledged shares (by way of example if the company makes a distribution of $50 million following the original effective date of the pledge agreement, Kenon is entitled to draw from the pledged account $6.25 million). |
C. | Organizational Structure |
D. | Property, Plants and Equipment |
Ownership Percentage | Method of Accounting | Treatment in Consolidated Financial Statements | ||||||
OPC | 70 | % | Consolidated | Consolidated | ||||
Qoros | 24 | 1% | Equity | Share in losses of associated companies, net of tax | ||||
ZIM | 32 | % | Equity | Share in losses of associated companies, net of tax | ||||
Other | ||||||||
Primus | 91 | % | Consolidated | Consolidated |
(1) | In January 2018, our ownership in Qoros was reduced from 50% to 24% in connection with the investment in Qoros by the Majority Shareholder in Qoros. In April 2020, Kenon sold half of its remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros. As a result, Kenon now has a 12% stake in Qoros. |
Year Ended December 31, 2019 | ||||||||||||||||
OPC | Quantum1 | Other2 | Consolidated Results | |||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||
Revenue | $ | 373 | $ | — | $ | — | $ | 373 | ||||||||
Depreciation and amortization | (31 | ) | — | — | (31 | ) | ||||||||||
Financing income | 2 | — | 16 | 18 | ||||||||||||
Financing expenses | (28 | ) | — | (2 | ) | (30 | ) | |||||||||
Fair value loss on put option | — | (19 | ) | — | (19 | ) | ||||||||||
Recovery of financial guarantee | — | 11 | — | 11 | ||||||||||||
Share in losses of associated companies | — | (37 | ) | (4 | ) | (41 | ) | |||||||||
Profit / (Loss) before taxes | $ | 48 | $ | (45 | ) | $ | (8 | ) | $ | (5 | ) | |||||
Income taxes | (14 | ) | — | (3 | ) | (17 | ) | |||||||||
Profit / (Loss) from continuing operations | $ | 34 | $ | (45 | ) | $ | (11 | ) | $ | (22 | ) | |||||
Segment assets3 | $ | 1,000 | $ | 72 | $ | 246 | 4 | $ | 1,318 | |||||||
Investments in associated companies | — | 106 | 84 | 190 | ||||||||||||
Segment liabilities | 762 | — | 34 | 5 | 796 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | Excludes investments in associates. |
(4) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities. |
Year Ended December 31, 2018 | ||||||||||||||||||||
OPC | Quantum1 | Other2 | Adjustments3 | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | $ | 363 | $ | — | $ | 1 | $ | — | $ | 364 | ||||||||||
Depreciation and amortization | (30 | ) | — | — | — | (30 | ) | |||||||||||||
Financing income | 2 | 10 | 48 | (32 | ) | 28 | ||||||||||||||
Financing expenses | (27 | ) | (2 | ) | (33 | ) | 32 | (30 | ) | |||||||||||
Gain on third party investment in Qoros | — | 504 | — | — | 504 | |||||||||||||||
Fair value loss on put option | — | (40 | ) | — | — | (40 | ) | |||||||||||||
Recovery of financial guarantee | — | 63 | — | — | 63 | |||||||||||||||
Share in losses of associated companies | — | (78 | ) | (27 | ) | — | (105 | ) | ||||||||||||
Profit / (Loss) before taxes | $ | 36 | $ | 457 | $ | (31 | ) | $ | — | $ | 462 | |||||||||
Income taxes | (10 | ) | — | (1 | ) | — | (11 | ) | ||||||||||||
Profit / (Loss) from continuing operations | $ | 26 | $ | 457 | $ | (32 | ) | $ | — | $ | 451 | |||||||||
Segment assets4 | $ | 893 | $ | 92 | $ | 239 | 5 | $ | — | $ | 1,224 | |||||||||
Investments in associated companies | — | 139 | 92 | — | 231 | |||||||||||||||
Segment liabilities | 700 | — | 39 | 6 | — | 739 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | “Adjustments” includes inter segment financing income and expense. |
(4) | Excludes investments in associates. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(6) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities |
Year Ended December 31, 2019 | ||||||||||||
Qoros | ZIM | Total | ||||||||||
(in millions of USD) | ||||||||||||
Loss (100% of results) | $ | (312 | ) | $ | (18 | ) | $ | (330 | ) | |||
Share of loss from Associates | (37 | ) | (4 | ) | (41 | ) | ||||||
Book Value | 106 | 84 | 190 |
Year Ended December 31, 2018 | ||||||||||||
Qoros | ZIM | Total | ||||||||||
(in millions of USD) | ||||||||||||
Loss (100% of results) | $ | (330 | ) | $ | (126 | ) | $ | (456 | ) | |||
Share of loss from Associates | (78 | ) | (27 | ) | (105 | ) | ||||||
Book Value | 139 | 92 | 231 |
• | recoverable amount of non-financial assets and CGUs; and |
• | Qoros put option. |
A. | Operating Results |
Year Ended December 31, 2019 | ||||||||||||||||
OPC | Quantum1 | Other2 | Consolidated Results | |||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||
Revenue | $ | 373 | $ | — | $ | — | $ | 373 | ||||||||
Depreciation and amortization | (31 | ) | — | — | (31 | ) | ||||||||||
Financing income | 2 | — | 16 | 18 | ||||||||||||
Financing expenses | (28 | ) | — | (2 | ) | (30 | ) | |||||||||
Fair value loss on put option | — | (19 | ) | — | (19 | ) | ||||||||||
Recovery of financial guarantee | — | 11 | — | 11 | ||||||||||||
Share in losses of associated companies | — | (37 | ) | (4 | ) | (41 | ) | |||||||||
Profit / (Loss) before taxes | $ | 48 | $ | (45 | ) | $ | (8 | ) | $ | (5 | ) | |||||
Income taxes | (14 | ) | — | (3 | ) | (17 | ) | |||||||||
Profit / (Loss) from continuing operations | $ | 34 | $ | (45 | ) | $ | (11 | ) | $ | (22 | ) | |||||
Segment assets3 | $ | 1,000 | $ | 72 | $ | 246 | 4 | $ | 1,318 | |||||||
Investments in associated companies | — | 106 | 84 | 190 | ||||||||||||
Segment liabilities | 762 | — | 34 | 5 | 796 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | Excludes investments in associates. |
(4) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities. |
1 | For a comparison of Kenon’s operating results for the fiscal year ended December 31, 2018 with the fiscal year ended December 31, 2017, please see Item 5.A of Kenon’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018. |
Year Ended December 31, 2018 | ||||||||||||||||||||
OPC | Quantum1 | Other2 | Adjustments3 | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | $ | 363 | $ | — | $ | 1 | $ | — | $ | 364 | ||||||||||
Depreciation and amortization | (30 | ) | — | — | — | (30 | ) | |||||||||||||
Financing income | 2 | 10 | 48 | (32 | ) | 28 | ||||||||||||||
Financing expenses | (27 | ) | (2 | ) | (33 | ) | 32 | (30 | ) | |||||||||||
Gain on third party investment in Qoros | — | 504 | — | — | 504 | |||||||||||||||
Fair value loss on put option | — | (40 | ) | — | — | (40 | ) | |||||||||||||
Recovery of financial guarantee | — | 63 | — | — | 63 | |||||||||||||||
Share in losses of associated companies | — | (78 | ) | (27 | ) | — | (105 | ) | ||||||||||||
Profit / (Loss) before taxes | $ | 36 | $ | 457 | $ | (31 | ) | $ | — | $ | 462 | |||||||||
Income taxes | (10 | ) | — | (1 | ) | — | (11 | ) | ||||||||||||
Profit / (Loss) from continuing operations | $ | 26 | $ | 457 | $ | (32 | ) | $ | — | $ | 451 | |||||||||
Segment assets4 | $ | 893 | $ | 92 | $ | 239 | 5 | $ | — | $ | 1,224 | |||||||||
Investments in associated companies | — | 139 | 92 | — | 231 | |||||||||||||||
Segment liabilities | 700 | — | 39 | 6 | — | 739 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | Includes the results of Primus, the results of ZIM, as an associated company; as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
(3) | “Adjustments” includes inter segment financing income and expense. |
(4) | Excludes investments in associates. |
(5) | Includes Kenon’s, IC Green’s and IC Power holding company assets. |
(6) | Includes Kenon’s, IC Green’s and IC Power holding company liabilities |
Year Ended December 31, 2019 | Year Ended December 31, 2018 | |||||||||||||||
ZIM | Qoros1 | ZIM | Qoros2 | |||||||||||||
(in millions of USD) | ||||||||||||||||
Revenue | $ | 3,300 | $ | 350 | $ | 3,248 | $ | 812 | ||||||||
(Loss)/Income | (18 | ) | (312 | ) | (126 | ) | (330 | ) | ||||||||
Other comprehensive loss | (10 | ) | - | (6 | ) | - | ||||||||||
Total comprehensive (loss)/income | $ | (28 | ) | $ | (312 | ) | $ | (132 | ) | $ | (330 | ) | ||||
Share of Kenon in total comprehensive (loss)/income | $ | (9 | ) | $ | (37 | ) | $ | (40 | ) | $ | (78 | ) | ||||
Adjustments | 1 | - | 13 | - | ||||||||||||
Share of Kenon in total comprehensive (loss)/gain presented in the books | $ | (8 | ) | $ | (37 | ) | $ | (27 | ) | $ | (78 | ) | ||||
Total assets | $ | 1,926 | $ | 1,708 | $ | 1,826 | $ | 1,914 | ||||||||
Total liabilities | 2,178 | 1,584 | 2,050 | 1,475 | ||||||||||||
Book value of investment | 84 | 106 | 92 | 139 |
(1) | We owned 50% of Qoros until January 2018, when our equity interest in Qoros was reduced to 24% in connection with the initial investment by the Majority Shareholder in Qoros. In April 2020, we sold half of our remaining interest in Qoros (i.e. 12%) to the Majority Shareholder in Qoros and, as a result, we hold a 12% interest in Qoros. |
(2) | We owned 24% of Qoros throughout 2018. |
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 |
• | 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. |
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. |
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
(in millions of USD) | ||||||||
Revenue | $ | 3,300 | $ | 3,248 | ||||
Cost of services | 3,037 | 3,100 | ||||||
Gross profit | 263 | 148 | ||||||
Operating loss | 153 | (29 | )1 | |||||
Loss before taxes on income | (1 | ) | (106 | ) | ||||
Taxes on income | (12 | ) | (14 | ) | ||||
(Loss)/profit for the period | $ | (13 | ) | $ | (120 | ) |
1. | Includes an impairment of $38 million with respect to certain vessels classified as held for sale. |
B. | Liquidity and Capital Resources |
Year Ended December 31, | ||||||||
2019 | 2018 | |||||||
(in millions of USD) | ||||||||
Continuing operations | ||||||||
Net cash flows provided by operating activities | ||||||||
OPC | 109 | 86 | ||||||
Adjustments and Other | (23 | ) | (34 | ) | ||||
Total | 86 | 52 | ||||||
Net cash flows (used in) / provided by investing activities | (30 | ) | 42 | |||||
Net cash flows used in financing activities | (74 | ) | (1,217 | ) | ||||
Net change in cash from continuing operations | (18 | ) | (1,123 | ) | ||||
Net change in cash from discontinued operations | 25 | (155 | ) | |||||
Cash—opening balance | 131 | 1,417 | ||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 9 | (8 | ) | |||||
Cash—closing balance | $ | 147 | $ | 131 |
2 | For a comparison of Kenon’s liquidity and capital resources for the fiscal year ended December 31, 2018 with the fiscal year ended December 31, 2017, please see Item 5.A of Kenon’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018. |
Outstanding Principal Amount as of December 31, 2019 | Interest Rate | Final Maturity | Amortization Schedule | |||||||
($millions) | ||||||||||
OPC-Rotem: | ||||||||||
Financing agreement1 | 346 | 4.9%-5.4, % CPI linked | June 2031 | Quarterly principal payments to maturity | ||||||
OPC-Hadera: | ||||||||||
Financing agreement2 | 194 | 3.4%-3.9%, CPI linked (2/3 of the loan) 4.7%-5.4% (1/3 of the loan) | 18 years from commercial operations date of OPC-Hadera power plant | Quarterly principal payments to maturity, commencing 6 months following commercial operations of OPC-Hadera power plant | ||||||
Tzomet: | ||||||||||
Financing agreement3 | - | 3 | CPI or US$ linked with interest equal to prime plus margin of 0.5-1.5% - agreement includes provisions for conversion of interest from variable to CPI-linked debenture interest plus margin of 2-3% | Earliest of 19 years from commercial operations date of Tzomet power plant and 23 years from the signing date, but no later than December 31, 2042 | Quarterly principal payments to maturity, commencing close to the end of the second or third quarter following commercial operations of the Tzomet power plant | |||||
OPC4: | ||||||||||
Bonds (Series A)5 | 82 | 4.45% (commencing from the date of registration for trading on the stock exchange) | December 2030 | Semi-annual principal payments to maturity | ||||||
Short-term credit facility6 | - | Prime plus 0.6%. As of January 2020, the adjusted interest rate based on an annual calculation was 2.371%6 | April 20206 | Single payment at maturity | ||||||
Total | 622 |
(1) | Represents NIS 1,197 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.456 to $1.00. All debt has been issued in Israeli currency (NIS) linked to CPI. |
(2) | Represents NIS 671 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.456 to $1.00. All debt has been issued in Israeli currency (NIS), of which 2/3 is linked to CPI and 1/3 is not linked to CPI. |
(3) | In February 2020, Tzomet made its first drawing under the facility agreement in the aggregate amount of approximately $7 million, which represents NIS 25 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.434 to $1.00. All debt has been issued in Israeli currency (NIS) part of which is linked to CPI and part of which is not linked to CPI. |
(4) | In April 2020, OPC completed an offering of NIS400 million (approximately $113 million) of Series B Bonds on the Tel Aviv Stock Exchange, at an annual interest rate of 2.75%. See “—OPC Bonds—Series B.” |
(5) | Represents NIS 283 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.456 to $1.00. All debt has been issued in Israeli currency (NIS) and is not linked to CPI. |
(6) | In January 2020, OPC fully drew down this short-term facility through a drawdown of approximately $66 million, representing NIS 230 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.460 to $1.00. All debt has been issued in Israeli currency (NIS) and is not linked to CPI. The facility was entered into December 2019 and consisted of a NIS 169 million (approximately $47 million) three-month loan due April 2020, bearing interest at the prime rate plus 0.6%, and a NIS 61 million (approximately $18 million) bank guarantee to be released in January 2021. In April 2020, OPC refinanced the loan through a new short-term credit facility consisting of a NIS 169 million (approximately $47 million) loan due October 2020, bearing interest at the prime rate plus 1.7%. For more information see, “—OPC Short-Term Credit Facility.” |
• | minimum annual (in the past 12 months) debt service coverage ratio (DSCR), annual projected DSCR and annual loan life coverage ratio (LLCR): 1.05-1.1, depending on the supply of electricity to IEC; |
• | maintenance of minimum amounts in the reserve accounts in accordance with the agreement; and |
• | other non-financial covenants and limitations such as restrictions on asset sales, pledges investments and incurrence of debt, as well as reporting obligations. |
• | minimum projected DSCR, average projected DSCR (in relation to long-term loans at the commercial operation date of the power plant) and LLCR (at the commercial operation date of the power plant): 1.10 – on the withdrawal dates the ratio must be at least 1.20; |
• | maintenance of minimum amounts in the reserve accounts in accordance with the agreement; and |
• | other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledges investments and incurrence of debt as well as reporting obligations. |
• | minimum projected average debt service coverage ratio (ADSCR), average projected ADSCR and LLCR: 1.05 – on the withdrawal dates, Tzomet is required to comply with a minimum contractual ADSCR (i.e. the lowest contractual ADSCR of all the contractual ADSCRs up to the date of final repayment) an average contractual ADSCR (i.e. the average contractual ADSCR of all the contractual ADSCRs up to the date of final repayment), and a contractual LLCR on the commencement date of the commercial operation of at least 1.3; |
• | maintenance of minimum amounts in the reserve accounts in accordance with the agreement; and |
• | other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledge investments and incurrence of debt. |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
E. | Off-Balance Sheet Arrangements |
F. | Tabular Disclosure of Contractual Obligations |
Payments Due by Period1 | ||||||||||||||||||||
Total | Less than One Year | One to Two Years | Two to Five Years | More than Five Years | ||||||||||||||||
($ millions) | ||||||||||||||||||||
OPC’s consolidated contractual obligations | ||||||||||||||||||||
Trade Payables | $ | 36 | $ | 36 | $ | — | $ | — | $ | — | ||||||||||
Other payables | 5 | 5 | — | — | — | |||||||||||||||
Bonds | 105 | 12 | 13 | 27 | 53 | |||||||||||||||
Lease liabilities | 9 | 1 | 1 | 2 | 5 | |||||||||||||||
Loans | 722 | 62 | 60 | 182 | 418 | |||||||||||||||
Derivative instruments | 42 | 6 | 5 | 14 | 17 | |||||||||||||||
Total contractual obligations and commitments | $ | 919 | 122 | 79 | 225 | 493 |
(1) | Excludes Kenon’s back-to-back guarantees to Chery as well as obligations under agreement with capital provider relating to Peru BIT claim and guarantee of indemnity obligations under the sale agreement for the Inkia Business. For further information on other commitments, see Note 20 to our financial statements included in this annual report. |
G. | Safe Harbor |
A. | Directors and Senior Management |
Name | Age | Function | Original Appointment Date | Current Term Begins | Current Term Expires | |||||
Antoine Bonnier | 37 | Board Member | 2016 | 2019 | 2020 | |||||
Laurence N. Charney | 73 | Chairman of the Audit Committee, Compensation Committee Member, Board Member | 2014 | 2019 | 2020 | |||||
Barak Cohen | 38 | Board Member | 2018 | 2019 | 2020 | |||||
Cyril Pierre-Jean Ducau | 41 | Chairman of the Board, Nominating and Corporate Governance Committee Chairman | 2014 | 2019 | 2020 | |||||
N. Scott Fine | 63 | Audit Committee Member, Compensation Committee Chairman, Board Member | 2014 | 2019 | 2020 | |||||
Bill Foo | 62 | Board Member, Nominating and Corporate Governance Committee Member | 2017 | 2019 | 2020 | |||||
Aviad Kaufman | 49 | Compensation Committee Member, Board Member, Nominating and Corporate Governance Committee Member | 2015 | 2019 | 2020 | |||||
Arunava Sen | 59 | Board Member, Audit Committee Member | 2017 | 2019 | 2020 |
Name | Age | Position | ||
Robert L. Rosen | 47 | Chief Executive Officer | ||
Mark Hasson | 44 | Chief Financial Officer |
B. | Compensation |
C. | Board Practices |
• | the quality and integrity of our financial statements and internal controls; |
• | the compensation, qualifications, evaluation and independence of, and making a recommendation to our board for recommendation to the annual general meeting for appointment of, our independent registered public accounting firm; |
• | the performance of our internal audit function; |
• | our compliance with legal and regulatory requirements; and |
• | review of related party transactions. |
• | reviewing and determining the compensation package for our Chief Executive Officer and other senior executives; |
• | reviewing and making recommendations to our board with respect to the compensation of our non-employee directors; |
• | reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other senior executives, including evaluating their performance in light of such goals and objectives; and |
• | reviewing periodically and approving and administering stock options plans, long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans for all employees, including reviewing and approving the granting of options and other incentive awards. |
D. | Employees |
Number of Employees as of December 31, | ||||||||||||
Company | 2019 | 2018 | 2017 | |||||||||
OPC | 96 | 92 | 88 | |||||||||
Primus | 12 | 13 | 14 | |||||||||
Kenon | 6 | 7 | 6 | |||||||||
Total | 114 | 112 | 108 |
E. | Share Ownership |
A. | Major Shareholders |
Beneficial Owner (Name/Address) | Ordinary Shares Owned | Percentage of Ordinary Shares | ||||||
Ansonia Holdings Singapore B.V.1 | 31,156,869 | 58.0 | % | |||||
Clal Insurance Enterprises Holdings Ltd.2 | 5,472,886 | 10.2 | % | |||||
Menora Mivtachim Holdings Ltd.3 | 3,033,732 | 5.64 | % | |||||
Harel Insurance Investments & Financial Services Ltd.4 | 2,852,397 | 5.2 | % | |||||
Laurence N. Charney5 | 37,187 | * | 6 | |||||
Barak Cohen5 | 45,438 | * | 6 | |||||
N. Scott Fine5 | 30,464 | * | 6 | |||||
Bill Foo5 | 6,284 | * | 6 | |||||
Arunava Sen5 | 6,284 | * | 6 | |||||
Directors and Executive Officers7 | — | * | 6 |
(1) | Based solely on the Schedule 13-D/A (Amendment No. 4) filed by Ansonia Holdings Singapore B.V. with the SEC on January 25, 2017. A discretionary trust, in which Mr. Idan Ofer is the beneficiary, indirectly holds 100% of Ansonia Holdings Singapore B.V. |
(2) | Based solely upon the Schedule 13-G/A (Amendment No. 2) filed by Clal Insurance Enterprises Holdings Ltd. with the SEC on February 10, 2020. According to the Schedule 13-G/A, of the 5,472,886 ordinary shares reported on the Schedule 13-G/A, (i) 5,425,777 ordinary shares are held for members of the public through, among others, provident funds and/or pension funds and/or insurance policies, which are managed by subsidiaries of Clal Insurance Enterprises Holdings Ltd., which subsidiaries operate under independent management and make independent voting and investment decisions; and (ii) 47,109 ordinary shares are beneficially held for Clal Insurance Enterprises Holdings Ltd.’s own account. |
(3) | Based solely upon the Schedule 13-G/A (Amendment No. 2) filed by Menora Mivtachim Holdings Ltd. with the SEC on February 12, 2020. According to the Schedule 13-G/A (i) the ordinary shares reported are beneficially owned by Menora Mivtachim Holdings Ltd. and by entities that are its direct or indirect, wholly-owned or majority-owned, subsidiaries; and (ii) the economic interest or beneficial ownership in a portion of the ordinary shares reported (including the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities) is held for the benefit of insurance policy holders or the members of provident funds or pension funds, as the case may be. According to the Schedule 13-G/A, of the 3,033,732 ordinary shares reported, (i) 2,548,102 ordinary shares are held by Menora Mivtachim Pensions and Gemel Ltd; (ii) 442,699 ordinary shares are held by Menora Mivtachim Insurance Ltd.; and (iii) 42,931 ordinary shares are held by Menora Mivtachim Vehistadrut Hamehandesim Nihul Kupot Gemel Ltd. |
(4) | Based solely upon the Schedule 13-G filed by Harel Insurance Investments & Financial Services Ltd. with the SEC on February 24, 2020. According to the Schedule 13-G/A of the 2,852,397 ordinary shares reported on the Schedule 13-G, (i) 2,852,396 ordinary shares are held for members of the public through, among others, provident funds and/or pension funds and/or insurance policies and/or exchange traded funds, which are managed by subsidiaries of Harel Insurance Investments & Financial Services Ltd., which subsidiaries operate under independent management and make independent voting and investment decisions; and (ii) 1 ordinary share is beneficially held for Harel Insurance Investments & Financial Services Ltd.’s own account. |
(5) | Based solely on Exhibit 99.3 to the Form 6-K furnished by Kenon with the SEC on May 16, 2019. |
(6) | Owns less than 1% of Kenon’s ordinary shares. |
(7) | Excludes shares held by Laurence N. Charney, Barak Cohen, N. Scott Fine, Bill Foo and Arunava Sen. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
A. | Offer and Listing Details. |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution. |
F. | Expenses of the Issue |
A. | Share Capital |
B. | Constitution |
• | the conclusion of the next annual general meeting; |
• | the expiration of the period within which the next annual general meeting is required by law to be held (i.e., within six months after our financial year end, being December 31); or |
• | the subsequent revocation or modification of approval by our shareholders acting at a duly convened general meeting. |
• | upon any resolution concerning the winding-up of our company; and |
• | upon any resolution which varies the rights attached to such preference shares. |
• | all the directors have made a solvency statement in relation to such redemption; and |
• | we have lodged a copy of the statement with the Singapore Registrar of Companies. |
• | 14 days’ written notice to be given by Kenon of a general meeting to pass an ordinary resolution; and |
• | 21 days’ written notice to be given by Kenon of a general meeting to pass a special resolution, |
• | a company and its related companies, the associated companies of any of the company and its related companies, companies whose associated companies include any of these companies and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights; |
• | a company and its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts); |
• | a company and its pension funds and employee share schemes; |
• | a person and any investment company, unit trust or other fund whose investment such person manages on a discretionary basis but only in respect of the investment account which such person manages; |
• | a financial or other professional adviser, including a stockbroker, and its clients in respect of shares held by the adviser and persons controlling, controlled by or under the same control as the adviser; |
• | directors of a company (including their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for the company may be imminent; |
• | partners; and |
• | an individual and such person’s close relatives, related trusts, any person who is accustomed to act in accordance with such person’s instructions and companies controlled by the individual, such person’s close relatives, related trusts or any person who is accustomed to act in accordance with such person’s instructions and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights. |
Delaware | Singapore—Kenon Holdings Ltd. | |
Board of Directors | ||
A typical certificate of incorporation and bylaws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation. | The constitution of companies will typically state the minimum and maximum number of directors as well as provide that the number of directors may be increased or reduced by shareholders via ordinary resolution passed at a general meeting, provided that the number of directors following such increase or reduction is within the maximum and minimum number of directors provided in the constitution and the Singapore Companies Act, respectively. Our constitution provides that, unless otherwise determined by a general meeting, the minimum number of directors is five and the maximum number is 12. |
Limitation on Personal Liability of Directors | ||
A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation would also provide that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended. | Pursuant to the Singapore Companies Act, any provision (whether in the constitution, contract or otherwise) purporting to exempt a director (to any extent) from any liability attaching in connection with any negligence, default, breach of duty or breach of trust in relation to Kenon will be void except as permitted under the Singapore Companies Act. Nevertheless, a director can be released by the shareholders of Kenon for breaches of duty to Kenon, except in the case of fraud, illegality, insolvency and oppression or disregard of minority interests. Our constitution currently provides that, subject to the provisions of the Singapore Companies Act and every other act for the time being in force concerning companies and affecting Kenon, every director, auditor, secretary or other officer of Kenon and its subsidiaries and affiliates shall be entitled to be indemnified by Kenon against all liabilities incurred by him in the execution and discharge of his duties and where he serves at the request of Kenon as a director, officer, employee or agent of any subsidiary or affiliate of Kenon or in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of Kenon, and in which judgment is given in his favor (or the proceedings otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted, or in connection with an application under statute in respect of such act or omission in which relief is granted to him by the court. | |
Interested Shareholders | ||
Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years. A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption. | There are no comparable provisions in Singapore with respect to public companies which are not listed on the Singapore Exchange Securities Trading Limited. | |
Removal of Directors | ||
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board). | According to the Singapore Companies Act, directors of a public company may be removed before expiration of their term of office with or without cause by ordinary resolution (i.e., a resolution which is passed by a simple majority of those shareholders present and voting in person or by proxy). Notice of the intention to move such a resolution has to be given to Kenon not less than 28 days before the meeting at which it is moved. Kenon shall then give notice of such resolution to its shareholders not less than 14 days before the meeting. Where any director removed in this manner was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove such director will not take effect until such director’s successor has been appointed. Our constitution provides that Kenon may by ordinary resolution of which special notice has been given, remove any director before the expiration of his period of office, notwithstanding anything in our constitution or in any agreement between Kenon and such director and appoint another person in place of the director so removed. |
Filling Vacancies on the Board of Directors | ||
A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires. | The constitution of a Singapore company typically provides that the directors have the power to appoint any person to be a director, either to fill a vacancy or as an addition to the existing directors, but so that the total number of directors will not at any time exceed the maximum number fixed in the constitution. Any newly elected director shall hold office until the next following annual general meeting, where such director will then be eligible for re-election. Our constitution provides that the shareholders may by ordinary resolution, or the directors may, appoint any person to be a director as an additional director or to fill a vacancy provided that any person so appointed by the directors will only hold office until the next annual general meeting, and will then be eligible for re-election. | |
Amendment of Governing Documents | ||
Under the Delaware General Corporation Law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law. Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws. | Our constitution may be altered by special resolution (i.e., a resolution passed by at least a three-fourths majority of the shares entitled to vote, present in person or by proxy at a meeting for which not less than 21 days’ written notice is given). The board of directors has no right to amend the constitution. | |
Meetings of Shareholders | ||
Annual and Special Meetings Typical bylaws provide that annual meetings of stockholders are to be held on a date and at a time fixed by the board of directors. Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws. Quorum Requirements Under the Delaware General Corporation Law, a corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting. | Annual General Meetings All companies are required to hold an annual general meeting once every calendar year. The first annual general meeting was required to be held within 18 months of Kenon’s incorporation and subsequently, annual general meetings must be held within six months after Kenon’s financial year end. Extraordinary General Meetings Any general meeting other than the annual general meeting is called an “extraordinary general meeting.” Two or more members (shareholders) holding not less than 10% of the total number of issued shares (excluding treasury shares) may call an extraordinary general meeting. In addition, the constitution usually also provides that general meetings may be convened in accordance with the Singapore Companies Act by the directors. Notwithstanding anything in the constitution, the directors are required to convene a general meeting if required to do so by requisition (i.e., written notice to directors requiring that a meeting be called) by shareholder(s) holding not less than 10% of the total number of paid-up shares of Kenon carrying voting rights. Our constitution provides that the directors may, whenever they think fit, convene an extraordinary general meeting. Quorum Requirements Our constitution provides that shareholders entitled to vote holding 33 and 1/3 percent of our issued and paid-up shares, present in person or by proxy at a meeting, shall be a quorum. In the event a quorum is not present, the meeting may be adjourned for one week. |
Indemnification of Officers, Directors and Employers | ||
Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: • acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and • in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Delaware corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper. To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for expenses (including attorneys’ fees) actually and reasonably incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified. | The Singapore Companies Act specifically provides that Kenon is allowed to: • purchase and maintain for any officer insurance against any liability attaching to such officer in respect of any negligence, default, breach of duty or breach of trust in relation to Kenon; • indemnify such officer against liability incurred by a director to a person other than Kenon except when the indemnity is against (i) any liability of the director to pay a fine in criminal proceedings or a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or (ii) any liability incurred by the officer (1) in defending criminal proceedings in which he is convicted, (2) in defending civil proceedings brought by Kenon or a related company of Kenon in which judgment is given against him or (3) in connection with an application for relief under specified sections of the Singapore Companies Act in which the court refuses to grant him relief. • indemnify any auditor against any liability incurred or to be incurred by such auditor in defending any proceedings (whether civil or criminal) in which judgment is given in such auditor’s favor or in which such auditor is acquitted; or • indemnify any auditor against any liability incurred by such auditor in connection with any application under specified sections of the Singapore Companies Act in which relief is granted to such auditor by a court. In cases where, inter alia, an officer is sued by Kenon the Singapore Companies Act gives the court the power to relieve directors either wholly or partially from the consequences of their negligence, default, breach of duty or breach of trust. However, Singapore case law has indicated that such relief will not be granted to a director who has benefited as a result of his or her breach of trust. In order for relief to be obtained, it must be shown that (i) the director acted reasonably; (ii) the director acted honestly; and (iii) it is fair, having regard to all the circumstances of the case including those connected with such director’s appointment, to excuse the director. Our constitution currently provides that, subject to the provisions of the Singapore Companies Act and every other act for the time being in force concerning companies and affecting Kenon, every director, auditor, secretary or other officer of Kenon and its subsidiaries and affiliates shall be entitled to be indemnified by Kenon against all liabilities incurred by him in the execution and discharge of his duties and where he serves at the request of Kenon as a director, officer, employee or agent of any subsidiary or affiliate of Kenon or in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of Kenon, and in which judgment is given in his favor (or the proceedings otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted, or in connection with an application under statute in respect of such act or omission in which relief is granted to him by the court. |
Shareholder Approval of Business Combinations | ||
Generally, under the Delaware General Corporation Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote. The Delaware General Corporation Law also requires a special vote of stockholders in connection with a business combination with an “interested stockholder” as defined in section 203 of the Delaware General Corporation Law. For further information on such provisions, see “—Interested Shareholders” above. | The Singapore Companies Act mandates that specified corporate actions require approval by the shareholders in a general meeting, notably: • notwithstanding anything in Kenon’s constitution, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of Kenon’s undertaking or property unless those proposals have been approved by shareholders in a general meeting; • subject to the constitution of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting; and • notwithstanding anything in Kenon’s constitution, the directors may not, without the prior approval of shareholders, issue shares, including shares being issued in connection with corporate actions. | |
Shareholder Action Without a Meeting | ||
Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action. | There are no equivalent provisions under the Singapore Companies Act in respect of passing shareholders’ resolutions by written means that apply to public companies listed on a securities exchange. |
Shareholder Suits | ||
Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. Delaware Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile. | Derivative actions The Singapore Companies Act has a provision which provides a mechanism enabling any registered shareholder to apply to the court for leave to bring a derivative action on behalf of Kenon. In addition to registered shareholders, courts are given the discretion to allow such persons as they deem proper to apply as well (e.g., beneficial owners of shares or individual directors). It should be noted that this provision of the Singapore Companies Act is primarily used by minority shareholders to bring an action in the name and on behalf of Kenon or intervene in an action to which Kenon is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of Kenon. Class actions | |
The concept of class action suits, which allows individual shareholders to bring an action seeking to represent the class or classes of shareholders, generally does not exist in Singapore. However, it is possible as a matter of procedure for a number of shareholders to lead an action and establish liability on behalf of themselves and other shareholders who join in or who are made parties to the action. Further, there are certain circumstances in which shareholders may file and prove their claims for compensation in the event that Kenon has been convicted of a criminal offense or has a court order for the payment of a civil penalty made against it. Additionally, for as long as Kenon is listed in the U.S. or in Israel, Kenon has undertaken not to claim that it is not subject to any derivative/class action that may be filed against it in the U.S. or Israel, as applicable, solely on the basis that it is a Singapore company. |
Dividends or Other Distributions; Repurchases and Redemptions | ||
The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. Under the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced. | The Singapore Companies Act provides that no dividends can be paid to shareholders except out of profits. The Singapore Companies Act does not provide a definition on when profits are deemed to be available for the purpose of paying dividends and this is accordingly governed by case law. Our constitution provides that no dividend can be paid otherwise than out of profits of Kenon. Acquisition of a company’s own shares The Singapore Companies Act generally prohibits a company from acquiring its own shares subject to certain exceptions. Any contract or transaction by which a company acquires or transfers its own shares is void. However, provided that it is expressly permitted to do so by its constitution and subject to the special conditions of each permitted acquisition contained in the Singapore Companies Act, Kenon may: • redeem redeemable preference shares (the redemption of these shares will not reduce the capital of Kenon). Preference shares may be redeemed out of capital if all the directors make a solvency statement in relation to such redemption in accordance with the Singapore Companies Act; • whether listed (on an approved exchange in Singapore or any securities exchange outside Singapore) or not, make an off-market purchase of its own shares in accordance with an equal access scheme authorized in advance at a general meeting; • whether listed on a securities exchange (in Singapore or outside Singapore) or not, make a selective off-market purchase of its own shares in accordance with an agreement authorized in advance at a general meeting by a special resolution where persons whose shares are to be acquired and their associated persons have abstained from voting; and • whether listed (on an approved exchange in Singapore or any securities exchange outside Singapore) or not, make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance at a general meeting by a special resolution. Kenon may also purchase its own shares by an order of a Singapore court. The total number of ordinary shares that may be acquired by Kenon in a relevant period may not exceed 20% of the total number of ordinary shares in that class as of the date of the resolution pursuant to the relevant share repurchase provisions under the Singapore Companies Act. Where, however, Kenon has reduced its share capital by a special resolution or a Singapore court made an order to such effect, the total number of ordinary shares shall be taken to be the total number of ordinary shares in that class as altered by the special resolution or the order of the court. Payment must be made out of Kenon’s distributable profits or capital, provided that Kenon is solvent. Such payment may include any expenses (including brokerage or commission) incurred directly in the purchase or acquisition by Kenon of its ordinary shares. Financial assistance for the acquisition of shares Kenon may not give financial assistance to any person whether directly or indirectly for the purpose of: • the acquisition or proposed acquisition of shares in Kenon or units of such shares; or • the acquisition or proposed acquisition of shares in its holding company or ultimate holding company, as the case may be, or units of such shares. Financial assistance may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt or otherwise. | |
However, it should be noted that Kenon may provide financial assistance for the acquisition of its shares or shares in its holding company if it complies with the requirements (including, where applicable, approval by the board of directors or by the passing of a special resolution by its shareholders) set out in the Singapore Companies Act. Our constitution provides that subject to the provisions of the Singapore Companies Act, we may purchase or otherwise acquire our own shares upon such terms and subject to such conditions as we may deem fit. These shares may be held as treasury shares or cancelled as provided in the Singapore Companies Act or dealt with in such manner as may be permitted under the Singapore Companies Act. On cancellation of the shares, the rights and privileges attached to those shares will expire. |
Transactions with Officers and Directors | ||
Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum. | Under the Singapore Companies Act, the chief executive officer and directors are not prohibited from dealing with Kenon, but where they have an interest in a transaction with Kenon, that interest must be disclosed to the board of directors. In particular, the chief executive officer and every director who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with Kenon must, as soon as practicable after the relevant facts have come to such officer or director’s knowledge, declare the nature of such officer or director’s interest at a board of directors’ meeting or send a written notice to Kenon containing details on the nature, character and extent of his interest in the transaction or proposed transaction with Kenon. In addition, a director or chief executive officer who holds any office or possesses any property which, directly or indirectly, duties or interests might be created in conflict with such officer’s duties or interests as director or chief executive officer, is required to declare the fact and the nature, character and extent of the conflict at a meeting of directors or send a written notice to Kenon containing details on the nature, character and extent of the conflict. The Singapore Companies Act extends the scope of this statutory duty of a director or chief executive officer to disclose any interests by pronouncing that an interest of a member of the director’s or, as the case may be, the chief executive officer’s family (including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director. | |
There is however no requirement for disclosure where the interest of the director or chief executive officer (as the case may be) consists only of being a member or creditor of a corporation which is interested in the proposed transaction with Kenon if the interest may properly be regarded as immaterial. Where the proposed transaction relates to any loan to Kenon, no disclosure need be made where the director or chief executive officer has only guaranteed or joined in guaranteeing the repayment of such loan, unless the constitution provides otherwise. Further, where the proposed transaction is to be made with or for the benefit of a related corporation (i.e. the holding company, subsidiary or subsidiary of a common holding company) no disclosure need be made of the fact that the director or chief executive officer is also a director or chief executive officer of that corporation, unless the constitution provides otherwise. |
Subject to specified exceptions, including a loan to a director for expenditure in defending criminal or civil proceedings, etc. or in connection with an investigation, or an action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to Kenon, the Singapore Companies Act prohibits Kenon from: (i) making a loan or quasi-loan to its directors or to directors of a related corporation (each, a “relevant director”); (ii) giving a guarantee or security in connection with a loan or quasi-loan made to a relevant director by any other person; (iii) entering into a credit transaction as creditor for the benefit of a relevant director; (iv) giving a guarantee or security in connection with such credit transaction entered into by any person for the benefit of a relevant director; (v) taking part in an arrangement where another person enters into any of the transactions in (i) to (iv) above or (vi) below and such person obtains a benefit from Kenon or a related corporation; or (vi) arranging for the assignment to Kenon or assumption by Kenon of any rights, obligations or liabilities under a transaction in (i) to (v) above. Kenon is also prohibited from entering into the transactions in (i) to (vi) above with or for the benefit of a relevant director’s spouse or children (whether adopted or naturally or step-children). | ||
Dissenters’ Rights | ||
Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction. | There are no equivalent provisions under the Singapore Companies Act. | |
Cumulative Voting | ||
Under the Delaware General Corporation Law, a corporation may adopt in its bylaws that its directors shall be elected by cumulative voting. When directors are elected by cumulative voting, a stockholder has the number of votes equal to the number of shares held by such stockholder times the number of directors nominated for election. The stockholder may cast all of such votes for one director or among the directors in any proportion. | There is no equivalent provision under the Singapore Companies Act in respect of companies incorporated in Singapore. |
Anti-Takeover Measures | ||
Under the Delaware General Corporation Law, the certificate of incorporation of a corporation may give the board the right to issue new classes of preferred stock with voting, conversion, dividend distribution, and other rights to be determined by the board at the time of issuance, which could prevent a takeover attempt and thereby preclude shareholders from realizing a potential premium over the market value of their shares In addition, Delaware law does not prohibit a corporation from adopting a stockholder rights plan, or “poison pill,” which could prevent a takeover attempt and also preclude shareholders from realizing a potential premium over the market value of their shares. | The constitution of a Singapore company typically provides that the company may allot and issue new shares of a different class with preferential, deferred, qualified or other special rights as its board of directors may determine with the prior approval of the company’s shareholders in a general meeting. Our constitution provides that our shareholders may grant to our board the general authority to issue such preference shares until the next general meeting. For further information, see “Item 3.D Risk Factors—Risks Relating to Our Ordinary Shares—Our directors have general authority to allot and issue new shares on terms and conditions and with any preferences, rights or restrictions as may be determined by our board of directors in its sole discretion, which may dilute our existing shareholders. We may also issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to our existing shareholders” and “—Preference Shares.” Singapore law does not generally prohibit a corporation from adopting “poison pill” arrangements which could prevent a takeover attempt and also preclude shareholders from realizing a potential premium over the market value of their shares. However, under the Singapore Code on Take-overs and Mergers, if, in the course of an offer, or even before the date of the offer announcement, the board of the offeree company has reason to believe that a bona fide offer is imminent, the board must not, except pursuant to a contract entered into earlier, take any action, without the approval of shareholders at a general meeting, on the affairs of the offeree company that could effectively result in any bona fide offer being frustrated or the shareholders being denied an opportunity to decide on its merits. For further information on the Singapore Code on Take-overs and Mergers, see “—Takeovers.” |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
• | persons that are not U.S. Holders; |
• | persons that are subject to alternative minimum taxes; |
• | insurance companies; |
• | tax-exempt entities; |
• | financial institutions; |
• | broker-dealers; |
• | persons that hold our ordinary shares through partnerships (or other entities classified as partnerships for U.S. federal income tax purposes); |
• | pass-through entities; |
• | persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the total value of shares of all classes of our stock; |
• | traders in securities that elect to apply a mark-to-market method of accounting, holders that hold our ordinary shares as part of a “hedge,” “straddle,” “conversion,” or other risk reduction transaction for U.S. federal income tax purposes; and |
• | individuals who receive our ordinary shares upon the exercise of compensatory options or otherwise as compensation. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
• | currency risk, as a result of changes in the rates of exchange of various foreign currencies (in particular, the Euro and the New Israeli Shekel) in relation to the U.S. Dollar, our functional currency and the currency against which we measure our exposure; |
• | index risk, as a result of changes in the Consumer Price Index; |
• | interest rate risk, as a result of changes in the market interest rates affecting certain of our businesses’ issuance of debt and related financial instruments; and |
• | price risk, as a result of changes in market prices, such as the price of certain commodities (e.g., natural gas and heavy fuel oil). |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
Year ended December 31, | ||||||||
2019 | 2018 | |||||||
(in thousands of USD) | ||||||||
Audit Fees1 | $ | 3,426 | $ | 2,948 | ||||
Audit-Related Fees | 71 | 1 | ||||||
Tax Fees2 | 841 | 729 | ||||||
All Other Fees | 42 | 472 | ||||||
Total | $ | 4,380 | $ | 4,150 |
(1) | Includes fees billed or accrued for professional services rendered by the principal accountant, and member firms in their respective network, for the audit of our annual financial statements, and those of our consolidated subsidiaries, as well as additional services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, except for those not required by statute or regulation. |
(2) | Tax fees consist of fees for professional services rendered during the fiscal year by the principal accountant mainly for tax compliance and assistance with tax audits and appeals. |
Exhibit Number | Description of Document | |
Exhibit Number | Description of Document | |
Exhibit Number | Description of Document | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
(1) | Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act. Omitted information has been filed separately with the SEC. |
(2) | Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
Page | |
F-1 – F-6 | |
F-7 – F-8 | |
F-9 | |
F-10 | |
F-11 – F-13 | |
F-14 – F-15 | |
F-16 – F-105 |
KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 | Telephone +65 6213 3388 Fax +65 6225 0984 Internet www.kpmg.com.sg |
Kenon Holdings Ltd.:
April 30, 2020
KPMG LLP 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 | Telephone +65 6213 3388 Fax +65 6225 0984 Internet www.kpmg.com.sg |
Kenon Holdings Ltd.:
April 30, 2020
Deloitte, Inc. Contadores Públicos Autorizados RUC 16292-152-155203 D.V. 65 Torre Banco Panamá, piso 12 Avenida Boulevard y la Rotonda Costa del Este, Panamá Apartado 0816-01558 Panamá, Rep. de Panamá Teléfono: (507) 303-4100 Fax: (507) 269-2386 infopanama@deloitte.com www.deloitte.com/pa |
Deloitte LATCO Firma miembro de Deloitte Touche Tohmatsu Limited |
As at December 31, | |||||||||||
2019 | 2018 | ||||||||||
Note | $ Thousands | ||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 5 | 147,153 | 131,123 | ||||||||
Short-term deposits and restricted cash | 6 | 33,554 | 49,938 | ||||||||
Trade receivables | 7 | 39,321 | 35,548 | ||||||||
Short-term derivative instruments | 245 | 726 | |||||||||
Other current assets | 8 | 39,678 | 40,788 | ||||||||
Asset held for sale | 9.B.b.3 | 69,592 | 69,592 | ||||||||
Total current assets | 329,543 | 327,715 | |||||||||
Non-current assets | |||||||||||
Investments in associated companies | 9 | 119,718 | 161,188 | ||||||||
Long-term deposits and restricted cash | 77,350 | 48,640 | |||||||||
Long term prepaid expenses | 11 | 30,185 | 23,573 | ||||||||
Long-term derivative instruments | 32.D.1 | 2,048 | - | ||||||||
Other non-current assets | 12 | 57,717 | 67,810 | ||||||||
Deferred payment receivable | 13 | 204,299 | 189,166 | ||||||||
Deferred taxes, net | 27.C.2 | 1,516 | 632 | ||||||||
Property, plant and equipment, net | 14 | 667,642 | 635,088 | ||||||||
Intangible assets, net | 15 | 1,233 | 1,306 | ||||||||
Right-of-use assets, net | 19 | 17,123 | - | ||||||||
Total non-current assets | 1,178,831 | 1,127,403 | |||||||||
Total assets | 1,508,374 | 1,455,118 |
As at December 31, | |||||||||||
2019 | 2018 | ||||||||||
Note | $ Thousands | ||||||||||
Current liabilities | |||||||||||
Current maturities of loans from banks and others | 16 | 45,605 | 23,235 | ||||||||
Trade payables | 17 | 36,007 | 47,672 | ||||||||
Short-term derivative instruments | 32.D.1 | 6,273 | - | ||||||||
Current tax liabilities | 8 | 6,939 | |||||||||
Other current liabilities | 18 | 16,251 | 12,072 | ||||||||
Current maturities of lease liabilities | 861 | - | |||||||||
Total current liabilities | 105,005 | 89,918 | |||||||||
Non-current liabilities | |||||||||||
Long-term loans from banks and others | 16 | 503,647 | 487,759 | ||||||||
Debentures | 16 | 73,006 | 75,476 | ||||||||
Deferred taxes, net | 27.C.2 | 79,563 | 59,067 | ||||||||
Non-current tax liabilities | 29,510 | 26,811 | |||||||||
Other non-current liabilities | 719 | 369 | |||||||||
Long-term lease liabilities | 5,136 | - | |||||||||
Total non-current liabilities | 691,581 | 649,482 | |||||||||
Total liabilities | 796,586 | 739,400 | |||||||||
Equity | 21 | ||||||||||
Share capital | 602,450 | 602,450 | |||||||||
Translation reserve | 17,889 | 802 | |||||||||
Capital reserve | 13,962 | 16,854 | |||||||||
Accumulated (loss)/profit | (10,949 | ) | 28,917 | ||||||||
Equity attributable to owners of the Company | 623,352 | 649,023 | |||||||||
Non-controlling interests | 88,436 | 66,695 | |||||||||
Total equity | 711,788 | 715,718 | |||||||||
Total liabilities and equity | 1,508,374 | 1,455,118 |
Cyril Pierre-Jean Ducau | Robert L. Rosen | Mark Hasson | ||
Chairman of Board of Directors | CEO | CFO |
For the year ended December 31, | |||||||||||||||
2019 | 2018 | 2017 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Continuing Operations | |||||||||||||||
Revenue | 23 | 373,473 | 364,012 | 365,704 | |||||||||||
Cost of sales and services (excluding depreciation) | 24 | (256,036 | ) | (259,515 | ) | (267,136 | ) | ||||||||
Depreciation | (31,141 | ) | (29,809 | ) | (30,102 | ) | |||||||||
Gross profit | 86,296 | 74,688 | 68,466 | ||||||||||||
Selling, general and administrative expenses | 25 | (35,854 | ) | (34,031 | ) | (56,292 | ) | ||||||||
Write back of assets and investments | 9.B.a.2 | - | - | 28,758 | |||||||||||
Other expenses | (582 | ) | (613 | ) | (51 | ) | |||||||||
Other income | 6,114 | 2,147 | 1,410 | ||||||||||||
Financing expenses | 26 | (29,946 | ) | (30,382 | ) | (70,166 | ) | ||||||||
Financing income | 26 | 17,679 | 28,592 | 2,904 | |||||||||||
Financing expenses, net | (12,267 | ) | (1,790 | ) | (67,262 | ) | |||||||||
Gain on third party investment in Qoros | 9.B.b.2 | - | 504,049 | - | |||||||||||
Fair value loss on put option | 9.B.b.2 | (18,957 | ) | (39,788 | ) | - | |||||||||
Recovery of financial guarantee | 9.B.b.6.h | 11,144 | 62,563 | - | |||||||||||
Share in losses of associated companies, net of tax | 9.A.2 | (41,430 | ) | (105,257 | ) | (110,665 | ) | ||||||||
(Loss)/profit before income taxes | (5,536 | ) | 461,968 | (135,636 | ) | ||||||||||
Income taxes | 27 | (16,675 | ) | (11,499 | ) | (72,809 | ) | ||||||||
(Loss)/profit for the year from continuing operations | (22,211 | ) | 450,469 | (208,445 | ) | ||||||||||
Profit/(loss) for the year from discontinued operations | 1.B, 29 | ||||||||||||||
-Recovery of retained claims, net | 25,666 | 4,530 | - | ||||||||||||
-Other | (1,013 | ) | (10,161 | ) | 476,565 | ||||||||||
24,653 | (5,631 | ) | 476,565 | ||||||||||||
Profit for the year | 2,442 | 444,838 | 268,120 | ||||||||||||
Attributable to: | |||||||||||||||
Kenon’s shareholders | (13,359 | ) | 434,213 | 236,590 | |||||||||||
Non-controlling interests | 15,801 | 10,625 | 31,530 | ||||||||||||
Profit for the year | 2,442 | 444,838 | 268,120 | ||||||||||||
Basic/diluted profit per share attributable to Kenon’s shareholders (in dollars): | 28 | ||||||||||||||
Basic/diluted (loss)/profit per share | (0.25 | ) | 8.07 | 4.40 | |||||||||||
Basic/diluted (loss)/profit per share from continuing operations | (0.71 | ) | 8.17 | (4.00 | ) | ||||||||||
Basic/diluted profit/(loss) per share from discontinued operations | 0.46 | (0.10 | ) | 8.40 |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Profit for the year | 2,442 | 444,838 | 268,120 | |||||||||
Items that are or will be subsequently reclassified to profit or loss | ||||||||||||
Foreign currency translation differences in respect of foreign operations | 22,523 | 8,672 | 29,320 | |||||||||
Foreign currency translation and capital reserves differences reclassified to profit or loss due to third party investment in Qoros | - | (15,073 | ) | - | ||||||||
Group’s share in other comprehensive loss of associated companies | (3,201 | ) | (177 | ) | (1,239 | ) | ||||||
Effective portion of change in the fair value of cash-flow hedges | (8,309 | ) | 491 | 19,489 | ||||||||
Change in fair value of derivative financial instruments used for hedging cash flows recorded to the cost of the hedged item | 1,351 | - | - | |||||||||
Change in fair value of derivatives used to hedge cash flows transferred to the statement of profit & loss | 2,743 | - | - | |||||||||
Income taxes in respect of components of other comprehensive income/(loss) | 252 | (104 | ) | (6,142 | ) | |||||||
Total other comprehensive income/(loss) for the year | 15,359 | (6,191 | ) | 41,428 | ||||||||
Total comprehensive income for the year | 17,801 | 438,647 | 309,548 | |||||||||
Attributable to: | ||||||||||||
Kenon’s shareholders | (2,353 | ) | 432,576 | 270,175 | ||||||||
Non-controlling interests | 20,154 | 6,071 | 39,373 | |||||||||
Total comprehensive income for the year | 17,801 | 438,647 | 309,548 |
Non- | |||||||||||||||||||||||||||||||
controlling | |||||||||||||||||||||||||||||||
Attributable to the owners of the Company | interests | Total | |||||||||||||||||||||||||||||
Share | Translation | Capital | Accumulated | ||||||||||||||||||||||||||||
Capital | reserve | reserve | profit/(loss) | Total | |||||||||||||||||||||||||||
Note | $ Thousands | ||||||||||||||||||||||||||||||
Balance at January 1, 2019 | 602,450 | 802 | 16,854 | 28,917 | 649,023 | 66,695 | 715,718 | ||||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||
Share-based payment transactions | - | - | 1,222 | - | 1,222 | 324 | 1,546 | ||||||||||||||||||||||||
Dividends declared and paid | 21.D | - | - | - | (65,169 | ) | (65,169 | ) | (33,123 | ) | (98,292 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | - | - | 1,222 | (65,169 | ) | (63,947 | ) | (32,799 | ) | (96,746 | ) | ||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Sale of subsidiary | - | - | - | - | - | 299 | 299 | ||||||||||||||||||||||||
Dilution in investment in subsidiary | - | - | - | 41,863 | 41,863 | 34,537 | 76,400 | ||||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | - | - | (1,234 | ) | - | (1,234 | ) | (450 | ) | (1,684 | ) | ||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | (1,234 | ) | 41,863 | 40,629 | 34,386 | 75,015 | |||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | (13,359 | ) | (13,359 | ) | 15,801 | 2,442 | ||||||||||||||||||||||
Other comprehensive income/(loss) for the year, net of tax | - | 17,087 | (2,880 | ) | (3,201 | ) | 11,006 | 4,353 | 15,359 | ||||||||||||||||||||||
Total comprehensive income for the year | - | 17,087 | (2,880 | ) | (16,560 | ) | (2,353 | ) | 20,154 | 17,801 | |||||||||||||||||||||
Balance at December 31, 2019 | 602,450 | 17,889 | 13,962 | (10,949 | ) | 623,352 | 88,436 | 711,788 |
Non- | |||||||||||||||||||||||||||||||||||
controlling | |||||||||||||||||||||||||||||||||||
Attributable to the owners of the Company | interests | Total | |||||||||||||||||||||||||||||||||
Shareholder | |||||||||||||||||||||||||||||||||||
Share | transaction | Translation | Capital | Accumulated | |||||||||||||||||||||||||||||||
Capital | reserve | reserve | reserve | profit/(loss) | Total | ||||||||||||||||||||||||||||||
Note | $ Thousands | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2018 | 1,267,210 | 3,540 | (1,592 | ) | 19,297 | (305,337 | ) | 983,118 | 68,229 | 1,051,347 | |||||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||||||
Share-based payment transactions | - | - | - | 1,411 | - | 1,411 | 403 | 1,814 | |||||||||||||||||||||||||||
Cash distribution to owners of the Company | 21.A | (664,760 | ) | - | - | - | - | (664,760 | ) | - | (664,760 | ) | |||||||||||||||||||||||
Dividend to holders of non-controlling interests in subsidiaries | - | - | - | - | - | - | (8,219 | ) | (8,219 | ) | |||||||||||||||||||||||||
Dividends declared and paid | 21.D | - | - | - | - | (100,118 | ) | (100,118 | ) | - | (100,118 | ) | |||||||||||||||||||||||
Transactions with controlling shareholder | - | (3,540 | ) | - | - | - | (3,540 | ) | - | (3,540 | ) | ||||||||||||||||||||||||
Total contributions by and distributions to owners | (664,760 | ) | (3,540 | ) | - | 1,411 | (100,118 | ) | (767,007 | ) | (7,816 | ) | (774,823 | ) | |||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | - | - | - | - | 336 | 336 | 4 | 340 | |||||||||||||||||||||||||||
Acquisition of subsidiary with non-controlling interests | - | - | - | - | - | - | 207 | 207 | |||||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | - | - | 336 | 336 | 211 | 547 | |||||||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | - | 434,213 | 434,213 | 10,625 | 444,838 | |||||||||||||||||||||||||||
Other comprehensive income/(loss) for the year, net of tax | - | - | 2,394 | (3,854 | ) | (177 | ) | (1,637 | ) | (4,554 | ) | (6,191 | ) | ||||||||||||||||||||||
Total comprehensive income for the year | - | - | 2,394 | (3,854 | ) | 434,036 | 432,576 | 6,071 | 438,647 | ||||||||||||||||||||||||||
Balance at December 31, 2018 | 602,450 | - | 802 | 16,854 | 28,917 | 649,023 | 66,695 | 715,718 |
Non- | |||||||||||||||||||||||||||||||||||
controlling | |||||||||||||||||||||||||||||||||||
Attributable to the Kenon’s shareholders | interests | Total | |||||||||||||||||||||||||||||||||
Shareholder | |||||||||||||||||||||||||||||||||||
Share | transaction | Translation | Capital | Accumulated | |||||||||||||||||||||||||||||||
Capital | reserve | reserve | reserves | deficit | Total | ||||||||||||||||||||||||||||||
Note | $ Thousands | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2017 | 1,267,450 | 26,559 | (21,745 | ) | 11,575 | (602,598 | ) | 681,241 | 212,963 | 894,204 | |||||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||||||
Share-based payment transactions | (240 | ) | - | - | 748 | - | 508 | 449 | 957 | ||||||||||||||||||||||||||
Dividend declared and paid to holders of non-controlling interests in subsidiaries | - | - | - | - | - | - | (33,848 | ) | (33,848 | ) | |||||||||||||||||||||||||
Cash distribution to non-controlling interests in subsidiaries | - | - | - | - | - | - | (13,805 | ) | (13,805 | ) | |||||||||||||||||||||||||
Fair value of shareholder loan | - | (23,019 | ) | - | - | - | (23,019 | ) | - | (23,019 | ) | ||||||||||||||||||||||||
Total contributions by and distributions to owners | (240 | ) | (23,019 | ) | - | 748 | - | (22,511 | ) | (47,204 | ) | (69,715 | ) | ||||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||||||
Sale of Colombian assets | - | - | - | - | - | - | (8,890 | ) | (8,890 | ) | |||||||||||||||||||||||||
Non-controlling interests in respect of business combination | - | - | - | - | - | - | (50 | ) | (50 | ) | |||||||||||||||||||||||||
Sale of subsidiaries - Latin America and Caribbean businesses | - | - | (5,650 | ) | 2,045 | - | (3,605 | ) | (170,513 | ) | (174,118 | ) | |||||||||||||||||||||||
Dilution of investment in subsidiary | 22 | - | - | 299 | (4,691 | ) | 62,210 | 57,818 | 42,550 | 100,368 | |||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | (5,351 | ) | (2,646 | ) | 62,210 | 54,213 | (136,903 | ) | (82,690 | ) | |||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | - | 236,590 | 236,590 | 31,530 | 268,120 | |||||||||||||||||||||||||||
Other comprehensive income/(loss) for the year, net of tax | - | - | 25,504 | 9,620 | (1,539 | ) | 33,585 | 7,843 | 41,428 | ||||||||||||||||||||||||||
Total comprehensive income for the year | - | - | 25,504 | 9,620 | 235,051 | 270,175 | 39,373 | 309,548 | |||||||||||||||||||||||||||
Balance at December 31, 2017 | 1,267,210 | 3,540 | (1,592 | ) | 19,297 | (305,337 | ) | 983,118 | 68,229 | 1,051,347 |
For the year ended December 31 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Cash flows from operating activities | ||||||||||||
Profit for the year | 2,442 | 444,838 | 268,120 | |||||||||
Adjustments: | ||||||||||||
Depreciation and amortization | 32,092 | 30,416 | 178,461 | |||||||||
Impairment/(write back) of assets and investments | - | 4,812 | (8,314 | ) | ||||||||
Financing expenses, net | 12,267 | 1,790 | 275,799 | |||||||||
Share in losses of associated companies, net | 41,430 | 105,257 | 109,980 | |||||||||
Capital gains, net* | (492 | ) | - | (25,529 | ) | |||||||
Loss on disposal of property, plant and equipment, net | - | 206 | - | |||||||||
Net change in fair value of derivative financial instruments | 352 | 1,002 | - | |||||||||
Recovery of financial guarantee | (11,144 | ) | (62,563 | ) | - | |||||||
Bad debt expense | - | - | 7,866 | |||||||||
Gain on third party investment in Qoros | - | (504,049 | ) | - | ||||||||
Fair value loss on put option | 18,957 | 39,788 | - | |||||||||
Retained claim | (30,000 | ) | - | - | ||||||||
Write down of other payables | - | 489 | - | |||||||||
Share-based payments | 1,546 | 1,814 | 957 | |||||||||
Income taxes | 22,022 | 16,244 | 278,447 | |||||||||
89,472 | 80,044 | 1,085,787 | ||||||||||
Change in inventories | - | - | 1,291 | |||||||||
Change in trade and other receivables | 4,338 | 9,192 | (62,436 | ) | ||||||||
Change in trade and other payables | (5,968 | ) | (35,311 | ) | (568,364 | ) | ||||||
Change in provisions and employee benefits | - | - | 2,021 | |||||||||
Cash generated from operating activities | 87,842 | 53,925 | 458,299 | |||||||||
Income taxes paid, net | (2,453 | ) | (1,546 | ) | (66,830 | ) | ||||||
Dividends received from investments in associates | - | - | 382 | |||||||||
Net cash provided by operating activities | 85,389 | 52,379 | 391,851 |
For the year ended December 31, | |||||||||||||||
2019 | 2018 | 2017 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Cash flows from investing activities | |||||||||||||||
Proceeds from sale of property, plant and equipment and intangible assets | - | 66 | 4,727 | ||||||||||||
Short-term deposits and loans, net | 19,554 | (28,511 | ) | (4,876 | ) | ||||||||||
Investment in long-term deposits, net | (24,947 | ) | (13,560 | ) | - | ||||||||||
Proceeds from sale of subsidiary less cash sold | 880 | - | - | ||||||||||||
Cash paid for asset acquisition, less cash acquired | - | (2,344 | ) | - | |||||||||||
Sale of subsidiaries - Latin America and Caribbean businesses, net of cash disposed off | 29 | - | - | 792,585 | |||||||||||
Income tax paid | (5,629 | ) | (169,845 | ) | - | ||||||||||
Sale of Colombian assets, net of cash disposed off | - | - | 600 | ||||||||||||
Investment in associates | - | (90,154 | ) | - | |||||||||||
Acquisition of property, plant and equipment | (34,141 | ) | (69,314 | ) | (227,601 | ) | |||||||||
Acquisition of intangible assets | (258 | ) | (132 | ) | (10,412 | ) | |||||||||
(Payment of)/proceeds from realization of long-term deposits | (3,138 | ) | 18,476 | 4,655 | |||||||||||
Interest received | 2,469 | 12,578 | 6,825 | ||||||||||||
(Payment of)/proceeds from transactions in derivatives, net | (929 | ) | 31 | - | |||||||||||
Proceeds from dilution of third party investment in Qoros | - | 259,749 | - | ||||||||||||
Receipt from recovery of/(payment of) financial guarantee | 10,963 | 18,336 | (72,278 | ) | |||||||||||
Payment of transaction cost for sale of subsidiaries | - | (48,759 | ) | - | |||||||||||
Energuate purchase adjustment | - | - | 10,272 | ||||||||||||
Insurance claim received | - | - | 80,000 | ||||||||||||
Retained claims received, net | 30,196 | - | - | ||||||||||||
Net cash (used in)/provided by investing activities | (4,980 | ) | (113,383 | ) | 584,497 | ||||||||||
Cash flows from financing activities | |||||||||||||||
Dividend paid to non-controlling interests | (33,123 | ) | (8,219 | ) | (29,443 | ) | |||||||||
Dividends paid | (65,169 | ) | (100,084 | ) | - | ||||||||||
Capital distribution | - | (664,700 | ) | - | |||||||||||
Proceeds from issuance of shares to holders of non-controlling interests in subsidiaries | 76,400 | - | 100,478 | ||||||||||||
Payment of issuance expenses related to long term debt | - | - | (34,391 | ) | |||||||||||
Payment of consent fee | - | - | (4,547 | ) | |||||||||||
Receipt of long-term loans and issuance of debentures | - | 33,762 | 1,938,877 | ||||||||||||
Repayment of long-term loans and debentures, derivative financial instrument and lease liabilities | (30,068 | ) | (376,412 | ) | (1,506,553 | ) | |||||||||
Short-term credit from banks and others, net | 139 | (77,073 | ) | (126,287 | ) | ||||||||||
Payment of swap unwinding and early repayment fee | - | - | (46,966 | ) | |||||||||||
Purchase of non-controlling interest | (413 | ) | - | (13,805 | ) | ||||||||||
Interest paid | (21,414 | ) | (24,875 | ) | (180,242 | ) | |||||||||
Net cash (used in)/provided by financing activities | (73,648 | ) | (1,217,601 | ) | 97,121 | ||||||||||
Increase/(decrease) in cash and cash equivalents | 6,761 | (1,278,605 | ) | 1,073,469 | |||||||||||
Cash and cash equivalents at beginning of the year | 131,123 | 1,417,388 | 326,635 | ||||||||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 9,269 | (7,660 | ) | 17,284 | |||||||||||
Cash and cash equivalents at end of the year | 147,153 | 131,123 | 1,417,388 |
A. | The Reporting Entity |
B. | Sale of power business |
C. | Definitions |
A. | Declaration of compliance with International Financial Reporting Standards (IFRS) |
B. | Functional and presentation currency |
C. | Basis of measurement |
• | Deferred tax assets and liabilities |
• | Derivative instruments |
• | Assets and liabilities in respect of employee benefits |
• | Investments in associates |
• | Qoros put option |
D. | Use of estimates and judgment |
1. | Recoverable amount of non-financial assets and Cash Generating Units (“CGUs”) |
2. | Qoros put option |
A. | First-time application of new accounting standards, amendments and interpretations |
(1) | IFRS 16, Leases |
B. | Basis for consolidation/ combination |
(1) | Business combinations |
(2) | Subsidiaries |
(3) | Non-Controlling Interest (“NCI”) |
(4) | Investments in equity-accounted investees |
(5) | Loss of significant influence |
(6) | Change in interest held in equity accounted investees while retaining significant influence |
(7) | Intra-group Transactions |
(8) | Reorganizations under Common Control Transactions |
C. | Foreign currency |
(1) | Foreign currency transactions |
(2) | Foreign operations |
D. | Cash and Cash Equivalents |
E. | Financial Instruments |
a) | Non-derivative financial assets and financial liabilities - recognition and de-recognition |
b) | Non-derivative financial assets – measurement |
Financial assets at fair value through profit and loss | A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein, including any interest or dividend income, are recognized in profit or loss. | |
Held-to-maturity financial assets | These assets are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized cost using the effective interest method. | |
Loans and receivables | These assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized cost using the effective interest method, less any impairment losses. | |
Held-for-sale financial assets | These assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on debt instruments, are recognized in Other Comprehensive Income (“OCI”) and accumulated in the fair value reserve. When these assets are derecognized, the gain or loss accumulated in equity is reclassified to profit or loss. |
c) | Non-derivative financial liabilities - Measurement |
d) | Derivative financial instruments and hedge accounting |
e) | Cash flow hedges |
f) | Financial guarantees |
a) | Classification and measurement of financial assets and financial liabilities |
- | The objective of the entity's business model is to hold the financial asset to collect the contractual cash flows; and |
- | The contractual terms of the financial asset create entitlement on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
b) | Subsequent measurement |
• | contingent events that would change the amount or timing of cash flows; |
• | terms that may adjust the contractual coupon rate, including variable rate features; |
• | prepayment and extension features; and |
• | terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features). |
c) | Impairment |
- | Contract assets (as defined in IFRS 15). |
- | Financial assets measured at amortized cost. |
- | Financial Guarantees |
- | It is not probable that the borrower will fully meet its payment obligations to the Company, and the Company has no right to perform actions such as the realization of collaterals (if any); or |
- | The contractual payments in respect of the financial asset are more than 90 days in arrears. |
F. | Property, plant and equipment, net |
(1) | Recognition and measurement |
• | The cost of materials and direct labor; |
• | Any other costs directly attributable to bringing the assets to a working condition for their intended use; |
• | Spare parts, servicing equipment and stand-by equipment; |
• | When the Group has an obligation to remove the assets or restore the site, an estimate of the costs of dismantling and removing the items and restoring the site on which they are located; and |
• | Capitalized borrowing costs. |
(2) | Subsequent Cost |
(3) | Depreciation |
Years | |
Roads, buildings and leasehold improvements (*) | 3 – 30 |
Facilities, machinery and equipment | 5 – 30 |
Computers | 3 |
Office furniture and equipment | 3 – 16 |
Others | 5 – 15 |
G. | Intangible assets, net |
(1) | Recognition and measurement |
Goodwill | Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment; and any impairment loss is allocated to the carrying amount of the equity investee as a whole. |
Software | Software acquired by the Group having a finite useful life is measured at cost less accumulated amortization and any accumulated impairment losses. |
Customer relationships | Intangible assets acquired as part of a business combination and are recognized separately from goodwill if the assets are separable or arise from contractual or other legal rights and their fair value can be measured reliably. Customer relationships are measured at cost less accumulated amortization and any accumulated impairment losses. |
Other intangible assets | Other intangible assets, including licenses, patents and trademarks, which are acquired by the Group having finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses. |
(2) | Amortization |
• | Software | 3-10 years |
• | Others | 1-33 years |
(3) | Subsequent expenditure |
H. | Service Concession arrangements |
I. | Leases |
- | Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term and leases which end within 12 months from the date of initial application. |
- | Excluded initial direct costs from measuring the right-of-use asset at the date of initial application. |
- | Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease. |
– | Land – 25–49 years. |
– | PRMS facility – 24 years. |
– | Offices – 9 years. |
J. | Borrowing costs |
K. | Impairment of non-financial assets |
L. | Employee benefits |
(1) | Short-term employee benefits |
(2) | Bonus plans transactions |
(3) | Termination Benefits |
(4) | Defined Benefit Plans |
(5) | Share-based compensation plans |
M. | Provisions |
N. | Revenue recognition |
(A) | The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying their obligations thereunder; |
(B) | The Group is able to identify the rights of each party in relation to the goods or services that are to be transferred; |
(C) | The Group is able to identify the payment terms for the goods or services that are to be transferred; |
(D) | The contract has commercial substance (i.e., the entity’s risk, timing and amount of future cash flows are expected to change as a result of the contract); and |
(E) | It is probable that the consideration to which the Group is entitled to in exchange for the goods or services transferred to the customer will be collected. |
(A) | Negotiations were held on the contracts as one package with a single commercial purpose; |
(B) | The amount of the consideration in one contract depends on the price or performance of a different contract; or |
(C) | The goods or services promised in the contracts (or certain goods or services promised in each one of the contracts) constitute a single performance obligation. |
(A) | Goods or services (or a bundle of goods or services) that are distinct; or |
(B) | A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer. |
O. | Government grants |
P. | Deposits received from consumers |
Deposits received from consumers, plus interest accrued and less any outstanding debt for past services, are refundable to the users when they cease using the electric energy service rendered by the Group. The Group has classified these deposits as current liabilities since the Group does not have legal rights to defer these payments in a period that exceed a year. However, the Group does not anticipate making significant payments in the next year.
Q. | Energy purchase |
Costs from energy purchases either acquired in the spot market or from contracts with suppliers are recorded on an accrual basis according to the energy actually delivered. Purchases of electric energy, including those which have not yet been billed as of the reporting date, are recorded based on estimates of the energy supplied at the prices prevailing in the spot market or agreed-upon in the respective purchase agreements, as the case may be.
R. | Financing income and expenses |
• | Interest income; |
• | Interest expense; |
• | The net gain or loss on the disposal of held-for-sale financial assets; |
• | The net gain or loss on financial assets at fair value through profit or loss; |
• | The foreign currency gain or loss on financial assets and financial liabilities; |
• | The fair value loss on contingent consideration classified as financial liability; |
• | Impairment losses recognized on financial assets (other than trade receivables); |
• | The net gain or loss on hedging instruments that are recognized in profit or loss; and |
• | The reclassification of net gains previously recognized in OCI. |
S. | Income taxes |
• | Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; |
• | Temporary differences related to investments in subsidiaries and associates where the Group is able to control the timing of the reversal of the temporary differences and it is not probable that they will reverse it in the foreseeable future; and |
• | Taxable temporary differences arising on the initial recognition of goodwill. |
T. | Earnings per share |
U. | Share capital – ordinary shares |
V. | Discontinued operations |
• | Represents a separate major line of business or geographic area of operations, |
• | Is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or |
• | Is a subsidiary acquired exclusively with a view to re-sell. |
W. | Operating segment and geographic information |
1. | OPC – OPC Energy Ltd and its subsidiaries operate in the Israeli electricity generation sector, including the initiation, development, construction and operation of power plants and the sale and supply of electricity. They are aggregated to form one reportable segment, taking into consideration the economic characteristics of each individual entities. |
2. | Quantum – Quantum (2007) LLC is a wholly owned subsidiary of Kenon which holds Kenon’s interest in Qoros Automotive Co. Ltd. (“Qoros”). Qoros is a China-based automotive company that is jointly-owned by Quantum together with Baoneng Group and Wuhu Chery Automobile Investment Co., Ltd., (“Wuhu Chery”). |
X. | Transactions with controlling shareholders |
Y. | New standards and interpretations not yet adopted |
- | Amendments to References to Conceptual Framework in IFRS Standards, |
- | Definition of Material (Amendments to IAS 1 and IAS 8). |
A. | Cash Generating Unit for impairment testing |
B. | Derivatives and Qoros put option |
C. | Non-derivative financial liabilities |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Cash in banks | 53,810 | 72,074 | ||||||
Time deposits | 93,343 | 59,049 | ||||||
147,153 | 131,123 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Short-term deposits and restricted cash (1) | 33,497 | 49,881 | ||||||
Others | 57 | 57 | ||||||
33,554 | 49,938 |
(1) | Balance as at December 31, 2018 includes approximately $22 million held in escrow in relation to the Tamar dispute which was released in 2019 (Refer to Note 10.A.a). |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Trade receivables | 39,321 | 35,548 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Advances to suppliers | 843 | 827 | ||||||
Prepaid expenses | 2,631 | 1,740 | ||||||
Government institutions | 1,879 | 5,362 | ||||||
Contingent consideration (1) | - | 4,500 | ||||||
Indemnification asset (2) | 14,750 | - | ||||||
Qoros put option (3) | 15,571 | 24,435 | ||||||
Others | 4,004 | 3,924 | ||||||
39,678 | 40,788 |
(1) | As at December 31, 2018, this represents a receivable related to the transaction described in Note 29; this amount was received in 2019. |
(2) | Mainly relates to compensation receivable from OPC Hadera contractor as a result of the delay in the construction of the Hadera Power Plant. Please refer to Note 20.B.b for further details. |
(3) | Refer to Note 9.B.b.2 |
A. | Condensed information regarding significant associated companies |
1. | Condensed financial information with respect to the statement of financial position |
ZIM | Qoros | |||||||||||||||
As at December 31, | ||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
$ Thousands | ||||||||||||||||
Principal place of business | International | China | ||||||||||||||
Proportion of ownership interest | 32% | 32% | 24% | 24% | ||||||||||||
Current assets | 630,817 | 746,636 | 570,764 | 724,697 | ||||||||||||
Non-current assets | 1,295,277 | 1,079,501 | 1,136,740 | 1,188,996 | ||||||||||||
Current liabilities | (926,339 | ) | (932,969 | ) | (1,080,340 | ) | (939,950 | ) | ||||||||
Non-current liabilities | (1,252,022 | ) | (1,117,180 | ) | (503,193 | ) | (534,720 | ) | ||||||||
Non-controlling interests | (5,402 | ) | (6,282 | ) | - | - | ||||||||||
Total net (liabilities)/assets attributable to the Group | (257,669 | ) | (230,294 | ) | 123,971 | 439,023 | ||||||||||
Share of Group in net (liabilities)/assets | (82,454 | ) | (73,694 | ) | 14,877 | 105,366 | ||||||||||
Adjustments: | ||||||||||||||||
Currency translation | - | - | 20,571 | 33,818 | ||||||||||||
Excess cost | 166,724 | 165,290 | - | - | ||||||||||||
Book value of investment | 84,270 | 91,596 | 35,448 | 139,184 | ||||||||||||
Investment in associated companies | 84,270 | 91,596 | 35,448 | 69,592 | ||||||||||||
Asset held for sale (1) | - | - | 69,592 | 69,592 |
* As a result of the transaction described in Note 9.B.b.3, Share of Group in net (liabilities)/assets in Qoros in 2019 is 12%.
(1) Refer to Note 9.B.b.3 for further details.
2. | Condensed financial information with respect to results of operations |
ZIM | Qoros* | |||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||
2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Revenue | 3,299,761 | 3,247,864 | 2,978,291 | 349,832 | 811,997 | 280,079 | ||||||||||||||||||
(Loss) / income ** | (18,148 | ) | (125,653 | ) | 6,235 | (312,007 | ) | (330,023 | ) | (242,395 | ) | |||||||||||||
Other comprehensive (loss) / income ** | (9,999 | ) | (6,057 | ) | (3,871 | ) | (8 | ) | (23 | ) | 31 | |||||||||||||
Total comprehensive (loss) / income | (28,147 | ) | (131,710 | ) | 2,364 | (312,015 | ) | (330,046 | ) | (242,364 | ) | |||||||||||||
Kenon’s share of comprehensive | ||||||||||||||||||||||||
(loss) / income | (9,007 | ) | (42,147 | ) | 756 | (37,442 | ) | (79,211 | ) | (121,182 | ) | |||||||||||||
Adjustments | 1,432 | 13,290 | 8,538 | 386 | 873 | (16 | ) | |||||||||||||||||
Kenon’s share of comprehensive | ||||||||||||||||||||||||
(loss) / income presented in the books | (7,575 | ) | (28,857 | ) | 9,294 | (37,056 | ) | (78,338 | ) | (121,198 | ) |
* | The depreciation and amortization, interest income, interest expense and income tax expenses recorded by Qoros during 2019 were approximately $172 million, $6 million, $49 million and $33 thousand (2018: $129 million, $5 million, $42 million and $142 thousand; 2017: $102 million, $2 million, $50 million and $14 thousand) respectively. |
** | Excludes portion attributable to non-controlling interest. |
B. | Additional information |
a. | ZIM |
(a) | In 2016, ZIM approached some of its creditors for the purpose of rescheduling payments. |
1) | Deferral of payments in a total amount of $116 million (the “Deferred Amounts”), during a period of up to 12 months starting on September 30, 2016, each creditor with relation to its specific contracts. The repayment of the Deferred Amounts will begin as from January 1, 2018 on a straight-line basis and will end on December 31, 2020 (the “Repayment Period”). In case any respective agreement expires before the end of the Repayment Period, the unpaid balance of Deferred Amounts will be paid in full upon expiration. |
2) | The Deferred Amounts bear interest, at an annual rate of Libor + 2.8% paid quarterly in cash. |
3) | ZIM granted security related to its rights and interests deriving from certain of its receivables, for securing the repayment of the Deferred Amounts. The balance of the secured Deferred Amounts as of December 31, 2019 was nil (2018: $58 million). |
4) | In case of excess cash, as defined in the rescheduling agreements, a mechanism of mandatory prepayments of the abovementioned rescheduled amounts and their related accrued interest, will apply. |
(b) | In 2018, ZIM obtained amendments to its financial covenants. Below are the current financial covenants of ZIM: |
1) | Fixed Charge Cover ratio – During the period starting on (and including) September 30, 2018 and through (and including) December 31, 2019, all prior Fixed Charge Cover ratio requirements are waived. In the following periods, commencing March 31, 2020, the required ratio will be 0.90:1 and will remain at that level thereafter. |
2) | Total Leverage ratio - During the period starting on (and including) September 30, 2018 and through (and including) December 31, 2019, all prior Total Leverage ratio requirements are waived. In the following periods, commencing March 31, 2020, the required ratio will be 9.00:1 and will remain at that level thereafter. |
3) | Minimum Liquidity - Starting December 31, 2016 the minimum Liquidity required is at $125 million. |
(c) | In 2019, ZIM entered into a revolving arrangement with a financial institution, subject to periodical renewals, for the recurring sale, meeting the criteria of “true sale”, of portion of receivables, designated by ZIM. According to this arrangement, an agreed portion of each designated receivable is sold to the financial institution in consideration of cash in the amount of the portion sold (limited to an aggregated amount of $90 million), net of the related fees. The collection of receivables previously sold, enables the recurring utilization of the above-mentioned limit. The true sale of the receivables under this arrangement meets the conditions for derecognition of financial assets as prescribed in IFRS 9. Further to this arrangement, ZIM is required to comply with a minimum balance of cash (as determined in the agreement) in the amount of $125 million, as described above), as well with other requirements customarily applied in such arrangements. |
2. | For the year ended December 31, 2016, Kenon recognized an impairment loss of $72 million in relation to its carrying value of ZIM. Based on a valuation performed at the end of 2017, Kenon recorded an impairment write-back of $29 million, bringing the carrying value of ZIM as at December 31, 2017 to $120 million. As at December 31, 2019 and 2018, Kenon did not identify any impairment indicators in relation to its carrying value in ZIM and hence no valuation analysis was performed and no additional impairment was recognized. As at December 31, 2019, the carrying value of ZIM is $84 million (2018: $92 million). |
b. | Qoros Automotive Co. Ltd. (“Qoros”) |
1. | As at December 31, 2019, the Group holds a 24% equity interest in Qoros through a wholly-owned and controlled company, Quantum (2007) LLC (“Quantum”). Chery Automobiles Limited (“Chery”), a Chinese automobile manufacturer, holds a 25% equity interest and, following the transaction detailed below in Note 9.B.b.2, the remaining 51% interest is held by an entity related to the Baoneng Group (“New Qoros Investor” or “New Strategic Partner”). |
2. | Qoros introduced a New Strategic Partner |
3. | In January 2019, Kenon, on behalf of its wholly owned subsidiary Quantum (2007) LLC, announced that it had entered into an agreement to sell half (12%) of its remaining interest (24%) in Qoros to the New Qoros Investor for RMB1,560 million (approximately $220 million) (“2019 Transaction”), which was based on the same post-investment valuation as the initial investment by the New Qoros Investor in Qoros. In April 2020, Kenon completed the sale of half of its remaining interest in Qoros. Refer to Note 33.2 for further details. |
4. | Qoros incurred a net loss of RMB 2.2 billion (approximately $312 million) in 2019 and had net current liabilities of approximately RMB 3.5 billion (approximately $510 million) for the year ended December 31, 2019, (RMB2.2 billion (approximately $332 million) and RMB 1.5 billion (approximately $215 million) as of December 31, 2018 and (RMB 1.4 billion (approximately $211 million) and RMB 3.7 billion (approximately $555 million) as of December 31, 2017 respectively). |
5. | Ansonia Loans |
a. | Overview |
6. | Financial Guarantees Provision and Releases |
a. | In July 2012, Chery provided a guarantee to the banks, in the amount of RMB1.5 billion (approximately $242 million), in relation to an agreement with the banks to provide Qoros a loan, in the amount of RMB3 billion (approximately $482 million). In November 2015, Kenon provided back-to-back guarantees to Chery of RMB750 million (approximately $115 million) in respect of this loan thereby committing to pay half of every amount Chery may be required to pay with respect to the guarantee. As a result, if Qoros is unable to comply with the terms of certain of its debt agreements, Kenon may be required to make payments under its guarantees to Chery. The fair value of the guarantee was recorded in the financial statements. |
b. | On May 12, 2015, Qoros signed a Consortium Loan Agreement with the Export-Import Bank of China, and China Construction Bank Co., LTD, Suzhou Branch, concerning the Project of Research and Development of Hybrid Model (“Loan Agreement”), for an amount of RMB700 million (approximately $108 million) or in USD not exceeding the equivalent to RMB480 million (approximately $78 million) (the “Facility”). |
c. | On June 15, 2015, this Facility was guaranteed by Chery and pledged with Qoros’ 90 vehicle patents with an appraisal value of minimum RMB3.1 billion (approximately $500 million). The Loan Agreement’s term of 102 months bears a 5-years interest rate quoted by the People’s Bank of China in RMB at LIBOR+10%, or in USD at LIBOR+3.50% per annum. |
d. | On July 31, 2014, in order to secure additional funding for Qoros of approximately RMB 1.2 billion (approximately $200 million) IC pledged a portion of its shares (including dividends derived therefrom) in Qoros, in proportion to its share in Qoros’s capital, in favor of the Chinese bank providing Qoros with such financing. Simultaneously, the subsidiary of Chery that holds Chery’s rights in Qoros also pledged a proportionate part of its rights in Qoros. Such financing agreement includes, inter alia, covenants, events of immediate payment and/or early payment for violations and/or events specified in the agreement. The pledge agreement includes, inter alia, provisions concerning the ratio of securities and the pledging of further securities in certain circumstances, including pledges of up to all of Quantum’s shares in Qoros (or cash), provisions regarding events that would entitle the Chinese Bank to enforce the pledge, certain representations and covenants, and provisions regarding the registration and approval of the pledge. |
e. | On June 30, 2016, Kenon increased its previously recognized provision of approximately $30 million to approximately $160 million in respect to Kenon’s “back-to-back” guarantee obligations to Chery (RMB1,100 million), in respect of guarantees that Chery has given for Qoros’ bank debt and has pledged a portion of its interests in Qoros to secure Qoros’ bank debt. In addition to the then current liquidity needs of Qoros, its financial position and Kenon’s strategic intent, the provision was made due to uncertainty in the Chinese automobile market. As a result, Kenon recognised a $130 million charge to expense for such financial guarantees in its consolidated statement of profit or loss in 2016. |
f. | On December 25, 2016. Kenon agreed to provide a RMB250 million (approximately $36 million) shareholder loan to Qoros, and in relation to this loan, the maximum amount of Kenon’s back-to-back guarantee obligations to Chery was reduced by RMB250 million (approximately $40 million). As part of the loan to Qoros, Kenon’s back-to-back guarantee obligations to Chery with respect to Chery’s guarantee of Qoros’ RMB3 billion loan facility with the Export-Import Bank of China (“EXIM Bank”) were reduced by one third, and the maximum amount of Kenon’s obligations under this back-to-back guarantee (subject to certain obligations to negotiate fees and interest) were reduced from RMB750 million to RMB500 million (approximately $72 million). In addition, Ansonia committed to fund RMB25 million (approximately $4 million) of Kenon’s remaining back-to-back guarantee obligations to Chery in certain circumstances (“Ansonia Commitment”). |
g. | On March 10, 2017, Kenon announced that it had agreed to fund up to RMB777 million (approximately $114 million) to Qoros in relation to the full release of its remaining RMB825 million (approximately $125 million) back-to-back guarantee obligations to Chery in two tranches, which released Kenon from commitments to pay any related interest and fees to Chery under the guarantees. |
Date | Description | Amount ($ million) |
June 2016 | Provision in respect of Kenon’s “back-to-back” guarantee obligations to Chery (See Note 9.B.b.6.e) | 160 |
December 2016 | Shareholder loan to Qoros (See Note 9.B.b.6.f) | (36) |
March 2017 | Transfer of First Tranche Loans (See Note 9.B.b.6.g) | (64) |
April 2017 | Transfer of Second Tranche Loans (See Note 9.B.b.6.g) | (16) |
January 2018 | Release of remaining financial guarantees (See Note 9.B.b.6.g) | (44) |
December 2018 | Year end balance | - |
h. | As described above, in connection with the previous reductions in Kenon’s back-to-back guarantee obligations to Chery, Kenon provided cash collateral to Chery and the relevant agreements provide that Kenon is entitled to a proportionate return of this cash collateral to the extent that Chery's guarantee obligations are reduced. Kenon therefore received aggregate cash payments of $17 million from Chery in December 2019 and April 2020 following repayments on Qoros' bank loans and corresponding reductions of Chery’s obligations under its guarantees. In addition, as a result of the completion of the sale, Kenon expects to receive the remaining RMB5 million (approximately $1 million) cash collateral previously provided to Chery, bringing the total cash to be received from Chery to RMB244 million (approximately $36 million) in connection with these repayments. |
7. | Business Plans |
C. | Details regarding dividends received from associated companies |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
From associated companies | - | - | 382 |
D. | Restrictions |
A. | Investments |
1. | O.P.C. Energy Ltd. (formerly part of the I.C. Power Ltd group) |
a. | O.P.C Rotem Ltd. (“OPC Rotem”) |
b. | O.P.C. Hadera Ltd. (“OPC Hadera”) |
c. | Tzomet Energy Ltd. (“OPC Tzomet”) |
d. | Setting of tariffs by the EA |
e. | Dividend |
f. | Issuance of new shares by OPC |
2. | I.C. Green Energy Ltd (I.C. Green) |
B. | The following table summarizes the information relating to the Group’s subsidiary in 2019, 2018 and 2017 that has material NCI: |
As at and for the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
OPC Energy Ltd. | OPC Energy Ltd. | OPC Energy Ltd. | ||||||||||
$ Thousands | ||||||||||||
NCI percentage * | 35.31 | % | 32.23 | % | 34.82 | % | ||||||
Current assets | 204,128 | 184,211 | 204,461 | |||||||||
Non-current assets | 807,133 | 720,469 | 736,123 | |||||||||
Current liabilities | (100,313 | ) | (77,792 | ) | (99,441 | ) | ||||||
Non-current liabilities | (663,328 | ) | (624,570 | ) | (667,996 | ) | ||||||
Net assets | 247,620 | 202,318 | 173,147 | |||||||||
Carrying amount of NCI | 87,435 | 65,215 | 60,290 | |||||||||
Revenue | 373,142 | 363,262 | 365,395 | |||||||||
Profit after tax | 34,366 | 26,266 | 15,934 | |||||||||
Other comprehensive income/(loss) | 15,569 | (14,280 | ) | 8,514 | ||||||||
Profit attributable to NCI | 16,433 | 11,396 | 8,323 | |||||||||
OCI attributable to NCI | 4,353 | (4,554 | ) | 3,686 | ||||||||
Cash flows from operating activities | 109,254 | 85,581 | 110,290 | |||||||||
Cash flows from investing activities | (41,123 | ) | (102,080 | ) | (154,194 | ) | ||||||
Cash flows from financing activites excluding dividends paid to NCI | (40,539 | ) | (34,474 | ) | 165,107 | |||||||
Dividends paid to NCI | (13,501 | ) | - | (4,159 | ) | |||||||
Effect of changes in the exchange rate on cash and cash equivalents | 9,202 | (7,570 | ) | 7,126 | ||||||||
Net increase/(decrease) in cash and cash equivalents | 23,293 | (58,543 | ) | 124,170 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Deferred expenses, net (1) | 22,600 | 18,786 | ||||||
Contract costs | 4,721 | 3,720 | ||||||
Others | 2,864 | 1,067 | ||||||
30,185 | 23,573 |
(1) | Relates to deferred expenses, net for OPC’s connection fees to the gas transmission network and the electricity grid. |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Qoros put option (1) | 55,575 | 65,668 | ||||||
Others | 2,142 | 2,142 | ||||||
57,717 | 67,810 |
(1) | Refer to Note 9.B.b.2. |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Deferred payment receivable | 204,299 | 189,166 |
A. | Composition |
As at December 31, 2019 | ||||||||||||||||||||||||
Balance at beginning of year | Additions** | Disposals | Reclassification* | Differences in translation reserves | Balance at end of year | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
Land, roads, buildings and leasehold improvements | 43,261 | 199 | - | (4,679 | ) | 3,171 | 41,952 | |||||||||||||||||
Facilities, machinery and equipment | 465,627 | 1,428 | (296 | ) | (7,130 | ) | 40,319 | 499,948 | ||||||||||||||||
Computers | 491 | 145 | (23 | ) | - | 41 | 654 | |||||||||||||||||
Office furniture and equipment | 1,026 | 14 | (21 | ) | - | 28 | 1,047 | |||||||||||||||||
Assets under construction | 207,017 | 14,874 | - | - | 18,043 | 239,934 | ||||||||||||||||||
Other | 30,701 | 13,041 | (9,999 | ) | - | 2,512 | 36,255 | |||||||||||||||||
748,123 | 29,701 | (10,339 | ) | (11,809 | ) | 64,114 | 819,790 | |||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||
Land, roads, buildings and leasehold improvements | 8,059 | 1,544 | - | (277 | ) | 557 | 9,883 | |||||||||||||||||
Facilities, machinery and equipment | 103,570 | 28,903 | (319 | ) | (264 | ) | 8,736 | 140,626 | ||||||||||||||||
Computers | 310 | 108 | (23 | ) | - | 15 | 410 | |||||||||||||||||
Office furniture and equipment | 691 | 44 | (22 | ) | - | 9 | 722 | |||||||||||||||||
Other | 405 | 107 | (38 | ) | - | 33 | 507 | |||||||||||||||||
113,035 | 30,706 | (402 | ) | (541 | ) | 9,350 | 152,148 | |||||||||||||||||
Balance as at December 31, 2019 | 635,088 | (1,005 | ) | (9,937 | ) | (11,268 | ) | 54,764 | 667,642 |
* | Reclassified to Right-Of-Use assets after initial application of IFRS 16. Refer to Note 19 Right-of-use Assets. |
** | Additions to property, plant and equipment in OPC Hadera are presented net of agreed compensation from the construction contractor. Refer to Note 20.B.b for further details. |
As at December 31, 2018 | ||||||||||||||||||||
Balance at beginning of year | Additions | Disposals | Differences in translation reserves | Balance at end of year | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
Cost | ||||||||||||||||||||
Land, roads, buildings and leasehold improvements* | 42,792 | 4,189 | (188 | ) | (3,532 | ) | 43,261 | |||||||||||||
Facilities, machinery and equipment* | 489,218 | 26,154 | (13,063 | ) | (36,682 | ) | 465,627 | |||||||||||||
Computers* | 431 | 306 | (263 | ) | 17 | 491 | ||||||||||||||
Office furniture and equipment* | 1,044 | 86 | (85 | ) | (19 | ) | 1,026 | |||||||||||||
Assets under construction* | 162,853 | 59,878 | - | (15,714 | ) | 207,017 | ||||||||||||||
Other* | 29,459 | 9,795 | (7,650 | ) | (903 | ) | 30,701 | |||||||||||||
725,797 | 100,408 | (21,249 | ) | (56,833 | ) | 748,123 | ||||||||||||||
Accumulated depreciation | ||||||||||||||||||||
Land, roads, buildings and leasehold improvements* | 7,293 | 1,714 | (458 | ) | (490 | ) | 8,059 | |||||||||||||
Facilities, machinery and equipment* | 100,833 | 28,024 | (17,705 | ) | (7,582 | ) | 103,570 | |||||||||||||
Computers* | 512 | 76 | (259 | ) | (19 | ) | 310 | |||||||||||||
Office furniture and equipment* | 678 | 106 | (84 | ) | (9 | ) | 691 | |||||||||||||
Other* | 317 | 113 | - | (25 | ) | 405 | ||||||||||||||
109,633 | 30,033 | (18,506 | ) | (8,125 | ) | 113,035 | ||||||||||||||
Balance as at December 31, 2018 | 616,164 | 70,375 | (2,743 | ) | (48,708 | ) | 635,088 |
* | Reclassified to be comparable with current year presentation. |
B. | Net carrying values |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Land, roads, buildings and leasehold improvements* | 32,069 | 35,202 | ||||||
Facilities, machinery and equipment* | 359,322 | 362,057 | ||||||
Computers* | 244 | 181 | ||||||
Office furniture and equipment* | 325 | 335 | ||||||
Assets under construction* | 239,934 | 207,017 | ||||||
Other* | 35,748 | 30,296 | ||||||
667,642 | 635,088 |
* | Reclassified 2018 numbers to be comparable with current year presentation. |
C. | When there is any indication of impairment, the Group’s entities perform impairment tests for their long-lived assets using fair values less cost to sell based on independent appraisals or value in use estimations, with assumptions based on past experience and current sector forecasts, described below: |
• | Discount rate is a post-tax measure based on the characteristics of each CGU. |
• | Cash flow projections include specific estimates for around five years and a terminal growth rate thereafter. The terminal growth rate is determined based on management’s estimate of long-term inflation. |
• | Existing power purchase agreements (PPAs) signed and existing number of customers. |
• | The production mix of each country was determined using specifically-developed internal forecast models that consider factors such as prices and availability of commodities, forecast demand of electricity, planned construction or the commissioning of new capacity in the country’s various technologies. |
• | The distribution business profits were determined using specifically-developed internal forecast models that consider factors such as forecasted demand, fuel prices, energy purchases, collection rates, percentage of losses, quality service improvement, among others. |
• | Fuel prices have been calculated based on existing supply contracts and on estimated future prices including a price differential adjustment specific to every product according to local characteristics. |
• | Assumptions for energy sale and purchase prices and output of generation facilities are made based on complex specifically-developed internal forecast models for each country. |
• | Demand – Demand forecast has taken into consideration the most probably economic performance as well as growth forecasts of different sources. |
• | Technical performance – The forecast takes into consideration that the power plants have an appropriate preventive maintenance that permits their proper functioning and the distribution businesss has the required capital expenditure to expand and perform properly in order to reach the targeted quality levels. |
D. | The amount of borrowing costs capitalized in 2019 was approximately $12 million ($8 million in 2018). |
E. | Fixed assets purchased on credit in 2019, 2018 and 2017 were approximately $11 million, $23 million and $5 million respectively. |
F. | The composition of depreciation expenses from continuing operations is as follows: |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Depreciation charged to cost of sales | 31,141 | 29,809 | ||||||
Depreciation charged to selling, general and administrative expenses | 766 | 224 | ||||||
Depreciation charged to results | 31,907 | 30,033 | ||||||
Amortization of intangibles charged to selling, general and administrative expenses | 185 | 383 | ||||||
Depreciation and amortization from continuing operations | 32,092 | 30,416 |
G. | Change in estimates of useful life |
2019 | 2020 | 2021 | 2022 | 2023 | 2024 and after | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
(Decrease)/increase in depreciation | (956 | ) | (3,619 | ) | (3,619 | ) | (3,619 | ) | (3,619 | ) | 15,432 |
A. | Composition: |
Goodwill | Software | Others | Total | |||||||||||||
$ Thousands | ||||||||||||||||
Cost | ||||||||||||||||
Balance as at January 1, 2019 | 21,880 | 1,248 | 454 | 23,582 | ||||||||||||
Acquisitions – self development | - | 273 | - | 273 | ||||||||||||
Disposals | (319 | ) | (45 | ) | (210 | ) | (574 | ) | ||||||||
Translation differences | 25 | 84 | 50 | 159 | ||||||||||||
21,586 | 1,560 | 294 | 23,440 | |||||||||||||
Amortization and impairment | ||||||||||||||||
Balance as at January 1, 2019 | 21,545 | 524 | 207 | 22,276 | ||||||||||||
Amortization for the year | - | 170 | 15 | 185 | ||||||||||||
Disposals | (95 | ) | (45 | ) | (168 | ) | (308 | ) | ||||||||
Translation differences | 5 | 37 | 12 | 54 | ||||||||||||
Balance as at December 31, 2019 | 21,455 | 686 | 66 | 22,207 | ||||||||||||
Carrying value | ||||||||||||||||
As at January 1, 2019 | 335 | 724 | 247 | 1,306 | ||||||||||||
As at December 31, 2019 | 131 | 874 | 228 | 1,233 |
Goodwill | Software | Others | Total | |||||||||||||
$ Thousands | ||||||||||||||||
Cost | ||||||||||||||||
Balance as at January 1, 2018 | 21,914 | 1,153 | 509 | 23,576 | ||||||||||||
Acquisitions – self development | - | 162 | - | 162 | ||||||||||||
Translation differences | (34 | ) | (67 | ) | (55 | ) | (156 | ) | ||||||||
Balance as at December 31, 2018 | 21,880 | 1,248 | 454 | 23,582 | ||||||||||||
Amortization and impairment | ||||||||||||||||
Balance as at January 1, 2018 | 21,455 | 445 | 35 | 21,935 | ||||||||||||
Amortization for the year | �� | 94 | 107 | 182 | 383 | |||||||||||
Translation differences | (4 | ) | (28 | ) | (10 | ) | (42 | ) | ||||||||
Balance as at December 31, 2018 | 21,545 | 524 | 207 | 22,276 | ||||||||||||
Carrying value | ||||||||||||||||
As at January 1, 2018 | 459 | 708 | 474 | 1,641 | ||||||||||||
As at December 31, 2018 | 335 | 724 | 247 | 1,306 |
B. | The total carrying amounts of intangible assets with a finite useful life and with an indefinite useful life or not yet available for use |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Intangible assets with a finite useful life | 1,102 | 971 | ||||||
Intangible assets with an indefinite useful life or not yet available for use | 131 | 335 | ||||||
1,233 | 1,306 |
As at December 31 | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Current liabilities | ||||||||
Current maturities of long-term liabilities: | ||||||||
Loans from banks and others | 36,630 | 20,302 | ||||||
Non-convertible debentures | 8,841 | 2,933 | ||||||
Others | 134 | - | ||||||
45,605 | 23,235 | |||||||
Non-current liabilities | ||||||||
Loans from banks and others | 503,647 | 487,759 | ||||||
Non-convertible debentures | 73,006 | 75,476 | ||||||
576,653 | 563,235 | |||||||
Total | 622,258 | 586,470 |
A. | Classification based on currencies and interest rates |
Weighted-average interest rate December 31 | As at December 31, | |||||||||||
2019 | 2019 | 2018 | ||||||||||
% | $ Thousands | |||||||||||
Debentures | ||||||||||||
In shekels | 4.45 | % | 81,847 | 78,409 | ||||||||
Loans from banks and others | ||||||||||||
In shekels | 4.70 | % | 540,411 | 508,061 | ||||||||
622,258 | 586,470 |
B. | OPC Rotem |
C. | OPC Hadera |
D. | OPC Tzomet |
E. | OPC |
In December 2019, the Company signed a framework agreement for taking out short‑term credit with a bank, for purposes of payment of the Initial Assessment of OPC Tzomet (as stated in Note 10.A.1.c), up to the end of March 2020 (hereinafter – “the Credit Framework Agreement”). The framework under the Credit Framework Agreement is in an amount of up to NIS 230 million (approximately $66 million), where amounts withdrawn by OPC will bear annual interest at the rate of prime + 0.6%. Subsequent to year end, in January 2020, OPC withdrew the amount of NIS 230 million (approximately $66 million) from the said framework, where the amount of NIS 169 million (approximately $49 million) was used by OPC for purposes of payment of the Initial Assessment (hereinafter – “the Loan”), and the balance was used by OPC in order to provide a bank guarantee to Israel Lands Authority to secure the balance of the payment (hereinafter – “the Guarantee”). The Loan is scheduled for repayment in April 2020, and the Guarantee is valid for a period of one year from the date of its grant. As part of the Credit Framework Agreement, OPC undertook that so long as short‑term credit has not been fully repaid, it will comply with the financial covenants as provided in the Credit Framework Agreement. The Company undertook not to create liens, in accordance with the covenant provided in the Credit Framework Agreement.
F. | In May 2017, OPC issued debentures (Series A) to classified investors under a private placement, which were listed for trade on the Institutional Continuous Trading Platform. The debentures, with a par value of NIS 320 million (approximately $85 million), bear annual interest at the rate of 4.95% and are repayable, principal and interest, every six months, commencing on June 30, 2018 (on June 30 and December 30 of every calendar year) through December 30, 2030. Under the terms, the interest on the debentures will be reduced by 0.5% in the event of their listing for trade on the main list of the TASE. The debentures have received a rating of A3 from Midroog and A- from S&P Global Ratings Maalot Ltd. (hereinafter -– “Maalot”). |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Current | ||||||||
Trade Payables | 15,375 | 25,082 | ||||||
Accrued expenses and other payables | 20,632 | 22,590 | ||||||
36,007 | 47,672 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Government institutions | 1,972 | 244 | ||||||
Employees and payroll institutions* | 4,983 | 2,870 | ||||||
Accrued expenses | 6,603 | 7,505 | ||||||
Interest payable | 516 | 277 | ||||||
Liability in respect of acquisition of non-controlling interests (1) | 1,302 | - | ||||||
Others* | 875 | 1,176 | ||||||
16,251 | 12,072 |
* | Reclassified 2018 numbers to be comparable with current year presentation. |
(1) | Refer to Note 10.A.1.c for further details. |
A) | The Group leases the following items: |
i) | Land |
ii) | OPC gas transmission infrastructure |
iii) | Offices |
B) | Right-of-use assets |
As at December 31, 2019 | ||||||||||||||||
Balance at beginning of year | Depreciation charge for the year | Adjustments | Balance at end of year | |||||||||||||
$ Thousands | ||||||||||||||||
Land* | 6,537 | (263 | ) | 579 | 6,853 | |||||||||||
PRMS facility* | 6,866 | (451 | ) | 91 | 6,506 | |||||||||||
Offices | 3,573 | (487 | ) | 219 | 3,305 | |||||||||||
Others | 423 | - | 36 | 459 | ||||||||||||
17,399 | (1,201 | ) | 925 | 17,123 |
C) | Amounts recognized in the consolidated statements of profit & loss |
As at December 31, | ||||
2019 | ||||
$ Thousands | ||||
Interest expenses in respect of lease liability | 108 |
D) | Amounts recognized in the consolidated statements of cash flows |
As at December 31, | ||||
2019 | ||||
$ Thousands | ||||
Total cash outflow for leases | 831 |
A. | Contingent Liabilities |
a. | Local Council of Shapir development levies |
b. | ORL Claim |
c. | Dalia petition |
d. | IEC power purchase agreement |
B. | Commitments |
a. | OPC Rotem |
b. | OPC Hadera |
c. | OPC Energy Ltd. |
d. | OPC Tzomet |
e. | OPC Rotem and OPC Hadera |
f. | Inkia Energy Limited (liquidated in July 2019) |
A. | Share Capital |
Company | ||||||||
No. of shares | ||||||||
(’000) | ||||||||
2019 | 2018 | |||||||
Authorised and in issue at January, 1 | 53,827 | 53,808 | ||||||
Issued for share plan | 31 | 19 | ||||||
Authorised and in issue at December. 31 | 53,858 | 53,827 |
B. | Translation reserve |
C. | Capital reserves |
D. | Dividends |
E. | Kenon's share plan |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Revenue from sale of electricity | 356,648 | 347,167 | 349,957 | |||||||||
Revenue from sale of steam | 16,494 | 16,095 | 15,438 | |||||||||
Others | 331 | 750 | 309 | |||||||||
373,473 | 364,012 | 365,704 |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Fuels | 138,502 | 118,698 | 129,788 | |||||||||
Electricity and infrastructure services | 101,085 | 125,623 | 122,340 | |||||||||
Salaries and related expenses | 6,661 | 6,097 | 5,822 | |||||||||
Generation and operating expenses and outsourcing | 6,326 | 6,509 | 6,432 | |||||||||
Insurance | 2,360 | 1,548 | 1,734 | |||||||||
Others | 1,102 | 1,040 | 1,020 | |||||||||
256,036 | 259,515 | 267,136 |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Payroll and related expenses | 10,853 | 11,399 | 21,380 | |||||||||
Depreciation and amortization | 951 | 607 | 692 | |||||||||
Professional fees | 12,806 | 12,115 | 20,334 | |||||||||
Other expenses | 11,244 | 9,910 | 13,886 | |||||||||
35,854 | 34,031 | 56,292 |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Interest income from bank deposits | 2,545 | 4,360 | 640 | |||||||||
Interest income from deferred payment | 15,134 | 14,166 | - | |||||||||
Interest income from associated company | - | 8,494 | - | |||||||||
Net change in exchange rates | - | 1,129 | 2,259 | |||||||||
Other income | - | 443 | 5 | |||||||||
Financing income | 17,679 | 28,592 | 2,904 | |||||||||
Interest expenses to banks and others | (22,420 | ) | (30,382 | ) | (59,514 | ) | ||||||
Amount reclassified to consolidated statements of profit & loss from capital reserve in respect of cash flow hedges | (2,743 | ) | - | - | ||||||||
Net change in exchange rates | (2,328 | ) | - | - | ||||||||
Net change in fair value of derivative financial instruments | (1,657 | ) | - | (1,168 | ) | |||||||
Other expenses | (798 | ) | - | (9,484 | ) | |||||||
Financing expenses | (29,946 | ) | (30,382 | ) | (70,166 | ) | ||||||
Net financing expenses recognized in the statement of profit and loss | (12,267 | ) | (1,790 | ) | (67,262 | ) |
A. | Components of the Income Taxes |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Current taxes on income | ||||||||||||
In respect of current year* | 2,569 | 1,878 | 64,291 | |||||||||
In respect of prior years | (18 | ) | (48 | ) | 44 | |||||||
Deferred tax income | ||||||||||||
Creation and reversal of temporary differences | 14,124 | 9,669 | 8,474 | |||||||||
Total taxes on income | 16,675 | 11,499 | 72,809 |
* | Current taxes on income in 2017 include $61 million taxes payable in connection with a restructuring to simplify the holding structure of some of the companies remaining in the Kenon group subsequent to the Inkia transaction. As a result of this restructuring (which was substantially completed in January 2018), Kenon holds its interest in OPC directly. Kenon does not expect any further tax liability in relation to any future sales of its interest in OPC. |
B. | Reconciliation between the theoretical tax expense (benefit) on the pre-tax income (loss) and the actual income tax expenses |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
(Loss)/profit from continuing operations before income taxes | (5,536 | ) | 461,968 | (135,636 | ) | |||||||
Statutory tax rate | 17.00 | % | 17.00 | % | 17.00 | % | ||||||
Tax computed at the statutory tax rate | (941 | ) | 78,535 | (23,058 | ) | |||||||
Increase (decrease) in tax in respect of: | ||||||||||||
Elimination of tax calculated in respect of the Group’s share in losses of associated companies | 7,043 | 18,215 | 20,924 | |||||||||
Income subject to tax at a different tax rate | 5,960 | 2,632 | 63,446 | |||||||||
Non-deductible expenses | 5,408 | 6,752 | 12,850 | |||||||||
Exempt income | (4,714 | ) | (97,664 | ) | (7,006 | ) | ||||||
Taxes in respect of prior years | (18 | ) | (48 | ) | 44 | |||||||
Changes in temporary differences in respect of which deferred taxes are not recognized | - | (4 | ) | 4,285 | ||||||||
Tax losses and other tax benefits for the period regarding which deferred taxes were not recorded | 3,946 | 2,883 | 350 | |||||||||
Differences between the measurement base of income reported for tax purposes and the income reported in the financial statements | - | - | 13 | |||||||||
Other differences | (9 | ) | 198 | 961 | ||||||||
Taxes on income included in the statement of profit and loss | 16,675 | 11,499 | 72,809 |
C. | Deferred tax assets and liabilities |
1. | Deferred tax assets and liabilities recognized |
Property plant and equipment | Carryforward of losses and deductions for tax purposes | Other* | Total | |||||||||||||
$ Thousands | ||||||||||||||||
Balance of deferred tax asset (liability) as at January 1, 2018 | (90,168 | ) | 35,449 | 1,531 | (53,188 | ) | ||||||||||
Changes recorded on the statement of profit and loss | 4,532 | (14,695 | ) | 494 | (9,669 | ) | ||||||||||
Changes recorded in other comprehensive income | - | - | (104 | ) | (104 | ) | ||||||||||
Translation differences | 6,577 | (2,064 | ) | 13 | 4,526 | |||||||||||
Balance of deferred tax asset (liability) as at December 31, 2018 | (79,059 | ) | 18,690 | 1,934 | (58,435 | ) | ||||||||||
Changes recorded on the statement of profit and loss | 2,843 | (17,213 | ) | 246 | (14,124 | ) | ||||||||||
Changes recorded in other comprehensive income | - | - | 252 | 252 | ||||||||||||
Change as a result of sale of subsidiary | - | - | 10 | 10 | ||||||||||||
Translation differences | (6,589 | ) | 1,041 | (202 | ) | (5,750 | ) | |||||||||
Balance of deferred tax asset (liability) as at December 31, 2019 | (82,805 | ) | 2,518 | 2,240 | (78,047 | ) |
* | This amount includes deferred tax arising from derivative instruments, intangibles, undistributed profits, non-monetary items and trade receivables distribution. |
2. | The deferred taxes are presented in the statements of financial position as follows: |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
As part of non-current assets | 1,516 | 632 | ||||||
As part of non-current liabilities | (79,563 | ) | (59,067 | ) | ||||
(78,047 | ) | (58,435 | ) |
3. | Tax and deferred tax liabilities not recorded |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Losses for tax purposes | 35,041 | 20,817 | ||||||
Deductible temporary differences | 3,584 | 652 | ||||||
38,625 | 21,469 |
4. | Tax in Singapore |
• | Accrued in or derived from Singapore; or |
• | Received in Singapore from outside of Singapore. |
• | dividend income; |
• | trade or business profits of a foreign branch; or |
• | service fee income derived from a business, trade or profession carried on through a fixed place of operation in a foreign jurisdiction may be exempted from tax in Singapore. |
1. | The highest corporate tax rate (headline tax rate) of the foreign jurisdiction from which the income is received is at least 15% at the time the foreign income is received in Singapore; |
2. | The foreign income had been subjected to tax in the foreign jurisdiction from which they were received (known as the "subject to tax" condition). The rate at which the foreign income was taxed can be different from the headline tax rate; and |
3. | The Tax Comptroller is satisfied that the tax exemption would be beneficial to the person resident in Singapore. |
A. | Profit/(Loss) allocated to the holders of the ordinary shareholders |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
(Loss)/profit for the year attributable to Kenon’s shareholders | (13,359 | ) | 434,213 | 236,590 | ||||||||
Profit/(loss) for the year from discontinued operations (after tax) | 24,653 | (5,631 | ) | 476,565 | ||||||||
Less: NCI | - | - | (24,928 | ) | ||||||||
Profit/(loss) for the year from discontinued operations (after tax) attributable to Kenon’s shareholders | 24,653 | (5,631 | ) | 451,637 | ||||||||
(Loss)/profit for the year from continuing operations attributable to Kenon’s shareholders | (38,012 | ) | 439,844 | (215,047 | ) |
B. | Number of ordinary shares |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
Thousands | ||||||||||||
Weighted Average number of shares used in calculation of basic/diluted earnings per share | 53,856 | 53,826 | 53,761 |
(a) | I.C. Power (Latin America businesses) |
Year ended December 31, 2019 | Year ended December 31, 2018 | Year ended December 31, 2017 | ||||||||||
$ Thousands | ||||||||||||
Revenue | - | - | 1,777,232 | |||||||||
Cost of sales and services (excluding depreciation and amortization) | - | - | (1,235,214 | ) | ||||||||
Depreciation and amortization | - | - | (135,733 | ) | ||||||||
Gross profit | - | - | 406,285 | |||||||||
Profit before income taxes | - | - | 152,280 | |||||||||
Recovery of retained claims | 30,000 | 5,340 | - | |||||||||
Income taxes (1) | (5,347 | ) | (10,971 | ) | (73,141 | ) | ||||||
(Loss)/profit after income taxes | 24,653 | (5,631 | ) | 79,139 | ||||||||
Gain on sale of discontinued operations | - | - | 529,923 | |||||||||
Tax on gain/loss on sale of discontinued operations | - | - | (132,497 | ) | ||||||||
Profit/(loss) from discontinued operations | 24,653 | (5,631 | ) | 476,565 | ||||||||
Net cash flows provided by operating activities | - | - | 319,637 | |||||||||
Net cash flows provided by/(used in) investing activities | 24,567 | (155,361 | ) | 816,544 | ||||||||
Net cash flows used in financing activities | - | - | (103,524 | ) | ||||||||
Cash and cash equivalents provided by/(used in) discontinued operations | 24,567 | (155,361 | ) | 1,032,657 |
(1) | Additional taxes mainly relates to the sale by IC Power of its Latin American and Caribbean businesses and tax on retained claims. |
OPC | Quantum | Others | Total | |||||||||||||
$ Thousands | ||||||||||||||||
2019 | ||||||||||||||||
Revenue | 373,142 | - | 331 | 373,473 | ||||||||||||
Profit/(loss) before taxes | 48,513 | (44,626 | ) | (9,423 | ) | (5,536 | ) | |||||||||
Income Taxes | (14,147 | ) | - | (2,528 | ) | (16,675 | ) | |||||||||
Profit/(loss) from continuing operations | 34,366 | (44,626 | ) | (11,951 | ) | (22,211 | ) | |||||||||
Depreciation and amortization | 31,141 | - | 951 | 32,092 | ||||||||||||
Financing income | (1,930 | ) | (242 | ) | (15,507 | ) | (17,679 | ) | ||||||||
Financing expenses | 28,065 | - | 1,881 | 29,946 | ||||||||||||
Other items: | ||||||||||||||||
Recovery of financial guarantee | - | (11,144 | ) | - | (11,144 | ) | ||||||||||
Fair value loss on put option | - | 18,957 | - | 18,957 | ||||||||||||
Share in losses of associated companies | - | 37,055 | 4,375 | 41,430 | ||||||||||||
57,276 | 44,626 | (8,300 | ) | 93,602 | ||||||||||||
Adjusted EBITDA | 105,789 | - | (17,723 | ) | 88,066 | |||||||||||
Segment assets | 1,000,329 | 71,580 | 247,155 | 1,319,064 | ||||||||||||
Investments in associated companies | - | 105,040 | 84,270 | 189,310 | ||||||||||||
1,508,374 | ||||||||||||||||
Segment liabilities | 761,866 | - | 34,720 | 796,586 |
OPC | Quantum | Others | Adjustments | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2018 | ||||||||||||||||||||
Revenue | 363,262 | - | 750 | - | 364,012 | |||||||||||||||
Profit/(loss) before taxes | 36,499 | 456,854 | (31,385 | ) | 461,968 | |||||||||||||||
Income Taxes | (10,233 | ) | - | (1,266 | ) | - | (11,499 | ) | ||||||||||||
Profit/(loss) from continuing operations | 26,266 | 456,854 | (32,651 | ) | - | 450,469 | ||||||||||||||
Depreciation and amortization | 29,809 | - | 607 | 30,416 | ||||||||||||||||
Financing income | (2,031 | ) | (10,371 | ) | (48,430 | ) | 32,240 | (28,592 | ) | |||||||||||
Financing expenses | 27,219 | 2,003 | 33,400 | (32,240 | ) | 30,382 | ||||||||||||||
Other items: | ||||||||||||||||||||
Write back of financial guarantee | - | (62,563 | ) | - | - | (62,563 | ) | |||||||||||||
Gain on third party investment in Qoros | - | (504,049 | ) | - | - | (504,049 | ) | |||||||||||||
Fair value loss on put option | - | 39,788 | - | - | 39,788 | |||||||||||||||
Share in losses of associated companies | - | 78,338 | 26,919 | - | 105,257 | |||||||||||||||
54,997 | (456,854 | ) | 12,496 | - | (389,361 | ) | ||||||||||||||
Adjusted EBITDA | 91,496 | - | (18,889 | ) | - | 72,607 | ||||||||||||||
Segment assets | 893,162 | 91,626 | 239,550 | - | 1,224,338 | |||||||||||||||
Investments in associated companies | - | 139,184 | 91,596 | - | 230,780 | |||||||||||||||
1,455,118 | ||||||||||||||||||||
Segment liabilities | 700,452 | - | 38,948 | - | 739,400 |
OPC | Quantum | Others | Adjustments | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2017 | ||||||||||||||||||||
Revenue | 365,395 | - | 309 | - | 365,704 | |||||||||||||||
Profit/(loss) before taxes | 22,708 | (127,526 | ) | (30,818 | ) | - | (135,636 | ) | ||||||||||||
Income Taxes | (8,945 | ) | - | (63,864 | ) | - | (72,809 | ) | ||||||||||||
Profit/(loss) from continuing operations | 13,763 | (127,526 | ) | (94,682 | ) | - | (208,445 | ) | ||||||||||||
Depreciation and amortization | 30,102 | - | 692 | - | 30,794 | |||||||||||||||
Financing income | (1,088 | ) | - | (13,230 | ) | 11,414 | (2,904 | ) | ||||||||||||
Financing expenses | 33,753 | 6,328 | 41,499 | (11,414 | ) | 70,166 | ||||||||||||||
Other items: | ||||||||||||||||||||
Share in losses/(income) of associated companies | - | 121,198 | (10,533 | ) | - | 110,665 | ||||||||||||||
Write back of impairment of investments | - | - | (28,758 | ) | - | (28,758 | ) | |||||||||||||
62,767 | 127,526 | (10,330 | ) | - | 179,963 | |||||||||||||||
Adjusted EBITDA | 85,475 | - | (41,148 | ) | - | 44,327 | ||||||||||||||
Segment assets | 939,809 | 15,654 | 1,448,700 | - | 2,404,163 | |||||||||||||||
Investments in associated companies | - | 1,694 | 120,000 | - | 121,694 | |||||||||||||||
2,525,857 | ||||||||||||||||||||
Segment liabilities | 742,692 | 75,081 | 656,737 | - | 1,474,510 |
A. | Customer and Geographic Information |
2019 | 2018 | 2017 | ||||||||||||||||||||||
Customer | Total revenues | Percentage of revenues of the Group | Total revenues | Percentage of revenues of the Group | Total revenues | Percentage of revenues of the Group | ||||||||||||||||||
Customer 1 | 80,861 | 21.65 | % | 61,482 | 16.89 | % | 50,461 | 13.80 | % | |||||||||||||||
Customer 2 | 76,653 | 20.52 | % | 74,019 | 20.33 | % | 75,757 | 20.72 | % | |||||||||||||||
Customer 3 | 56,393 | 15.10 | % | 54,639 | 15.01 | % | 53,617 | 14.66 | % | |||||||||||||||
Customer 4 | 48,724 | 13.05 | % | 42,487 | 11.67 | % | * | * | ||||||||||||||||
Customer 5 | 39,904 | 10.68 | % | 39,276 | 10.79 | % | 38,223 | 10.45 | % |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Israel | 373,142 | 363,262 | 365,395 | |||||||||
Others | 331 | 750 | 309 | |||||||||
Total revenue | 373,473 | 364,012 | 365,704 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Israel | 668,808 | 636,256 | ||||||
Others | 67 | 138 | ||||||
Total non-current assets | 668,875 | 636,394 |
A. | Identity of related parties: |
B. | Transactions with directors and officers (Kenon's directors and officers): |
B. Key management personnel compensation |
For the year ended December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Short-term benefits | 1,839 | 2,475 | ||||||
Share-based payments | 511 | 732 | ||||||
2,350 | 3,207 |
C. | Transactions with related parties (excluding associates): |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Sale of electricity | 78,362 | 80,269 | 102,443 | |||||||||
Sale of gas | - | 6,868 | 31,296 | |||||||||
Other (income)/expenses, net | (63 | ) | 393 | 331 | ||||||||
Financing expenses, net | 1,256 | 2,091 | 18,444 | |||||||||
Repayment of loan to Ansonia | - | (77,085 | ) | - | ||||||||
Repayment of loan to IC | - | (239,971 | ) | - |
D. | Transactions with associates: |
For the year ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
$ Thousands | ||||||||||||
Finance income, net | - | 8,494 | - | |||||||||
Other income, net | 66 | 140 | 198 |
As at December 31, | As at December 31, | |||||||||||||||
2019 | 2018 | |||||||||||||||
Other related parties * | Total | Other related parties * | Total | |||||||||||||
$ Thousands | $ Thousands | |||||||||||||||
Trade receivables | 7,603 | 7,603 | 7,041 | 7,041 | ||||||||||||
Loans and Other Liabilities | ||||||||||||||||
In US dollar or linked thereto | (156,431 | ) | (156,431 | ) | (1,481 | ) | (1,481 | ) |
* | IC, Israel Chemicals Ltd (“ICL”), Oil Refineries Ltd (“ORL”). |
E. | Regarding the convertible loan from Ansonia to Quantum, see Note 9.B.b.5. |
F. | Gas Sale Agreement with ORL, see Note 20.B.a. |
A. | General |
B. | Credit risk |
(1) | Exposure to credit risk |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Carrying amount | ||||||||
Cash and cash equivalents | 147,153 | 131,123 | ||||||
Short-term and long-term deposits and restricted cash | 110,904 | 98,578 | ||||||
Trade receivables and other assets | 332,931 | 325,008 | ||||||
Short-term and long-term derivative instruments | 2,293 | 726 | ||||||
593,281 | 555,435 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
$ Thousands | ||||||||
Israel | 39,271 | 35,291 | ||||||
Other regions | 50 | 257 | ||||||
39,321 | 35,548 |
(2) | Aging of debts and impairment losses |
As at December 31 | ||||||||
2019 | 2018 | |||||||
$ Thousands | $ Thousands | |||||||
Not past due | 39,321 | 35,438 | ||||||
Past due up to 3 months | - | 87 | ||||||
Past due more than one year | - | 23 | ||||||
39,321 | 35,548 |
C. | Liquidity risk |
As at December 31, 2019 | ||||||||||||||||||||||||
Book value | Projected cash flows | Up to 1 year | 1-2 years | 2-5 years | More than 5 years | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||||||
Trade payables | 36,007 | 36,007 | 36,007 | - | - | - | ||||||||||||||||||
Other current liabilities | 9,099 | 9,099 | 9,099 | - | - | - | ||||||||||||||||||
Lease liabilities including interest * | 6,070 | 9,547 | 1,147 | 1,258 | 1,807 | 5,335 | ||||||||||||||||||
Debentures (including interest payable) * | 81,847 | 105,203 | 12,576 | 13,246 | 26,680 | 52,701 | ||||||||||||||||||
Loans from banks and others including interest * | 540,721 | 722,727 | 61,826 | 60,516 | 181,718 | 418,667 | ||||||||||||||||||
673,744 | 882,583 | 120,655 | 75,020 | 210,205 | 476,703 |
* | Includes current portion of long-term liabilities. |
As at December 31, 2018 | ||||||||||||||||||||||||
Book value | Projected cash flows | Up to 1 year | 1-2 years | 2-5 years | More than 5 years | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||||||
Trade payables | 47,672 | 47,672 | 47,672 | - | - | - | ||||||||||||||||||
Other current liabilities | 5,885 | 5,885 | 5,885 | - | - | - | ||||||||||||||||||
Debentures (including interest payable) * | 78,409 | 103,561 | 6,555 | 11,596 | 30,910 | 54,500 | ||||||||||||||||||
Loans from banks and others including interest * | 538,209 | 699,563 | 41,646 | 56,446 | 165,829 | 435,642 | ||||||||||||||||||
670,175 | 856,681 | 101,758 | 68,042 | 196,739 | 490,142 |
* | Includes current portion of long-term liabilities. |
D. | Market risks |
As at December 31, 2019 | |||||||||||||||||
Index receivable | Interest payable | Expiration date | Amount of linked principal | Fair value | |||||||||||||
$ Thousands | |||||||||||||||||
CPI-linked derivative instruments | |||||||||||||||||
Interest exchange contract | CPI | 1.70 | % | 2031 | 242,666 | (2,853 | ) | ||||||||||
Interest exchange contract | CPI | 1.76 | % | 2036 | 106,754 | (1,372 | ) |
As at December 31, 2019 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 100,529 | - | 1,633 | |||||||||
Short-term deposits and restricted cash | 33,497 | - | 55 | |||||||||
Trade receivables | 39,003 | - | 50 | |||||||||
Other current assets | 965 | - | 15,992 | |||||||||
Long-term deposits and restricted cash | 73,192 | - | - | |||||||||
Other non-current assets | - | - | 55,575 | |||||||||
Total financial assets | 247,186 | - | 73,305 | |||||||||
Trade payables | 8,888 | - | 10,237 | |||||||||
Other current liabilities | 2,989 | 6,229 | 395 | |||||||||
Loans from banks and others and debentures | 147,792 | 474,775 | 518 | |||||||||
Total financial liabilities | 159,669 | 481,004 | 11,150 | |||||||||
Total non-derivative financial instruments, net | 87,517 | (481,004 | ) | 62,155 | ||||||||
Derivative instruments | - | (4,225 | ) | - | ||||||||
Net exposure | 87,517 | (485,229 | ) | 62,155 |
As at December 31, 2018 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 86,896 | - | 2,778 | |||||||||
Short-term investments, deposits and loans | 27,638 | - | 55 | |||||||||
Trade receivables | 35,291 | - | 44 | |||||||||
Other receivables | 286 | - | 26 | |||||||||
Long-term deposits and loans | 48,490 | - | - | |||||||||
Other non-current assets | - | - | 65,668 | |||||||||
Total financial assets | 198,601 | - | 68,571 | |||||||||
Trade payables | 23,774 | - | 9,968 | |||||||||
Other payables | 2,215 | - | 811 | |||||||||
Loans from banks and others and debentures | 163,162 | 450,571 | - | |||||||||
Total financial liabilities | 189,151 | 450,571 | 10,779 | |||||||||
Total non-derivative financial instruments, net | 9,450 | (450,571 | ) | 57,792 | ||||||||
Derivative instruments | - | - | 90,184 | |||||||||
Net exposure | 9,450 | (450,571 | ) | 147,976 |
As at December 31, 2019 | ||||||||||||||||
10% increase | 5% increase | 5% decrease | 10% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
Shekel/dollar | (1,601 | ) | (863 | ) | 863 | 1,601 | ||||||||||
CPI | (26,640 | ) | (13,320 | ) | 10,524 | 10,914 | ||||||||||
As at December 31, 2018 | ||||||||||||||||
10% increase | 5% increase | 5% decrease | 10% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
Shekel/dollar | (35,582 | ) | (18,658 | ) | 18,658 | 35,582 | ||||||||||
CPI | (25,875 | ) | (12,937 | ) | 10,222 | 10,600 |
As at December 31, | ||||||||
2019 | 2018 | |||||||
Carrying amount | ||||||||
$ Thousands | ||||||||
Fixed rate instruments | ||||||||
Financial assets | 72,958 | 55,027 | ||||||
Financial liabilities | (621,754 | ) | (586,334 | ) | ||||
(548,796 | ) | (531,307 | ) | |||||
Variable rate instruments | ||||||||
Financial assets | 131,073 | 102,392 |
As at December 31, 2019 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | 1,311 | (1,311 | ) | |||||
As at December 31, 2018 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | 1,024 | (1,024 | ) |
E. | Fair value |
As at December 31, 2019 | ||||||||
Carrying amount | Fair value | |||||||
$ Thousands | ||||||||
Liabilities | ||||||||
Non-convertible debentures | 81,847 | 93,930 | ||||||
Long-term loans from banks and others (excluding interest) | 540,350 | 649,100 | ||||||
As at December 31, 2018 | ||||||||
Carrying amount | Fair value | |||||||
$ Thousands | ||||||||
Non-convertible debentures | 78,409 | 80,998 | ||||||
Long-term loans from banks and others (excluding interest) | 508,203 | 555,570 |
As at | As at | |||||||
December 31, 2019 | December 31, 2018 | |||||||
Level 3 | Level 3 | |||||||
$ Thousands | $ Thousands | |||||||
Assets | ||||||||
Qoros put option | 71,146 | 90,103 |
• | The underlying asset value is Qoros’ equity value as of the valuation date. |
• | The exercise price of the option is the price that must be paid for the stock on the date the put option is exercised, and is defined by the terms of the award. |
• | The expected exercise date is the period between the grant date and the expiration date. |
• | The Risk-free interest rate was based on yields on traded China government bonds, with time to maturity equals to the put option contractual period. |
• | Expected volatility in the range of 27.3% to 33.9% was based on the historical weekly volatility of comparable companies for a period of 3.26 years (remaining contractual term of the put option, as of the valuation date). |
• | Expected dividend yield is 0% as no dividend distribution is expected in the foreseeable future. |
• | The credit risk adjustment was calculated using a recovery rate of 40% (common assumption of market participants) and credit spreads based on traded corporate bonds which have credit ratings of AA for a similar time to maturity as the put option. |
Type | Valuation technique | Significant unobservable data | Inter-relationship between significant unobservable inputs and fair value measurement |
Put Options | The Group applies standard valuation techniques such as: Binomial model using risk free rates from market information suppliers. | The group researched on data from comparable companies on inputs such as expected volatility and credit risk. | The estimated fair value would increase(decrease) if: - the volatility is higher (lower) - the credit risk is lower (higher) |
Interest Exchange Contracts | The Group applies standard valuation techniques using discounted cash flows which incorporate the forward CPI curve, and market interest rates for the remaining term. | Not applicable | Not applicable |
Foreign Exchange Forwards | The Group applies standard valuation techniques which include market observable parameters such as the implicit exchange rate calculated with forward points. These variables are obtained through market information suppliers. | Not applicable | Not applicable |
Credit from banks, others and debentures | Discounted cash flows with market interest rate | Not applicable | Not applicable |
Marketable Securities held for trade | DLOM valuation method | Not applicable | Not applicable |
1. | COVID-19 |
2. | Qoros |
A. | In April 2020, Kenon completed the sale of half of its remaining interest in Qoros (i.e.12%) to the New Qoros Investor (as decribed in Note 9.B.b.3) and received full payment of RMB1,560 million (approximately $220 million). As a result, Kenon now holds a 12% interest in Qoros, the New Qoros Investor holds 63% and Chery owns 25%. |
3. | OPC |
A. | On February 19, 2020, the EA published its Decision from Meeting 573, held on January 27, 2020, regarding Amendment of Standards in connection with Deviations from the Consumption Plans (hereinafter – the “Decision”). Pursuant to the Decision, a supplier is not permitted to sell to its consumers more than the amount of the capacity that is the subject of all the undertakings it has entered into with holders of private generation licenses. In addition, the EA indicates (in the notes to the Decision that it is expected that the supplier will enter into private transactions with consumers in a scope that permits it to supply all their consumption from energy that is generated by private generators over the entire year. Actual consumption of energy at a rate in excess of 3% from the installed capacity allocated to the supplier will trigger payment of an annual tariff that reflects the annual cost of the capacity the supplier used as a result of the deviation, as detailed in the Decision (“Annual Payment in respect of Deviation from the Capacity”). In addition, the Decision provides a settlement mechanism in respect of a deviation from the daily consumption plan (surpluses and deficiencies), which will apply concurrent with the annual payment in respect of a deviation from the capacity. Application of the Decision will commence from September 1, 2020. According to the Decision, the said amendment will apply to OPC Rotem after determination of supplemental arrangements for OPC Rotem, which as at the date of the report had not yet been determined. OPC is studying the Decision and will formulate a position regarding the required supplementary arrangements. Therefore, as at the date of the Report, there is no certainty regarding the extent of the impact of the unfavorable impact of the Decision, if any, on OPC’s activities. |
B. | In January 2020, OPC Hadera submitted a request to the EA for extension of the commercial operation date stated in its conditional license. In March 2020, the EA approved the extension of OPC Hadera’s conditional license by an additional 12 months to Q1 2021. In February 2020, Hadera contacted Hadera’s Lenders with a request to extend the final date for commercial operation stipulated in the Hadera Financing Agreement up to the end of June 2020. In March 2020, the approval was received. |
C. | 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. |
Kenon Holdings Ltd. | |||
By: | /s/ Robert L. Rosen | ||
Name: Robert L. Rosen | |||
Title: Chief Executive Officer |
Exhibit Number | Description of Document | |
Exhibit Number | Description of Document | |
Exhibit Number | Description of Document | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
(1) | Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act. Omitted information has been filed separately with the SEC. |
(2) | Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed. |