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.) |
James A. McDonald
Skadden, Arps, Slate, Meagher and Flom (UK) LLP
22 Bishopsgate
London EC2N 4BQ
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 ☐ |
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 | |
57 | ||
A. History and Development of the Company | 57 | |
B. Business Overview | 58 | |
C. Organizational Structure | 146 | |
D. Property, Plants and Equipment | 146 | |
146 | ||
146 | ||
A. Operating Results | 163 | |
B. Liquidity and Capital Resources | 168 | |
C. Research and Development, Patents and Licenses, Etc. | 182 | |
D. Trend Information | 182 | |
E. Critical Accounting Policies and Significant Estimates | 184 | |
184 | ||
A. Directors and Senior Management | 184 | |
B. Compensation | 187 | |
C. Board Practices | 187 | |
D. Employees | 190 | |
E. Share Ownership | 190 | |
191 | ||
A. Major Shareholders | 191 | |
B. Related Party Transactions | 192 | |
C. Interests of Experts and Counsel | 192 | |
192 | ||
A. Consolidated Statements and Other Financial Information | 192 | |
B. Significant Changes | 192 | |
193 | ||
A. Offer and Listing Details | 193 | |
B. Plan of Distribution | 193 | |
C. Markets | 193 | |
D. Selling Shareholders | 193 | |
E. Dilution | 193 | |
F. Expenses of the Issue | 193 | |
193 | ||
A. Share Capital | 193 | |
B. Constitution | 193 | |
C. Material Contracts | 205 | |
D. Exchange Controls | 205 | |
E. Taxation | 205 | |
F. Dividends and Paying Agents | 212 | |
G. Statement by Experts | 212 | |
H. Documents on Display | 212 | |
I. Subsidiary Information | 212 | |
212 | ||
213 | ||
A. Debt Securities | 213 | |
B. Warrants and Rights | 213 | |
C. Other Securities | 213 | |
D. American Depositary Shares | 213 |
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216 |
• | “CPV” means the CPV Group (i.e., CPV Power Holdings LP, Competitive Power Ventures Inc. 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 in January 2021 by CPV Group LP, an entity in which OPC indirectly holds a 70% interest; |
• | 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 55% 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; and |
• | ZIM Integrated Shipping Services, Ltd. (“ZIM”), an Israeli global container shipping company, in which Kenon has an approximately 21% 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” means Inkia Energy Limited, a Bermuda corporation, which was wholly-owned subsidiary of IC Power. In December 2017, Inkia sold all of its Latin American and Caribbean businesses and has since been wound up; |
• | “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; |
• | “Majority Shareholder” means the China-based investor related to Shenzhen Baoneng Investment Group Co., Ltd. (“Baoneng Group”) that holds 63% of Qoros; |
• | “our businesses” shall refer to each of our subsidiaries and associated company, collectively, as the context may require; |
• | “Quantum” means Quantum (2007) LLC, a Delaware limited liability company, is a wholly-owned subsidiary of Kenon and which is the direct owner of our interest in Qoros; |
• | “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; and |
• | “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. |
• | “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; |
• | “EA” means Israeli Electricity Authority; |
• | “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; |
• | “Gnrgy” means Gnrgy Ltd.; |
• | “GW” means gigawatt; |
• | “GWh” means gigawatt per hour (one GWh is equal to 1,000 MWh); |
• | “Hadera Energy Center” means OPC Hadera’s boilers and a steam turbine. The Hadera 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; |
• | “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; |
• | “IEC Reform” means the following: reform in the Israeli electricity sector and the restructuring of the IEC pursuant to a government resolution (Government Resolution No. 3859) received in 2018, including amendment to the Electricity Sector Law as published in the Official Gazette (Electricity Sector Law (Amendment No. 16 and Temporary Order), 2018); |
• | “Infinya” means Infinya Ltd. (formerly Hadera Paper Ltd.), an Israeli corporation; |
• | “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; |
• | “Kiryat Gat Power Plant” means a combined-cycle power plant powered by conventional energy with installed capacity of 75 MW located in the Kiryat Gat area, which began commercial operation in November 2019; |
• | “kWh” means kilowatt per hour; |
• | “Minimum Price” means the minimum price of gas in USD set forth in gas purchase agreements between Tamar Group and each of OPC-Hadera and OPC-Rotem based on a natural gas price formula described in the agreements that may be affected by generation component tariff; |
• | “MW” means megawatt (one MW is equal to 1,000 kilowatts or kW); |
• | “MWh” means megawatt per hour; |
• | “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 Israel has an 100% interest; |
• | “OPC Israel” or “OPC Holdings Israel Ltd” is an Israeli corporation which owns and operates OPC’s businesses in Israel, in which OPC holds an 80% interest; |
• | “OPC Power” means OPC Power Ventures LP; |
• | “PPA” means power purchase agreement; |
• | “Samay I” means Samay I S.A., a Peruvian corporation; |
• | “Sorek” means OPC Sorek 2 Ltd.; |
• | “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; |
• | “Tzomet” means Tzomet Energy Ltd., an Israeli corporation in which OPC has a 100% interest; and |
• | “Veridis” means Veridis Power Plants Ltd. |
• | “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; |
• | “strategic cooperation” means a more extensive type of cooperation arrangement, generally being longer term and involving more trade routes. It involves some joint planning mechanism, but joint planning is less extensive as compared to a strategic alliance. A strategic cooperation can take the form of one or a combination of cooperation arrangements; and |
• | “TEU” means twenty-foot equivalent unit. |
• | 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 tax status and treatment and expected status and treatment under relevant regulations; |
• | our treasury activities; |
• | statements relating to litigation; |
• | 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; and |
• | the expected effects of COVID-19 on our businesses; |
• | with respect to OPC: |
• | the expected cost and timing of commencement and completion of development and construction projects, as well as the anticipated installed capacities and expected performance (e.g., efficiency) of such projects, including the 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); |
• | gas supply agreements; |
• | strategy; |
• | dividend policy; |
• | expected trends in energy consumption; |
• | regulatory trends; |
• | 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; and |
• | statements with respect to the litigation and arbitration with the Majority Shareholder. |
• | with respect to ZIM: |
• | expectations regarding general market conditions, including as a result of rising inflation and corresponding increasing interest rates, the Russian invasion of Ukraine, the COVID-19 pandemic and other global economic trends; |
• | expectations regarding trends related to the global container shipping industry, including with respect to fluctuations in container supply, industry consolidation, demand for containerized shipping services, bunker prices, charter/ freights rates, container values and other factors affecting supply and demand; |
• | ZIM’s plans regarding its business strategy, areas of possible expansion and expected capital spending or operating expenses; |
• | anticipated ability of ZIM to obtain additional financing in the future to fund expenditures; |
• | expectation of modifications with respect to ZIM’s 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; |
• | the expected benefits of ZIM’s cooperation agreements and strategic partnerships; |
• | formation of new alliances among global carriers, changes in and disintegration of existing alliances and collaborations, including alliances and collaborations to which ZIM is not a party to; |
• | anticipated insurance costs; |
• | beliefs regarding the availability of crew; |
• | expectations regarding ZIM’s environmental and regulatory conditions, including changes in laws and regulations or actions taken by regulatory authorities, and the expected effect of such regulations; |
• | beliefs regarding potential liability from current or future litigation; |
• | plans regarding hedging activities; |
• | ability to pay dividends in accordance with ZIM’s dividend policy; |
• | expectations regarding ZIM’s competition and ability to compete effectively; and |
• | ability to effectively handle cyber-security threats and recover from cyber-security incidents. |
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 $1,163 million of outstanding indebtedness, including $159 million of outstanding indebtedness at the CPV level, and |
• | ZIM had outstanding indebtedness (mostly lease liabilities) of approximately $4.3 billion; |
• | 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; |
• | 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. |
• | global and regional economic and geopolitical trends, including the short- and long-term impact of the COVID-19 pandemic on the global economy, armed conflicts (including the Russia-Ukraine conflict), terrorist activities, embargoes, strikes, rising inflation, climbing interest rates 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, including vessel fuels and marine LNG; |
• | 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 55% 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 |
• | Israel in which OPC is engaged in the initiation, development, construction and operation of power plants using natural gas and renewable energy in Israel and supply of electricity to private customers and to the System Operator. The total capacity of OPC’s active or under-construction projects in Israel is approximately 1,203 MW. OPC manages its activities through OPC Israel, in which OPC holds 80%, with the remaining 20% held by Veridis; |
• | Renewable Energy in the U.S. in which OPC (through the CPV Group) is engaged in the initiation, development, construction and operation of power plants using renewable energy in the United States. CPV’s share and generation capacity in the active renewable energy power plants is approximately 152 MW in wind energy power plants and approximately 228 MW in two solar projects under construction; and |
• | Energy Transition in the U.S. in which OPC (through the CPV Group) is engaged mainly in the holding interest (usually minority interests) in operating power plants and power plants under construction operating using natural gas at high efficiency, which the CPV Group initiated and constructed, which are part of the Energy Transition - the process of switching to low-emission energy generation. CPV’s share and its generation capacity in active gas-fired and advanced combined cycle power plants stands at 1,290 MW out of 4,045 MW (five power plants), and approximately 126 MW out of a total capacity of approximately 1,258 MW under construction. |
* | OPC entered into a transaction for the acquisition of the Kiryat Gat Power Plant through OPC Power Plants. As of March 19, 2023, this transaction has not yet been completed. |
• | OPC-Rotem, a wholly-owned subsidiary of OPC Israel, 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 Israel, 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 Hadera Energy Center, which consists of boilers and a steam turbine. The Hadera 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 Israel, is developing a natural gas-fired open-cycle power station in Israel with capacity of approximately 396 MW. OPC expects that the Tzomet plant will reach its COD in the first half of 2023 and that the estimated total cost of completing the Tzomet plant will be approximately NIS 1.4 billion (approximately $0.4 billion) (excluding NIS 200 million, which is the tax assessment on the land). As of December 31, 2022, OPC had invested approximately NIS1.2 billion (approximately $341 million) in the project (not including amounts relating to milestones provided in the Tzomet power plant construction agreement that have been partially completed). |
• | Energy generation facilities on the premises of consumers. OPC has entered into agreements with several consumers for the installation and operation of generation facilities on the premises of consumers using gas-powered electricity generation installation, photovoltaic (solar) installations and setting up electricity storage installations for aggregate capacity of approximately 110 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 will depend on the number of arrangements entered into and is expected to be an average of NIS 4 million for each installed MW. |
• | Sorek Generation Facility. In May 2020, Sorek (a special-purpose company wholly-owned by OPC) signed an agreement with SMS IDE Ltd., which won a tender from the State of Israel for the construction, operation, maintenance and transfer of a seawater desalination facility on the Sorek B site (the “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 (the “Sorek 2 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. At the end of this 25-year period, ownership of the Sorek 2 Generation Facility will be transferred to the State of Israel. OPC estimates that construction of the plant will be completed in the second half of 2023. |
• | Kiryat Gat Power Plant. In June 2022, OPC, through a subsidiary, entered into a purchase agreement to acquire a combined-cycle power plant with installed capacity of 75 MW located in the Kiryat Gat area of Israel. The plant began commercial operation in November 2019. Consideration for the acquisition is approximately NIS 870 million (approximately $248 million), subject to further adjustments for cash balances and working capital. |
Power plant/ energy generation facilities | Capacity(1) (MW) | Method of presentation in the financial statements of the Company | Location | Type of project / technology | Year of commercial operation | |||||
Rotem | 466 | Consolidated | Mishor Rotem | Natural gas, combined cycle | 2013 | |||||
Hadera(2) | 144 | Consolidated | Hadera | Natural–gas – cogeneration | 2020 |
(1) | As stipulated in the relevant generation license |
(2) | Hadera holds the Hadera Energy Center (boilers and turbines located at the premises of Infinya), which serves as back-up for steam generated by the Hadera power plant. Since the end of 2020, the turbine at the Hadera Energy Center is not operating. |
Power plants / energy generation facilities | Status | Capacity (MW)(1) | Location | Technology | Expected commercial operation date | Main customer/ consumer | Total expected construction cost (in NIS million) | Total investment cost as of December 31, 2022 (in NIS million) | ||||||||
Tzomet | Under construction | 396 | Plugot Intersection | Conventional, open-cycle | First half of 2023 | System Operator | 1,400(2) | 1,200(3) | ||||||||
Sorek 2 | Under construction | 87 | On the premises of the Sorek B seawater desalination facility | Cogeneration | Second half of 2023 | Onsite consumers and the System Operator | 200 | 81 | ||||||||
Energy generation facilities on the consumers’ premises | various stages of development/construction | –Projects with an aggregate capacity of approx. 110 MW. The Company intends to expand projects to an aggregate capacity of at least approx. 120 MW. | On consumers’ premises across Israel | Conventional, renewable energy (solar) and storage | As from the first half of 2023, gradually | Onsite consumers also including Group customers | An average of about 4 per MW | 119 |
(1) | As stipulated in the relevant generation license. |
(2) | The estimate of the costs does not consider account half of the assessment issued by Israel Land Authority (ILA) in January 2021. The initial fee assessment was approximately NIS 200 million (not including VAT) (approximately $64 million) in respect of capitalization fees. OPC filed a legal appeal of the final assessment. |
(3) | Not including amounts relating to milestones provided in the Sorek power plant construction agreement that were partially completed. |
Power plant/ energy generation facilities | Status | Location | Technology | Additional details | ||||
Hadera 2 | Under development | Hadera, adjacent to the Hadera power plant | Conventional with storage capability | On December 27, 2021, the National Infrastructure Committee decided to submit National Infrastructure Plan 20B for government approval under Section 76C (9) of the Planning and Building Law, 1965 (hereinafter – the “Planning and Building Law”). For further information, including regarding the petition to the High Court of Justice that was filed against the decision of the National Infrastructure Committee and others (including Hadera 2). On June 28, 2022, a judgment was rendered which rejected the petition in limine. In December 2022, a renewable option agreement was signed with Infinya Ltd., for a 5-year period, to lease the land for the project. | ||||
Rotem 2 | Under development | Mishor Rotem, adjacent to the Rotem power plant | Under review, following the National Infrastructure Committee’s decision. | On December 27, 2021, the National Infrastructure Committee resolved to dismiss National Infrastructure Plan 94 advanced by Rotem 2, however it called on a developer to assess the option of realizing other technologies at the site. |
Plant | Location | CPV Ownership Interest | Field/ technology | Installed Capacity (MW) | Year of commercial operation | |||||
Conventional Energy Projects | ||||||||||
Fairview | Pennsylvania | 25% | Conventional gas-fired, Combined cycle | 1,050 | 2019 | |||||
Towantic | Connecticut | 26% | Conventional gas-fired (dual fuel / two fuels), Combined cycle | 805 | 2018 | |||||
Maryland | Maryland | 25% | Conventional gas-fired, combined cycle | 745 | 2017 | |||||
Shore | New Jersey | 37.53% | Conventional gas-fired, Combined cycle | 725 | 2016 | |||||
Valley | New York | 50% | Conventional gas-fired, dual-fuel, Combined cycle | 720 | 2018 | |||||
Renewable Energy Projects | ||||||||||
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, 2020 | December 31, 2021 | |||||||||||||||
Installed Capacity (MW) | % of Total Installed Capacity in the Market | Installed Capacity (MW) | % of Total Installed Capacity in the Market | |||||||||||||
IEC | 11,615 | 58 | % | 11,615 | 54 | % | ||||||||||
Private electricity producers (without renewable energy) | 5,780 | 29 | % | 6,231 | 29 | % | ||||||||||
Renewable energy (private electricity producers) | 2,549 | 13 | % | 3,656 | 17 | % | ||||||||||
Total in the market | 19,944 | 100 | % | 21,502 | 100 | % |
Energy produced (thousands of MWh) | % of total energy produced in Israel | Energy produced (thousands of MWh) | % of total energy produced in Israel | |||||||||||||
IEC | 44,333 | 61 | % | 38,223 | 52 | % | ||||||||||
Private electricity producers (without renewable energy) | 24,308 | 33 | % | 30,077 | 41 | % | ||||||||||
Renewable energy (private electricity producers) | 4,150 | 6 | % | 5,674 | 7.7 | % | ||||||||||
Total in the market | 72,791 | 100 | % | 73,974 | 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 independent capacity in natural gas by 2030 | 3,511-6,111 |
• | Operations in Israel: OPC manages its activities through OPC Israel, in which OPC holds 80%, with the remaining 20% held by Veridis. The total capacity of OPC’s active or under-construction projects in Israel is approximately 1,203 MW; |
• | Renewable Energy in the U.S. in which OPC (through the CPV Group) is engaged in the initiation, development, construction and operation of power plants using renewable energy in the United States. CPV’s share and generation capacity in the active renewable energy power plants is approximately 152 MW in wind energy power plants and approximately 228 MW in two solar projects under construction; and |
• | Conventional Energy in the U.S. in which OPC (through the CPV Group) is engaged mainly in the holding rights (usually minority rights) in active power plants and power plants under construction operating using natural gas at high efficiency, which the CPV Group initiated and constructed, which are part of the Energy Transition - the process of switching to low-emission energy generation. CPV’s share and its generation capacity in active gas-fired and advanced combined cycle power plants stands at 1,290 MW out of 4,045 MW (five power plants), and approximately 126 MW out of a total capacity of approximately 1,258 MW under construction. |
Entity | Installed Capacity (MW) | Net energy generated (GWh)(1) | Availability factor (%)(2) | |||||||||
OPC-Rotem | 466 | 3,285 | 90.5 | % | ||||||||
OPC-Hadera | 144 | 800 | 73.6 | % | ||||||||
OPC Total | 610 | 4,085 |
(1) | The nextnet generation is the gross production capacity during the year, less energy consumed by the power plant for its own use. |
(2) | The availability factor is the period during which the power plant was available for electricity generation, including scheduled and non-scheduled maintenance work. |
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 |
Project | Location | Installed Capacity (MW) | CPV ownership interest | Year of commercial operation | Type of project/ technology / client | Regulated market(1) | Commercial Structure |
Conventional Energy | ||||||||||||||
CPV Fairview, LLC (“Fairview”) | Pennsylvania | 1,050 | 25% | 2019 | 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 2025. The capacity price determined for the 2022/2023 capacity year is $95.79 per MW/day in the zone in which the project is located. The capacity price determined for both the 2023/2024 and 2024/2025 capacity years is USD 49.49 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. 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 agreements to hedge the energy and gas prices for some or all of the capacity using a range of tools and products in order to reduce the level of uncertainty of the margin between the price of electricity received on the PJM and the price paid for the gas. | |||||||
CPV Towantic, LLC (“Towantic”) | Connecticut | 805 | 26% | 2018 | Gas-fired (with dual fuel), 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 to 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 2023-2024, there is a possibility to sell an additional 45 MW. The capacity price set for the 2025/2026 and 2026/2027 capacity years is $2.59 per kW/month in the area in which the project is located. Afterwards, 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. The 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 agreements to hedge the energy and gas prices for some or all of the capacity using a range of tools and products in order to reduce the level of uncertainty of the margin between the electricity price received on the ISO-NE and the price paid for the gas. |
Project | Location | Installed Capacity (MW) | CPV ownership interest | Year of commercial operation | Type of project/ technology / client | Regulated market(1) | Commercial Structure |
Conventional Energy | ||||||||||||||
CPV Maryland, LLC (“Maryland”) | Maryland | 745 | 25% | 2017 | 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 2025. The capacity price determined for the 2022/2023 capacity year is $95.79 per MW/day in the zone in which the project is located. The capacity price determined for the 2023/2024 and 2024/2025 capacity years is $49.49 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. The gas for the project is acquired based on market on the basis of market prices at the purchase point. From time to time, the project may enter into agreements to hedge the energy and gas prices for some or all of the capacity using a range of tools and products in order to reduce the uncertainty of the margin between the electricity price received on the PJM and the price paid for the gas. | |||||||
CPV Shore Holdings, LLC (“Shore”) | New Jersey | 725 | 37.53% | 2016 | 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 2025. The capacity price determined for the 2022/2023 capacity year is $97.86 per MW/day in the zone in which the project is located. The capacity price determined for the 2023/2024 capacity year is $49.49 per MW/day in the zone in which the project is located. The capacity price determined for the 2024/2025 capacity year is USD 54.95 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. The gas for the project is acquired based on the market prices at the purchase point. From time to time, the project may enter into agreements to hedge the energy and gas prices for some or all of the capacity using a range of tools and products to reduce the uncertainty of the margin between the price received on PJM and the price paid for the gas. | |||||||
CPV Valley Holdings, LLC (“Valley”) | New York | 720 | 50% | 2018 | 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 agreements to hedge the energy and gas prices using range of tools and products in order to reduce the uncertainty of the margin between the price of electricity received on the NYISO and the price paid for the gas. |
Project | Location | Installed Capacity (MW) | CPV ownership interest | Year of commercial operation | Type of project/ technology / client | Regulated market(1) | Commercial Structure |
Renewable Energy Projects(3) | ||||||||||||||
CPV Keenan II Renewable Energy Company, LLC (“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. |
(3) | In January 2023, CPV (through a wholly and indirectly owned entity) entered into an agreement for the acquisition of all rights (100%) in four active power plants for the generation of electricity through wind energy, with a total aggregate total capacity of approximately 81 MW, located in the State of Maine (United States) (the “Projects” and the “Mountain Wind Transaction,” as applicable). The Projects’ commercial operation started between 2008 and 2017, and are in the ISO-NE market. The Projects sell all the electricity and RECs under separate PPAs for the next 13 to 19 years, with most of the capacity being sold under contracts with a term for the next 15 years. The consummation of the Mountain Wind Transaction is subject to certain conditions precedent, including, among others, receipt of regulatory approvals in the United States. With respect one of the required consents, in February 2023 the waiting period under the applicable United States antitrust laws, the Hart-Scott-Rodino Act (the “HSR”), lapsed and therefore the Mountain Wind Transaction was cleared for closing for HSR purposes. The consideration for the Mountain Wind Transaction is $172 million, and subject to the adjustments and the other terms and conditions in the acquisition agreement. CPV intends to finance approximately 40% of the consideration in the transaction using external financing which terms are currently under negotiations and which is expected to include senior debt in project finance including collaterals of the Projects and the equity rights in the Projects, all subject to certain conditions that have not yet been finalized. |
2021 | 2022 | |||||||||||||||||||||||
Net Electricity generation (GWh)(1) | Actual Generation(2) (%) | Actual Availability Percentage (%) | Net Electricity generation (GWh)(1) | Actual Generation (%)(3) | Actual Availability Percentage (%) | |||||||||||||||||||
Conventional Energy Projects | ||||||||||||||||||||||||
Fairview(4) | 7,899 | 88.5 | % | 91.6 | % | 7,607 | 85.5 | % | 87.3 | % | ||||||||||||||
Towantic | 5,556 | 77.3 | % | 91.2 | % | 4,960 | 69.0 | % | 83.5 | % | ||||||||||||||
Maryland | 3,796 | 58.6 | % | 84.8 | % | 3,779 | 58.1 | % | 90.9 | % | ||||||||||||||
Shore | 3,654 | 57.6 | % | 93.6 | % | 4,422 | 69.7 | % | 96.0 | % | ||||||||||||||
Valley | 4,334 | 71.8 | % | 78.3 | % | 4,831 | 80.1 | % | 88.6 | % | ||||||||||||||
Renewable Energy Projects | ||||||||||||||||||||||||
Keenan II | 530 | 39.8 | % | 93.7 | % | 286 | 21.5 | % | 92.3 | % |
(1) | The net generation is the gross generation during the year less the electricity consumed for the self-use of the power plants. |
(2) | 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 unplanned outages or maintenance in the power plants which are conducted in regular time intervals. Major planned maintenance normally takes 30 – 40 days and reduces the power plants’ scope of production and capacity until maintenance is completed. |
(3) | 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. In January 2023, there was an unplanned maintenance in one of the power plants for approximately 13 days to repair a malfunction which was fixed. In 2023, Fairview, Shore, and Valley, are each expected to undertake material planned maintenance. |
(4) | The availability of Fairview’s production and capacity compared to 2021 was mainly affected by an unplanned maintenance. Maryland availability was affected mainly by weather conditions and extensions of the spring and fall planned maintenance. Towantic was out of order for a total of approximately 50 days during 2022 for planned and unplanned maintenance. Shore benefited from stronger market conditions which led to an increase in production and availability. Keenan absorbed curtailments in generation. |
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 |
Conventional Energy Projects | ||||||||||||||||
CPV Three Rivers LLC (“Three Rivers”) | Illinois | 1,258 | 10%(1) | 2020 | Second half 2023 | Natural gas, combined cycle | Three Rivers participated in tenders for capacity in the PJM Market for the 2023/2024 year. Capacity payments from PJM regardless of the actual quantity of generated electricity, based on the price determined in an annual tender for the year of operation three years in advance. The capacity price is determined up to May 2025. The capacity price determined for the 2023/2024 capacity is $34.13 per MW/day in the zone in which the project is located. The capacity price determined for the 2024/2025 capacity year is $28.92 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. The gas for the project will also be purchased on the market on the basis of market prices at the purchase points gas metrics. | Approximately $1.3 billion |
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 |
Renewable Energy Projects | ||||||||||||||||
CPV Maple Hill Solar LLC (“Maple Hill”) | Pennsylvania | 126 MWdc (Approximately 100 Mwac) | 100%(3) | Q2 2021 | Second half 2023(2) | Solar | The capacity payments from the PJM market, regardless of the actual quantities generated, based on the price set in an annual tender for the year of operation three years in advance. The capacity price is known up to May 2025. The capacity price determined for the 2022/2023 capacity year is $95.79 per MW/day in the zone in which the project is located. The capacity price determined for both 2023/2024 and 2024/2025 capacity years is $49.49 per MW/day in the zone in which the project located. Sale of 100% of the project’s SREC to a global energy company by 2026. CPV Group provided collateral to secure its obligations in the agreement, which include making certain payments to the other party if certain milestones (including commencement of activity) in the project are not completed according to a specific schedule. Sale of 48% of the electricity generated by the facility in accordance with virtual PPA. The remaining electricity is sold 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 $0.2 billion |
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 |
CPV Stagecoach Solar, LLC (“Stagecoach”)(4) | Georgia | 100 MW | 100% | Q2 2022 | First half 2024 | Solar | The project entered into a power supply agreement (PPA) with a utility company for the supply of all the electricity to be produced for a period of up to 30 years from the project’s commercial operation date, at market prices. Sale to a global company of 100% of the project’s SRECs, as well as a hedge covering the entire electricity price of the quantity that shall be produced and sold to the utility company, at a fixed price, for a period of 20 years from the date of commercial operation of the project | Approximately $127 million(5) |
(1) | Reflects completion of the sale of 7.5% of CPV’s interest in the Three Rivers Project on February 3, 2021. |
(2) | In light of suspension of the investigation started by the U.S. Department of Commerce, the project’s original panel supplier will not continue to supply the panels, the CPV Group made the adjustments to the project, as stated below, by means of utilization of the Group’s framework agreement for acquisition of panels from March 2022. The CPV Group is taking the required steps in order to implement replacement of the panel supplier. About 24 megawatts was supplied to the site by the original panel supplier. The balance of the solar panels, in the scope of about 102 megawatts is expected to be supplied under the framework agreement for acquisition of panels during 2023, and subject to execution of the adaptation and installation work of the panels on the project’s site. In light of the postponement of the connection date, the project is expected to reach commercial operation in the second half of 2023. The CPV Group is in contact with the parties involved with the project in order to update the agreements with them (if necessary) so as to reflect therein the said change. In April 2022, the project received a connection agreement with PJM and the connection is expected to be made in the second quarter of 2023. Maple Hill’s expected commercial operation date may be delayed even beyond what is stated above, including as a result of regulatory issues, changes pertaining to market terms in connection with raw materials (such as availability of solar panels) and supply chains, or technical delays (including adjusting and assembling equipment for the project) or the completion of the process of connecting Maple Hill to the grid by PJM. Delays may affect Maple Hill’s ability to meet certain schedule obligations with counterparties and may result in liquidated damages payments. |
(3) | In 2022, 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 IRA). The parties are currently discussing an update to the term sheet, including an increase of the investment to approximately $52 million. |
(4) | In May 2022, a Work Commencement Order for the construction work was issued to the project’s construction contractor, with solar technology having a capacity of approximately 100 megawatts in the State of Georgia (U.S.) – SREC market. On that date, among other things, a construction agreement (EPC) was signed with the project’s construction contractor. The total cost of the investment in the project is estimated at about $127 million (including development fees to the CPV Group in the estimated amount at about $20 million), and the project’s commercial operation date, subject to completion of the construction work is expected to take place in the first half of 2024. The project signed an agreement for sale of electricity (PPA) with a local utility company for sale of the electricity generated for a period that could reach up to 30 years from the project’s commercial operation date, at market prices. At the same time, the project contracted with a global company for sale of 100% of the project’s SRECs, RECs, and a full hedge of the electricity price of the quantity that will be generated and sold to the utility company, at a fixed price for 20 years from the project’s commercial operation date. The CPV Group has provided guarantees, in the cumulative amount of about $10 million, for purposes of assuring the project’s liabilities (including with respect to the dates relating to the project). The CPV Group continues to analyze the impact of the IRA on the project and the worthwhileness of the choice of the ITC or PTC benefit, as well as the project’s entitlement to a tax benefit. |
(5) | Including estimated development fees of approximately $20 million. The CPV Group is currently in discussions with a potential tax equity partner for the project. |
Project | Location | Capacity (MW) | OPC Ownership Interest | Projected Year of construction start | Projected date of commercial operation | Type of project/ technology | Activity area and electricity region | Manner of sale of capacity/ electricity | Expected construction cost ($ millions) | |||||||||
CPV Rogue’s Wind, LLC (“Rogue’s Wind”) | Pennsylvania | Approx. 114 MW | 100%(1) | Second half of 2023 | Second half of 2025(2) | Wind | PJM MAAC | In April 2021, signed PPA agreement for 10 years with a clean energy company. PPA may be adjusted to updated factors of the project | Approximately $257 |
(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 in connection with PJM’s interconnection process, including construction works or upgrade works (as of March 19, 2023, the project was issued with interconnection agreement). 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. In relation to storm Elliot, the gas supplier raised a claim relating to disruptions transporting natural gas. Fairview has agreed to settle for an amount that is immaterial to the CPV Group. |
• | 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. Fairview pays a fixed and a variable amount commencing from the date of the commercial operation. Fairview has paid an average of approximately $9 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. Fairview has paid an average of approximately $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: A CPV entity served as the asset manager for Fairview until September 2022. In accordance with an inter-company management agreement, one of the other investors in the project replaced the said entity on behalf of CPV, in accordance with the terms of the agreement. This other investor of the project assumed the role of asset manager for Fairview starting at October 1, 2022 and the CPV entity will provide certain limited scope services to the other investor on behalf of Fairview. |
• | 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, 2025. 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. On November 30, 2022, Towantic entered into a new natural gas supply arrangements. The agreement provides it with a maximum of 125,000 MMBtus/day of firm natural gas. The agreement has an initial term, which will commence on April 1, 2023 and end on March 31, 2025. |
• | 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 an average of approximately $8 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. Towantic has paid 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 and at September 7, 2022, Maryland extended it through October 31, 2024. |
• | 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. 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. Maryland has paid 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 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. |
• | Engineering, Procurement and Construction Agreement. Maryland signed an Engineering, Procurement and Construction Agreement dated October 31, 2022, for the construction of a Black Start facility in the event of grid power outages around the Maryland’s site. Total contract cost is approximately $30 million to be paid in accordance with a progress payment schedule incorporated into the agreement. Most of the consideration is financed through a financing agreement entered into by Maryland. |
• | 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 on August 31, 2022, OPC Maryland extended it through October 31, 2023. The agreement is renewable for one-year periods subsequent to October 31, 2023. |
• | 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 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. 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 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. Shore has paid an average of approximately $4 million each year over the past two years. |
• | 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 by up to three periods of five-year additional periods. 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. Valley has paid an average of approximately $6 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-year periods unless there is a written notice of termination at least 6 months prior to a renewal date. Valley has paid 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 ends on 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 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. The agreement expire in February 2031. Keenan II has paid an average of approximately $5 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. |
• | GSPA. Three Rivers entered into a Base Contract for Sale and Purchase of Natural Gas (GSPA) on December 15, 2022. The GSPA requires the supplier to provide gas supply of up to 200,000 MMBtu/day at a price indexed to market. The agreement had an initial term until January 31, 2023. The agreement is automatically renewed month-to-month unless one of the parties terminates by notification no less than 5 business days prior to the last day of the month. |
• | 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, 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 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 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, 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 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. The parties are currently discussing updates to the term sheet as a result of the IRA, including an increase in the investment amount to approximately $52 million. 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 consideration included the payment of a fixed price (as amended) for the purchase of the solar modules, plus the cost of transportation to the plant. On August 30, 2022, Maple Hill terminated the agreement. As of the termination date, Maple Hill had paid the supplier $9.8 million for the 24 MW of panels received. There was no early termination fee related to this contract. On March 10, 2022, the CPV Group entered into a master agreement for the purchase of solar panels with a total capacity of 530 MW for a maximum total consideration of $187 million. Pursuant to the agreement, the solar panels will be supplied in accordance with orders to be placed with the supplier by the CPV Group in 2023-2024. As of March 19, 2023, the CPV Group has started receiving deliveries of the solar panel, some of which are currently undergoing tests to evaluate compliance. |
• | 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 other party if certain milestones (including commencement of activity) in the project are not completed according to a specific 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. The agreement is subject to preconditions, which to the date of approval of the financial reports were not completed yet. The agreement was amended in late 2022, to extend the guaranteed commercial operation date of the project to the current, expected commercial operation date. |
• | Energy Sale Agreement (non-firm). In March 2022, Stagecoach entered into an agreement to sell 100% of non-firm energy to a utility company. The utility company is to receive all of the energy and ancillary services produced by Stagecoach. The agreement excludes tax attributes arising from the ownership of the solar project and any environmental attributes generated by the Stagecoach. The consideration is based on the hourly avoided energy rate for each hour of generation up to a maximum energy output as defined in the agreement. The agreement is for a period of 30 years from the commercial operation date of Stagecoach. |
• | Agreement to sell renewable solar energy credits. In April 2022, Stagecoach entered into an agreement with a global company to sell 100% of the renewable solar energy credits produced by the solar project, along with a full hedge of the electricity price of the energy that will be generated and sold under the agreement with the utility company mentioned above, at a fixed price for 20 years from the commercial operation date. |
• | EPC. In May 2022, Stagecoach signed an EPC agreement with an international contractor. Pursuant to the agreement, the contractor is to design, engineer, procure, install, construct, test, and commission the solar project on a turnkey, guaranteed-completion-date basis. The total consideration to be paid to the contractor is a fixed amount payable under a milestone schedule. |
• | Operation and Maintenance Agreement. In August 2022, Stagecoach entered into an operating and maintenance agreement with a third-party service provider to provide services during the mobilization and operational period of the Stagecoach solar facility. The agreement is for an initial 3-year term starting on August 1, 2022 and ending on December 31 of the third year from the date on which the service provider actually started rendering operational period services. The term of the agreement may be renewed for a maximum of two one-year renewals, unless one of the parties delivers a notice of non-renewal in accordance with the terms of the agreement. Stagecoach will pay both a fixed fee and a variable fee monthly over the term of the agreement. |
• | Rogue’s Wind Energy Project. In April 2021, an agreement was signed for sale of all the electricity, and the project’s environmental consideration (including RECs), benefits relating to availability and accompanying services). The agreement was signed for a period of 10 years from the commercial operation date. The CPV Group provided as collateral for securing its liabilities under the agreement, including execution of certain payments to the other part upon reaching certain milestones (including commencement of activities) in the project will not be completed in accordance with a specific timetable. |
Weighted production rate (AGOROT per kWh) | ||||||||
Season | Demand Hours | January to April 2022 | May to July 2022 | July to December 2022 | ||||
Winter | Off—peak | 21.22 | 20.45 | 23.23 | ||||
Mid-peak | 41.17 | 39.67 | 45.06 | |||||
On-peak | 71.87 | 69.25 | 78.67 | |||||
Transition | Off—peak | 18.13 | 17.47 | 19.84 | ||||
Mid-peak | 23.17 | 22.32 | 25.36 | |||||
On-peak | 29.84 | 28.76 | 32.67 | |||||
Summer | Off—peak | 17.91 | 17.26 | 19.6 | ||||
Mid-peak | 29.03 | 28.00 | 31.81 | |||||
On-peak | 75.37 | 72.62 | 82.5 | |||||
Weighted Average Rate | 28.69 | 27.64 | 31.4 |
2021 ($ millions) | 2022 ($ millions) | |||||||
Summer (2 months) | 255 | 338 | ||||||
Winter (3 months) | 379 | 458 | ||||||
Transitional Seasons (7 months) | 721 | 838 | ||||||
Total for the year | 1,355 | 1,634 |
Site | Location | Right in Asset | Area and Characteristics |
Land on which the Rotem Power Plant was built | Mishor Rotem | Lease | About 55 dunams |
Hadera Energy Center and the Hadera power plant (including emergency road) | Hadera | Rental | About 30 dunams (Power Plant and Hadera Energy Center) |
Hadera Expansion – Land near the area of the Hadera Power Plant | Hadera | Rental option through the end of 2028 | About 68 dunams |
Land near to space on which Rotem Power Plant was built | Mishor Rotem | Lease | About 55 dunams |
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 |
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 |
Land on which the Shore power plant was constructed | Middlesex County, New Jersey | Ownership | About 111,290 square meters (28 acres) | N/A |
Land on which the Maryland power plant was constructed | Charles County, Maryland | Ownership / easements / licenses and permits / authority | About 308,290 square meters (76 acres) | N/A |
Land on which the Valley power plant was constructed | Wawayanda, Orange County, New York | Substantive Ownership(1) / easements or permits | About 121,406 square meters (30 acres) | N/A |
Land on which the Towantic power plant was constructed | New Haven County, Connecticut | Ownership / easements | About 107,242 square meters (26 acres) | N/A |
Land on which the Fairview power plant was constructed | Cambria County, Jackson Township, Pennsylvania | Ownership / easements | About 352,077 square meters (87 acres) | N/A |
Land on which the Three Rivers power plant was constructed | Grundy County, Illinois | Ownership / easements | About 485,623 square meters (120 acres) | N/A |
Land on which the Keenan II wind farm was constructed | Woodward County, Oklahoma | Contractual easements | Rights to land and the equipment | December 31, 2040 |
Land on which the Maple Hill power plant is being constructed | Cambria County, Jackson Township, Pennsylvania | Ownership / easements | About 3,063,470 square meters (757 acres, of which 11 acres are leased) | With regard to the leased area December 1, 2061 |
Stagecoach Land on which the Stagecoach power plant is being built | Macon County, Georgia | Lease Agreement | Approx. 2,541,426 m² (628 acres) | May 22, 2042 with option to extend for an additional 20 years |
(1) | This land is held for the benefit of Valley, which is entitled to transfer it to its name. |
As of December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Number of employees by category of activity: | ||||||||||||
Headquarters | 42 | 34 | 66 | |||||||||
Plant operation, corporate management, finance, commercial and other | 108 | 86 | 50 | |||||||||
OPC Total (in Israel) | 150 | 120 | 116 |
• | 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% |
(1) | In 2030 and through 2049 – no more than 73% of the annual quantity measured in the base year. |
(2) | In 2050 and thereafter – no more than 15% of the annual quantity measured in the base year. |
• | Conventional technology – electricity generation using fossil fuel (natural gas, diesel oil or carbon). As of December 31, 2021, the total installed capacity in this technology which is primarily held by the independent producers, is about 5,931 megawatts. Gas-fired combined cycle generation facilities are planned to be operational during most hours over the year. Conventional open cycle power plants (the “peaker power plants”) are generally planned to operate for a number of hours during the day; these power plants are operated when the demand for electricity exceeds the supply - whether due to demand peaks, as backup in case of malfunctions in other generation facilities, or as a supplement when solar energy is unavailable – whether in the early morning hours or at night. |
• | 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 assigned under the current 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 2022, the installed capacity of renewable energy generation facilities was 4,795 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. Most of the renewable energy generation activities are sold to the System Operator or for own consumption and to the onsite consumers. |
• | 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 capacity of one of the production facilities (which is in operation) using this technology amounts to 300 MW with two additional facilities using this technology with capacity of approximately 800 MW are under construction. |
• | 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). Considering 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 with a capacity of thousands of MWh, deriving from the readiness of the technology and the economic feasibility of its use. OPC takes steps to integrate energy storage. For example, OPC entered into a number of agreements for generation of electricity at the consumers’ premises, which allow OPC to build storage facilities. |
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 mid-peak 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. | Electricity production facilities using renewable energy are often required to hold coverage in accordance with general permits applicable to flood water and, the discharge of dredged and fill materials to the ‘Waters of the U.S.’ Depending on the area of the affected site, these facilities may be required to obtain individual permits from ACOE in respect of those effects; however, generally, it is possible to build projects in places that will not require such permits. |
4. | State and local permits for renewable energy facilities (the permit’s requirements depend on the state in which the project is built and its location within the state). |
Year ended December 31, | ||||||||||||||
Geographic trade zone (percentage of total TEUs carried for the period) | Primary trade | 2022 | 2021 | 2020 | ||||||||||
Pacific | Transpacific | 34 | % | 39 | % | 40 | % | |||||||
Cross-Suez | Asia-Europe | 13 | % | 10 | % | 12 | % | |||||||
Atlantic-Europe | Atlantic | 15 | % | 18 | % | 21 | % | |||||||
Intra-Asia | Intra-Asia | 31 | % | 27 | % | 21 | % | |||||||
Latin America | Intra-America | 7 | % | 6 | % | 6 | % | |||||||
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 | 1,860,853 | 3,131,023 | |||||||
Reefer containers | Temperature controlled cargo, including pharmaceuticals, electronics and perishable cargo | 96,200 | 189,610 | |||||||
Other specialized containers | Heavy cargo and goods of excess height and/or width, such as machinery, vehicles and building | 48,778 | 59,353 | |||||||
Total | 2,005,831 | 3,379,986 |
Number | Capacity (TEU) | Non-container Vessels | Total(1) | |||||||||||||
Vessels owned by ZIM | 9 | 31,842 | — | 9 | ||||||||||||
Vessels chartered from parties related to ZIM | 5 | 20,660 | 1 | 6 | ||||||||||||
Periods up to 1 year (from December 31, 2022) | 3 | 12,154 | 3 | |||||||||||||
Periods between 1 to 5 years (from December 31, 2022) | 2 | 8,506 | 1 | 3 | ||||||||||||
Periods over 5 years (from December 31, 2022) | — | — | — | — | ||||||||||||
Vessels chartered from third parties(2) | 125 | 496,776 | 10 | 135 | ||||||||||||
Periods up to 1 year (from December 31, 2022) | 27 | 75,285 | 1 | 28 | ||||||||||||
Periods between 1 to 5 years (from December 31, 2022) | 95 | 408,732 | 9 | 99 | ||||||||||||
Periods over 5 years (from December 31, 2022) | 3 | 12,759 | — | 3 | ||||||||||||
Total(3) | 139 | 549,278 | 11 | 150 |
(1) | Includes 136 vessels accounted as right-of-use assets under the accounting guidance of IFRS 16. |
(2) | Includes 130 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) | 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 its vessels ZIM charters under “bareboat” terms, ZIM provides its own operational and technical management services or through a third-party ship management service provider. 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,” for repositioning of empty containers. Under these agreements, other carriers offer ZIM space on their own operated vessels, in exchange for space on its vessels for the purpose of repositioning empty containers. ZIM has developed this cooperation. ZIM has slot swap agreements with 14 carriers and exchange thousands of TEUs each year. |
• | Slot sale agreements. ZIM sells slots on board its vessels to transport empty 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. ZIM is a global leader in one-way container volumes. |
• | 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) | ✓ | ✓ | ✓ | |||||||
Mediterranean Shipping Company(1) | ✓ | ✓ | ||||||||
CMA CGM S.A. | ✓ | |||||||||
Evergreen Marine Corporation | ✓ | |||||||||
Hapag-Lloyd AG(2) | ✓ | ✓ | ✓ | |||||||
China Ocean Shipping Company (COSCO) | ✓ | ✓ | ||||||||
ONE | ✓ | ✓ | ||||||||
Orient Overseas Container Line Limited (OOCL) | ✓ | |||||||||
Yang Ming Marine Transport Corporation | ✓ | ✓ | ||||||||
Hyundai Merchant Marine Co., Ltd. | ✓ | |||||||||
Others | ✓ | ✓ |
(1) | ZIM’s cooperation with Maersk and MSC is under the 2M Alliance framework. However, in the Latin America ZIM also has a separate bilateral cooperation agreement with MSC, and its separate bilateral cooperation with MSC on the Atlantic terminated effective as of April 2022. ZIM also has a separate bilateral cooperation agreement with Maersk in the Latin America and Intra Asia trades. |
(2) | With respect to the Atlantic-Europe trade, ZIM has a swap agreement with THE Alliance member Hapag-Lloyd, supporting ZIM loadings on THE Alliance service on this trade. ZIM also has a separate bilateral agreement with respect to the Atlantic-Europe trade with Hapag-Lloyd in its standalone capacity. |
• | 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 or issuance 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 is now expired. |
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 | 54.7%(1) | Consolidated | Consolidated | ||
ZIM | 20.7%(2) | Equity | Share in profits of associated company, net of tax | ||
Other |
(1) | In 2021 and 2022, OPC has issued new shares in public and private and Kenon has participated in some of these share offerings. See details below. |
• | In January 2021, OPC issued 10,300,000 million ordinary shares for total gross proceeds of NIS 350 million (approximately $107 million), and as results a result, Kenon’s interest in OPC decreased from 62.1% to 58.2%. |
• | In September 2021, OPC issued 13 million new shares in a rights offering to fund the development and expansion of OPC’s activity in the U.S. for total gross proceeds of approximately NIS 329 million (approximately $102 million). Kenon purchased approximately 8 million shares in the rights offering 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 July 2022, OPC issued 9,443,800 new shares for total gross proceeds of NIS 331 million (approximately $94 million). Kenon purchased 3,898,000 shares in this offering for total consideration of NIS 136 million (approximately $39 million). |
• | In September 2022, OPC issued 12,500,000 new shares for total gross proceeds of NIS 500 million (approximately $141 million). |
(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 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). In March 2022, Kenon sold 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. |
Year Ended December 31, 2022 | ||||||||||||||||||||
OPC Israel | CPV | ZIM | Other(1) | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | 517 | 57 | — | — | 574 | |||||||||||||||
Depreciation and amortization | (47 | ) | (16 | ) | — | — | (63 | ) | ||||||||||||
Financing income | 10 | 25 | — | 10 | 45 | |||||||||||||||
Financing expenses | (42 | ) | (7 | ) | — | (1 | ) | (50 | ) | |||||||||||
Share in profit of associated companies | — | 85 | 1,033 | — | 1,118 | |||||||||||||||
Losses related to ZIM | — | — | (728 | ) | — | (728 | ) | |||||||||||||
Profit / (Loss) before taxes | 24 | 61 | 305 | (2 | ) | 388 | ||||||||||||||
Income tax (expense)/benefit | (10 | ) | (10 | ) | — | (18 | ) | (38 | ) | |||||||||||
Profit / (Loss) from continuing operations | 14 | 51 | 305 | (20 | ) | 350 | ||||||||||||||
Segment assets(2) | 1,504 | 553 | — | 636 | 2,693 | |||||||||||||||
Investments in associated companies | — | 652 | 427 | — | 1,079 | |||||||||||||||
Segment liabilities | 1,226 | 242 | — | 8 | 1,476 |
(1) | Includes the results of Kenon’s, Qoros’ and IC Power’s holding company (including assets and liabilities) and general and administrative expenses. |
(2) | Excludes investments in associates. |
Year Ended December 31, 2021 | ||||||||||||||||||||
OPC Israel | CPV | ZIM | Other(1) | 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 | (263 | ) | 880 | ||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | (29 | ) | (5 | ) | |||||||||||||
(Loss) / Profit from continuing operations | (47 | ) | (47 | ) | 1,261 | (292 | ) | 875 | ||||||||||||
Segment assets(2) | 1,512 | 431 | — | 227 | 2,170 | |||||||||||||||
Investments in associated companies | — | 545 | 1,354 | — | 1,899 | |||||||||||||||
Segment liabilities | 1,354 | 218 | — | 216 | 1,788 |
(1) | Includes the results of Kenon’s, Qoros’ and IC Power’s holding company (including assets and liabilities) and general and administrative expenses. |
(2) | Excludes investments in associates. |
2022 | 2021 | |||||||
Revenue | 574 | 488 | ||||||
Cost of Sales (excluding depreciation and amortization) | (417 | ) | (337 | ) | ||||
Net Profit/(Loss) | 65 | (94 | ) | |||||
Adjusted EBITDA(1) | 77 | 91 | ||||||
Proportionate share of EBITDA of associated companies(1) | 168 | 106 | ||||||
Total Debt(2) | 1,163 | 1,215 |
(1) | OPC defines “EBITDA” for each period as earnings (losses) before depreciation and amortization, financing expenses or income and taxes on income, and “Adjusted EBITDA” for each period as earnings (losses) after adjustments in respect of changes in fair value of derivative financial instruments and items not in the ordinary course of OPC’s business and/or having a non-recurring nature. EBITDA and Adjusted EBITDA are not recognized under IFRS or any other generally accepted accounting principles as a measure of financial performance and should not be considered as a substitute for net income or loss, cash flow from operations or other measures of operating performance or liquidity determined in accordance with IFRS. EBITDA and Adjusted EBITDA are not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. EBITDA and Adjusted EBITDA present limitations that impair its use as a measure of OPC’s profitability since it does not take into consideration certain costs and expenses that result from its business that could have a significant effect on OPC’s net loss, such as finance expenses, taxes and depreciation and amortization. |
(2) | Includes short-term and long-term debt. |
2022 | 2021 | |||||||
Net profit/(loss) for the period | 65 | (94 | ) | |||||
Depreciation and amortization | 63 | 57 | ||||||
Financing expenses, net | 14 | 141 | ||||||
Income tax expense/(benefit) | 20 | (24 | ) | |||||
EBITDA | 162 | 80 | ||||||
Share in (profits)/losses of associated companies, net | (85 | ) | 11 | |||||
Adjusted EBITDA | 77 | 91 |
Share in profits/(losses) of associated companies, net | 85 | (11 | ) | |||||
Share of depreciation and amortization | 44 | 39 | ||||||
Share of financing expenses, net | 39 | 78 | ||||||
Proportionate share of EBITDA of associated companies | 168 | 106 |
Year Ended | ||||||||||||
Region | December 31 | |||||||||||
(Project) | 2022 | 2021 | Change | |||||||||
TETCO M3 (Shore, Valley) | 6.80 | 3.40 | 100 | % | ||||||||
Transco Zone 5 North (Maryland) | 8.55 | 3.91 | 119 | % | ||||||||
TETCO M2 (Fairview) | 5.53 | 3.08 | 80 | % | ||||||||
Dominion South (Valley) | 5.51 | 3.06 | 80 | % | ||||||||
Algonquin (Towantic) | 9.15 | 4.51 | 103 | % | ||||||||
* | Source: The Day‑Ahead prices at gas Midpoints as reported in Platt’s Gas Daily. The actual gas prices of the power plants of the CPV Group could be significantly different. |
Year Ended | ||||||||||||
Region | December 31 | |||||||||||
(Project) | 2022 | 2021 | Change | |||||||||
PJM West (Shore and Maryland) | 73.09 | 38.92 | 88 | % | ||||||||
PJM AD Hub (Fairview) | 69.42 | 38.35 | 81 | % | ||||||||
NYISO Zone G (Valley) | 82.21 | 40.74 | 102 | % | ||||||||
ISO‑NE Mass Hub (Towantic) | 85.56 | 45.92 | 86 | % |
Sub-zone | CPV power plants2 | 2024/2025 | 2023/20243 | 2022/2023 | 2021/2022 |
PJM – RTO | -- | 28.92 | 34.13 | 50 | 140 |
PJM COMED | Three Rivers | 28.92 | 34.13 | - | - |
PJM MAAC | Fairview, Maryland, Maple Hill | 49.49 | 49.49 | 95.79 | 140 |
PJM EMAAC | Shore | 54.95 | 49.49 | 97.86 | 165.73 |
Sub-zone | CPV power plants | Winter 2022/2023 | Summer 2022 | Winter 2021/2022 |
NYISO Rest of the Market | - | 1.18 | 3.40 | 1.00 |
Lower Hudson Valley | Valley | 1.31 | 4.65 | 1.01 |
Sub-area | CPV power plants | 2026/2027 | 2025/2026 |
ISO-NE Rest of the market | Towantic | 2.59 | 2.59 |
• | local shipping agencies’ effectiveness in capturing such demand; |
• | level of customer service, which affects ZIM’s 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, 2022 | ||||||||||||||||||||
OPC Israel | CPV | ZIM | Other(1) | Consolidated Results | ||||||||||||||||
(in millions of USD, unless otherwise indicated) | ||||||||||||||||||||
Revenue | 517 | 57 | — | — | 574 | |||||||||||||||
Depreciation and amortization | (47 | ) | (16 | ) | — | — | (63 | ) | ||||||||||||
Financing income | 10 | 25 | — | 10 | 45 | |||||||||||||||
Financing expenses | (42 | ) | (7 | ) | — | (1 | ) | (50 | ) | |||||||||||
Share in profit of associated companies | — | 85 | 1,033 | — | 1,118 | |||||||||||||||
Profit / (Loss) before taxes | 24 | 61 | 305 | (2 | ) | 388 | ||||||||||||||
Income tax (expense)/benefit | (10 | ) | (10 | ) | — | (18 | ) | (38 | ) | |||||||||||
Profit / (Loss) from continuing operations | 14 | 51 | 305 | (20 | ) | 350 | ||||||||||||||
Segment assets(2) | 1,504 | 553 | — | 636 | 2,693 | |||||||||||||||
Investments in associated companies | — | 652 | 427 | — | 1,079 | |||||||||||||||
Segment liabilities | 1,226 | 242 | — | 8 | 1,476 |
(1) | Includes the results of Kenon’s, Qoros’ and IC Power’s holding company (including assets and liabilities) and general and administrative expenses. |
(2) | Excludes investments in associates. |
Year Ended December 31, 2021 | ||||||||||||||||||||
OPC Israel | CPV | ZIM | Other(1) | 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 | (263 | ) | 880 | ||||||||||||
Income tax benefit/(expense) | 10 | 14 | — | (29 | ) | (5 | ) | |||||||||||||
(Loss) / Profit from continuing operations | (47 | ) | (47 | ) | 1,261 | (292 | ) | 875 | ||||||||||||
Segment assets(2) | 1,512 | 431 | — | 227 | 2,170 | |||||||||||||||
Investments in associated companies | — | 545 | 1,354 | — | 1,899 | |||||||||||||||
Segment liabilities | 1,354 | 218 | — | 216 | 1,788 |
(1) | Includes the results of Kenon’s, Qoros’ and IC Power’s holding company (including assets and liabilities) and general and administrative expenses. |
(2) | Excludes investments in associates. |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
$ millions | ||||||||
Israel | 517 | 437 | ||||||
U.S. | 57 | 488 | ||||||
Total | 574 | 488 |
• | Revenue from sale of energy to private customers in Israel – Excluding the impact of exchange rate fluctuations, such revenues increased by $73 million primarily as a result of (i) an $49 million increase in the generation component tariff and (ii) $24 million as a result of an increase in customer consumption. |
• | Other revenue in Israel – Revenue from the commencement of operations of Gnrgy amounted to $12 million in 2022 and reflects the commencement of operations of Gnrgy, which is engaged in the business of charging services for electric vehicles. |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
$ millions | ||||||||
Israel | 385 | 312 | ||||||
U.S. | 32 | 25 | ||||||
Total | 417 | 337 |
• | Natural gas and diesel oil consumption in Israel – Excluding the impact of exchange rate fluctuations, such costs increased by $11 million primarily as a result of (i) an $18 million increase due to the increase in gas prices as a result of an increase in the generation component tariff and movements in the USD/NIS exchange rate and (ii) compensation paid in 2021 (reducing costs in that year) to OPC-Rotem and OPC-Hadera of $5 million due to the delay in the commercial operation of the Karish reservoir. These increases were partially offset by a decrease of $11 million due to lower consumption of natural gas as a result of maintenance at the OPC-Rotem power plant. |
• | Expenses for acquisition of energy in Israel— Excluding the impact of exchange rate fluctuations, such cost of sales increased by $57 million in 2022, as compared to 2021 primarily as a result of (i) a $37 million increase reflecting the commencement of virtual supply in 2021 and (ii) a $20 million increase due to maintenance at the OPC-Rotem power plant. |
• | Other expenses — Cost from the commencement of operations of Gnrgy amounted to $9 million in 2022. |
Year Ended December 31, 2022 | Year Ended December 31, 2021 | |||||||
(in millions of USD) | ||||||||
Revenue | 12,562 | 10,729 | ||||||
Operating expenses and cost of services | 4,765 | 3,906 | ||||||
Operating profit | 6,136 | 5,816 | ||||||
Profit before taxes on income | 6,027 | 5,659 | ||||||
Income tax expense | (1,398 | ) | (1,010 | ) | ||||
Profit for the period | 4,629 | 4,649 | ||||||
Adjusted EBITDA(1) | 7,541 | 6,597 | ||||||
Share of Kenon in total comprehensive income | 1,024 | 1,261 | ||||||
Book value of ZIM investment in Kenon’s books | 427 | 1,354 |
(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 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, 2022 | Year Ended December 31, 2021 | |||||||
(in millions of USD) | ||||||||
Net profit | 4,629 | 4,649 | ||||||
Financing expenses, net | 109 | 157 | ||||||
Income tax expense | 1,398 | 1,010 | ||||||
Depreciation and amortization | 1,396 | 780 | ||||||
EBITDA | 7,532 | 6,596 | ||||||
Non-cash charter hire expenses(1) | — | (1 | ) | |||||
Capital gains, beyond the ordinary course of business | (1 | ) | — | |||||
Expenses related to contingencies | 10 | 2 | ||||||
Adjusted EBITDA | 7,541 | 6,597 |
(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, | ||||||||
2022 | 2021 | |||||||
(in millions of USD) | ||||||||
Share in profits/(losses) of associated companies, net | 85 | (11 | ) |
B. | Liquidity and Capital Resources |
Year Ended December 31, | ||||||||
2022 | 2021 | |||||||
(in millions of USD) | ||||||||
Continuing operations | ||||||||
Net cash flows provided by operating activities | ||||||||
OPC | 63 | 119 | ||||||
Other | 708 | 121 | ||||||
Total | 771 | 240 | ||||||
Net cash flows used in investing activities | (203 | ) | (205 | ) | ||||
Net cash flows provided by financing activities | (494 | ) | 147 | |||||
Net change in cash from continuing operations | 74 | 182 | ||||||
Cash—opening balance | 475 | 286 | ||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | (14 | ) | 7 | |||||
Cash—closing balance | 535 | 475 |
• | 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 July 2022, OPC issued 9,443,800 ordinary shares of NIS0.01 par value per share to the public as part of the shelf offering. Gross issuance proceeds amounted to NIS 331 million (approximately $94 million). Kenon took part in the issuance and was issued 3,898,000 ordinary shares for a gross amount of NIS 136 million (approximately $39 million). |
• | In September 2022, OPC offered 12,500,000 ordinary shares of NIS 0.01 par value per share to qualified investors as part of private offering. Gross issuance proceeds amounted to NIS 500 million (approximately $141 million). |
Outstanding Principal Amount as of December 31, 2022* ($ millions) | Interest Rate ($ millions) | Final Maturity | Amortization Schedule | ||||
OPC-Hadera: | |||||||
Financing agreement(1) | 194 | 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 agreement(2) | 150 | 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) | 272 | 2.75% (CPI-Linked) | September 2028 | Semi-annual principal payments commencing on September 30, 2020 | |||
Bonds (Series C)(4) | 242 | 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 | 858 |
* | Includes interest payable, net of expenses. |
(1) | Represents NIS 681 million converted into USD at the exchange rate for NIS into USD of NIS 3.52 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. |
(2) | Represents NIS 528 million converted into U.S. Dollars at the exchange rate for NIS into U.S. Dollar of NIS 3.52 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. |
(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, 2022 | Maturity Date | Annual interest | Covenants |
Fairview | March 24, 2017 | 710 | 503(1) | June 30, 2025(2) | LIBOR plus margin of 2.5% Weighted-average interest as at December 31, 2022: 4.9% | 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 | 556(3) | June 30, 2025(2) | LIBOR plus margin of 3.1% Weighted-average interest as at December 31, 2022: 5.7% | Similar to Fairview (see above) | ||||||
Maryland | August 8, 2014 | 450 | 340(4) | May 11, 2028 (Term Loan B)(2) November 11, 2027(2) (Ancillary Facilities) | LIBOR plus margin of 3.6% Weighted-average interest as at December 31, 2022: 6.5% | Historical debt service coverage ratio of 1:1 during the last 4 quarters. As of March 19, 2023, 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. | ||||||
Shore | December 2018 | 545 | 459(5) | Dec. 27, 2025 (Term Loan) Dec. 27, 2023 (Ancillary Facilities)(2) | Term Loan: LIBOR plus margin of 3.5% Weighted-average interest as at December 31, 2022: 6.1% | 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. |
Project | Financial Closing Date | Total Commitment (approximately in $millions) | Total Outstanding/ Issued (approximately in $millions) as of Dec. 31, 2022 | Maturity Date | Annual interest | Covenants |
Valley | June 12, 2015 | 680 | 502(6) | June 30, 2023 | LIBOR plus margin of 3.8% Weighted-average interest as at December 31, 2022: 7.2% | 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). Valley is in discussions with the lenders to extend the loan for at least an additional 2 years. The terms for extension, all of which are subject to negotiation, include extension fees, increase in interest margins, credit spread increases, and debt reduction, which is expected to include equity contribution in a range, estimated by CPV, of $40 million to $100 million (of which the CPV Group’s share is 50%) as a condition to extension. As of March 19, 2023, the parties are still in discussion and there is no certainty as to the execution of such extension or its terms. In case such extension is not agreed, Valley will be required to repay the loan on the original repayment date of June 30, 2023. | ||||||
Keenan II | August 2021 | 120 | 102(7) | December 31, 2030 | LIBOR + margin 1.1% Weighted-average interest as at December 31, 2022: 3.0% | 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) |
Project | Financial Closing Date | Total Commitment (approximately in $millions) | Total Outstanding/ Issued (approximately in $millions) as of Dec. 31, 2022 | Maturity Date | Annual interest | Covenants |
Three Rivers (under construction) | Aug. 21, 2020 | 875 | 823(8) | June 30, 2028(2) | LIBOR plus margin of 3.6% Weighted-average interest as at December 31, 2022: 4.7% | Similar to Fairview (see above) |
(1) | Consisting of Term Loan (Variable): $375 million, Term Loan (Fixed, 5.78%): $101 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: approximately $27 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): $478 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $78 million). |
(4) | Consisting of Term Loan (Variable): $306 million, Ancillary Facilities ($34 million). |
(5) | Consisting of Term Loan (Variable): $379 million, Ancillary Facilities ($80 million). |
(6) | Consisting of Term Loan (Variable): $424 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $78 million (of which approximately $25 million was withdrawn re: debt service reserve as of December 31, 2022)). In April 2021, 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. Valley is holding discussions with the lenders on extension of the Loan for at least an additional 2 years. The terms for extension, all of which are subject to negotiation, include extension fees, credit spread increases, and debt reduction which is expected to include equity contribution in a range estimated by CPV of $40 to $100 million) as conditions to extension. Currently, the parties are still in discussions and there is no certainty as to the execution of such extension or its terms. In case such extension will not be agreed Valley will be required to repay the loan on June 30, 2023. |
(7) | Consisting of Term Loan (Variable): $88 million, Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $14 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): $632 million, Term Loan (Fixed, 4.5%): $100 million; Ancillary Facilities (Working Capital Loan: $0; Letters of Credit/LC Loans: $91 million). |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
Zone | Q4 2021 | 2021 | Q4 2022 | 2022 | ||||
PJM West (Shore, Maryland) | $54.39 | $38.92 | $68.74 | $73.09 | ||||
PJM AD Hub (Fairview) | $51.88 | $38.35 | $64.70 | $69.42 | ||||
NYISO Zone G (Valley) | $51.33 | $40.74 | $73.04 | $82.21 | ||||
ISO-NE Mass Hub (Towantic) | $59.88 | $45.92 | $76.92 | $85.56 |
E. | Critical Accounting Policies and Significant Estimates |
• | allocation of acquisition costs; |
• | long-term investment (Qoros); |
• | Recoverable amount of cash-generating unit that includes goodwill (CPV); and |
• | Recoverable amount of cash-generating unit of investment in equity-accounted companies (ZIM). |
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 | 40 | Board Member | 2016 | 2021 | 2022 | |||||
Laurence N. Charney | 76 | Chairman of the Audit Committee, Compensation Committee Member, Board Member, ESG Committee Member | 2014 | 2021 | 2022 | |||||
Barak Cohen | 41 | Board Member | 2018 | 2021 | 2022 | |||||
Cyril Pierre-Jean Ducau | 44 | Chairman of the Board, Nominating and Corporate Governance Committee Chairman, ESG Committee Member | 2014 | 2021 | 2022 | |||||
N. Scott Fine | 66 | Audit Committee Member, Compensation Committee Chairman, Board Member | 2014 | 2021 | 2022 | |||||
Bill Foo | 65 | Board Member, Nominating and Corporate Governance Committee Member | 2017 | 2021 | 2022 | |||||
Aviad Kaufman | 52 | Compensation Committee Member, Board Member, Nominating and Corporate Governance Committee Member | 2015 | 2021 | 2022 | |||||
Arunava Sen | 62 | Board Member, Audit Committee Member, ESG Committee Chairman | 2017 | 2021 | 2022 |
Name | Age | Position | ||
Robert L. Rosen | 50 | Chief Executive Officer | ||
Mark Hasson | 47 | 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, 2022 | |||
OPC(1) | 281 | |||
Kenon | 6 | |||
Total | 287 |
(1) | 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 Altshuler(2) | 3,615,360 | 6.7 | % | |||||
Laurence N. Charney | 49,180 | (3) | * | (4) | ||||
Bill Foo | 16,420 | (3) | * | (4) | ||||
Arunava Sen | 16,420 | (3) | * | (4) | ||||
Nathan Scott Fine | 1,804 | (3) | * | (4) | ||||
Directors and Senior Management (Executive Officers)(5) | — | * | (4) |
(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 21, 2023. According to the Schedule 13-G, the 3,615,360 ordinary shares consists of (i) 3,325,657 ordinary shares by provident and pension funds managed by Altshuler Shaham Provident & Pension Funds Ltd., a majority-owned subsidiary of Altshuler-Shaham Ltd., (ii) 277,203 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) 12,4,500 ordinary shares held by hedge funds managed by Altshuler Shaham Owl, Limited Partnership, an affiliate of Altshuler-Shaham Ltd. |
(3) | Based solely on Exhibit 99.3 to the Form 6-K furnished by Kenon with the SEC on April 27, 2022. |
(4) | Owns less than 1% of Kenon’s ordinary shares. |
(5) | Excludes shares held by Laurence N. Charney, Bill Foo, Arunava Sen and Nathan Scott Fine. |
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. |
Delaware | Singapore—Kenon Holdings Ltd. |
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. |
Delaware | Singapore—Kenon Holdings Ltd. |
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% 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. |
Delaware | Singapore—Kenon Holdings Ltd. |
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 permission 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. |
Delaware | Singapore—Kenon Holdings Ltd. |
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. |
Delaware | Singapore—Kenon Holdings Ltd. |
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 (i) 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 (ii) 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). |
Delaware | Singapore—Kenon Holdings Ltd. |
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, | ||||||||
2022 | 2021 | |||||||
(in thousands of USD) | ||||||||
Audit Fees(1) | 3,960 | 3,054 | ||||||
Audit-Related Fees | 2 | 3 | ||||||
Tax Fees(2) | 314 | 295 | ||||||
Total | 4,276 | 3,352 |
(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 |
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. |
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-86 |
KPMG LLP 12 Marina View, #15-01 Asia Square Tower 2 Singapore 018961 | Telephone +65 6213 3388 Fax +65 6225 0984 Internet kpmg.com.sg |
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 30, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
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 it relates.
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. |
As discussed in Notes 3.J and 13.C to the consolidated financial statements, the carrying amount of the cash generating unit (CGU) to which goodwill is allocated is reviewed at each reporting date for impairment. As of December 31, 2022, the Group’s goodwill arising from the acquisition of CPV Group amounted to $105 million (Renewable Energy CGU). The Company estimates the recoverable amount of the Renewable Energy CGU based on discounted expected future cash flows. An impairment loss is recognized if the carrying value of the Renewable Energy CGU exceeds its estimated recoverable amount.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls relating to the impairment assessment of Renewable Energy CGU, including the control related to evaluating the discount rates used in the discounted cashflows. In addition, we involved valuation professionals with specialized skills and knowledge to assist us in evaluating the discount rates by comparing them against an independently developed range of discount rates using inputs from publicly available information.
KPMG LLP 12 Marina View, #15-01 Asia Square Tower 2 Singapore 018961 | Telephone +65 6213 3388 Fax +65 6225 0984 Internet kpmg.com.sg |
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. |
As at December 31, | |||||||||||
2022 | 2021 | ||||||||||
Note | $ Thousands | ||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 5 | 535,171 | 474,544 | ||||||||
Short-term deposits and restricted cash | 6 | 45,990 | 229 | ||||||||
Trade receivables | 73,900 | 62,643 | |||||||||
Short-term derivative instruments | 2,918 | 798 | |||||||||
Other investments | 7 | 344,780 | - | ||||||||
Other current assets | 8 | 58,956 | 43,379 | ||||||||
Total current assets | 1,061,715 | 581,593 | |||||||||
Non-current assets | |||||||||||
Investment in ZIM (associated company) | 9 | 427,059 | 1,354,212 | ||||||||
Investment in OPC's associated companies | 9 | 652,358 | 545,242 | ||||||||
Long-term restricted cash | 15,146 | 21,463 | |||||||||
Long-term derivative instruments | 29.D.1 | 16,077 | 11,637 | ||||||||
Deferred taxes | 24.C.2 | 6,382 | 19,016 | * | |||||||
Property, plant and equipment, net | 12 | 1,222,421 | 1,125,820 | ||||||||
Intangible assets, net | 13 | 220,795 | 224,282 | ||||||||
Long-term prepaid expenses and other non-current assets | 14 | 50,814 | 57,266 | ||||||||
Right-of-use assets, net | 17 | 99,293 | 97,883 | ||||||||
Total non-current assets | 2,710,345 | 3,456,821 | |||||||||
Total assets | 3,772,060 | 4,038,414 |
As at December 31, | |||||||||||
2022 | 2021 | ||||||||||
Note | $ Thousands | ||||||||||
Current liabilities | |||||||||||
Current maturities of loans from banks and others | 15 | 39,262 | 38,311 | ||||||||
Trade and other payables | 16 | 133,415 | 171,537 | ||||||||
Dividend payable | 19.D | - | 188,607 | ||||||||
Short-term derivative instruments | 29.D.1 | 889 | 8,688 | ||||||||
Current tax liabilities | 653 | 34 | |||||||||
Deferred taxes | 24.C.2 | 1,285 | 21,117 | ||||||||
Current maturities of lease liabilities | 17,474 | 18,991 | |||||||||
Total current liabilities | 192,978 | 447,285 | |||||||||
Non-current liabilities | |||||||||||
Long-term loans from banks and others | 15 | 610,434 | 596,489 | ||||||||
Debentures | 15 | 513,375 | 575,314 | ||||||||
Deferred taxes | 24.C.2 | 97,800 | 95,080 | * | |||||||
Other non-current liabilities | 41,388 | 28,817 | |||||||||
Long-term derivative instruments | 10 | 192 | |||||||||
Long-term lease liabilities | 20,157 | 14,951 | |||||||||
Total non-current liabilities | 1,283,164 | 1,310,843 | |||||||||
Total liabilities | 1,476,142 | 1,758,128 | |||||||||
Equity | 19 | ||||||||||
Share capital | 50,134 | 602,450 | |||||||||
Translation reserve | 1,206 | 25,680 | |||||||||
Capital reserve | 42,553 | 25,783 | |||||||||
Accumulated profit | 1,504,592 | 1,139,775 | |||||||||
Equity attributable to owners of the Company | 1,598,485 | 1,793,688 | |||||||||
Non-controlling interests | 697,433 | 486,598 | |||||||||
Total equity | 2,295,918 | 2,280,286 | |||||||||
Total liabilities and equity | 3,772,060 | 4,038,414 |
_____________________________ | _____________________________ | _____________________________ |
Cyril Pierre-Jean Ducau Chairman of Board of Directors | Robert L. Rosen CEO | Mark Hasson CFO |
For the year ended December 31, | |||||||||||||||
2022 | 2021 | 2020 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Revenue | 20 | 573,957 | 487,763 | 386,470 | |||||||||||
Cost of sales and services (excluding depreciation and amortization) | 21 | (417,261 | ) | (336,298 | ) | (282,086 | ) | ||||||||
Depreciation and amortization | (56,853 | ) | (53,116 | ) | (33,135 | ) | |||||||||
Gross profit | 99,843 | 98,349 | 71,249 | ||||||||||||
Selling, general and administrative expenses | 22 | (99,936 | ) | (75,727 | ) | (49,957 | ) | ||||||||
Other income/(expenses) | 2,918 | (81 | ) | 1,721 | |||||||||||
Operating profit | 2,825 | 22,541 | 23,013 | ||||||||||||
Financing expenses | 23 | (50,397 | ) | (144,295 | ) | (51,174 | ) | ||||||||
Financing income | 23 | 44,686 | 2,934 | 14,291 | |||||||||||
Financing expenses, net | (5,711 | ) | (141,361 | ) | (36,883 | ) | |||||||||
(Losses)/gains related to Qoros | 10 | - | (251,483 | ) | 309,918 | ||||||||||
(Losses)/gains related to ZIM | 9.B.a | (727,650 | ) | (204 | ) | 43,505 | |||||||||
Share in profit/(losses) of associated companies, net | |||||||||||||||
- ZIM | 9.A.2 | 1,033,026 | 1,260,993 | 167,142 | |||||||||||
- OPC's associated companies | 9.A.2 | 85,149 | (10,844 | ) | - | ||||||||||
- Qoros | 9.A.2 | - | - | (6,248 | ) | ||||||||||
Profit before income taxes | 387,639 | 879,642 | 500,447 | ||||||||||||
Income tax expense | 24 | (37,980 | ) | (4,325 | ) | (4,698 | ) | ||||||||
Profit for the year from continuing operations | 349,659 | 875,317 | 495,749 | ||||||||||||
Gain for the year from discontinued operations | 26 | ||||||||||||||
-Recovery of retained claims, net | - | - | 8,476 | ||||||||||||
Profit for the year | 349,659 | 875,317 | 504,225 | ||||||||||||
Attributable to: | |||||||||||||||
Kenon’s shareholders | 312,652 | 930,273 | 507,106 | ||||||||||||
Non-controlling interests | 37,007 | (54,956 | ) | (2,881 | ) | ||||||||||
Profit for the year | 349,659 | 875,317 | 504,225 | ||||||||||||
Basic/diluted profit per share attributable to Kenon’s shareholders (in dollars): | 25 | ||||||||||||||
Basic/diluted profit per share | 5.80 | 17.27 | 9.41 | ||||||||||||
Basic/diluted profit per share from continuing operations | 5.80 | 17.27 | 9.25 | ||||||||||||
Basic/diluted profit per share from discontinued operations | - | - | 0.16 |
For the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Profit for the year | 349,659 | 875,317 | 504,225 | |||||||||
Items that are or will be subsequently reclassified to profit or loss | ||||||||||||
Foreign currency translation differences in respect of foreign operations | (40,694 | ) | 17,489 | 36,354 | ||||||||
Reclassification of foreign currency and capital reserve differences on loss of significant influence | - | - | (23,425 | ) | ||||||||
Group’s share in other comprehensive income of associated companies | 13,611 | 12,360 | 1,873 | |||||||||
Effective portion of change in the fair value of cash-flow hedges | 14,774 | 8,772 | (45,322 | ) | ||||||||
Change in fair value of other investments at FVOCI | (2,100 | ) | - | - | ||||||||
Change in fair value of derivative financial instruments used for hedging cash flows recorded to the cost of the hedged item | (1,043 | ) | 37,173 | 3,067 | ||||||||
Change in fair value of derivatives financial instruments used to hedge cash flows transferred to the statement of profit & loss | (4,125 | ) | (2,121 | ) | 6,300 | |||||||
Income taxes in respect of components of other comprehensive income | (2,658 | ) | (423 | ) | 1,346 | |||||||
Total other comprehensive income for the year | (22,235 | ) | 73,250 | (19,807 | ) | |||||||
Total comprehensive income for the year | 327,424 | 948,567 | 484,418 | |||||||||
Attributable to: | ||||||||||||
Kenon’s shareholders | 290,985 | 969,862 | 486,165 | |||||||||
Non-controlling interests | 36,439 | (21,295 | ) | (1,747 | ) | |||||||
Total comprehensive income for the year | 327,424 | 948,567 | 484,418 |
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, 2022 | 602,450 | 25,680 | 25,783 | 1,139,775 | 1,793,688 | 486,598 | 2,280,286 | ||||||||||||||||||||||||
Transactions with owners, recognised directly in equity | |||||||||||||||||||||||||||||||
Contributions by and distributions to owners | |||||||||||||||||||||||||||||||
Cash distribution to owners of the Company | 19.F | (552,316 | ) | - | - | - | (552,316 | ) | - | (552,316 | ) | ||||||||||||||||||||
Share-based payment transactions | - | 8,502 | 8,502 | 2,104 | 10,606 | ||||||||||||||||||||||||||
Total contributions by and distributions to owners | (552,316 | ) | - | 8,502 | - | (543,814 | ) | 2,104 | (541,710 | ) | |||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 11.A.5 | - | - | - | 57,585 | 57,585 | 135,567 | 193,152 | |||||||||||||||||||||||
Acquisition of subsidiary with non-controlling interest | - | - | 41 | - | 41 | - | 41 | ||||||||||||||||||||||||
Investments from holders of non-controlling interests in equity of subsidiary | - | - | - | - | - | 36,725 | 36,725 | ||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | 41 | 57,585 | 57,626 | 172,292 | 229,918 | ||||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | 312,652 | 312,652 | 37,007 | 349,659 | ||||||||||||||||||||||||
Other comprehensive income for the year, net of tax | - | (24,474 | ) | 8,227 | (5,420 | ) | (21,667 | ) | (568 | ) | (22,235 | ) | |||||||||||||||||||
Total comprehensive income for the year | - | (24,474 | ) | 8,227 | 307,232 | 290,985 | 36,439 | 327,424 | |||||||||||||||||||||||
Balance at December 31, 2022 | 50,134 | 1,206 | 42,553 | 1,504,592 | 1,598,485 | 697,433 | 2,295,918 |
The accompanying notes are an integral part of the consolidated financial statements.
Kenon Holdings Ltd. and subsidiaries
Consolidated Statements of Changes in Equity
For the years ended December 31, 2022, 2021 and 2020
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 | - | - | 7,371 | - | 7,371 | 1,187 | 8,558 | ||||||||||||||||||||||||
Dividends declared | 19.D | - | - | - | (288,811 | ) | (288,811 | ) | (10,214 | ) | (299,025 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | - | - | 7,371 | (288,811 | ) | (281,440 | ) | (9,027 | ) | (290,467 | ) | ||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 11.A.5 | - | - | - | 38,443 | 38,443 | 103,891 | 142,334 | |||||||||||||||||||||||
Non-controlling interests in respect of business combinations | - | - | - | - | - | 6,769 | 6,769 | ||||||||||||||||||||||||
Investments from holders of non-controlling interests in equity of subsidiary | - | - | - | - | - | 197,075 | 197,075 | ||||||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | - | 38,443 | 38,443 | 307,735 | 346,178 | ||||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | 930,273 | 930,273 | (54,956 | ) | 875,317 | |||||||||||||||||||||||
Other comprehensive income for the year, net of tax | - | 9,784 | 29,755 | 50 | 39,589 | 33,661 | 73,250 | ||||||||||||||||||||||||
Total comprehensive income for the year | - | 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 | - | - | 874 | - | 874 | 236 | 1,110 | ||||||||||||||||||||||||
Dividend to holders of non-controlling interests in subsidiaries | - | - | |||||||||||||||||||||||||||||
Dividends declared and paid | 19.D | - | - | - | (120,133 | ) | (120,133 | ) | (12,412 | ) | (132,545 | ) | |||||||||||||||||||
Total contributions by and distributions to owners | - | - | 874 | (120,133 | ) | (119,259 | ) | (12,176 | ) | (131,435 | ) | ||||||||||||||||||||
Changes in ownership interests in subsidiaries | |||||||||||||||||||||||||||||||
Dilution in investment in subsidiary | 11.A.5 | - | - | - | 80,674 | 80,674 | 136,170 | 216,844 | |||||||||||||||||||||||
Acquisition of non-controlling interests without a change in control | - | - | (4,109 | ) | - | (4,109 | ) | (1,498 | ) | (5,607 | ) | ||||||||||||||||||||
Total changes in ownership interests in subsidiaries | - | - | (4,109 | ) | 80,674 | 76,565 | 134,672 | 211,237 | |||||||||||||||||||||||
Total comprehensive income for the year | |||||||||||||||||||||||||||||||
Net profit for the year | - | - | - | 507,106 | 507,106 | (2,881 | ) | 504,225 | |||||||||||||||||||||||
Other comprehensive income for the year, net of tax | (1,993 | ) | (22,070 | ) | 3,122 | (20,941 | ) | 1,134 | (19,807 | ) | |||||||||||||||||||||
Total comprehensive income for the year | - | (1,993 | ) | (22,070 | ) | 510,228 | 486,165 | (1,747 | ) | 484,418 | |||||||||||||||||||||
Balance at December 31, 2020 | 602,450 | 15,896 | (11,343 | ) | 459,820 | 1,066,823 | 209,185 | 1,276,008 |
For the year ended December 31, | |||||||||||||||
2022 | 2021 | 2020 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Cash flows from operating activities | |||||||||||||||
Profit for the year | 349,659 | 875,317 | 504,225 | ||||||||||||
Adjustments: | |||||||||||||||
Depreciation and amortization | 62,876 | 57,640 | 34,171 | ||||||||||||
Financing expenses, net | 23 | 5,711 | 141,361 | 36,883 | |||||||||||
Share in profit of associated companies, net | 9.A.2 | (1,118,175 | ) | (1,250,149 | ) | (160,894 | ) | ||||||||
Gains on disposal of property, plant and equipment, net | - | - | (1,551 | ) | |||||||||||
Losses/(gains) related to Qoros | 10 | - | 251,483 | (309,918 | ) | ||||||||||
Losses/(gains) related to ZIM | 9.B.a | 727,650 | 204 | (43,505 | ) | ||||||||||
Recovery of retained claims | 26 | - | - | (9,923 | ) | ||||||||||
Share-based payments | 18,855 | 18,369 | 1,110 | ||||||||||||
Income taxes | 37,980 | 4,325 | 6,145 | ||||||||||||
84,556 | 98,550 | 56,743 | |||||||||||||
Change in trade and other receivables | (28,819 | ) | (1,171 | ) | (9,669 | ) | |||||||||
Change in trade and other payables | (10,100 | ) | (429 | ) | 45,061 | ||||||||||
Cash generated from operating activities | 45,637 | 96,950 | 92,135 | ||||||||||||
Dividends received from associated companies, net | 727,309 | 143,964 | - | ||||||||||||
Income taxes (paid)/refunded, net | (1,565 | ) | (385 | ) | 61 | ||||||||||
Net cash provided by operating activities | 771,381 | 240,529 | 92,196 |
For the year ended December 31, | |||||||||||||||
2022 | 2021 | 2020 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Cash flows from investing activities | |||||||||||||||
Short-term deposits and restricted cash, net | (46,266 | ) | 558,247 | (501,618 | ) | ||||||||||
Short-term collaterals deposits, net | (19,180 | ) | - | - | |||||||||||
Investment in long-term deposits, net | 12,750 | 51,692 | 6,997 | ||||||||||||
Purchase of other investments | (650,777 | ) | - | - | |||||||||||
Proceeds from sale of other investments | 308,829 | - | - | ||||||||||||
Long-term advance deposits and prepaid expenses | (11,013 | ) | (6,976 | ) | (57,591 | ) | |||||||||
Long-term loan to an associate | - | (5,000 | ) | - | |||||||||||
Proceeds from sale of subsidiary, net of cash disposed off | - | - | 407 | ||||||||||||
Acquisition of subsidiary, less cash acquired | 11.A.4 | - | (659,169 | ) | - | ||||||||||
Investments in associated companies, less cash acquired | (2,932 | ) | (8,566 | ) | - | ||||||||||
Acquisition of property, plant and equipment | (259,820 | ) | (231,235 | ) | (74,456 | ) | |||||||||
Acquisition of intangible assets | (10,453 | ) | (1,452 | ) | (368 | ) | |||||||||
Proceeds from sale of property, plant and equipment and intangible assets | - | - | 546 | ||||||||||||
Reimbursement in respect of right-of-use asset | - | 4,823 | - | ||||||||||||
Interest received | 6,082 | 269 | 709 | ||||||||||||
Income tax paid | - | - | (32,332 | ) | |||||||||||
Deferred consideration in respect of acquisition of subsidiary | - | - | (13,632 | ) | |||||||||||
Proceeds from/(payment of) transactions in derivatives, net | 1,349 | (5,635 | ) | (3,963 | ) | ||||||||||
Proceeds from distribution from associated companies | 4,444 | 46,729 | - | ||||||||||||
Proceeds from deferred payment | - | - | 217,810 | ||||||||||||
Proceeds from sales of interest in ZIM | 9.B.a.4 | 463,549 | 67,087 | - | |||||||||||
Proceeds from sale of interest in Qoros | 10.3 | - | - | 219,723 | |||||||||||
(Payment)/recovery of financial guarantee | 10.6 | - | (16,265 | ) | 6,265 | ||||||||||
Recovery of retained claims | 26 | - | - | 9,923 | |||||||||||
Net cash used in investing activities | (203,438 | ) | (205,451 | ) | (221,580 | ) | |||||||||
Cash flows from financing activities | |||||||||||||||
Dividends paid to holders of non-controlling interests | - | (10,214 | ) | (12,412 | ) | ||||||||||
Cash distribution and dividends paid | 19.D, 19.F | (740,922 | ) | (100,209 | ) | (120,115 | ) | ||||||||
Investments from holders of non-controlling interests in equity of subsidiary | 36,725 | 197,076 | 32 | ||||||||||||
Costs paid in advance in respect of taking out of loans | (2,845 | ) | (4,991 | ) | (8,556 | ) | |||||||||
Payment of early redemption commission with respect to the debentures | 15.1.B | - | (75,820 | ) | (11,202 | ) | |||||||||
Payment in respect of derivative financial instruments, net | (923 | ) | (13,933 | ) | - | ||||||||||
Proceeds from issuance of share capital by a subsidiary to non-controlling interests, net of issuance expenses | 11.A.5, 11.A.6 | 193,148 | 142,334 | 216,844 | |||||||||||
Receipt of long-term loans | 102,331 | 343,126 | 73,236 | ||||||||||||
Proceeds from issuance of debentures, less issuance expenses | 15.2 | - | 262,750 | 280,874 | |||||||||||
Repayment of long-term loans, debentures and lease liabilities | (55,762 | ) | (562,016 | ) | (130,210 | ) | |||||||||
Short-term credit from banks and others, net | - | - | (134 | ) | |||||||||||
Acquisition of non-controlling interests | - | - | (7,558 | ) | |||||||||||
Interest paid | (25,428 | ) | (31,523 | ) | (24,989 | ) | |||||||||
Net cash (used in)/provided by financing activities | (493,676 | ) | 146,580 | 255,810 | |||||||||||
Increase in cash and cash equivalents | 74,267 | 181,658 | 126,426 | ||||||||||||
Cash and cash equivalents at beginning of the year | 474,544 | 286,184 | 147,153 | ||||||||||||
Effect of exchange rate fluctuations on balances of cash and cash equivalents | (13,640 | ) | 6,702 | 12,605 | |||||||||||
Cash and cash equivalents at end of the year | 535,171 | 474,544 | 286,184 |
A. | The Reporting Entity |
B. | Definitions |
In these consolidated financial statements -
A. | Declaration of compliance with International Financial Reporting Standards |
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 (CPV) |
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) |
3. | Recoverable amount of cash-generating unit that includes goodwill (CPV) |
4. | Recoverable amount of cash-generating unit of investment in equity-accounted companies (ZIM) |
A. | First-time application of new accounting standards, amendments and interpretations |
B. | Basis for consolidation/combination |
(1) | Business combinations |
(2) | Subsidiaries |
(3) | Non-Controlling Interest (“NCI”) |
(4) | Investments in equity-accounted investees |
(5) | Loss of significant influence |
(6) | Change in interest held in equity accounted investees while retaining significant influence |
(7) | Intra-group transactions |
(8) | Reorganizations under common control transactions |
C. | Foreign currency |
(1) | Foreign currency transactions |
(2) | Foreign operations |
D. | Cash and Cash Equivalents |
E. | Financial Instruments |
a) | 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. |
- | It is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and |
- | Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
b) | Subsequent measurement |
• | the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets; |
• | how the performance of the portfolio is evaluated and reported to the Group’s management; |
• | the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; |
• | how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and |
• | the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity. |
• | contingent events that would change the amount or timing of cash flows; |
• | terms that may adjust the contractual coupon rate, including variable rate features; |
• | prepayment and extension features; and |
• | terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features). |
- | the change is necessary as a direct consequence of the reform; and |
- | the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the basis immediately before the change. |
c) | Impairment |
- | Contract assets (as defined in IFRS 15); |
- | Financial assets measured at amortized cost; |
- | Financial guarantees; |
- | Debt investments; |
- | 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. |
- | the change is necessary as a direct consequence of the reform; and |
- | the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e. the basis immediately before the change. |
- | designating an alternative benchmark rate as the hedged risk; |
- | updating the description of hedged item, including the description of the designated portion of the cash flows or fair value being hedged; or |
- | updating the description of the hedging instrument. |
- | it makes a change required by interest rate benchmark reform by using an approach other than changing the basis for determining the contractual cash flows of the hedging instrument; |
- | it chosen approach is economically equivalent to changing the basis for determining the contractual cash flows of the original hedging instrument; and |
- | the original hedging instrument is not derecognized |
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. |
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. | Leases |
Years | |
Land | 19 – 49 |
Pressure regulation and management system facility | 24 |
Offices | 3 – 9 |
I. | Borrowing costs |
J. | Impairment of non-financial assets |
K. | Employee benefits |
(1) | Short-term employee benefits |
(2) | Bonus plans transactions |
(3) | Termination Benefits |
(4) | Defined Benefit Plans |
(5) | Share-based compensation plans |
L. | Provisions |
M. | Revenue recognition |
N. | Government grants |
O. | Deposits received from consumers |
P. | 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. |
Q. | 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. |
R. | Earnings per share |
S. | Share capital – ordinary shares |
T. | 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. |
U. | Operating segment and geographic information |
1. | OPC Power Plants – OPC Power Plants Ltd. (“OPC Power Plants”) (formerly OPC Israel Energy Ltd.) 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. |
V. | Transactions with controlling shareholders |
W. | New standards and interpretations not yet adopted |
- | Classification of Liabilities as Current or Non-current (Amendments to IAS 1), |
- | Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) |
- | Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) |
- | Definition of Accounting Estimate (Amendments to IAS 8) |
A. | Derivatives and Long-term investment (Qoros) |
B. | Non-derivative financial liabilities |
C. | Fair value of equity-accounted investments (ZIM) |
1. | the investment as a whole; or |
2. | each individual share making up the investment. |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Cash and cash equivalents in banks | 361,580 | 425,017 | ||||||
Time deposits | 173,591 | 49,527 | ||||||
535,171 | 474,544 |
The Group held cash and cash equivalents which are of investment grade based on Standard and Poor’s Ratings.
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Short-term deposits with bank and others | 35,662 | 50 | ||||||
Short-term restricted cash | 10,328 | 179 | ||||||
45,990 | 229 |
The Group held short-term deposits and restricted cash which are of investment grade based on Standard and Poor’s Ratings.
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Debt investments - at FVOCI | 344,780 | - |
The Group held debt investments at FVOCI which are of investment grade based on Standard and Poor’s Ratings and have stated interest rates of 0.26% to 5.94% (2021: Nil) with an average maturity of 2 years. These debt investments are expected to be realized within the next 12 months.
Information about the Group’s exposure to credit and market risks, and fair value measurement, is included in Note 29 Financial Instruments.
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Advances to suppliers | 1,219 | 459 | ||||||
Inventories | 1,928 | 1,706 | ||||||
Prepaid expenses | 10,004 | 6,639 | ||||||
Input tax receivable | 4,660 | 5,029 | ||||||
Indemnification asset (1) | - | 9,047 | ||||||
Deposits in connection with projects under construction (2) | 35,475 | 16,398 | ||||||
Others | 5,670 | 4,101 | ||||||
58,956 | 43,379 |
(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 18.A.2.a for further details. |
(2) | Relates to collateral provided to secure a hedging agreement in CPV Valley amounting to $20 million (2021: Nil) and collaterals provided in connection with renewable energy projects under development in the United States amounting to $15 million. |
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, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal place of business | International | US | US | US | US | US | US | |||||||||||||||||||||||||||||||||||||||||||||||||
Proportion of ownership interest | 21% | 26% | 25% | 25% | 25% | 25% | 37.5% | 37.5% | 26% | 26% | 50% | 50% | 10% | 10% | ||||||||||||||||||||||||||||||||||||||||||
Current assets | 4,271,600 | 5,084,865 | 98,942 | 107,380 | 73,985 | 26,649 | 92,808 | 45,538 | 86,698 | 38,558 | 59,191 | 35,783 | 32,626 | 2,997 | ||||||||||||||||||||||||||||||||||||||||||
Non-current assets | 7,353,700 | 4,756,973 | 938,869 | 986,321 | �� | 654,720 | 669,668 | 983,576 | 1,039,153 | 936,268 | 952,997 | 678,540 | 705,501 | 1,338,392 | 949,385 | |||||||||||||||||||||||||||||||||||||||||
Current liabilities | (2,662,200 | ) | (2,756,595 | ) | (166,468 | ) | (136,136 | ) | (73,883 | ) | (37,067 | ) | (53,619 | ) | (7,904 | ) | (133,746 | ) | (124,247 | ) | (542,176 | ) | (85,176 | ) | (47,939 | ) | (20,921 | ) | ||||||||||||||||||||||||||||
Non-current liabilities | (3,067,200 | ) | (2,485,714 | ) | (400,309 | ) | (591,169 | ) | (320,518 | ) | (356,838 | ) | (649,860 | ) | (727,037 | ) | (490,610 | ) | (538,750 | ) | (6,450 | ) | (537,310 | ) | (820,943 | ) | (708,402 | ) | ||||||||||||||||||||||||||||
Total net assets | 5,895,900 | 4,599,529 | 471,034 | 366,396 | 334,304 | 302,412 | 372,905 | 349,750 | 398,610 | 328,558 | 189,105 | 118,798 | 502,136 | 223,059 | ||||||||||||||||||||||||||||||||||||||||||
Group's share of net assets | 1,217,797 | 1,182,810 | 117,759 | 91,599 | 83,576 | 75,603 | 139,951 | 131,261 | 103,639 | 85,425 | 94,553 | 59,399 | 60,609 | 56,021 | ||||||||||||||||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess cost | 138,071 | 171,402 | 80,414 | 81,678 | (14,396 | ) | (14,854 | ) | (52,777 | ) | (56,330 | ) | 26,615 | 26,799 | (806 | ) | (1,223 | ) | 8,379 | 8,379 | ||||||||||||||||||||||||||||||||||||
Total impairment loss | (928,809 | ) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
Book value of investment | 427,059 | 1,354,212 | 198,173 | 173,277 | 69,180 | 60,749 | 87,174 | 74,931 | 130,254 | 112,224 | 93,747 | 58,176 | 68,988 | 64,400 | ||||||||||||||||||||||||||||||||||||||||||
Investments in associated companies | 427,059 | 1,354,212 | 198,173 | 173,277 | 69,180 | 60,749 | 87,174 | 74,931 | 130,254 | 112,224 | 93,747 | 58,176 | 68,988 | 64,400 |
Note 9 – Investment in Associated Companies (Cont’d)
2. | Condensed financial information with respect to results of operations |
CPV | CPV | CPV | CPV | CPV | CPV | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ZIM | Fairview | Maryland | Shore | Towantic | Valley | Three Rivers | Qoros** | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the year ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2020*** | |||||||||||||||||||||||||||||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | 12,561,600 | 10,728,698 | 3,991,696 | 373,967 | 199,030 | 243,710 | 170,292 | 261,386 | 189,985 | 494,665 | 258,292 | 405,548 | 139,473 | (2,722 | ) | 174 | 23,852 | |||||||||||||||||||||||||||||||||||||||||||||||
Income / loss* | 4,619,400 | 4,640,305 | 517,961 | 98,907 | 9,666 | 33,249 | 5,420 | 6,853 | 16,247 | 47,436 | 18,520 | 69,138 | (58,793 | ) | (7,934 | ) | (9,281 | ) | (52,089 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income * | (41,200 | ) | (3,462 | ) | 5,854 | 15,730 | 11,192 | 6,419 | 10,983 | 16,301 | 7,779 | 22,616 | 11,140 | 1,178 | 3,710 | 53,814 | 19,361 | (3 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 4,578,200 | 4,636,843 | 523,815 | 114,637 | 20,858 | 39,668 | 16,403 | 23,154 | 24,026 | 70,052 | 29,660 | 70,316 | (55,083 | ) | 45,880 | 10,080 | (52,092 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Kenon’s share of comprehensive income | 1,023,567 | 1,258,913 | 167,621 | 28,659 | 5,214 | 9,917 | 4,101 | 8,690 | 9,017 | 18,214 | 7,711 | 35,158 | (27,542 | ) | 4,588 | 1,008 | (6,251 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Adjustments | 558 | 1,116 | 1,394 | (1,267 | ) | (1,249 | ) | 458 | 2,354 | 3,554 | 3,644 | (184 | ) | 50 | 413 | 681 | - | - | 3 | |||||||||||||||||||||||||||||||||||||||||||||
Kenon’s share of comprehensive income presented in the books | 1,024,125 | 1,260,029 | 169,015 | 27,392 | 3,965 | 10,375 | 6,455 | 12,244 | 12,661 | 18,030 | 7,761 | 35,571 | (26,861 | ) | 4,588 | 1,008 | (6,248 | ) |
* | Excludes portion attributable to non-controlling interest. |
** | 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 $nil thousand respectively. |
*** | 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 10 for further details. |
Note 9 – Investment in Associated Companies (Cont’d)
B. | Additional information |
a. | ZIM |
1. | Financial position |
For the year ended | |||||||||||||
December 31 | |||||||||||||
2022 | 2021 | 2020 | |||||||||||
Note | $ Thousands | $ Thousands | $ Thousands | ||||||||||
Gain on dilution from ZIM IPO | 9.B.a.2 | - | 9,724 | - | |||||||||
Loss on dilution from ZIM options exercised | 9.B.a.3 | (3,475 | ) | (39,438 | ) | - | |||||||
Gain on sale of ZIM shares | 9.B.a.4 | 204,634 | 29,510 | - | |||||||||
(Impairment)/write back of ZIM investment | 9.B.a.5 | (928,809 | ) | - | 43,505 | ||||||||
(727,650 | ) | (204 | ) | 43,505 |
2. | Initial public offering |
3. | Exercise of ZIM options |
4. | Sales of ZIM shares |
Note 9 – Investment in Associated Companies (Cont’d)
5. | Impairment assessment |
For the purposes of Kenon’s impairment assessment of its investment, ZIM is considered one CGU, which consists of all of ZIM’s operating assets. The recoverable amount is based on the higher of the value-in-use and the fair value less cost of disposal (“FVLCOD”).
Year Ended December 31, 2022
Kenon identified indicators of impairment in accordance with IAS 28 as a result of a significant decrease in ZIM’s market capitalization towards the end of 2022. Therefore, the carrying value of Kenon’s investment in ZIM was tested for impairment in accordance with IAS 36.
Kenon did not identify any objective evidence that its net investment in ZIM was impaired as at 31 December 31, 2021 and therefore, in accordance with IAS 28, no assessment of the recoverable amount of ZIM was performed.
Note 9 – Investment in Associated Companies (Cont’d)
C. | OPC’s associated companies |
Ownership interest as at December 31 | |||||||||||||
Note | Main location of company's activities | 2022 | 2021 | ||||||||||
CPV, Three Rivers, LLC | 9.C.1 | Illinois | 10 | % | 10 | % | |||||||
CPV Fairview, LLC | 9.C.2 | Pennsylvania | 25 | % | 25 | % | |||||||
CPV Maryland, LLC | 9.C.3 | Maryland | 25 | % | 25 | % | |||||||
CPV Shore Holdings, LLC | 9.C.4 | New Jersey | 38 | % | 38 | % | |||||||
CPV Towantic, LLC | 9.C.5 | Connecticut | 26 | % | 26 | % | |||||||
CPV Valley Holdings, LLC | 9.C.6 | New York | 50 | % | 50 | % |
1. | CPV Three Rivers, LLC (“CPV Three Rivers”) |
2. | CPV Fairview, LLC (“CPV Fairview”) |
Note 9 – Investment in Associated Companies (Cont’d)
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 10 – Long-term investment (Qoros)
For the year ended December 31, | |||||||||||||||
2022 | 2021 | 2020 | |||||||||||||
Note | $ Thousands | ||||||||||||||
Fair value (loss)/gain on remaining 12% interest in Qoros | 10.3, 10.5 | - | (235,218 | ) | 154,475 | ||||||||||
(Payment)/recovery of financial guarantee | 10.6 | - | (16,265 | ) | 6,195 | ||||||||||
Gain on sale of 12% interest in Qoros | 10.3 | - | - | 152,610 | |||||||||||
Fair value loss on put option | 10.3 | - | - | (3,362 | ) | ||||||||||
- | (251,483 | ) | 309,918 |
1. | As at December 31, 2022, the Group holds a 12% (2021: 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% (2021: 25%) equity interest and the remaining 63% (2021: 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 In September 2021, in light of the events described above, Kenon performed an assessment of the fair value of the long-term investment (Qoros) under IFRS 13 Fair value measurement. Kenon concluded that the fair value of the long-term investment (Qoros) is zero. Therefore, in 2021 Kenon recognized a fair value loss of $235 million in its consolidated financial statements for the year ended 2021. There were no significant changes in circumstances in 2022 as compared to 2021, therefore, management has assessed that there is no change in fair value of Qoros. |
6. | Financial Guarantees Provision and Releases |
7. | Restrictions |
A. | Investments |
i. | generation and supply of electricity and energy (electricity, steam and charging services for electric vehicles) in Israel to private customers, Israel Electric Company (“IEC”) and Noga – The Israel Independent System Operator Ltd. (“System Operator” or “Noga’), including initiation, development, construction and operation of power plants and facilities for energy generation; |
ii. | generation and supply of electricity and energy in the United States using renewable energy, including development, construction and management of renewable energy power plants; and |
iii. | generation and supply of electricity and energy in the United States using conventional (natural gas) power plants, including development, construction and management of conventional energy power plants in the United States. |
Ownership interest as at December 31 | ||||||||||||||||
Note | Main location of company's activities | 2022 | 2021 | |||||||||||||
OPC Power Plants Ltd. (formerly OPC Israel Energy Ltd.) | 11.A. 1 | Israel | 100 | % | 100 | % | ||||||||||
CPV Group LP | 11.A. 2 | USA | 70 | % | 70 | % |
1. | OPC Power Plants Ltd. (“OPC Power Plants”) |
Note 11 – Subsidiaries (Cont’d)
a. | OPC Rotem Ltd. (“OPC Rotem”) |
b. | OPC Hadera Ltd. (“OPC Hadera”) |
c. | Tzomet Energy Ltd. (“OPC Tzomet”) |
Note 11 – Subsidiaries (Cont’d)
d. | OPC Sorek 2 Ltd. (“OPC Sorek 2”) |
e. | Additional subsidiaries in Israel |
Note 11 – Subsidiaries (Cont’d)
2. | CPV Group LP (“CPV Group”) |
3. | OPC Power Ventures LP (“OPC Power”) |
Note 11 – Subsidiaries (Cont’d)
4. | Acquisition of CPV Group |
Note 11 – Subsidiaries (Cont’d)
5. | Issuances of new shares by OPC |
6. | Rights issuance |
Note 11 – Subsidiaries (Cont’d)
B. | The following table summarizes the information relating to the Group’s subsidiary in 2022, 2021 and 2020 that has material NCI: |
As at and for the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
OPC Energy Ltd. | OPC Energy Ltd. | OPC Energy Ltd. | ||||||||||
$ Thousands | ||||||||||||
NCI percentage * | 56.20 | % | 53.14 | % | 39.09 | % | ||||||
Current assets | 419,636 | 346,380 | 693,913 | |||||||||
Non-current assets | 2,289,101 | 2,141,744 | 1,040,400 | |||||||||
Current liabilities | (184,418 | ) | (230,518 | ) | (221,975 | ) | ||||||
Non-current liabilities | (1,283,445 | ) | (1,341,962 | ) | (980,028 | ) | ||||||
Net assets | 1,240,874 | 915,644 | 532,310 | |||||||||
Carrying amount of NCI | 697,433 | 486,598 | 208,080 | |||||||||
Revenue | 573,957 | 487,763 | 385,625 | |||||||||
Profit/(loss) after tax | 65,352 | (93,898 | ) | (12,583 | ) | |||||||
Other comprehensive income | (11,249 | ) | 74,219 | (2,979 | ) | |||||||
Profit/(loss) attributable to NCI | 37,007 | (54,022 | ) | (2,567 | ) | |||||||
OCI attributable to NCI | (568 | ) | 33,661 | (616 | ) | |||||||
Cash flows from operating activities | 62,538 | 119,264 | 104,898 | |||||||||
Cash flows from investing activities | (328,610 | ) | (256,200 | ) | (643,942 | ) | ||||||
Cash flows from financing activites excluding dividends paid to NCI | 285,898 | 311,160 | 489,919 | |||||||||
Dividends paid to NCI | - | (10,214 | ) | (12,412 | ) | |||||||
Effect of changes in the exchange rate on cash and cash equivalents | (13,545 | ) | 6,717 | 12,566 | ||||||||
Net increase/(decrease) in cash and cash equivalents | 6,281 | 170,727 | (48,971 | ) |
A. | Composition |
Roads, buildings and leasehold improvements | Facilities, machinery and equipment | Wind turbines | Computers | Office furniture and equipment | Assets under construction | Other | Total | |||||||||||||||||||||||||
$ Thousands | ||||||||||||||||||||||||||||||||
Cost | ||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | 72,222 | 763,828 | - | 763 | 1,132 | 127,116 | 43,840 | 1,008,901 | ||||||||||||||||||||||||
Additions | 5,709 | 2,527 | 894 | - | 240 | 252,096 | 5,761 | 267,227 | ||||||||||||||||||||||||
Disposals | (453 | ) | - | (972 | ) | - | (150 | ) | - | (1,885 | ) | (3,460 | ) | |||||||||||||||||||
Reclassification | 2,242 | - | - | (763 | ) | (808 | ) | - | (671 | ) | - | |||||||||||||||||||||
Acquisitions as part of a business | 1,682 | - | 29,922 | - | - | 18,990 | - | 50,594 | ||||||||||||||||||||||||
Differences in translation reserves | 2,554 | 25,920 | - | - | - | 11,578 | 1,097 | 41,149 | ||||||||||||||||||||||||
Balance at December 31, 2021 | 83,956 | 792,275 | 29,844 | - | 414 | 409,780 | 48,142 | 1,364,411 | ||||||||||||||||||||||||
Additions | 3,442 | 18,657 | 191 | - | (8 | ) | 185,938 | 46,025 | 254,245 | |||||||||||||||||||||||
Disposals | (160 | ) | (13,007 | ) | (43 | ) | - | - | (1,969 | ) | (12,769 | ) | (27,948 | ) | ||||||||||||||||||
Reclassification | - | - | - | - | - | 3 | (3 | ) | - | |||||||||||||||||||||||
Differences in translation reserves | (9,633 | ) | (75,558 | ) | - | - | - | (41,164 | ) | (6,016 | ) | (132,371 | ) | |||||||||||||||||||
Balance at December 31, 2022 | 77,605 | 722,367 | 29,992 | - | 406 | 552,588 | 75,379 | 1,458,337 | ||||||||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||||||||||
Balance at January 1, 2021 | 12,799 | 175,633 | - | 511 | 757 | - | 640 | 190,340 | ||||||||||||||||||||||||
Additions | 3,453 | 36,620 | 634 | - | 71 | - | - | 40,778 | ||||||||||||||||||||||||
Disposals | (240 | ) | - | (71 | ) | - | (151 | ) | - | - | (462 | ) | ||||||||||||||||||||
Reclassification | 1,585 | - | - | (511 | ) | (434 | ) | - | (640 | ) | - | |||||||||||||||||||||
Differences in translation reserves | 551 | 7,384 | - | - | - | - | - | 7,935 | ||||||||||||||||||||||||
Balance at December 31, 2021 | 18,148 | 219,637 | 563 | - | 243 | - | - | 238,591 | ||||||||||||||||||||||||
Additions | 3,864 | 37,057 | 1,109 | - | 80 | - | - | 42,110 | ||||||||||||||||||||||||
Disposals | (10 | ) | (13,007 | ) | (21 | ) | - | (8 | ) | - | - | (13,046 | ) | |||||||||||||||||||
Differences in translation reserves | (3,557 | ) | (28,182 | ) | - | - | - | - | - | (31,739 | ) | |||||||||||||||||||||
Balance at December 31, 2022 | 18,445 | 215,505 | 1,651 | - | 315 | - | - | 235,916 | ||||||||||||||||||||||||
Carrying amounts | ||||||||||||||||||||||||||||||||
At January 1, 2021 | 59,423 | 588,195 | - | 252 | 375 | 127,116 | 43,200 | 818,561 | ||||||||||||||||||||||||
At December 31, 2021 | 65,808 | 572,638 | 29,281 | - | 171 | 409,780 | 48,142 | 1,125,820 | ||||||||||||||||||||||||
At December 31, 2022 | 59,160 | 506,862 | 28,341 | - | 91 | 552,588 | 75,379 | 1,222,421 |
B. | The amount of borrowing costs capitalized in 2022 was approximately $16 million (2021: $7 million). |
C. | Fixed assets purchased on credit in 2022 was approximately $47 million (2021: $39 million). |
D. | The composition of depreciation expenses from continuing operations is as follows: |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Depreciation and amortization included in gross profit | 56,853 | 53,116 | ||||||
Depreciation and amortization charged to selling, general and administrative expenses | 6,023 | 4,524 | ||||||
Depreciation and amortization from continuing operations | 62,876 | 57,640 |
A. | Composition: |
Goodwill* | PPA** | Others | Total | |||||||||||||
$Thousands | ||||||||||||||||
Cost | ||||||||||||||||
Balance as at January 1, 2021 | 21,596 | - | 2,372 | 23,968 | ||||||||||||
Acquisitions as part of business combinations | 118,458 | 110,446 | 3,410 | 232,314 | ||||||||||||
Additions | - | - | 1,451 | 1,451 | ||||||||||||
Translation differences | 158 | - | 237 | 395 | ||||||||||||
Balance as at December 31, 2021 | 140,212 | 110,446 | 7,470 | 258,128 | ||||||||||||
Additions | - | - | 10,799 | 10,799 | ||||||||||||
Translation differences | (1,599 | ) | - | (1,316 | ) | (2,915 | ) | |||||||||
Balance as at December 31, 2022 | 138,613 | 110,446 | 16,953 | 266,012 | ||||||||||||
Amortization | ||||||||||||||||
Balance as at January 1, 2021 | 21,455 | - | 1,061 | 22,516 | ||||||||||||
Amortization for the year | - | 10,947 | 339 | 11,286 | ||||||||||||
Translation differences | - | - | 44 | 44 | ||||||||||||
Balance as at December 31, 2021 | 21,455 | 10,947 | 1,444 | 33,846 | ||||||||||||
Amortization for the year | - | 10,569 | 991 | 11,560 | ||||||||||||
Translation differences | - | - | (189 | ) | (189 | ) | ||||||||||
Balance as at December 31, 2022 | 21,455 | 21,516 | 2,246 | 45,217 | ||||||||||||
Carrying value | ||||||||||||||||
As at January 1, 2021 | 141 | - | 1,311 | 1,452 | ||||||||||||
As at December 31, 2021 | 118,757 | 99,499 | 6,026 | 224,282 | ||||||||||||
As at December 31, 2022 | 117,158 | 88,930 | 14,707 | 220,795 |
* | Relates mainly to goodwill arising from acquisition of CPV Group and Gnrgy of $105 million and $14 million respectively. Refer to Note 11.A.4 for further information. |
** | Relates to the power purchase agreement from the acquisition of CPV Keenan, which is part of the CPV Group. |
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, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Intangible assets with a finite useful life | 103,637 | 105,525 | ||||||
Intangible assets with an indefinite useful life or not yet available for use | 117,158 | 118,757 | ||||||
220,795 | 224,282 |
C. | Impairment testing of goodwill arising from acquisition of CPV Group |
1. | Forecast years - represents the period spanning from January 1, 2023 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 2.3% equals the derived 10-year inflation rate as of the estimate date. |
4. | The WACC - calculated for each material project separately, and ranges between 6.75% (project with agreements for sale of the entire capacity) and 8%. |
D. | Impairment testing of goodwill arising from acquisition of Gnrgy |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Deferred expenses, net (1) | 32,840 | 42,840 | ||||||
Contract costs | 4,337 | 5,119 | ||||||
Other non-current assets | 13,637 | 9,307 | ||||||
50,814 | 57,266 |
(1) | Relates to deferred expenses, net for OPC’s connection fees to the gas transmission network and the electricity grid. |
As at December 31 | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Current liabilities | ||||||||
Current maturities of long-term liabilities: | ||||||||
Loans from banks and others | 26,113 | 21,861 | ||||||
Non-convertible debentures | 9,497 | 7,125 | ||||||
Others | 3,652 | 9,325 | ||||||
39,262 | 38,311 | |||||||
Non-current liabilities | ||||||||
Loans from banks and others | 610,434 | 596,489 | ||||||
Non-convertible debentures | 513,375 | 575,314 | ||||||
1,123,809 | 1,171,803 | |||||||
Total | 1,163,071 | 1,210,114 |
Note 15 – Loans and Debentures (Cont’d)
A.1 | Classification based on currencies and interest rates |
Weighted- average interest rate December 31 | As at December 31, | |||||||||||
2022 | 2022 | 2021 | ||||||||||
% | $Thousands | |||||||||||
Debentures | ||||||||||||
In shekels | 2.50% - 2.75 | % | 522,872 | 582,439 | ||||||||
Loans from banks and others | ||||||||||||
In shekels | 2.40% - 5.40 | % | 640,199 | 627,675 | ||||||||
1,163,071 | 1,210,114 |
A.2 | Reconciliation of movements of liabilities to cash flows arising from financing activities |
Financial liabilities (including interest payable) | ||||||||||||||||
Loans and credit | Loans from holders of interests that do not confer financial control | Debentures | Financial instruments designated for hedging | |||||||||||||
$ Thousands | ||||||||||||||||
Balance as at January 1, 2022 | 488,455 | 139,838 | 586,600 | (8,305 | ) | |||||||||||
Changes as a result of cash flows from financing activities | ||||||||||||||||
Payment in respect of derivative financial instruments, net | - | - | - | (923 | ) | |||||||||||
Receipt of loans | 88,651 | 13,680 | - | - | ||||||||||||
Repayment of debentures and loans | (21,601 | ) | (25,617 | ) | (5,972 | ) | - | |||||||||
Interest paid | (11,058 | ) | (2,094 | ) | (11,889 | ) | - | |||||||||
Prepaid costs for loans taken | (2,845 | ) | - | - | - | |||||||||||
Net cash provided by/(used in) financing activities | 53,147 | (14,031 | ) | (17,861 | ) | (923 | ) | |||||||||
Effect of changes in foreign currency exchange rates | (51,435 | ) | (8,419 | ) | (68,696 | ) | 967 | |||||||||
Interest and CPI expenses | 27,444 | 6,764 | 26,728 | - | ||||||||||||
Changes in fair value, application of hedge accounting and other | (1,416 | ) | - | - | (7,826 | ) | ||||||||||
Balance as at December 31, 2022 | 516,195 | 124,152 | 526,771 | (16,087 | ) |
Note 15 – Loans and Debentures (Cont’d)
Financial liabilities (including interest payable) | ||||||||||||||||
Loans and credit | Loans from holders of interests that do not confer financial control | Debentures | Financial instruments designated for hedging | |||||||||||||
$ Thousands | ||||||||||||||||
Balance as at January 1, 2021 | 615,403 | 439 | 304,701 | 11,014 | ||||||||||||
Changes as a result of cash flows from financing activities | ||||||||||||||||
Payment in respect of derivative financial instruments | - | - | - | (13,933 | ) | |||||||||||
Proceeds from issuance of debentures less issuance expenses | - | - | 262,750 | - | ||||||||||||
Receipt of long-term loans from banks | 211,738 | 131,388 | - | - | ||||||||||||
Repayment of loans, debentures and lease liabilities | (601,474 | ) | - | (5,876 | ) | - | ||||||||||
Interest paid | (25,095 | ) | - | (6,093 | ) | - | ||||||||||
Costs paid in advance in respect of taking out loans | (4,991 | ) | - | - | - | |||||||||||
Net cash (used in)/provided by financing activities | (419,822 | ) | 131,388 | 250,781 | (13,933 | ) | ||||||||||
Changes due to gain of control in subsidiaries | 172,163 | - | - | 12,176 | ||||||||||||
Effect of changes in foreign exchange rates | 10,820 | 2,497 | 17,993 | (487 | ) | |||||||||||
Changes in fair value | - | - | - | (13,726 | ) | |||||||||||
Interest in the period | 38,803 | 4,275 | 13,125 | - | ||||||||||||
Other changes and additions during the year | 71,088 | 1,239 | - | (3,349 | ) | |||||||||||
Balance as at December 31, 2021 | 488,455 | 139,838 | 586,600 | (8,305 | ) |
1. | Long-term loans from banks and others |
B. | OPC Rotem |
C. | OPC Hadera |
D. | OPC Tzomet |
Note 15 – Loans and Debentures (Cont’d)
E. | OPC |
In 2020 and 2021, due to changes in the inflationary expectations and in light of the changes in the projected interest rates, OPC recorded an increase in the assets and liabilities, respectively, following revaluation of the financial derivative in respect of the CPI Transactions (hereinafter – “the Derivative”), in the amount of NIS 43 (approximately $13 million) million and NIS 42 million (approximately $13 million), respectively, which was recorded as part of other comprehensive income. OPC deposits collaterals to secure its loans from the bank in connection with the Derivative. The value of the Derivative was calculated by means of discounting the linked shekel cash flows expected to be received less the discounted fixed shekel cash flows payable. An adjustment was made to this valuation for the credit risks of the parties.
F. | CPV Keenan |
G. | OPC Power |
2. | Debentures |
A. | OPC |
Note 15 – Loans and Debentures (Cont’d)
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Trade Payables | 95,036 | 136,505 | ||||||
Accrued expenses and other payables | 10,833 | 11,479 | ||||||
Government institutions | 2,083 | 2,459 | ||||||
Employees and payroll institutions | 14,491 | 11,625 | ||||||
Interest payable | 4,472 | 5,213 | ||||||
Others | 6,500 | 4,256 | ||||||
133,415 | 171,537 |
Note 17 – Right-Of-Use Assets, Net and Lease Liabilities
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, 2022 | ||||||||||||||||
Balance at beginning of year | Depreciation charge for the year | Adjustments | Balance at end of year | |||||||||||||
$ Thousands | ||||||||||||||||
Land | 81,355 | (3,484 | ) | (908 | ) | 76,963 | ||||||||||
PRMS facility | 6,239 | (660 | ) | 8,398 | 13,977 | |||||||||||
Offices | 10,282 | (2,142 | ) | 213 | 8,353 | |||||||||||
Others | 7 | (6 | ) | (1 | ) | - | ||||||||||
97,883 | (6,292 | ) | 7,702 | 99,293 |
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 | - | - | 7 | 7 | ||||||||||||
86,024 | (5,571 | ) | 17,430 | 97,883 |
C) | Amounts recognized in the consolidated statements of profit & loss and cash flows |
As at December 31, | As at December 31, | |||||||
2022 | 2021 | |||||||
$ Thousands | $ Thousands | |||||||
Interest expenses in respect of lease liability | 572 | 550 | ||||||
Total cash outflow for leases | 2,572 | 1,993 |
A. | Contingent Liabilities |
1. | OPC Rotem Power Purchase Agreement |
2. | Construction agreements |
a. | OPC Hadera |
As at December 31, 2022, an arbitration proceeding was conducted between OPC Hadera and the construction contractor, of which a hearing is scheduled for in June 2024.
b. | OPC Tzomet |
3. | Agreements for the acquisition of natural gas |
a. | OPC Rotem and OPC Hadera |
OPC Rotem and OPC Hadera has an agreement with Tamar Group in connection to the supply of natural gas to the power plants. Both OPC Rotem and OPC Hadera undertook to continue to consume all the gas required for its power plants from Tamar Group (including quantities exceeding the minimum quantities) up to the completion date of the commissioning of the Karish Reservoir, except for a limited consumption of gas during the commissioning period of the Karish Reservoir.
In May 2022, an amendment to the Energean Agreements was signed, which set out, among other things, arrangements pertaining to bringing forward the reduction of the quantities of gas supplied by OPC Rotem and OPC Hadera, of which the scope of reduction was not yet determined as at December 31, 2022.
4. | Other contingent liabilities |
a. | Bazan electricity purchase claim |
b. | Oil Refineries Ltd. (now known as “Bazan”) gas purchase claim |
c. | Purchase of rights in Alon Energy Centers Limited Partnership |
d. | Inkia Energy Limited (liquidated in 2019) |
B. | Commitments |
A. | Share Capital |
Company | ||||||||
No. of shares | ||||||||
(’000) | ||||||||
2022 | 2021 | |||||||
Authorised and in issue at January, 1 | 53,879 | 53,871 | ||||||
Issued for share plan | 8 | 8 | ||||||
Authorised and in issue at December. 31 | 53,887 | 53,879 |
B. | Translation reserve |
C. | Capital reserves |
D. | Dividends |
E. | Kenon's share plan |
F. | Capital reduction |
For the Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Revenue from sale of electricity and infrastructure services in Israel | 486,680 | 419,395 | 369,421 | |||||||||
Revenue from sale of electricity in US | 25,780 | 25,605 | - | |||||||||
Revenue from sale of steam in Israel | 18,476 | 17,648 | 16,204 | |||||||||
Revenue from provision of services in US | 31,509 | 25,115 | - | |||||||||
Other revenue in Israel | 11,512 | - | 845 | |||||||||
573,957 | 487,763 | 386,470 |
For the Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Fuels | 155,760 | 153,122 | 135,706 | |||||||||
Electricity and infrastructure services | 192,723 | 133,502 | 125,782 | |||||||||
Salaries and related expenses | 30,598 | 21,095 | 7,244 | |||||||||
Generation and operating expenses and outsourcing | 17,283 | 16,798 | 8,625 | |||||||||
Insurance | 5,190 | 4,989 | 3,503 | |||||||||
Others | 15,707 | 6,792 | 1,226 | |||||||||
417,261 | 336,298 | 282,086 |
For the Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Payroll and related expenses (1) | 46,660 | 41,930 | 11,360 | |||||||||
Depreciation and amortization | 3,259 | 2,623 | 1,023 | |||||||||
Professional fees | 15,798 | 16,069 | 8,386 | |||||||||
Business development expenses | 15,186 | 1,566 | 1,998 | |||||||||
Expenses in respect of acquisition of CPV Group | - | 752 | 12,227 | |||||||||
Office maintenance | 4,581 | 3,022 | 936 | |||||||||
Other expenses | 14,452 | 9,765 | 14,027 | |||||||||
99,936 | 75,727 | 49,957 |
For the Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Interest income from bank deposits | 12,108 | 167 | 780 | |||||||||
Amount reclassified to consolidated statements of profit & loss from capital reserve in respect of cash flow hedges | 4,125 | 2,121 | - | |||||||||
Net change in exchange rates | 28,453 | - | - | |||||||||
Net change in fair value of derivative financial instruments | - | 443 | - | |||||||||
Interest income from deferred payment | - | - | 13,511 | |||||||||
Other income | - | 203 | - | |||||||||
Financing income | 44,686 | 2,934 | 14,291 | |||||||||
Interest expenses to banks and others | (47,542 | ) | (51,924 | ) | (24,402 | ) | ||||||
Amount reclassified to consolidated statements of profit & loss from capital reserve in respect of cash flow hedges | - | - | (6,300 | ) | ||||||||
Impairment loss on debt securities at FVOCI | (732 | ) | - | - | ||||||||
Net change in fair value of financial assets held for trade | (45 | ) | - | - | ||||||||
Net change in exchange rates | - | (5,997 | ) | (5,645 | ) | |||||||
Net change in fair value of derivative financial instruments | (291 | ) | - | (1,569 | ) | |||||||
Early repayment fee (Note 15.B, Note 15.E) | - | (84,196 | ) | (11,852 | ) | |||||||
Other expenses | (1,787 | ) | (2,178 | ) | (1,406 | ) | ||||||
Financing expenses | (50,397 | ) | (144,295 | ) | (51,174 | ) | ||||||
Net financing expenses | (5,711 | ) | (141,361 | ) | (36,883 | ) |
A. | Components of the Income Taxes |
For the Year Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$Thousands | ||||||||||||
Current taxes on income | ||||||||||||
In respect of current year | 39,559 | 6,892 | * | 734 | ||||||||
In respect of prior years | - | - | 1 | |||||||||
Deferred tax expense/(income) | ||||||||||||
Creation and reversal of temporary differences | (1,579 | ) | (2,567 | )* | 3,963 | |||||||
Total tax expense on income | 37,980 | 4,325 | 4,698 |
Note 24 – Income Taxes (Cont’d)
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, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Profit from continuing operations before income taxes | 387,639 | 879,642 | 500,447 | |||||||||
Statutory tax rate | 17.00 | % | 17.00 | % | 17.00 | % | ||||||
Tax computed at the statutory tax rate | 65,899 | 149,539 | 85,076 | |||||||||
(Decrease) increase in tax in respect of: | ||||||||||||
Elimination of tax calculated in respect of the Group’s share in profit of associated companies | (45,464 | ) | (190,539 | ) | (27,353 | ) | ||||||
Different tax rate applicable to subsidiaries operating overseas | 6,429 | (9,297 | ) | - | ||||||||
Income subject to tax at a different tax rate | 116 | - | 441 | |||||||||
Non-deductible expenses | 158,811 | 44,851 | 1,028 | |||||||||
Exempt income | (164,822 | ) | (23,937 | ) | (61,415 | ) | ||||||
Taxes in respect of prior years | (739 | ) | (361 | ) | 1 | |||||||
Tax in respect of foreign dividend | 18,447 | 28,172 | - | |||||||||
Share of non-controlling interests in entities transparent for tax purposes | (1,082 | ) | 5,528 | - | ||||||||
Tax losses and other tax benefits for the period regarding which deferred taxes were not recorded | 511 | 95 | 7,647 | |||||||||
Other differences | (126 | ) | 274 | (727 | ) | |||||||
Tax expense on income included in the statement of profit and loss | 37,980 | 4,325 | 4,698 |
C. | Deferred tax assets and liabilities |
1. | Deferred tax assets and liabilities recognized |
Note 24 – Income Taxes (Cont’d)
Property plant and equipment | Carryforward of losses and deductions for tax purposes | Financial instruments | Other* | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
Balance of deferred tax (liability) asset as at January 1, 2021 | (95,674 | ) | 1,691 | 1,816 | 5,205 | (86,962 | ) | |||||||||||||
Changes recorded on the statement of profit and loss | (23,591 | ) | 106,643 | 49 | (80,534 | ) | 2,567 | |||||||||||||
Changes recorded in other comprehensive income | - | - | (423 | ) | (2,847 | ) | (3,270 | ) | ||||||||||||
Change as a result of sale of subsidiary | (4,050 | ) | 2,882 | (232 | ) | (5,350 | ) | (6,750 | ) | |||||||||||
Translation differences | (3,915 | ) | 1,126 | 50 | (27 | ) | (2,766 | ) | ||||||||||||
Balance of deferred tax (liability) asset as at December 31, 2021 | (127,230 | ) | 112,342 | 1,260 | (83,553 | ) | (97,181 | ) | ||||||||||||
Changes recorded on the statement of profit and loss | (20,103 | ) | 8,116 | (235 | ) | 13,801 | 1,579 | |||||||||||||
Changes recorded in other comprehensive income | - | - | (2,657 | ) | (4,439 | ) | (7,096 | ) | ||||||||||||
Translation differences | 14,615 | (4,370 | ) | (103 | ) | (147 | ) | 9,995 | ||||||||||||
Balance of deferred tax (liability) asset as at December 31, 2022 | (132,718 | ) | 116,088 | (1,735 | ) | (74,338 | ) | (92,703 | ) |
* | 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, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
As part of non-current assets | 6,382 | 19,016 | * | |||||
As part of current liabilities | (1,285 | ) | (21,117 | ) | ||||
As part of non-current liabilities | (97,800 | ) | (95,080 | )* | ||||
(92,703 | ) | (97,181 | ) |
Note 24 – Income Taxes (Cont’d)
3. | Tax and deferred tax balances not recorded |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Losses for tax purposes | 153,907 | 167,758 |
• | 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, offsetable 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 harbor rules |
Note 25 – Earnings per Share
A. | Profit allocated to the holders of the ordinary shareholders |
For the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Profit for the year attributable to Kenon’s shareholders | 312,652 | 930,273 | 507,106 | |||||||||
Profit for the year from discontinued operations (after tax) attributable to Kenon’s shareholders | - | - | 8,476 | |||||||||
Profit for the year from continuing operations attributable to Kenon’s shareholders | 312,652 | 930,273 | 498,630 |
B. | Number of ordinary shares |
For the year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Thousands | ||||||||||||
Weighted Average number of shares used in calculation of basic/diluted earnings per share | 53,885 | 53,879 | 53,870 |
(a) | I.C. Power (Latin America businesses) |
Year ended December 31, 2022 | Year ended December 31, 2021 | Year ended December 31, 2020 | ||||||||||
$ Thousands | ||||||||||||
Recovery of retained claims | - | - | 9,923 | |||||||||
Income taxes | - | - | (1,447 | ) | ||||||||
Profit after income taxes | - | - | 8,476 | |||||||||
Net cash flows provided by investing activities | - | - | 8,476 |
OPC Israel | CPV Group | ZIM | Others* | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2022 | ||||||||||||||||||||
Revenue | 516,668 | 57,289 | - | - | 573,957 | |||||||||||||||
Profit before taxes | 23,728 | 61,039 | 305,376 | (2,504 | ) | 387,639 | ||||||||||||||
Income tax expense | (9,522 | ) | (9,892 | ) | - | (18,566 | ) | (37,980 | ) | |||||||||||
Profit/(loss) from continuing operations | 14,206 | 51,147 | 305,376 | (21,070 | ) | 349,659 | ||||||||||||||
Depreciation and amortization | 47,134 | 15,519 | - | 223 | 62,876 | |||||||||||||||
Financing income | (10,301 | ) | (25,197 | ) | - | (9,188 | ) | (44,686 | ) | |||||||||||
Financing expenses | 42,062 | 7,521 | - | 814 | 50,397 | |||||||||||||||
Other items: | ||||||||||||||||||||
Losses related to ZIM | - | - | 727,650 | - | 727,650 | |||||||||||||||
Share in profit of associated companies | - | (85,149 | ) | (1,033,026 | ) | - | (1,118,175 | ) | ||||||||||||
78,895 | (87,306 | ) | (305,376 | ) | (8,151 | ) | (321,938 | ) | ||||||||||||
Adjusted EBITDA | 102,623 | (26,267 | ) | - | (10,655 | ) | 65,701 | |||||||||||||
Segment assets | 1,503,811 | 552,569 | - | 636,263 | 2,692,643 | |||||||||||||||
Investments in associated companies | 652,358 | 427,059 | - | 1,079,417 | ||||||||||||||||
3,772,060 | ||||||||||||||||||||
Segment liabilities | 1,226,395 | 241,468 | - | 8,279 | 1,476,142 |
OPC Israel | CPV Group | ZIM | Others* | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2021 | ||||||||||||||||||||
Revenue | 437,043 | 50,720 | - | - | 487,763 | |||||||||||||||
(Loss)/profit before taxes | (57,040 | ) | (60,709 | ) | 1,260,789 | (263,398 | ) | 879,642 | ||||||||||||
Income tax benefit/(expense) | 10,155 | 13,696 | - | (28,176 | ) | (4,325 | ) | |||||||||||||
(Loss)/profit from continuing operations | (46,885 | ) | (47,013 | ) | 1,260,789 | (291,574 | ) | 875,317 | ||||||||||||
Depreciation and amortization | 44,296 | 13,102 | - | 242 | 57,640 | |||||||||||||||
Financing income | (2,730 | ) | (37 | ) | - | (167 | ) | (2,934 | ) | |||||||||||
Financing expenses | 119,392 | 24,640 | - | 263 | 144,295 | |||||||||||||||
Other items: | ||||||||||||||||||||
Losses related to Qoros | - | - | - | 251,483 | 251,483 | |||||||||||||||
Losses related to ZIM | - | - | 204 | - | 204 | |||||||||||||||
Share in losses/(profit) of associated companies | 419 | 10,425 | (1,260,993 | ) | - | (1,250,149 | ) | |||||||||||||
161,377 | 48,130 | (1,260,789 | ) | 251,821 | (799,461 | ) | ||||||||||||||
Adjusted EBITDA | 104,337 | (12,579 | ) | - | (11,577 | ) | 80,181 | |||||||||||||
Segment assets | 1,481,149 | 431,474 | - | 226,337 | 2,138,960 | |||||||||||||||
Investments in associated companies | - | 545,242 | 1,354,212 | - | 1,899,454 | |||||||||||||||
4,038,414 | ||||||||||||||||||||
Segment liabilities | 1,324,217 | 218,004 | - | 215,907 | 1,758,128 |
OPC Israel | CPV Group | ZIM | Others* | Total | ||||||||||||||||
$ Thousands | ||||||||||||||||||||
2020 | ||||||||||||||||||||
Revenue | 385,625 | - | - | 845 | 386,470 | |||||||||||||||
(Loss)/profit before taxes | (8,620 | ) | - | 210,647 | 298,420 | 500,447 | ||||||||||||||
Income tax expense | (3,963 | ) | - | - | (735 | ) | (4,698 | ) | ||||||||||||
(Loss)/profit from continuing operations | (12,583 | ) | - | 210,647 | 297,685 | 495,749 | ||||||||||||||
Depreciation and amortization | 33,981 | - | - | 190 | 34,171 | |||||||||||||||
Financing income | (354 | ) | - | - | (13,937 | ) | (14,291 | ) | ||||||||||||
Financing expenses | 50,349 | - | - | 825 | 51,174 | |||||||||||||||
Other items: | ||||||||||||||||||||
Net gains related to Qoros | - | - | - | (309,918 | ) | (309,918 | ) | |||||||||||||
Write back of impairment of investment | - | - | (43,505 | ) | - | (43,505 | ) | |||||||||||||
Share in losses/(profit) of associated companies | - | - | (167,142 | ) | 6,248 | (160,894 | ) | |||||||||||||
83,976 | - | (210,647 | ) | (316,592 | ) | (443,263 | ) | |||||||||||||
Adjusted EBITDA | 75,356 | - | - | (18,172 | ) | 57,184 | ||||||||||||||
Segment assets | 1,723,967 | - | - | 461,218 | 2,185,185 | |||||||||||||||
Investments in associated companies | - | - | 297,148 | - | 297,148 | |||||||||||||||
2,482,333 | ||||||||||||||||||||
Segment liabilities | 1,200,363 | - | - | 5,962 | 1,206,325 |
A. | Customer and Geographic Information |
2022 | 2021 | 2020 | ||||||||||||||||||||||
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 | 107,081 | 18.66 | % | 93,959 | 19.26 | % | 86,896 | 22.48 | % | |||||||||||||||
Customer 2 | 73,518 | 12.81 | % | 70,801 | 14.52 | % | 74,694 | 19.33 | % | |||||||||||||||
Customer 3 | - | * | - | * | - | * | - | * | - | * | - | * | ||||||||||||
Customer 4 | - | * | - | * | - | * | - | * | - | * | - | * | ||||||||||||
Customer 5 | - | * | - | * | - | * | - | * | - | * | - | * |
For the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Israel | 516,668 | 437,043 | 385,625 | |||||||||
United States | 57,289 | 50,720 | - | |||||||||
Others | - | - | 845 | |||||||||
Total revenue | 573,957 | 487,763 | 386,470 |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Israel | 1,050,386 | 1,039,505 | ||||||
United States | 392,734 | 310,426 | ||||||
Others | 96 | 171 | ||||||
Total non-current assets | 1,443,216 | 1,350,102 |
A. | Identity of related parties: |
The Group’s related parties include Kenon’s beneficial owners and Kenon’s subsidiaries, affiliates and associates companies. Kenon’s immediate holding company is Ansonia Holdings Singapore B.V. A discretionary trust, in which Mr. Idan Ofer is the ultimate beneficiary, indirectly holds 100% of Ansonia Holdings Singapore B.V.
B. | Transactions with directors and officers (Kenon's directors and officers): |
For the year ended December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Short-term benefits | 2,229 | 1,994 | ||||||
Share-based payments | 292 | 258 | ||||||
2,521 | 2,252 |
C. | Transactions with related parties (including associates): |
For the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Sale of electricity and revenues from provision of services | 94,264 | 88,004 | 80,416 | |||||||||
Cost of sales | (658) | 7,802 | 16 | |||||||||
Dividend received from associate | 727,309 | 143,964 | - | |||||||||
Other income, net | - | (337 | ) | (90 | ) | |||||||
Financing expenses, net | 580 | 39,901 | 2,156 | |||||||||
Interest expenses capitalized to property plant and equipment | - | - | 119 |
D. | Balances with related parties (including associates): |
As at December 31, | ||||||||
2022 | 2021 | |||||||
Other related parties * | ||||||||
$ Thousands | ||||||||
Cash and cash equivalent | 176,246 | 89,814 | ||||||
Short-term deposits and restricted cash | 35,662 | - | ||||||
Trade receivables and other receivables | 15,421 | 14,860 | ||||||
Other payables | (535 | ) | (424 | ) | ||||
Loans and Other Liabilities | �� | |||||||
In US dollar or linked thereto | (34,524 | ) | (27,587 | ) |
* IC, Israel Chemicals Ltd (“ICL”), Oil Refineries Ltd (“Bazan”). |
E. | For further investment by Kenon into OPC, see Note 11.A.5 and 11.A.6. |
A. | General |
B. | Credit risk |
(1) | Exposure to credit risk |
As at December 31, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Carrying amount | ||||||||
Cash and cash equivalents | 535,171 | 474,544 | ||||||
Short-term and long-term deposits and restricted cash | 61,136 | 21,692 | ||||||
Trade receivables and other assets | 122,797 | 97,580 | ||||||
Short-term and long-term derivative instruments | 16,730 | 9,103 | ||||||
Other investments | 344,780 | - | ||||||
| 1,080,614 | 602,919 |
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 expected credit losses 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, | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Israel | 67,177 | 56,632 | ||||||
Other regions | 6,723 | 6,011 | ||||||
73,900 | 62,643 |
| (2) | Aging of debts |
As at December 31 | ||||||||
2022 | 2021 | |||||||
$ Thousands | ||||||||
Not past due nor impaired | 73,900 | 62,643 |
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.
Debt securities
For the year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
$ Thousands | ||||||||||||
Impairment loss on debt securities at FVOCI | 732 | - | - |
C. | Liquidity risk |
As at December 31, 2022 | ||||||||||||||||||||||||
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 | 95,036 | 95,036 | 95,036 | - | - | - | ||||||||||||||||||
Other current liabilities | 17,681 | 17,681 | 17,681 | - | - | - | ||||||||||||||||||
Lease liabilities including interest payable * | 37,570 | 46,938 | 17,812 | 2,855 | 6,756 | 19,515 | ||||||||||||||||||
Debentures (including interest payable) * | 526,771 | 588,997 | 22,413 | 66,467 | 223,939 | 276,178 | ||||||||||||||||||
Loans from banks and others including interest * | 640,348 | 793,946 | 44,142 | 74,438 | 172,343 | 503,023 | ||||||||||||||||||
1,317,406 | 1,542,598 | 197,084 | 143,760 | 403,038 | 798,716 |
* | Includes current portion of long-term liabilities. |
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 | - | - | - | ||||||||||||||||||
Other current liabilities | 204,686 | 204,686 | 204,686 | - | - | - | ||||||||||||||||||
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 | - | - | ||||||||||||||||||
Other forward exchange rate contracts | 1,199 | 1,790 | 1,790 | - | - | - | ||||||||||||||||||
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, 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 |
The Group’s exposure to foreign currency risk in respect of non‑hedging derivative financial instruments is as follows:
As at December 31, 2022 | |||||||||||||||||||
Currency/ linkage receivable | Currency/ linkage payable | Amount receivable | Amount payable | Expiration dates | Fair value | ||||||||||||||
$ Thousands | |||||||||||||||||||
Forward contracts on exchange rates | Dollar | NIS | 5,566 | 18,912 | 2023 | 641 |
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 | ) |
a. | Breakdown of CPI-linked derivative instruments |
As at December 31, 2022 | |||||||||||||||||
Index receivable | Interest payable | Expiration date | Amount of linked principal | Fair value | |||||||||||||
$ Thousands | |||||||||||||||||
CPI-linked derivative instruments | |||||||||||||||||
Interest exchange contract | CPI | 1.76 | % | 2036 | 89,619 | 9,353 |
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 |
b. | Exposure to CPI and foreign currency risks |
As at December 31, 2022 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 165,186 | - | 1,102 | |||||||||
Short-term deposits and restricted cash | 35,695 | - | - | |||||||||
Trade receivables | 10,007 | - | - | |||||||||
Other current assets | 58,006 | - | 212 | |||||||||
Long-term deposits and restricted cash | 15,146 | - | - | |||||||||
Total financial assets | 284,040 | - | 1,314 | |||||||||
Trade payables | 36,669 | - | 14,734 | |||||||||
Other current liabilities | 20,930 | 5,494 | 640 | |||||||||
Loans from banks and others and debentures | 583,651 | 414,071 | - | |||||||||
Total financial liabilities | 641,250 | 419,565 | 15,374 | |||||||||
Total non-derivative financial instruments, net | (357,210 | ) | (419,565 | ) | (14,060 | ) | ||||||
Derivative instruments | - | 9,353 | - | |||||||||
Net exposure | (357,210 | ) | (410,212 | ) | (14,060 | ) |
As at December 31, 2021 | ||||||||||||
Foreign currency | ||||||||||||
Shekel | ||||||||||||
Unlinked | CPI linked | Other | ||||||||||
Non-derivative instruments | ||||||||||||
Cash and cash equivalents | 159,838 | - | 1,329 | |||||||||
Short-term deposits and restricted cash | 179 | - | 50 | |||||||||
Trade receivables | 56,632 | - | 81 | |||||||||
Other current assets | 1,308 | - | 4 | |||||||||
Long-term deposits and restricted cash | 21,463 | - | - | |||||||||
Total financial assets | 239,420 | - | 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 | - | |||||||||
Total financial liabilities | 675,019 | 466,776 | 12,032 | |||||||||
Total non-derivative financial instruments, net | (435,599 | ) | (466,776 | ) | (10,568 | ) | ||||||
Derivative instruments | - | 7,369 | (1,199 | ) | ||||||||
Net exposure | (435,599 | ) | (459,407 | ) | (11,767 | ) |
c. | Sensitivity analysis |
As at December 31, 2022 | ||||||||||||||||
10% increase | 5% increase | 5% decrease | 10% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
Shekel/dollar | (7,375 | ) | (3,687 | ) | 3,687 | 7,375 | ||||||||||
Shekel/EUR | (1,094 | ) | (547 | ) | 547 | 1,094 |
As at December 31, 2022 | ||||||||||||||||
2% increase | 1% increase | 1% decrease | 2% decrease | |||||||||||||
$ Thousands | ||||||||||||||||
Non-derivative instruments | ||||||||||||||||
CPI | (6,306 | ) | (3,153 | ) | 3,153 | 6,306 |
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 |
(2) | Interest rate risk |
As at December 31, | ||||||||
2022 | 2021 | |||||||
Carrying amount | ||||||||
$ Thousands | ||||||||
Fixed rate instruments | ||||||||
Financial assets | 549,467 | 16,137 | ||||||
Financial liabilities | (837,698 | ) | (941,733 | ) | ||||
(288,231 | ) | (925,596 | ) | |||||
Variable rate instruments | ||||||||
Financial assets | 4,827 | 55,033 | ||||||
Financial liabilities | (324,887 | ) | (267,882 | ) | ||||
(320,060 | ) | (212,849 | ) |
As at December 31, 2022 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | (3,201 | ) | 3,201 |
As at December 31, 2021 | ||||||||
100bp increase | 100 bp decrease | |||||||
$ Thousands | ||||||||
Variable rate instruments | (2,128 | ) | 2,128 |
As at December 31, 2022 | ||||||||||||||||
1.5% decrease | 1.0% decrease | 1.0% increase | 1.5% increase | |||||||||||||
$ Thousands | ||||||||||||||||
Long-term loans (US LIBOR) | 1,357 | 904 | (904 | ) | (1,357 | ) | ||||||||||
Interest rate swaps (US LIBOR) | (959 | ) | (638 | ) | 638 | 959 |
Note 29 – Financial Instruments (Cont’d)
The Group’s exposure to LIBOR risk for derivative financial instruments used for hedging is as follows:
As at December 31, 2022 | |||||||||||||||||
Linkage receivable | Interest rate | Expiration date | Amount of the linked reserve | Fair value | |||||||||||||
$ Thousands | |||||||||||||||||
Interest rate swaps | USD LIBOR interest | 0.93 | % | 2030 | 62,256 | 6,734 |
E. | Fair value |
(1) | Fair value compared with carrying value |
As at December 31, 2022 | ||||||||
Carrying amount | Fair value | |||||||
Assets | $ Thousands | |||||||
Other investments | 344,780 | 344,780 | ||||||
Liabilities | ||||||||
Non-convertible debentures | 526,771 | 492,714 | ||||||
Long-term loans from banks and others (excluding interest) | 516,195 | 528,011 | ||||||
Loans from non-controlling interests | 124,153 | 113,673 |
As at December 31, 2021 | ||||||||
Carrying amount | Fair value | |||||||
Liabilities | $ Thousands | |||||||
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 |
Note 29 – Financial Instruments (Cont’d)
Type | Valuation technique | Significant unobservable data | Inter-relationship between significant unobservable inputs and fair value measurement |
Long-term investment (Qoros) | 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. |
Note 30 – Subsequent Events
1. | Kenon |
A. | Dividend In March 2023, Kenon’s board of directors approved a cash dividend of $2.79 per share (an aggregate amount of approximately $150 million), payable to Kenon’s shareholders of record as of the close of trading on April 10, 2023, for payment on or about April 19, 2023. |
B. | Share repurchase plan In March 2023, Kenon’s board of directors authorized a share repurchase plan of up to $50 million. |
2. | OPC |
A. | Veridis Transaction |
B. | Agreement by CPV to Acquire Wind Energy Power Plants in the United States |
3. | ZIM |
A. | Dividend |
B. | Fair value of ZIM |
As at the date of approval of the consolidated financial statements, the fair value of ZIM, represented by its share price, had increased which may result in a reversal of impairment in 2023. The financial impact on Kenon from the increase in market capitalization of ZIM has yet to be determined.
Kenon Holdings Ltd. By: /s/ Robert L. Rosen Name:Robert L. Rosen Title: Chief Executive Officer |
ITEM 19. | Exhibits |
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. |