UNITED STATES
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 |
2021
☐ | 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 |
(Company Registration No. 201406588W)
Singapore | ||
(Jurisdiction of incorporation or organization) | (Company Registration No. 201406588W) 4911 (Primary Standard Industrial Classification Code Number) | |
1 Temasek Avenue #37-02B Millenia Tower Singapore 039192 +65 6351 1780 | Not Applicable (I.R.S. Employer Identification No.) |
Principal Executive Offices)
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Ordinary Shares, no par value | KEN | The New York Stock Exchange |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
53,871,159
☒
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 ☐ |
A. | Directors and Senior Management | ||
B. | Advisers | ||
C. | Auditors | ||
A. | Reserved | ||
B. | Capitalization and Indebtedness | ||
C. | Reasons for the Offer and Use of Proceeds | ||
D. | Risk Factors | ||
A. | History and Development of the Company | ||
B. | Business Overview | ||
C. | Organizational Structure | ||
D. | Property, Plants and Equipment | ||
A. | Operating Results | ||
B. | Liquidity and Capital Resources | ||
C. | Research and Development, Patents and Licenses, Etc. | ||
D. | Trend Information | ||
E. Critical Accounting Policies and Significant Estimates | |||
A. | Directors and Senior Management | ||
B. | Compensation | ||
C. | Board Practices | ||
D. | Employees | ||
E. | Share Ownership | ||
A. | Major Shareholders | ||
B. | Related Party Transactions | ||
C. | Interests of Experts and Counsel | ||
A. | Consolidated Statements and Other Financial Information | ||
B. | Significant Changes | ||
A. | Offer and Listing | ||
B. | Plan of Distribution | ||
C. | Markets | ||
D. | Selling Shareholders | ||
E. Dilution | |||
F. | Expenses of the Issue |
A. | Share Capital | ||
B. | Constitution | ||
C. | Material Contracts | ||
D. | Exchange Controls | ||
E. | Taxation | ||
F. | Dividends and Paying Agents | 179 | |
G. | Statement by Experts | ||
H. | Documents on Display | ||
I. | Subsidiary Information | ||
A. | Debt Securities | ||
B. | Warrants and Rights | ||
C. | Other Securities | ||
D. | American Depositary Shares |
183 | |||
• | with respect to OPC: |
• | with respect to Qoros: |
• |
ITEM | Identity of Directors, Senior Management and Advisers |
A. | Directors and Senior Management |
B. | Advisers |
C. | Auditors |
ITEM | Offer Statistics and Expected Timetable |
ITEM | Key Information |
A. | Reserved |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | 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. |
• | obtaining any required approvals and permits for |
ITEM | Information on the Company |
A. | History and Development of the Company |
B. | Business Overview |
• | 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 a power plant using cogeneration technology with an installed capacity of 144 MW in Hadera which reached its COD on July 1, 2020 and owns the Energy Center, which consists of boilers and a steam turbine. The Energy Center currently serves as back-up for the OPC-Hadera power plant’s supply of steam and its turbine is not currently operating and is not expected to operate with generation of more than 16MW. |
• | 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. Tzomet has a conditional license for the development project, which 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 and provision of certain maintenance services in connection with the power station’s main equipment for a period of 20 years from the plant’s COD. During 2021, the construction of the Tzomet power plant continued. OPC expects that the Tzomet plant will reach its COD in the first quarter of 2023 and that the estimated total cost of completing the Tzomet plant will be approximately NIS 1.5 billion (approximately $0.5 billion) (excluding NIS 200 million, which is the tax assessment on the land). As of December 31, 2021, OPC had invested approximately NIS 1,019 million (approximately $328 million) in the project (not including amounts relating to milestones provided in the Tzomet power plant construction agreement that partially completed). |
• | Construction of energy generation facilities on the premises of consumers. OPC has entered into agreements with several consumers (including consumers that were successful in the EA’s tender) for the installation and operation of generation facilities (natural gas) on the premises of consumers for aggregate capacity of approximately 102 MW, as well as arrangements for the sale and supply of energy to consumers. Once completed, OPC will sell electricity from the generation facilities to the consumers for a period of approximately 15-20 years from the COD of the generation facilities. The total amount of OPC’s investment depends on the number of arrangements entered into and is expected to be an average of NIS 4 million for each installed MW. OPC has also entered into construction agreements and agreements for supply of motors for the generation facilities with a total capacity of approximately 581 MW. |
• | Sorek Generation Facility. In May 2020, Sorek (a special-purpose company wholly owned by OPC) signed an agreement with SMS IDE Ltd. (“IDE”) that won a tender of the State of Israel for the construction, operation, maintenance and transfer of a seawater desalination facility on the Sorek B site (“Desalination Facility”), whereby Sorek is to supply equipment, construct, operate, and maintain a natural gas-powered energy generation facility on Sorek B site, with a production capacity of 87 MW (“Sorek B Generation Facility”), and supply the energy required for the Sorek B Desalination Facility for a period of 25 years from the Desalination Facility’s commercial operation date (“Sorek B IPP Agreement”). At the end of the aforesaid period, ownership of the Sorek Generation Facility will be transferred to the State of Israel. In addition, a build, operate, transfer (“BOT”) agreement was signed between IDE and the State of Israel. OPC has committed to construct the plant within 24 months from the approval date of the national infrastructure plan, which approval was received in November 2021. In June 2021, Sorek also signed construction and equipment supply agreements with BHI CO Ltd, a South Korean-owned corporation that will serve as the project’s construction contractor in accordance with an EPC agreement according to the milestones, terms, and dates stipulated in the agreement. OPC estimates that construction of the plant will be completed in the fourth quarter of 2023. Excess capacity beyond that used by the Desalination Facility is expected to be sold to an onsite consumer and the System Operator. |
• | Gnrgy Ltd. As of December 31, 2021, OPC owns 51% interest in Gnrgy, which it acquired in April 2021. Gnrgy was established in Israel in 2008 and operates in the field of charging electric vehicles (e-mobility) and the installation of charging stations for electric vehicles. For further information, see “Item 4.B Business Overview—Our Businesses—OPC’s Description of Operations—Acquisition of Gnrgy Ltd.” |
Amount of | Total | |||||||||||||||||
OPC | estimated | |||||||||||||||||
Power | investment | cost of the | ||||||||||||||||
plants/ | in the | investment | ||||||||||||||||
facilities | Installed | Current | project at | in the | ||||||||||||||
for | electricity | OPC | COD/ | Main | 12/31/2020 | project | ||||||||||||
generation | capacity | Ownership | Expected | customer/ | (NIS | (NIS | ||||||||||||
of energy | Status | (MW) | Interest | Location | Technology | COD | consumer | millions) | millions) | |||||||||
Rotem Power Plant | Active | » 466 | 80% | Rotem plain | Conventional | July 2013 | Private customers and IEC | » 2,000 | – | |||||||||
Hadera Power Plant | Active | » 144 | 100% | Hadera Industrial Zone | Cogeneration | July 2020 | Private customers and the System Administrator | » 9001 | – | |||||||||
Energy Center which as at the submission date of the report is operated for supply of steam as a back up | On the premises of Hadera Paper Mills | |||||||||||||||||
Zomet | Under construction | » 396 | 100% | Plugot Intersection | Conventional with open cycle | January 2023 | The System Administrator | » 694 | » 1,5002 | |||||||||
Sorek 2 | In initiation | Up to 99 | 100% | On the premises of the Sorek B seawater desalination facility | Conventional | Second half of 2023 | Yard consumer and pursuant to EA regulations | » 1 | Up to 200 | |||||||||
Facilities for generation of energy on the consumer’s premises | In various stages of development starting from initiation and up to construction | Every facility up to 16 megawatts (as at the submission date of the report, construction and operation agreements were signed for a total of 76 megawatts. The Company intends to take action to sign construction and operation agreements in a cumulative scope of at least 120 megawatts | 100% | On the premises of consumers throughout Israel | Conventional | The planned commercial operation dates are pursuant to the conditions provided in the agreements and in any case no later than 48 months from the signing date of the agreement3 | Yard consumers also including Group customers | » 12 | » an average of NIS 4 per megawatt |
Project / activity | Capacity(1) (MW) | Ownership stake | Method of presentation in the financial statements of the Company | Location | Type of project / technology | Year of commercial operation | ||||||
Rotem | 466 | 80% | Consolidated | Mishor Rotem | Natural gas, combined cycle | 2013 | ||||||
Hadera(2) | 144 | 100% | Consolidated | Hadera | Natural gas - cogeneration | 2020 |
(1) | As stipulated in the relevant generation license |
(2) | Hadera holds the Energy Center (boilers and turbines located at the premises of Infinya), which serves as back-up for steam generated by the Hadera power plant. From the end of 2020, the turbine at the Energy Center is not operating. |
Power plants / energy generation facilities | Status | Capacity (MW)(1) | Rate of holdings(2) | Location | Technology | Date / expected commercial operation date | Main customer/ consumer | Total expected construction cost (in NIS million) | Total investment cost as of December 31, 2021 (in NIS million) | |||||||||
Tzomet | Under construction | 396 | 100% | Plugot Intersection | Conventional, open-cycle | Fourth quarter of 2023 | System Operator | 1,500(3) | 1,019(4) | |||||||||
Sorek | Under construction | 87 | 100% | On the premises of the Sorek B seawater desalination facility | Cogeneration | Fourth quarter of 2023 | Onsite consumers and the System Operator | 200 | 22 | |||||||||
Energy generation facilities on the consumers’ premises | various stages of development / construction | each facility - up to 16 MW. As to the filing date of the Report, build and operate agreements representing a total capacity of approx. 100 MW were signed. The Company intends to sign build and operate agreements representing a total capacity of approx. 120 MW. | 100%(5) | On consumers’ premises across Israel | Conventional, cogeneration, renewable energy (solar) and storage | As from 2022 | Onsite consumers also including Group customers | An average of about 4 per MW | 52 |
(1) | As stipulated in the relevant generation license. |
(2) | Companies consolidated in OPC’s financial statements. |
(3) | The estimate of the costs, as stated, does not take into account half of the assessment issued by Israel Lands Authority in January 2021, in the amount of about NIS 200 million (not including VAT) (approximately $64 million) in respect of capitalization fees. OPC has filed a legal appeal of the final assessment. In August 2021, OPC was informed that the appeal was rejected by Israel Land Authority and as at March 27, 2022, OPC intends to continue the appraisal appeal procedures. |
(4) | Not including amounts relating to milestones provided in the Tzomet power plant construction agreement that were partially completed. |
(5) | OPC operates under an intercompany arrangement, intended to govern the settling accounts method following from OPC’s construction of generation facilities on OPC-Rotem customers’ premises (as of March 27, 2022, OPC-Rotem is 80%-held by OPC). |
CPV | Year of | ||||||||||||||||||||||
Ownership | Fuel/ | Installed Capacity | commercial | ||||||||||||||||||||
Plant | Location | Interest | technology | (MW) | operation | Location | CPV Ownership Interest | Field/ technology | Installed Capacity (MW) | Year of commercial operation | |||||||||||||
CPV Fairview | Pennsylvania | 25% | Natural gas, combined cycle | 1,050 | 2019 | Pennsylvania | 25% | Conventional natural gas-fired, combined cycle | 1,050 | 2019 | |||||||||||||
CPV Towantic | Connecticut | 26% | Natural gas / two fuels, combined cycle | 805 | 2018 | Connecticut | 26% | Conventional natural gas-fired, dual fuel / two fuels, combined cycle | 805 | 2018 | |||||||||||||
CPV Maryland | Maryland | 25% | Natural gas, combined cycle | 745 | 2017 | Maryland | 25% | Conventional natural gas-fired, combined cycle | 745 | 2017 | |||||||||||||
CPV Shore | New Jersey | 37.53% | Natural gas, combined cycle | 725 | 2016 | New Jersey | 37.53% | Conventional natural gas-fired, combined cycle | 725 | 2016 | |||||||||||||
CPV Valley | New York | 50% | Natural gas, combined cycle | 720 | 2018 | New York | 50% | Conventional natural gas-fired, dual-fuel, combined cycle | 720 | 2018 | |||||||||||||
CPV Keenan II | Oklahoma | 70%1 | Wind | 152 | 2010 | Oklahoma | 100%1 | Wind | 152 | 2010 |
(1) | In April 2021, CPV acquired the remaining 30% interest in this project and, therefore, has 100% ownership interest. |
December 31, 2019 | December 31, 2020 | |||||||||||||||
Installed Capacity (MW) | % of Total Installed Capacity in the Market | Installed Capacity (MW) | % of Total Installed Capacity in the Market | |||||||||||||
IEC | 12,752 | 66 | % | 11,615 | 58 | % | ||||||||||
Private electricity producers (without renewable energy) | 4,288 | 22 | % | 5,780 | 29 | % | ||||||||||
Renewable energy (private electricity producers) | 2,326 | 12 | % | 2,549 | 13 | % | ||||||||||
Total in the market | 19,366 | 100 | % | 19,944 | 100 | % |
December 31, 2019 | December 31, 2018 | |||||||||||||||
Installed Capacity (MW) | % of Total Installed Capacity in the Market | Installed Capacity (MW) | % of Total Installed Capacity in the Market | |||||||||||||
IEC | 12,752 | 66 | % | 13,355 | 73 | % | ||||||||||
Private electricity producers (without renewable energy) | 4,288 | 22 | % | 3,439 | 19 | % | ||||||||||
Renewable energy (private electricity producers) | 2,326 | 12 | % | 1,424 | 8 | % | ||||||||||
Total in the market | 19,366 | 100 | % | 18,198 | 100 | % |
Energy generated (thousands of MWh) | % of total generated in the market | Energy generated (thousands of MWh) | % of total generated in the market | |||||||||||||
IEC | 47,784 | 66 | % | 44,333 | 61 | % | ||||||||||
Private electricity producers (without renewable energy) | 21,359 | 29 | % | 24,308 | 33 | % | ||||||||||
Renewable energy (private electricity producers) | 3,334 | 5 | % | 4,150 | 6 | % | ||||||||||
Total in the market | 72,476 | 100 | % | 72,791 | 100 | % |
Energy generated (thousands of MWh) | % of total generated in the market | Energy generated (thousands of MWh) | % of total generated in the market | |||||||||||||
IEC | 47,784 | 66 | % | 47,900 | 69 | % | ||||||||||
Private electricity producers (without renewable energy) | 21,359 | 29 | % | 19,232 | 28 | % | ||||||||||
Renewable energy (private electricity producers) | 3,334 | 5 | % | 2,038 | 3 | % | ||||||||||
Total in the market | 72,476 | 100 | % | 69,170 | 100 | % |
Estimates
| |
New installed (gas fired) capacity with gas | 1,400-4,000 |
Sale of IEC sites that have not yet been sold in accordance with sector reform | |
Total additional potential private capacity |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,726 | 98.88 | % | ||||||||
OPC-Hadera | 144 | 769 | 84 | % | ||||||||
OPC Total | 610 | 4,495 |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,321 | 92 | % | ||||||||
OPC-Hadera | 144 | 431 | 79 | % | ||||||||
OPC Total | 610 | 3,752 |
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,321 | 92 | % | ||||||||
OPC-Hadera | 144 | 431 | 79 | % | ||||||||
OPC Total | 610 | 3,752 |
The following table sets forth summary operational information for OPC’s operating plants in Israel as of and 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 (Energy Center) | 18 | 84 | 94 | % | ||||||||
OPC Total | 484 | 3,811 |
The following table sets forth summary operational information for OPC’s operating plants in Israel as of and for the year ended December 31, 2018:
Entity | Installed Capacity (MW) | Net energy generated (GWh) | Availability factor (%) | |||||||||
OPC-Rotem | 466 | 3,299 | 87 | % | ||||||||
OPC-Hadera (Energy Center) | 18 | 84 | 94 | % | ||||||||
OPC Total | 484 | 3,383 |
Project | Location | Installed Capacity (MW) | CPV ownership interest | Year of commercial operation | Type of project/ technology / client | Regulated market(1) | Commercial Structure | |||||||
CPV Fairview | Pennsylvania | 1,050 | 25% | 2019 | Conventional natural gas-fired, combined cycle | PJM MAAC | Capacity payments from PJM, regardless of the actual quantity generated, based on the price determined in an annual tender for the year of operation three years in advance. The capacity price is known up to May 2023. The capacity price determined for the 2021/22 capacity year is $140 per MW/day in the zone in which the project is located. The capacity price determined for the 2022/23 capacity year is $95.79 per MW/day in the zone in which the project is located. The sale of electricity on the PJM market is organized, supervised and administered by PJM to ensure the supply of electricity in accordance with bids of the electricity producers. Gas for the project is acquired on the market on the basis of market prices in (at) the purchase points. From time to time the project may enter into hedging agreements on the energy and gas prices for part or all of the capacity through a variety of instruments and products to reduce the uncertainty of the margin between the PJM electricity price received and the gas price paid. | |||||||
CPV Towantic | Connecticut | 805 | 26% | 2018 | Conventional natural gas-fired (with dual fuel capability) combined cycle | ISO-NE CT | Capacity payments from ISO-NE, without reference to the actual quantity generated, are based on the price determined in the tender. The project participated in a capacity tender for the first time in June 2018- May 2019 based on a price of $9.55 per KW/month and it exercised the possibility to determine (fix) the tariff for seven years in respect of 725 MW linked to the Utilities Inputs Index. For 2023-24, there is a possibility to sell an additional 45 MW. The capacity price is known up to May 2025. The capacity price determined for the 2025/26 capacity year is $2.59 per kW/month in the zone in which the project is located. For capacity years of 2026/20227 and beyond, capacity prices will be based on an annual tender for the activity year three years in advance. The sale of electricity on the organized ISO-NE market, which is supervised and administered by ISO-NE to ensure the supply of electricity in accordance with the bids of the electricity producers. Gas for the project is purchased on the market on the basis of market prices in (at) the purchase point. From time to time, the project may enter into hedging agreements on energy and gas prices for part or all of the capacity through a variety of instruments and products to reduce the uncertainty of the margin between the ISO-NE electricity price received and the gas price paid. |
Installed | CPV | Year of | Type of | |||||||||||
Capacity | ownership | commercial | project/ | Regulated | ||||||||||
Project | Location | (MW) | interest | operation | technology | market1 | Manner of sale of capacity/electricity | |||||||
CPV Fairview | Pennsylvania | 1,050 | 25% | 2019 | Natural gas, combined cycle (there is a possibility of an ethane mix up to 25%) | PJM | Capacity payments from PJM, without reference to the actual quantity generated, based on the price determined in an annual tender for the activity year three years in advance. The capacity price is known up to May 2022. The capacity price determined for the 2021/22 capacity year is $140 per MW/day in the region in which the project is located.
Gas for the project is acquired in the market on the basis of market prices at the acquisition points. | |||||||
CPV Towantic | Connecticut | 805 | 26% | 2018 | Natural gas / two fuels, combined cycle | ISO-NE | Capacity payments from ISO‑NE, without reference to the actual quantity generated, based on the price determined in the tender. The project participated in a capacity tender for the first time in 2018‑2019 based on a price of $9.55 per KW/month and it exercised the possibility to determine (fix) the tariff for seven years in respect of 725 MW linked to the Utilities Inputs Index. For 2023‑24 there is a possibility to sell an additional 45 MW. From 2025, capacity prices will be based on an annual tender for the activity year three years in advance.
Gas for the project is acquired in the market on the basis of market prices at the acquisition points. | |||||||
CPV Maryland
| Maryland | 745 | 25% | 2017 | Natural gas, combined cycle | PJM | Capacity payments from PJM, without reference to the actual quantity generated, based on the price determined in an annual tender for the activity year three years in advance. The capacity price is known up to May 2022. The capacity price determined for the 2021/22 capacity year is $140 per MW/day in the region in which the project is located.
Gas for the project is acquired in the market on the basis of market prices at the acquisition points. | |||||||
CPV Shore
| New Jersey | 725 | 37.53% | 2016 | Natural gas, combined cycle | PJM | Capacity payments from PJM, without reference to the actual quantity generated, based on the price determined in an annual tender for the activity year three years in advance. The capacity price is known up to May 2022. The capacity price determined for the 2021/22 capacity year is $166 per MW/day in the region in which the project is located.
Gas for the project is made based on the market prices at the acquisition points. | |||||||
CPV Valley | New York | 720 | 50% | 2018 | Natural gas, combined cycle | NYISO | Capacity payments from NYISO, based on the price determined in seasonal, monthly and SPOT capacity tenders, with capacity prices that change every month. Gas for the project is acquired in the market on the basis of market prices at the acquisition points. | |||||||
CPV Keenan II | Oklahoma | 152 | 70%2 | 2010 | Wind | SPP | The project entered into an agreement for supply of electricity (PPA) with a utility company for 100% of the electricity generated up to 2030. |
Project | Location | Installed Capacity (MW) | CPV ownership interest | Year of commercial operation | Type of project/ technology / client | Regulated market(1) | Commercial Structure |
CPV Maryland | Maryland | 745 | 25% | 2017 | Conventional, natural gas-fired, combined cycle | PJM SW MAAC | Capacity payments from PJM, regardless of the actual quantity generated, based on the price determined in an annual tender for the year of operation three years in advance. The capacity price is known up to May 2023. The capacity price determined for the 2021/22 capacity year is $140 per MW/day in the zone in which the project is located. The capacity price determined for the 2022/23 capacity year is $95.79 per MW/day in the zone in which the project is located. The Sale of electricity on the PJM market is organized, supervised and administered by PJM to ensure the supply of electricity in accordance with the bids of the electricity producers. Gas for the project is acquired in the market on the basis of market prices at the purchase point. From time to time, the project may enter into hedging agreements on energy and gas prices through a variety of instruments and products to reduce the uncertainty of the margin between the PJM electricity price received and the gas price paid. | |||||||
CPV Shore | New Jersey | 725 | 37.53% | 2016 | Conventional, natural gas-fired, combined cycle | PJM EMAAC | Capacity payments from PJM, regardless of the actual quantity generated, based on the price determined in an annual tender for the year of operation three years in advance. The capacity price is known up to May 2023. The capacity price determined for the 2021/22 capacity year is $166 per MW/day in the zone in which the project is located. The capacity price determined for the 2022/23 capacity year is $97.86 per MW/day in the zone in which the project is located. The sale of electricity on the PJM market is organized, supervised and administered by PJM to ensure the supply of electricity in accordance with the bids of the electricity producers. Gas for the project is made based on the market prices at the purchase point. From time to time, the project may enter into hedging agreements on energy and gas prices through a variety of instruments and products to reduce the uncertainty of the margin between the PJM electricity price received and the gas price paid. | |||||||
CPV Valley | New York | 720 | 50% | 2018 | Conventional, natural gas-fired, combined cycle | NYISO Zone G | Capacity payments to NYISO, based on the price set in the seasonal, monthly, and spot capacity tenders, with variable monthly capacity prices; The sale of electricity on the NYISO market is organized, supervised and administered by NYISO to ensure supply of the electricity in accordance with the bids of the electricity producers. The gas for the project is acquired on the market on the basis of market prices in (at) the purchase points. From time to time, the project may enter into hedging agreements on energy and gas prices through a variety of instruments and products to reduce the uncertainty of the margin between the NY-ISO electricity price received and the gas price paid. | |||||||
CPV Keenan II | Oklahoma | 152 | 100%2 | 2010 | Wind | SPP (Long-term PPA) | The project entered into a PPA with a utility company for the electricity generated up to 2030. |
(1) | Sale of electricity in the organized PJM market is supervised and administered by PJM to ensure supply of the electricity in accordance with price offers of the electricity generators. Sale of electricity in the organized NYISO market is supervised and administered by NYISO to manage the supply of the electricity in accordance with price offers of the electricity generators. |
(2) | On April 7, 2021, CPV |
2021 | 2020 | |||||||||||||||||||||||
Net Electricity generation (GWh)1 | Actual Generation2 (%) | Actual Availability Percentage (%) | Net Electricity generation (GWh)1 | Actual Generation (%)2 | Actual Availability Percentage (%) | |||||||||||||||||||
Fairview3 | 7,899 | 88.5 | % | 91.6 | % | 7,397 | 78.4 | % | 86.5 | % | ||||||||||||||
Towantic | 5,556 | 77.3 | % | 91.2 | % | 5,322 | 72.6 | % | 92.4 | % | ||||||||||||||
Maryland | 3,796 | 58.6 | % | 84.8 | % | 3,790 | 58.2 | % | 93.6 | % | ||||||||||||||
Shore | 3,654 | 57.6 | % | 93.6 | % | 4,444 | 68.8 | % | 92.8 | % | ||||||||||||||
Valley | 4,334 | 71.8 | % | 78.3 | % | 4,705 | 75.8 | % | 92.2 | % | ||||||||||||||
Keenan II | 530 | 39.8 | % | 93.7 | % | 587 | 44.0 | % | 94.6 | % |
2020 | 2019 | |||||||||||||||
Net Electricity generation (GWh)1 | Actual Generation (%)2 | Net Electricity generation (GWh)1 | Actual Generation (%)2 | |||||||||||||
Fairview3 | 7,397 | 78.4 | % | 373 | 66.9 | % | ||||||||||
Towantic | 5,322 | 72.6 | % | 3,868 | 52.9 | % | ||||||||||
Maryland | 3,790 | 58.2 | % | 4,191 | 64.4 | % | ||||||||||
Shore | 4,444 | 68.8 | % | 5,013 | 78.3 | % | ||||||||||
Valley | 4,705 | 75.8 | % | 4,100 | 66.3 | % | ||||||||||
Keenan II | 587 | 44.0 | % | 586 | 44.1 | % |
(1) |
(2) | The actual generation percentage is the electricity produced by the power plants relative to the maximum amount of generation |
(3) |
Project | Location | Planned Capacity (MW) | CPV Ownership Interest | Year of construction start | Projected date of commercial operation | Type of project/ technology | Manner of sale of capacity/ electricity | Expected construction cost for 100% of the project ($ millions) | |||||||||
CPV Three Rivers | Illinois | 1,258 | 10%1 | 2020 | Q2 2023 | Natural gas, combined cycle | Expected to participate in tenders for capacity in the PJM market for the 2023/2024 year. The sale of electricity on the PJM market is organized, supervised and administered by PJM to ensure the supply of electricity in accordance with the bids of the electricity producers. Gas for the project will also be purchased on the market on the basis of market prices in (at) the purchase points according to certain power and gas indices. | Approximately $1,293 | |||||||||
CPV Maple Hill Solar, LLC | Pennsylvania | 126 MWdc (Approximately 100 MWac) | 100%3 | Q2 2021 | Second half of 20222 | Solar | Capacity payments from PJM, regardless of the actual quantity generated, based on the price determined in an annual tender for the year of operation three years in advance. The capacity price is known up to May 2023. The capacity price determined for the 2022/23 capacity year is $95.79 per MW/day in the zone in which the project is located. Sale of 100% of the SRECs of the project for a period of 5 years. Sale of approximately 48% of the electricity generated by the facility pursuant to a virtual PPA. The remainder by sale on the PJM market which is organized, supervised and administered by PJM to ensure the supply of electricity in accordance with the bids of the electricity producers. | Approximately $200 |
Expected | ||||||||||||||||
Projected | Manner of | construction | ||||||||||||||
Planned | CPV | Year of | date of | Type of | sale of | cost for 100% | ||||||||||
Loca- | Capacity | Ownership | construction | commercial | project/ | capacity/ | of the project (US$ | |||||||||
Project | tion | (MW) | Interest | start | operation | technology | electricity | millions) | ||||||||
CPV Three Rivers | Illinois | 1,258 | 10%1 | 2020 | May 2023 | Natural gas, combined cycle | Expected to participate in tenders for capacity in the PJM market for the 2023/2024 year.
Gas for the project will be acquired in the market on the basis of market prices in (at) the acquisition points. | Approximately 1,293 |
(1) | Reflects completion of the sale of 7.5% of CPV’s interest in the Three Rivers Project on February 3, 2021. |
(2) | The expected date of operation for Maple Hill may be delayed due to delays with PJM’s interconnection process. Delays may affect Maple Hill’s ability to meet certain schedule obligations with counterparties and may result in liquidated damages payments. |
(3) | As of the publication date of the report, CPV signed a term sheet with a “tax equity partner” for an investment of approximately $45 million in the project; the agreement is subject to completion of negotiations and the signing of binding agreements and ongoing considerations with respect regulatory and legislative developments (including but not limited to the BBB Act). Upon consummation of an agreement with a “tax partner” CPV will have 100% of Class B rights. Class A rights are held by Tax Equity investors, who have excess tax benefits and dividend rights until a certain return (Tax Flip) is achieved. |
Summary of Development Projects (as of the date of this report) | ||||||||||||
(in megawatts)1 | ||||||||||||
Technology | Advanced Stage | Initial Stage | Total | |||||||||
Solar2 | 1,300 | 1,600 | 2,900 | |||||||||
Wind | 100 | 150 | 250 | |||||||||
Total Renewable Energy | 1,400 | 1,750 | 3,150 | |||||||||
Natural Gas | 2,000 | 2,000 | 4,000 | |||||||||
Storage | — | 100-500 | 100-500 |
Summary of the Scopes of the Development Projects as at the Submission Date of the Report (in megawatts)1 | |||||||||
Technology | Advanced | Early | Total | ||||||
PV | 895 | 1,150 | 2,045 | ||||||
Wind | 175 | 0 | 175 | ||||||
CCGT | 1,985 | 1,970 | 3,955 | ||||||
Storage2 | 100 – 500 | ||||||||
Total | 3,055 | 3,120 | 6,175 |
(1) | In general, CPV considers projects that are estimated to be up to two or three years for before the start of construction as projects in the advanced development stage (there is no certainty that the projects under development, including the projects in the advanced development stage, will be carried out). It is noted that the abovementioned depends on the scope of the project and the technology, and could change based on specific characteristics of a given project, as well as due to external factors that are relevant to a project. For example, projects that are intended to operate in the PJM market may be affected by pending interconnection process changes. It is clarified that in the initial development stages (in particular) the scope of the projects and their characteristics are subject to change, if and to the extent that they reach advanced stages. |
(2) | The capacities for solar technology in this report are denominated in MWdc. The capacities of solar technology projects in the advanced stages of development and in the initial stages of development are approximately 1,197 MWac and 1,050 MWac, respectively. |
Project | Location | Capacity (MW) | OPC Ownership Interest | Projected Year of construction start | Projected date of commercial operation | Type of project/ technology | Activity area and electricity region | Manner of sale of capacity/ electricity | Expected | |||||||||||||||||
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Rogue’s Wind | Approx. 114 MW | 100% |
Second half of 2022 |
| Second half of 20232 | Wind | PJM MAAC | In April 2021, signed PPA agreement for sale of electricity, capacity and renewable energy certificates for 10 years with a clean energy company |
1. | Upon consummation of an agreement with a |
2. |
• |
Gas Supply:a Base Contract for |
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• | Management: Although one of the entities in CPV currently serves as asset manager to CPV Fairview pursuant to an intercompany asset management agreement, one of the other investors in the project is expected to replace CPV entity pursuant to the terms of the agreement that provided for such replacement after one year of commercial operation of the project. |
• | Gas |
• | an agreement for the guaranteed gas transmission of 2,500 MMBtu per day, at the AFT 1 Tariff. The initial agreement term ended on March 31, 2022 and has been extended through March 31, 2023. The agreement renews automatically for periods of one year each time, unless one of the parties terminates the agreement. |
• | an agreement for the supply of |
• | Maintenance: a services agreement (CSA) with its original equipment manufacturer, for the provision of maintenance services for the combustion turbines. In consideration for the maintenance services, Towantic pays a fixed and a variable amount as of the date stipulated in the agreement. The agreement term is 20 years. Towantic has paid the counterparty an average of approximately $9.5 million each year over the past two years. |
• | Operation: an agreement for operation and maintenance of the facility. The consideration includes a fixed and variable amount, a performance-based bonus, and reimbursement for employment expenses, including payroll costs and taxes, subcontractor costs and other costs. In July 2021, the agreement was extended and the agreement term spans from 2022 to 2024. The agreement includes an extension/renewal clause for a period of one year, unless one of the parties gives a termination notice in accordance with that provided in the agreement. CPV Towantic has paid the counterparty an average of approximately $5 million each year over the past two years. |
• | Gas Supply: an agreement for the supply of firm natural gas |
• | Gas |
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• | Operation: an agreement for operation and maintenance of the facility. |
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Gas |
• | Gas |
• | Maintenance: an amended services agreementwith its original equipment manufacturer |
• | Operation: an agreement for operation of the facility. The consideration includes fixed annual management fees, a |
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• | Gas |
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• | Operation: an operation and maintenance agreement with one of the partners in the project. The consideration includes fixed annual management fees, an operation bonus, and reimbursement of certain costs |
• | Hedging: |
• | Equity Purchase Agreement: an agreement for the purchase of the 100% of the outstanding equity interests in Keenan. As a result of the acquisition in April 2021, CPV holds all of the rights to Keenan. |
• | PPA: a wind power energy agreement (PPA) for sale of renewable energy. Pursuant to the terms and conditions of the agreement, the |
• |
• | Gas |
• | Gas |
• | Gas Transmission: an agreement for transmission of gas with an interstate pipeline company and its Canadian affiliate, for firm transmission of natural gas from Alberta, Canada to the facility. The agreements include capacity of 36.2 MMcf per day, at agreed prices. The agreement |
• |
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• | Operation: an agreement for operation and maintenance of the facility to begin once the facility is well into its construction period. The consideration includes fixed annual management fees, a |
• | Tax Equity Partner. CPV signed a term sheet with a “tax equity partner” for an investment of approximately $45 million in the project; as of this date, the agreement is subject to completion of negotiations and the signing of binding agreements. The tax equity partner is expected to benefit from most of the tax benefits for the project, mainly investment tax credits (ITC) and depreciation expenses for tax purposes, as well as participation in a proportionate share to be agreed on in the distributable cash flow. The right to participate in some of the free cash flow is valid until reaching the investment period of the tax equity partner as set out in the agreement. After reaching the period, the tax equity partner’s share in the profit and cash flow shall be reduced to a minimum rate. Since CPV has not yet signed a final agreement, there is no certainty that such an agreement will be signed or that its terms and conditions, including the scope of the investment, will be in accordance with the aforesaid (if it is signed). |
• | Solar Panels. an agreement for the purchase of solar panels with an international supplier and the agreement was amended twice in the second half of 2021. The later amendments reflected pricing increases in connection with market conditions relating to supply chain issues. The consideration includes the payment of a fixed price (as amended and may be amended from time to time under the agreement) for the purchase of the solar modules, plus the cost of transportation to the plant. |
• | Maintenance. an operating and maintenance agreement with a third-party service provider for services related to the ongoing operation and maintenance of the Maple Hill solar power generation facility. The agreement has an initial term of |
• |
• | Construction. an EPC agreement with an international contractor. Pursuant to the agreement, the contractor will plan and construct the required components for the power plant in order to integrate all the required equipment into the power plant. The total consideration to be paid to the contractor is a fixed fee which shall be paid according to a milestone schedule. The construction agreement and the equipment purchase agreement constitute a substantial portion of the cost of the project. |
• | SREC. an agreement with an international energy company for the sale of 100% of the SRECs generated in the project through 2026 to an international energy company. CPV |
• | Virtual PPA. an |
• | Rogue’s Wind Energy Project. In April 2021, CPV signed an agreement for the sale of electricity, environmental attributes of Rogue’s Wind energy project (including RECs, capacity-related benefits and ancillary services). The agreement was signed for a period of 10 years commencing on the commercial operation date. CPV provided collateral for its obligations under the agreement which include making certain payments to the |
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Season | Demand Hours | Weighted production rate (AGOROT per kWh) | |||
Winter | Off—peak | 21.22 | |||
Shoulder | 41.17 | ||||
Peak | 71.87 | ||||
Transition | Off—peak | 18.13 | |||
Shoulder | 23.17 | ||||
Peak | 29.84 | ||||
Summer | Off—peak | 17.91 | |||
Shoulder | 29.03 | ||||
Peak | 75.37 | ||||
Weighted Average Rate |
2021 ($ millions) | 2020 ($ millions) | |
Summer (2 months) | 255 (80) | 289 (84) |
Winter (3 months) | 379 (117) | 349 (102) |
Transitional Seasons (7 months) | 721 (223) | 631 (184) |
Total for the year | 1,355 (420) | 1,269 (370) |
2020 | 2019 | |||||||
Summer (2 months) | 84 | 70 | ||||||
Winter (3 months) | 101 | 102 | ||||||
Transitional Seasons (7 months) | 184 | 184 | ||||||
Total for the year | 369 | 356 |
Site | Location | Right in Asset | Area and Characteristics |
Real estate held through Rotem | |||
Land on which the Rotem Power Plant was built | Mishor Rotem | Lease | About 55 dunams |
Real estate held through Hadera | |||
Energy Center and the Hadera | Hadera | Rental | About 30 dunams |
Real estate (including options for land) held by Hadera for Hadera | |||
Hadera Expansion – Land near the area of the Hadera Power Plant | Hadera | Rental option through the end of 2022 | About 68 dunams |
Land near to space on which Rotem Power Plant was built | Mishor Rotem | Lease | About 55 dunams |
Land held by | |||
Land on which | Plugot Intersection | About 85 dunams | |
Right-of-use of the land for Sorek | |||
Land on which Sorek is being constructed | Sorek 2 Desalination Facility | Right of use | About 2 dunams |
Site | Location | The right in the property | Area and characteristics | Expiration | ||||||||
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Shore | ||||||||||||
Land on which the CPV Shore | Middlesex County, New Jersey | Ownership | About 111,290 square meters (28 acres) | N/A | ||||||||
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Maryland | ||||||||||||
Land on which the CPV Maryland | Charles County, Maryland | Ownership / | About 308,290 square meters (76 acres) | N/A | ||||||||
Valley | ||||||||||||
Land on which the CPV Valley | Wawayanda, Orange County, New York | Substantive Ownership1 / | About 121,406 square meters (30 acres) | N/A | ||||||||
Towantic | ||||||||||||
Land on which the CPV Towantic | New Haven County, Connecticut | Ownership / | easements | About 107,242 square meters (26 acres) | N/A | |||||||
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Land on which the CPV Fairview power plant was constructed | Cambria County, Jackson Township, Pennsylvania | Ownership / easements | About 352,077 square meters (87 acres) | N/A | ||||
Keenan II | ||||||||
Land on which the CPV Keenan II wind field was constructed | Woodward County, Oklahoma | Contractual easements | Rights for access to land and the equipment | December 31, 2040 |
(1) | This land is held for the benefit of CPV Valley, which is entitled to transfer it to its name. |
Site | Location | The right in the property | Area and characteristics | Expiration date of right | ||||
Three Rivers | ||||||||
Land on which the CPV Three Rivers power plant is being constructed | Grundy County, Illinois | Ownership / | easements | About 485,623 square meters (120 acres) | N/A | |||
Maple Hill | ||||||||
Land on which the CPV Maple Hill power plant is being constructed | Cambria County, Pennsylvania | Ownership / easements | 3,063,470 square meters (757 acres, of which 11 acres are leased) | For lease area December 1, 2061 |
As of December 31, | As of December 31, | |||||||||||||||||||||||
2020 | 2019 | 2018 | 2021 | 2020 | 2019 | |||||||||||||||||||
Number of employees by category of activity: | ||||||||||||||||||||||||
Plant operation and maintenance | 66 | 56 | 55 | |||||||||||||||||||||
Corporate management, finance, commercial and other | 50 | 40 | 37 | |||||||||||||||||||||
Headquarters | 34 | 66 | 56 | |||||||||||||||||||||
Plant operation, corporate management, finance, commercial and other | 86 | 50 | 40 | |||||||||||||||||||||
OPC Total (in Israel) | 116 | 96 | 92 | 120 | 116 | 96 |
Main Targets | Indicator | 2018 | 2030 Target | 2050 Target |
Reducing greenhouse gas in the energy sector | Percentage reduction of greenhouse gas over 2015 | 0% | 22% | 80% |
Reducing greenhouse gas in the electricity sector | Percentage reduction of greenhouse gas over 2015 | 7.5% | 30% | 75%-85% |
Energy efficiency | Percentage of annual improvement in energy intensity (TW/NUS million) | 0.7% | Annual improvement of 1.3% in energy intensity | Annual improvement of 1.3% in energy intensity |
Use of coal | Percentage of coal in the electricity generation mix | 30% | 0% | 0% |
• | Conventional technology – electricity generation using fossil fuel (natural gas or diesel oil). As of December 31, 2020, the total installed capacity in this technology which is in the hands of independent producers, is about 5,480 megawatts. During 2021, the Ramat Hovav power plant transitioned from the IEC to an independent producer. Therefore, according to OPC’s understanding, the installed capacity in the hands of independent producers increased by an additional 1,195 megawatts. |
• | 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. In November 2020, the Israeli government updated the generation targets for renewable energy to 30% of the consumption up to 2030. As of the end of 2021, the installed capacity of renewable energy generation facilities was 3,656 MW. In recent years, there has been an uptick in the entrance of electricity producers and generation facilities that use renewable energies in to the electricity generation market, including solar energy, wind energy, and storage; that use the grid resources. As of the report date, most of the renewable energy generation activities are sold to the System Operator or for own consumption and to the Onsite Producers. |
• | 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. |
• | Energy storage – this is possible through a range of technologies, including, among others, pumped storage, mechanical storage (for example compressed air) and chemical storage (for example batteries). In light of the Israeli government decision that provides a target for generation of electricity using renewable energies (mainly solar energy) at the rate of 30% out of the generation up to 2030, the EA estimates that the electricity sector in Israel will need to prepare for construction of facilities for energy storage. The use of this technology is currently negligible; however, it is expected to increase significantly in the upcoming years due to the need for storage facilities as a result of the anticipated increase in renewable energies. In particular, based on EA publications, compliance with the target for renewable energies up to 2030 will require construction of storage facilities in the scope of about 2,700 to 5,300 MW, deriving from the readiness of the technology and the economic feasibility of its use. |
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. In addition, when IEC requests to dispatch OPC-Rotem, the IEC shall pay a variable payment based on the cost of fuel and the efficiency of the station. This payment will cover the variable cost deriving from the operation of the OPC-Rotem Power station and the generation of electricity. |
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. |
1. | CPV is required to hold permits in order to operate and/or construct the power plants, the purpose of which is prevention or reduction of air pollution. The power plants may also be required to hold permits for flowing water, waste-water and other waste into the local sewer systems or into other water sources in the United States. |
2. | Due to the height and location of the exhaust stacks and other components of the generation facilities, which could endanger the air traffic, the power plants are required to hold a permit for construction of the stacks and additional components in the generation facilities. This permit is issued by the Federal Aviation Authority (FAA). |
3. | Renewable energy facilities are frequently required to obtain coverage under general permits applicable to the control of stormwater and the discharge of dredged and fill materials to waters of the United States; depending on the size of the area impacted, such facilities may require individual permits from the ACOE for such impacts, although usually projects can be sited to avoid this requirement. |
4. | State or local siting permits for renewable energy facilities (permit requirements will depend on the state and locality where the project is situated). |
Installment | Amount (RMB) | Percentage of the Aggregate Purchase Price | Payment Date |
Deposit | 78,000,000 | 5% | July 31, 2021 or earlier if certain conditions are met1 |
First Payment | 312,000,000 | 20% | September 30, 20211 |
Second Payment | 390,000,000 | 25% | March 31, 20221 |
Third Payment | 390,000,000 | 25% | September 30, 2022 |
Fourth Payment | 390,000,000 | 25% | March 31, 2023 |
Year ended December 31, | Year ended December 31, | |||||||||||||||||||||||||||
Geographic trade zone (percentage of total TEUs carried for the period) | Primary trade | 2020 | 2019 | 2018 | Primary trade | 2021 | 2020 | 2019 | ||||||||||||||||||||
Pacific | Transpacific | 40 | % | 36 | % | 38 | % | Transpacific | 39 | % | 40 | % | 36 | % | ||||||||||||||
Cross-Suez | Asia-Europe | 12 | % | 13 | % | 15 | % | Asia-Europe | 10 | % | 12 | % | 13 | % | ||||||||||||||
Atlantic-Europe | Atlantic | 21 | % | 21 | % | 18 | % | Atlantic | 18 | % | 21 | % | 21 | % | ||||||||||||||
Intra-Asia | Intra-Asia | 21 | % | 23 | % | 22 | % | Intra-Asia | 27 | % | 21 | % | 23 | % | ||||||||||||||
Latin America | Intra-America | 6 | % | 7 | % | 7 | % | Intra-America | 6 | % | 6 | % | 7 | % | ||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Type of Container | Type of Cargo | Quantity | TEUs | Type of Cargo | Quantity | TEUs | ||||||||||||||
Dry van containers | Most general cargo, including commodities in bundles, cartons, boxes, loose cargo, bulk cargo and furniture | 1,563,218 | 2,162,156 | Most general cargo, including commodities in bundles, cartons, boxes, loose cargo, bulk cargo and furniture | 1,923,428 | 3,249,958 | ||||||||||||||
Reefer containers | Temperature controlled cargo, including pharmaceuticals, electronics and perishable | 82,951 | 164,712 | Temperature controlled cargo, including pharmaceuticals, electronics and perishable cargo | 87,207 | 172,706 | ||||||||||||||
Other specialized containers | Heavy cargo and goods of excess height and/or width, such as machinery, vehicles and building | 50,722 | 63,684 | Heavy cargo and goods of excess height and/or width, such as machinery, vehicles and building | 48,832 | 58,751 | ||||||||||||||
Total | 1,696,891 | 2,840,552 | 2,059,467 | 3,481,415 |
Number | Capacity (TEU) | Other Vessels | Total(1) | ||||
Vessels owned by ZIM | 1 | 4,992 | - | 1 | |||
Vessels chartered from parties related to ZIM | |||||||
Periods up to 1 year (from December 31, 2020) | 3 | 6,359 | 1 | 4 | |||
Periods between 1 to 5 years (from December 31, 2020) | 4 | 16,601 | - | 4 | |||
Periods over 5 years (from December 31, 2020) | - | - | - | - | |||
Vessels chartered from third parties(2) | |||||||
Periods up to 1 year (from December 31, 2020) | 43 | 181,174 | 1 | 44 | |||
Periods between 1 to 5 years (from December 31, 2020) | 32 | 145,386 | - | 32 | |||
Periods over 5 years (from December 31, 2020) | 2 | 20,124 | - | 2 | |||
Total(3) | 85 | 374,636 | 2 | 87 |
Number | Capacity (TEU) | Other Vessels | Total(1) | |||||||||||||
Vessels owned by ZIM | 4 | 13,265 | — | 4 | ||||||||||||
Vessels chartered from parties related to ZIM | 10 | 36,208 | 1 | 11 | ||||||||||||
Periods up to 1 year (from December 31, 2021) | 5 | 15,548 | 5 | |||||||||||||
Periods between 1 to 5 years (from December 31, 2021) | 5 | 20,660 | 1 | 6 | ||||||||||||
Periods over 5 years (from December 31, 2021) | — | — | — | — | ||||||||||||
Vessels chartered from third parties(2) | 96 | 377,252 | 7 | 103 | ||||||||||||
Periods up to 1 year (from December 31, 2021) | 12 | 60,417 | 5 | 17 | ||||||||||||
Periods between 1 to 5 years (from December 31, 2021) | 80 | 293,770 | 2 | 82 | ||||||||||||
Periods over 5 years (from December 31, 2021) | 4 | 23,065 | 4 | |||||||||||||
Total(3) | 110 | 426,725 | 8 | 118 |
(1) | Includes |
(2) | Includes |
(3) | Between January 1, |
(4) | Under ZIM’s time charters, the vessel owner is responsible for operational costs and technical management of |
• | Slot swap agreements. ZIM enters into agreements with other carriers for the exchange of vessel space, or “slots.” Each carrier continues to operate its own line, while also having access to slots on the other carrier’s line. ZIM currently has slot swap agreements with 12 other carriers. |
• | Slot sale agreements. ZIM sells slots on board its vessels to transport empty, shipper-owned containers. |
• | One-way container lease. ZIM uses leasing companies and other shipping liners’ empty containers to move cargo from locations with increased demand to over-supplied locations. |
• | Equipment sub-leases. ZIM leases its equipment to other carriers and freight forwarders in order to reduce its container repositioning and evacuation costs. |
Geographic trade zone | ||||||||||||
Partner | Pacific | Cross-Suez | Intra-Asia | Atlantic-Europe | Latin America | |||||||
A.P. Moller-Maersk(1) | ✓(3) | ✓(3) | ✓ | ✓ | ||||||||
Mediterranean Shipping Company(1) | ✓(3) | ✓(3) | ✓(4) | ✓ | ||||||||
CMA CGM S.A. | ✓ | |||||||||||
Evergreen Marine Corporation | ✓ | |||||||||||
Hapag-Lloyd AG(2) | ✓ | ✓ | ✓ | |||||||||
China Ocean Shipping Company | ✓ | ✓ | ||||||||||
American President Lines Ltd. | ✓ | |||||||||||
ONE | ✓ | ✓ | ||||||||||
Orient Overseas Container Line Limited | ✓ | |||||||||||
Yang Ming Marine Transport Corporation(2) | ✓ | ✓ | ||||||||||
Hyundai Merchant Marine Co., Ltd. | ✓ | |||||||||||
Others | ✓ | ✓ |
(1) | ZIM’s cooperation with Maersk and MSC is under the 2M Alliance framework. However, in the |
(2) | With respect to the Atlantic-Europe trade, ZIM has a swap agreement with some of THE Alliance members: Hapag-Lloyd and Yang Ming, supporting ZIM loadings on THE Alliance service on this trade. ZIM also has a separate bilateral agreement in respect of the Atlantic-Europe trade with Hapag-Lloyd. |
(3) | Cooperation to terminate effective as of April 2022. |
(4) | Cooperation terminated in February 2022. |
C. | Organizational Structure |
D. | Property, Plants and Equipment |
ITEM | Unresolved Staff Comments |
ITEM | Operating and Financial Review and Prospects |
Ownership Percentage | Method of Accounting | Treatment in Consolidated Financial Statements | ||||||
OPC | 58.8 | Consolidated | Consolidated | |||||
ZIM | 26 | Equity | Share in | |||||
Qoros | 12 | Fair value | Long-term investment | |||||
Other | ||||||||
(1) | In January 2021, OPC issued 10,300,000 ordinary shares in a private placement for a total (gross) consideration of NIS 350 million (approximately $107 million). As a result of this share issuance, Kenon’s interest in OPC decreased from 62.1% to 58.2%. In September 2021, OPC issued rights to purchase approximately 13 million OPC shares to fund the development and expansion of OPC’s activity in the U.S., with investors purchasing approximately 99.7% of the total shares offered in the rights offering. The gross proceeds from the offering amounted to approximately NIS 329 million (approximately $102 million). Kenon exercised rights for the purchase of approximately 8 million shares for total consideration of approximately NIS 206 million (approximately $64 million), which included its pro rata share and additional rights it purchased during the rights trading period plus the cost to purchase these additional rights. As a result, Kenon holds approximately 58.8% of the outstanding shares of OPC. |
(2) | In February 2021, ZIM completed an initial public offering of its shares on the New York Stock Exchange and, as a result of the offering, our interest in ZIM |
(3) | In April 2020, Kenon sold half of its interest in Qoros (i.e. 12%) to the Majority |
125 |
Year Ended December 31, 2020 | Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
OPC | Quantum1 | ZIM | Other2 | Consolidated Results | OPC Israel | CPV | ZIM | Quantum1 | Other2 | Consolidated Results | ||||||||||||||||||||||||||||||||||
(in millions of USD, unless otherwise indicated) | (in millions of USD, unless otherwise indicated) | |||||||||||||||||||||||||||||||||||||||||||
Revenue | 386 | — | — | — | 386 | 437 | 51 | — | — | — | 488 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | (34 | ) | — | — | — | (34 | ) | (44 | ) | (13 | ) | — | — | (1 | ) | (58 | ) | |||||||||||||||||||||||||||
Financing income | — | — | — | 14 | 14 | 3 | — | — | — | — | 3 | |||||||||||||||||||||||||||||||||
Financing expenses | (50 | ) | — | — | — | (51 | ) | (119 | ) | (25 | ) | — | — | — | (144 | ) | ||||||||||||||||||||||||||||
Net gains related to changes of interest in Qoros | — | 310 | — | (1 | ) | 310 | ||||||||||||||||||||||||||||||||||||||
—Share in (losses)/profit of associated companies | — | (6 | ) | 167 | — | 161 | ||||||||||||||||||||||||||||||||||||||
Write back of impairment of investment | — | — | 44 | — | 44 | |||||||||||||||||||||||||||||||||||||||
Losses related to Qoros | — | — | — | (251 | ) | — | (251 | ) | ||||||||||||||||||||||||||||||||||||
Share in (losses)/profit of associated companies | — | (11 | ) | 1,261 | — | — | 1,250 | |||||||||||||||||||||||||||||||||||||
(Loss) / Profit before taxes | (9 | ) | 304 | 211 | (5 | ) | 501 | (57 | ) | (61 | ) | 1,261 | (251 | ) | (12 | ) | 880 | |||||||||||||||||||||||||||
Income taxes | (4 | ) | — | — | (1 | ) | (5 | ) | ||||||||||||||||||||||||||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | — | (29 | ) | (5 | ) | ||||||||||||||||||||||||||||||||||||
(Loss) / Profit from continuing operations | (13 | ) | 304 | 211 | (6 | ) | 496 | (47 | ) | (47 | ) | 1,261 | (251 | ) | (41 | ) | 875 | |||||||||||||||||||||||||||
Segment assets3 | 1,724 | 235 | — | 226 | 4 | 2,185 | 1,512 | 431 | — | — | 227 | 2,170 | ||||||||||||||||||||||||||||||||
Investments in associated companies | — | — | 297 | — | 297 | — | 545 | 1,354 | — | — | 1,899 | |||||||||||||||||||||||||||||||||
Segment liabilities | 1,200 | — | — | 6 | 5 | 1,206 | 1,354 | 218 | — | — | 216 | 1,788 |
Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
Includes the results of Kenon’s and IC Power’s holding company (including assets and liabilities) and general and administrative expenses. |
(3) | Excludes investments in associates. |
Year Ended December 31, 2020 | ||||||||||||||||||||
OPC Israel | Quantum1 | ZIM | Other2 | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | 386 | — | — | — | 386 | |||||||||||||||
Depreciation and amortization | (34 | ) | — | — | — | (34 | ) | |||||||||||||
Financing income | — | — | — | 14 | 14 | |||||||||||||||
Financing expenses | (50 | ) | — | — | (1 | ) | (51 | ) | ||||||||||||
Gains related to Qoros | — | 310 | — | — | 310 | |||||||||||||||
Share in (losses)/profit of associated companies | — | (6 | ) | 167 | — | 161 | ||||||||||||||
Write back of impairment of investment | — | — | 44 | — | 44 | |||||||||||||||
(Loss) / Profit before taxes | (9 | ) | 304 | 211 | (5 | ) | 501 | |||||||||||||
Income tax expense | (4 | ) | — | — | (1 | ) | (5 | ) | ||||||||||||
(Loss) / Profit from continuing operations | (13 | ) | 304 | 211 | (6 | ) | 496 | |||||||||||||
Segment assets3 | 1,724 | 235 | — | 226 | 4 | 2,185 | ||||||||||||||
Investments in associated companies | — | — | 297 | — | 297 | |||||||||||||||
Segment liabilities | 1,200 | — | — | 6 | 5 | 1,206 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | Includes the results of Primus, as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
Excludes investments in associates. |
Includes Kenon’s, IC Green’s and IC |
Includes Kenon’s, IC Green’s and IC |
Year Ended December 31, 2019 | ||||||||||||||||||||
OPC | Quantum1 | ZIM | 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 | ) | $ | (4 | ) | $ | (4 | ) | $ | (5 | ) | ||||||
Income taxes | (14 | ) | — | — | (3 | ) | (17 | ) | ||||||||||||
Profit / (Loss) from continuing operations | $ | 34 | $ | (45 | ) | $ | (4 | ) | $ | (7 | ) | $ | (22 | ) | ||||||
Segment assets3 | $ | 1,000 | $ | 72 | $ | — | $ | 246 | 4 | $ | 1,318 | |||||||||
Investments in associated companies | — | 106 | 84 | — | 190 | |||||||||||||||
Segment liabilities | 762 | — | — | 34 | 5 | 796 |
Year Ended December 31, | ||||||||
2020 | 2019 | |||||||
(in millions of USD) | ||||||||
Profit/(Loss) (100% of results) | 518 | (18 | ) | |||||
Share of profit/(loss) from Associates (i.e. Kenon's share of ZIM's results) | 167 | (4 | ) | |||||
Book Value | 297 | 84 |
Year Ended December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2021 | 2020 | ||||||||||||||||
($ millions) | ||||||||||||||||||||
Revenue | 386 | 373 | 363 | 488 | 386 | |||||||||||||||
Cost of Sales (excluding depreciation and amortization) | (282 | ) | (256 | ) | (258 | ) | (337 | ) | (282 | ) | ||||||||||
Net (Loss) / Profit | (13 | ) | 34 | 26 | ||||||||||||||||
EBITDA1 | 75 | 105 | 91 | |||||||||||||||||
Net Loss | (94 | ) | (13 | ) | ||||||||||||||||
Adjusted EBITDA1 | 91 | 75 | ||||||||||||||||||
Proportionate share of EBITDA of associated companies1 | 106 | — | ||||||||||||||||||
Total Debt2 | 921 | 622 | 587 | 1,215 | 921 |
OPC defines “EBITDA” for each period as net |
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
(in millions of USD) | ||||||||||||
Net (loss) / profit for the period | (13 | ) | 34 | 26 | ||||||||
Depreciation and amortization | 34 | 31 | 30 | |||||||||
Finance expenses, net | 50 | 26 | 25 | |||||||||
Income tax expense | 4 | 14 | 10 | |||||||||
EBITDA | 75 | 105 | 91 |
2021 | 2020 | |||||||
Net loss for the period | (94 | ) | (13 | ) | ||||
Depreciation and amortization | 57 | 34 | ||||||
Financing expenses, net | 141 | 50 | ||||||
Share in losses of associated companies, net | 11 | — | ||||||
Income tax (benefit)/expense | (24 | ) | 4 | |||||
Adjusted EBITDA | 91 | 75 |
Share in losses of associated companies, net | (11 | ) | — | |||||
Share of depreciation and amortization | 39 | — | ||||||
Share of financing expenses, net | 78 | — | ||||||
Proportionate share of EBITDA of associated companies | 106 | — |
Includes short-term and long-term debt. |
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
($ millions, except as otherwise indicated) | ||||||||||||
Revenue | 386 | 373 | 363 | |||||||||
Cost of Sales (excluding depreciation and amortization) | (282 | ) | (256 | ) | (258 | ) | ||||||
Gross profit | 71 | 86 | 75 | |||||||||
Gross profit margin | 18 | % | 23 | % | 21 | % | ||||||
Financing expenses, net | 50 | 26 | 25 | |||||||||
Net (loss) / profit for the period | (13 | ) | 34 | 26 | ||||||||
Net Energy sales (kWh) | 4,344 | 4,030 | 3,965 |
A. | Operating Results |
Year Ended December 31, 2020 | Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||
OPC | Quantum1 | ZIM | Other2 | Consolidated Results | OPC Israel | CPV | ZIM | Quantum1 | Other2 | Consolidated Results | ||||||||||||||||||||||||||||||||||
(in millions of USD, unless otherwise indicated) | (in millions of USD, unless otherwise indicated) | |||||||||||||||||||||||||||||||||||||||||||
Revenue | 386 | — | — | — | 386 | 437 | 51 | — | — | — | 488 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | (34 | ) | — | — | — | (34 | ) | (44 | ) | (13 | ) | — | — | (1 | ) | (58 | ) | |||||||||||||||||||||||||||
Financing income | — | — | — | 14 | 14 | 3 | — | — | — | — | 3 | |||||||||||||||||||||||||||||||||
Financing expenses | (50 | ) | — | — | (1 | ) | (51 | ) | (119 | ) | (25 | ) | — | — | — | (144 | ) | |||||||||||||||||||||||||||
Net gains related to changes of interest in Qoros | — | 310 | — | — | 310 | |||||||||||||||||||||||||||||||||||||||
Losses related to Qoros | — | — | — | (251 | ) | — | (251 | ) | ||||||||||||||||||||||||||||||||||||
Share in (losses)/profit of associated companies | — | (6 | ) | 167 | — | 161 | — | (11 | ) | 1,261 | — | — | 1,250 | |||||||||||||||||||||||||||||||
Write back of impairment of investment | — | — | 44 | — | 44 | |||||||||||||||||||||||||||||||||||||||
(Loss) / Profit before taxes | (9 | ) | 304 | 211 | (5 | ) | 501 | (57 | ) | (61 | ) | 1,261 | (251 | ) | (12 | ) | 880 | |||||||||||||||||||||||||||
Income taxes | (4 | ) | — | — | (1 | ) | (5 | ) | ||||||||||||||||||||||||||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | — | (29 | ) | (5 | ) | ||||||||||||||||||||||||||||||||||||
(Loss) / Profit from continuing operations | (13 | ) | 304 | 211 | (6 | ) | 496 | (47 | ) | (47 | ) | 1,261 | (251 | ) | (41 | ) | 875 | |||||||||||||||||||||||||||
Segment assets3 | 1,724 | 235 | — | 216 | 4 | 2,185 | 1,512 | 431 | — | — | 227 | 2,170 | ||||||||||||||||||||||||||||||||
Investments in associated companies | — | — | 297 | — | 297 | — | 545 | 1,354 | — | — | 1,899 | |||||||||||||||||||||||||||||||||
Segment liabilities | 1,200 | — | — | 6 | 5 | 1,206 | 1,354 | 218 | — | — | 216 | 1,788 |
Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
Includes the results of |
Excludes investments in associates. |
Year Ended December 31, 2019 | Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||||||
OPC | Quantum1 | ZIM | Other2 | Consolidated Results | OPC Israel | Quantum1 | ZIM | Other2 | Consolidated Results | |||||||||||||||||||||||||||||||
(in millions of USD, unless otherwise indicated) | (in millions of USD, unless otherwise indicated) | |||||||||||||||||||||||||||||||||||||||
Revenue | $ | 373 | $ | — | $ | — | $ | — | $ | 373 | 386 | — | — | — | 386 | |||||||||||||||||||||||||
Depreciation and amortization | (31 | ) | — | — | — | (31 | ) | (34 | ) | — | — | — | (34 | ) | ||||||||||||||||||||||||||
Financing income | 2 | — | — | 16 | 18 | — | — | — | 14 | 14 | ||||||||||||||||||||||||||||||
Financing expenses | (28 | ) | — | — | (2 | ) | (30 | ) | (50 | ) | — | — | (1 | ) | (51 | ) | ||||||||||||||||||||||||
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 | ) | $ | (4 | ) | $ | (4 | ) | $ | (5 | ) | ||||||||||||||||||||||||||
Income taxes | (14 | ) | — | — | (3 | ) | (17 | ) | ||||||||||||||||||||||||||||||||
Profit / (Loss) from continuing operations | $ | 34 | $ | (45 | ) | $ | (4 | ) | $ | (7 | ) | $ | (22 | ) | ||||||||||||||||||||||||||
Gains related to Qoros | — | 310 | — | — | 310 | |||||||||||||||||||||||||||||||||||
Share in (losses)/profit of associated companies | — | (6 | ) | 167 | — | 161 | ||||||||||||||||||||||||||||||||||
Write back of impairment of investment | — | — | 44 | — | 44 | |||||||||||||||||||||||||||||||||||
(Loss) / Profit before taxes | (9 | ) | 304 | 211 | (5 | ) | 501 | |||||||||||||||||||||||||||||||||
Income tax expense | (4 | ) | — | — | (1 | ) | (5 | ) | ||||||||||||||||||||||||||||||||
(Loss) / Profit from continuing operations | (13 | ) | 304 | 211 | (6 | ) | 496 | |||||||||||||||||||||||||||||||||
Segment assets3 | $ | 1,000 | $ | 72 | $ | — | $ | 246 | 4 | $ | 1,318 | 1,724 | 235 | — | 226 | 4 | 2,185 | |||||||||||||||||||||||
Investments in associated companies | — | 106 | 84 | — | 190 | — | — | 297 | — | 297 | ||||||||||||||||||||||||||||||
Segment liabilities | 762 | — | — | 34 | 5 | 796 | 1,200 | — | — | 6 | 5 | 1,206 |
Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
Includes the results of Primus, as well as Kenon’s and IC Green’s holding company and general and administrative expenses. |
Excludes investments in associates. |
Includes Kenon’s, IC Green’s and IC |
Includes Kenon’s, IC Green’s and IC |
For the year ended December 31, | ||||||||
2021 | 2020 | |||||||
$ millions | ||||||||
Israel | ||||||||
Revenue from sale of energy to private customers | 299 | 275 | ||||||
Revenue from private customers in respect of infrastructures services | 92 | 80 | ||||||
Revenue from sale of surplus energy | 28 | 15 | ||||||
Revenue from sale of steam | 18 | 16 | ||||||
437 | 386 | |||||||
U.S. | ||||||||
Revenue from sale of electricity and provision of services in the U.S. | 51 | — | ||||||
Total | 488 | 386 |
• | Revenue from sale of energy to customers — increased by $24 million in 2021, as compared to 2020. As OPC’s revenue is denominated in NIS, translation of its revenue into US Dollars had a positive impact of $18 million. Excluding the impact of exchange rate fluctuations, OPC’s revenues increased by $6 million primarily as a result of (i) an $18 million increase due to a full year of commercial operation of the OPC-Hadera power plant in 2021 and (ii) a $14 million increase reflecting the commencement of virtual supply in 2021, partially offset by (i) a $19 million decrease due to a decline in the generation component tariff and (ii) a $7 million decrease due to decline in energy consumption by OPC-Rotem’s customers. |
• | Revenue from private customers in respect of infrastructure services — increased by $12 million in 2021, as compared to 2020. As OPC’s revenue is denominated in NIS, translation of its revenue into US Dollars had a positive impact of $5 million. Excluding the impact of exchange rate fluctuations, these revenues increased by $7 million primarily as a result of (i) a $7 million increase due to 2021 including a full year of commercial operation of the OPC-Hadera power plant in 2021, (ii) a $4 million increase reflecting the commencement of virtual supply in 2021 and (ii) a $1 million increase due to a tariff increase for OPC-Rotem’s customers, partially offset by (i) a $2 million decrease due to a decline in infrastructure tariffs for 2021 and (ii) a $2 million decrease in sale of energy purchased for OPC-Rotem’s customers. |
• | Revenue from sale of surplus energy — increased by $13 million in 2021, as compared to 2020. As OPC’s revenue is denominated in NIS, translation of its revenue into US Dollars had a positive impact of $2 million. Excluding the impact of exchange rate fluctuations, these revenues increased by $11 million primarily as a result of an increase in sale of energy to the System Operator from (i) the OPC-Hadera power plant of $10 million and (ii) the OPC-Rotem power plant of $1 million. |
• | Revenue from sale of electricity and provision of services in the U.S. — which reflects revenue of CPV following the completion of the acquisition of CPV in January 2021, which was $51 million in 2021. |
For the year ended December 31, | ||||||||
2021 | 2020 | |||||||
$ millions | ||||||||
Israel | ||||||||
Natural gas and diesel oil consumption | 153 | 135 | ||||||
Expenses for infrastructure services | 92 | 80 | ||||||
Expenses for acquisition of energy | 32 | 36 | ||||||
Gas transmission costs | 10 | 10 | ||||||
Operating expenses | 25 | 21 | ||||||
312 | 282 | |||||||
U.S. | ||||||||
Operating costs and cost of services in the U.S. | 25 | — | ||||||
Total | 337 | 282 |
• | Natural gas and diesel oil consumption — increased by $18 million in 2021, as compared to 2020. As OPC’s cost of sales is denominated in NIS, translation of its cost of sales into US Dollars had a negative impact of $9 million. Excluding the impact of exchange rate fluctuations, OPC’s cost of sales increased by $9 million primarily as a result of increase in availability from (i) the OPC-Hadera power plant of $12 million and (ii) the OPC-Rotem power plant of $11 million, partially offset by (i) a $9 million decrease due to the decline in gas price as a result of a decline in foreign exchange rate of the dollar versus NIS and (ii) the receipt of $5 million compensation in respect of a delay in the commercial operation of the Karish reservoir. |
• | Expenses for infrastructure services — increased by $12 million in 2021, as compared to 2020. As OPC’s cost of sales is denominated in NIS, translation of its cost of sales into US Dollars had a negative impact of $5 million. Excluding the impact of exchange rate fluctuations, OPC’s cost of sales increased by $7 million primarily as a result of (i) a $7 million increase due to the full year of commercial operation of the OPC-Hadera power plant in 2021 and (ii) $4 million reflecting the commencement of virtual supply, partially offset by (i) a $4 million decrease due to a decline in infrastructure tariffs and (ii) decline in energy consumption by OPC-Rotem’s customers. |
• | Expenses for acquisition of energy — decreased by $4 million in 2021, as compared to 2020. As OPC’s cost of sales is denominated in NIS, translation of its cost of sales into US Dollars had a negative impact of $2 million. Excluding the impact of exchange rate fluctuations, OPC’s cost of sales decreased by $6 million primarily as a result of (i) a $17 million decrease due to decline in load reductions and increase in availability of the OPC-Rotem power plant and (ii) a $6 million decrease due to a decline in infrastructure tariffs and decline in energy consumption by OPC-Rotem’s customers, partially offset by (i) a $4 million increase due to additional downtime during the first full year of commercial operation of the OPC-Hadera power plant in 2021 and (ii) a $14 million increase reflecting the commencement of virtual supply in 2021. |
• | Operating costs and cost of services in the U.S. — which reflects CPV operating costs following the completion of the acquisition of CPV in January 2021, was $25 million in 2021. |
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||
(in millions of USD) | ||||||||
Revenue | 3,992 | 3,300 | ||||||
Profit/(Loss) | 518 | (18 | ) | |||||
Other comprehensive income | 6 | (10 | ) | |||||
Total comprehensive income | 524 | (28 | ) | |||||
Adjusted EBITDA1 | 1,036 | 386 | ||||||
Share of Kenon in total comprehensive income/(loss) | 167 | (9 | ) | |||||
Adjustments | - | 1 | ||||||
Share of Kenon in total comprehensive income/(loss) presented in the books | 167 | (8 | ) | |||||
Total assets | 2,824 | 1,926 | ||||||
Total liabilities | 2,550 | 2,178 | ||||||
Book value of investment | 297 | 84 |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
(in millions of USD) | ||||||||
Revenue | 10,729 | 3,992 | ||||||
Operating expenses and cost of services | 3,906 | 2,835 | ||||||
Operating profit | 5,816 | 772 | ||||||
Profit before taxes on income | 5,659 | 541 | ||||||
Income tax expense | (1,010 | ) | (17 | ) | ||||
Profit for the period | 4,649 | 524 | ||||||
Adjusted EBITDA1 | 6,597 | 1,036 | ||||||
Share of Kenon in total comprehensive income | 1,261 | 167 | ||||||
Book value of ZIM investment in Kenon’s books | 1,354 | 297 |
1. | Adjusted EBITDA is a non-IFRS financial measure that ZIM defines as net |
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||||||||
(in millions of USD) | (in millions of USD) | |||||||||||||||
Net income (loss) | 524 | (13 | ) | |||||||||||||
Financial expenses, net | 181 | 154 | ||||||||||||||
Income taxes | 17 | 12 | ||||||||||||||
Net profit | 4,649 | 524 | ||||||||||||||
Financing expenses, net | 157 | 181 | ||||||||||||||
Income tax expense | 1,010 | 17 | ||||||||||||||
Depreciation and amortization | 314 | 246 | 780 | 314 | ||||||||||||
EBITDA | 1,036 | 399 | 6,596 | 1,036 | ||||||||||||
Non-cash charter hire expenses1 | 1 | 2 | (1 | ) | 1 | |||||||||||
Capital loss (gain), beyond the ordinary course of business2 | - | (14 | ) | |||||||||||||
Assets Impairment loss (recovery) | (4 | ) | 1 | |||||||||||||
Asset impairment recovery | — | (4 | ) | |||||||||||||
Expenses related to contingencies | 3 | (2 | ) | 2 | 3 | |||||||||||
Adjusted EBITDA | 1,036 | 386 | 6,597 | 1,036 |
1. | Mainly related to amortization of deferred charter hire costs, recorded in connection with the 2014 restructuring. Following the adoption of IFRS 16 on January 1, 2019, part of the adjustments are recorded as amortization of right-of-use assets. |
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
$ millions | ||||||||
Revenue from energy generated by OPC (and/or purchased from other generators) and sold to private customers | 246 | 261 | ||||||
Revenue from energy purchased by OPC at the TAOZ rate and sold to private customers | 29 | 16 | ||||||
Revenue from private customers in respect of infrastructures services | 80 | 76 | ||||||
Revenue from energy sold to the System Administrator | 15 | 3 | ||||||
Revenue from sale of steam | 16 | 17 | ||||||
Total | 386 | 373 |
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
$ millions | ||||||||
Natural gas and diesel oil | 135 | 138 | ||||||
Payment to IEC for infrastructure services and purchase of electricity | 116 | 92 | ||||||
Gas transmission costs | 10 | 9 | ||||||
Operating expenses | 21 | 17 | ||||||
Total | 282 | 256 |
Year Ended December 31, | ||||||||
2020 | 2019 | |||||||
(in millions of USD) | ||||||||
Revenue | 3,992 | 3,300 | ||||||
Cost of services | 3,127 | 3,037 | ||||||
Gross profit | 865 | 263 | ||||||
Operating profit | 772 | 153 | ||||||
Profit (loss) before taxes on income | 541 | (1 | ) | |||||
Taxes on income | (17 | ) | (12 | ) | ||||
Profit/(loss) for the period | 524 | (13 | ) |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
(in millions of USD) | ||||||||
Share in losses of associated companies, net | (11 | ) | — |
B. | Liquidity and Capital Resources |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
(in millions of USD) | (in millions of USD) | |||||||||||||||
Continuing operations | ||||||||||||||||
Net cash flows provided by operating activities | ||||||||||||||||
OPC | 105 | 109 | 119 | 105 | ||||||||||||
Adjustments and Other | (13 | ) | (23 | ) | ||||||||||||
Other | 121 | (13 | ) | |||||||||||||
Total | 92 | 86 | 240 | 92 | ||||||||||||
Net cash flows used in investing activities | (230 | ) | (30 | ) | (205 | ) | (230 | ) | ||||||||
Net cash flows provided by / (used in) financing activities | 256 | (74 | ) | |||||||||||||
Net cash flows provided by financing activities | 147 | 256 | ||||||||||||||
Net change in cash from continuing operations | 118 | (18 | ) | 182 | 118 | |||||||||||
Net change in cash from discontinued operations | 8 | 25 | — | 8 | ||||||||||||
Cash—opening balance | 147 | 131 | 286 | 147 | ||||||||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 13 | 9 | 7 | 13 | ||||||||||||
Cash—closing balance | 286 | 147 | 475 | 286 |
Outstanding Principal Amount as of December 31, 2021* ($ millions) | Interest Rate ($ millions) | Final Maturity | Amortization Schedule | ||||
OPC-Hadera: | |||||||
Financing agreement1 | 224 | 2.4%-3.9%, CPI linked (2/3 of the loan) 3.6%-5.4% (1/3 of the loan) | September 2037 | Quarterly principal payments to maturity, commencing 6 months following commercial operations of OPC-Hadera power plant | |||
Tzomet: | |||||||
Financing agreement2 | 59 | CPI or USD-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 first or second quarter following commercial operations of the Tzomet power plant | |||
OPC4: | |||||||
Bonds (Series B) 3 | 307 | 2.75% (CPI-Linked) | September 2028 | Semi-annual principal payments commencing on September 30, 2020 | |||
Bonds (Series C)4 | 274 | 2.5% | August 2030 | 12 semi-annual payments (which repayment amounts vary, and range from 5% up to 16% of the total issued amount) commencing in February 2024 | |||
Total | 864 |
* |
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| |||
(1) | Represents NIS |
Represents NIS 184 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS |
In April 2020, OPC completed an offering of |
In |
Project | Financial Closing Date | Total Commitment (approximately in | Total Outstanding/ Issued (approximately in | Maturity Date | Annual interest | Covenants | |
Fairview | March 24, 2017 | 710 | 6621 | June 30, 20252 | LIBOR plus margin of 2.50%–2.75% ; fixed interest tranche of 5.78% | ||
Towantic | March 11, 2016 | 753 | 5983 | June 30, 20252 | LIBOR plus margin of 2.75%–3.25%
| Similar to Fairview (see above) | |
CPV Maryland | August 8, 2014 | 3714 | May 11, 2028 (Term Loan B)2 November 11, 20272 (Ancillary Facilities) | LIBOR plus margin 4% (Term Loan B) (agreement includes an alternate base rate) LIBOR plus margin of 2.75% (Ancillary Facilities) (subject to replacement base interest rate) | |||
CPV Shore | 5045 | Dec. 27, 2025 (Term Loan) Dec. 27, 2023 (Ancillary Facilities)2 | Term Loan: LIBOR plus margin of 3.75% (subject to replacement base interest rate) Ancillaries: 3.00% margin | Historic rolling 4 quarter debt service coverage ratio of 1:1. CPV is currently in compliance with this covenant | |||
CPV Valley | June 12, 2015 | 680 | 5726 | June 30, 2023 | LIBOR plus margin of 3.50%–3.75%
| ||
CPV Keenan II | 1107 |
| Execution of a distribution is subject to | ||||
CPV Three Rivers (under construction) | Aug. 21, 2020 | 875 | 7078 | June 30, 20282 | LIBOR plus margin of 3.50%–4.00% (subject to replacement base interest rate); Fixed interest tranche of 4.75% | Similar to Fairview (see above) |
1. | Consisting of Term Loan (Variable): |
2. | The rate and scope of repayment of loan principal varies until final repayment, in accordance with integration of amortization and cash sweep repayment mechanisms (“mini perm” financing). |
3. | Consisting of Term Loan (Variable): |
4. | Consisting of Term Loan (Variable): |
5. | Consisting of Term Loan (Variable): $385 million, Ancillary Facilities ($119 million). |
6. | Consisting of Term Loan (Variable): $459 million, Ancillary Facilities (Working Capital Loan: |
7. | Consisting of Term Loan (Variable): |
8. | Consisting of: Term Loan (Variable): |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
Region | 2020 | 2019 |
ISO-NE Mass Hub | $23.31/MWh | $31.22/MWh |
NY-ISO Zone G | $20.32/MWh | $26.87/MWh |
PJM West | $20.95/MWh | $26.69/MWh |
PJM AD Hub | $20.95/MWh | $26.77/MWh |
Zone | Q4 2021 | 2021 | Q4 2020 | 2020 |
PJM West (Shore, Maryland) | $54.39 | $38.92 | $23.05 | $20.95 |
PJM AD Hub (Fairview) | $51.88 | $38.35 | $22.52 | $20.95 |
NY-ISO Zone G (Valley) | $51.33 | $40.74 | $24.29 | $20.32 |
ISO-NE Mass Hub (Towantic) | $59.88 | $45.92 | $30.06 | $23.31 |
E. |
Payments Due by Period1,2 | ||||||||||||||||||||
Total | Less than One Year | One to Two Years | Two to Five Years | More than Five Years | ||||||||||||||||
($ millions) | ||||||||||||||||||||
Kenon’s consolidated contractual obligations | ||||||||||||||||||||
Trade Payables | 93 | 93 | — | — | — | |||||||||||||||
Other payables | 24 | 24 | — | — | — | |||||||||||||||
Bonds | 350 | 14 | 14 | 90 | 232 | |||||||||||||||
Lease liabilities | 22 | 14 | 1 | 2 | 5 | |||||||||||||||
Loans | 799 | 65 | 63 | 260 | 411 | |||||||||||||||
Interest SWAP contracts | 41 | 6 | 6 | 14 | 15 | |||||||||||||||
Derivative instruments | 34 | 32 | 2 | — | — | |||||||||||||||
Total contractual obligations and commitments | $ | 1,363 | 248 | 86 | 366 | 663 |
ITEM | Directors, Senior Management and Employees |
A. | Directors and Senior Management |
Name | Age | Function | Original Appointment Date | Current Term Begins | Current Term Expires | |||||
Antoine Bonnier | 38 | Board Member | 2016 | 2020 | 2021 | |||||
Laurence N. Charney | 74 | Chairman of the Audit Committee, Compensation Committee Member, Board Member | 2014 | 2020 | 2021 | |||||
Barak Cohen | 39 | Board Member | 2018 | 2020 | 2021 | |||||
Cyril Pierre-Jean Ducau | 42 | Chairman of the Board, Nominating and Corporate Governance Committee Chairman | 2014 | 2020 | 2021 | |||||
N. Scott Fine | 64 | Audit Committee Member, Compensation Committee Chairman, Board Member | 2014 | 2020 | 2021 | |||||
Bill Foo | 63 | Board Member, Nominating and Corporate Governance Committee Member | 2017 | 2020 | 2021 | |||||
Aviad Kaufman | 50 | Compensation Committee Member, Board Member, Nominating and Corporate Governance Committee Member | 2015 | 2020 | 2021 | |||||
Arunava Sen | 60 | Board Member, Audit Committee Member | 2017 | 2020 | 2021 |
Name | Age | Function | Original Appointment Date | Current Term Begins | Current Term Expires | |||||
Antoine Bonnier | 39 | Board Member | 2016 | 2021 | 2022 | |||||
Laurence N. Charney | 75 | Chairman of the Audit Committee, Compensation Committee Member, Board Member | 2014 | 2021 | 2022 | |||||
Barak Cohen | 40 | Board Member | 2018 | 2021 | 2022 | |||||
Cyril Pierre-Jean Ducau | 43 | Chairman of the Board, Nominating and Corporate Governance Committee Chairman | 2014 | 2021 | 2022 | |||||
N. Scott Fine | 65 | Audit Committee Member, Compensation Committee Chairman, Board Member | 2014 | 2021 | 2022 | |||||
Bill Foo | 64 | Board Member, Nominating and Corporate Governance Committee Member | 2017 | 2021 | 2022 | |||||
Aviad Kaufman | 51 | Compensation Committee Member, Board Member, Nominating and Corporate Governance Committee Member | 2015 | 2021 | 2022 | |||||
Arunava Sen | 61 | Board Member, Audit Committee Member | 2017 | 2021 | 2022 |
Name | Age | Position | ||
Robert L. Rosen | Chief Executive Officer | |||
Mark Hasson | Chief Financial Officer |
B. | Compensation |
C. | Board Practices |
D. | Employees |
Number of Employees as of December 31, | ||||||||||||
Company | 2020 | 2019 | 2018 | |||||||||
OPC1 | 116 | 96 | 92 | |||||||||
Primus2 | — | 12 | 13 | |||||||||
Kenon | 8 | 8 | 9 | |||||||||
Total | 124 | 116 | 114 |
Company | December 31, 2021 | |||
OPC1 | 222 | |||
Kenon | 6 | |||
Total | 228 |
(1) | In January 2021, an entity in which OPC holds a 70% interest, completed the acquisition of CPV. This table |
E. | Share Ownership |
ITEM | Major Shareholders and Related Party Transactions |
A. | Major Shareholders |
Beneficial Owner (Name/Address) | Ordinary Shares Owned | Percentage of Ordinary Shares | Ordinary Shares Owned | Percentage of Ordinary Shares | ||||||||||||
Ansonia Holdings Singapore B.V.1 | 31,156,869 | 58.0 | % | 32,497,569 | 60.3 | % | ||||||||||
Clal Insurance Enterprises Holdings Ltd.2 | 5,616,814 | 10.4 | % | |||||||||||||
Gilad Altshuler2 | 3,340,668 | 6.2 | % | |||||||||||||
Harel Insurance Investments & Financial Services Ltd. 3 | 2,950,827 | 5.5 | % | 3,090,402 | 5.7 | % | ||||||||||
Menora Mivtachim Holdings Ltd. 4 | 1,839,921 | 3.42 | % | |||||||||||||
Laurence N. Charney | 43,952 | 5 | * | 6 | 47,650 | 4 | * | 5 | ||||||||
Bill Foo | 10,884 | 5 | * | 6 | 14,108 | 4 | * | 5 | ||||||||
Arunava Sen | 10,884 | 5 | * | 6 | 14,108 | 4 | * | 5 | ||||||||
Directors and Executive Officers7 | — | * | 6 | |||||||||||||
Directors and Senior Management (Executive Officers)6 | — | * | 5 |
Based solely on the Schedule 13-D/A (Amendment No. |
Based solely on the Schedule 13-G filed by Gilad Altshuler with the SEC on February 14, 2022. According to the Schedule 13-G, the 3,340,668 ordinary shares consists of (i) 2,975,843 ordinary shares by provident and pension funds managed by Altshuler Shaham Provident & Pension Funds Ltd., a majority-owned subsidiary of Altshuler-Shaham Ltd., (ii) 350,825 ordinary shares held by mutual funds managed by Altshuler Shaham Mutual Funds Management Ltd., also a majority-owned subsidiary of Altshuler-Shaham Ltd, and (iii) 14,000 ordinary shares held by hedge funds managed by Altshuler Shaham Owl, Limited Partnership, an affiliate of Altshuler-Shaham Ltd. |
(3) | Based solely upon the Schedule 13-G/A (Amendment No. |
Based solely on Exhibit 99.3 to the Form 6-K furnished by Kenon with the SEC on May |
Owns less than 1% of Kenon’s ordinary shares. |
Excludes shares held by Laurence N. Charney, Bill Foo and Arunava Sen. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
ITEM | Financial Information |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
ITEM | The Offer and Listing |
A. | Offer and Listing |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution. |
F. | Expenses of the Issue |
ITEM | Additional Information |
A. | Share Capital |
B. | Constitution |
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 | ||
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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. |
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). This provision of the Singapore Companies Act is primarily used by minority shareholders to bring an action in the name and on behalf of the company or intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.
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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, 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 |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
ITEM | Quantitative and Qualitative Disclosures about Market Risk |
ITEM | Description of Securities Other than Equity Securities |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
ITEM | Defaults, Dividend Arrearages and Delinquencies |
ITEM | Material Modifications to the Rights of Security Holders and Use of Proceeds |
ITEM | Controls and Procedures |
ITEM |
ITEM | Audit Committee Financial Expert |
ITEM | Code of Ethics |
ITEM | Principal Accountant Fees and Services |
Year ended December 31, | Year ended December 31, | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
(in thousands of USD) | (in thousands of USD) | |||||||||||||||
Audit Fees1 | 3,052 | 3,426 | 3,054 | 1,351 | ||||||||||||
Audit-Related Fees | 25 | 71 | 3 | 14 | ||||||||||||
Tax Fees2 | 1,351 | 841 | 295 | 462 | ||||||||||||
All Other Fees | 77 | 42 | ||||||||||||||
Total | 4,505 | 4,380 | 3,352 | 1,827 |
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. |
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. |
ITEM | Exemptions from the Listing Standards for Audit Committees |
ITEM | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
ITEM | Change in Registrant’s Certifying Accountant |
ITEM | Corporate Governance |
ITEM | Mine Safety Disclosure |
ITEM | Financial Statements |
ITEM | Financial Statements |
ITEM | Exhibits |
Exhibit Number | Description of Document | ||
Number | Description of Document | |
101.INS* | Inline XBRL Instance Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Inline XBRL for the cover page of this Annual Report on Form 20-F, included in the Exhibit 101 Inline XBRL Document Set. |
* | 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 | |
Reports of Independent Registered Public Accounting Firms (PCAOB ID No. 1051) | F-1 – F-4 |
F-5 – F-6 | |
F-7 | |
F-8 | |
F-9 – F-11 | |
F-12 – F-13 | |
F-14 – F- |
KPMG LLP | Telephone | +65 6213 3388 | |
16 Raffles Quay #22-00 | Fax | +65 6225 0984 | |
Hong Leong Building | Internet | www.kpmg.com.sg | |
Singapore 048581 |
To the Stockholders and Board of Directors
Kenon Holdings Ltd.:
Opinion on the Consolidated Financial Statements
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinionsopinion on the critical audit matter or on the accounts or disclosures to which they relate.
KPMG LLP (Registration No. T08LL1267L), an accounting limited liability partnership registered in Singapore under the Limited Liability Partnership Act (Chapter 163A) and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. |
F - 1
Evaluation of fair value of the Qoros equity interestsidentified assets acquired and liabilities assumed
F - 2
KPMG LLP | Telephone | +65 6213 3388 | |
16 Raffles Quay #22-00 | Fax | +65 6225 0984 | |
Hong Leong Building | Internet | www.kpmg.com.sg | |
Singapore 048581 |
F - 3
F - 4
As at December 31, | |||||||||||
2021 | 2020 | ||||||||||
Note | $ Thousands | ||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 5 | 474,544 | 286,184 | ||||||||
Short-term deposits and restricted cash | 6 | 229 | 564,247 | ||||||||
Trade receivables | 62,643 | 47,948 | |||||||||
Short-term derivative instruments | 798 | 114 | |||||||||
Other current assets | 7 | 43,379 | 21,295 | ||||||||
Total current assets | 581,593 | 919,788 | |||||||||
Non-current assets | |||||||||||
Investment in ZIM (associated company) | 8 | 1,354,212 | 297,148 | ||||||||
Investment in OPC's associated companies | 8 | 545,242 | 0 | ||||||||
Long-term investment (Qoros) | 9.5 | 0 | 235,218 | ||||||||
Long-term restricted cash | 21,463 | 71,954 | |||||||||
Long-term derivative instruments | 28.D.1 | 11,637 | 165 | ||||||||
Deferred taxes, net | 23.C.2 | 49,275 | 7,374 | ||||||||
Property, plant and equipment, net | 11 | 1,125,820 | 818,561 | ||||||||
Intangible assets, net | 12 | 224,282 | 1,452 | ||||||||
Long-term prepaid expenses and other non-current assets | 13 | 57,266 | 44,649 | ||||||||
Right-of-use assets, net | 16 | 97,883 | 86,024 | ||||||||
Total non-current assets | 3,487,080 | 1,562,545 | |||||||||
Total assets | 4,068,673 | 2,482,333 |
As at December 31, | ||||||||||||
2020 | 2019 | |||||||||||
Note | $ Thousands | |||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 5 | 286,184 | 147,153 | |||||||||
Short-term deposits and restricted cash | 6 | 564,247 | 33,554 | |||||||||
Trade receivables | 7 | 47,948 | 39,321 | |||||||||
Short-term derivative instruments | 114 | 245 | ||||||||||
Other current assets | 8 | 21,295 | 39,678 | |||||||||
Asset held for sale | 9.B.b.3 | - | 69,592 | |||||||||
Total current assets | 919,788 | 329,543 | ||||||||||
Non-current assets | ||||||||||||
Investments in associated companies | 9 | 297,148 | 119,718 | |||||||||
Long-term investment | 9.B.b.3 | 235,218 | - | |||||||||
Long-term deposits and restricted cash | 71,954 | 77,350 | ||||||||||
Long term prepaid expenses | 11 | 44,649 | 30,185 | |||||||||
Long-term derivative instruments | 30.D.1 | 165 | 2,048 | |||||||||
Other non-current assets | 12 | - | 57,717 | |||||||||
Deferred payment receivable | 13 | - | 204,299 | |||||||||
Deferred taxes, net | 25.C.2 | 7,374 | 1,516 | |||||||||
Property, plant and equipment, net | 14 | 818,561 | 667,642 | |||||||||
Intangible assets, net | 15 | 1,452 | 1,233 | |||||||||
Right-of-use assets, net | 18 | 86,024 | 17,123 | |||||||||
Total non-current assets | 1,562,545 | 1,178,831 | ||||||||||
Total assets | 2,482,333 | 1,508,374 |
Kenon Holdings Ltd. and subsidiaries
As at December 31, | |||||||||||
2021 | 2020 | ||||||||||
Note | $ Thousands | ||||||||||
Current liabilities | |||||||||||
Current maturities of loans from banks and others | 14 | 38,311 | 46,471 | ||||||||
Trade and other payables | 15 | 171,537 | 128,242 | ||||||||
Dividend payable | 18.D | 188,607 | 0 | ||||||||
Short-term derivative instruments | 28.D.1 | 8,688 | 39,131 | ||||||||
Current tax liabilities | 34 | 9 | |||||||||
Deferred taxes | 23.C.2 | 21,117 | 0 | ||||||||
Current maturities of lease liabilities | 18,991 | 14,084 | |||||||||
Total current liabilities | 447,285 | 227,937 | |||||||||
Non-current liabilities | |||||||||||
Long-term loans from banks and others | 14 | 596,489 | 575,688 | ||||||||
Debentures | 14 | 575,314 | 296,146 | ||||||||
Deferred taxes, net | 23.C.2 | 125,339 | 94,336 | ||||||||
Other non-current liabilities | 28,817 | 816 | |||||||||
Long-term derivative instruments | 192 | 6,956 | |||||||||
Long-term lease liabilities | 14,951 | 4,446 | |||||||||
Total non-current liabilities | 1,341,102 | 978,388 | |||||||||
Total liabilities | 1,788,387 | 1,206,325 | |||||||||
Equity | 18 | ||||||||||
Share capital | 602,450 | 602,450 | |||||||||
Translation reserve | 25,680 | 15,896 | |||||||||
Capital reserve | 25,783 | (11,343 | ) | ||||||||
Accumulated profit | 1,139,775 | 459,820 | |||||||||
Equity attributable to owners of the Company | 1,793,688 | 1,066,823 | |||||||||
Non-controlling interests | 486,598 | 209,185 | |||||||||
Total equity | 2,280,286 | 1,276,008 | |||||||||
Total liabilities and equity | 4,068,673 | 2,482,333 |
As at December 31, | ||||||||||||
2020 | 2019 | |||||||||||
Note | $ Thousands | |||||||||||
Current liabilities | ||||||||||||
Current maturities of loans from banks and others | 16 | 46,471 | 45,605 | |||||||||
Trade and other payables | 17 | 128,242 | 52,258 | |||||||||
Short-term derivative instruments | 30.D.1 | 39,131 | 6,273 | |||||||||
Current tax liabilities | 9 | 8 | ||||||||||
Current maturities of lease liabilities | 14,084 | 861 | ||||||||||
Total current liabilities | 227,937 | 105,005 | ||||||||||
Non-current liabilities | ||||||||||||
Long-term loans from banks and others | 16 | 575,688 | 503,647 | |||||||||
Debentures | 16 | 296,146 | 73,006 | |||||||||
Deferred taxes, net | 25.C.2 | 94,336 | 79,563 | |||||||||
Non-current tax liabilities | - | 29,510 | ||||||||||
Other non-current liabilities | 816 | 719 | ||||||||||
Long-term derivative instruments | 6,956 | - | ||||||||||
Long-term lease liabilities | 4,446 | 5,136 | ||||||||||
Total non-current liabilities | 978,388 | 691,581 | ||||||||||
Total liabilities | 1,206,325 | 796,586 | ||||||||||
Equity | 20 | |||||||||||
Share capital | 602,450 | 602,450 | ||||||||||
Translation reserve | 15,896 | 17,889 | ||||||||||
Capital reserve | (11,343 | ) | 13,962 | |||||||||
Accumulated profit/(loss) | 459,820 | (10,949 | ) | |||||||||
Equity attributable to owners of the Company | 1,066,823 | 623,352 | ||||||||||
Non-controlling interests | 209,185 | 88,436 | ||||||||||
Total equity | 1,276,008 | 711,788 | ||||||||||
Total liabilities and equity | 2,482,333 | 1,508,374 |
_____________________________ | _____________________________ | _____________________________ |
Cyril Pierre-Jean Ducau Chairman of Board of Directors | Robert L. Rosen CEO | Mark Hasson CFO |
Kenon Holdings Ltd. and subsidiaries
For the year ended December 31, | |||||||||||||||
2021 | 2020 | 2019 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Revenue | 19 | 487,763 | 386,470 | 373,473 | |||||||||||
Cost of sales and services (excluding depreciation and amortization) | 20 | (336,298 | ) | (282,086 | ) | (256,036 | ) | ||||||||
Depreciation and amortization | (53,116 | ) | (33,135 | ) | (31,141 | ) | |||||||||
Gross profit | 98,349 | 71,249 | 86,296 | ||||||||||||
Selling, general and administrative expenses | 21 | (75,727 | ) | (49,957 | ) | (36,436 | ) | ||||||||
Other (expenses)/income | (81 | ) | 1,721 | 6,114 | |||||||||||
Operating profit | 22,541 | 23,013 | 55,974 | ||||||||||||
Financing expenses | 22 | (144,295 | ) | (51,174 | ) | (29,946 | ) | ||||||||
Financing income | 22 | 2,934 | 14,291 | 17,679 | |||||||||||
Financing expenses, net | (141,361 | ) | (36,883 | ) | (12,267 | ) | |||||||||
(Losses)/gains related to Qoros | 9 | (251,483 | ) | 309,918 | (7,813 | ) | |||||||||
(Losses)/gains related to ZIM | 8.B.a | (204 | ) | 43,505 | 0 | ||||||||||
Share in profit/(losses) of associated companies, net | |||||||||||||||
- ZIM | 8.A.2 | 1,260,993 | 167,142 | (4,374 | ) | ||||||||||
- OPC's associated companies | 8.A.2 | (10,844 | ) | 0 | 0 | ||||||||||
- Qoros | 8.A.2 | 0 | (6,248 | ) | (37,056 | ) | |||||||||
Profit/(loss) before income taxes | 879,642 | 500,447 | (5,536 | ) | |||||||||||
Income tax expense | 23 | (4,325 | ) | (4,698 | ) | (16,675 | ) | ||||||||
Profit/(loss) for the year from continuing operations | 875,317 | 495,749 | (22,211 | ) | |||||||||||
Gain/(loss) for the year from discontinued operations | 25 | ||||||||||||||
-Recovery of retained claims, net | 0 | 8,476 | 25,666 | ||||||||||||
-Other | 0 | 0 | (1,013 | ) | |||||||||||
0 | 8,476 | 24,653 | |||||||||||||
Profit for the year | 875,317 | 504,225 | 2,442 | ||||||||||||
Attributable to: | |||||||||||||||
Kenon’s shareholders | 930,273 | 507,106 | (13,359 | ) | |||||||||||
Non-controlling interests | (54,956 | ) | (2,881 | ) | 15,801 | ||||||||||
Profit for the year | 875,317 | 504,225 | 2,442 | ||||||||||||
Basic/diluted profit/(loss) per share attributable to Kenon’s shareholders (in dollars): | 24 | ||||||||||||||
Basic/diluted profit/(loss) per share | 17.27 | 9.41 | (0.25 | ) | |||||||||||
Basic/diluted profit/(loss) per share from continuing operations | 17.27 | 9.25 | (0.71 | ) | |||||||||||
Basic/diluted profit per share from discontinued operations | 0 | 0.16 | 0.46 |
For the year ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
Note | $ Thousands | |||||||||||||||
Revenue | 21 | 386,470 | 373,473 | 364,012 | ||||||||||||
Cost of sales and services (excluding depreciation and amortization) | 22 | (282,086 | ) | (256,036 | ) | (259,515 | ) | |||||||||
Depreciation and amortization | (33,135 | ) | (31,141 | ) | (29,809 | ) | ||||||||||
Gross profit | 71,249 | 86,296 | 74,688 | |||||||||||||
Selling, general and administrative expenses | 23 | (49,957 | ) | (36,436 | ) | (34,644 | ) | |||||||||
Write back of impairment of investment | 9.B.a.6 | 43,505 | - | - | ||||||||||||
Other income | 1,721 | 6,114 | 2,147 | |||||||||||||
Operating profit | 66,518 | 55,974 | 42,191 | |||||||||||||
Financing expenses | 24 | (51,174 | ) | (29,946 | ) | (30,382 | ) | |||||||||
Financing income | 24 | 14,291 | 17,679 | 28,592 | ||||||||||||
Financing expenses, net | (36,883 | ) | (12,267 | ) | (1,790 | ) | ||||||||||
Net gains/(losses) related to Qoros | 9.B.b | 309,918 | (7,813 | ) | 526,824 | |||||||||||
Share in profit/(losses) of associated companies, net of tax | 9.A.2 | 160,894 | (41,430 | ) | (105,257 | ) | ||||||||||
Profit/(loss) before income taxes | 500,447 | (5,536 | ) | 461,968 | ||||||||||||
Income taxes | 25 | (4,698 | ) | (16,675 | ) | (11,499 | ) | |||||||||
Profit/(loss) for the year from continuing operations | 495,749 | (22,211 | ) | 450,469 | ||||||||||||
Gain/(loss) for the year from discontinued operations | 27 | |||||||||||||||
-Recovery of retained claims, net | 8,476 | 25,666 | 4,530 | |||||||||||||
-Other | - | (1,013 | ) | (10,161 | ) | |||||||||||
8,476 | 24,653 | (5,631 | ) | |||||||||||||
Profit for the year | 504,225 | 2,442 | 444,838 | |||||||||||||
Attributable to: | ||||||||||||||||
Kenon’s shareholders | 507,106 | (13,359 | ) | 434,213 | ||||||||||||
Non-controlling interests | (2,881 | ) | 15,801 | 10,625 | ||||||||||||
Profit for the year | 504,225 | 2,442 | 444,838 | |||||||||||||
Basic/diluted profit/(loss) per share attributable to Kenon’s shareholders (in dollars): | 26 | |||||||||||||||
Basic/diluted profit/(loss) per share | 9.41 | (0.25 | ) | 8.07 | ||||||||||||
Basic/diluted profit/(loss) per share from continuing operations | 9.25 | (0.71 | ) | 8.17 | ||||||||||||
Basic/diluted profit/(loss) per share from discontinued operations | 0.16 | 0.46 | (0.10 | ) |
Kenon Holdings Ltd. and subsidiaries
For the year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Profit for the year | 875,317 | 504,225 | 2,442 | |||||||||
Items that are or will be subsequently reclassified to profit or loss | ||||||||||||
Foreign currency translation differences in respect of foreign operations | 17,489 | 36,354 | 22,523 | |||||||||
Reclassification of foreign currency and capital reserve differences on loss of significant influence | 0 | (23,425 | ) | 0 | ||||||||
Group’s share in other comprehensive income of associated companies | 12,360 | 1,873 | (3,201 | ) | ||||||||
Effective portion of change in the fair value of cash-flow hedges | 8,772 | (45,322 | ) | (8,309 | ) | |||||||
Change in fair value of derivative financial instruments used for hedging cash flows recorded to the cost of the hedged item | 37,173 | 3,067 | 1,351 | |||||||||
Change in fair value of derivatives used to hedge cash flows transferred to the statement of profit & loss | (2,121 | ) | 6,300 | 2,743 | ||||||||
Income taxes in respect of components of other comprehensive income | (423 | ) | 1,346 | 252 | ||||||||
Total other comprehensive income for the year | 73,250 | (19,807 | ) | 15,359 | ||||||||
Total comprehensive income for the year | 948,567 | 484,418 | 17,801 | |||||||||
Attributable to: | ||||||||||||
Kenon’s shareholders | 969,862 | 486,165 | (2,353 | ) | ||||||||
Non-controlling interests | (21,295 | ) | (1,747 | ) | 20,154 | |||||||
Total comprehensive income for the year | 948,567 | 484,418 | 17,801 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
$ Thousands | ||||||||||||
Profit for the year | 504,225 | 2,442 | 444,838 | |||||||||
Items that are or will be subsequently reclassified to profit or loss | ||||||||||||
Foreign currency translation differences in respect of foreign operations | 36,354 | 22,523 | 8,672 | |||||||||
Reclassification of foreign currency and capital reserve differences on loss of significant influence | (23,425 | ) | - | (15,073 | ) | |||||||
Group’s share in other comprehensive income of associated companies | 1,873 | (3,201 | ) | (177 | ) | |||||||
Effective portion of change in the fair value of cash-flow hedges | (45,322 | ) | (8,309 | ) | 491 | |||||||
Change in fair value of derivative financial instruments used for hedging cash flows recorded to the cost of the hedged item | 3,067 | 1,351 | - | |||||||||
Change in fair value of derivatives used to hedge cash flows transferred to the statement of profit & loss | 6,300 | 2,743 | - | |||||||||
Income taxes in respect of components of other comprehensive income | 1,346 | 252 | (104 | ) | ||||||||
Total other comprehensive income for the year | (19,807 | ) | 15,359 | (6,191 | ) | |||||||
Total comprehensive income for the year | 484,418 | 17,801 | 438,647 | |||||||||
Attributable to: | ||||||||||||
Kenon’s shareholders | 486,165 | (2,353 | ) | 432,576 | ||||||||
Non-controlling interests | (1,747 | ) | 20,154 | 6,071 | ||||||||
Total comprehensive income for the year | 484,418 | 17,801 | 438,647 |
Kenon Holdings Ltd. and subsidiaries
Non- | |||||||||||||||||||||||||||||||
controlling | |||||||||||||||||||||||||||||||
Attributable to the owners of the Company | interests | Total | |||||||||||||||||||||||||||||
Share | Translation | Capital | Accumulated | ||||||||||||||||||||||||||||
Capital | reserve | reserve | profit | Total | |||||||||||||||||||||||||||
Note | $ Thousands | ||||||||||||||||||||||||||||||
Balance at January 1, 2021 | 602,450 | 15,896 | (11,343 | ) | 459,820 | 1,066,823 | 209,185 | 1,276,008 | |||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||
Share-based payment transactions | 0 | 0 | 7,371 | 0 | 7,371 | 1,187 | 8,558 | ||||||||||||||||||||||||
Dividends declared | 18.D | 0 | 0 | 0 | (288,811 | ) | (288,811 | ) | (10,214 | ) | (299,025 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | 0 | 0 | 7,371 | (288,811 | ) | (281,440 | ) | (9,027 | ) | (290,467 | ) | ||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 10.A.1.o | 0 | 0 | 0 | 38,443 | 38,443 | 103,891 | 142,334 | |||||||||||||||||||||||
Non-controlling interests in respect of business combinations | 0 | 0 | 0 | 0 | 0 | 6,769 | 6,769 | ||||||||||||||||||||||||
Investments from holders of non-controlling interests in equity of subsidiary | 0 | 0 | 0 | 0 | 0 | 197,075 | 197,075 | ||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | 0 | 0 | 0 | 38,443 | 38,443 | 307,735 | 346,178 | ||||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | 0 | 0 | 0 | 930,273 | 930,273 | (54,956 | ) | 875,317 | |||||||||||||||||||||||
Other comprehensive income for the year, net of tax | 0 | 9,784 | 29,755 | 50 | 39,589 | 33,661 | 73,250 | ||||||||||||||||||||||||
Total comprehensive income for the year | 0 | 9,784 | 29,755 | 930,323 | 969,862 | (21,295 | ) | 948,567 | |||||||||||||||||||||||
Balance at December 31, 2021 | 602,450 | 25,680 | 25,783 | 1,139,775 | 1,793,688 | 486,598 | 2,280,286 |
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, 2020 | 602,450 | 17,889 | 13,962 | (10,949 | ) | 623,352 | 88,436 | 711,788 | ||||||||||||||||||||||||
Transactions with owners, recognised directly in equity | ||||||||||||||||||||||||||||||||
Contributions by and distributions to owners | ||||||||||||||||||||||||||||||||
Share-based payment transactions | - | - | 874 | - | 874 | 236 | 1,110 | |||||||||||||||||||||||||
Dividends declared and paid | 20.D | - | - | - | (120,133 | ) | (120,133 | ) | (12,412 | ) | (132,545 | ) | ||||||||||||||||||||
Total contributions by and distributions to owners | - | - | 874 | (120,133 | ) | (119,259 | ) | (12,176 | ) | (131,435 | ) | |||||||||||||||||||||
Changes in ownership interests in subsidiaries | ||||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 10.A.h | - | - | - | 80,674 | 80,674 | 136,170 | 216,844 | ||||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | - | - | (4,109 | ) | - | (4,109 | ) | (1,498 | ) | (5,607 | ) | |||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | (4,109 | ) | 80,674 | 76,565 | 134,672 | 211,237 | ||||||||||||||||||||||||
Total comprehensive income for the year | ||||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | 507,106 | 507,106 | (2,881 | ) | 504,225 | ||||||||||||||||||||||||
Other comprehensive income for the year, net of tax | (1,993 | ) | (22,070 | ) | 3,122 | (20,941 | ) | 1,134 | (19,807 | ) | ||||||||||||||||||||||
Total comprehensive income for the year | - | (1,993 | ) | (22,070 | ) | 510,228 | 486,165 | (1,747 | ) | 484,418 | ||||||||||||||||||||||
Balance at December 31, 2020 | 602,450 | 15,896 | (11,343 | ) | 459,820 | 1,066,823 | 209,185 | 1,276,008 |
Kenon Holdings Ltd. and subsidiaries
Non- | |||||||||||||||||||||||||||||||
controlling | |||||||||||||||||||||||||||||||
Attributable to the owners of the Company | interests | Total | |||||||||||||||||||||||||||||
Share | Translation | Capital | Accumulated | ||||||||||||||||||||||||||||
Capital | reserve | reserve | profit | Total | |||||||||||||||||||||||||||
Note | $ Thousands | ||||||||||||||||||||||||||||||
Balance at January 1, 2020 | 602,450 | 17,889 | 13,962 | (10,949 | ) | 623,352 | 88,436 | 711,788 | |||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||
Share-based payment transactions | 0 | 0 | 874 | 0 | 874 | 236 | 1,110 | ||||||||||||||||||||||||
Dividends declared and paid | 18.D | 0 | 0 | 0 | (120,133 | ) | (120,133 | ) | (12,412 | ) | (132,545 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | 0 | 0 | 874 | (120,133 | ) | (119,259 | ) | (12,176 | ) | (131,435 | ) | ||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 10.A.1.o | 0 | 0 | 0 | 80,674 | 80,674 | 136,170 | 216,844 | |||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | 0 | 0 | (4,109 | ) | 0 | (4,109 | ) | (1,498 | ) | (5,607 | ) | ||||||||||||||||||||
Total changes in ownership interests in subsidiaries | 0 | 0 | (4,109 | ) | 80,674 | 76,565 | 134,672 | 211,237 | |||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | 0 | 0 | 0 | 507,106 | 507,106 | (2,881 | ) | 504,225 | |||||||||||||||||||||||
Other comprehensive income for the year, net of tax | (1,993 | ) | (22,070 | ) | 3,122 | (20,941 | ) | 1,134 | (19,807 | ) | |||||||||||||||||||||
Total comprehensive income for the year | 0 | (1,993 | ) | (22,070 | ) | 510,228 | 486,165 | (1,747 | ) | 484,418 | |||||||||||||||||||||
Balance at December 31, 2020 | 602,450 | 15,896 | (11,343 | ) | 459,820 | 1,066,823 | 209,185 | 1,276,008 |
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 | 20.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 | 10.A.h | - | - | - | 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 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 |
Kenon Holdings Ltd. and subsidiaries
Non- | Attributable to the owners of the Company | Non- controlling interests | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
controlling | Share | Translation | Capital | Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Attributable to the owners of the Company | interests | Total | Capital | reserve | reserve | profit/(loss) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholder | Note | $ Thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | - | - | - | 1,411 | - | 1,411 | 403 | 1,814 | 0 | 0 | 1,222 | 0 | 1,222 | 324 | 1,546 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash distribution to owners of the Company | 20.A | (664,760 | ) | - | - | - | - | (664,760 | ) | - | (664,760 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividend to holders of non-controlling interests in subsidiaries | - | - | - | - | - | - | (8,219 | ) | (8,219 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared and paid | 20.D | - | - | - | - | (100,118 | ) | (100,118 | ) | - | (100,118 | ) | 18.D | 0 | 0 | 0 | (65,169 | ) | (65,169 | ) | (33,123 | ) | (98,292 | ) | ||||||||||||||||||||||||||||||||||||||||||
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 | ) | 0 | 0 | 1,222 | (65,169 | ) | (63,947 | ) | (32,799 | ) | (96,746 | ) | |||||||||||||||||||||||||||||||||||||||||
Changes in ownership interests in subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of subsidiary | 0 | 0 | 0 | 0 | 0 | 299 | 299 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 10.A.1.o | 0 | 0 | 0 | 41,863 | 41,863 | 34,537 | 76,400 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | - | - | - | - | 336 | 336 | 4 | 340 | 0 | 0 | (1,234 | ) | 0 | (1,234 | ) | (450 | ) | (1,684 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of subsidiary with non-controlling interests | - | - | - | - | - | - | 207 | 207 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | - | - | 336 | 336 | 211 | 547 | 0 | 0 | (1,234 | ) | 41,863 | 40,629 | 34,386 | 75,015 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income for the year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | - | 434,213 | 434,213 | 10,625 | 444,838 | 0 | 0 | 0 | (13,359 | ) | (13,359 | ) | 15,801 | 2,442 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income for the year, net of tax | - | - | 2,394 | (3,854 | ) | (177 | ) | (1,637 | ) | (4,554 | ) | (6,191 | ) | 0 | 17,087 | (2,880 | ) | (3,201 | ) | 11,006 | 4,353 | 15,359 | ||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income for the year | - | - | 2,394 | (3,854 | ) | 434,036 | 432,576 | 6,071 | 438,647 | 0 | 17,087 | (2,880 | ) | (16,560 | ) | (2,353 | ) | 20,154 | 17,801 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 | 602,450 | - | 802 | 16,854 | 28,917 | 649,023 | 66,695 | 715,718 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 602,450 | 17,889 | 13,962 | (10,949 | ) | 623,352 | 88,436 | 711,788 |
Kenon Holdings Ltd. and subsidiaries
For the year ended December 31, | |||||||||||||||
2021 | 2020 | 2019 | |||||||||||||
Note | $Thousands | ||||||||||||||
Cash flows from operating activities | |||||||||||||||
Profit for the year | 875,317 | 504,225 | 2,442 | ||||||||||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 57,640 | 34,171 | 32,092 | ||||||||||||
Financing expenses, net | 22 | 141,361 | 36,883 | 12,267 | |||||||||||
Share in (profit)/losses of associated companies, net | 8.A.2 | (1,250,149 | ) | (160,894 | ) | 41,430 | |||||||||
Gains on disposal of property, plant and equipment, net | 0 | (1,551 | ) | (492 | ) | ||||||||||
Net change in fair value of derivative financial instruments | 0 | 0 | 352 | ||||||||||||
Losses/(gains) related to Qoros | 9 | 251,483 | (309,918 | ) | 7,813 | ||||||||||
Losses/(gains) related to ZIM | 8.B.a | 204 | (43,505 | ) | 0 | ||||||||||
Recovery of retained claims | 25 | 0 | (9,923 | ) | (30,000 | ) | |||||||||
Share-based payments | 18,369 | 1,110 | 1,546 | ||||||||||||
Income taxes | 23 | 4,325 | 6,145 | 22,022 | |||||||||||
98,550 | 56,743 | 89,472 | |||||||||||||
Change in trade and other receivables | (1,171 | ) | (9,669 | ) | 4,338 | ||||||||||
Change in trade and other payables | (429 | ) | 45,061 | (5,968 | ) | ||||||||||
Cash generated from operating activities | 96,950 | 92,135 | 87,842 | ||||||||||||
Dividends received from associated companies | 143,964 | 0 | 0 | ||||||||||||
Income taxes (paid)/refunded, net | (385 | ) | 61 | (2,453 | ) | ||||||||||
Net cash provided by operating activities | 240,529 | 92,196 | 85,389 |
For the year ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
Note | $ Thousands | |||||||||||||||
Cash flows from operating activities | ||||||||||||||||
Profit for the year | 504,225 | 2,442 | 444,838 | |||||||||||||
Adjustments: | ||||||||||||||||
Depreciation and amortization | 34,171 | 32,092 | 30,416 | |||||||||||||
(Write back)/impairment of assets and investments | (43,505 | ) | - | 4,812 | ||||||||||||
Financing expenses, net | 36,883 | 12,267 | 1,790 | |||||||||||||
Share in (profit)/losses of associated companies, net | (160,894 | ) | 41,430 | 105,257 | ||||||||||||
(Gains)/losses on disposal of property, plant and equipment, net | (1,551 | ) | (492 | ) | 206 | |||||||||||
Net change in fair value of derivative financial instruments | - | 352 | 1,002 | |||||||||||||
Net (gains)/losses related to Qoros | 9.B.b | (309,918 | ) | 7,813 | (526,824 | ) | ||||||||||
Recovery of retained claims | 27 | (9,923 | ) | (30,000 | ) | - | ||||||||||
Write down of other payables | - | - | 489 | |||||||||||||
Share-based payments | 1,110 | 1,546 | 1,814 | |||||||||||||
Income taxes | 6,145 | 22,022 | 16,244 | |||||||||||||
56,743 | 89,472 | 80,044 | ||||||||||||||
Change in trade and other receivables | (9,669 | ) | 4,338 | 9,192 | ||||||||||||
Change in trade and other payables | 45,061 | (5,968 | ) | (35,311 | ) | |||||||||||
Cash generated from operating activities | 92,135 | 87,842 | 53,925 | |||||||||||||
Income taxes recovered/(paid), net | 61 | (2,453 | ) | (1,546 | ) | |||||||||||
Net cash provided by operating activities | 92,196 | 85,389 | 52,379 |
Kenon Holdings Ltd. and subsidiaries
For the year ended December 31, | |||||||||||||||
2021 | 2020 | 2019 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Cash flows from investing activities | |||||||||||||||
Short-term deposits and restricted cash, net | 558,247 | (501,618 | ) | 19,554 | |||||||||||
Investment in long-term deposits, net | 51,692 | 6,997 | (28,085 | ) | |||||||||||
Long-term advance deposits and prepaid expenses | (6,976 | ) | (57,591 | ) | 0 | ||||||||||
Long term loan to an associate | (5,000 | ) | 0 | 0 | |||||||||||
Proceeds from sale of subsidiary, net of cash disposed off | 0 | 407 | 880 | ||||||||||||
Acquisition of subsidiary, less cash acquired | 10.A.1.i | (659,169 | ) | 0 | 0 | ||||||||||
Acquisition of associated company, less cash acquired | (8,566 | ) | 0 | 0 | |||||||||||
Acquisition of property, plant and equipment | (231,235 | ) | (74,456 | ) | (34,141 | ) | |||||||||
Acquisition of intangible assets | (1,452 | ) | (368 | ) | (258 | ) | |||||||||
Proceeds from sale of property, plant and equipment and intangible assets | 0 | 546 | 0 | ||||||||||||
Reimbursement of right-of use asset | 4,823 | 0 | 0 | ||||||||||||
Interest received | 269 | 709 | 2,469 | ||||||||||||
Income tax paid | 0 | (32,332 | ) | (5,629 | ) | ||||||||||
Deferred consideration in respect of acquisition of subsidiary | 0 | (13,632 | ) | 0 | |||||||||||
Payment of transactions in derivatives, net | (5,635 | ) | (3,963 | ) | (929 | ) | |||||||||
Proceeds from sale of and distribution from associated companies | 46,729 | 0 | 0 | ||||||||||||
Proceeds from deferred payment | 0 | 217,810 | 0 | ||||||||||||
Proceeds from sales of interest in ZIM | 8.B.a.5 | 67,087 | 0 | 0 | |||||||||||
Proceeds from sale of interest in Qoros | 9.3 | 0 | 219,723 | 0 | |||||||||||
(Payment)/recovery of financial guarantee | 9.6.d, 9.6.e | (16,265 | ) | 6,265 | 10,963 | ||||||||||
Recovery of retained claims | 25 | 0 | 9,923 | 30,196 | |||||||||||
Net cash used in investing activities | (205,451 | ) | (221,580 | ) | (4,980 | ) | |||||||||
Cash flows from financing activities | |||||||||||||||
Dividends paid to holders of non-controlling interests | (10,214 | ) | (12,412 | ) | (33,123 | ) | |||||||||
Dividends paid | (100,209 | ) | (120,115 | ) | (65,169 | ) | |||||||||
Investments of holders of non-controlling interests in the capital of a subsidiary | 197,076 | 32 | 0 | ||||||||||||
Costs paid in advance in respect of taking out of loans | (4,991 | ) | (8,556 | ) | (1,833 | ) | |||||||||
Payment of early redemption commission with respect to the debentures | 14.B | (75,820 | ) | (11,202 | ) | 0 | |||||||||
Payment in respect of derivative financial instruments, net | (13,933 | ) | 0 | 0 | |||||||||||
Proceeds from issuance of share capital by a subsidiary to non-controlling interests, net of issuance expenses | 10.A.1.o, 10.A.1.p | 142,334 | 216,844 | 76,400 | |||||||||||
Proceeds from long-term loans | 343,126 | 73,236 | 0 | ||||||||||||
Proceeds from issuance of debentures, net of issuance expenses | 14.E | 262,750 | 280,874 | 0 | |||||||||||
Repayment of long-term loans, debentures and lease liabilities | (562,016 | ) | (130,210 | ) | (28,235 | ) | |||||||||
Short-term credit from banks and others, net | 0 | (134 | ) | 139 | |||||||||||
Acquisition of non-controlling interests | 0 | (7,558 | ) | (413 | ) | ||||||||||
Interest paid | (31,523 | ) | (24,989 | ) | (21,414 | ) | |||||||||
Net cash provided by/(used in) financing activities | 146,580 | 255,810 | (73,648 | ) | |||||||||||
Increase in cash and cash equivalents | 181,658 | 126,426 | 6,761 | ||||||||||||
Cash and cash equivalents at beginning of the year | 286,184 | 147,153 | 131,123 | ||||||||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 6,702 | 12,605 | 9,269 | ||||||||||||
Cash and cash equivalents at end of the year | 474,544 | 286,184 | 147,153 |
For the year ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
Note | $ Thousands | |||||||||||||||
Cash flows from investing activities | ||||||||||||||||
Proceeds from sale of property, plant and equipment and intangible assets | 546 | - | 66 | |||||||||||||
Short-term deposits and restricted cash, net | (501,618 | ) | 19,554 | (28,511 | ) | |||||||||||
Investment in long-term deposits, net | 6,997 | (24,947 | ) | (13,560 | ) | |||||||||||
Deferred consideration in respect of sale of subsidiary, net of cash disposed off | 407 | 880 | - | |||||||||||||
Cash paid for asset acquisition, less cash acquired | - | - | (2,344 | ) | ||||||||||||
Income tax paid | (32,332 | ) | (5,629 | ) | (169,845 | ) | ||||||||||
Investment in associates | - | - | (90,154 | ) | ||||||||||||
Acquisition of property, plant and equipment | (74,456 | ) | (34,141 | ) | (69,314 | ) | ||||||||||
Acquisition of intangible assets | (368 | ) | (258 | ) | (132 | ) | ||||||||||
(Payment of)/proceeds from realization of long-term deposits | - | (3,138 | ) | 18,476 | ||||||||||||
Interest received | 709 | 2,469 | 12,578 | |||||||||||||
Deferred consideration in respect of acquisition of subsidiary | (13,632 | ) | - | - | ||||||||||||
Long-term advance deposits and prepaid expenses | (57,591 | ) | - | - | ||||||||||||
(Payment of)/proceeds from transactions in derivatives, net | (3,963 | ) | (929 | ) | 31 | |||||||||||
Proceeds from deferred payment | 217,810 | - | - | |||||||||||||
Proceeds from sale of interest in Qoros | 9.B.b.3 | 219,723 | - | 259,749 | ||||||||||||
Receipt from recovery of financial guarantee | 9.B.b.4.h | 6,265 | 10,963 | 18,336 | ||||||||||||
Payment of transaction cost for sale of subsidiaries | - | - | (48,759 | ) | ||||||||||||
Recovery of retained claims | 9,923 | 30,196 | - | |||||||||||||
Net cash used in investing activities | (221,580 | ) | (4,980 | ) | (113,383 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Dividends paid to holders of non-controlling interests | (12,412 | ) | (33,123 | ) | (8,219 | ) | ||||||||||
Dividends paid | (120,115 | ) | (65,169 | ) | (100,084 | ) | ||||||||||
Capital distribution | - | - | (664,700 | ) | ||||||||||||
Investments of holders of non-controlling interests in the capital of a subsidiary | 32 | - | - | |||||||||||||
Costs paid in advance in respect of taking out of loans | (8,556 | ) | (1,833 | ) | (656 | ) | ||||||||||
Payment of early redemption commission with respect to the debentures (Series A) | (11,202 | ) | - | - | ||||||||||||
Proceeds from issuance of share capital by a subsidiary to non-controlling interests, net of issuance expenses | 216,844 | 76,400 | - | |||||||||||||
Proceeds from long-term loans | 73,236 | - | 33,762 | |||||||||||||
Proceeds from issuance of debentures, net of issuance expenses | 280,874 | - | - | |||||||||||||
Repayment of long-term loans and debentures, derivative financial instruments and lease liabilities | (130,210 | ) | (28,235 | ) | (375,756 | ) | ||||||||||
Short-term credit from banks and others, net | (134 | ) | 139 | (77,073 | ) | |||||||||||
Acquisition of non-controlling interests | (7,558 | ) | (413 | ) | - | |||||||||||
Interest paid | (24,989 | ) | (21,414 | ) | (24,875 | ) | ||||||||||
Net cash provided by/(used in) financing activities | 255,810 | (73,648 | ) | (1,217,601 | ) | |||||||||||
Increase/(decrease) in cash and cash equivalents | 126,426 | 6,761 | (1,278,605 | ) | ||||||||||||
Cash and cash equivalents at beginning of the year | 147,153 | 131,123 | 1,417,388 | |||||||||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 12,605 | 9,269 | (7,660 | ) | ||||||||||||
Cash and cash equivalents at end of the year | 286,184 | 147,153 | 131,123 |
A. | The Reporting Entity |
B. | 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 associated companies |
• | Long-term investment (Qoros) |
D. | Use of estimates and judgment |
1. | Allocation of acquisition costs |
In addition, in determining the depreciation rates of the tangible, intangible assets and liabilities, the Group estimates the expected life of the asset or liability.
2. | Long-term investment (Qoros) |
A. | First-time application of new accounting standards, amendments and interpretations |
B. | Basis for consolidation/combination |
(1) | Business combinations |
Note 3 – Significant Accounting Policies (Cont’d)
Note 3 – Significant Accounting Policies (Cont’d)
Investments in equity-accounted investees |
(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) | 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 |
c) | Impairment |
- | Contract assets (as defined in IFRS 15); |
- | Financial assets measured at amortized cost; |
- | Financial guarantees; |
- | Lease receivables. |
- | 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 |
Wind turbines | 35 |
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. |
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 |
• |
• | Others | 1-33 years |
(3) | Subsequent expenditure |
H. | Service Concession arrangements |
Definition of a lease At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative stand-alone prices. For lease contracts that include components that are not lease components, such as services or maintenance which relate to the lease component, the Group elected to treat the lease component separately. As a lessee However, the Group has elected not to recognize right-of-use assets and lease liabilities for some leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which affects the amount of lease liabilities and right-of-use assets recognized. Depreciation of right-of-use asset Subsequent to the commencement date of the lease, a right-of-use asset is measured using the cost method, less accumulated depreciation and accrued losses from decline in value and is adjusted in respect of re‑measurements of the liability in respect of the lease. The depreciation is calculated on the “straight‑line” basis over the useful life or the contractual lease period – whichever is shorter.
Specific and non-specific borrowing costs are capitalized to qualifying assets throughout the period required for completion and construction until they are ready for their intended use. Non-specific borrowing costs are capitalized in the same manner to the same investment in qualifying assets, or portion thereof, which was not financed with specific credit by means of a rate which is the weighted-average cost of the credit sources which were not specifically capitalized. Foreign currency differences from credit in foreign currency are capitalized if they are considered an adjustment of interest costs. Other borrowing costs are expensed as incurred. Income earned on the temporary investment of specific credit received for investing in a qualifying asset is deducted from the borrowing costs eligible for capitalization. F - 25 Note 3 – Significant Accounting Policies (Cont’d)
At each reporting date, management of the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment, and whenever impairment indicators exist. For impairment testing, assets are grouped together into smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Goodwill arising from a business combination is allocated to CGUs or group of CGUs that are expected to benefit from these synergies of the combination. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impairment loss in respect of goodwill is not reversed. For other assets, an assessment is performed at each reporting date for any indications that these losses have decreased or no longer exist. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on when the Group expects the benefits to be wholly settled.
The Group’s senior executives receive remuneration in the form of share-appreciations rights, which can only be settled in cash (cash-settled transactions). The cost of cash-settled transactions is measured initially at the grant date and is recognized as an expense with a corresponding increase in liabilities over the period that the employees become unconditionally entitled to payment. With respect to grants made to senior executives of OPC Energy Ltd (“OPC”), this benefit is calculated by determining the present value of the settlement (execution) price set forth in the plan. The liability is re-measured at each reporting date and at the settlement date based on the formulas described above. Any changes in the liability are recognized as operating expenses in profit or loss.
Severance pay is charged to income statement when there is a clear obligation to pay termination of employees before they reach the customary age of retirement according to a formal, detailed plan, without any reasonable chance of cancellation. The benefits given to employees upon voluntary retirement are charged when the Group proposes a plan to the employees encouraging voluntary retirement, it is expected that the proposal will be accepted and the number of employee acceptances can be estimated reliably.
The calculation of defined benefit obligation is performed at the end of each reporting period by a qualified actuary using the projected unit credit method. Remeasurements of the defined benefit liability, which comprise actuarial gains and losses and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. Interest expense and other expenses related to defined benefit plan are recognized in profit or loss. F - 26 Note 3 – Significant Accounting Policies (Cont’d) When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.
Qualifying employees are awarded grants of the Group’s shares under the Group’s 2014 Share Incentive
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.
The Group recognizes revenue when the customer obtains control over the promised goods or services. The revenue is measured according to the amount of the consideration to which the Group expects to be entitled in exchange for the goods or services promised to the customer. Revenues from the sale of electricity The Group includes Key agent or a principal The Group is a F - 27 Note 3 – Significant Accounting Policies (Cont’d)
Government grants related to distribution projects are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants are recorded at the value of the grant received and any difference between this value and the actual construction cost is recognized in profit or loss of the year in which the asset is released. Government grants related to distribution assets are deducted from the related assets. They are recognized in statement of income on a systematic basic over the useful life of the related asset reducing the depreciation expense.
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.
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.
Financing income includes income from interest on amounts invested and gains from exchange rate differences. Interest income is recognized as accrued, using the effective interest method. Financing expenses include interest on loans received, commitment fees on borrowings, and changes in the fair value of derivatives financial instruments presented at fair value through profit or loss, and exchange rate losses. Borrowing costs, which are not capitalized, are recorded in the income statement using the effective interest method. In the statements of cash flows, interest received is presented as part of cash flows from investing activities. Dividends received are presented as part of cash flows from operating activities. Interest paid and dividends paid are presented as part of cash flows from financing activities. Accordingly, financing costs that were capitalized to qualifying assets are presented together with interest paid as part of cash flows from financing activities. Gains and losses from exchange rate differences and gains and losses from derivative financial instruments are reported on a net basis as financing income or expenses, based on the fluctuations on the rate of exchange and their position (net gain or loss). The Group’s finance income and finance costs include:
Interest income or expense is recognized using the effective interest method. F - 28 Note 3 – Significant Accounting Policies (Cont’d)
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI. (i) Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax liability arising from dividends. Current tax assets and liabilities are offset only if certain criteria are met. (ii) Deferred tax Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for:
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profit improves. Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Management of the Group regularly reviews its deferred tax assets for recoverability, taking into consideration all available evidence, both positive and negative, including historical pre-tax and taxable income, projected future pre-tax and taxable income and the expected timing of the reversals of existing temporary differences. In arriving at these judgments, the weight given to the potential effect of all positive and negative evidence is commensurate with the extent to which it can be objectively verified. Management believes the Group’s tax positions are in compliance with applicable tax laws and regulations. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The Group believes that its liabilities for unrecognized tax benefits, including related interest, are adequate in relation to the potential for additional tax assessments. There is a risk, however, that the amounts ultimately paid upon resolution of audits could be materially different from the amounts previously included in our income tax expense and, therefore, could have a material impact on our tax provision, net income and cash flows. (iii) Uncertain tax positions A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more probable than not that the Group will have to use its economic resources to pay the obligation. F - 29 Note 3 – Significant Accounting Policies (Cont’d)
The Group presents basic and diluted earnings per share data for its ordinary share capital. The basic earnings per share are calculated by dividing income or loss allocable to the Group’s ordinary equity holders by the weighted-average number of ordinary shares outstanding during the period. The diluted earnings per share are determined by adjusting the income or loss allocable to ordinary equity holders and the weighted-average number of ordinary shares outstanding for the effect of all potentially dilutive ordinary shares including options for shares granted to employees.
Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognized as a deduction from equity.
A discontinued operation is a component of the Group´s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year. The changes in each cash flow based on operating, investing and financing activities are reported in Note
The Company's CEO and CFO are considered to be the Group's chief operating decision maker ("CODM"). The following summary describes the Group’s reportable segments:
In addition to the segments detailed above, the Group has other activities, such as investment holding categorized as Others. The CODM evaluates the operating segments performance based on Adjusted EBITDA. Adjusted EBITDA is defined as the net income (loss) excluding depreciation and amortization, financing income, financing expenses, income taxes and other items. The CODM evaluates segment assets based on total assets and segment liabilities based on total liabilities. The accounting policies used in the determination of the segment amounts are the same as those used in the preparation of the Group's consolidated financial statements, Inter-segment pricing is determined based on transaction prices occurring in the ordinary course of business. In determining the information to be presented on a geographical basis, revenue is based on the geographic location of the customer and non-current assets are based on the geographic location of the assets. F - 30 Note 3 – Significant Accounting Policies (Cont’d)
Inventories are measured at the lower of cost or net realizable value. The cost of raw material inventories is determined using the first in, first out (FIFO) method. The cost of inventories of finished goods is determined on the basis of average cost, including materials, labor and the attributable share of production overheads, based on normal capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs required for the sale.
Assets, liabilities and benefits with respect to which a transaction is executed with the controlling shareholders are measured at fair value on the transaction date. The Group records the difference between the fair value and the consideration in equity.
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after January 1, 2021 and have not been applied in preparing these consolidated financial statements. The following amended standards and interpretations are not expected to have a significant impact on the Group’s consolidated financial statements:
Note 4 – Determination of Fair Value
See Note
Non-derivative financial liabilities are measured at their respective fair values, at initial recognition and for disclosure purposes, at each reporting date. Fair value for disclosure purposes, is determined based on the quoted trading price in the market for traded debentures, whereas for non-traded loans, debentures and other financial liabilities is determined by discounting the future cash flows in respect of the principal and interest component using the market interest rate as at the date of the report. F - 31 Note 5 – Cash and Cash Equivalents
Note 6 – Short-Term Deposits and Restricted Cash
Note
Note
F - 33 Note
F - 34 Note
In view of the aforementioned business environment and in order to constantly improve ZIM’s results of operations and liquidity position, ZIM continues to optimize its network by entering into new partnerships and cooperation agreements and by upgrading its customer’s offerings, whilst seeking operational excellence and cost efficiencies. In addition, ZIM continues to explore options which may contribute to strengthen its capital and operational structure.
As of December 31,
In February 2021, ZIM completed its initial public offering (“IPO”) of 15,000,000 ordinary shares (including shares issued upon the exercise of the underwriters’ option), for gross consideration of $225 million (before deducting underwriting discounts and commissions or other offering expenses). ZIM’s ordinary shares began trading on the NYSE on January 28, 2021. Prior to the IPO, ZIM obtained waivers from its notes holders, subject to the completion of ZIM’s IPO, by which certain requirements and limitations in respect of repurchase of debt, incurrences of debt, vessel financing, reporting requirements and dividend distributions, were relieved or removed. As a result of the IPO, Kenon’s interest in ZIM was diluted from 32% to 28%. Following the IPO, Kenon recognized a gain on dilution of $10 million in its consolidated financial statements in 2021.
In August 2021, ZIM issued approximately 4 million shares as a result of options being exercised. As a result of the issuance, Kenon recognized a loss on dilution of approximately $27 million in its consolidated financial statements. In December 2021, ZIM issued approximately 1.2 million shares as a result of options being exercised. As a result of the issuance, Kenon recognized a loss on dilution of approximately $13 million in its consolidated financial statements.
Between September and November 2021, Kenon sold approximately 1.2 million ZIM shares at an average price of $58 per share for a total consideration of approximately $67 million. As a result, Kenon recognized a gain on sale of approximately $30 million in its consolidated financial statements. As at December 31, 2021, as a result of the sales of ZIM shares and the issuance of new shares described in Note 8.B.a.4, Kenon’s interest in ZIM reduced from 28% to 26%. F - 35 Note 8 – Investment in Associated Companies (Cont’d)
In June 2020, ZIM completed an early and full repayment of its Tranche A loans of amount $13 million. Following such repayment, certain financial covenants, such as “Total leverage ratio” and “Fixed charge cover ratio”, as well as restrictions related to assets previously securing such loans, were removed. In September 2020, ZIM launched a tender offer to repurchase, at its own discretion, some of its notes of Tranches C and D (Series 1 and 2 Notes) up to an amount of $60 million (including related costs). In October 2020, ZIM completed the repurchase of Tranche C notes with an aggregated face value of $58 million for a total consideration (including related costs) of $47 million, resulting in a gain from repurchase of debt of $6 million.
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 $100 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. As at December 31, 2021, 0 amounts with withdrawn under this facility (2020: $2 million). 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 Subsequent to year end, the agreement was renewed to expire in February 2023.
For the purpose of IAS Due to an improvement in ZIM’s financial performance in 2020, Kenon, independently F - 36 Note 8 – Investment in Associated Companies (Cont’d) For the purposes of Kenon’s impairment assessment of the Group’s investment, ZIM is considered one CGU, which consists of all of ZIM’s operating assets. The recoverable amount is based on the higher of the value-in-use and the fair value less cost of disposal (“FVLCOD”). The valuation is predominantly based on publicly available information and earnings of ZIM over the 12-month period to December 31, 2020. The valuation approach was based on the equity method, recognizing the cost of investment share of profits in ZIM, and subsequently to assess a maintainable level of earnings to form a view on the appropriate valuation range as at December 31, 2020. The following data points and benchmarks were considered by the independent valuer:
The independent valuer arrived at a range of equity valued between $430 million and $585 million after adjustments for Net Debt. The fair value measurement was categorized as a Level 3 fair value based on the inputs in the valuation technique used.
The holders of ordinary shares of ZIM are entitled to receive dividends when declared and are entitled to one vote per share at meetings of ZIM. All shares rank equally with regard to the ZIM's residual assets, except as disclosed below. In the framework of the process of privatizing ZIM, all the State of Israel’s holdings in ZIM (about 48.6%) were acquired by IC pursuant to an agreement from February 5, 2004. As part of the process, ZIM allotted to the State of Israel a On July 14, 2014 the State of Israel and ZIM reached a settlement agreement (the “Settlement Agreement”) that was validated as a judgment by the Supreme Court. The Settlement Agreement provides, inter alia, the following arrangement shall apply: the State’s consent is required to any transfer of the shares in ZIM which confers on the holder a holding of 35% and more of the ZIM’s share capital. In addition, any transfer of shares which confers on the holders a holding exceeding 24% but not exceeding 35%, shall require prior notice to the State. To the extent the State determines that the transfer involves a potential damage to the State’s security or any of its vital interests or if the State did not receive the relevant information in order to formulate a decision regarding the transfer, the State shall be entitled to inform, within 30 days, that it objects to the transfer, and it will be required to reason its objection. In such an event, the transferor shall be entitled to approach a competent court on this matter. Kenon’s ownership of F - 37 Note
CPV Three Rivers is a project under construction in Illinois, United States. The commercial operation date is expected to be in Q2 2023, and the total construction cost (in respect of 100% of the project) is expected to be approximately $1,293 million. In respect of an interest of 17.5% in the rights to the Three Rivers construction project (the “Construction Project”), a Sellers’ Loan in the amount of $95 million (the “Sellers’ Loan”) was provided to the CPV Group. The Seller’s Loan was granted for a period of up to two years from the Transaction Completion Date, bore interest at an annual rate of 4.5%, to be paid quarterly and was secured by a lien on shares of the holding company that owns the rights in the project under construction and rights pursuant to the management agreement of the project under construction. On February 3, 2021, the transaction for sale of 7.5% of the rights in the Construction Project was completed for a consideration of approximately $41 million which was served for repayment as part of the Sellers’ Loan. No gain or loss was recognized on the sale. The remaining 10% equity interest continued to be subject to the Sellers’ Loan of approximately $55 million, which was repaid in October 2021. Loans As at December 31, 2021, CPV Three Rivers has outstanding debt of approximately $707 million. The final repayment date is June 30, 2028, and the rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The variable interest is set at LIBOR plus a spread ranging from 3.5% to 4% per year, and the fixed interest is at an annual rate of 4.75%. As a result of the loan, CPV Three Rivers is subject to certain covenants and distribution restrictions.
CPV Fairview is a power plant in Pennsylvania, United States using natural gas and combined cycle technology whose commercial operations started in 2019. Loans As at December 31, 2021, CPV Fairview has outstanding debt of approximately $662 million. The final repayment date is June 30, 2025, and the rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The variable interest is set at LIBOR plus a spread ranging from 2.5% to 2.75% per year, and the fixed interest is at an annual rate of 5.78%. As a result of the loan, CPV Fairview is subject to certain covenants and distribution restrictions.
CPV Maryland is a power plant in Maryland, United States using natural gas and combined cycle technology whose commercial operations started in 2017. Loans As at December 31, 2021, CPV Maryland has outstanding debt of approximately $371million. The final repayment dates of the loan and ancillary credit facilities are May 2028 and November 2027, respectively. The rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The loans are subject to interest rates of LIBOR plus 4% per term loan and LIBOR plus 2.75% for ancillary credit facilities. As a result of the loan, CPV Maryland is subject to certain covenants and distribution restrictions.
CPV Shore is a power plant in New Jersey, United States using natural gas and combined cycle technology whose commercial operations started in 2016. Loans As at December 31, 2021, CPV Shore has outstanding debt of approximately $504 million. The final repayment date of the loans and ancillary credit facilities are December 27, 2025 and December 27, 2023, respectively. The rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The loans are subject to interest rates of LIBOR plus 3.75% per term loan and LIBOR plus 3% for ancillary credit facilities. As a result of the loan, CPV Shore is subject to certain covenants and distribution restrictions. F - 38 Note 8 – Investment in Associated Companies (Cont’d)
CPV Towantic is a power plant in Connecticut, United States using natural gas/dual-fuel and combined cycle technology whose commercial operations started in 2018. Loans As at December 31, 2021, CPV Towantic has outstanding debt of approximately $598 million. The final repayment date is June 30, 2025, and the rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The debt is subject to interest of LIBOR plus a spread ranging from 2.75% to 3.25%. As a result of the loan, CPV Towantic is subject to certain covenants and distribution restrictions.
CPV Valley is a power plant in New York, United States using natural gas/dual-fuel and combined cycle technology whose commercial operations started in 2018. Loans As at December 31, 2021, CPV Valley has outstanding debt of approximately $578 million. The final repayment date of the loan is June 30, 2023. The rate and scope of the repayment of the loan principal varies until the final repayment, in accordance with a combination of amortization and cash sweep repayment mechanisms. The loan is subject to interest rate of LIBOR plus spread ranging from 3.5% to 3.75%. As a result of the loan, CPV Valley is subject to certain covenants and distribution restrictions. In April 2021 some expedients were received for the ancillary credit facilities in exchange for a commitment to provide equity in the cumulative amount of $10 million from the investors in the project (a commitment of $5 million was provided in April 2021 by CPV Valley and the other investor. The withdrawals are provided as shareholder loans bearing annual interest at a rate of 5%). The expedients pertain to a waiver of the annual repayment obligation of the working capital loans and release of $5 million in restricted working capital due to a regulatory permit. Note 9 – Long-term investment (Qoros)
In January 2018, the New Qoros Investor purchased 51% of Qoros from Kenon and Chery for RMB 3.315 billion (approximately $504 million), resulting in Kenon’s and Chery’s interest in Qoros dropping from 50% each to 24% and 25%, respectively. This was part of an investment structure (“Investment Agreement”) to invest a total of approximately RMB 6.63 billion (approximately $1,002 million) by the New Qoros Investor. The Investment Agreement provided Kenon with a put option over its remaining equity interest in Qoros which was initially valued at approximately $90 million. The value of the put option was reduced by approximately $19 million to approximately $71 million as a result of the fair value assessment as at December 31, 2019. F - 39 Note 9 – Long-term investment (Qoros) (Cont’d)
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), which was based on the same post-investment valuation as the initial investment by the New Qoros Investor. In April 2020, Kenon completed the sale of this half of its remaining interest in Qoros and received payment of RMB1,560 million (approximately $220 million). Kenon recognized a gain of approximately $153 million from the sale of its 12% interest in Qoros and the derecognition of the current portion of the put option pertaining to the 12% interest sold. As a result of the sale, Kenon lost significant influence over Qoros and ceased equity accounting. Since April 29, 2020, the remaining 12% interest in Qoros was accounted for on a fair value basis through profit and loss and, together with the non-current portion of the put option pertaining to the remaining 12% interest (see Note 9.2), was reclassified in the statement of financial position as a long-term investment (Qoros). Upon reclassification, Kenon immediately recognized a fair value gain of approximately $139 million and the long-term investment (Qoros) was initially measured at a combined fair value of approximately $220 million. By the end of 2020, primarily due to the appreciation of RMB against the USD, the fair value of the long-term investment (Qoros) increased by approximately $15 million to $235 million. In 2020 up until the completion date of the sale and prior to the reclass detailed above, the aggregate current and non-current put option fair value was reduced by approximately $3 million to $68 million. The sale was not made pursuant to the put option described above in Note 9.2. As part of the sale agreement, the New Qoros Investor assumed its pro-rata share of guarantees of Kenon and Chery based on the change to its equity ownership.
In April 2021, Quantum entered into an agreement with the New Qoros Investor to sell all of its remaining 12% interest in Qoros. The key terms of the agreement are set forth below. The total purchase price is RMB1.56 billion (approximately $245 million), which is the same valuation as the previous sales by Quantum to the New Qoros Investor. The deal is subject to certain conditions, including a release of the share pledge (refer to Note 9.6.c) over the shares to be sold (substantially all of which have been pledged to Qoros’ lending banks), and necessary regulatory approvals. The Baoneng Group guaranteed the obligations of the New Qoros Investor under this agreement. The purchase price was to be paid over time according to a payment schedule. The first and second payments, including the deposit, were to be paid into a designated account set up in the name of the New Qoros Investor over which Quantum is a joint signatory to, of which the deposit was due July 31, 2021. According to the agreement, the transfer of these payments to Quantum would occur by the end of Q2 2022. To date, the New Qoros Investor has failed to make any of the required payments under this agreement. In the fourth quarter of 2021, Kenon started arbitration proceedings against the New Qoros Investor for breach of the agreement and Kenon also started litigation proceedings against the New Qoros Investor with regards to the New Qoros Investor’s obligations to Kenon’s pledged shares in relation to Qoros’ RMB 1.2 billion loan (as described below). The outcomes of these legal proceedings and any related awards are uncertain. As a result of the payment delay, Quantum currently has the right to exercise the Put Option it has to sell its remaining shares to the New Qoros Investor. F - 40 Note 9 – Long-term investment (Qoros) (Cont’d)
In September 2021, in light of the events described above, Kenon performed an assessment of the fair value of the long-term investment (Qoros) under IFRS 13 Fair value measurement. Kenon concluded that the fair value of the long-term investment (Qoros) is zero. Therefore, in 2021 Kenon recognized a fair value loss of $235 million in its consolidated financial statements for the year ended 2021.
As at December 31, 2018, Kenon’s back-to-back guarantee exposure to Chery was approximately $44 million however, following the New Qoros Investor’s investment into Qoros (refer to Note 9.2), Kenon assessed that the likelihood of future cash payments in relation to the guarantees was not probable. As a result, all provisions related to financial guarantees were released in 2018. Following completion of the transaction in 2019, the New Qoros Investor assumed its proportionate obligations with respect to the Qoros loans. As a result of this and repayments by Qoros in relation to its loans, Chery’s obligations under the loan guarantees were reduced. As a result, Kenon received $11 million from Chery. As at December 31, 2019, Kenon’s back-to-back guarantee obligations to Chery were reduced to approximately $23 million. In April 2020, Kenon received an additional $6 million from Chery following repayments by Qoros in relation to its loans. This brought the total cash received from Chery to RMB 244 million (approximately $36 million) in connection with these repayments. As at December 31, 2020, Kenon’s back-to-back guarantee obligations to Chery were reduced to approximately $16 million. F - 41 Note 9 – Long-term investment (Qoros) (Cont’d)
In the fourth quarter of 2021, Chery paid the full amount of its guarantee obligations under the RMB 3 billion and RMB 700 million loan facilities. As discussed above, Kenon had back-to-back guarantee obligations of approximately $16 million to Chery in respect of guarantees Chery had given for these two loans. Kenon paid the $16 million to Chery and recognized a corresponding $16 million expense in its consolidated statements of profit and loss. Following this payment, Kenon does not have any remaining guarantee obligations with respect to Qoros debt. As at December 31, 2021, as described in Note 9.6.c, Kenon has pledged substantially all of its interests in Qoros to secure Qoros’ RMB 1.2 billion loan facility. The New Qoros Investor was required to assume its pro rata share of pledge obligations. It has not yet provided all such pledges but has provided Kenon with a guarantee in respect of its pro rata share, and up to all, of Quantum's pledge obligations. Qoros continues to engage in discussions with the lenders and other relevant stakeholders relating to its other outstanding bank loans and resumption of manufacturing production which was shut down earlier this year.
Qoros has restrictions with respect to distribution of dividends and sale of assets deriving from legal and regulatory restrictions, restrictions under the joint venture agreement and the Articles of Association and restrictions stemming from credit received. F - 42 Note 10 – Subsidiaries
OPC is a publicly-traded company whose securities are listed on the TASE. OPC is engaged in In October 2020, OPC signed an agreement to acquire the CPV Group (as OPC’s activities in Israel are subject to seasonal fluctuations as a result of changes in the official Time of Use of Electricity Tariff (“TAOZ”), which is regulated and published by the The revenues of the CPV Group from electricity generation are seasonal and impacted by variable demand, gas prices and electricity prices, as fixed contractual price for the project.
The COVID-19 outbreak has led to quarantines, cancellation of events and travel, businesses and school shutdowns and restrictions, and alongside the conflict between Russia and Ukraine, supply chain interruptions, During the reporting period, high global demand for raw materials, transportation and shipping services were impacted by the spread of COVID-19 and the conflict, causing limited production capabilites, transportation and shipping restrictions, resulting in a significant increase in the cost of raw materials, production and supply chain, and an increase in the cost of maritime transport. This resulted in global delays in delivery dates for equipment alongside increased prices of raw materials and equipment used for construction and maintenance of OPC’s facilities and power plants. This also affected the construction and maintenance costs of OPC’s projects in the markets of activity and schedules for their completion. As of reporting date, there is no certainty as to the duration or scope of the COVID-19 impact, therefore OPC is unable to assess with full certainty its impact on its businesses.F - 43 Note 10 – Subsidiaries (Cont’d) Material subsidiaries Set forth below are details regarding OPC’s material subsidiaries:
*This represents the interest held by OPC Power Ventures LP OPC Israel holds most of OPC’s businesses in Israel, such as OPC’s interests in OPC Rotem, OPC Hadera, OPC Tzomet and OPC Sorek 2 (all defined below).
OPC Rotem operates the Rotem Power Plant located in the Rotem Plain. Its operations commenced on July 6, 2013, and OPC Rotem has a license which allows it to produce and sell electricity for a period of 30 years from that date. The Rotem power plant operates using conventional technology in an integrated cycle and has generation capacity of about 466 megawatts (“MW”). The remaining 20% is held by In October 2020, planned maintenance work continued for 13 days, during which the Rotem power plant was shut down. As at publication date, the next maintenance is planned to be in April 2022, during which the activities of the Rotem Power Plant and the related energy generation activities will be discontinued for a period of 20 days.
OPC Hadera holds a permanent OPC Hadera supplies all the electricity and steam needs of Additional maintenance work is expected to be performed on the steam turbine in In October 2021 the Hadera Power Plant was connected to Infinya by way of a direct electricity line. F - 44 Note 10 – Subsidiaries (Cont’d)
OPC Tzomet is in the construction stages of a conventional open-cycle power plant In April 2019, OPC Tzomet received a conditional license for construction of the Tzomet power plant. In December 2019, OPC Tzomet received tariff approval from the IEA.Lease of OPC Tzomet land In January 2020, Israel Lands Authority (“ILA”) approved allotment of an area measuring about In January 2020, a financial specification was received from ILA in respect of the capitalization fees, whereby value of the Land (not including development expenses) of about NIS 207 million (approximately $60 million) (not including VAT) was set (hereinafter – “the Initial Assessment”). In February 2021, the Joint Company submitted a legal appeal regarding the Final Assessment amount, which the ILA dismissed in August 2021. In November 2021, the Joint Company filed an assessor objection. As at December 31, F - 45 Note 10 – Subsidiaries (Cont’d)
In May 2020, OPC Sorek 2 signed an agreement with SMS IDE Ltd., which won a tender of the State of Israel for construction, operation, maintenance and transfer of a seawater desalination facility on the “Sorek B” site (the “Sorek B Desalination Facility”), where OPC Sorek 2 will construct, operate and maintain an energy generation facility (“Sorek B Generation Facility) with a generation capacity of up to 99 MW on the premises of the Sorek 2 Desalination Facility, and will supply the energy required for the Sorek B Desalination Facility for a period of 25 years after the operation date of the Sorek B Desalination Facility. At the end of the aforesaid period, ownership of the Sorek B Generation Facility will be transferred to the State of Israel. OPC undertook to construct the Sorek B Generation Facility within 24 months from the date of approval of the National Infrastructure Plan (approved in November 2021), and to supply energy at a specific scope of capacity to the Sorek B Desalination Facility. Establishment of the Sorek B Generation Facility is contingent on, among other things, completion of the planning and/or licensing processes and receipt of approval with respect to the ability to output electricity from the site, which as at the submission date of the report had not yet been received. In OPC’s estimation, the
In In July 2021, Gnrgy received a virtual supply license.
In January 2021, IC Green transferred its interest in ICGE to OPC at zero consideration. Refer to Note 10.A.2 for further details. As at December 31, 2021, ICGE, which is held directly by OPC, holds OPC’s businesses in the United States. During 2005-2020, ICGE recorded net operating losses for tax purposes, which as at December 31, 2020 amounted to approximately $108 million, and utilizable tax credits in the amount of approximately $1.7 million, which may be offset for tax purposes in the United States against future income in the United States, subject to complying with the conditions of the law, some of which are not under OPC’s control and, therefore, OPC did not recognize deferred tax assets in respect thereof. OPC coordinates its operations in the United States (including following the acquisition of CPV Group, as set out in Note 10.A.1.i) under ICGE. Among other things, the said transfer will allow tax savings with respect to profits, if any, from the business activities in the United States. F - 46 Note 10 – Subsidiaries (Cont’d) In addition, in January 2021, following the transfer of ICGE, OPC transferred its rights and loans in OPC Power to ICGE in respect of a loan in the amount of NIS 472 million (approximately $152 million), and capital notes issued by ICGE to OPC of amount NIS 1,188 million (approximately $382 million). The loan is denominated in shekels and bears annual interest at a rate of 7%. The loan principal will be repayable at any time that will be agreed on between the parties, but no later than January 2028. Accrued interest is payable on a quarterly basis. To the extent the payment made by ICGE is lower than the amount of the accrued interest, the payment in respect of the balance will be postponed to the next quarter, but not later than January 2028. The capital notes are repayable only after 5 years will have elapsed from their issuance date; they are denominated in shekels and are to be repaid based on the decision of ICGE.
In October 2020, OPC signed a partnership agreement (the “Partnership Agreement” and the “Partnership”, where applicable) with three financial entities to form OPC Power, whereby the limited partners in the Partnership are OPC which holds about 70% interest, Clal Insurance Group which hold 12.75% interest, Migdal Insurance Group which hold 12.75% interest, and a corporation from Poalim Capital Markets which hold 4.5% interest. The General Partner of the Partnership, a wholly-owned company of OPC, will manage the Partnership’s business as its General Partner, with certain material actions (or which may involve a conflict of interest between the General Partner and the limited partners), requiring approval of a majority of special majority (according to the specific action) of the institutional investors which are limited partners. The General Partner is entitled to management fees and success fees subject to meeting certain achievements. OPC also entered into an agreement with entities from the Migdal Insurance Group with respect to their holdings in the Partnership, whereby OPC granted said entities a put option, and they granted OPC a call option (to the extent that the put option is not exercised), which is exercisable after 10 years in certain circumstances. The total investment undertakings and provision of shareholders’ loans provided by all partners under the Partnership Agreement pro rata to the holdings discussed above is $1,215 million. The amount is designated for acquisition of all the rights in the CPV Group and for financing additional investments. In 2021, OPC and the holders of the non-controlling interests provided OPC Power in partnership capital and loans of approximately $657 million and $204 million respectively. The loans are denominated in dollars and bear interest at an annual rate of 7%. The loan principal is repayable at any time, but not later than January 2028. The accrued interest is to be paid on a quarterly basis. To the
The CPV Group is engaged in the development, construction and management of power plants using renewable energy and conventional energy (power plants running on natural gas of the advanced‑generation Acquisition of CPV Group On January 25, 2021 (“Transaction completion date”), the Group acquired 70% of the rights and holdings in CPV Power Holdings LP; Competitive Power Ventures Inc.; and CPV Renewable Energy Company Inc through the limited partnership, CPV Group LP (the “Buyer”). For the year ended December 31, 2021, Kenon’s consolidated results comprised results of the CPV Group from period end. F - 47 Note 10 – Subsidiaries (Cont’d) On the Transaction Completion Date, in accordance with the mechanism for determination of the consideration as defined in the acquisition agreement, the Buyer paid the Sellers approximately $648 million, and about $5 million for a deposit which remains in the CPV Group. In May 2021, the consideration for the acquisition of the CPV Group was adjusted slightly, as a result of which the sellers paid the CPV Group an immaterial amount. For further details relating to the Seller’s Loan provided in relation to Three Rivers, refer to Note 8.B.b.1. OPC bore legal expenses and costs of a due diligence examination attributable to the acquisition, which were included in selling, general and administrative expenses in the consolidated statements of profit and loss, in the amount of about NIS 44 million (approximately $13 million), of which about NIS 2 million (approximately $1 million) were incurred in 2021. Business combination OPC partially hedged its exposure to changes in the cash flows from payments in dollars in connection with the acquisition agreement by means of forward transactions and dollar deposits. OPC chose to designate the forward transactions as an accounting hedge. On the completion date of the transaction, OPC recorded the amount of about NIS 103 million (approximately $32 million) that was accrued in a hedge capital reserve to the cost of the investment in the CPV Group. This cost was recorded in the “goodwill” category and increased the cost of the acquisition by about $32 million. The contribution of the CPV Group to the Group’s revenue and consolidated loss from the acquisition date until December Determination of fair value of identified assets and liabilities: On the Transaction Completion Date, OPC included the CPV Group’s net assets at fair value. Presented below is the fair value of the
Combined cash flows as a result of the
F - 48 Note 10 – Subsidiaries (Cont’d) Goodwill Goodwill created as part of the business combination reflects the potential of future activities of the CPV Group in the
CPV Keenan owns a wind energy power plant with a capacity of 152 MW, located in Oklahoma, United States. In
CPV Maple Hill is in the construction stages of a solar energy power plant with a capacity of 126 MW located in Pennsylvania, United States. In May 2021, a commencement order for the construction work on CPV Maple Hill (hereinafter – “the Project”) was issued. As at December 31, 2021, the aggregate cost of the investment in the Project is estimated at about $178 million and the Project’s commercial operation date is expected to be in the second half of 2022.
CPV Rogue’s Wind is currently in the advanced development stage of developing a wind energy power plant with a capacity of 114 MW, located in Pennsylvania, United States. Construction of the power plant is expected to commence in the second half of 2022. In April 2021, the CPV Group signed a power purchase agreement for sale of all the energy, availability (capacity) and Renewable Energy Certificates (RECs) of CPV Rogue’s Wind (hereinafter - “the Project”). As at December 31, 2021, the aggregate cost of the investment in the Project is estimated at about $200 to $205 million and the Project’s commercial operation date is expected to be in the second half of 2023.
In 2019, OPC Rotem distributed In In June 2019, OPC issued 5,179,147 new ordinary shares at a price of NIS 23.17 per share to three external institutional entities. Total cash consideration of approximately NIS 120 million (approximately $33 million) was received. As a result of the share issuance, Kenon registered a decrease of 3% in equity interests of OPC from 76% to 73%. Accordingly, the Group recognised $14 million in non-controlling interests and $19 million in accumulated profits arising from changes in the Group’s proportionate share of OPC. F - 49 Note 10 – Subsidiaries (Cont’d) In September 2019, OPC issued 5,849,093 new ordinary shares at a price of NIS 26.5 per share to four external institutional entities. Total cash consideration of approximately NIS 155 million (approximately $44 million) was received. As a result of the share issuance, Kenon registered a decrease of 3% in equity interests of OPC from 73% to 70%. Accordingly, in 2019 the Group recognised $20 million in non-controlling interests and $24 million in accumulated profits arising from changes in the Group’s proportionate share of OPC. In October 2020, OPC published a shelf offer report for issuance of ordinary shares of NIS 0.01 par value each to the public through a uniform offer with a range of quantities by means of a tender on the price per unit and the quantity. Kenon submitted bids for participation in the tender at prices not less than the uniform price determined in the tender, and as part of the issuance it was issued 10,700,200 shares for a consideration of approximately $101 million. A total of 23,022,100 shares were issued to the public. The gross proceeds from the issuance amount to approximately NIS 737 million (approximately $217 million) and the issuance expenses amounted to approximately NIS 5 million (approximately $1 million). In addition, in October 2020, OPC completed a private offer of 11,713,521 ordinary shares to institutional entities from the Clal group and Phoenix group. The price per ordinary share with respect to each of the offerees was NIS 29.88, which was determined through negotiations between the offerees. The gross proceeds from the issuance amount to approximately NIS 350 million (approximately $103 million) and the issuance expenses amount to approximately NIS 5 million (approximately $1 million). Following completion of the In February 2021, OPC issued
In September 2021, OPC issued rights to purchase 13,174,419 ordinary OPC shares of NIS 0.01 per value each (hereinafter - the “Rights”), in connection with the development and expansion of OPC’s activity in the USA. The rights were offered such that each holder of ordinary shares of OPC who held 43 ordinary shares was entitled to purchase one right unit comprising of three shares at a price of NIS 75 (NIS 25 per share). Through the deadline for exercising the rights, notices of exercise were received for the purchase of 13,141,040 ordinary shares (constituting approximately 99.7% of the total shares offered in the rights offering). The gross proceeds from the exercised rights amounted to approximately NIS 329 million (approximately $102 million). In October 2021, Kenon exercised rights for the purchase of approximately 8 million shares for total consideration of approximately NIS 206 million (approximately $64 million), which included its pro rata share and additional rights it purchased during the rights trading period plus the cost to purchase these additional rights. As a result, Kenon now holds approximately 58.8% of the outstanding shares of OPC. Accordingly, the Group recognized $41 million in non-controlling interests and $60 million in accumulated profits arising from changes in the Group’s proportionate share of OPC. 2. IC Green Energy Ltd (“IC Green”) In 2020, IC Green acquired the remaining interests of ICG Energy, Inc (“ICGE”) (formerly known as Primus Green Energy Inc.), and F - 50 Note 10 – Subsidiaries (Cont’d)
* The NCI percentage represents the effective NCI of the F - 51
Note
F - 52 Note 11 – Property, Plant and Equipment, Net (Cont’d)
F - 53 Note
Note
*Relates to the acquisition of CPV Keenan, which is part of the CPV Group. Refer to Note 10.A.1.i for further information.
F - 55 Note
As part of the acquisition of the CPV Group as described in Note 10.A.1.i, on the acquisition date, OPC recognized goodwill of $105 million, which reflects the potential of future activities of CPV Group in the market in which it operates. Goodwill was attributed in full to CPV Group, which is a cash-generating unit. OPC conducted an annual impairment test as of December 31, 2021. OPC has considered the report from a qualified external valuer regarding the recoverable amount of the cash-generating unit based on discounted expected future cash flows provided by OPC. Projects under commercial operation and projects under construction were estimated by discounting expected future cash flows before tax and the weighted average cost of capital (WACC) after tax. Projects under development were estimated at cost. Below are the main assumptions used in the valuation:
OPC used a relevant discount rate reflecting the specific risks associated with the future cash flow of a cash-generating unit. As of December 31, 2021, the recoverable amount of the cash-generating unit of the CPV Group exceeds its book value and therefore, no impairment has been recognized for them. The fair value measurement was classified at Level 3 due to the use of input that is not based on observable market inputs in the assessment model. As of the report date, in accordance with management's assessments regarding future industry trends, which are based on external and internal sources, OPC has not identified any key assumptions in which possible likely changes may occur, which would cause the CPV Group's recoverable amount to decrease below its carrying amount. F - 56 Note 13 – Long-Term Prepaid Expenses and Other Non-Current Assets
Note Following are the contractual conditions of the Group’s interest-bearing loans and credit, which are measured based on amortized cost. Additional information regarding the Group’s exposure to interest risks, foreign currency and liquidity risk is provided in Note
F - 57 Note A.1 Classification based on currencies and interest rates
As at December 31, A.2Reconciliation of movements of liabilities to cash flows arising from financing activities
F - 58 Note
OPC The power plant project of OPC Rotem was financed by the project financing method (hereinafter – The loans (which In October 2021, the early repayment of the In proportion to their interests in OPC Rotem, OPC and Veridis extended to OPC Rotem loans for the financing of the early repayment of amounts NIS 904 million (approximately $291 million) and F - 59 Note
In July 2016, Hadera entered into a financing agreement for the senior debt (hereinafter – “the Hadera Financing Agreement”) with a consortium of lenders (hereinafter – “Hadera’s Lenders”), headed by Israel Discount Bank Ltd. (hereinafter – “Bank Discount”) and Harel Insurance Company Ltd. (hereinafter – “Harel”) to finance the construction of the Hadera Power Plant, whereby the lenders undertook to provide Hadera credit Some of the loans in the Hadera Financing Agreement are linked to the CPI and some are unlinked. The loans bear interest rates between 2.4% and 3.9% on the CPI-linked loans, and between 3.6% and 5.4% on the unlinked loans, and are As at December 31,
In December 2019, a financing agreement for the senior debt (project financing) was signed between OPC Tzomet and a syndicate of financing entities led by Bank Hapoalim Ltd. (hereinafter – “Bank Hapoalim”, and together with the other financing entities hereinafter – “Tzomet’s Lenders”), As part of As at December 31, As of December 31, Subsequent to year end, OPC Tzomet withdrew NIS 156 million (approximately $50 million) from the facility.OPC In December 2019, an equity subscription agreement (hereinafter – “Tzomet’s Equity Subscription Agreement”) was signed. As part of the said agreement, F - 60 Note
Short-term loans In December 2019, In March 2020, OPC took a loan from Bank Mizrahi Tafahot Ltd. (“Bank Mizrahi”), a related party of the Group, of amount NIS 50 million (approximately $16 million). The loan bore interest at the annual rate of prime In June 2019, OPC entered into a hedge agreement with Bank Hapoalim Ltd. for hedge of 80% of the exposure to the CPI with respect to the principal of loans from financial institutions, in exchange for payment of additional interest at the annual rate of between 1.7% and 1.76% (hereinafter – “the CPI Transactions”). OPC chose to designate the CPI Transactions as an “accounting hedge”. In 2020 and 2021, due to changes in the inflationary expectations and in light of the changes in the projected interest rates, OPC recorded an increase in the assets and liabilities, F - 61 Note 14 – Loans and Debentures (Cont’d) Series A Debentures In May 2017, OPC issued debentures (Series A). The par value of the debentures was NIS 320 million (approximately $85 million), bore annual interest at the rate of 4.95% and were 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. Subsequent to the additional issuance of Series B debentures in October 2020 as described below, OPC made early redemption of its Series A debentures. As a result of the early redemption, the debt service reserve of approximately NIS 67 million (approximately $19 million) was released. The total amount of full early redemption, in respect of principal, interest and compensation, amounted to approximately NIS 313 million (approximately $92 million). The compensation component of approximately NIS 41 million (approximately $12 million) Series B Debentures In April 2020, OPC issued debentures (Series B) with a par value of NIS400 million (approximately $113 million), which were listed on the TASE. As a result, approximately $111 million representing the par value, net of issuance cost is recognised as debentures. The debentures are linked to the Israeli consumer price index and bear annual interest at the rate of 2.75%. The principal and interest of the debentures (Series B) are repayable every six months, commencing on March 31, 2021 (on March 31 and September 30 of every calendar year) through September 30, 2028. In October 2020, OPC issued additional Series B debentures of par value NIS 556 million (approximately $162 million) (the “Expansion of Series B”). The gross proceeds of the issuance amount to approximately NIS 584 million (approximately $171 million) and the issuance costs were approximately NIS 7 million (approximately $2 million). A trust certificate was signed between OPC and Reznik Paz Nevo Trusts Ltd. in April 2020, which details customary grounds for calling the debentures for immediate repayment (subject to cure periods), including insolvency events, liquidation proceedings, receivership, a stay of proceedings and creditors’ arrangements, certain structural changes, a significant worsening in OPC’s financial position, etc. The trust certificate also includes a commitment of OPC to comply with certain financial covenants and restrictions as follows: As at December 31, Series C Debentures In September 2021, OPC issued Series C debentures at a par value of NIS 851 million (approximately $266 million), with the proceeds designated primarily for the early repayment of OPC Rotem’s financing (refer to Note 14.B). The debentures are listed on the TASE, are not CPI-linked and bear annual interest of 2.5%. The debentures shall be repaid in twelve semi-annual and unequal installments (on February 28 and August 31) as set out in the amortization schedule, starting on February 28, 2024 through August 31, 2030 (the first interest payment is due on February 28, 2022). The issuance expenses amounted to about NIS 9 million (approximately $3 million). OPC is required to comply with certain financial covenants and restrictions as follows: As at December 31, 2021, OPC’s shareholders’ equity was NIS 2,270 million (approximately $730 million) (minimum required is NIS 1 billion, and for purposes of a distribution, NIS 1.4 billion); the ratio of OPC’s shareholders’ equity to OPC’s total assets was 55% (minimum required is 20%, and for purposes of distribution, 30%); the ratio of the net consolidated financial debt less the financial debt designated for construction of projects that have not yet commenced producing EBITDA and Adjusted EBITDA is 7.3 (maximum allowed is 13, and for purposes of a distribution, 11); equity to consolidated balance sheet ratio of 37% (minimum required is 17%. F - 62 Note 14 – Loans and Debentures (Cont’d)
Keenan financing agreement In August 2021, CPV Keenan and a number of financial entities entered into a $120 million financing agreement (hereinafter - the “Keenan Financing Agreement”). Concurrently with the closing of the Keenan Financing Agreement, CPV Keenan repaid its former financing agreement entered into in 2014 (as of the repayment date, the outstanding principal was approximately $67 million). No financial penalties were imposed on the early repayment of the former financing agreement. The previous annual interest rate was LIBOR plus a 2.25%-2.75% spread on the Term Loan, and a 1% spread on the ancillary credit facilities. The loan and the ancillary credit facilities in the Keenan Financing Agreement shall be repaid in installments over the term of the agreement; the final repayment date is December 31, 2030. The loan and the ancillary credit facilities in the Keenan Financing Agreement shall carry an annual interest of LIBOR + 1% to 1.375%. As part of the Keenan Financing Agreement, collateral and pledges on the project's assets held by CPV Keenan were provided in favor of the lenders. It should be noted that the Keenan Financing Agreement includes, among other things, and as customary in agreements of this type, provisions regarding mandatory prepayments, fees in respect of credit facilities, annual fees relating to the issuance of LC and additional customary terms and conditions, including hedging of the base interest rate in respect of 70% of the loan. As part of the Keenan Financing Agreement, collateral and pledges on the project's assets held by CPV Keenan were provided in favor of the lenders. The Keenan Financing Agreement includes a number of restrictions, such as compliance with a minimum debt service coverage ratio of 1.15 during the 4 quarters that preceded the distribution, and a condition whereby no grounds for repayment or breach event exists (as defined in the financing agreement). The Keenan Financing Agreement includes grounds for calling for immediate repayment as customary in agreements of this type, including, among others – breach of representations and covenants that have a material adverse effect, non payment events, non compliance with certain obligations, various insolvency events, termination of the activities of the project or termination of significant parties in the project (as defined in the agreement), occurrence of certain events relating to the regulatory status of the project and maintaining of government approvals, certain changes in the project’s ownership, certain events in connection with the project, existence of legal proceedings relating to the project, and a situation wherein the project is not entitled to receive payments for electricity – all in accordance with and subject to the terms and conditions, definitions and cure periods detailed in the financing agreement. G. OPC Power Shareholder loans In 2021, OPC (through a wholly-owned subsidiary) and non-controlling interests provided loans to OPC Power in the amounts of $143 million and $61 million, respectively. Subsequent to year end, OPC (through a wholly owned subsidiary) and non-contorlling interests provided additional loans to OPC Power in the amounts of $8 million and $4 million, respectively. Refer to Note 10.A.1.h for further details. The loans bear annual interest at a rate of 7%. The loan principal will be repayable at any time as will be agreed on between the parties, but no later than January 2028. Accrued interest is payable on a quarterly basis. To the extent that payment made by OPC Power is lower than the amount of the accrued interest, payment in respect of the balance will be postponed to the following quarter – but not later than January 2028. Note
F - 63 Note
The lease for the gas Pressure Regulation and Measurement Station (“PRMS”) relates to the facility at OPC Hadera’s power plant. For further details, please refer to Note
The leases range from 3 to 10 years, with options to extend.
The total for low-value items on short-term leases are not material. Accordingly, the Group has not recognized right-of-use assets and lease liabilities for these leases.
F - 64 Note
In December 2019, an arrangement was signed between OPC Tzomet and the Local Council of
In January 2018, a request was filed with the Tel Aviv-Jaffa District Court to approve a derivative claim by a shareholder of Bazan against former and current directors of Bazan, Israel Chemicals Ltd., OPC Rotem, OPC Hadera and IC (collectively the "Group Companies"), over: (1) a transaction of the Group Companies for the purchase of natural gas from Tamar Partners, (2) transactions of the Group Companies for the purchase of natural gas from Energean Israel Ltd. (“Energean”) and (3) transaction for sale of surplus gas to Bazan. In August 2018, the Group Companies submitted their response to the claim filed. OPC rejected the contentions appearing in the claim and requested summary dismissal of the claim. In OPC’s estimation, based on advice from its legal advisors, it is more likely than not that the claim will not be accepted by the Court and, accordingly, no provision has been included in the financial statements in respect of the claim as at December 31,
In November 2017, a request was filed with the Tel Aviv-Jaffa District Court to approve a derivative claim on behalf of Bazan. The request is based on the petitioner's contention that the undertaking in the electricity purchase transaction between Bazan and OPC Rotem is an extraordinary interested party transaction that did not receive the approval of the general assembly of Bazan shareholders on the relevant dates. The respondents to the request include Bazan, OPC Rotem, the Israel Corporation Ltd. and the members of Bazan's Board of Directors at the time of entering into the electricity purchase transaction. The requested remedies include remedies such as an injunction and financial remedies. In July 2018, OPC Rotem submitted its response to the request. Bazan’s request for summary judgement was F - 65 Note
In 2014 (commencing in August), letters were exchanged between OPC Rotem and IEC regarding the tariff to be paid by OPC Rotem to IEC in respect of electricity that it had purchased from the electric grid, in connection with sale of electricity to private customers, where the electricity generation in the power plant was insufficient to meet the electricity needs of such customers. It is OPC Rotem’s position that the applicable tariff is the “ex-post” tariff, whereas according to IEC in the aforesaid exchange of letters, the applicable tariff is the TAOZ tariff, and based on part of the correspondences even a tariff that is 25% higher than the TAOZ tariff (and some of the correspondences also raise allegations of IEC raised contentions regarding past accountings in respect of the acquisition cost of energy for OPC Rotem’s customers in a case of a load reduction of the plant by the System Operator, and collection differences due to non‑transfer of meter data in the years 2013 through 2015. In addition, IEC stated its position with respect to additional matters in the arrangement between the parties relating to the acquisition price of surplus energy and the acquisition cost of energy by OPC Rotem during performance of tests. OPC Rotem’s position regarding the matters referred to by IEC, based on its legal advisors, is different and talks are being held between the parties. As at December 31, 2021, the open matters had not yet been resolved and there is no certainty regarding formulation of consents between the parties. In OPC Rotem’s estimation, it is more likely than not that OPC Rotem will not pay any additional amounts in respect of the period ended December 31,
In February 2020, the In May 2021, IEC notified OPC Rotem that according to its approach, sale of energy by OPC Rotem to end‑consumers in excess of the As at filing date, the extent of the final supplementary arrangements to be determined. F - 66 Note
In January 2016, an agreement was signed between OPC Hadera and SerIDOM Servicios Integrados IDOM, S.A.U (“IDOM”), for the design, engineering, procurement and construction of a cogeneration power plant, in consideration of about NIS 639 million (approximately $185 million) (as amended several times as part of change orders, including an amendment made in 2019 and described below), which is payable on the basis of the progress of the construction and compliance with milestones (hereinafter – “the Hadera Construction Agreement”). IDOM has provided bank guarantees and a corporate guarantee of its parent company to secure the said obligations, and OPC has provided a corporate guarantee to IDOM, in the amount of $10.5 million, to secure part of OPC Hadera’s liabilities. In addition, as part of an addendum to OPC Hadera’s construction agreement which was signed in October 2018, the parties agreed to waiver of past claims up to the signing date of the addendum. In accordance with the construction agreement, OPC Hadera is entitled to certain compensation from IDOM in respect of the delay in completion of the construction of the Hadera Power Plant, and to compensation in a case of non-compliance with conditions in connection with the plant’s performance. In OPC Hadera’s estimation, as at year end the amount of compensation due to it for delay in deliver of the power plant is about NIS 76 million (approximately $23 million). In July 2020, upon completion of the Hadera Power Plant, a request was received from IDOM for payment of the two final milestones of amount NIS 48 million (approximately $15 million). The two final milestone payments were paid by means of an offset against the balance of compensation. In OPC Hadera’s estimation, while IDOM has contentions regarding the final settlement, OPC Hadera has an unconditional contractual right to receive the compensation for the delay in the delivery of the power plant as stated and it is more likely than not that its position will be accepted, hence, no provision has been included in the financial statements. In May 2021 a notice letter of a dispute was received from IDOM alleging that OPC Hadera does not have grounds for charging them the amounts specified in the construction agreement for the delay (“LDs”) and the performance of the power plant (including by way of offsetting), and that IDOM is entitled to additional consideration of EUR 7 million (approximately $8 million). It is noted that in June 2021, the bank guarantee provided by IDOM was extended until May 2022. In September 2021, IDOM started an arbitration procedure against OPC Hadera in the International Court of Arbitration, including a claim for payments totaling $14 million for meeting milestones (that OPC Hadera has unilaterally offset against LDs), net of any compensation in respect of LDs which the construction contractor may be required to pay as a result of the arbitration process; additional consideration totaling EUR 7 million (approximately $8 million) in respect of work; a claim by IDOM to the effect that it may reduce the amount of guarantees it provided in favor of OPC Hadera, as well as certain declarative remedies. OPC Hadera disputes the claims of IDOM (except in respect of an insignificant amount out of said claim, relative to EUR 7 million (approximately $8 million)), and the claims were rejected even prior to receiving IDOM’s said notice. It is OPC Hadera’s position, according to the power plant’s construction agreement and based on the position of its legal counsel, that it is entitled to LDs and damages (limited to an amount up to the maximum specified in the construction agreement) for non-compliance with conditions set out in the agreement in connection with the performance of the power plant. The total amount in respect of all of the above grounds for compensation is capped at $36 million (which includes the offset payments described above). As at December 31, As In November 2021, OPC received a refund from their insurance company for IDOM of F - 67 Note
In September 2018, OPC Tzomet signed a planning, procurement and construction agreement (hereinafter – “the Agreement”) with PW Power Systems LLC (hereinafter – “Tzomet Construction Contractor” or “PWPS”), for construction of the Tzomet project. The Agreement is a “lump‑sum turnkey” agreement wherein the Tzomet Construction Contractor committed to construct the Tzomet project in accordance with the technical and engineering specifications determined and includes various undertakings of the contractor. In OPC Tzomet’s estimation, based on the work specifications, the aggregate consideration that will be paid in the framework of the Agreement is about $300 million, and it will be paid based on the milestones The continuity of construction has been affected by COVID-19 due to the need to transport equipment and foreign crews to the site. The construction work In Due to the delay in supply of the gas from the Karish reservoir, OPC Rotem and OPC Hadera will be required to acquire the quantity of gas it had planned to acquire from Energean for purposes of operation of the power plants at present gas prices, which is higher than the price stipulated in the Energean agreement. The delays in the commercial operation date of Energean, and in turn, a delay in supply of the gas from the Karish reservoir, will have an unfavorable impact on OPC’s profits. In the agreements with Energean, compensation for delays had been provided, the amount of which depends on the reasons for the delay, where the limit with respect to the compensation in a case where the damages caused is “force majeure” is lower. It is noted that the damages that will be caused to OPC stemming from a delay could exceed the amount of the said compensation. F - 68 Note
As part of the sale described in Note Subsequent to year end, in accordance with the agreement, 53,500,000 shares were released from pledge, and 1,500,000 shares of OPC remain pledged in light of an indemnity claim relating to a tax assessment claim in the amount of $11 million.
OPC entered into long-term service maintenance contracts for its operating power plants. The number of maintenance hours and price are specified in the agreements. OPC entered into long-term infrastructure contracts for use of PRMS at its operating power plants. The price is specified in the agreements. OPC entered into long-term PPAs with its customers (of which some included construction of generation facilities) for sale of electricity and gas. The supply quantity, period and pricing are specified in the agreements. OPC has also entered into long-term PPAs with its suppliers for purchase of electricity and gas. The minimum purchase quantity, period and pricing are specified in the agreements. OPC entered into long-term construction agreements for constructing its power plants. The price, technical and engineering specifications, and work milestones are specified in the agreements. For more information relating to the construction of the Tzomet power plant, refer to 17.A.g. F - 69 Note
All shares rank equally with regards to Company’s residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. All issued shares are fully paid with no par value. The capital structure of the Company comprises of issued capital and accumulated In
The translation reserve includes all the foreign currency differences stemming from translation of financial statements of foreign activities as well as from translation of items defined as investments in foreign activities commencing from January 1, 2007 (the date IC first adopted IFRS).
The capital reserve reflects the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge (ie the portion that is offset by the change in the cash flow hedge reserve). In 2021, approximately 4.7 million share options of ZIM were exercised, resulting in a proportionate share of increase in capital reserve attributable to owners of the Company of $5.4 million. Approximately 250 thousand share options of OPC were exercised, resulting in an increase in capital reserve attributable to owners of the Company of $1.6 million.
In April 2021, Kenon’s board of directors approved a cash dividend of $1.86 per share (an aggregate amount of approximately $100 million), to Kenon’s shareholders of record as of the close of trading on April 29, 2021, paid on May 6, 2021. In November 2021, Kenon’s board of directors approved a cash dividend of $3.50 per share (an aggregate amount of approximately $189 million), to Kenon’s shareholders of record as of the close of trading on January 19, 2022, paid subsequent to year end on January 27, 2022. F - 70 Note
Kenon has established a Note
Note
F - 71 Note
(1) A portion of this relates to profit sharing for CPV Group employees
The fair value of the CPV Group’s Profit-Sharing Plan is recognized as an expense, against a corresponding increase in liability, over the period in which the unconditional right to payment is achieved. The liability is remeasured at each reporting date until the settlement date. Any change in the fair value of the liability is recognized in the consolidated statements of profit and loss. In 2021, the CPV Group recorded expenses in the amount of approximately NIS 50 million (approximately $15 million). Note
F - 72 Note
No previously unrecognized tax benefits were used in
F - 73 Note
The deferred taxes are calculated based on the tax rate expected to apply at the time of the reversal as detailed below. Deferred taxes in respect of subsidiaries were calculated based on the tax rates relevant for each country. The deferred tax assets and liabilities are derived from the following items:
Income tax rate in Israel is 23% for the years ended December 31, 2021, 2020 F - 74 Note On January 4, 2016, Amendment 216 to the Income Tax Ordinance (New Version) – 1961 (hereinafter – “the Ordinance”) was passed in the Knesset. As part of the amendment, OPC’s and Hadera’s income tax rate was reduced by 1.5% to a rate of 25% as from 2016. Furthermore, on December 22, 2016 the Knesset plenum passed the Economic Efficiency Law (Legislative Amendments for Achieving Budget Objectives in the Years 2017 and 2018) – 2016, by which, inter alia, the corporate tax rate would be reduced from 25% to 23% in two steps. The first step will be to a rate of 24% as from January 2017 and the second step will be to a rate of 23% as from January 2018. As a result of reducing the tax rate to 23%, the deferred tax balance as at December 31,
In Unrecognised deferred tax liabilities The tax effect on taxable temporary differences of $112 million (2020: $nil) has not been recorded as this arises from undistributed profits of the Group’s associated companies which the Group does not expect to incur. Singapore does not impose taxes on disposal gains, which are considered to be capital in nature, but imposes tax on income and gains of a trading nature. As such, whenever a gain is realized on the disposal of an asset, the practice of the IRAS is to rely upon a set of commonly-applied rules in determining the question of capital (not taxable) or revenue (taxable). Under Singapore tax laws, any gains derived by a divesting company from its disposal of ordinary shares in an investee company between June 1, 2012 and December 31, 2027 are generally not taxable if, immediately prior to the date of such disposal, the divesting company has held at least 20% of the ordinary shares in the investee company for a continuous period of at least 24 months. F - 75 Note Data used in calculation of the basic / diluted earnings per share
Note
In December 2017, Kenon, through its wholly-owned subsidiary Inkia Energy Limited (“Inkia”), sold its Latin American and Caribbean power business to an infrastructure private equity firm, I Squared Capital (“ISQ”). As a result, the Latin American and Caribbean businesses were classified as discontinued operations. Kenon’s subsidiaries are entitled to receive payments in connection with certain claims held by companies within Inkia’s businesses. In 2019, one of Kenon’s subsidiaries received a favorable award in a commercial arbitration proceeding relating to retained claims from the sale of the Inkia business. In 2020, following the completion of a tax review related to the sale, Kenon recognized income of $8 million, net of taxes. Set forth below are the results attributable to the discontinued operations
F - 76 Note Financial information of the reportable segments is set forth in the following tables:
F - 77 Note
Major customers Following is information on the total sales of the Group to material customers and the percentage of the Group’s total revenues (in
* Represents an amount less than 10% of the revenues. F - 78 Note Information based on geographic areas The Group’s geographic revenues are as follows:
The Group’s non-current assets* on the basis of geographic location:
* Composed of property, plant and equipment and intangible assets. Note
The Group’s related parties In the ordinary course of business, some of the Group’s subsidiaries and affiliates engage in business activities with each other. Ordinary course of business transactions are aggregated in this note. Other than disclosed elsewhere in the consolidated financial statements during the period, the Group engaged the following material related party transactions. Key management personnel of the Company are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company. The directors, CEO and CFO are considered key management personnel of the Company.
Key management personnel compensation
F - 79 Note
These balances relate to amounts with entities that are related to Kenon's beneficial owners.
Note
The Group has international activity in which it is exposed to credit, liquidity and market risks (including currency, interest, inflation and other price risks). In order to reduce the exposure to these risks, the Group holds derivative financial instruments, (including forward transactions, interest rate swap (“SWAP”) transactions, and options) for the purpose of economic (not accounting) hedging of foreign currency risks, inflation risks, commodity price risks, interest risks and risks relating to the price of inputs. This note presents information about the Group’s exposure to each of the above risks, and the Group’s objectives, policies and processes for measuring and managing the risk. The risk management of the Group companies is executed by them as part of the ongoing current management of the companies. The Group companies monitor the above risks on a regular basis. The hedge policies with respect to all the different types of exposures are discussed by the boards of directors of the companies. The comprehensive responsibility for establishing the base for the risk management of the Group and for supervising its implementation lies with the Board of Directors and the senior management of the Group.
Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if a counterparty defaults on their obligations under the contract. This includes any cash amounts owed to the Group by those counterparties, less any amounts owed to the counterparty by the Group where a legal right of set-offs exists and also includes the fair values of contracts with individual counterparties which are included in the financial statements. The maximum exposure to credit risk at each reporting date is the carrying value of each class of financial assets mentioned in this note.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk as at year end was:
Based on the credit risk profiles of the Group’s counterparties relating to the Group’s cash and cash equivalents, short-term and long-term deposits and restricted cash, trade receivables and other assets, short-term and long-term derivative instruments, the Group has assessed these expected credit loss on the financial assets to be immaterial. The maximum exposure to credit risk for trade receivables as at year end, by geographic region was as follows:
F - 81 Note
Set forth below is an aging of the trade receivables:
No ECL has been recorded on any trade receivable amounts based on historical credit loss data and the Group’s view of economic conditions over the expected lives of the receivables.
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and adverse credit and market conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages its liquidity risk by means of holding cash balances, short-term deposits, other liquid financial assets and credit lines. Set forth below are the anticipated repayment dates of the financial liabilities, including an estimate of the interest payments. This disclosure does not include amounts regarding which there are offset agreements:
Note
D. Market risks Market risk is the risk that changes in market prices, such as foreign exchange rates, the CPI, interest rates and prices of capital products and instruments will affect the fair value of the future cash flows of a financial instrument. The Group buys and sells derivatives in the ordinary course of business, and also incurs financial liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Boards of Directors of the companies. For the most part, the Group companies enter into hedging transactions for purposes of avoiding economic exposures that arise from their operating activities. Most of the transactions entered into do not meet the conditions for recognition as an accounting hedge and, therefore, differences in their fair values are recorded on the statement of profit and loss. (1) CPI and foreign currency risk Currency risk The Group’s functional currency is the U.S. dollar. The exposures of the Group companies are measured with reference to the changes in the exchange rate of the dollar vis-à-vis the other currencies in which it transacts business. The Group is exposed to currency risk on sales, purchases, assets and liabilities that are denominated in a currency other than the respective functional currencies of the Group entities. The primary exposure is to the Shekel (NIS). The Group uses options and forward exchange contracts on exchange rates for purposes of hedging short-term currency risks, usually up to one year, in order to reduce the risk with respect to the final cash flows in dollars deriving from the existing assets and liabilities and sales and purchases of goods and services within the framework of firm or anticipated commitments, including in relation to future operating expenses. The Group is exposed to currency risk in relation to loans it has taken out and debentures it has issued in currencies other than the dollar. The principal amounts of these bank loans and debentures have been hedged by swap transactions the repayment date of which corresponds with the payment date of the loans and debentures. F - 83 Note The Group’s exposure to foreign currency risk in respect of non‑hedging derivative financial instruments is as follows:
The Group’s exposure to foreign currency risk in respect of non‑hedging derivative financial instruments is as follows:
Inflation risk The Group has CPI-linked loans. The Group is exposed to payments of higher interest and principal as the result of an increase in the CPI. It is noted that part of the Group’s anticipated revenues will be linked to the CPI. The Group does not hedge this exposure beyond the expected hedge included in its revenues. F - 84 Note 28 – Financial Instruments (Cont’d)
The Group’s exposure to index risk with respect to derivative instruments used for hedging purposes is shown below:
For additional details, please refer to Note F - 85 Note
The Group’s exposure to CPI and foreign currency risk, based on nominal amounts, is as follows:
F - 86 Note
A strengthening of the dollar exchange rate by 5%–10% against the following currencies and change of the CPI in rate of 1%–2% would have increased (decreased) the net income or net loss and the equity by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
The Group is exposed to changes in the interest rates with respect to loans bearing interest at variable rates, as well as in relation to swap transactions of liabilities in foreign currency for dollar liabilities bearing a variable interest rate. The Group has not set a policy limiting the exposure and it hedges this exposure based on forecasts of future interest rates. The Group enters into transactions mainly to reduce the exposure to cash flow risk in respect of interest rates. The transactions include interest rate swaps and “collars”. In addition, options are acquired and written for hedging the interest rate at different rates. F - 87 Note 28 – Financial Instruments (Cont’d) Type of interest Set forth below is detail of the type of interest borne by the Group’s interest-bearing financial instruments:
The Group’s assets and liabilities bearing fixed interest are not measured at fair value through the statement of profit and loss and the Group does not designate derivatives interest rate swaps as hedging instruments under a fair value hedge accounting model. Therefore, a change in the interest rates as at the date of the report would not be expected to affect the income or loss with respect to changes in the value of fixed – interest assets and liabilities. A change of 100 basis points in interest rate at reporting date would have increased/(decreased) profit and loss before tax by the amounts below. This analysis assumes that all variables, in particular foreign currency rates, remain constant.
A change of 0.5%–1.5% in the LIBOR interest rate at reporting date would have increased/(decreased) the net income or net loss and the equity by the amounts below. This analysis assumes that all variables, in particular foreign currency rates, remain constant.
The Group’s exposure to LIBOR risk for derivative financial instruments used for hedging is as follows:
The Group’s financial instruments include mainly non-derivative assets, such as: cash and cash equivalents, investments, deposits and short-term loans, receivables and debit balances, investments and long-term receivables; non-derivative liabilities: such as: short-term credit, payables and credit balances, long-term loans, finance leases and other liabilities; as well as derivative financial instruments. In addition, fair value disclosure of lease liabilities is not required. Due to their nature, the fair value of the financial instruments included in the Group’s working capital is generally identical or approximates the book value. The following table shows in detail the carrying amount and the fair value of financial instrument groups presented in the financial statements not in accordance with their fair value. F - 88 Note 28 – Financial Instruments (Cont’d)
The fair value of long-term loans from banks and others (excluding interest) is classified as level 2, and measured using the technique of discounting the future cash flows with respect to the principal component and the discounted interest using the market interest rate on the measurement date. The following table presents an analysis of the financial instruments measured at fair value, using an evaluation method. The various levels were defined as follows: – Level 1: Quoted prices (not adjusted) in an active market for identical instruments. – Level 2: Observed data, direct or indirect, not included in Level 1 above. – Level 3: Data not based on observed market data. Derivative instruments are measured at fair value using a Level 2 valuation method – observable data, directly or indirectly, which are not included in quoted prices in an active market for identical instruments. See Note Level 3 financial instrument measured at fair value
(3) Data and measurement of the fair value of financial instruments at Level 2 and 3 Level 2 The fair value of forward contracts on foreign currency is determined using trading programs that are based on market prices. The market price is determined based on a weighting of the exchange rate and the appropriate interest coefficient for the period of the transaction along with an index of the relevant currencies. The fair value of contracts for exchange (SWAP) of interest rates and fuel prices is determined using trading programs which incorporate market prices, the remaining term of the contract and the credit risks of the parties to the contract. The fair value of currency and interest exchange (SWAP) transactions is valued using discounted future cash flows at the market interest rate for the remaining term. The fair value of transactions used to hedge inflation is valued using discounted future cash flows which incorporate the forward CPI curve, and market interest rates for the remaining term. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The fair value of marketable securities held for trade is determined using the ‘Discounts for Lack of Marketability’ (“DLOM”) valuation method, which is a method used to calculate the value of restricted securities. The method purports that the only difference between a company’s common stock and its restricted securities is the lack of marketability of the restricted securities which is derived from the price difference between both prices. F - 89 Note 28 – Financial Instruments (Cont’d) Level 3 As at December 31, 2020, the fair value of the long-term investment (Qoros) described in Note 9.3, was based on the market comparison technique using the following variables:
The following table shows the valuation techniques used in measuring Level 3 fair values as at December 31,
Note
In March 2022, majority of OPC shares that were previously pledged as part of the Inkia sale described in Note 25 were released. Refer to Note 17.A.i for further details.
Kenon will seek shareholder approval for a capital reduction at its forthcoming annual general meeting to return share capital amounting to $10.25 per share ($552 million in total) to Kenon’s shareholders, subject to and contingent upon the approval of the High Court of the Republic of Singapore.
In March 2022, ZIM’s board of directors approved a cash
SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
Date: ITEM 19. Exhibits Index to Exhibits 187
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