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 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of registrant as specified in its charter)
Singapore (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.) |
Scott V. Simpson
James A. McDonald
Skadden, Arps, Slate, Meagher and Flom (UK) LLP
40 Bank Street
London E14 5DS
Telephone: +44 20 7519 7000
Facsimile: +44 20 7519 7070
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
Ordinary Shares, no par value | KEN | The New York Stock Exchange |
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Emerging growth company ☐ |
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
1 | ||
A. Directors and Senior Management | 1 | |
B. Advisers | 1 | |
C. Auditors | 1 | |
1 | ||
1 | ||
A. Reserved | 1 | |
B. Capitalization and Indebtedness | 1 | |
C. Reasons for the Offer and Use of Proceeds | 1 | |
D. Risk Factors | 1 | |
54 | ||
A. History and Development of the Company | 54 | |
B. Business Overview | 55 | |
C. Organizational Structure | 124 | |
D. Property, Plants and Equipment | 125 | |
125 | ||
125 | ||
A. Operating Results | 133 | |
B. Liquidity and Capital Resources | 139 | |
C. Research and Development, Patents and Licenses, Etc. | 149 | |
D. Trend Information | 149 | |
E. Critical Accounting Policies and Significant Estimates | 150 | |
151 | ||
A. Directors and Senior Management | 151 | |
B. Compensation | 153 | |
C. Board Practices | 153 | |
D. Employees | 156 | |
E. Share Ownership | 156 | |
157 | ||
A. Major Shareholders | 157 | |
B. Related Party Transactions | 158 | |
C. Interests of Experts and Counsel | 158 | |
158 | ||
A. Consolidated Statements and Other Financial Information | 158 | |
B. Significant Changes | 158 | |
159 | ||
A. Offer and Listing Details | 159 | |
B. Plan of Distribution | 159 | |
C. Markets | 159 | |
D. Selling Shareholders | 159 | |
E. Dilution | 159 | |
F. Expenses of the Issue | 159 | |
159 | ||
A. Share Capital | 159 | |
B. Constitution | 159 | |
C. Material Contracts | 172 | |
D. Exchange Controls | 172 | |
E. Taxation | 172 | |
F. Dividends and Paying Agents | 179 | |
G. Statement by Experts | 179 | |
H. Documents on Display | 179 | |
I. Subsidiary Information | 180 | |
180 | ||
180 | ||
A. Debt Securities | 180 | |
B. Warrants and Rights | 180 | |
C. Other Securities | 181 | |
D. American Depositary Shares | 181 |
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184 |
• | OPC Energy Ltd. (“OPC”), an owner, developer and operator of power generation facilities in the Israeli and United States power markets, in which Kenon has an approximately 58.8% interest; |
• | Qoros Automotive Co., Ltd. (“Qoros”), a Chinese automotive company based in China, in which Kenon, through its 100%-owned subsidiary Quantum (as defined below), has a 12% interest; |
• | ZIM Integrated Shipping Services, Ltd. (“ZIM”), an Israeli global container shipping company, in which Kenon has an approximately 20.7% interest; and |
• | “CPV” means the CPV Group (i.e. CPV Power Holdings LP (a limited partnership established under Delaware law), Competitive Power Ventures Inc. (a company incorporated under Delaware law) and CPV Renewable Energy Company Inc.), a business engaged in the development, construction and management of power plants running conventional energy (powered by natural gas) and renewable energy in the United States, which was acquired from Global Infrastructure Management, LLC in January 2021 by CPV Group LP, an entity in which OPC indirectly holds a 70% interest. |
• | “Ansonia” means Ansonia Holdings Singapore B.V., a company organized under the laws of Singapore, which owns approximately 60% of the outstanding shares of Kenon; |
• | “Chery” means Chery Automobile Co. Ltd., a supplier to and shareholder of Qoros; |
• | “IC” means Israel Corporation Ltd., an Israeli corporation traded on the Tel Aviv Stock Exchange, or the “TASE,” and Kenon’s former parent company; |
• | “IC Green” means IC Green Energy Ltd., an Israeli corporation and a wholly-owned subsidiary of Kenon; |
• | “IC Power” means IC Power Ltd., formerly IC Power Pte. Ltd, a Singaporean company and a wholly-owned subsidiary of Kenon; |
• | “Inkia Business” means Inkia’s Latin American and Caribbean power generation and distribution businesses, which were sold in December 2017; |
• | “Kallpa” means Kallpa Generación SA, a company within the Inkia Business. Kallpa was owned by Inkia until December 2017; and |
• | “Majority Shareholder” means the China-based investor related to Shenzhen Baoneng Investment Group Co., Ltd. (“Baoneng Group”) that holds 63% of Qoros; |
• | “Availability factor” refers to the number of hours that a generation facility is available to produce electricity divided by the total number of hours in a year; |
• | “COD” means the commercial operation date of a development project; |
• | “distribution” refers to the transfer of electricity from the transmission lines at grid supply points and its delivery to consumers at lower voltages through a distribution system; |
• | “Energy Center” means OPC Hadera’s boilers and a steam turbine. The Energy Center currently serves as back-up for the OPC-Hadera power plant’s supply for steam and its turbine is not currently operating and is not expected to operate with generation of more than approximately 16MW; |
• | “EPC” means engineering, procurement and construction; |
• | “firm capacity” means the amount of energy available for production that, pursuant to applicable regulations, must be guaranteed to be available at a given time for injection to a certain power grid; |
• | “GWh” means gigawatt hours (one GWh is equal to 1,000 MWh); |
• | “IEC” means Israel Electric Corporation, a government-owned entity, which generates and supplies the majority of electricity in Israel, transmits and distributes all of the electricity in Israel, acts as the system operator of Israel’s electricity system, determines the dispatch order of generation units, grants interconnection surveys, and sets spot prices, among other roles; |
• | “Infinya” means Infinya Ltd. (formerly Hadera Paper Ltd.), an Israeli corporation, which is owned by OPC; |
• | “installed capacity” means the intended full-load sustained output of energy that a generation unit is designed to produce (also referred to as name-plate capacity); |
• | “IPP” means independent power producer, excluding co-generators and generators for self-consumption; |
• | “kWh” means kilowatts per hour; |
• | “MW” means megawatts (one MW is equal to 1,000 kilowatts or kW); |
• | “MWh” means megawatt per hour; |
• | “OEM” means original equipment manufacturer; |
• | “OPC’s capacity” or “OPC’s installed capacity” means, with respect to each asset, 100% of the capacity of such asset, regardless of OPC’s ownership interest in the entity that owns such asset; |
• | “OPC-Hadera” is an Israeli corporation, in which OPC has a 100% interest; |
• | “OPC-Rotem” means O.P.C. Rotem Ltd., an Israeli corporation, in which OPC has an 80% interest; |
• | “our businesses” shall refer to each of our subsidiaries and associated company, collectively, as the context may require; |
• | “PPA” means power purchase agreement; |
• | “Primus” refers to Primus Green Energy, Inc. In 2020, Primus changed its name to ICG Energy, Inc and was transferred to OPC in 2021; |
• | “Quantum” means Quantum (2007) LLC, a Delaware limited liability company, is a wholly-owned subsidiary of Kenon and which is the direct owner of our interest in Qoros; |
• | “Samay I” means Samay I S.A., a Peruvian corporation; |
• | “Sorek” means OPC Sorek 2 Ltd.; |
• | “spin-off” shall refer to (i) IC’s January 7, 2015 contribution to Kenon of its interests in IC Power, Qoros, ZIM and other entities, and (ii) IC’s January 9, 2015 distribution of Kenon’s issued and outstanding ordinary shares, via a dividend-in-kind, to IC’s shareholders; |
• | “Tower” means Tower Semiconductor Ltd., an Israeli specialty foundry semiconductor manufacturer, listed on the NASDAQ stock exchange, or “NASDAQ,” and the TASE, in which Kenon used to hold an interest until June 30, 2015; |
• | “transmission” refers to the bulk transfer of electricity from generating facilities to the distribution system at load center station in which the electricity is stabilized by means of the transmission grid; and |
• | “Tzomet” means Tzomet Energy Ltd., an Israeli corporation in which OPC has a 100% interest, following the acquisition of the remaining 5% interest in February 2020; |
• | “cooperation agreements” means one or more vessel sharing arrangements, swap agreements and slot sharing arrangements; |
• | “strategic alliance” means a more extensive type of cooperation arrangement and is longer-term than a strategic cooperation. It involves cooperation arrangements and usually includes all of ZIM’s East/West routes, such as Asia-Europe, Asia-Med, Cross Atlantic and Trans Pacific. The duration of a strategic alliance will typically be long-term, as long as 10 years; and |
• | “strategic cooperation” means a more extensive type of cooperation arrangement, generally being longer term and involving more trade routes. It involves some joint planning mechanism, but joint planning is less extensive as compared to a strategic alliance. A strategic cooperation can take the form of one or a combination of cooperation arrangements. |
• | our goals and strategies; |
• | the strategies, business plans and funding requirements of our businesses; |
• | the potential spin-off, listing, offering, distribution or monetization of our businesses; |
• | expected trends in the industries and markets in which each of our businesses operate; |
• | our expected tax status and treatment and expected status and treatment under relevant regulations; |
• | statements relating to litigation and/or regulatory proceedings; |
• | critical accounting estimates and the expected effect of new accounting standards on Kenon; |
• | the assumptions used in impairment analysis conducted by Kenon and its businesses; |
• | the expected effects of COVID-19, including the effect of any current or future force majeure notices, on our businesses; |
• | with respect to OPC: |
• | the expected cost and timing of commencement and completion of development and construction of CPV’s construction and development projects and the Tzomet project, as well as the anticipated installed capacities and expected performance (e.g., efficiency) of such projects, including the license and approvals for the development of and financing for projects; |
• | expected macroeconomic trends in Israel and the US, including the expected growth in energy demand; |
• | potential expansions (including new projects or existing projects); |
• | its gas supply agreements; |
• | its strategy; |
• | its dividend policy; |
• | expected trends in energy consumption; |
• | regulatory trends; |
• | its anticipated capital expenditures, and the expected sources of funding for capital expenditures; |
• | projections for growth and expected trends in the electricity market in Israel and the US; and |
• | the price and volume of gas available to OPC in Israel and the US; |
• | with respect to Qoros: |
• | statements relating to the agreement to sell Kenon’s remaining interest in Qoros to the Majority Shareholder; |
• | statements with respect to Qoros’ loan agreements and discussions with its creditors; |
• | statements with respect to pledges and guarantees of Qoros’ debt; |
• | with respect to ZIM: |
• | ZIM’s expectation of modifications with respect to its and other shipping companies’ operating fleet and lines, including the utilization of larger vessels within certain trade zones and modifications made in light of environmental regulations; |
• | statements regarding the 2M Alliance and expected benefits of the alliance; |
• | statements with respect to ZIM’s dividends and dividend policy; and |
• | trends related to market conditions and the global container shipping industry, including with respect to fluctuations in container supply, industry consolidation, demand, bunker prices and charter/freights rates, including as a result of the COVID-19 pandemic. |
ITEM 1. | Identity of Directors, Senior Management and Advisers |
A. | Directors and Senior Management |
B. | Advisers |
C. | Auditors |
ITEM 2. | Offer Statistics and Expected Timetable |
ITEM 3. | Key Information |
A. | Reserved |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | OPC had $1,215 million of outstanding indebtedness, |
• | ZIM had outstanding indebtedness (mostly lease liabilities) of approximately $3.3 billion, and |
• | Qoros had external loans and borrowings of RMB 2,734 million (approximately $429 million) and loans and other advances from parties related to the Majority Shareholder of RMB 5,978 million (approximately $938 million). |
• | minimum equity; |
• | debt service coverage ratio; |
• | limits on the incurrence of liens or the pledging of certain assets; |
• | limits on the incurrence of subsidiary debt; |
• | limits on the ability to enter into transactions with affiliates, including us; |
• | limits on the ability to pay dividends to shareholders, including us; |
• | limits on the ability to sell assets; and |
• | other non-financial covenants and limitations and various reporting obligations. |
• | Transaction Risk—exists where sales or purchases are denominated in overseas currencies and the exchange rate changes after our entry into a purchase or sale commitment but prior to the completion of the underlying transaction itself; |
• | Translation Risk—exists where the currency in which the results of a business are reported differs from the underlying currency in which the business’ operations are transacted; |
• | Economic Risk—exists where the manufacturing cost base of a business is denominated in a currency different from the currency of the market into which the business’ products are sold; and |
• | Reinvestment Risk—exists where our ability to reinvest earnings from operations in one country to fund the capital needs of operations in other countries becomes limited. |
• | heightened economic volatility; |
• | difficulty in enforcing agreements, collecting receivables and protecting assets; |
• | the possibility of encountering unfavorable circumstances from host country laws or regulations; |
• | fluctuations in revenues, operating margins and/or other financial measures due to currency exchange rate fluctuations and restrictions on currency and earnings repatriation; |
• | unfavorable changes in regulated electricity tariffs; |
• | trade protection measures, import or export restrictions, licensing requirements and local fire and security codes and standards; |
• | increased costs and risks of developing, staffing and simultaneously managing a number of operations across a number of countries as a result of language and cultural differences; |
• | issues related to occupational safety, work hazard, and adherence to local labor laws and regulations; |
• | adverse tax developments; |
• | geopolitical events such as military actions; |
• | changes in the general political, social and/or economic conditions in the countries where we operate; and |
• | the presence of corruption in certain countries. |
• | minimum liquidity, loan life coverage ratios and debt service coverage ratios covenants; and |
• | other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledges investments and incurrence of debt, as well as reporting obligations. |
• | delays in project completion, |
• | costs exceeding budget, including increases in equipment and material prices, transport costs, |
• | risks associated with the construction contractor, |
• | supply and operation of key equipment, |
• | performance of works at the required specifications, |
• | receipt of services required from the IEC to establish the station and connect it to the grid (which may be affected by sanctions and IEC strikes), |
• | impact on PPAs from any delays in completing new projects, |
• | COVID-related delays, |
• | applicable regulations, and |
• | obtaining any required approvals and permits for the development and operation of the station, including obtaining permits required in connection with the environment, including emission permits, and compliance with their terms. See “Item 4.B Business Overview—Our Businesses—OPC—OPC’s Description of Operations—Potential Expansions and Projects in Various Stages of Development.” |
• | difficulties in the integration of operations and systems; |
• | conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the OPC and CPV; |
• | difficulties in managing the expanded operations of a larger and more complex company; and |
• | coordinating across a new jurisdiction for OPC. |
• | global and regional economic and geopolitical trends, armed conflicts, terrorist activities, embargoes, strikes and trade wars; |
• | the global supply of and demand for commodities and industrial products globally and in certain key markets, such as China; |
• | developments in international trade, including the imposition of tariffs, the modification of trade agreements between states and other trade protectionism (for example, in the U.S.-China trade); |
• | currency exchange rates; |
• | prices of energy resources; |
• | environmental and other regulatory developments; |
• | changes in seaborne and other transportation patterns; |
• | changes in the shipping industry, including mergers and acquisitions, bankruptcies, restructurings and alliances; |
• | changes in the infrastructure and capabilities of ports and terminals; |
• | weather conditions; |
• | outbreaks of diseases, including the COVID-19 pandemic; and |
• | development of digital platforms to manage operations and customer relations, including billing and services. |
ITEM 4. | Information on the Company |
A. | History and Development of the Company |
• | an approximately 58.8% interest in OPC, an owner, developer and operator of power generation facilities in the Israeli and US power market; |
• | an approximately 20.7% interest in ZIM, a large provider of global container shipping services; and |
• | a 12% interest in Qoros, a China-based automotive 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.” |
• | In 2019, OPC issued a total of 11,028,240 new ordinary shares (representing approximately 8% of OPC’s issued and outstanding share capital at the time on a fully diluted basis) in two share issuances, for total cash consideration net of issuance expenses of approximately NIS 272 million (approximately $76 million). As a result of these share issuances, Kenon’s interest in OPC decreased from 75.8% to 69.8%. |
• | In October 2020, OPC issued 11,713,521 new ordinary shares (representing approximately 7.5% of OPC’s issued and outstanding share capital at the time on a fully diluted basis) for total (gross) consideration of NIS 350 million (approximately $103 million) to two institutional investors in a private placement in connection with the acquisition of CPV. |
• | Also in October 2020, OPC issued 23,022,100 new ordinary shares (representing approximately 14.8% of OPC’s issued and outstanding share capital at the time on a fully diluted basis) for a total (gross) consideration of NIS 737 million (approximately $217 million) in a public offering. Kenon was allocated 10,700,200 shares in the public offering for a total purchase price of approximately $101 million. |
• | In January 2021, OPC issued 10,300,000 ordinary shares (representing approximately 5.5% of OPC’s issued and outstanding share capital at the time on a fully diluted basis) in a private placement for a total (gross) consideration of NIS 350 million (approximately $107 million). |
• | 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. |
• | In April 2020, OPC issued debentures (Series B) at a par value of NIS 400 million (approximately $113 million) that are linked to the CPI and bear interest at the annual rate of 2.75%. The debentures are to be repaid in semi‑annual payments (on March 31, and September 30 of every calendar year), commencing from March 31, 2021 and up to September 30, 2028 (the first payment of interest falls on September 30, 2020). |
• | In September 2021, OPC issued debentures (Series C) at a par value of NIS 851 million (approximately $266 million), bearing annual interest of 2.5%. The Series C bonds are repayable over 12 semi-annual payments (which repayment amounts vary, and range from 5% up to 16% of the total issued amount) commencing in February 2024 with the final payment in August 2030. OPC used the proceeds from the Series C bonds for the early repayment of project financing debt of OPC-Rotem. |
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). |
Plant | Location | CPV Ownership Interest | Field/ technology | Installed Capacity (MW) | Year of commercial operation | |||||
CPV Fairview | Pennsylvania | 25% | Conventional natural gas-fired, combined cycle | 1,050 | 2019 | |||||
CPV Towantic | Connecticut | 26% | Conventional natural gas-fired, dual fuel / two fuels, combined cycle | 805 | 2018 | |||||
CPV Maryland | Maryland | 25% | Conventional natural gas-fired, combined cycle | 745 | 2017 | |||||
CPV Shore | New Jersey | 37.53% | Conventional natural gas-fired, combined cycle | 725 | 2016 | |||||
CPV Valley | New York | 50% | Conventional natural gas-fired, dual-fuel, combined cycle | 720 | 2018 | |||||
CPV Keenan II | 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 | % |
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 | % |
Estimates megawatts | |
New installed (gas fired) capacity with gas by 2030 | 1,400-4,000 |
Sale of IEC sites that have not yet been sold in accordance with sector reform (Eshkol and Redding) | 2,111 |
Total additional potential private capacity in natural gas by 2030 | 3,511-6,111 |
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 |
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. |
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 signed and completed the acquisition of 30% of the rights in Keenan II from its tax equity partner. |
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 | % |
(1) | The net generation is the gross generation during the year less the electricity consumed for the self-use of the power plants. The actual generation percentage is the electricity produced by the power plants relative to the maximum generation capacity during the year and is affected by ordinary course maintenance activities at the power plants which are scheduled at fixed intervals. Such maintenance activities typically last for approximately 30 – 40 days and reduce the power plants’ generation and availability until such maintenance has been completed. |
(2) | The actual generation percentage is the electricity produced by the power plants relative to the maximum amount of generation capacity during the year and is affected by ordinary course maintenance activities at the power plants which are scheduled at fixed intervals. Such maintenance activities typically last for approximately 30–40 days and reduce the power plants’ generation and availability until such maintenance has been completed. |
(3) | Fairview’s favorable generation and availability compared to 2020 was attributed to near perfect availability in the second half of 2021 and, after a risk review, deferral of the budgeted fall seasonal readiness outage. Maryland’s unfavorable availability compared to 2020 was due primarily to unplanned outages. Shore’s unfavorable generation compared to 2020 was due primarily to increased cycling driven by market conditions. Valley’s unfavorable generation compared to 2020 was primarily driven by emergent electric generator repairs identified during the spring 2021 scheduled outage, emergent remedial bearing repairs on the steam turbine bearing in the fall of 2021. Keenan experienced curtailments by the PPA offtaker in 2021, in combination with blade icing events during winter storm Uri, which reduced both generation and availability. |
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 |
(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 |
(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 construction cost ($ millions) | ||||||||||
Rogue’s Wind | Pennsylvania | Approx. 114 MW | 100%1 | 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 | Approximately $257 million |
1. | 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. |
2. | The expected date of operation for Rogue’s Wind may be delayed due to delays with PJM’s interconnection process. Delays may affect Rogue Wind’s ability to meet certain schedule obligations with counterparties and may result in liquidated damages payments. |
• | Gas Supply: a Base Contract for purchase and transmission of natural gas which provides for supply of natural gas at a quantity of up to 180,000 MMBtu per day at a price that is linked to market prices as provided in the agreement. Pursuant to the agreement, the gas supplier is responsible for transport of natural gas to the designated supply point and is permitted to transport ethane in lieu of natural gas up to a rate of 25% of the agreed supply quantity. The agreement is valid up to May 31, 2025. |
• | Maintenance: a services agreement (CSA) with its original equipment manufacturer, for the supply of spare parts and maintenance services for the combustion turbines. The CSA agreement went into effect on December 27, 2016 (the “Effective Date”) and ends on the earlier of: (i) 25 years from the Effective Date; or (ii) when specific milestones are reached on the basis of usage and wear and tear. CPV Fairview pays a fixed and a variable amount commencing from the date of the commercial operation. CPV Fairview 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 period of the agreement is three years from the completion date of construction of the facility. The agreement includes an extension/renewal clause for a period of one year, unless one of the parties gives notice of termination of the agreement in accordance with its provisions. CPV Fairview has paid the counterparty an average of approximately $5.5 million each year over the past two years. |
• | Hedging: a hedge agreement on electricity margins of the Revenue Put Option (“RPO”). The RPO is intended to provide CPV a minimum margin for the term of the agreement. Calculation of the amount for the minimum margin is determined for each contractual year, with the actual netting dates taking place every three months in respect of the respective partial amount and an annual adjustment is made to calculate the total annual margin for the year. The RPO has an annual exercise price that covers an exercise period of a fiscal year. To calculate the gross margin pursuant to the agreement, specific parameters are taken into account, such as utilization, heat rate, the expected generation levels, forward prices for electricity and gas, gas transmission costs and other specific project costs. The RPO ends on May 31, 2025. |
• | 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 Supply & Transmission: |
• | 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 gas, pursuant to which up to 115,000 MMBtu per day will be supplied at a price linked to market prices. The supply period ends on March 31, 2023. |
• | 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, pursuant to which up to 132,000 MMBtu per day will be supplied at a price linked to market prices. The agreement ends on October 31, 2022. |
• | Gas Transmission: a natural gas transmission agreement for guaranteed capacity of up to 132,000 MMBtu/d. The agreement term is 20 years from May 31, 2016, with an option for Maryland to extend it by an additional 5 years. |
• | Maintenance: a services agreement with its original equipment manufacturer. CPV Maryland may acquire additional services under the agreement, as needed. The payments under the agreement consist of minimum annual fixed payments, variable quarterly payments based on operating parameters of the defined equipment, and fixed quarterly management fees. Aside from the minimum annual payment, the remaining payments increase by 2.5% every year. The agreement ends on the earlier of: (i) the date on which the equipment reaches a defined milestone; or (ii) 25 years from the signing date, on August 8, 2014. CPV Maryland has paid the counterparty an average of approximately $6 million each year over the past two years. |
• | Operation: an agreement for operation and maintenance of the facility. The consideration includes fixed annual management fees, a performance-based bonus, and reimbursement of employment expenses, payroll costs and taxes, subcontractor costs and other costs. In March 2021, the agreement was extended to continue until July 23, 2028 and may be renewed for one-year periods, unless one of the parties gives a termination notice in accordance with the notice obligations provided in the agreement. Maryland has paid the counterparty an average of approximately $4 million each year over the past two years. |
• | Hedging: a hedge agreement on electricity margins of the RPO type. The RPO is intended to provide CPV a minimum margin for the duration of the agreement term. Calculation of the amount for the minimum margin is determined for each contractual year, with the actual netting dates taking place every three months with respect to the respective partial amount and an annual adjustment is made to calculate the total annual margin, which includes each year for the RPO an annual exercise price covering the exercise period of a fiscal year. To calculate the minimum gross margin, specific parameters are taken into account, such as utilization, heat rate, the expected generation levels, forward prices for electricity and gas, gas transport costs and other specific project costs. The RPO term ended on February 28, 2022. |
• | Gas Supply: an agreement for supply of natural gas. Pursuant to the agreement, the gas supplier supplies 120,000 MMBtu of gas per day at a price linked to the market price. The agreement term is until October 31, 2022 and is renewable for one-year periods thereafter. |
• | Gas Transmission: two agreements with interstate pipeline companies for the use of 2 different pipeline systems, one of which was already operational and the second of which became operational in late 2021. Pursuant to the agreements, natural gas connection and transmission services are provided to CPV Shore by means of a pipeline the start of which is an existing interstate pipe and allows for gas to reach the facility’s connection point. CPV Shore paid a down payment to one of the pipeline companies for said services. The period of the gas transmission agreements are 15 years (until April 2030) for one interconnection, with an option to extend the agreement twice by ten years and 20 years (until September 2041) for the other interconnection, with an option to extend annually. |
• | Maintenance: an amended services agreement with its original equipment manufacturer in December, 2017. Shore may acquire additional services under the agreement, as needed. The consideration consists of a fixed minimum annual payment, variable quarterly payments based on operating parameters of the defined equipment, and quarterly management fees. In addition to the minimum annual payment, the remaining payments increase by 2.5% every year. The agreement ends on the earlier of: (i) the date on which the equipment reaches a defined milestone; or (ii) 20 years from the signing date. Shore has paid the counterparty an average of approximately $5 million each year over the past two years. |
• | Operation: an agreement for operation of the facility. The consideration includes fixed annual management fees, a performance-based bonus and reimbursement of employment expenses, including, payroll and taxes, subcontractor costs and other costs as provided in the agreement. The agreement is valid until July 2023 and 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 Shore has paid the counterparty an average of approximately $4 million each year over the past two years. |
• | Hedging: a Heat Rate Call Option agreement (HRCO). The agreement covers 100% of the facility’s output and is consistent with the customary terms and conditions for agreements of this type. The agreement term ended on April 30, 2021. |
• | Gas Supply: an agreement for the supply of natural gas of up to 127,200 MMBtu of natural gas per day at a price linked to the market price. Pursuant to the agreement, the supplier is responsible for transmission of natural gas to the designated supply point. In 2021, the agreement was extended until October 31, 2025. |
• | Gas Transmission: an agreement with an interstate pipeline company for the licensing, construction, operating and maintenance of a pipeline and measurement and regulating facilities, from the interstate pipeline system for transmission of natural gas up to the facility. The supplier provides 127,200 MMBtu per day of firm natural gas delivery at an agreed price during a period ending March 31, 2033, with an option to extend for up to three periods of five additional years. Valley signed an additional agreement for provision of transmission services (firm) of 35,000 MMBtu per day, for a period of 15 years ending on March 31, 2033, which can deliver gas from a different location into the firm transportation agreement referenced above. |
• | Maintenance: an agreement with its original equipment manufacturer, for maintenance services for the fire turbines. The consideration includes fixed and variable amounts from the initial activation date of the turbines. The agreement period is the earlier of: (i) 132,800 equivalent base load hours; or (ii) 29 years from June 9, 2015. CPV Valley has paid the counterparty an average of approximately $5 million each year over the past two years. |
• | 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 set out in the agreement. The period of the agreement is five years from the completion date of construction of the facility, and the agreement may be renewed for an additional three years. Valley has paid the counterparty an average of approximately $5 million each year over the past two years. |
• | Hedging: a hedge agreement on electricity margins of the RPO type. The RPO is intended to provide CPV a minimum margin for the duration of the agreement term. Calculation of the amount for the minimum margin is determined for each contractual year, with the actual netting dates taking place every three months with respect to the respective partial amount and an annual adjustment is made to calculate the total annual margin, which includes each year for the RPO an annual exercise price covering the exercise period or a fiscal year. To calculate the minimum gross margin, specific parameters are taken into account, such as utilization, heat rate, the expected generation levels, forward prices for electricity and gas, gas transport costs and other specific project costs. The RPO is up to May 31, 2023. |
• | 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 acquirer is to receive all of the electricity generated by the wind farm, credits, certificates, similar rights or other environmental allotments. The consideration includes a fixed payment. The period of the agreement is 20 years, ending in 2030. The acquirer is permitted, under certain circumstances, to extend the agreement for another five-year period, and to acquire an option to purchase the project at the end of the agreement period at its fair market value, as defined in the agreement and pursuant to the terms and conditions stipulated therein. |
• | Operation: a master services agreement and an operations agreement with its original equipment manufacturer for the operation, maintenance and repair of the facility. The consideration includes fixed annual fees, performance-based bonus and reimbursement of expenses. CPV Keenan II has paid the counterparty an average of approximately $6 million each year over the past 2 years. |
• | Gas Supply: two agreements for the supply of natural gas. The agreements supply 139,500 MMBtu in natural gas per day to the facility, from the operation date of the facility for a period of five years, and a reduced quantity of 25,000 MMBtu per day from the fifth year of operation of the facility and up to the tenth year. The price of natural gas delivered under these agreements is linked to the day-ahead electricity prices in the PJM market. The agreements include an obligation to purchase such fixed volume of natural gas, with a right to resell surplus gas. |
• | Gas Interconnection: two connection agreements for transmission of gas, where each of them is sufficient for the full demand of the facility. |
• | One agreement is an interconnection agreement with an interstate pipeline company for transmission of natural gas. The agreement sets forth the responsibility of the parties in connection with the design, construction, ownership, operation and management of a pipeline as well as the connection and pressure equipment. Based on the agreement, CPV Three Rivers will bear the costs of all the facilities. |
• | The second agreement is an additional interconnection agreement with an interstate pipeline company for transmission of natural gas. As part of the agreement, the counterparty is responsible for the design and construction to connect to the existing pipeline. The counterparty to the agreement will remain the owner of these facilities and will operate them, and CPV Three Rivers will bear the development and construction costs. |
• | 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 term is 11 years from the signing date of the agreement on November 1, 2020; the counterparty may extend the agreement for an additional year by means of prior notice of 12 months. |
• | Equipment: an agreement for acquisition of equipment for the purchase of power generation equipment and ancillary services, with an international company specializing in design and manufacture of equipment, including that required for an electricity generation facility. The equipment includes two units, with each consisting of the following main components: a gas or combustion turbine; a steam generator for heat recovery; a steam turbine; a generator; a continuous control system for emissions and additional related equipment. The equipment supplier is responsible for supply and installation in accordance with that stipulated in the agreement. In addition, the supplier is to provide technical consulting services to CPV Three Rivers in order to support the installation process, commissioning, inspections and operation of the equipment. Pursuant to the terms and conditions of the agreement, CPV Three Rivers will pay the third party in installments based on reaching milestones. |
• | EPC: an EPC agreement with an international engineering, acquisition and construction contractor. Pursuant to the agreement, the contractor will design and construct the required components of the facility, to integrate all the equipment required for the power plant. |
• | Maintenance: a services agreement with its original equipment manufacturer, for maintenance services for the combustion turbines. The consideration includes a fixed and a variable payment as from the commercial operation commencement date. The agreement term is from August 21, 2020 until the earlier of: (i) 25 years from August 21, 2020; or (ii) when specific milestones are reached on the basis of use and wear and tear. |
• | 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 performance-based bonus, and reimbursement of employment expenses, payroll costs and taxes, subcontractor costs and other costs. The agreement period will commence during the construction period, and will continue for approximately 3 years from the construction completion date of the facility. |
• | 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 three years, commencing on May 11, 2021 and ending on December 31st following the third anniversary of the date that the service provider actually begins providing services and can be renewed for 2 one-year terms unless one of the parties provides notice on non-renewal in accordance with the agreement. The consideration to be paid by Maple Hill is a fixed fee paid in monthly installments paid over the term of the agreement. |
• | Transformer. an agreement for the purchase of a transformer with an international supplier. The consideration includes payment of a fixed price for the purchase of the transformer, supply, and installation. |
• | 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 provided collateral for its obligations under the agreement which include making certain payments to the counterparty if certain project milestones (including commencement of operations) are not completed pursuant to a specified schedule. |
• | Virtual PPA. an agreement with a third party for the sale of 48% of the total generated electricity, where the electricity price calculation is performed based on financial netting between the parties for 10 years from the commercial date of operation. In accordance with the agreement, a net calculation will be made of the difference between the variable price that Maple Hill receives from the system operator and which is published (the spot price) and the fixed price set with a third party. As a security for the payment and performance of its obligations (which includes achieving certain project milestones, including commencement of operation by a specific date), Maple Hill granted the third party a security interest in a bank deposit account. CPV provided collateral for its obligations under the agreement which include making certain payments to the counterparty if certain project milestones (including commencement of operations) are not completed pursuant to a specified schedule. The agreement includes an option to transition to a physical PPA with a fixed price on fulfillment of certain terms and conditions, which have yet to be met as of the report date. The agreement is subject to preconditions, which to the date of approval of the financial reports were not completed yet. |
• | 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 counterparty if certain project milestones (including commencement of operations) are not completed pursuant to a specified schedule. |
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 | 28.69 |
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) |
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 power plant (including emergency road) | Hadera | Rental | About 30 dunams (Power Plant and Energy Center) |
Real estate (including options for land) held by Hadera for Hadera 2 | |||
Hadera Expansion – Land near the area of the Hadera Power Plant | Hadera | Rental option through the end of 2022 | About 68 dunams |
Rotem 2’s land agreement | |||
Land near to space on which Rotem Power Plant was built | Mishor Rotem | Lease | About 55 dunams |
Land held by Tzomet (through Tzomet HLH General Partner Ltd. and Tzomet Netiv Limited Partnership) | |||
Land on which Tzomet is situated | Plugot Intersection | Tzomet Netiv Limited Partnership – (by force of a development agreement with Israel Lands Authority) – Lease | 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 date of right |
Shore | ||||
Land on which the CPV Shore power plant was constructed | Middlesex County, New Jersey | Ownership | About 111,290 square meters (28 acres) | N/A |
Maryland | ||||
Land on which the CPV Maryland power plant was constructed | Charles County, Maryland | Ownership / easements / licenses and permits / authority | About 308,290 square meters (76 acres) | N/A |
Valley | ||||
Land on which the CPV Valley power plant was constructed | Wawayanda, Orange County, New York | Substantive Ownership1 / easements or permits | About 121,406 square meters (30 acres) | N/A |
Towantic | ||||
Land on which the CPV Towantic power plant was constructed | New Haven County, Connecticut | Ownership / easements | About 107,242 square meters (26 acres) | N/A |
Fairview | ||||
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, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Number of employees by category of activity: | ||||||||||||
Headquarters | 34 | 66 | 56 | |||||||||
Plant operation, corporate management, finance, commercial and other | 86 | 50 | 40 | |||||||||
OPC Total (in Israel) | 120 | 116 | 96 |
• | An entity may not hold more than 20% of the total planned installed capacity on the date of sale of all the sites being sold. The generation capacity of an entity’s related parties with generation licenses will be counted towards such entity’s capacity for purposes of this 20% limitation. In addition, the EA published proposed regulations in respect of maximum holdings in generation licenses which are not identical to the Competition Authority principles. The Competition Authority has stated that the relevant limit is 20% of 10,500 MW (which is the anticipated capacity in the market held by private players by 2023, excluding capacity of IEC), while, the EA has proposed regulation whereby the relevant limit is 20% of 16,000 MW (including capacity of IEC). OPC may be subject to a more restrictive interpretation. The MW currently attributable to OPC, including Oil Refineries Ltd., or ORL, and Israel Chemicals Ltd. as parties with generation licenses that are related to OPC, is approximately 1,480 MW; and |
• | An entity holding a right to a fuel venture may not acquire any of the sites being sold. |
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). |
Year ended December 31, | ||||||||||||||
Geographic trade zone (percentage of total TEUs carried for the period) | Primary trade | 2021 | 2020 | 2019 | ||||||||||
Pacific | Transpacific | 39 | % | 40 | % | 36 | % | |||||||
Cross-Suez | Asia-Europe | 10 | % | 12 | % | 13 | % | |||||||
Atlantic-Europe | Atlantic | 18 | % | 21 | % | 21 | % | |||||||
Intra-Asia | Intra-Asia | 27 | % | 21 | % | 23 | % | |||||||
Latin America | Intra-America | 6 | % | 6 | % | 7 | % | |||||||
100 | % | 100 | % | 100 | % |
Type of Container | Type of Cargo | Quantity | TEUs | |||||||
Dry van containers | 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 cargo | 87,207 | 172,706 | |||||||
Other specialized containers | Heavy cargo and goods of excess height and/or width, such as machinery, vehicles and building | 48,832 | 58,751 | |||||||
Total | 2,059,467 | 3,481,415 |
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 106 vessels accounted as right-of-use assets under the accounting guidance of IFRS 16. |
(2) | Includes 96 vessels accounted as right-of-use assets under the accounting guidance of IFRS 16 and 4 vessels accounted under sale and leaseback refinancing agreements. |
(3) | Between January 1, 2022, and March 1, 2022, ZIM took ownership of additional two vessels (net, not including vessels pending delivery). For additional strategic charter agreements for vessels pending delivery, see “—ZIM’s vessel fleet—Strategic Chartering Agreements”. |
(4) | Under ZIM’s time charters, the vessel owner is responsible for operational costs and technical management of the vessel, such as crew, maintenance and repairs including periodic drydocking, cleaning and painting and maintenance work required by regulations, and certain insurance costs. Transport expenses such as bunker and port canal costs are borne by ZIM. For some of the vessels that ZIM owns and for our vessels it charters under “bareboat” terms, ZIM provides its own operational and technical management services. ZIM’s operational management services include the chartering-in, sale and purchase of vessels and accounting services, while its technical management services include, among others, selecting, engaging, and training competent personnel to supervise the maintenance and general efficiency of its vessels; arranging and supervising the maintenance, drydockings, repairs, alterations and upkeep of its vessels in accordance with the standards developed by ZIM, the requirements and recommendations of each vessel’s classification society, and relevant international regulations and maintaining necessary certifications and ensuring that its vessels comply with the law of their flag state. |
• | 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 Cross-Suez trade, Atlantic and Latin America, ZIM also has a separate bilateral cooperation agreement with MSC, as well as a separate bilateral cooperation agreement with Maersk and in the Latin America and Intra Asia trades. |
(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. |
• | ZIM must be, at all times, a company incorporated and registered in Israel, with its headquarters and principal and registered office domiciled in Israel. |
• | Subject to certain exceptions, ZIM must maintain a minimal fleet of 11 seaworthy vessels that are fully owned by ZIM, either directly or indirectly through its subsidiaries, at least three of which must be capable of carrying general cargo. Subject to certain exceptions, any transfer of vessels in violation thereof shall be invalid unless approved in advance by the State of Israel pursuant to the mechanism set forth in ZIM’s amended and restated articles of association. Currently, as a result of waivers received from the State of Israel, ZIM owns fewer vessels than the minimum fleet requirement. |
• | At least a majority of the members of ZIM’s board of directors, including the chairperson of the board and ZIM’s chief executive officer, must be Israeli citizens. |
• | The State of Israel must provide prior written consent for any holding or transfer of shares that confers possession of 35% or more of ZIM’s issued share capital, or that provides control over ZIM, including as a result of a voting agreement. |
• | Any transfer of shares that confers its owner with a holding of more than 24% but not more than 35% of ZIM’s issued share capital will require an advance notice to the State of Israel which will include full details regarding the proposed transferor and transferee, the percentage of shares to be held by the transferee after the transfer and relevant details regarding the transaction, including voting agreements and agreements for the appointment of directors (if any). If the State of Israel shall be of the opinion that the transfer of shares may possibly harm the security interests of the State of Israel or any of its vital interests or that it has not received the relevant information for the purpose of reaching its decision, the State of Israel shall be entitled to serve notice, within 30 days, that it objects to the transfer, giving reason for its objection. In such circumstances, the party requesting the transfer may initiate proceedings in connection with this matter with the competent court, which will consider and rule on the matter. |
• | The State of Israel must consent in writing to any winding-up, merger or spin-off, except for certain mergers with subsidiaries that would not impact the Special State Share or the minimal fleet. |
• | ZIM must provide governance, operational and financial information to the State of Israel similar to information that ZIM provides to its ordinary shareholders. In addition, ZIM must provide the State of Israel with particular information related to ZIM’s compliance with the terms of the Special State share and other information reasonably required to safeguard the State of Israel’s vital interests. |
• | Any amendment, review or cancellation of the rights afforded to the State of Israel by the Special State Share must be approved in writing by the State of Israel prior to its effectiveness. |
• | prior to their expiration in July 2019 (or December 2020 in the case of representations relating to environmental matters), a breach of any of the sellers’ representations and warranties (other than fundamental representations) up to a maximum amount of $176.55 million; |
• | prior to their expiration upon the expiration of the statute of limitations applicable to breach of contract claims in New York, a breach of any of the sellers’ covenants or agreements set forth in the share purchase agreement; |
• | prior to their expiration thirty days after the expiration of the applicable statute of limitations, certain tax liabilities for pre-closing periods and certain transfer taxes, breach of certain tax representations and the incurrence of certain capital gain taxes by the transferred companies in connection with the transaction; and |
• | without limitation with respect to time, a breach of any of the sellers’ fundamental representations (including representations relating to due authorization, ownership title, and capitalization). |
• | Kenon’s pledge of OPC shares representing 29% of OPC’s outstanding shares as of March 31, 2021, which pledge was agreed to expire on December 31, 2021; and |
• | to the extent any obligations remain outstanding after the exercise of the above-described pledge (or payments of amounts equal to the value of the pledge), a corporate guarantee from Kenon which guarantee expires on December 31, 2021. |
C. | Organizational Structure |
D. | Property, Plants and Equipment |
ITEM 4A. | Unresolved Staff Comments |
ITEM 5. | Operating and Financial Review and Prospects |
Ownership Percentage | Method of Accounting | Treatment in Consolidated Financial Statements | ||||||
OPC | 58.8 | %1 | Consolidated | Consolidated | ||||
ZIM | 26 | %2 | Equity | Share in profits of associated company, net of tax | ||||
Qoros | 12 | %3 | 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 decreased from 32% to 27.8%. Between September and November 2021, Kenon sold approximately 1.2 million ZIM shares for a total consideration of approximately $67 million. As a result of the sales, Kenon held a 26% interest in ZIM (25.6% on a fully diluted basis). During March 2022, Kenon completed a sale of 6 million ZIM shares for total consideration of $463 million. As a result of the sale, Kenon now holds a 20.7% interest in ZIM and remains the largest shareholder in ZIM. |
(3) | In April 2020, Kenon sold half of its interest in Qoros (i.e. 12%) to the Majority Shareholder. As a result, Kenon now has a 12% stake in Qoros and no longer accounts for Qoros under the equity method. |
Year Ended December 31, 2021 | ||||||||||||||||||||||||
OPC Israel | CPV | ZIM | Quantum1 | Other2 | Consolidated Results | |||||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||||||
Revenue | 437 | 51 | — | — | — | 488 | ||||||||||||||||||
Depreciation and amortization | (44 | ) | (13 | ) | — | — | (1 | ) | (58 | ) | ||||||||||||||
Financing income | 3 | — | — | — | — | 3 | ||||||||||||||||||
Financing expenses | (119 | ) | (25 | ) | — | — | — | (144 | ) | |||||||||||||||
Losses related to Qoros | — | — | — | (251 | ) | — | (251 | ) | ||||||||||||||||
Share in (losses)/profit of associated companies | — | (11 | ) | 1,261 | — | — | 1,250 | |||||||||||||||||
(Loss) / Profit before taxes | (57 | ) | (61 | ) | 1,261 | (251 | ) | (12 | ) | 880 | ||||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | — | (29 | ) | (5 | ) | ||||||||||||||||
(Loss) / Profit from continuing operations | (47 | ) | (47 | ) | 1,261 | (251 | ) | (41 | ) | 875 | ||||||||||||||
Segment assets3 | 1,512 | 431 | — | — | 227 | 2,170 | ||||||||||||||||||
Investments in associated companies | — | 545 | 1,354 | — | — | 1,899 | ||||||||||||||||||
Segment liabilities | 1,354 | 218 | — | — | 216 | 1,788 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | 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. |
(3) | Excludes investments in associates. |
(4) | Includes Kenon’s, IC Green’s and IC Power’s holding company assets. |
(5) | Includes Kenon’s, IC Green’s and IC Power’s holding company liabilities. |
2021 | 2020 | |||||||
Revenue | 488 | 386 | ||||||
Cost of Sales (excluding depreciation and amortization) | (337 | ) | (282 | ) | ||||
Net Loss | (94 | ) | (13 | ) | ||||
Adjusted EBITDA1 | 91 | 75 | ||||||
Proportionate share of EBITDA of associated companies1 | 106 | — | ||||||
Total Debt2 | 1,215 | 921 |
(1) | OPC defines “EBITDA” for each period as net loss for the period before depreciation and amortization, financing expenses, net and income tax expense, and “Adjusted EBITDA” for each period as net loss for the period before depreciation and amortization, financing expenses, net, income tax expense and share of losses of associated companies, net. |
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 | — |
(2) | Includes short-term and long-term debt. |
• | local shipping agencies’ effectiveness in capturing such demand; |
• | level of customer service, which affects its ability to retain and attract customers; |
• | ability to effectively deploy capacity to meet such demand; |
• | operating efficiency; and |
• | ability to establish and operate existing and new services in markets where there is growing demand. |
• | cyclical demand for container shipping services relative to the supply of vessel and container capacity; |
• | competition in specific trades; |
• | bunker prices; |
• | costs of operation; |
• | the particular dominant leg on which the cargo is transported; |
• | average vessel size in specific trades; |
• | the origin and destination points selected by the shipper; and |
• | the type of cargo and container type. |
A. | Operating Results |
Year Ended December 31, 2021 | ||||||||||||||||||||||||
OPC Israel | CPV | ZIM | Quantum1 | Other2 | Consolidated Results | |||||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||||||
Revenue | 437 | 51 | — | — | — | 488 | ||||||||||||||||||
Depreciation and amortization | (44 | ) | (13 | ) | — | — | (1 | ) | (58 | ) | ||||||||||||||
Financing income | 3 | — | — | — | — | 3 | ||||||||||||||||||
Financing expenses | (119 | ) | (25 | ) | — | — | — | (144 | ) | |||||||||||||||
Losses related to Qoros | — | — | — | (251 | ) | — | (251 | ) | ||||||||||||||||
Share in (losses)/profit of associated companies | — | (11 | ) | 1,261 | — | — | 1,250 | |||||||||||||||||
(Loss) / Profit before taxes | (57 | ) | (61 | ) | 1,261 | (251 | ) | (12 | ) | 880 | ||||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | — | (29 | ) | (5 | ) | ||||||||||||||||
(Loss) / Profit from continuing operations | (47 | ) | (47 | ) | 1,261 | (251 | ) | (41 | ) | 875 | ||||||||||||||
Segment assets3 | 1,512 | 431 | — | — | 227 | 2,170 | ||||||||||||||||||
Investments in associated companies | — | 545 | 1,354 | — | — | 1,899 | ||||||||||||||||||
Segment liabilities | 1,354 | 218 | — | — | 216 | 1,788 |
(1) | Subsidiary of Kenon that owns Kenon’s equity holding in Qoros. |
(2) | 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. |
(3) | Excludes investments in associates. |
(4) | Includes Kenon’s, IC Green’s and IC Power’s holding company assets. |
(5) | Includes Kenon’s, IC Green’s and IC Power’s holding company liabilities |
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, 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 profit adjusted to exclude financial expenses (income), net, income taxes, depreciation and amortization in order to reach EBITDA, and further adjusted to exclude impairments of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to contingencies. Adjusted EBITDA is a key measure used by ZIM’s management and board of directors to evaluate ZIM’s operating performance. Accordingly, ZIM believes that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating ZIM’s operating results and comparing its operating results between periods on a consistent basis, in the same manner as ZIM’s management and board of directors. The table below sets forth a reconciliation of ZIM’s net profit, to Adjusted EBITDA for each of the periods indicated. |
Year Ended December 31, 2021 | Year Ended December 31, 2020 | |||||||
(in millions of USD) | ||||||||
Net profit | 4,649 | 524 | ||||||
Financing expenses, net | 157 | 181 | ||||||
Income tax expense | 1,010 | 17 | ||||||
Depreciation and amortization | 780 | 314 | ||||||
EBITDA | 6,596 | 1,036 | ||||||
Non-cash charter hire expenses1 | (1 | ) | 1 | |||||
Asset impairment recovery | — | (4 | ) | |||||
Expenses related to contingencies | 2 | 3 | ||||||
Adjusted EBITDA | 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. |
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, | ||||||||
2021 | 2020 | |||||||
(in millions of USD) | ||||||||
Continuing operations | ||||||||
Net cash flows provided by operating activities | ||||||||
OPC | 119 | 105 | ||||||
Other | 121 | (13 | ) | |||||
Total | 240 | 92 | ||||||
Net cash flows used in investing activities | (205 | ) | (230 | ) | ||||
Net cash flows provided by financing activities | 147 | 256 | ||||||
Net change in cash from continuing operations | 182 | 118 | ||||||
Net change in cash from discontinued operations | — | 8 | ||||||
Cash—opening balance | 286 | 147 | ||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | 7 | 13 | ||||||
Cash—closing balance | 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 |
* | Includes interest payable, net of expenses. |
(1) | Represents NIS 698 million converted into USD at the exchange rate for NIS into USD of NIS 3.11 to $1.00. All debt has been issued in NIS, of which 2/3 is linked to CPI and 1/3 is not linked to CPI. OPC-Hadera repaid the amount of about NIS 30 million of the principal of its loans. |
(2) | Represents NIS 184 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollars of NIS 3.11 to $1.00. All debt has been issued in NIS, part of which is linked to CPI and part of which is not linked to CPI. Tzomet drew down about NIS 349 million from the long-term loans framework in accordance with its financing agreement. |
(3) | In April 2020, OPC completed an offering of NIS 400 million (approximately $113 million) of Series B bonds on the TASE, at an annual interest rate of 2.75%. In October 2020, OPC issued 555,555 units of NIS 1,000 Series B bonds, totaling gross proceeds of NIS 584 million ($171 million). The offering was an extension of the existing Series B bonds previously issued by OPC. The proceeds of the additional Series B issuance were used to redeem Series A bonds (NIS 313 million ($92 million)) and in part to fund the CPV acquisition. |
(4) | In September 2021, OPC issued Series C debentures at a par value of NIS 851 million (approximately $266 million), bearing annual interest of 2.5%. The Series C bonds are repayable over 12 semi-annual payments (which repayment amounts vary, and range from 5% up to 16% of the total issued amount) commencing in February 2024 with the final payment in August 2030. OPC used the proceeds from the Series C bonds for the early repayment of project financing debt of OPC-Rotem as described below. |
• | minimum projected DSCR, average projected DSCR (in relation to long-term loans at the commercial operation date of the power plant) and LLCR (at the commercial operation date of the power plant): 1.10 – on the withdrawal dates the ratio must be at least 1.20; |
• | maintenance of minimum amounts in the reserve accounts in accordance with the agreement; and |
• | other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledges investments and incurrence of debt as well as reporting obligations. |
• | minimum projected average debt service coverage ratio (ADSCR), average projected ADSCR and LLCR: 1.05 – on the withdrawal dates, Tzomet is required to comply with a minimum contractual ADSCR (i.e. the lowest contractual ADSCR of all the contractual ADSCRs up to the date of final repayment) an average contractual ADSCR (i.e. the average contractual ADSCR of all the contractual ADSCRs up to the date of final repayment), and a contractual LLCR on the commencement date of the commercial operation of at least 1.3; |
• | maintenance of minimum amounts in the reserve accounts in accordance with the agreement; and |
• | other non-financial covenants and limitations such as restrictions on dividend distributions, repayments of shareholder loans, asset sales, pledge investments and incurrence of debt. |
Project | Financial Closing Date | Total Commitment (approximately in $millions) | Total Outstanding/ Issued (approximately in $millions) as of Dec. 31, 2021 | 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% (subject to replacement base interest rate) | Distribution is subject to the project company’s compliance with several terms and conditions, including compliance with a minimum debt service coverage ratio of 1.2 during the 4 quarters that preceded the distribution, compliance with reserve requirements (pursuant to the terms of the financing agreement), compliance with the debt balances target defined in the agreement, and that no ground for repayment or breach event exists (as defined in the financing agreement). |
Towantic | March 11, 2016 | 753 | 5983 | June 30, 20252 | LIBOR plus margin of 2.75%–3.25% (subject to replacement base interest rate) | Similar to Fairview (see above) |
CPV Maryland | August 8, 2014 | 450 | 3714 | May 11, 2028 (Term Loan B)2 November 11, 20272 (Ancillary Facilities) | LIBOR plus margin of 4% (Term Loan B) (agreement includes an alternate base rate) LIBOR plus margin of 2.75% (Ancillary Facilities) (subject to replacement base interest rate) | Historical debt service coverage ratio of 1:1 during the last 4 quarters. As of March 27, 2022, Maryland is in compliance with the covenant. Execution of a distribution is conditional on the project company complying with several terms and conditions, including, compliance with a reserve requirements (as provided in the agreement), and that no ground for repayment or breach event exists in accordance with the financing agreement. |
CPV Shore | December 2018 | 545 | 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 Distribution is subject to, among others, certain reserve requirements, and having no existing default or event of default. |
CPV Valley | June 12, 2015 | 680 | 5726 | June 30, 2023 | LIBOR plus margin of 3.50%–3.75% (subject to replacement base interest rate) | Distribution is subject to the project company meeting conditions, including compliance with a minimum debt service coverage ratio of 1.2 during the 4 quarters that preceded the distribution, compliance with reserve requirements (pursuant to the terms of the financing agreement), compliance with requirements for receipt of a certain permit, compliance with the debt balances target defined in the agreement, and that no ground for repayment or default event exists (as defined in the financing agreement). |
CPV Keenan II | August 2021 | 120 | 1107 | December 31, 2030 | LIBOR + margin 1%–1.375% (subject to replacement base interest rate) | Execution of a distribution is subject to the project company’s compliance with several terms and conditions, including compliance with a minimum debt service coverage ratio of 1.15 during the 4 quarters that preceded the distribution, and that no grounds for repayment or breach event exist (as defined in the financing agreement) |
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): $471 million, Term Loan (Fixed, 5.78%): $106 million, Ancillary Facilities (Working Capital Loan: $30 million; Letters of Credit/LC Loans: approximately $55 million). |
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): $521 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $77 million). |
4. | Consisting of Term Loan (Variable): $327 million, Ancillary Facilities ($46 million). |
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: $9 million; Letters of Credit/LC Loans: $104 million (of which approximately $31 million was withdrawn re: debt service reserve as of December 31, 2021)). In April 2021, CPV Valley received certain concessions on the ancillary facilities in exchange for a $10 million aggregate capital commitment from the project sponsors ($5 million from CPV). The concessions waive the annual, mandatory full repayment of the working capital loans through June 29, 2022 and release $5 million of working capital capacity that is currently restricted due to the Title V permit matter. |
7. | Consisting of Term Loan (Variable): $98 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $12 million). The amortization schedule of the term loan is based on the December 2030 maturity date, with a 100% cash sweep mechanism starting March 2027, so that the term loan is expected to be repaid in full by the December 2028 maturity date. |
8. | Consisting of: Term Loan (Variable): $547 million, Term Loan (Fixed, 4.5%): $100 million; Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $60 million). |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
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. | Critical Accounting Policies and Significant Estimates |
• | allocation of acquisition costs; and |
• | long-term investment (Qoros). |
ITEM 6. | Directors, Senior Management and Employees |
A. | Directors and Senior Management |
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 | 49 | Chief Executive Officer | ||
Mark Hasson | 46 | Chief Financial Officer |
B. | Compensation |
C. | Board Practices |
• | the quality and integrity of our financial statements and internal controls; |
• | the compensation, qualifications, evaluation and independence of, and making a recommendation to our board for recommendation to the annual general meeting for appointment of, our independent registered public accounting firm; |
• | the performance of our internal audit function; |
• | our compliance with legal and regulatory requirements; and |
• | review of related party transactions. |
• | reviewing and determining the compensation package for our Chief Executive Officer and other senior executives; |
• | reviewing and making recommendations to our board with respect to the compensation of our non-employee directors; |
• | reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other senior executives, including evaluating their performance in light of such goals and objectives; and |
• | reviewing periodically and approving and administering stock options plans, long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans for all employees, including reviewing and approving the granting of options and other incentive awards. |
D. | Employees |
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 includes CPV’s employees. |
E. | Share Ownership |
ITEM 7. | Major Shareholders and Related Party Transactions |
A. | Major Shareholders |
Beneficial Owner (Name/Address) | Ordinary Shares Owned | Percentage of Ordinary Shares | ||||||
Ansonia Holdings Singapore B.V.1 | 32,497,569 | 60.3 | % | |||||
Gilad Altshuler2 | 3,340,668 | 6.2 | % | |||||
Harel Insurance Investments & Financial Services Ltd.3 | 3,090,402 | 5.7 | % | |||||
Laurence N. Charney | 47,650 | 4 | * | 5 | ||||
Bill Foo | 14,108 | 4 | * | 5 | ||||
Arunava Sen | 14,108 | 4 | * | 5 | ||||
Directors and Senior Management (Executive Officers)6 | — | * | 5 |
(1) | Based solely on the Schedule 13-D/A (Amendment No. 5) filed by Ansonia Holdings Singapore B.V. with the SEC on July 7, 2021. A discretionary trust, in which Mr. Idan Ofer is the beneficiary, indirectly holds 100% of Ansonia Holdings Singapore B.V. |
(2) | 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. 2) filed by Harel Insurance Investments & Financial Services Ltd. (“Harel”) with the SEC on January 31, 2022. According to the Schedule 13-G/A, all of the ordinary shares reported are held for members of the public through, among others, provident funds and/or mutual funds and/or pension funds and/or insurance policies and/or exchange traded funds, which are managed by subsidiaries of Harel, which subsidiaries operate under independent management and make independent voting and investment decisions. |
(4) | Based solely on Exhibit 99.3 to the Form 6-K furnished by Kenon with the SEC on May 12, 2021. |
(5) | Owns less than 1% of Kenon’s ordinary shares. |
(6) | Excludes shares held by Laurence N. Charney, Bill Foo and Arunava Sen. |
B. | Related Party Transactions |
C. | Interests of Experts and Counsel |
ITEM 8. | Financial Information |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
ITEM 9. | The Offer and Listing |
A. | Offer and Listing Details. |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution. |
F. | Expenses of the Issue |
ITEM 10. | Additional Information |
A. | Share Capital |
B. | Constitution |
• | the conclusion of the next annual general meeting; |
• | the expiration of the period within which the next annual general meeting is required by law to be held (i.e., within six months after our financial year end, being December 31); or |
• | the subsequent revocation or modification of approval by our shareholders acting at a duly convened general meeting. |
• | upon any resolution concerning the winding-up of our company under section 160 of the Insolvency, Restructuring and Dissolution Act 2018; and |
• | upon any resolution which varies the rights attached to such preference shares. |
• | all the directors have made a solvency statement in relation to such redemption; and |
• | we have lodged a copy of the statement with the Singapore Registrar of Companies. |
• | 14 days’ written notice to be given by Kenon of a general meeting to pass an ordinary resolution; and |
• | 21 days’ written notice to be given by Kenon of a general meeting to pass a special resolution, |
• | a company and its related companies, the associated companies of any of the company and its related companies, companies whose associated companies include any of these companies and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights; |
• | a company and its directors (including their close relatives, related trusts and companies controlled by any of the directors, their close relatives and related trusts); |
• | a company and its pension funds and employee share schemes; |
• | a person and any investment company, unit trust or other fund whose investment such person manages on a discretionary basis but only in respect of the investment account which such person manages; |
• | a financial or other professional adviser, including a stockbroker, and its clients in respect of shares held by the adviser and persons controlling, controlled by or under the same control as the adviser; |
• | directors of a company (including their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for the company may be imminent; |
• | partners; and |
• | an individual and such person’s close relatives, related trusts, any person who is accustomed to act in accordance with such person’s instructions and companies controlled by the individual, such person’s close relatives, related trusts or any person who is accustomed to act in accordance with such person’s instructions and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the foregoing for the purchase of voting rights. |
Delaware | Singapore—Kenon Holdings Ltd. | |
Board of Directors | ||
A typical certificate of incorporation and bylaws would provide that the number of directors on the board of directors will be fixed from time to time by a vote of the majority of the authorized directors. Under Delaware law, a board of directors can be divided into classes and cumulative voting in the election of directors is only permitted if expressly authorized in a corporation’s certificate of incorporation. | The constitution of companies will typically state the minimum and maximum number of directors as well as provide that the number of directors may be increased or reduced by shareholders via ordinary resolution passed at a general meeting, provided that the number of directors following such increase or reduction is within the maximum and minimum number of directors provided in the constitution and the Singapore Companies Act, respectively. Our constitution provides that, unless otherwise determined by a general meeting, the minimum number of directors is five and the maximum number is 12. |
Limitation on Personal Liability of Directors | ||
A typical certificate of incorporation provides for the elimination of personal monetary liability of directors for breach of fiduciary duties as directors to the fullest extent permissible under the laws of Delaware, except for liability (i) for any breach of a director’s loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (relating to the liability of directors for unlawful payment of a dividend or an unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. A typical certificate of incorporation would also provide that if the Delaware General Corporation Law is amended so as to allow further elimination of, or limitations on, director liability, then the liability of directors will be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law as so amended. | Pursuant to the Singapore Companies Act, any provision (whether in the constitution, contract or otherwise) purporting to exempt a director (to any extent) from any liability attaching in connection with any negligence, default, breach of duty or breach of trust in relation to Kenon will be void except as permitted under the Singapore Companies Act. Nevertheless, a director can be released by the shareholders of Kenon for breaches of duty to Kenon, except in the case of fraud, illegality, insolvency and oppression or disregard of minority interests. Our constitution currently provides that, subject to the provisions of the Singapore Companies Act and every other act for the time being in force concerning companies and affecting Kenon, every director, auditor, secretary or other officer of Kenon and its subsidiaries and affiliates shall be entitled to be indemnified by Kenon against all liabilities incurred by him in the execution and discharge of his duties and where he serves at the request of Kenon as a director, officer, employee or agent of any subsidiary or affiliate of Kenon or in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of Kenon, and in which judgment is given in his favor (or the proceedings otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted, or in connection with an application under statute in respect of such act or omission in which relief is granted to him by the court. |
Interested Shareholders | ||
Section 203 of the Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in specified corporate transactions (such as mergers, stock and asset sales, and loans) with an “interested stockholder” for three years following the time that the stockholder becomes an interested stockholder. Subject to specified exceptions, an “interested stockholder” is a person or group that owns 15% or more of the corporation’s outstanding voting stock (including any rights to acquire stock pursuant to an option, warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect to which the person has voting rights only), or is an affiliate or associate of the corporation and was the owner of 15% or more of the voting stock at any time within the previous three years. A Delaware corporation may elect to “opt out” of, and not be governed by, Section 203 through a provision in either its original certificate of incorporation, or an amendment to its original certificate or bylaws that was approved by majority stockholder vote. With a limited exception, this amendment would not become effective until 12 months following its adoption. | There are no comparable provisions in Singapore with respect to public companies which are not listed on the Singapore Exchange Securities Trading Limited. |
Removal of Directors | ||
A typical certificate of incorporation and bylaws provide that, subject to the rights of holders of any preferred stock, directors may be removed at any time by the affirmative vote of the holders of at least a majority, or in some instances a supermajority, of the voting power of all of the then outstanding shares entitled to vote generally in the election of directors, voting together as a single class. A certificate of incorporation could also provide that such a right is only exercisable when a director is being removed for cause (removal of a director only for cause is the default rule in the case of a classified board). | According to the Singapore Companies Act, directors of a public company may be removed before expiration of their term of office with or without cause by ordinary resolution (i.e., a resolution which is passed by a simple majority of those shareholders present and voting in person or by proxy). Notice of the intention to move such a resolution has to be given to Kenon not less than 28 days before the meeting at which it is moved. Kenon shall then give notice of such resolution to its shareholders not less than 14 days before the meeting. Where any director removed in this manner was appointed to represent the interests of any particular class of shareholders or debenture holders, the resolution to remove such director will not take effect until such director’s successor has been appointed. Our constitution provides that Kenon may by ordinary resolution of which special notice has been given, remove any director before the expiration of his period of office, notwithstanding anything in our constitution or in any agreement between Kenon and such director and appoint another person in place of the director so removed. |
Filling Vacancies on the Board of Directors | ||
A typical certificate of incorporation and bylaws provide that, subject to the rights of the holders of any preferred stock, any vacancy, whether arising through death, resignation, retirement, disqualification, removal, an increase in the number of directors or any other reason, may be filled by a majority vote of the remaining directors, even if such directors remaining in office constitute less than a quorum, or by the sole remaining director. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires. | The constitution of a Singapore company typically provides that the directors have the power to appoint any person to be a director, either to fill a vacancy or as an addition to the existing directors, but so that the total number of directors will not at any time exceed the maximum number fixed in the constitution. Any newly elected director shall hold office until the next following annual general meeting, where such director will then be eligible for re-election. Our constitution provides that the shareholders may by ordinary resolution, or the directors may, appoint any person to be a director as an additional director or to fill a vacancy provided that any person so appointed by the directors will only hold office until the next annual general meeting, and will then be eligible for re-election. | |
Amendment of Governing Documents | ||
Under the Delaware General Corporation Law, amendments to a corporation’s certificate of incorporation require the approval of stockholders holding a majority of the outstanding shares entitled to vote on the amendment. If a class vote on the amendment is required by the Delaware General Corporation Law, a majority of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation or by other provisions of the Delaware General Corporation Law. Under the Delaware General Corporation Law, the board of directors may amend bylaws if so authorized in the charter. The stockholders of a Delaware corporation also have the power to amend bylaws. | Our constitution may be altered by special resolution (i.e., a resolution passed by at least a three-fourths majority of the shares entitled to vote, present in person or by proxy at a meeting for which not less than 21 days’ written notice is given). The board of directors has no right to amend the constitution. |
Meetings of Shareholders | ||
Annual and Special Meetings Typical bylaws provide that annual meetings of stockholders are to be held on a date and at a time fixed by the board of directors. Under the Delaware General Corporation Law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the certificate of incorporation or the bylaws. Quorum Requirements Under the Delaware General Corporation Law, a corporation’s certificate of incorporation or bylaws can specify the number of shares which constitute the quorum required to conduct business at a meeting, provided that in no event shall a quorum consist of less than one-third of the shares entitled to vote at a meeting. | Annual General Meetings All companies are required to hold an annual general meeting once every calendar year. The first annual general meeting was required to be held within 18 months of Kenon’s incorporation and subsequently, annual general meetings must be held within six months after Kenon’s financial year end. Extraordinary General Meetings Any general meeting other than the annual general meeting is called an “extraordinary general meeting.” Two or more members (shareholders) holding not less than 10% of the total number of issued shares (excluding treasury shares) may call an extraordinary general meeting. In addition, the constitution usually also provides that general meetings may be convened in accordance with the Singapore Companies Act by the directors. Notwithstanding anything in the constitution, the directors are required to convene a general meeting if required to do so by requisition (i.e., written notice to directors requiring that a meeting be called) by shareholder(s) holding not less than 10% of the total number of paid-up shares of Kenon carrying voting rights. Our constitution provides that the directors may, whenever they think fit, convene an extraordinary general meeting. Quorum Requirements Our constitution provides that shareholders entitled to vote holding 33 and 1/3 percent of our issued and paid-up shares, present in person or by proxy at a meeting, shall be a quorum. In the event a quorum is not present, the meeting may be adjourned for one week. |
Indemnification of Officers, Directors and Employers | ||
Under the Delaware General Corporation Law, subject to specified limitations in the case of derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made a party to any third-party action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other enterprise) against expenses, including attorney’s fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding through, among other things, a majority vote of a quorum consisting of directors who were not parties to the suit or proceeding, if the person: • acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation or, in some circumstances, at least not opposed to its best interests; and • in a criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. Delaware corporate law permits indemnification by a corporation under similar circumstances for expenses (including attorneys’ fees) actually and reasonably incurred by such persons in connection with the defense or settlement of a derivative action or suit, except that no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged to be liable to the corporation unless the Delaware Court of Chancery or the court in which the action or suit was brought determines upon application that the person is fairly and reasonably entitled to indemnity for the expenses which the court deems to be proper. To the extent a director, officer, employee or agent is successful in the defense of such an action, suit or proceeding, the corporation is required by Delaware corporate law to indemnify such person for expenses (including attorneys’ fees) actually and reasonably incurred thereby. Expenses (including attorneys’ fees) incurred by such persons in defending any action, suit or proceeding may be paid in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of that person to repay the amount if it is ultimately determined that that person is not entitled to be so indemnified. | The Singapore Companies Act specifically provides that Kenon is allowed to: • purchase and maintain for any officer insurance against any liability attaching to such officer in respect of any negligence, default, breach of duty or breach of trust in relation to Kenon; • indemnify such officer against liability incurred by a director to a person other than Kenon except when the indemnity is against (i) any liability of the director to pay a fine in criminal proceedings or a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising); or (ii) any liability incurred by the officer (1) in defending criminal proceedings in which he is convicted, (2) in defending civil proceedings brought by Kenon or a related company of Kenon in which judgment is given against him or (3) in connection with an application for relief under specified sections of the Singapore Companies Act in which the court refuses to grant him relief. • indemnify any auditor against any liability incurred or to be incurred by such auditor in defending any proceedings (whether civil or criminal) in which judgment is given in such auditor’s favor or in which such auditor is acquitted; or • indemnify any auditor against any liability incurred by such auditor in connection with any application under specified sections of the Singapore Companies Act in which relief is granted to such auditor by a court. In cases where, inter alia, an officer is sued by Kenon the Singapore Companies Act gives the court the power to relieve directors either wholly or partially from the consequences of their negligence, default, breach of duty or breach of trust. However, Singapore case law has indicated that such relief will not be granted to a director who has benefited as a result of his or her breach of trust. In order for relief to be obtained, it must be shown that (i) the director acted reasonably; (ii) the director acted honestly; and (iii) it is fair, having regard to all the circumstances of the case including those connected with such director’s appointment, to excuse the director. Our constitution currently provides that, subject to the provisions of the Singapore Companies Act and every other act for the time being in force concerning companies and affecting Kenon, every director, auditor, secretary or other officer of Kenon and its subsidiaries and affiliates shall be entitled to be indemnified by Kenon against all liabilities incurred by him in the execution and discharge of his duties and where he serves at the request of Kenon as a director, officer, employee or agent of any subsidiary or affiliate of Kenon or in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, which relate to anything done or omitted or alleged to have been done or omitted by him as an officer or employee of Kenon, and in which judgment is given in his favor (or the proceedings otherwise disposed of without any finding or admission of any material breach of duty on his part) or in which he is acquitted, or in connection with an application under statute in respect of such act or omission in which relief is granted to him by the court. |
Shareholder Approval of Business Combinations | ||
Generally, under the Delaware General Corporation Law, completion of a merger, consolidation, or the sale, lease or exchange of substantially all of a corporation’s assets or dissolution requires approval by the board of directors and by a majority (unless the certificate of incorporation requires a higher percentage) of outstanding stock of the corporation entitled to vote. The Delaware General Corporation Law also requires a special vote of stockholders in connection with a business combination with an “interested stockholder” as defined in section 203 of the Delaware General Corporation Law. For further information on such provisions, see “—Interested Shareholders” above. | The Singapore Companies Act mandates that specified corporate actions require approval by the shareholders in a general meeting, notably: • notwithstanding anything in Kenon’s constitution, directors are not permitted to carry into effect any proposals for disposing of the whole or substantially the whole of Kenon’s undertaking or property unless those proposals have been approved by shareholders in a general meeting; • subject to the constitution of each amalgamating company, an amalgamation proposal must be approved by the shareholders of each amalgamating company via special resolution at a general meeting; and • notwithstanding anything in Kenon’s constitution, the directors may not, without the prior approval of shareholders, issue shares, including shares being issued in connection with corporate actions. |
Shareholder Action Without a Meeting | ||
Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action that may be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if the holders of outstanding stock, having not less than the minimum number of votes that would be necessary to authorize such action, consent in writing. It is not uncommon for a corporation’s certificate of incorporation to prohibit such action. | There are no equivalent provisions under the Singapore Companies Act in respect of passing shareholders’ resolutions by written means that apply to public companies listed on a securities exchange. | |
Shareholder Suits | ||
Under the Delaware General Corporation Law, a stockholder may bring a derivative action on behalf of the corporation to enforce the rights of the corporation. An individual also may commence a class action suit on behalf of himself or herself and other similarly situated stockholders where the requirements for maintaining a class action under the Delaware General Corporation Law have been met. A person may institute and maintain such a suit only if such person was a stockholder at the time of the transaction which is the subject of the suit or his or her shares thereafter devolved upon him or her by operation of law. Additionally, under Delaware case law, the plaintiff generally must be a stockholder not only at the time of the transaction which is the subject of the suit, but also through the duration of the derivative suit. Delaware Law also requires that the derivative plaintiff make a demand on the directors of the corporation to assert the corporate claim before the suit may be prosecuted by the derivative plaintiff, unless such demand would be futile. | Derivative actions The Singapore Companies Act has a provision which provides a mechanism enabling any registered shareholder to apply to the court for leave to bring a derivative action on behalf of the company. 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. Class actions The concept of class action suits, which allows individual shareholders to bring an action seeking to represent the class or classes of shareholders, generally does not exist in Singapore. However, it is possible as a matter of procedure for a number of shareholders to lead an action and establish liability on behalf of themselves and other shareholders who join in or who are made parties to the action. Further, there are certain circumstances in which shareholders may file and prove their claims for compensation in the event that Kenon has been convicted of a criminal offense or has a court order for the payment of a civil penalty made against it. Additionally, for as long as Kenon is listed in the U.S. or in Israel, Kenon has undertaken not to claim that it is not subject to any derivative/class action that may be filed against it in the U.S. or Israel, as applicable, solely on the basis that it is a Singapore company. |
Dividends or Other Distributions; Repurchases and Redemptions | ||
The Delaware General Corporation Law permits a corporation to declare and pay dividends out of statutory surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year as long as the amount of capital of the corporation following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. Under the Delaware General Corporation Law, any corporation may purchase or redeem its own shares, except that generally it may not purchase or redeem these shares if the capital of the corporation is impaired at the time or would become impaired as a result of the redemption. A corporation may, however, purchase or redeem out of capital shares that are entitled upon any distribution of its assets to a preference over another class or series of its shares if the shares are to be retired and the capital reduced. | The Singapore Companies Act provides that no dividends can be paid to shareholders except out of profits. The Singapore Companies Act does not provide a definition on when profits are deemed to be available for the purpose of paying dividends and this is accordingly governed by case law. Our constitution provides that no dividend can be paid otherwise than out of profits of Kenon. Acquisition of a company’s own shares The Singapore Companies Act generally prohibits a company from acquiring its own shares subject to certain exceptions. Any contract or transaction by which a company acquires or transfers its own shares is void. However, provided that it is expressly permitted to do so by its constitution and subject to the special conditions of each permitted acquisition contained in the Singapore Companies Act, Kenon may: • redeem redeemable preference shares (the redemption of these shares will not reduce the capital of Kenon). Preference shares may be redeemed out of capital if all the directors make a solvency statement in relation to such redemption in accordance with the Singapore Companies Act; • whether listed (on an approved exchange in Singapore or any securities exchange outside Singapore) or not, make an off-market purchase of its own shares in accordance with an equal access scheme authorized in advance at a general meeting; • whether listed on a securities exchange (in Singapore or outside Singapore) or not, make a selective off-market purchase of its own shares in accordance with an agreement authorized in advance at a general meeting by a special resolution where persons whose shares are to be acquired and their associated persons have abstained from voting; and • whether listed (on an approved exchange in Singapore or any securities exchange outside Singapore) or not, make an acquisition of its own shares under a contingent purchase contract which has been authorized in advance at a general meeting by a special resolution. Kenon may also purchase its own shares by an order of a Singapore court. The total number of ordinary shares that may be acquired by Kenon in a relevant period may not exceed 20% of the total number of ordinary shares in that class as of the date of the resolution pursuant to the relevant share repurchase provisions under the Singapore Companies Act. Where, however, Kenon has reduced its share capital by a special resolution or a Singapore court made an order to such effect, the total number of ordinary shares shall be taken to be the total number of ordinary shares in that class as altered by the special resolution or the order of the court. Payment must be made out of Kenon’s distributable profits or capital, provided that Kenon is solvent. Such payment may include any expenses (including brokerage or commission) incurred directly in the purchase or acquisition by Kenon of its ordinary shares. Financial assistance for the acquisition of shares Kenon may not give financial assistance to any person whether directly or indirectly for the purpose of: • the acquisition or proposed acquisition of shares in Kenon or units of such shares; or • the acquisition or proposed acquisition of shares in its holding company or ultimate holding company, as the case may be, or units of such shares. Financial assistance may take the form of a loan, the giving of a guarantee, the provision of security, the release of an obligation, the release of a debt or otherwise. However, Kenon may provide financial assistance for the acquisition of its shares or shares in its holding company if it complies with the requirements (including, where applicable, approval by the board of directors or by the passing of a special resolution by its shareholders) set out in the Singapore Companies Act. Our constitution provides that subject to the provisions of the Singapore Companies Act, we may purchase or otherwise acquire our own shares upon such terms and subject to such conditions as we may deem fit. These shares may be held as treasury shares or cancelled as provided in the Singapore Companies Act or dealt with in such manner as may be permitted under the Singapore Companies Act. On cancellation of the shares, the rights and privileges attached to those shares will expire. |
Transactions with Officers and Directors | ||
Under the Delaware General Corporation Law, some contracts or transactions in which one or more of a corporation’s directors has an interest are not void or voidable because of such interest provided that some conditions, such as obtaining the required approval and fulfilling the requirements of good faith and full disclosure, are met. Under the Delaware General Corporation Law, either (a) the stockholders or the board of directors must approve in good faith any such contract or transaction after full disclosure of the material facts or (b) the contract or transaction must have been “fair” as to the corporation at the time it was approved. If board approval is sought, the contract or transaction must be approved in good faith by a majority of disinterested directors after full disclosure of material facts, even though less than a majority of a quorum. | Under the Singapore Companies Act, the chief executive officer and directors are not prohibited from dealing with Kenon, but where they have an interest in a transaction with Kenon, that interest must be disclosed to the board of directors. In particular, the chief executive officer and every director who is in any way, whether directly or indirectly, interested in a transaction or proposed transaction with Kenon must, as soon as practicable after the relevant facts have come to such officer or director’s knowledge, declare the nature of such officer or director’s interest at a board of directors’ meeting or send a written notice to Kenon containing details on the nature, character and extent of his interest in the transaction or proposed transaction with Kenon. In addition, a director or chief executive officer who holds any office or possesses any property which, directly or indirectly, duties or interests might be created in conflict with such officer’s duties or interests as director or chief executive officer, is required to declare the fact and the nature, character and extent of the conflict at a meeting of directors or send a written notice to Kenon containing details on the nature, character and extent of the conflict. The Singapore Companies Act extends the scope of this statutory duty of a director or chief executive officer to disclose any interests by pronouncing that an interest of a member of the director’s or, as the case may be, the chief executive officer’s family (including spouse, son, adopted son, step-son, daughter, adopted daughter and step-daughter) will be treated as an interest of the director. There is however no requirement for disclosure where the interest of the director or chief executive officer (as the case may be) consists only of being a member or creditor of a corporation which is interested in the proposed transaction with Kenon if the interest may properly be regarded as immaterial. Where the proposed transaction relates to any loan to Kenon, no disclosure need be made where the director or chief executive officer has only guaranteed or joined in guaranteeing the repayment of such loan, unless the constitution provides otherwise. Further, where the proposed transaction is to be made with or for the benefit of a related corporation (i.e. the holding company, subsidiary or subsidiary of a common holding company) no disclosure need be made of the fact that the director or chief executive officer is also a director or chief executive officer of that corporation, unless the constitution provides otherwise. Subject to specified exceptions, including a loan to a director for expenditure in defending criminal or civil proceedings, etc. or in connection with an investigation, or an action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to Kenon, the Singapore Companies Act prohibits Kenon from: (i) making a loan or quasi-loan to its directors or to directors of a related corporation (each, a “relevant director”); (ii) giving a guarantee or security in connection with a loan or quasi-loan made to a relevant director by any other person; (iii) entering into a credit transaction as creditor for the benefit of a relevant director; (iv) giving a guarantee or security in connection with such credit transaction entered into by any person for the benefit of a relevant director; (v) taking part in an arrangement where another person enters into any of the transactions in (i) to (iv) above or (vi) below and such person obtains a benefit from Kenon or a related corporation; or (vi) arranging for the assignment to Kenon or assumption by Kenon of any rights, obligations or liabilities under a transaction in (i) to (v) above. Kenon is also prohibited from entering into the transactions in (i) to (vi) above with or for the benefit of a relevant director’s spouse or children (whether adopted or naturally or step-children). |
Dissenters’ Rights | ||
Under the Delaware General Corporation Law, a stockholder of a corporation participating in some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or she would otherwise receive in the transaction. | There are no equivalent provisions under the Singapore Companies Act. | |
Cumulative Voting | ||
Under the Delaware General Corporation Law, a corporation may adopt in its bylaws that its directors shall be elected by cumulative voting. When directors are elected by cumulative voting, a stockholder has the number of votes equal to the number of shares held by such stockholder times the number of directors nominated for election. The stockholder may cast all of such votes for one director or among the directors in any proportion. | There is no equivalent provision under the Singapore Companies Act in respect of companies incorporated in Singapore. |
Anti-Takeover Measures | ||
Under the Delaware General Corporation Law, the certificate of incorporation of a corporation may give the board the right to issue new classes of preferred stock with voting, conversion, dividend distribution, and other rights to be determined by the board at the time of issuance, which could prevent a takeover attempt and thereby preclude shareholders from realizing a potential premium over the market value of their shares In addition, Delaware law does not prohibit a corporation from adopting a stockholder rights plan, or “poison pill,” which could prevent a takeover attempt and also preclude shareholders from realizing a potential premium over the market value of their shares. | The constitution of a Singapore company typically provides that the company may allot and issue new shares of a different class with preferential, deferred, qualified or other special rights as its board of directors may determine with the prior approval of the company’s shareholders in a general meeting. Our constitution provides that our shareholders may grant to our board the general authority to issue such preference shares until the next general meeting. For further information, see “Item 3.D Risk Factors—Risks Relating to Our Ordinary Shares—Our directors have general authority to allot and issue new shares on terms and conditions and with any preferences, rights or restrictions as may be determined by our board of directors in its sole discretion, which may dilute our existing shareholders. We may also issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to our existing shareholders” and “—Preference Shares.” Singapore law does not generally prohibit a corporation from adopting “poison pill” arrangements which could prevent a takeover attempt and also preclude shareholders from realizing a potential premium over the market value of their shares. However, under the Singapore Code on Take-overs and Mergers, if, in the course of an offer, or even before the date of the offer announcement, the board of the offeree company has reason to believe that a bona fide offer is imminent, the board must not, except pursuant to a contract entered into earlier, take any action, without the approval of shareholders at a general meeting, on the affairs of the offeree company that could effectively result in any bona fide offer being frustrated or the shareholders being denied an opportunity to decide on its merits. For further information on the Singapore Code on Take-overs and Mergers, see “—Takeovers.” |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
• | persons that are not U.S. Holders; |
• | persons that are subject to alternative minimum taxes; |
• | insurance companies; |
• | cooperatives; |
• | pension plans; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | tax-exempt entities; |
• | banks and other financial institutions; |
• | broker-dealers; |
• | pass-through entities; |
• | persons that hold our ordinary shares through partnerships (or other entities classified as partnerships for U.S. federal income tax purposes); |
• | persons that acquire our ordinary shares through any employee share option or otherwise as compensation; |
• | persons that actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock or 10% or more of the total value of shares of all classes of our stock; |
• | traders in securities that elect to apply a mark-to-market method of accounting; |
• | investors that will hold our ordinary shares as part of a “hedge,” “straddle,” “conversion,” “constructive sale” or other integrated transaction for U.S. federal income tax purposes; |
• | investors that have a functional currency other than the U.S. dollar; and |
• | individuals who receive our ordinary shares upon the exercise of compensatory options or otherwise as compensation. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (i) is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (ii) that has otherwise validly elected to be treated as a U.S. person under the Code. |
• | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares; |
• | the amount allocated to the taxable year of the excess distribution, sale or other disposition and to any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; |
• | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and |
• | the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
ITEM 11. | Quantitative and Qualitative Disclosures about Market Risk |
• | currency risk, as a result of changes in the rates of exchange of various foreign currencies (in particular, the Euro and the New Israeli Shekel) in relation to the U.S. Dollar, our functional currency and the currency against which we measure our exposure; |
• | index risk, as a result of changes in the Consumer Price Index; |
• | interest rate risk, as a result of changes in the market interest rates affecting certain of our businesses’ issuance of debt and related financial instruments; and |
• | price risk, as a result of changes in market prices, such as the price of certain commodities (e.g., natural gas and heavy fuel oil). |
ITEM 12. | Description of Securities Other than Equity Securities |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
ITEM 13. | Defaults, Dividend Arrearages and Delinquencies |
ITEM 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
ITEM 15. | Controls and Procedures |
ITEM 16. | [RESERVED] |
ITEM 16A. | Audit Committee Financial Expert |
ITEM 16B. | Code of Ethics |
ITEM 16C. | Principal Accountant Fees and Services |
Year ended December 31, | ||||||||
2021 | 2020 | |||||||
(in thousands of USD) | ||||||||
Audit Fees1 | 3,054 | 1,351 | ||||||
Audit-Related Fees | 3 | 14 | ||||||
Tax Fees2 | 295 | 462 | ||||||
Total | 3,352 | 1,827 |
(1) | Includes fees billed or accrued for professional services rendered by the principal accountant, and member firms in their respective network, for the audit of our annual financial statements, and those of our consolidated subsidiaries, as well as additional services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, except for those not required by statute or regulation. |
(2) | Tax fees consist of fees for professional services rendered during the fiscal year by the principal accountant mainly for tax compliance and assistance with tax audits and appeals. |
ITEM 16D. | Exemptions from the Listing Standards for Audit Committees |
ITEM 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
ITEM 16F. | Change in Registrant’s Certifying Accountant |
ITEM 16G. | Corporate Governance |
ITEM 16H. | Mine Safety Disclosure |
ITEM 17. | Financial Statements |
ITEM 18. | Financial Statements |
ITEM 19. | Exhibits |
Exhibit Number | Description of Document | |
* | Filed herewith. |
(1) | Portions of this exhibit have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Exchange Act. Omitted information has been filed separately with the SEC. |
(2) | Portions of this exhibit have been omitted because they are both (i) not material and (ii) would be competitively harmful if publicly disclosed. |
Page | |
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-91 |
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 opinion 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 identified assets acquired and liabilities assumed
/s/ KPMG LLP
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
Definition and Limitations of Internal Control Over Financial Reporting
F - 4
Kenon Holdings Ltd. and subsidiaries
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 |
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 |
_____________________________ | _____________________________ | _____________________________ |
Cyril Pierre-Jean Ducau Chairman of Board of Directors | Robert L. Rosen CEO | Mark Hasson CFO |
Approval date of the consolidated financial statements: March 31, 2022
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 |
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 |
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 |
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 |
Kenon Holdings Ltd. and subsidiaries
Attributable to the owners of the Company | Non- controlling 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 | 0 | 0 | 1,222 | 0 | 1,222 | 324 | 1,546 | ||||||||||||||||||||||||
Dividends declared and paid | 18.D | 0 | 0 | 0 | (65,169 | ) | (65,169 | ) | (33,123 | ) | (98,292 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | 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 | 0 | 0 | (1,234 | ) | 0 | (1,234 | ) | (450 | ) | (1,684 | ) | ||||||||||||||||||||
Total changes in ownership interests in subsidiaries | 0 | 0 | (1,234 | ) | 41,863 | 40,629 | 34,386 | 75,015 | |||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | 0 | 0 | 0 | (13,359 | ) | (13,359 | ) | 15,801 | 2,442 | ||||||||||||||||||||||
Other comprehensive income for the year, net of tax | 0 | 17,087 | (2,880 | ) | (3,201 | ) | 11,006 | 4,353 | 15,359 | ||||||||||||||||||||||
Total comprehensive income for the year | 0 | 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
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 |
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 |
A. | The Reporting Entity |
B. | Definitions |
In these consolidated financial statements -
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)
(4) | 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 |
• | Power purchase agreement | 10 years |
• | Others | 1-33 years |
(3) | Subsequent expenditure |
H. | Service Concession arrangements |
I. | Leases |
Years | |
Land | 19 – 49 |
Pressure regulation and management system facility | 24 |
Offices | 3 – 9 |
J. | Borrowing costs |
K. | Impairment of non-financial assets |
L. | Employee benefits |
(1) | Short-term employee benefits |
(2) | Bonus plans transactions |
(3) | Termination Benefits |
(4) | Defined Benefit Plans |
(5) | Share-based compensation plans |
M. | Provisions |
N. | Revenue recognition |
Note 3 – Significant Accounting Policies (Cont’d)
O. | Government grants |
P. | Deposits received from consumers |
Q. | Energy purchase |
R. | Financing income and expenses |
• | Interest income; |
• | Interest expense; |
• | The net gain or loss on the disposal of held-for-sale financial assets; |
• | The net gain or loss on financial assets at fair value through profit or loss; |
• | The foreign currency gain or loss on financial assets and financial liabilities; |
• | The fair value loss on contingent consideration classified as financial liability; |
• | Impairment losses recognized on financial assets (other than trade receivables); |
• | The net gain or loss on hedging instruments that are recognized in profit or loss; and |
• | The reclassification of net gains previously recognized in OCI. |
Note 3 – Significant Accounting Policies (Cont’d)
S. | Income taxes |
• | Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; |
• | Temporary differences related to investments in subsidiaries and associates where the Group is able to control the timing of the reversal of the temporary differences and it is not probable that they will reverse it in the foreseeable future; and |
• | Taxable temporary differences arising on the initial recognition of goodwill. |
T. | Earnings per share |
U. | Share capital – ordinary shares |
V. | Discontinued operations |
• | Represents a separate major line of business or geographic area of operations, |
• | Is part of a single coordinated plan to dispose of a separate major line of business or geographic area of operations; or |
• | Is a subsidiary acquired exclusively with a view to re-sell. |
W. | Operating segment and geographic information |
1. | OPC Israel – OPC Israel Ltd. (“OPC Israel”) is a wholly owned subsidiary of OPC Energy Ltd. (“OPC”), which generates and supply electricity and energy in Israel. |
2. | CPV Group – CPV Group LP (“CPV Group”) is a limited partnership owned by OPC, which generates and supply electricity and energy in the United States. |
3. | ZIM – ZIM Integrated Shipping Services, Ltd., an associated company, is an Israeli global container shipping company. |
4. | Quantum – Quantum (2007) LLC is a wholly owned subsidiary of Kenon which holds Kenon’s interest in Qoros Automotive Co. Ltd. (“Qoros”). Qoros is a China-based automotive company that is jointly-owned by Quantum together with Baoneng Group and Wuhu Chery Automobile Investment Co., Ltd., (“Wuhu Chery”). |
X. | Inventories |
Y. | Transactions with controlling shareholders |
Z. | New standards and interpretations not yet adopted |
- | Classification of Liabilities as Current or Non-current (Amendments to IAS 1), |
- | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28). |
A. | Derivatives and Long-term investment (Qoros) |
B. | Non-derivative financial liabilities |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Cash in banks | 425,017 | 255,750 | ||||||
Time deposits | 49,527 | 30,434 | ||||||
474,544 | 286,184 |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Short-term deposits and restricted cash (1) | 229 | 564,247 |
(1) | A significant portion of the balance in 2020 was used to pay for the acquisition of CPV in January 2021. For further details, refer to Note 10.a.1.i. |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Advances to suppliers | 459 | 876 | ||||||
Inventories | 1,706 | 0 | ||||||
Prepaid expenses | 6,639 | 4,061 | ||||||
Government institutions | 5,029 | 3,192 | ||||||
Indemnification asset (1) | 9,047 | 9,047 | ||||||
Deposits in connection with projects under construction | 16,398 | 0 | ||||||
Others | 4,101 | 4,119 | ||||||
43,379 | 21,295 |
(1) | Relates to compensation receivable from OPC Hadera contractor as a result of the delay in the construction of the Hadera Power Plant. Please refer to Note 17.A.f for further details. |
A. | Condensed information regarding significant associated companies |
1. | Condensed financial information with respect to the statement of financial position |
CPV | CPV | CPV | CPV | CPV | CPV | |||||||||||||||||||||||||||
ZIM | Fairview | Maryland | Shore | Towantic | Valley | Three Rivers | ||||||||||||||||||||||||||
As at December 31, | ||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2021 | 2021 | 2021 | 2021 | 2021 | |||||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||||||
Principal place of business | International | US | US | US | US | US | US | |||||||||||||||||||||||||
Proportion of ownership interest | 26% | 32% | 25% | 25% | 37.5% | 26% | 50% | 10% | ||||||||||||||||||||||||
Current assets | 5,084,865 | 1,201,628 | 107,380 | 26,649 | 45,538 | 38,558 | 35,783 | 2,997 | ||||||||||||||||||||||||
Non-current assets | 4,756,973 | 1,622,613 | 986,321 | 669,668 | 1,039,153 | 952,997 | 705,501 | 949,385 | ||||||||||||||||||||||||
Current liabilities | (2,756,595 | ) | (1,151,510 | ) | (136,136 | ) | (37,067 | ) | (7,904 | ) | (124,247 | ) | (85,176 | ) | (20,921 | ) | ||||||||||||||||
Non-current liabilities | (2,485,714 | ) | (1,398,276 | ) | (591,169 | ) | (356,838 | ) | (727,037 | ) | (538,750 | ) | (537,310 | ) | (708,402 | ) | ||||||||||||||||
Total net assets | 4,599,529 | 274,455 | 366,396 | 302,412 | 349,750 | 328,558 | 118,798 | 223,059 | ||||||||||||||||||||||||
Group's share of net assets | 1,182,810 | 85,525 | 91,599 | 75,603 | 131,261 | 85,425 | 59,399 | 56,021 | ||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||
Write back of assets and investment | 0 | 43,505 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Excess cost | 171,402 | 168,118 | 81,678 | (14,854 | ) | (56,330 | ) | 26,799 | (1,223 | ) | 8,379 | |||||||||||||||||||||
Book value of investment | 1,354,212 | 297,148 | 173,277 | 60,749 | 74,931 | 112,224 | 58,176 | 64,400 | ||||||||||||||||||||||||
Investments in associated companies | 1,354,212 | 297,148 | 173,277 | 60,749 | 74,931 | 112,224 | 58,176 | 64,400 |
2. | Condensed financial information with respect to results of operations |
CPV | ||||||||||||||||||||||||||||||||||||||||||||
ZIM | CPV Fairview | CPV Maryland | CPV Shore | CPV Towantic | CPV Valley | Three Rivers | Qoros* | |||||||||||||||||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2021 | 2021 | 2021 | 2021 | 2021 | 2021 | 2020*** | 2019 | ||||||||||||||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||||||||||||||||||
Revenue | 10,728,698 | 3,991,696 | 3,299,761 | 199,030 | 170,292 | 189,985 | 258,292 | 139,473 | 174 | 23,852 | 349,832 | |||||||||||||||||||||||||||||||||
Income / loss** | 4,640,305 | 517,961 | (18,149 | ) | 9,666 | 5,420 | 16,247 | 18,520 | (58,793 | ) | (9,281 | ) | (52,089 | ) | (312,007 | ) | ||||||||||||||||||||||||||||
Other comprehensive income ** | (3,462 | ) | 5,854 | (9,999 | ) | 11,192 | 10,983 | 7,779 | 11,140 | 3,710 | 19,361 | (3 | ) | (8 | ) | |||||||||||||||||||||||||||||
Total comprehensive income | 4,636,843 | 523,815 | (28,148 | ) | 20,858 | 16,403 | 24,026 | 29,660 | (55,083 | ) | 10,080 | (52,092 | ) | (312,015 | ) | |||||||||||||||||||||||||||||
Kenon’s share of comprehensive income | 1,258,913 | 167,621 | (9,007 | ) | 5,214 | 4,101 | 9,017 | 7,711 | (27,542 | ) | 1,008 | (6,251 | ) | (37,442 | ) | |||||||||||||||||||||||||||||
Adjustments | 1,116 | 1,394 | 1,432 | (1,249 | ) | 2,354 | 3,644 | 50 | 681 | 0 | 3 | 386 | ||||||||||||||||||||||||||||||||
Kenon’s share of comprehensive income presented in the books | 1,260,029 | 169,015 | (7,575 | ) | 3,965 | 6,455 | 12,661 | 7,761 | (26,861 | ) | 1,008 | (6,248 | ) | (37,056 | ) |
* | The depreciation and amortization, interest income, interest expense and income tax expenses recorded by Qoros during 2020 were approximately $13 million, $1 million, $18 million and $NaN thousand (2019: $172 million, $6 million, $49 million and $33 thousand) respectively. |
** | Excludes portion attributable to non-controlling interest. |
*** | The 2020 equity accounted results reflect Kenon’s share of losses in Qoros until the completion date of the sale, i.e. April 29, 2020. Subsequent to that, Qoros was reclassified as to Long-term investment (Qoros). Refer to Note 9 for further details. |
B. | Additional information |
a. | ZIM |
1. | The container shipping industry is characterized in recent years by volatility in freight rates, charter rates and bunker prices, accompanied by significant uncertainties in the global trade (including further implications from COVID-19, or the recent conflict between Russia and Ukraine). Current market conditions are impacted positively by increased freight rates and trade volumes. |
2. | Financial position |
For the year ended | |||||||||
December 31 | |||||||||
2021 | 2020 | ||||||||
Note | $ Thousands | $ Thousands | |||||||
Gain on dilution from ZIM IPO | 8.B.a.3 | 9,724 | 0 | ||||||
Loss on dilution from ZIM options exercised | 8.B.a.4 | (39,438 | ) | 0 | |||||
Gain on sale of ZIM shares | 8.B.a.5 | 29,510 | 0 | ||||||
Write back of impairment of investment | 8.B.a.9 | - | 43,505 | ||||||
(204 | ) | 43,505 |
3. | Initial public offering |
4. | Exercise of ZIM options |
5. | Sales of ZIM shares |
6. | Notes repurchase |
7. | Dividends |
8. | Factoring facility |
9. | Impairment assessment |
1) | An implied EV/EBITDA range of 5.5x to 6.5x based on LTM EBITDA multiples of comparable companies as of latest publicly available financial information; |
2) | An estimated sustainable EBITDA computed based on the average EBITDA of the last three years; and |
3) | Costs of disposal of 2% of EV. |
10. | Restrictions |
b. | OPC’s associated companies |
1. | CPV Three Rivers, LLC (“CPV Three Rivers”) |
2. | CPV Fairview, LLC (“CPV Fairview”) |
3. | CPV Maryland, LLC (“CPV Maryland”) |
4. | CPV Shore Holdings, LLC (“CPV Shore”) |
5. | CPV Towantic, LLC (“CPV Towantic”) |
6. | CPV Valley Holdings, LLC (“CPV Valley”) |
Note 9 – Long-term investment (Qoros)
For the year ended December 31, | |||||||||||||||
2021 | 2020 | 2019 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Fair value (loss)/gain on remaining 12% interest in Qoros | 9.3, 9.5 | (235,218 | ) | 154,475 | 0 | ||||||||||
(Payment)/recovery of financial guarantee | 9.6.d, 9.6.e | (16,265 | ) | 6,195 | 11,144 | ||||||||||
Gain on sale of 12% interest in Qoros | 9.3 | 0 | 152,610 | 0 | |||||||||||
Fair value loss on put option | 9.2, 9.3 | 0 | (3,362 | ) | (18,957 | ) | |||||||||
(251,483 | ) | 309,918 | (7,813 | ) |
1. | As at December 31, 2021, the Group holds a 12% equity interest in Qoros through a wholly-owned and controlled company, Quantum (2007) LLC (“Quantum”). Chery Automobiles Limited (“Chery”), a Chinese automobile manufacturer, holds a 25% equity interest and the remaining 63% interest is held by an entity related to the Baoneng Group (“New Qoros Investor” or “New Strategic Partner”). |
2. | Qoros introduced a New Strategic Partner |
3. | Kenon sells down from 24% to 12% |
4. | Agreement to sell remaining 12% interest |
5. | Fair value assessment |
6. | Financial Guarantees Provision and Releases |
a. | In July 2012, Chery provided a guarantee to the banks, in the amount of RMB1.5 billion (approximately $242 million), in relation to an agreement with the banks to provide Qoros a loan, in the amount of RMB3 billion (approximately $482 million). In November 2015, Kenon provided back-to-back guarantees to Chery of RMB750 million (approximately $115 million) in respect of this loan thereby committing to pay half of every amount Chery may be required to pay with respect to the guarantee. |
b. | On May 12, 2015, Qoros signed a loan agreement with the Export-Import Bank of China, and China Construction Bank Co., LTD, Suzhou Branch, for an amount of RMB700 million (approximately $108 million) (the “Facility”). This Facility was guaranteed by Chery and pledged with Qoros’ 90 vehicle patents with an appraisal value of minimum RMB3.1 billion (approximately $500 million). Kenon provided back-to-back guarantees to Chery of RMB350 million (approximately $54 million) thereby committing to pay half of every amount Chery may be required to pay with respect to the guarantee. |
c. | On July 31, 2014, in order to secure additional funding for Qoros of approximately RMB 1.2 billion (approximately $200 million) IC pledged a portion of its shares (including dividends derived therefrom) in Qoros, in proportion to its share in Qoros’s capital, in favor of the Chinese bank providing Qoros with such financing. Simultaneously, the subsidiary of Chery that holds Chery’s rights in Qoros also pledged a proportionate part of its rights in Qoros. Such financing agreement includes, inter alia, covenants, events of immediate payment and/or early payment for violations and/or events specified in the agreement. The pledge agreement includes, inter alia, provisions concerning the ratio of securities and the pledging of further securities in certain circumstances, including pledges of up to all of Quantum’s shares in Qoros (or cash), provisions regarding events that would entitle the Chinese Bank to enforce the pledge, certain representations and covenants, and provisions regarding the registration and approval of the pledge. As part of the spin-off described in Note 1.A, the shares pledged by IC were transferred to Kenon. |
d. | In 2017, Kenon provided cash collateral to Chery that was used to fund shareholder loans on behalf of Chery for a total amount of RMB 244 million, and pledged a portion of Kenon’s equity interests in Qoros to Chery. The agreements for this guarantee and pledge provide that in the event that Chery’s obligations under its guarantees are reduced, including through guarantee releases, Kenon is entitled to the proportionate return from Chery of the RMB 244 million funding provided on Chery’s behalf and/or a release of the equity pledged to Chery. |
e. | Qoros had been in discussions with lenders on rescheduling loan repayments on its long-term loans. Such a rescheduling has not been agreed. In 2021, Qoros did not make payments totaling approximately RMB 455 million ($71 million) which were due in respect of its RMB 3 billion, RMB 1.2 billion and RMB 0.7 billion loan facilities, and as a result, the lenders under these facilities accelerated these loans. These loans remain in default. |
7. | Restrictions |
A. | Investments |
1. | OPC Energy Ltd. |
Ownership interest as at December 31 | |||||||
Note | Main location of company's activities | 2021 | 2020 | ||||
OPC Israel Energy Ltd. | 10.A.1.a | Israel | 100% | 100% | |||
OPC Rotem Ltd. | 10.A.1.b | Israel | 80% | 80% | |||
OPC Hadera Ltd. | 10.A.1.c | Israel | 100% | 100% | |||
Tzomet Energy Ltd. | 10.A.1.d | Israel | 100% | 100% | |||
OPC Sorek 2 Ltd. | 10.A.1.e | Israel | 100% | 100% | |||
Gnrgy Ltd. | 10.A.1.f | Israel | 51% | 0 | |||
ICG Energy, Inc | 10.A.1.g | USA | 100% | 0 | |||
OPC Power Ventures LP | 10.A.1.h | USA | 70% | 0 | |||
CPV Group LP* | 10.A.1.i | USA | 100% | 0 | |||
CPV Keenan II Renewable Energy Company, LLC* | 10.A.1.j | USA | 100% | 0 | |||
CPV Maple Hill, LLC* | 10.A.1.k | USA | 100% | 0 | |||
CPV Rogue's Wind, LLC* | 10.A.1.l | USA | 100% | 0 |
a. | OPC Israel Energy Ltd. (“OPC Israel”) |
b. | OPC Rotem Ltd. (“OPC Rotem”) |
c. | OPC Hadera Ltd. (“OPC Hadera”) |
d. | Tzomet Energy Ltd. (“OPC Tzomet”) |
e. | OPC Sorek 2 Ltd. (“OPC Sorek 2”) |
f. | Gnrgy Ltd. (“Gnrgy”) |
g. | ICG Energy, Inc (“ICGE”) |
h. | OPC Power Ventures LP (“OPC Power”) |
i. | CPV Group LP (“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 Transaction completion date through to period end.
The contribution of the CPV Group to the Group’s revenue and consolidated loss from the acquisition date until December 31, 2021 amounted to $51 million and $47 million, respectively. Management estimates that had the acquisition took place on January 1, 2021, the consolidated revenue for the year ended December 31, 2021 would have been $492 million and the consolidated profit for the year would have been $883 million.
$ | ||||
Millions | ||||
Cash and cash equivalents | 29 | |||
Trade and other receivables | 15 | |||
Long-term restricted deposits and cash | 1 | |||
Investments in associated companies | 595 | |||
Property, plant and equipment | 50 | |||
Right-of-use assets | 10 | |||
Intangible assets | 111 | |||
Trade and other payables | (6 | ) | ||
Derivative financial instruments | (12 | ) | ||
Loans and credit | (169 | ) | ||
Lease liabilities | (10 | ) | ||
Other long-term liabilities | (28 | ) | ||
Liabilities for deferred taxes | (6 | ) | ||
Identified assets, net | 580 |
$ | ||||
Millions | ||||
Cash and cash equivalents paid | 653 | |||
Hedging costs paid | 32 | |||
Cash and cash equivalents acquired | (29 | ) | ||
656 |
$ | ||||
Millions | ||||
Consideration transferred | 653 | |||
Add: Hedging costs | 32 | |||
Less: fair value of identified assets, net | (580 | ) | ||
Goodwill | 105 |
j. | CPV Keenan II Renewable Energy Company, LLC (“CPV Keenan”) |
k. | CPV Maple Hill Solar, LLC (“CPV Maple Hill”) |
l. | CPV Rogue’s Wind, LLC (“CPV Rogue’s Wind”) |
m. | Dividends |
n. | Issuances of new shares by OPC |
o. | Rights issuance |
B. | The following table summarizes the information relating to the Group’s subsidiary in 2021, 2020 and 2019 that has material NCI: |
As at and for the year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
OPC Energy Ltd. | OPC Energy Ltd. | OPC Energy Ltd. | ||||||||||
$ Thousands | ||||||||||||
NCI percentage * | 53.14 | % | 39.09 | % | 35.31 | % | ||||||
Current assets | 346,380 | 693,913 | 204,128 | |||||||||
Non-current assets | 2,141,744 | 1,040,400 | 807,133 | |||||||||
Current liabilities | (230,518 | ) | (221,975 | ) | (100,313 | ) | ||||||
Non-current liabilities | (1,341,962 | ) | (980,028 | ) | (663,328 | ) | ||||||
Net assets | 915,644 | 532,310 | 247,620 | |||||||||
Carrying amount of NCI | 486,598 | 208,080 | 87,435 | |||||||||
Revenue | 487,763 | 385,625 | 373,142 | |||||||||
(Loss)/profit after tax | (93,898 | ) | (12,583 | ) | 34,366 | |||||||
Other comprehensive income | 74,219 | (2,979 | ) | 15,569 | ||||||||
(Loss)/profit attributable to NCI | (54,022 | ) | (2,567 | ) | 16,433 | |||||||
OCI attributable to NCI | 33,661 | (616 | ) | 4,353 | ||||||||
Cash flows from operating activities | 119,264 | 104,898 | 109,254 | |||||||||
Cash flows from investing activities | (256,200 | ) | (643,942 | ) | (41,123 | ) | ||||||
Cash flows from financing activites excluding dividends paid to NCI | 311,160 | 489,919 | (40,539 | ) | ||||||||
Dividends paid to NCI | (10,214 | ) | (12,412 | ) | (13,501 | ) | ||||||
Effect of changes in the exchange rate on cash and cash equivalents | 6,717 | 12,566 | 9,202 | |||||||||
Net increase/(decrease) in cash and cash equivalents | 170,727 | (48,971 | ) | 23,293 |
A. | Composition |
As at December 31, 2021 | ||||||||||||||||||||||||||||
Balance at beginning of year | Additions | Disposals | Reclassification | Acquisitions as part of a business | Differences in translation reserves | Balance at end of year | ||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||
Roads, buildings and leasehold improvements | 72,222 | 5,709 | (453 | ) | 2,242 | 1,682 | 2,554 | 83,956 | ||||||||||||||||||||
Facilities, machinery and equipment | 763,828 | 2,527 | 0 | 0 | 0 | 25,920 | 792,275 | |||||||||||||||||||||
Wind turbines | 0 | 894 | (972 | ) | 0 | 29,922 | 0 | 29,844 | ||||||||||||||||||||
Computers | 763 | 0 | 0 | (763 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Office furniture and equipment | 1,132 | 240 | (150 | ) | (808 | ) | 0 | 0 | 414 | |||||||||||||||||||
Assets under construction | 127,116 | 252,096 | 0 | 0 | 18,990 | 11,578 | 409,780 | |||||||||||||||||||||
Other | 43,840 | 5,761 | (1,885 | ) | (671 | ) | 0 | 1,097 | 48,142 | |||||||||||||||||||
1,008,901 | 267,227 | (3,460 | ) | 0 | 50,594 | 41,149 | 1,364,411 | |||||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||||||
Roads, buildings and leasehold improvements | 12,799 | 3,453 | (240 | ) | 1,585 | 0 | 551 | 18,148 | ||||||||||||||||||||
Facilities, machinery and equipment | 175,633 | 36,620 | 0 | 0 | 0 | 7,384 | 219,637 | |||||||||||||||||||||
Wind turbines | 0 | 634 | (71 | ) | 0 | 0 | 0 | 563 | ||||||||||||||||||||
Computers | 511 | 0 | 0 | (511 | ) | 0 | 0 | 0 | ||||||||||||||||||||
Office furniture and equipment | 757 | 71 | (151 | ) | (434 | ) | 0 | 0 | 243 | |||||||||||||||||||
Other | 640 | 0 | 0 | (640 | ) | 0 | 0 | 0 | ||||||||||||||||||||
190,340 | 40,778 | (462 | ) | 0 | 0 | 7,935 | 238,591 | |||||||||||||||||||||
Balance as at December 31, 2021 | 818,561 | 226,449 | (2,998 | ) | 0 | 50,594 | 33,214 | 1,125,820 |
As at December 31, 2020 | ||||||||||||||||||||||||
Balance at beginning of year | Additions* | Disposals | Reclassification | Differences in translation reserves | Balance at end of year | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||
Roads, buildings and leasehold improvements | 41,952 | 193 | 0 | 26,000 | 4,077 | 72,222 | ||||||||||||||||||
Facilities, machinery and equipment | 499,948 | 4,902 | (4,170 | ) | 208,931 | 54,217 | 763,828 | |||||||||||||||||
Computers | 654 | 179 | (63 | ) | 0 | (7 | ) | 763 | ||||||||||||||||
Office furniture and equipment | 1,047 | 60 | (6 | ) | 0 | 31 | 1,132 | |||||||||||||||||
Assets under construction | 239,934 | 113,434 | 0 | (234,931 | ) | 8,679 | 127,116 | |||||||||||||||||
Other | 36,255 | 16,309 | (9,565 | ) | 0 | 841 | 43,840 | |||||||||||||||||
819,790 | 135,077 | (13,804 | ) | 0 | 67,838 | 1,008,901 | ||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||
Roads, buildings and leasehold improvements | 9,883 | 2,114 | 0 | 0 | 802 | 12,799 | ||||||||||||||||||
Facilities, machinery and equipment | 140,626 | 29,341 | (4,170 | ) | 0 | 9,836 | 175,633 | |||||||||||||||||
Computers | 410 | 140 | (63 | ) | 0 | 24 | 511 | |||||||||||||||||
Office furniture and equipment | 722 | 29 | (6 | ) | 0 | 12 | 757 | |||||||||||||||||
Other | 507 | 95 | 0 | 0 | 38 | 640 | ||||||||||||||||||
152,148 | 31,719 | (4,239 | ) | 0 | 10,712 | 190,340 | ||||||||||||||||||
Balance as at December 31, 2020 | 667,642 | 103,358 | (9,565 | ) | 0 | 57,126 | 818,561 |
* | Additions in respect of assets under construction are presented net of agreed compensation from the construction contractor. Refer to Note 17.A.f for further details. |
B. | Net carrying values |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Roads, buildings and leasehold improvements | 65,808 | 59,423 | ||||||
Facilities, machinery and equipment | 572,638 | 588,195 | ||||||
Wind turbines | 29,281 | 0 | ||||||
Computers | 0 | 252 | ||||||
Office furniture and equipment | 171 | 375 | ||||||
Assets under construction | 409,780 | 127,116 | ||||||
Other | 48,142 | 43,200 | ||||||
1,125,820 | 818,561 |
C. | When there is any indication of impairment, the Group’s entities perform impairment tests for their long-lived assets using fair values less cost to sell based on independent appraisals or value in use estimations, with assumptions based on past experience and current sector forecasts, described below: |
• | Discount rate is a post-tax measure based on the characteristics of each CGU. |
• | Cash flow projections include specific estimates for around five years and a terminal growth rate thereafter. The terminal growth rate is determined based on management’s estimate of long-term inflation. |
• | Existing power purchase agreements (“PPAs”) signed and existing number of customers. |
• | The production mix of each country was determined using specifically-developed internal forecast models that consider factors such as prices and availability of commodities, forecast demand of electricity, planned construction or the commissioning of new capacity in the country’s various technologies. |
• | The distribution business profits were determined using specifically-developed internal forecast models that consider factors such as forecasted demand, fuel prices, energy purchases, collection rates, percentage of losses, quality service improvement, among others. |
• | Fuel prices have been calculated based on existing supply contracts and on estimated future prices including a price differential adjustment specific to every product according to local characteristics. |
• | Assumptions for energy sale and purchase prices and output of generation facilities are made based on complex specifically-developed internal forecast models for each country. |
• | Demand – Demand forecast has taken into consideration the most probably economic performance as well as growth forecasts of different sources. |
• | Technical performance – The forecast takes into consideration that the power plants have an appropriate preventive maintenance that permits their proper functioning and the distribution businesss has the required capital expenditure to expand and perform properly in order to reach the targeted quality levels. |
D. | The amount of borrowing costs capitalized in 2021 was approximately $7 million (2020: $9 million). |
E. | Fixed assets purchased on credit in 2021 was approximately $39 million (2020: $32 million). |
F. | The composition of depreciation expenses from continuing operations is as follows: |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Depreciation and amortization included in gross profit | 53,116 | 33,135 | ||||||
Depreciation and amortization charged to selling, general and administrative expenses | 4,524 | 1,036 | ||||||
Depreciation and amortization from continuing operations | 57,640 | 34,171 |
A. | Composition: |
Goodwill | PPA* | Others | Total | |||||||||||||
$ Thousands | ||||||||||||||||
Cost | ||||||||||||||||
Balance as at January 1, 2021 | 21,596 | 0 | 2,372 | 23,968 | ||||||||||||
Acquisitions as part of business combinations | 118,458 | 110,446 | 3,410 | 232,314 | ||||||||||||
Acquisitions – self development | 0 | 0 | 1,451 | 1,451 | ||||||||||||
Disposals | 0 | 0 | 0 | 0 | ||||||||||||
Translation differences | 158 | 0 | 237 | 395 | ||||||||||||
140,212 | 110,446 | 7,470 | 258,128 | |||||||||||||
Amortization | ||||||||||||||||
Balance as at January 1, 2021 | 21,455 | 0 | 1,061 | 22,516 | ||||||||||||
Amortization for the year | 0 | 10,947 | 339 | 11,286 | ||||||||||||
Disposals | 0 | 0 | 0 | 0 | ||||||||||||
Translation differences | 0 | 0 | 44 | 44 | ||||||||||||
Balance as at December 31, 2021 | 21,455 | 10,947 | 1,444 | 33,846 | ||||||||||||
Carrying value | ||||||||||||||||
As at January 1, 2021 | 141 | 0 | 1,311 | 1,452 | ||||||||||||
As at December 31, 2021 | 118,757 | 99,499 | 6,026 | 224,282 |
Goodwill | Others | Total | ||||||||||
$ Thousands | ||||||||||||
Cost | ||||||||||||
Balance as at January 1, 2020 | 21,586 | 1854 | 23,440 | |||||||||
Acquisitions – self development | 0 | 368 | 368 | |||||||||
Disposals | 0 | (3 | ) | (3 | ) | |||||||
Translation differences | 10 | 153 | 163 | |||||||||
21,596 | 2,372 | 23,968 | ||||||||||
Amortization | ||||||||||||
Balance as at January 1, 2020 | 21,455 | 752 | 22,207 | |||||||||
Amortization for the year | 0 | 249 | 249 | |||||||||
Disposals | 0 | (3 | ) | (3 | ) | |||||||
Translation differences | 0 | 63 | 63 | |||||||||
Balance as at December 31, 2020 | 21,455 | 1,061 | 22,516 | |||||||||
Carrying value | ||||||||||||
As at January 1, 2020 | 131 | 1,102 | 1,233 |
Note 12 – Intangible Assets, Net (Cont’d)
B. | The total carrying amounts of intangible assets with a finite useful life and with an indefinite useful life or not yet available for use |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Intangible assets with a finite useful life | 105,525 | 1,311 | ||||||
Intangible assets with an indefinite useful life or not yet available for use | 118,757 | 141 | ||||||
224,282 | 1,452 |
C. | Impairment testing of a cash-generating unit |
1. | Forecast years - represents the period spanning from January 1, 2022 to December 31, 2054, based on the estimate of the economic life of the power plants and their value as at the end of the forecast period. |
2. | Market prices and capacity - market prices (electricity, gas, capacity, etc.) were provided by an external independent appraiser, the cash flow forecasts were made for each power plant separately, taking into account the relevant electricity market (NYISO, ISO-NE, PJM and SPP) and the relevant regulation. |
3. | The annual inflation rate of 2.6% equals the derived 10-year inflation rate as of the estimate date. |
4. | The WACC - calculated for each material project separately, and ranges between 4.75 % (project with agreements for sale of the entire capacity) and 8.5%. |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Deferred expenses, net (1) | 42,840 | 26,776 | ||||||
Contract costs | 5,119 | 5,036 | ||||||
Other non-current assets | 9,307 | 12,837 | ||||||
57,266 | 44,649 |
(1) | Relates to deferred expenses, net for OPC’s connection fees to the gas transmission network and the electricity grid. |
As at December 31 | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Current liabilities | ||||||||
Current maturities of long-term liabilities: | ||||||||
Loans from banks and others | 21,861 | 39,702 | ||||||
Non-convertible debentures | 7,125 | 6,769 | ||||||
Others | 9,325 | 0 | ||||||
38,311 | 46,471 | |||||||
Non-current liabilities | ||||||||
Loans from banks and others | 596,489 | 575,688 | ||||||
Non-convertible debentures | 575,314 | 296,146 | ||||||
1,171,803 | 871,834 | |||||||
Total | 1,210,114 | 918,305 |
Weighted-average interest rate December 31 | As at December 31, | ||||||||||
2021 | 2021 | 2020 | |||||||||
% | $ Thousands | ||||||||||
Debentures | |||||||||||
In shekels | 2.50% - 2.75% | 582,439 | 302,915 | ||||||||
Loans from banks and others | |||||||||||
In shekels | 4.70% | 627,675 | 615,390 | ||||||||
1,210,114 | 918,305 |
Financial liabilities (including interest payable) | ||||||||||||||||||||||||||||
Loans and credit | Loans from holders of interests that do not confer financial control | Debentures | Lease liabilities | Financial instruments designated for hedging | Other liabilities | Total | ||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||
Balance as at January 1, 2021 | 615,403 | 439 | 304,701 | 18,605 | 11,014 | 0 | 950,162 | |||||||||||||||||||||
Acquisitions as part of business combinations | ||||||||||||||||||||||||||||
Changes as a result of cash flows from financing activities | ||||||||||||||||||||||||||||
Payment in respect of derivative financial instruments | 0 | 0 | 0 | 0 | (13,933 | ) | 0 | (13,933 | ) | |||||||||||||||||||
Proceeds from issuance of debentures less issuance expenses | 0 | 0 | 262,750 | 0 | 0 | 0 | 262,750 | |||||||||||||||||||||
Receipt of long-term loans from banks | 211,738 | 131,388 | 0 | 0 | 0 | 0 | 343,126 | |||||||||||||||||||||
Repayment of loans, debentures and lease liabilities | (601,474 | ) | 0 | (5,876 | ) | (1,991 | ) | 0 | (28,495 | ) | (637,836 | ) | ||||||||||||||||
Interest paid | (25,095 | ) | 0 | (6,093 | ) | (335 | ) | 0 | 0 | (31,523 | ) | |||||||||||||||||
Costs paid in advance in respect of taking out loans | (4,991 | ) | 0 | 0 | 0 | 0 | 0 | (4,991 | ) | |||||||||||||||||||
Net cash (used in)/provided by financing activities | (419,822 | ) | 131,388 | 250,781 | (2,326 | ) | (13,933 | ) | (28,495 | ) | (82,407 | ) | ||||||||||||||||
Changes due to gain of control in subsidiaries | 172,163 | 0 | 0 | 10,542 | 12,176 | 28,729 | 223,610 | |||||||||||||||||||||
Effect of changes in foreign exchange rates | (10,820 | ) | 2,497 | 17,993 | 1,627 | (487 | ) | (176 | ) | 32,274 | ||||||||||||||||||
Changes in fair value | 0 | 0 | 0 | 0 | (13,726 | ) | 15,119 | 1,393 | ||||||||||||||||||||
Interest in the period | 38,803 | 4,275 | 13,125 | 507 | 0 | 246 | 56,956 | |||||||||||||||||||||
Other changes and additions during the year | 71,088 | 1,239 | 0 | 5,085 | (3,349 | ) | 13,394 | 87,457 | ||||||||||||||||||||
Balance as at December 31, 2021 | 488,455 | 139,838 | 586,600 | 34,040 | (8,305 | ) | 28,817 | 1,269,445 |
Financial liabilities (including interest payable) | ||||||||||||||||||||||||
Loans and credit | Loans from holders of interests that do not confer financial control | Debentures | Lease liabilities | Financial instruments designated for hedging | Total | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Balance as at January 1, 2020 | 540,281 | 439 | 81,847 | 5,385 | 4,225 | 632,177 | ||||||||||||||||||
Changes as a result of cash flows from financing activities | ||||||||||||||||||||||||
Payment in respect of derivative financial instruments | 0 | 0 | 0 | 0 | (6,105 | ) | (6,105 | ) | ||||||||||||||||
Proceeds from issuance of debentures less issuance expenses | 0 | 0 | 280,874 | 0 | 0 | 280,874 | ||||||||||||||||||
Receipt of long-term loans from banks | 73,236 | 0 | 0 | 0 | 0 | 73,236 | ||||||||||||||||||
Repayment of loans and debentures | (39,067 | ) | 0 | (84,487 | ) | 0 | 0 | (123,554 | ) | |||||||||||||||
Interest paid | (21,210 | ) | 0 | (3,630 | ) | (149 | ) | 0 | (24,989 | ) | ||||||||||||||
Payment of principal of lease liabilities | 0 | 0 | 0 | (551 | ) | 0 | (551 | ) | ||||||||||||||||
Costs paid in advance in respect of taking out loans | (8,556 | ) | 0 | 0 | 0 | 0 | (8,556 | ) | ||||||||||||||||
Net cash provided by/(used in) financing activities | 4,403 | 0 | 192,757 | (700 | ) | (6,105 | ) | 190,355 | ||||||||||||||||
Effect of changes in foreign exchange rates | 42,607 | 0 | 23,795 | 1,581 | 749 | 68,732 | ||||||||||||||||||
Changes in fair value | 0 | 0 | 0 | 0 | 12,145 | 12,145 | ||||||||||||||||||
Interest in the period | 21,301 | 0 | 5,473 | 292 | 0 | 27,066 | ||||||||||||||||||
Other changes and additions during the year | 6,811 | 0 | 829 | 12,047 | 0 | 19,687 | ||||||||||||||||||
Balance as at December 31, 2020 | 615,403 | 439 | 304,701 | 18,605 | 11,014 | 950,162 |
B. | OPC Rotem |
C. | OPC Hadera |
D. | OPC Tzomet |
As part of the Tzomet Financing Agreement, terms were provided with reference to conversion of interest on the long term loans from variable interest to CPI linked interest. Such a conversion will take place in three cases: (a) automatically at the end of 6 years after the signing date of the Tzomet Financing Agreement; (b) at OPC Tzomet’s request during the first 6 years commencing from the signing date of the Tzomet Financing Agreement; (c) at Bank Hapoalim’s request, in certain cases, during the first 6 years commencing from the signing date of the Tzomet Financing Agreement. In addition, OPC Tzomet has the right to make early repayment of the loans within 6 years after the signing date of the Tzomet Financing Agreement, subject to a one time reduced payment (and without payment of an early repayment penalty), and provided that up to the time of the early repayment, the loans were not converted into loans bearing fixed interest linked to the CPI. The Tzomet Financing Agreement also includes certain restrictions with respect to distributions and repayment of shareholders’ loans.
E. | OPC |
F. | CPV Keenan |
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.
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Trade Payables | 136,505 | 92,542 | ||||||
Accrued expenses and other payables | 11,479 | 21,870 | ||||||
Government institutions | 2,459 | 3,144 | ||||||
Employees and payroll institutions | 11,625 | 5,940 | ||||||
Interest payable | 5,213 | 2,314 | ||||||
Others | 4,256 | 2,432 | ||||||
171,537 | 128,242 |
A) | The Group leases the following items: |
i) | Land |
ii) | OPC gas transmission infrastructure |
iii) | Offices |
iv) | Low-value items |
B) | Right-of-use assets |
As at December 31, 2021 | ||||||||||||||||
Balance at beginning of year | Depreciation charge for the year | Adjustments | Balance at end of year | |||||||||||||
$ Thousands | ||||||||||||||||
Land | 77,011 | (3,375 | ) | 7,719 | 81,355 | |||||||||||
PRMS facility | 6,514 | (480 | ) | 205 | 6,239 | |||||||||||
Offices | 2,499 | (1,716 | ) | 9,499 | 10,282 | |||||||||||
Others | 0 | 0 | 7 | 7 | ||||||||||||
86,024 | (5,571 | ) | 17,430 | 97,883 |
As at December 31, 2020 | ||||||||||||||||
Balance at beginning of year | Depreciation charge for the year | Adjustments | Balance at end of year | |||||||||||||
$ Thousands | ||||||||||||||||
Land | 6,853 | (2,141 | ) | 72,299 | 77,011 | |||||||||||
PRMS facility | 6,506 | (449 | ) | 457 | 6,514 | |||||||||||
Offices | 3,305 | (500 | ) | (306 | ) | 2,499 | ||||||||||
Others | 459 | 0 | (459 | ) | 0 | |||||||||||
17,123 | (3,090 | ) | 71,991 | 86,024 |
C) | Amounts recognized in the consolidated statements of profit & loss and cash flows |
As at December 31, | As at December 31, | |||||||
2021 | 2020 | |||||||
$ Thousands | $ Thousands | |||||||
Interest expenses in respect of lease liability | 550 | 149 | ||||||
Total cash outflow for leases | 1,993 | 551 |
A. | Contingent Liabilities |
a. | Local Council of Shafir development levies |
b. | Oil Refineries Ltd. (now known as “Bazan”) gas purchase claim |
c. | Bazan electricity purchase claim |
d. | IEC power purchase agreement |
e. | Impact on OPC Rotem from amendment of standards in connection with Deviations from Consumption Plans |
f. | Construction agreement between OPC Hadera and IDOM Servicios Integrados |
g. | Construction agreement between OPC Tzomet and PW Power Systems LLC |
h. | Gas agreement with Energean |
i. | Inkia Energy Limited (liquidated in 2019) |
B. | Commitments |
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.
A. | Share Capital |
Company No. of shares (’000) | ||||||||
2021 | 2020 | |||||||
Authorised and in issue at January, 1 | 53,871 | 53,858 | ||||||
Issued for share plan | 8 | 13 | ||||||
Authorised and in issue at December. 31 | 53,879 | 53,871 |
B. | Translation reserve |
C. | Capital reserves |
D. | Dividends |
E. | Kenon's share plan |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Revenue from sale of electricity | 445,000 | 369,421 | 356,648 | |||||||||
Revenue from sale of steam | 17,648 | 16,204 | 16,494 | |||||||||
Revenue from provision of services | 25,115 | 0 | 0 | |||||||||
Others | 0 | 845 | 331 | |||||||||
487,763 | 386,470 | 373,473 |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Fuels | 153,122 | 135,706 | 138,502 | |||||||||
Electricity and infrastructure services | 133,502 | 125,782 | 101,085 | |||||||||
Salaries and related expenses | 21,095 | 7,244 | 6,661 | |||||||||
Generation and operating expenses and outsourcing | 16,798 | 8,625 | 6,326 | |||||||||
Insurance | 4,989 | 3,503 | 2,360 | |||||||||
Others | 6,792 | 1,226 | 1,102 | |||||||||
336,298 | 282,086 | 256,036 |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Payroll and related expenses (1) | 41,930 | 11,360 | 10,853 | |||||||||
Depreciation and amortization | 2,623 | 1,023 | 951 | |||||||||
Professional fees | 16,069 | 8,386 | 12,806 | |||||||||
Business development expenses | 1,566 | 1,998 | 1,947 | |||||||||
Expenses in respect of acquisition of CPV Group | 752 | 12,227 | 0 | |||||||||
Other expenses | 12,787 | 14,963 | 9,879 | |||||||||
75,727 | 49,957 | 36,436 |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Interest income from bank deposits | 167 | 780 | 2,545 | |||||||||
Net change in fair value of derivative financial instruments | 443 | 0 | 0 | |||||||||
Interest income from deferred payment | 0 | 13,511 | 15,134 | |||||||||
Amount reclassified to consolidated statements of profit & loss from capital reserve in respect of cash flow hedges | 2,121 | 0 | 0 | |||||||||
Other income | 203 | 0 | 0 | |||||||||
Financing income | 2,934 | 14,291 | 17,679 | |||||||||
Interest expenses to banks and others | (51,924 | ) | (24,402 | ) | (22,420 | ) | ||||||
Amount reclassified to consolidated statements of profit & loss from capital reserve in respect of cash flow hedges | 0 | (6,300 | ) | (2,743 | ) | |||||||
Net change in exchange rates | (5,997 | ) | (5,645 | ) | (2,328 | ) | ||||||
Net change in fair value of derivative financial instruments | 0 | (1,569 | ) | (1,657 | ) | |||||||
Early repayment fee (Note 14.B, Note 14.E) | (84,196 | ) | (11,852 | ) | 0 | |||||||
Other expenses | (2,178 | ) | (1,406 | ) | (798 | ) | ||||||
Financing expenses | (144,295 | ) | (51,174 | ) | (29,946 | ) | ||||||
Net financing expenses | (141,361 | ) | (36,883 | ) | (12,267 | ) |
A. | Components of the Income Taxes |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Current taxes on income | ||||||||||||
In respect of current year | 28,009 | 734 | 2,569 | |||||||||
In respect of prior years | 0 | 1 | (18 | ) | ||||||||
Deferred tax (income)/expense | ||||||||||||
Creation and reversal of temporary differences | (23,684 | ) | 3,963 | 14,124 | ||||||||
Total tax expense on income | 4,325 | 4,698 | 16,675 |
B. | Reconciliation between the theoretical tax expense (benefit) on the pre-tax income (loss) and the actual income tax expenses |
For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Profit/(loss) from continuing operations before income taxes | 879,642 | 500,447 | (5,536 | ) | ||||||||
Statutory tax rate | 17.00 | % | 17.00 | % | 17.00 | % | ||||||
Tax computed at the statutory tax rate | 149,539 | 85,076 | (941 | ) | ||||||||
Increase (decrease) in tax in respect of: | ||||||||||||
Elimination of tax calculated in respect of the Group’s share in losses of associated companies | (190,539 | ) | (27,353 | ) | 7,043 | |||||||
Different tax rate applicable to subsidiaries operating overseas | (9,297 | ) | ||||||||||
Income subject to tax at a different tax rate | 0 | 441 | 5,960 | |||||||||
Non-deductible expenses | 44,851 | 1,028 | 5,408 | |||||||||
Exempt income | (23,937 | ) | (61,415 | ) | (4,714 | ) | ||||||
Taxes in respect of prior years | (361 | ) | 1 | (18 | ) | |||||||
Tax in respect of foreign dividend | 28,172 | 0 | 0 | |||||||||
Share of non-controlling interests in entities transparent for tax purposes | 5,528 | 0 | 0 | |||||||||
Tax losses and other tax benefits for the period regarding which deferred taxes were not recorded | 95 | 7,647 | 3,946 | |||||||||
Other differences | 274 | (727 | ) | (9 | ) | |||||||
Tax expense on income included in the statement of profit and loss | 4,325 | 4,698 | 16,675 |
Note 23 – Income Taxes (Cont’d)
C. | Deferred tax assets and liabilities |
1. | Deferred tax assets and liabilities recognized |
Property plant and equipment | Carryforward of losses and deductions for tax purposes | Financial instruments | Other* | Total | ||||||||||||||||
$ thousands | ||||||||||||||||||||
Balance of deferred tax asset (liability) as at January 1, 2020 | (82,805 | ) | 2,518 | 141 | 2,099 | (78,047 | ) | |||||||||||||
Changes recorded on the statement of profit and loss | (6,230 | ) | (951 | ) | 212 | 3,006 | (3,963 | ) | ||||||||||||
Changes recorded in other comprehensive income | 0 | 0 | 1,346 | 0 | 1,346 | |||||||||||||||
Translation differences | (6,639 | ) | 124 | 117 | 100 | (6,298 | ) | |||||||||||||
Balance of deferred tax asset (liability) as at December 31, 2020 | (95,674 | ) | 1,691 | 1,816 | 5,205 | (86,962 | ) | |||||||||||||
Changes recorded on the statement of profit and loss | (23,591 | ) | 106,643 | 49 | (80,662 | ) | 2,439 | |||||||||||||
Changes recorded in other comprehensive income | 0 | 0 | (423 | ) | (2,847 | ) | (3,270 | ) | ||||||||||||
Change as a result of business combinations | (4,050 | ) | 2,882 | (232 | ) | (5,350 | ) | (6,750 | ) | |||||||||||
Translation differences | (3,915 | ) | 1,126 | 50 | 101 | (2,638 | ) | |||||||||||||
Balance of deferred tax asset (liability) as at December 31, 2021 | (127,230 | ) | 112,342 | 1,260 | (83,553 | ) | (97,181 | ) |
* | This amount includes deferred tax arising from intangibles, undistributed profits, non-monetary items, associated companies and trade receivables distribution. |
2. | The deferred taxes are presented in the statements of financial position as follows: |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
As part of non-current assets | 49,275 | 7,374 | ||||||
As part of current liabilities | (21,117 | ) | 0 | |||||
As part of non-current liabilities | (125,339 | ) | (94,336 | ) | ||||
(97,181 | ) | (86,962 | ) |
Note 23 – Income Taxes (Cont’d)
3. | Tax and deferred tax balances not recorded |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Losses for tax purposes | 167,758 | 54,985 | ||||||
Deductible temporary differences | 0 | 1,971 | ||||||
167,758 | 56,956 |
According to Israeli tax law, there is no time limit on the utilization of tax losses and the utilization of the deductible temporary differences. Deferred tax assets were not recognized for these items, since it is not expected that there will be taxable income in the future, against which the tax benefits can be utilized.
• | Net operating losses for tax purposes of $108 million, which may be offset for tax purposes in the United States against future income, subject to complying with the conditions of the law, some of which are not under the OPC’s control and, therefore, OPC did not recognize deferred tax assets in respect thereof. These losses will expire in 2027-2037. |
• | $2 million in tax credits, offsettable for tax purposes in the United States against future profits in the United States, are subject to complying with the conditions of the law, some of which are not under the OPC’s control and, therefore, OPC did not recognize deferred tax assets. These losses will expire in 2027-2037. |
4. | Safe habor rules |
Note 24 – Earnings per Share
A. | Profit/(Loss) allocated to the holders of the ordinary shareholders |
For the year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Profit/(loss) for the year attributable to Kenon’s shareholders | 930,273 | 507,106 | (13,359 | ) | ||||||||
Profit for the year from discontinued operations (after tax) attributable to Kenon’s shareholders | 0 | 8,476 | 24,653 | |||||||||
Profit/(loss) for the year from continuing operations attributable to Kenon’s shareholders | 930,273 | 498,630 | (38,012 | ) |
B. | Number of ordinary shares |
For the year ended December 31 | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Thousands | ||||||||||||
Weighted Average number of shares used in calculation of basic/diluted earnings per share | 53,879 | 53,870 | 53,856 |
(a) | I.C. Power (Latin America businesses) |
Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019 | ||||||||||
$Thousands | ||||||||||||
Recovery of retained claims | 0 | 9,923 | 30,000 | |||||||||
Income taxes | 0 | (1,447 | ) | (5,347 | ) | |||||||
Profit after income taxes | 0 | 8,476 | 24,653 | |||||||||
Net cash flows provided by investing activities | 0 | 8,476 | 24,567 |
OPC Israel | CPV Group | ZIM | Quantum | Others | Total | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
2021 | ||||||||||||||||||||||||
Revenue | 437,043 | 50,720 | 0 | 0 | 0 | 487,763 | ||||||||||||||||||
(Loss)/profit before taxes | (57,040 | ) | (60,709 | ) | 1,260,789 | (251,483 | ) | (11,915 | ) | 879,642 | ||||||||||||||
Income tax benefit/(expense) | 10,155 | 13,696 | 0 | 0 | (28,176 | ) | (4,325 | ) | ||||||||||||||||
(Loss)/profit from continuing operations | (46,885 | ) | (47,013 | ) | 1,260,789 | (251,483 | ) | (40,091 | ) | 875,317 | ||||||||||||||
Depreciation and amortization | 44,296 | 13,102 | 0 | 0 | 242 | 57,640 | ||||||||||||||||||
Financing income | (2,730 | ) | (37 | ) | 0 | 0 | (167 | ) | (2,934 | ) | ||||||||||||||
Financing expenses | 119,392 | 24,640 | 0 | 0 | 263 | 144,295 | ||||||||||||||||||
Other items: | ||||||||||||||||||||||||
Losses related to Qoros | 0 | 0 | 0 | 251,483 | 0 | 251,483 | ||||||||||||||||||
Losses related to ZIM | 0 | 0 | 204 | 0 | 0 | 204 | ||||||||||||||||||
Share in losses/(profit) of associated companies | 419 | 10,425 | (1,260,993 | ) | 0 | 0 | (1,250,149 | ) | ||||||||||||||||
161,377 | 48,130 | (1,260,789 | ) | 251,483 | 338 | (799,461 | ) | |||||||||||||||||
Adjusted EBITDA | 104,337 | (12,579 | ) | 0 | 0 | (11,577 | ) | 80,181 | ||||||||||||||||
Segment assets | 1,511,408 | 431,474 | 0 | 0 | 226,337 | 2,169,219 | ||||||||||||||||||
Investments in associated companies | 0 | 545,242 | 1,354,212 | 0 | 0 | 1,899,454 | ||||||||||||||||||
4,068,673 | ||||||||||||||||||||||||
Segment liabilities | 1,354,476 | 218,004 | 0 | 0 | 215,907 | 1,788,387 |
OPC Israel | CPV Group | ZIM | Quantum | Others | Total | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
2020 | ||||||||||||||||||||||||
Revenue | 385,625 | 0 | 0 | 0 | 845 | 386,470 | ||||||||||||||||||
(Loss)/profit before taxes | (8,620 | ) | 0 | 210,647 | 303,669 | (5,249 | ) | 500,447 | ||||||||||||||||
Income tax expense | (3,963 | ) | 0 | 0 | 0 | (735 | ) | (4,698 | ) | |||||||||||||||
(Loss)/profit from continuing operations | (12,583 | ) | 0 | 210,647 | 303,669 | (5,984 | ) | 495,749 | ||||||||||||||||
Depreciation and amortization | 33,981 | 0 | 0 | 0 | 190 | 34,171 | ||||||||||||||||||
Financing income | (354 | ) | 0 | 0 | 0 | (13,937 | ) | (14,291 | ) | |||||||||||||||
Financing expenses | 50,349 | 0 | 0 | 1 | 824 | 51,174 | ||||||||||||||||||
Other items: | - | |||||||||||||||||||||||
Net gains related to Qoros | 0 | 0 | 0 | (309,918 | ) | 0 | (309,918 | ) | ||||||||||||||||
Write back of impairment of investment | 0 | 0 | (43,505 | ) | 0 | 0 | (43,505 | ) | ||||||||||||||||
Share in losses/(profit) of associated companies | 0 | 0 | (167,142 | ) | 6,248 | 0 | (160,894 | ) | ||||||||||||||||
83,976 | 0 | (210,647 | ) | (303,669 | ) | (12,923 | ) | (443,263 | ) | |||||||||||||||
Adjusted EBITDA | 75,356 | 0 | 0 | 0 | (18,172 | ) | 57,184 | |||||||||||||||||
Segment assets | 1,723,967 | 0 | 0 | 235,220 | 225,998 | 2,185,185 | ||||||||||||||||||
Investments in associated companies | 0 | 0 | 297,148 | 0 | 0 | 297,148 | ||||||||||||||||||
2,482,333 | ||||||||||||||||||||||||
Segment liabilities | 1,200,363 | 0 | 0 | 0 | 5,962 | 1,206,325 |
OPC Israel | Quantum | ZIM | Others | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2019 | ||||||||||||||||||||
Revenue | 373,142 | 0 | 0 | 331 | 373,473 | |||||||||||||||
Profit/(loss) before taxes | 48,513 | (44,626 | ) | (4,375 | ) | (5,048 | ) | (5,536 | ) | |||||||||||
Income Taxes | (14,147 | ) | 0 | 0 | (2,528 | ) | (16,675 | ) | ||||||||||||
Profit/(loss) from continuing operations | 34,366 | (44,626 | ) | (4,375 | ) | (7,576 | ) | (22,211 | ) | |||||||||||
Depreciation and amortization | 31,141 | 0 | 0 | 951 | 32,092 | |||||||||||||||
Financing income | (1,930 | ) | (242 | ) | 0 | (15,507 | ) | (17,679 | ) | |||||||||||
Financing expenses | 28,065 | 0 | 0 | 1,881 | 29,946 | |||||||||||||||
Other items: | ||||||||||||||||||||
Net losses related to Qoros | 0 | 7,813 | 0 | 0 | 7,813 | |||||||||||||||
Share in losses of associated companies | 0 | 37,055 | 4,375 | 0 | 41,430 | |||||||||||||||
57,276 | 44,626 | 4,375 | (12,675 | ) | 93,602 | |||||||||||||||
Adjusted EBITDA | 105,789 | 0 | 0 | (17,723 | ) | 88,066 | ||||||||||||||
Segment assets | 1,000,329 | 71,580 | 0 | 247,155 | 1,319,064 | |||||||||||||||
Investments in associated companies | 0 | 105,040 | 84,270 | 0 | 189,310 | |||||||||||||||
1,508,374 | ||||||||||||||||||||
Segment liabilities | 761,866 | 0 | 0 | 34,720 | 796,586 |
A. | Customer and Geographic Information |
2021 | 2020 | 2019 | ||||||||||||||||||||||
Customer | Total revenues | Percentage of revenues of the Group | Total revenues | Percentage of revenues of the Group | Total revenues | Percentage of revenues of the Group | ||||||||||||||||||
Customer 1 | 93,959 | 19.26 | % | 86,896 | 22.48 | % | 80,861 | 21.65 | % | |||||||||||||||
Customer 2 | 70,801 | 14.52 | % | 74,694 | 19.33 | % | 76,653 | 20.52 | % | |||||||||||||||
Customer 3 | 0 | * | 0 | * | 0 | * | 0 | * | 56,393 | 15.10 | % | |||||||||||||
Customer 4 | 0 | * | 0 | * | 0 | * | 0 | * | 48,724 | 13.05 | % | |||||||||||||
Customer 5 | 0 | * | 0 | * | 0 | * | 0 | * | 39,904 | 10.68 | % |
For the year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Israel | 437,043 | 385,625 | 373,142 | |||||||||
United States | 50,720 | 0 | 0 | |||||||||
Others | 0 | 845 | 331 | |||||||||
Total revenue | 487,763 | 386,470 | 373,473 |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Israel | 1,039,505 | 820,012 | ||||||
United States | 310,426 | 0 | ||||||
Others | 171 | 1 | ||||||
Total non-current assets | 1,350,102 | 820,013 |
A. | Identity of related parties: |
B. | Transactions with directors and officers (Kenon's directors and officers): |
For the year ended December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Short-term benefits | 1,994 | 1,837 | ||||||
Share-based payments | 258 | 351 | ||||||
2,252 | 2,188 |
C. | Transactions with related parties (including associates): |
For the year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
$ Thousands | ||||||||||||
Sale of electricity | 88,004 | 80,416 | 78,362 | |||||||||
Cost of sales | 7,802 | 16 | 14 | |||||||||
Dividend received from associate | 143,964 | 0 | 0 | |||||||||
Other income, net | (337 | ) | (90 | ) | (129 | ) | ||||||
Financing expenses, net | 39,901 | 2,156 | 1,256 | |||||||||
Interest expenses capitalized to property plant and equipment | 0 | 119 | 312 |
D. | Balances with related parties (including associates): |
As at December 31, | As at December 31, | |||||||||||||||
2021 | 2020 | |||||||||||||||
Other related parties * | Total | Other related parties * | Total | |||||||||||||
$ Thousands | $ Thousands | |||||||||||||||
Cash and cash equivalent | 89,814 | 89,814 | 467 | 467 | ||||||||||||
Short-term deposits and restricted cash | 0 | 0 | 352,150 | 352,150 | ||||||||||||
Trade receivables and other receivables | 14,860 | 14,860 | 9,108 | 9,108 | ||||||||||||
Other payables | (424 | ) | 424 | 0 | 0 | |||||||||||
Loans and Other Liabilities | ||||||||||||||||
In US dollar or linked thereto | (27,587 | ) | (27,587 | ) | (157,449 | ) | (157,449 | ) |
* | IC, Israel Chemicals Ltd (“ICL”), Oil Refineries Ltd (“Bazan”). |
E. | For further investment by Kenon into OPC, see Note 10.A.1.o. |
A. | General |
B. | Credit risk |
(1) | Exposure to credit risk |
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Carrying amount | ||||||||
Cash and cash equivalents | 474,544 | 286,184 | ||||||
Short-term and long-term deposits and restricted cash | 26,720 | 636,201 | ||||||
Trade receivables and other assets | 92,552 | 61,974 | ||||||
Short-term and long-term derivative instruments | 9,103 | 279 | ||||||
602,919 | 984,638 |
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:
As at December 31, | ||||||||
2021 | 2020 | |||||||
$ Thousands | ||||||||
Israel | 56,632 | 47,741 | ||||||
Other regions | 6,011 | 207 | ||||||
62,643 | 47,948 |
(2) | Aging of debts |
As at December 31 | ||||||||
2021 | 2020 | |||||||
$ Thousands | $ Thousands | |||||||
Not past due | 62,643 | 47,948 |
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.
C. | Liquidity risk |
As at December 31, 2021 | ||||||||||||||||||||||||
Book value | Projected cash flows | Up to 1 year | 1-2 years | 2-5 years | More than 5 years | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||||||
Trade payables | 136,505 | 136,505 | 136,505 | 0 | 0 | 0 | ||||||||||||||||||
Other current liabilities | 204,686 | 204,686 | 204,686 | 0 | 0 | 0 | ||||||||||||||||||
Lease liabilities including interest payable * | 33,395 | 38,375 | 19,492 | 2,602 | 6,232 | 10,049 | ||||||||||||||||||
Debentures (including interest payable) * | 586,600 | 669,883 | 21,326 | 24,431 | 236,364 | 387,762 | ||||||||||||||||||
Loans from banks and others including interest * | 628,293 | 772,875 | 44,244 | 70,895 | 325,201 | 332,535 | ||||||||||||||||||
Financial liabilities – hedging instruments | ||||||||||||||||||||||||
Forward exchange rate contracts | 5,014 | 6,368 | 6,230 | 138 | 0 | 0 | ||||||||||||||||||
Other forward exchange rate contracts | 1,199 | 1,790 | 1,790 | 0 | 0 | 0 | ||||||||||||||||||
1,595,692 | 1,830,482 | 434,273 | 98,066 | 567,797 | 730,346 |
* | Includes current portion of long-term liabilities. |
As at December 31, 2020 | ||||||||||||||||||||||||
Book value | Projected cash flows | Up to 1 year | 1-2 years | 2-5 years | More than 5 years | |||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||||||
Trade payables | 92,542 | 92,542 | 92,542 | 0 | 0 | 0 | ||||||||||||||||||
Other current liabilities | 24,302 | 24,302 | 24,302 | 0 | 0 | 0 | ||||||||||||||||||
Lease liabilities including interest payable * | 18,605 | 22,075 | 14,378 | 667 | 1,840 | 5,190 | ||||||||||||||||||
Debentures (including interest payable) * | 304,701 | 349,869 | 13,999 | 13,914 | 90,142 | 231,814 | ||||||||||||||||||
Loans from banks and others including interest * | 615,843 | 799,275 | 65,337 | 63,087 | 260,065 | 410,786 | ||||||||||||||||||
Financial liabilities – hedging instruments | ||||||||||||||||||||||||
Interest SWAP contracts | 11,014 | 41,092 | 6,083 | 5,596 | 13,923 | 15,490 | ||||||||||||||||||
Forward exchange rate contracts | 34,273 | 33,409 | 31,637 | 1,772 | 0 | 0 | ||||||||||||||||||
Other forward exchange rate contracts | 766 | 748 | 748 | 0 | 0 | 0 | ||||||||||||||||||
1,102,046 | 1,363,312 | 249,026 | 85,036 | 365,970 | 663,280 |
* | Includes current portion of long-term liabilities. |
As at December 31, 2021 | |||||||||||||||||||
Currency/ linkage receivable | Currency/ linkage payable | Amount receivable | Amount payable | Expiration dates | Fair value | ||||||||||||||
$ Thousands | |||||||||||||||||||
Forward contracts on exchange rates | Dollar | NIS | 3,135 | 9,746 | 2022 | 3 | |||||||||||||
Forward contracts on exchange rates | EURO | NIS | 4,929 | 18,571 | 2022 | (1,199 | ) | ||||||||||||
Call options on foreign currency | Dollar | NIS | 17,828 | 67,231 | 2022 | 4 |
As at December 31, 2020 | |||||||||||||||||||
Currency/ linkage receivable | Currency/ linkage payable | Amount receivable | Amount payable | Expiration dates | Fair value | ||||||||||||||
$ Thousands | |||||||||||||||||||
Forward contracts on exchange rates | Dollar | NIS | 12,064 | 39,535 | 2021 | (766 | ) | ||||||||||||
Call options on foreign currency | Dollar | NIS | 50,284 | 189,620 | 2021–2022 | 278 | |||||||||||||
Put options on foreign currency | Dollar | NIS | 35,347 | 9,374 | 2021 | (33 | ) |
The Group’s exposure to foreign currency risk in respect of non‑hedging derivative financial instruments is as follows:
As at December 31, 2021 | |||||||||||||||||||
Currency/ linkage receivable | Currency/ linkage payable | Amount receivable | Amount payable | Expiration dates | Fair value | ||||||||||||||
$ Thousands | |||||||||||||||||||
Forward contracts on exchange rates | Dollar | NIS | 33,333 | 109,259 | 2022-2023 | (5,014 | ) |
As at December 31, 2020 | |||||||||||||||||||
Currency/ linkage receivable | Currency/ linkage payable | Amount receivable | Amount payable | Expiration dates | Fair value | ||||||||||||||
$ Thousands | |||||||||||||||||||
Forward contracts on exchange rates | Dollar | NIS | 175,704 | 598,295 | 2021–2022 | (34,273 | ) |
a. | Breakdown of CPI-linked derivative instruments |
As at December 31, 2021 | |||||||||||||||||
Index receivable | Interest payable | Expiration date | Amount of linked principal | Fair value | |||||||||||||
$Thousands | |||||||||||||||||
CPI-linked derivative instruments | |||||||||||||||||
Interest exchange contract | CPI | 1.76 | % | 2036 | 107,598 | 7,369 |
As at December 31, 2020 | |||||||||||||||||
Index receivable | Interest payable | Expiration date | Amount of linked principal | Fair value | |||||||||||||
$Thousands | |||||||||||||||||
CPI-linked derivative instruments | |||||||||||||||||
Interest exchange contract | CPI | 1.70 | % | 2031 | 240,462 | (7,371 | ) | ||||||||||
Interest exchange contract | CPI | 1.76 | % | 2036 | 109,087 | (3,643 | ) |
b. | Exposure to CPI and foreign currency risks |
As at December 31, 2021 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 159,838 | 0 | 1,329 | |||||||||
Short-term deposits and restricted cash | 179 | 0 | 50 | |||||||||
Trade receivables | 56,632 | 0 | 81 | |||||||||
Other current assets | 1,308 | 0 | 4 | |||||||||
Long-term deposits and restricted cash | 21,463 | 0 | 0 | |||||||||
Total financial assets | 239,420 | 0 | 1,464 | |||||||||
Trade payables | 59,381 | 11,842 | ||||||||||
Other current liabilities | 23,536 | 7,044 | 190 | |||||||||
Loans from banks and others and debentures | 592,102 | 459,732 | 0 | |||||||||
Total financial liabilities | 675,019 | 466,776 | 12,032 | |||||||||
Total non-derivative financial instruments, net | (435,599 | ) | (466,776 | ) | (10,568 | ) | ||||||
Derivative instruments | 0 | 7,369 | (1,199 | ) | ||||||||
Net exposure | (435,599 | ) | (459,407 | ) | (11,767 | ) |
As at December 31, 2020 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 55,512 | 0 | 251 | |||||||||
Short-term deposits and restricted cash | 537,563 | 0 | 0 | |||||||||
Trade receivables | 47,791 | 0 | 156 | |||||||||
Other current assets | 2,909 | 0 | 8 | |||||||||
Investments in other companies | 0 | 0 | 235,218 | |||||||||
Long-term deposits and restricted cash | 60,954 | 0 | 0 | |||||||||
Total financial assets | 704,729 | 0 | 235,633 | |||||||||
Trade payables | 41,051 | 0 | 13,723 | |||||||||
Other current liabilities | 21,056 | 4,952 | 244 | |||||||||
Loans from banks and others and debentures | 131,082 | 789,462 | 0 | |||||||||
Total financial liabilities | 193,189 | 794,414 | 13,967 | |||||||||
Total non-derivative financial instruments, net | 511,540 | (794,414 | ) | 221,666 | ||||||||
Derivative instruments | 0 | (11,014 | ) | 0 | ||||||||
Net exposure | 511,540 | (805,428 | ) | 221,666 |
c. | Sensitivity analysis |
As at December 31, 2021 | ||||||||||||||||
10% increase | 5% increase | 5% decrease | 10% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
Shekel/dollar | (9,219 | ) | (4,609 | ) | 4,609 | 9,219 | ||||||||||
Shekel/EUR | (728 | ) | (364 | ) | 364 | 728 |
As at December 31, 2021 | ||||||||||||||||
2% increase | 1% increase | 1% decrease | 2% decrease | |||||||||||||
$Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
CPI | (6,639 | ) | (3,320 | ) | 3,320 | 6,201 |
As at December 31, 2020 | ||||||||||||||||
10% increase | 5% increase | 5% decrease | 10% decrease | |||||||||||||
$Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
Shekel/dollar | 452 | 226 | (226 | ) | (452 | ) | ||||||||||
Shekel/EUR | (814 | ) | (407 | ) | 407 | 814 |
As at December 31, 2020 | ||||||||||||||||
2% increase | 1% increase | 1% decrease | 2% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
CPI | (13,455 | ) | (6,727 | ) | 3,346 | 6,095 |
(2) | Interest rate risk |
As at December 31, | ||||||||
2021 | 2020 | |||||||
Carrying amount | ||||||||
$ Thousands | ||||||||
Fixed rate instruments | ||||||||
Financial assets | 16,137 | 580,607 | ||||||
Financial liabilities | (941,733 | ) | (860,787 | ) | ||||
(925,596 | ) | (280,180 | ) | |||||
Variable rate instruments | ||||||||
Financial assets | 55,033 | 86,028 | ||||||
Financial liabilities | (267,882 | ) | (57,078 | ) | ||||
(212,849 | ) | 28,950 |
As at December 31, 2021 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | (2,128 | ) | 2,128 |
As at December 31, 2020 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | 290 | (290 | ) |
As at December 31, 2021 | ||||||||||||||||
0.5% decrease | 0.5% increase | 1% increase | 1.5% increase | |||||||||||||
$ Thousands | ||||||||||||||||
Long-term loans (US LIBOR) | 566 | (567 | ) | (1,133 | ) | (1,699 | ) | |||||||||
Interest rate swaps (US LIBOR) | (396 | ) | 396 | 793 | 1,189 |
The Group’s exposure to LIBOR risk for derivative financial instruments used for hedging is as follows:
As at December 31, 2021 | |||||||||||||||||
Linkage receivable | Interest rate | Expiration date | Amount of the linked reserve | Fair value | |||||||||||||
$ Thousands | |||||||||||||||||
Interest rate swaps | USD LIBOR interest | 0.93 | % | 2030 | 69,371 | 936 |
E. | Fair value |
(1) | Fair value compared with carrying value |
As at December 31, 2021 | ||||||||
Carrying amount | Fair value | |||||||
$ Thousands | ||||||||
Liabilities | ||||||||
Non-convertible debentures | 586,600 | 642,077 | ||||||
Long-term loans from banks and others (excluding interest) | 488,455 | 545,806 | ||||||
Loans from non-controlling interests | 138,050 | 141,596 |
As at December 31, 2020 | ||||||||
Carrying amount | Fair value | |||||||
$ Thousands | ||||||||
Liabilities | ||||||||
Non-convertible debentures | 304,701 | 328,426 | ||||||
Long-term loans from banks and others (excluding interest) | 615,403 | 733,961 |
As at | As at | |||||||
December 31, 2021 | December 31, 2020 | |||||||
Level 3 | Level 3 | |||||||
$ Thousands | $ Thousands | |||||||
Asset | ||||||||
Long-term investment (Qoros) | 0 | 235,218 |
• | The underlying revenues estimate is based on Qoros’ 2021 budget. |
• | The EV/Revenues multiple of 1.7x was calculated using the enterprise value as of the valuation date, divided by the trailing 12-month net sales of relevant comparable companies in China based on latest public financial information available. |
• | The enterprise value was based on financial information extracted from unaudited Qoros management accounts as of the valuation date. |
• | The equity investment is calculated based on Kenon’s 12% interest in Qoros. |
• | The discount for lack of marketability is 15.1%, and is calculated using an average volatility of 45.6% based on a time period of 2.26 years (remaining contractual term of the put option as described below). |
Type | Valuation technique | Significant unobservable data | Inter-relationship between significant unobservable inputs and fair value measurement |
Long-term investment (Qoros) (2021) | The Group assessed the fair value of the long-term investment (Qoros) using the present value of the expected cash flows. | The likelihood of expected cash flows. | The estimated fair value would increase if the likelihood of expected cash flows increase. |
Long-term investment (Qoros) (2020) | The Group assessed the fair value of: (1) the equity interest using a market comparison technique based on market multiples derived from the quoted prices of companies comparable to the investee, taking into consideration certain adjustments including the effect of the non-marketability of the equity investments; and (2) the put option using standard valuation techniques such as: Binomial model using risk free rates from market information suppliers. | - Adjusted market multiples. - The Group researched on data from comparable companies on inputs such as expected volatility and credit risk. | The estimated fair value would increase (decrease) if: - the period end price is higher (lower) - the volatility is higher (lower) - the credit risk is lower (higher) |
1. | Kenon |
A. | Release of pledged OPC shares |
B. | Sale of ZIM shares |
C. | Capital reduction |
2. | ZIM |
A. | Dividend |
Kenon Holdings Ltd. | ||||
By: | /s/ Robert L. Rosen | |||
Name: | Robert L. Rosen | |||
Title: | Chief Executive Officer |
Exhibit Number | Description of Document | |
Exhibit Number | Description of Document | |
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. |