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Kenon Holdings Reports Second Quarter 2015 Results

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SINGAPORE, Sept. 8, 2015 /PRNewswire/ -- Kenon Holdings Ltd. (NYSE: KEN, TASE: KEN) announces its results for the second quarter in 2015 as well as additional updates.

Key Highlights


  • On July 23, 2015, we completed the pro rata distribution in specie of our ordinary shares of Tower (NASDAQ and TASE: TSEM).
  • On August 31, 2015, IC Power Pte. Ltd., a wholly-owned subsidiary of ours, filed a Registration Statement on Form F-1 with the Securities and Exchange Commission.
  • IC Power's net income  attributable to controlling shareholder (Kenon) for the six months and three months ended June 30, 2015, as reported by IC Power, was $33 million and $17 million, respectively[1].
  • IC Power's Adjusted EBITDA for the six months and three months ended June 30, 2015, as reported by IC Power, was $175 million and $90 million, respectively.
  • IC Power's results of operations this quarter were impacted by lower margins at OPC due in part to the lower tariffs published by the Israel Public Utilities Authority (Electricity) (PUAE) in January 2015, as OPC's tariffs for customers are based on PUAE rates; the PUAE has announced further tariff reductions effective from September 2015.
  • IC Power continued to develop its assets in advanced stages of construction. As of June 30, 2015, CDA (a 510 MW hydro project in Peru), Samay I (a 600 MW thermoelectric project in Peru) and Kanan (a 92 MW thermal generation project in Panama) have invested $787 million, $268 million and $61 million, respectively, in their respective construction, and have completed 79%, 76% and 76% of these projects, respectively. 
  • In Q2 2015, we and our JV partner Chery each provided a RMB400 million ($64 million) shareholder loan to Qoros; also in Q2, Kenon provided a back-to-back guarantee to Chery for RMB175 million ($28 million), plus up to RMB 30 million of related fees, in connection with Qoros' drawdown of RMB350m ($56 million) under a long-term loan, which drawdown is guaranteed by Chery.

Discussion of Results for the Three Months Ended June 30, 2015

Set forth below is a discussion of Kenon's results of operations.  Kenon's consolidated results of operations essentially comprise the results of I.C. Power Ltd. ("IC Power").  The results of Qoros Automotive Co., Ltd. ("Qoros"), ZIM Integrated Shipping Ltd. ("ZIM") and Tower Semiconductor Ltd. ("Tower") are reflected under results from associates. For a summary of the net income contribution from Kenon's subsidiaries and associated companies, see Appendix A.

IC Power

IC Power has identified as the reportable segments for its consolidated financial statements: Peru, Israel, Central America (which consists of Nicaragua, Guatemala, El Salvador and Panama) and Other, which reflects the results of the additional countries in which IC Power operates (Bolivia, Chile, the Dominican Republic, Jamaica and Colombia) and IC Power's share in income from associated companies and holding company results.

See Appendix B for IC Power's consolidated financial information. See Appendix C for the definition of IC Power's Adjusted EBITDA, which is a non-IFRS financial measure, and for a reconciliation to IC Power's net income. See Appendix D for summary financial information of IC Power's subsidiaries for the six months ended June 30, 2015 and 2014. See Appendix E for summary financial information of IC Power's segments for the six months ended June 30, 2015 and 2014 and the year ended December 31, 2014.

The following discussion of IC Power's results of operations below is derived from IC Power's consolidated financial statements (which reflect the certain adjustments described in Appendix B).

Revenues

IC Power's revenues were $333 million for the three months ended June 30, 2015 as compared to $336 million for the three months ended June 30, 2014, reflecting a 1% year-on-year ("YoY") decrease.  See below a discussion of revenues by segment for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014.

  • Peru –  $117 million,   compared to $102 million in the three months ended June 30, 2014, reflecting a 15% YoY increase, primarily as a result of an increase in the volume of energy sold by Kallpa this quarter to 1,592 GWh from 1,445 GWh in the three months ended June 30,  2014 and an increase in Kallpa's revenue from transmission tolls this quarter to $21 million from $15 million in the three months ended June 30, 2014.
  • Israel $69 million, compared to $93 million in the three months ended June 30, 2014, reflecting a 26% YoY decrease, primarily resulting from a decline in Israel's PUAE generation component tariff in 2015, which forms the basis of OPC's energy prices, and the strengthening of the U.S. Dollar against the New Israeli Shekel. OPC's average price of energy sold decreased from $93 per MWh in the three months ended June 30, 2014 to $71 per MWh this quarter.
  • Central America $97 million, compared to $87 million in the three months ended June 30, 2014, reflecting an 11% YoY increase, primarily a result of the acquisition and consolidation of Puerto Quetzal (Guatemala) in September 2014.
  • Other $50 million, compared to $54 million in the three months ended June 30, 2014, reflecting a 7% YoY decrease, primarily as a result of the expiration of a PPA of CEPP (Dominican Republic), which reduced CEPP's volumes and the prices at which it sold its energy. These effects were partially offset by an increase in  revenues at JPPC (Jamaica), which IC Power started consolidating in May 2014.

Cost of Sales

IC Power's cost of sales (excluding depreciation and amortization) was $234 million for the three months ended June 30, 2015 as compared to $244 million in the three months ended June 30, 2014, reflecting a 4% YoY decrease. See below a discussion of cost of sales by segment for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014

  • Peru$68 million, compared to $63 million in the three months ended June 30, 2014, reflecting a 8% YoY increase, primarily as a result of an $8 million increase in spot energy purchases to address Kallpa's customers higher consumption and a $2 million increase in transmission charges. These increases were partially offset by a $4 million decline in gas costs as a result of Kallpa's lower generation and a $2 million decrease in maintenance expenses.
  • Israel$57 million, compared to $71 million in the three months ended June 30, 2014, reflecting a 20% YoY decrease, due to lower gas costs (as OPC's gas costs are in part indexed to the PUAE tariff, which was lower in 2015) and the strengthening of the U.S. Dollar against the New Israeli Shekel.  In addition, costs of sales in the three months ended June 30, 2014 included the effect of certain provisions that have subsequently been revised as discussed in Appendix B.
  • Central America$77 million, compared to $72 million for the three months ended June 30, 2014, reflecting a 7% YoY increase, primarily as a result of the acquisition of Puerto Quetzal in September 2014.
  • Other –$34 million,  compared to $39 million for the three months ended June 30, 2014, reflecting a 14% YoY decrease, primarily reflecting an $8 million decline in CEPP as a result of a decrease in spot energy purchases and fuel cost, which was partially offset by a $5 million increase in JPPC's fuel and maintenance costs.

Adjusted EBITDA

IC Power's Adjusted EBITDA was $90 million for the three months ended June 30, 2015 as compared to $74 million for the three months ended June 30, 2014, reflecting a 22% YoY increase, primarily as a result of the following (by segment):

  • Peru - an $8 million increase, primarily as a result of an increase in the volume of energy sold;
  • Israel a $6 million decrease, primarily as a result of lower margins due to a weaker New Israeli Shekel against the US Dollar and lower PUAE tariffs in 2015, which resulted in a $24 million decline in revenues but only a $14 million decline in cost of sales;  Adjusted EBITDA for the three months ended June 30, 2014  also included certain provisions that were subsequently revised (see Appendix B for further information);
  • Central America -  a $2 million increase, primarily as a result of the acquisition of Puerto Quetzal, which increased the Adjusted EBITDA by $5 million, and was partially offset by a $5 million decline in ICPNH's EBITDA, primarily as a result of higher maintenance expenses incurred during the three months ended June 30, 2015; and
  • Other - a $12 million increase, primarily as a result of a $3 million decline in legal expenses at Inkia,  a $4 million dividend payment received from Edegel in the three months ended June 30, 2015, and a $4 million increase as a result of the acquisitions of JPPC (Jamaica) and Surpetroil (Colombia).

Net Income

IC Power's net income was $21 million for the three months ended June 30, 2015 as compared to  $16 million in the three months ended June 30, 2014, reflecting a 31% YoY increase, primarily as a result of the increase in its Adjusted EBITDA and the following:

  • $13 million decline in finance expenses, in part, as a result of a $95 million repayment of the capital notes owed to Israel Corporation Ltd. in June 2014; and
  • $6 million lower income tax expenses, primarily reflecting $8 million in withholding taxes in the three months ended June 30, 2014 related to dividends received by IC Power from Inkia.

The above effects were partially offset by the recognition in the three months ended June 30, 2014 of the $24 million gain on bargain-purchase recognized by IC Power from the acquisition of JPPC in 2014.

IC Power's net income from continuing operations by segment for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 were as follows:

  • Peru $15 million  net income, compared to net income of $10 million in the three months ended June 30, 2014
  • Israel  $4 million net loss, compared to net income of $1 million in the three months ended June 30, 2014
  • Central America $9 million net income, compared to net income of $5 million in the three months ended June 30, 2014
  • Other – $1 million net loss,  compared to a net loss of $3 million in the three months ended June 30, 2014

Capital Expenditures

IC Power's capital expenditures  was $219 million in the three months ended June 30, 2015, primarily relating to the expenditures of  CDA ($72 million), Samay I ($122 million) and Kanan ($11 million).

Qoros

Kenon recognizes 50% of Qoros' results under "share in income from associates." The discussion below reflects 100% of Qoros' financial results and contains conversions of certain RMB amounts into U.S. Dollars at a rate of 6.2:1 RMB/U.S. Dollar.

See Appendix F for Qoros' consolidated financial information.

Revenues

Qoros had revenues of RMB368 million ($59 million) for the three months ended June 30, 2015 as compared to RMB209 million ($34 million) for the three months ended June 30, 2014, reflecting a 76% YoY increase. Qoros sold 3,256 vehicles during the period (compared to 1,671 vehicles in Q2 2014), representing a 95% YoY increase in the number of vehicles sold.

Cost of Sales

Qoros' costs of sales were RMB366 million ($59 million) for the three months ended June 30, 2015 as compared RMB187 million ($30 million) for the three months ended June 30, 2014, reflecting a 96% YoY increase, as a result of the increase in the number of vehicles sold as compared to Q2 2014.

Research and Development Expenses

Qoros continues to invest in the research and development of its next vehicle model scheduled for launch in early 2016, the Qoros 5 SUV, and the 2016 model year versions of the Qoros 3 Sedan, the Qoros 3 Hatch and the Qoros 3 City SUV. Qoros had research and development expenses of RMB72 million ($12 million) in the three months ended June 30, 2015 

Selling and Distribution Expenses

Qoros had selling and distribution expenses of RMB150 million ($24 million) in the three months ended June 30, 2015 as compared to RMB208 million ($34 million) in the three months ended June 30, 2014, reflecting a 28% YoY decrease, as Qoros did not launch a marketing or advertising campaign during the first half of 2015.

Administration Expenses

Qoros had administration expenses of RMB147 million ($24 million) in the three months ended June 30, 2015 as compared to RMB168 million ($27 million) in the three months ended June 30, 2014, reflecting a 12% YoY decrease.

Finance Costs, Net

Qoros had finance costs of RMB93 million ($15 million) in the three months ended June 30, 2015 as compared to RMB29 million ($5 million) in the three months ended June 30, 2014 due to an increase in total debt outstanding. 

Loss for the Period

As a result of the above, Qoros had a loss of RMB476 million ($77 million) in the three months ended June 30, 2015 as compared to RMB487 million ($79 million) in the three months ended June 30, 2014.

Capital Expenditures

Qoros had capital expenditures of RMB386 million ($62 million) in the three months ended June 30, 2015. During this period, Qoros made investments in its next SUV model and the 2016 model year versions of the Qoros 3 Sedan, the Qoros 3 Hatch, and the Qoros 3 City SUV.

ZIM

In the three months ended June 30, 2015, ZIM recorded operating income and net income attributable to the owners of ZIM of $42 million and $10 million, respectively, as compared to an operating loss and net loss attributable to the owners of ZIM of $9 million and $69 million, respectively, in the three months ended June 30, 2014. ZIM's improved results, following its restructuring in July 2014, are primarily the result of a decrease in operating expenses (resulting, in part, from a decrease in bunker expenses) and a decline in ZIM's financing expenses, which is partially offset by a decrease in revenues, primarily as a result of a decline in carried cargo (resulting, in part, from ZIM's closure of a line from Asia to Northern Europe) and a decline in average revenue per TEU (twenty foot equivalent unit). ZIM publishes its results on its website. For more information, see www.ZIM.com. This website, and any information referenced therein, is not incorporated by reference herein. 

Tower

On July 23, 2015, Kenon completed the pro rata distribution of 18,030,041 ordinary shares of Tower, marking one of the key steps in the implementation of Kenon's strategy. The 18,030,041 ordinary shares distributed by Kenon represent all of the shares in Tower owned by Kenon, excluding the 1,669,795 shares in Tower underlying certain warrants held by Kenon.

Liquidity and Capital Resources

Kenon (Unconsolidated)

As of June 30, 2015, the total drawings outstanding under Kenon's $200 million credit facility from Israel Corporation Ltd. was $110 million.

As of June 30, 2015, cash, gross debt, and net debt (a non-IFRS financial measure, which is defined as total debt minus cash) at Kenon (parent company) were $19 million, $113 million and $95 million, respectively.

IC Power

As of June 30, 2015, IC Power's financial liabilities (excluding payables and derivative instruments) amounted to $2,514 million, cash, cash equivalents, short term deposits, including restricted cash of $621 million, and net financial liabilities (a non-IFRS financial measure, which is defined as financial liabilities minus monetary assets) amounted to $1,893 million.

Qoros

As of June 30, 2015, Qoros had loans and borrowings of RMB8.7 billion ($1.4 billion), including RMB3.0 billion ($484 million) of shareholder loans, and current cash and cash equivalents of RMB565 million ($91 million).

Business Developments

IC Power

Assets Under Construction

  • Update on assets in advanced stages of construction:

- CDA

As of June 30, 2015, CDA has received proceeds of $547 million from the $591 million available debt facilities for this project.

As of June 30, 2015, CDA has invested an aggregate $787 million in the project and has completed 79% of the project,  with 87% of the dam construction and 100% of the tunnel drilling completed.

CDA is expected to commence commercial operation by the middle of 2016 and has an estimated construction cost of $954 million.

- Samay I

As of June 30, 2015, Samay I has received $252 million in proceeds from the $311 million financing facility obtained for this project.

As of June 30, 2015, Samay I has invested an aggregate $268 million in the project and has completed 76% of the project.

Samay I is expected to commenced commercial operation by the middle of 2016 and has an estimated construction cost of $380 million

- Kanan

As of June 30, 2015, Kanan has invested an aggregate $61 million in the project (including $40 million of intercompany expenses relating to Puerto Quetzal's and CEPP's sale of the barges to Kanan) and has completed 76% of the project.

Kanan is expected to commence commercial operation by the end of 2015 and has an estimated construction cost of $73 million (including $40 million of intercompany expenses relating to Puerto Quetzal's and CEPP's sale of the barges to Kanan).

  • On August 10, 2015, IC Power acquired Advanced Integrated Energy ("AIE"), which holds a conditional license for the construction of a 120 MW cogeneration natural gas power plant and will seek regulatory approval for licenses in respect of an additional 25 MW in Israel, for NIS 60 million (approximately $16 million). The project is in the advanced development stage and construction is expected to commence in early 2016. Based upon its initial assessment, IC Power expects that the total cost of completing the AIE plant (including the consideration for the acquisition of AIE and the construction cost of the power station) will be approximately $200 million. The AIE plant is expected to commence commercial operations in the second half of 2018.
  • Project pipeline:  IC Power is currently assessing various projects in Israel and various Latin American countries, such as Chile, Colombia, Guatemala, Mexico, Peru, Panama, the Dominican Republic, and Nicaragua. These potential projects range in size from small-scale power facilities (e.g., less than 40 MW) to large-scale power facilities (e.g., approximately 550 MW) and utilize different fuels and technologies, including natural gas, hydroelectric, wind, and stranded gas. IC Power is also considering acquiring companies and assets in power generation and related businesses (e.g., transmission and distribution companies or assets). There is no guarantee that IC Power will proceed with any of the above-mentioned projects.

Decisions by the PUAE (Israel's Power Regulator)

In August 2015, Israel's Public Utilities Authority (the PUAE) published a decision that independent power producers ("IPPs") in Israel would be obligated to pay system management service charges, retroactively from June 1, 2013. According to the PUAE decision, the amount of system management service charges that would be payable by OPC from the effective date to June 2015 is approximately NIS 152 million (approximately $40 million), not including interest rate and linkage costs. IC Power is considering the implications of this decision and may contest it.  This decision has resulted in a revision in certain provisions that had been taken by OPC, and has resulted in adjustments to IC Power's income statement. Specifically, IC Power's cost of sales were adjusted downwards by $46 million and $6 million in the year ended December 31, 2014 and the three months ended March 31, 2015, respectively, resulting in a corresponding upward adjustment in IC Power's Adjusted EBITDA in those periods; there was no adjustment to Kenon's financials during those periods, but Kenon recognized a $52 million gain ($31 million for Kenon's shareholders after tax effect) in the three months ended June 30, 2015 in connection with its revision of this provision in its financial statements for the three months ended June 30, 2015.  For more information, see Appendix B.

In August 2015, the PUAE also published a notice for a hearing regarding tariff updates effective from September 9, 2015. Such tariffs reflect a decline in the generation component tariff from NIS 300.9 per MWh and NIS 301.5 per MWh to a single tariff of NIS 260.2 per MWh. OPC uses privately negotiated rates to sell electricity to customers under its PPAs, but such rates are expressed as a discount to the generation component included within the PUAE rate, so a decline in PUAE rates will result in a corresponding decline in OPC's rates and, accordingly, its revenues. OPC's main cost of sales is gas, and prices for the gas it consumes under its supply agreement with the Tamar Group are indexed in part to the PUAE generation component tariff and NIS/USD exchange rate.  However, the supply agreement also contains a floor price and, as a result of previous declines in the PUAE generation component tariff, OPC will soon begin to pay the floor price, so the decline in the tariff will result in a greater decline in OPC's margins.

Qoros

Car Sales

In the three months ended June 30, 2015, Qoros sold approximately 3,256 vehicles as compared to 2,488 vehicles sold in the three months ended March 31, 2015 and 1,671 vehicles in the three months ended June 30, 2014, representing an increase of 31% and 95%, respectively.

In the six months ended June 30, 2015, Qoros sold 5,744 vehicles as compared to 2,561 vehicles sold in the six months ended June 30, 2014.

In July 2015, Qoros sold 1,230 cars.

Dealerships

As of June 30, 2015, there were 81 Qoros dealerships (70 of which were operational), 12 additional dealerships under construction, and twenty three signed Memorandums of Understanding with respect to the development of 23 additional dealerships.  

Qoros Brand Day

On August 19, 2015 Qoros held a Qoros Brand Day in its Changshu plant with approximately 120 media personnel, 100 car owners and Key Opinion Leaders, and 33 dealers in attendance. The Qoros Brand Day event served as the kick-off for a series of Qoros marketing campaigns focusing on its brand positioning and product line updates.

Qoros also launched the new 2016 model year versions of the Qoros 3 Sedan, the Qoros 3 Hatch and the Qoros 3 City SUV. Two additional trims are also being offered for each of the Qoros 3 Sudan and the Qoros 3 Hatch, which has extended Qoros' pricing range to the RMB100,000 entry price.

Awards

In April 2015, the Qoros 3 Sedan was awarded a 5 plus star safety rating in the China – New Car Assessment Program (C-NCAP)'s 2015 crash test, and received the highest score ever in its 9-year history. 

In July 2015, Qoros received a Connected Service Award at the 2015 China Auto Customer Care Award in recognition of the QorosQloud. Qoros was the only Chinese brand among the eight brands which received a 2015 China Auto Customer Care Award in July.

Shareholder Investments in Qoros and Guarantees of Qoros Bank Debt

In Q2 2015, Kenon and Chery each provided a RMB400 million ($64 million) shareholder loan to Qoros.

Also in Q2 2015, Kenon provided a back-to-back guarantee to Chery for RMB175 million ($28 million), plus up to RMB30 million of related fees, in connection with Qoros' drawdown of RMB350m ($56 million) under a long-term loan, which drawdown is guaranteed by Chery.

Voluntarily Recall of Certain Vehicle Models

In July 2015, Qoros voluntarily recalled 6,736 vehicles as a result of information derived from frontal impact crash tests of new Qoros models under development, which suggested that certain Qoros vehicles already in production and in the market may have had safety belt pre-tensioner system crimping assembly process issues. Regarding customer safety as an absolute priority, Qoros decided to recall all vehicles within the scope of impact and to replace the front safety belt pre-tensioner free of charge, to eliminate any risk. As of the date of this release, Qoros has not received any field incidences or customer complaints related to this defect across any of its vehicles in the market.

China Vehicle Market Conditions

The overall passenger vehicle market in China continued to grow in the first half of 2015 with a 7% YoY growth rate and 8.97 million units sold during this period.  The first quarter of 2015 experienced an 11% YoY growth rate, and the second quarter of 2015 experienced a 3% YoY growth rate. This growth was unevenly distributed by segment; sales in the C Sedan and Hatch segments decreased by 10% and 34% YoY, respectively, while sales in the SUV segment increased by 43% YoY. Some auto manufacturers are offering significant price reductions, discounts, and/or rebates, to stimulate purchases of their vehicles. In addition, as sales are generally lower during the summer, Qoros expects such price reductions to continue, and potentially escalate, during the third quarter of 2015.

Additionally, the Shanghai Composite Index has declined by more than 30% percent since mid-June and this decline in China's stock market could further impact negatively consumption rates and the purchase of costly items, such as vehicles, throughout China. In light of current financial market and economic conditions in China, which could affect vehicle sales industry-wide in China, Qoros may find it challenging to so increase sales, and may even experience a decline in sales.

Qoros is evaluating appropriate measures to address the above market conditions. Qoros is also seeking to optimize its cost structure, and may undertake cost-cutting measures, including workforce optimizations, the downsizing of various departments and other measures to align its operations with its business plan.

Investors' Conference Call

Kenon's management will host a conference call for investors and analysts on September 8, 2015. To participate, please call one of the following teleconferencing numbers:

US:                1-888-407-2553
UK:                0-800-917-9141
Israel:             03- 918-0644
International:   972-3-918-0644

The call will commence at 9:00am Eastern Time, 6:00am Pacific Time, 2:00pm UK Time, 4:00pm Israel Time and 9:00pm Singapore Time.

About Kenon 

Kenon is a holding company that operates dynamic, primarily growth-oriented businesses. The companies it owns, in whole or in part, are at various stages of development, ranging from established, cash-generating businesses to early stage development companies. Kenon's businesses consist of:

  • IC Power (100% interest) – a leading owner, developer and operator of power generation facilities in the Latin American, Caribbean and Israeli power generation markets;
  • Qoros (50% interest) – a China-based automotive company;
  • ZIM Integrated Shipping Services, Ltd. (32% interest) – an international shipping company; and
  • Primus Green Energy, Inc. (91% interest) – an early stage developer of alternative fuel technology.

Kenon's primary focus is to grow and develop its primary businesses, IC Power and Qoros. Following the growth and development of its primary businesses, Kenon intends to provide its shareholders with direct access to these businesses, when we believe it is in the best interests of its shareholders for it to do so based on factors specific to each business, market conditions and other relevant information. Kenon intends to support the development of its non-primary businesses, and to act to realize their value for its shareholders by distributing its interests in its non-primary businesses to its shareholders or selling its interests in its non-primary businesses, rationally and expeditiously. For further information on Kenon's businesses and strategy, see Kenon's publicly available filings, which can be found on the SEC's website at www.sec.gov. Please also see http://www.kenon-holdings.com for additional information.

Caution Concerning Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about tariffs published by the PUAE and the expected impact on OPC, the impact of recent PUAE draft and financial decisions on IC Power's operations and financial results, the expected cost and expected timing of completion of IC Power's construction projects and the expected timing of completion of AIE, which IC Power recently acquired, IC Power's project pipeline, statements about China's vehicle market and other non-historical matters, including statements about IC Power's and Qoros' expected operating results and trends. These statements are based on Kenon's management's current expectations or beliefs, and are subject to uncertainty and changes in circumstances. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Kenon's control, which could cause the actual results to differ materially from those indicated in such forward-looking statements. Such risks include risks relating to a failure by IC Power to  complete the construction of its various power plants under construction on a timely basis, within expected budget or at all, develop or acquire any of the assets within its project pipeline, and other risks and factors, including those risks set forth under the heading "Risk Factors" in Kenon's Annual Report on Form 20-F filed with the SEC, and other filings. Except as required by law, Kenon undertakes no obligation to update these forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Contact Info






Kenon Holdings Ltd.






Barak Cohen

VP Business Development and IR

barakc@kenon-holdings.com

Tel: +65 6351 1780


External Investor Relations

Ehud Helft / Kenny Green

GK Investor Relations

kenon@gkir.com

Tel: +1 646 201 9246

 



 

[1] IC Power's net income attributable to Kenon  for the six months and three months ended June 30, 2015, as reported by Kenon, was $60 million and $48 million, respectively; the amounts differ from amounts reported by IC Power as a result of the revision of certain provisions at IC Power,  which were adjusted in IC Power's Q1 and 2014 financial statements, but were not adjusted until Q2 2015 for Kenon. For further information, see "Business Developments – Decisions by the PUAE (Israel's Power Regulator).

 


Kenon Holdings Ltd

Unaudited condensed consolidated statements of financial position








June 30
2015


December 31
2014








$ Thousands

Current assets





Cash and cash equivalents


460,469


610,056

Short-term investments and deposits


209,089


226,830

Trade receivables, net


173,809


181,358

Other current assets


91,335


59,064

Income tax receivable


4,422


3,418

Inventories


56,784


55,335

Assets held for distribution


45,595







Total current assets


1,041,503


1,136,061






Non-current assets





Investments in associated companies


474,077


435,783

Deposits, loans and other receivables, including financial instruments


98,349


74,658

Deferred taxes, net


38,679


42,609

Property, plant and equipment, net


2,830,272


2,502,787

Intangible assets


148,702


144,671






Total non-current assets


3,590,079


3,200,508






Total assets


4,631,582


4,336,569






 


Kenon Holdings Ltd

Unaudited condensed consolidated statements of financial position, continued








June 30
2015


December 31
2014








$ Thousands

Current liabilities





Loans and debentures


158,025


161,486

Trade payables


148,021


144,488

Other payables, including derivative


106,824


114,165

Provisions


38,432


69,882

Income tax payable


4,535


6,766






Total current liabilities


455,837


496,787






Non-current liabilities





Loans


1,802,345


1,528,930

Debentures


679,805


686,942

Derivative instruments


18,738


21,045

Deferred taxes, net


148,732


130,983

Employee benefits


6,254


6,219

Other non-current liabilities


9,966


10,072






Total non-current liabilities


2,665,840


2,384,191






Total liabilities


3,121,677


2,880,978






Equity





Share capital


1,281,272


Parent company investment



1,240,727

Translation reserve


(1,489)


28,440

Capital reserve


10,003


(25,274)

Retained Earnings


7,499







Equity attributable to owners of the Company


1,297,285


1,243,893

Non-controlling interests


212,620


211,698






Total equity


1,509,905


1,455,591






Total liabilities and equity


4,631,582


4,336,569






 

Kenon Holdings Ltd

Unaudited condensed consolidated statements of profit or loss












For the Six Months ended


For the Three
Months ended



June 30
    2015    


June 30
    2014 *   


June 30
    2015    


June 30
    2014    



$ Thousands


$ Thousands

Revenue


655,247


661,343


333,089


336,518

Cost of sales and services (excluding depreciation)


(412,251)


(468,277)


(181,887)


(244,714)

Depreciation


(54,121)


(48,178)


(28,506)


(25,268)










Gross profit


188,875


144,888


122,696


66,536

Other income


6,540


6,518


6,016


4,142

Gain from bargain purchase



47,767



24,116

Dilution gains from reductions in equity interest held in associates


32,829


6,591


404


 

4,314

Selling, general and administrative expenses


(47,487)


(51,370)


(21,379)


(31,476)

Other expenses


(1,948)


(959)


(1,475)


(840)










Operating profit from continuing operations


178,809


153,435


106,262


66,792










Financing expenses


(61,326)


(46,757)


(35,612)


(24,871)

Financing income


13,283


1,652


5,077


1,232










Financing expenses, net


(48,043)


(45,105)


(30,535)


(23,639)










Share in net losses of associated companies, net of tax


(63,378)


(52,002)


(29,677)


(39,064)










Profit from continuing operations before income taxes


67,388


56,328


46,050


 

4,089

Tax expenses


(33,360)


(34,748)


(22,055)


(17,779)










Profit/(loss) for the period from continuing operations


34,028


21,580


23,995


(13,690)

Loss for the period from discontinued operations



(130,069)



(70,204)










Profit/(loss) for the period


34,028


(108,489)


23,995


(83,894)










Attributable to:









Kenon's shareholders


17,218


(123,635)


12,698


(90,145)

Non-controlling interests


16,810


15,146


11,297


6,251










Profit/(loss) for the period


34,028


(108,489)


23,995


(83,894)




























Basic/Diluted profit (loss) per share attributable to Kenon's shareholders (in dollars):









Basic/Diluted profit (loss) per share


0.33


(2.32)


0.24


(1.69)

Basic/Diluted profit (loss) per share from continuing operations


0.33


(0.18)


0.24


(0.34)

Basic/Diluted loss per share from discontinued operations



(2.50)



(1.35)

* Reflects adjustments in the consolidated statement of income and cash flows for the six months ended June 30, 2014 as a result of the completion of the fair value measurement related to the acquisitions by IC Power's subsidiary Inkia Energy Limited of AIE Nicaragua Holdings, Surpetroil S.A.S. and AEI Jamaica Holdings, which occurred on March 12, 2104, March 28, 2014 and May 30, 2014, respectively.

 



Kenon Holdings Ltd

Unaudited condensed consolidated statements of cash flows










For the Six Months ended


For the Three Months ended


June 30, 2015


June 30, 2014 *


June 30, 2015


June 30, 2014 *


$ Thousands









Cash flows from operating activities








Profit/(loss) for the period

34,028


(108,489)


23,995


(83,894)

Adjustments:





-


-

Depreciation and amortization

58,537


128,748


29,327


67,220

Gain on bargain purchase


(47,767)


-


(24,116)

Financing expenses, net

48,043


152,320


30,535


84,070

Share in losses of associated companies, net of tax

63,378


46,737


29,677


36,140

Gain from changes in interest held in associates

(32,829)


(2,277)


(404)


-

Other capital loss/(gains), net

3,471


(8,889)


3,327


(8,099)

Share-based payments

(1,336)


2,964


(683)


2,812

Taxes on income

33,360


44,483


22,055


21,347










206,652


207,830


137,829


95,480

Change in inventories

(1,449)


(8,772)


2,670


703

Change in trade and other receivables

(9,811)


(32,538)


8,841


6,952

Change in trade and other payables

(29,966)


54,879


(16,165)


11,560

Change in provisions and employee benefits

(36,331)


25,324


(47,754)


14,337










129,095


246,723


85,421


129,032

Income taxes paid, net

(19,983)


(43,764)


(10,660)


(23,023)

Dividends received from investments in associates

4,487


14,973


3,850


13,765









Net cash provided by operating activities

113,599


217,932


78,611


119,774









 


Kenon Holdings Ltd

Unaudited condensed consolidated statements of cash flows, continued










For the Six Months ended


For the Three Months ended


June 30, 2015


June 30, 2014 *


June 30, 2015


June 30, 2014 *


$ Thousands









Cash flows from investing activities








Proceeds from sale of property, plant and equipment

221


17,298


193


4,720

Deposits and loans, net

23,641


(94,098)


(7,940)


(39,420)

Business combinations less cash acquired


(32,086)


-


(2,920)

Investment in associated company

(129,234)


(122,226)


(64,874)


(81,438)

Acquisition of property, plant and equipment**

(357,912)


(180,804)


(229,465)


(100,521)

Acquisition of intangible assets

(7,287)


(6,251)


(5,740)


(2,321)

Interest received

3,425


2,223


2,115


1,099

Payment of consideration retained

(2,800)



(2,800)


-

Payments for derivative investments used for hedging, net


876


-


1,001

Settlement of derivatives


(945)


-


(733)









Net cash used in investing activities

(469,946)


(416,013)


(308,511)


(220,533)









Cash flows from financing activities








Dividend paid to non-controlling interests

(4,254)


(9,208 )


(2,510)


(5,600)

Proceeds from issuance of shares to holders of non-controlling interests in subsidiaries

5,310


17,248


5,310


8,032

Receipt of long-term loans and issuance of debentures

296,890


367,234


251,890


121,997

Repayment of long-term loans and debentures

(51,511)


(121,727)


(25,369)


(39,624)

Purchase of non-controlling interest

(20,000)



-


-

Short-term credit from banks and others, net

(5,631)


45,430


(4,177)


16,328

Contribution from parent company

34,271


122,651


-


76,172

Payments to parent company


(300,047)


-


(300,047)

Interest paid

(47,974)


(121,771)


(28,237)


(64,615)









Net cash provided by/(used in) financing activities

207,101


(190)


196,907


(187,357)









Decrease in cash and cash equivalents

(149,246)


(198,271)


(32,993)


(288,116)

Cash and cash equivalents at beginning of the period

610,056


670,910


-


159

Effect of exchange rate fluctuations on balances of cash and cash equivalents

(341)


40


6,655


2,157









Cash and cash equivalents at end of the period

460,469


472,679


(26,338)


(285,800)









Significant non-cash investing transactions:








Acquisition of fixed assets under lease contract


(107,688)



(107,688)

Purchase of fixed assets on credit and others

(4,899)


(762)


3,629


7,252

 

Significant non-cash investing and financing activity during the period ended June 30, 2015 relating to transfer of certain business interests to Kenon Holdings Ltd from Israel Corporation Ltd and the issuance of common stock and reclassification of parent company investment in connection with the spin-off.

*   Reflects adjustments in the consolidated statement of income and cash flows for the six months ended June 30, 2014 as a result of the completion of the fair value measurement related to the acquisitions by IC Power's subsidiary Inkia Energy Limited of AIE Nicaragua Holdings, Surpetroil S.A.S. and AEI Jamaica Holdings, which occurred on March 12, 2104, March 28, 2014 and May 30, 2014, respectively.

** Mainly assets acquired by I.C. Power for the construction of projects in Cerro del Aguila and Samay facilities during the period ended June 30, 2015.


 

Segment Information





















I.C.
Power*


Qoros**


Other


Adjustments


Total


$ Thousands

For the six months ended June 30, 2015:










Sales to external customers

649,907



225



650,132

Intersegment sales

5,115





5,115












655,022



225



655,247

Elimination of intersegment sales

(5,115)




5,115












Total sales

649,907



225


5,115


655,247





















EBITDA

221,511



15,835



237,346











Depreciation and amortization

58,318



219



58,537

Financing income

(4,315 )



(8,968)



(13,283)

Financing expenses

57,254



4,072



61,326

Other items:










Share in (income)/losses of associated companies

(116)


73,864


(10,370)



63,378












111,141


73,864


(15,047)



169,958











Profit/(loss) before taxes

110,370


(73,864 )


30,882



67,388

Taxes on income

33,360





33,360











Profit/(loss) for the period from continuing operations

77,010


(73,864 )


30,882



34,028

 

* The total assets and liabilities of I.C. Power are $4,049,894 thousand and $2,999,249 thousand at June 30, 2015, respectively.

** Associated company


 




I.C.
Power*


Qoros**


Other


Adjustment


Total


Restatements***


Total


















$ Thousands

For the six months ended June 30, 2014:















Sales to external customers


654,776





654,776



654,776

Intersegment sales


6,567





6,567



6,567


















661,343





661,343



661,343

Elimination of intersegment sales


(6,567)




6,567



















Total sales


654,776




6,567


661,343



661,343































EBITDA


170,972



(14,224)



156,748


(86)


156,662
















Depreciation and amortization


49,782



566



50,348


646


50,994

Financing income


(1,719 )



(9,623)


9,690


(1,652)



(1,652)

Financing expenses


54,417



800


(9,690)


45,527


1,230


46,757

Other items:















Share in (income)/losses of associated companies


(13,051)


68,413


(3,360)



52,002



52,002

Gain on bargain purchase


(38,818)





(38,818)


(8,949)


(47,767)


















50,611


68,413


(11,617)



107,407


(7,073)


100,334
















Profit/(loss) before taxes


120,361


(68,413)


(2,607)



49,341


6,987


56,328

Taxes on income


34,878



(130)



34,748



34,748
















Profit/(loss) for the period from continuing operations


85,483


(68,413)


(2,477)



14,593


6,987


21,580
















Loss for the period from discontinued operations




(130,069)



(130,069)



(130,069)
















 

*  The total assets and liabilities of I.C. Power are $3,504,322 thousand and $2,637,894 thousand at June 30, 2014, respectively.

**  Associated company

*** Reflects adjustments in the consolidated statement of income and cash flows for the six months ended June 30, 2014 as a result of the completion of the fair value measurement related to the acquisitions by IC Power's subsidiary Inkia Energy Limited of AIE Nicaragua Holdings, Surpetroil S.A.S. and AEI Jamaica Holdings, which occurred on March 12, 2104, March 28, 2014 and May 30, 2014, respectively.

 



I.C.
Power


Qoros**


Other


Adjustments


Total



$ Thousands

For the three months ended June 30, 2015:











Sales to external customers

330,835





330,835


Intersegment sales

2,254





2,254














333,089





333,089


Elimination of intersegment sales

(2,254)




2,254














Total sales

330,835




2,254


333,089
























EBITDA

142,007



(6,418)



135,589













Depreciation and amortization

29,239



88



29,327


Financing income

(2,755 )



(869)


(1,453)


(5,077)


Financing expenses

34,159




1,453


35,612


Other items:











Share in (income)/losses of associated companies

(124)


38,104


(8,303)



29,677














60,519


38,104


(9,084)



89,539













Profit/(loss) before taxes

81,488


(38,104 )


2,666



46,050


Taxes on income

22,055





22,055













Profit/(loss) for the period from continuing operations

59,433


(38,104 )


2,666



23,995













** Associated company

 


I.C.
Power


Qoros**


Other


Adjustments 


Total



$ Thousands

For the three months ended June 30, 2014:











Sales to external customers

333,450





333,450


Intersegment sales

3,068





3,068














336,518





336,518


Elimination of intersegment sales

(3,068)




3,068














Total sales

333,450




3,068


336,518
























EBITDA

76,796



(7,070)



69,726













Depreciation and amortization

27,518



(468)



27,050


Financing income

(724 )



(6,115)


5,607


(1,232)


Financing expenses

30,478




(5,607)


24,871


Other items:











Share in (income)/losses of associated companies

(3,689)


39,060


3,693



39,064


Gain on bargain purchase

(24,116)






(24,116)














29,467


39,060


(2,890)



65,637













Profit/(loss) before taxes

47,329


(39,060)


(4,180)



4,089


Taxes on income

17,889



(110)



17,779













Profit/(loss) for the period from continuing operations

29,440


(39,060)


(4,070)



(13,690)













Loss for the period from discontinued operations



(70,204)



(70,204)













** Associated company


 

Information Regarding Associated Companies




A. Carrying amounts of investments in associated companies





As at

June 30, 2015


As at

December 31,
2014


(In USD Thousands)

ZIM

202,822


191,069

Tower


14,061

Qoros

262,339


221,038

Others

8,916


9,615


474,077


435,783

 


B. Equity in the net earnings (losses) of associate companies














For the six months ended


For the three months ended


June 30, 2015


June 30, 2014


June 30, 2015


June 30, 2014


(In USD Thousands)

ZIM

11,432



6,465


Tower

(798)


4,788


2,102


(3,230)

Qoros

(73,864)


(68,413)


(38,403)


(39,060)

Others

(148)


11,623


159


3,226


(63,378)


(52,002)


(29,677)


(39,064)

 


Appendix A






Contribution of Principal Operations to Profit (attributable to Kenon's shareholders)


Six Months Ended June 30,


Three Months 
Ended June 30,


2015


2014


2015

2014


(in millions of USD)

Profit / (loss) attributable to Kenon's shareholders

17


(124)


13

(90)

Contributions to Kenon's income (loss) for the period







IC Power

60


79


48

26

Qoros

(74)


(68)


(38)

(39)

Tower

(1)


5


2

(3)

ZIM

11


(131)


6

(69)

Other

21


(9)


(5)

(5)

 

Appendix B








IC Power's Consolidated Statement of Income (Unaudited)

















For the six month period
ended June 30


For the three month period
ended June 30


2015


*2014


2015


*2014


(in millions of USD)

Continuing Operations








Sales

655


661


333


336

Cost of sales (excluding depreciation and amortization)

(458)


(468)


(234)


(244)

Depreciation and amortization

(54)


(48)


(28)


(26)

Gross profit

143


145


71


66









General, selling and administrative expenses

(31)


(30)


(15)


(20)

Gain on bargain purchase

-


48


-


24

Measurement to fair value of pre-existing share

-


3


-


3

Other income, net

5


2


5


-

Operating income

117


168


61


73









Financing expenses, net

53


67


32


45









Share in income of companies, net of tax

-


2


-


1









Income before taxes from continuing operations

64


103


29


29









Taxes on income

(21)


(31)


(8)


(14)

Net income from continuing operations

43


72


21


15









Discontinued operations








Net income from discontinued operations, net of tax

-


7


-


1









Net income for the period

43


79


21


16









Attributable to:








Equity holders of the company

33


66


17


11

Non-controlling interest

10


13


4


5

Net income for the period

43


79


21


16

*Reflects adjustments in the consolidated statement of income and cash flows for the six months ended June 30, 2014 as a result of the completion of the fair value measurement related to the acquisitions by IC Power's subsidiary Inkia Energy Limited of AIE Nicaragua Holdings, Surpetroil S.A.S. and AEI Jamaica Holdings, which occurred on March 12, 2104, March 28, 2014 and May 30, 2014, respectively.


 


Summary Data from IC Power's Consolidated Statement of Cash Flows (Unaudited)












Six Months Ended


Three Months



June 30,


Ended June 30,



2015


2014


2015


2014












(in millions of USD)  


Cash flows provided by operating activities

131


177


86


87

Cash flows used in investing activities

(341)


(267)


(244)


(124)

Cash flows provided by (used in) financing activities

63


(90)


132


(242)









Increase (decrease) in cash and cash equivalents

(147)


(180)


(26)


(279)









Cash and cash equivalents at end of the period

436


339


436


339

Investments in property, plant and equipment

(333)


(178)


(205)


(108)

Total depreciation and amortization

58


51


29


28

 

Summary Data from IC Power's Consolidated Statement of Financial Position (Unaudited)













As at


June 30, 2015


June 30, 2014


December 31, 2014


(in millions of USD)

Total financial liabilities1

2,514


2,035


2,348

Total monetary assets2

621


406


791

Total equity attributable to the owners

852


685


815

Total assets

4,063


3,531


3,858







1.     Not including trade payables, other payables and credit balances and financial instruments.

2.     Not including trade receivables, other receivables and debit balances and financial instruments.

Decisions by the PUAE (Israel's Power Regulator)

In August 2015, Israel's Public Utilities Authority (the PUAE) published a decision that independent power producers (IPPs) in Israel would be obligated to pay system management service charges, retroactively from June 1, 2013. According to the PUAE decision, the amount of system management service charges that would be payable by OPC from the effective date to June 2015 is approximately NIS 152 million (approximately $40 million), not including interest rate and linkage costs. IC Power is considering the implications of this decision and may contest it.

IC Power's financial statements as of December 31, 2014 and March 31, 2015 initially authorized for issuance included provisions by OPC for system management service charges and diesel surcharges in the aggregate amount of $70 million as of December 31, 2014 and $79 million as of March 31, 2015. In IC Power's opinion, due to the PUAE decision, it is more likely than not that OPC will not be charged more than the amount that was indicated in the PUAE decision. Therefore, OPC revised the provisions, such that the revised balance of the provision as of December 31, 2014 and March 31, 2015 was $27 million and $31 million, respectively. Because IC Power reapproved its financial statements in connection with its filing of a registration statement with the SEC, this revision resulted in adjustments to IC Power's income statement (a $46 million and $6 million downward adjustment in cost of sales, and all line items below cost of sales in 2014 and Q1 2015, respectively, which resulted in a corresponding upward adjustment in IC Power's Adjusted EBITDA during those periods) and in its statement of financial position as of the end of 2014 and Q1 2015; for 2014, the provisions were taken over the full year, but the adjustment was only made in Q4 2014.  

In accordance with IFRS, Kenon revised its provisions as of June 30, 2015, such that the revised balance of the provision as of such date in Kenon's financial statements was $38 million, resulting in a gain of $52 million in Q2 2015 ($31 million to Kenon's shareholders after tax effect). Kenon was not required to revise its financial statements as of December 31, 2014 or March 31, 2015, as Kenon's financial statements for these periods were already approved at the time of the PUAE's August 2015 decision. Accordingly, income statement figures in IC Power's financials for 2014 and Q1 and Q2 2015 differ from those attributable to IC Power in Kenon's financials for those periods.


Appendix C

 IC Power's Non-IFRS Financial Measures

This press release, including the financial tables, presents Adjusted EBITDA, net debt and net financial liabilities, which are financial metrics considered to be "non-IFRS financial measures." Non-IFRS financial measures should be evaluated in conjunction with, and are not a substitute for, IFRS financial measures. The tables also present the IFRS financial measures, which are most comparable to the non-IFRS financial measures as well as reconciliation between the non-IFRS financial measures and the most comparable IFRS financial measures. The non-IFRS financial information presented herein should not be considered in isolation from or as a substitute for operating income, net income or per share data prepared in accordance with IFRS.

IC Power defines "Adjusted EBITDA" as for each period for each entity as net income, excluding net income from discontinued operations, net of tax (excluding dividends received from discontinued operations), before depreciation and amortization, finance expenses, net, income tax expense  and asset write-off, and excluding share in income from associates,  and negative goodwill. Adjusted EBITDA is not recognized under IFRS or any other generally accepted accounting principles as measures 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. Adjusted EBITDA is not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. Adjusted EBITDA presents limitations that impair its use as a measure of our profitability since it does not take into consideration certain costs and expenses that result from our business that could have a significant effect on our net income, such as financial expenses, taxes, depreciation, capital expenses and other related charges.

Set forth below is a reconciliation of IC Power's net income to Adjusted EBITDA for the periods presented. Other companies may calculate Adjusted EBITDA differently, and therefore this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures used by other companies.

 


Six Months Ended June 30,


Three Months
Ended June 30,


Year Ended December 31,


2015


2014


2015


2014


2014


(in USD million)










Net income for the period

43


79


21


16


268

Depreciation and amortization1

58


51


29


28


108

Financing expenses, net

53


67


32


45


119

Income tax expense

21


31


8


14


51

Asset write-off

-


-


-


-


35

Share in income of associated companies

-


(2)


-


(1)


(2)

Recognized negative goodwill

-


(51) 2


-


(27) 2


(71)2

Net income from discontinued operations, net of tax, excluding dividends received from discontinued operations3

 

-


 

(7)


 

-


 

(1)


 

(113)











Adjusted EBITDA

175


168


90


74


395











1.     Includes depreciation and amortization expenses from cost of sales and general, selling and administrative expenses.

2.     Includes $68 million of income recognized from recognition of negative goodwill and $3 million of income recognized from the measurement of fair value.

3.     Excludes $15 million received from Edegel post-equity method accounting, which is reflected as "other income" in IC Power's discontinued operations for that period.


 

Appendix D













Summary Financial Information of IC Power's Subsidiaries and Associated Company

(Unaudited)




























Six Months Ended June 30, 2015





Entity


Ownership
Interest
(%)


Revenues


Cost of
Sales


Adjusted EBITDA1


Outstanding
debt2


Net debt3



(in millions of USD, unless otherwise stated)







Operating Companies





Peru segment













Kallpa


75


225


139


78


438


409

Assets in advance stages of construction













CdA


75


-


-


-


546


453

Samay I


75


-


-


-


244


221

Israel segment













OPC


80


157


112


43


422


210

Central America segment













ICPNH4


61-65


57


37


18


104


88

Puerto Quetzal5


100


60


54


5


22


16

Nejapa6


100


53


46


6


-


(27)

Cenergica


100


5


3


1


-


(1)

Assets in advance stages of construction













Kanan


100


-


-


-


-


(4)

Other segment













COBEE


100


22


8


11


79


54

Central Cardones


87


8


2


6


47


43

Colmito


100


20


17


2


18


16

CEPP


97


20


17


3


25


24

JPPC7


100


24


21


2


7


3

Surpetroil8


60


4


2


1


3


2

Inkia & Other9


100


-


-


-


448


302

IC Power & Other10


100


-


-


(1)


111


84














Total




655


458


175


2,514


1,893

Pedregal


21


23


19


2


13


6

Total (Associated company)


-


23


19


2


13


6














1.     "Adjusted EBITDA" for each entity is defined as net income, excluding net income from discontinued operations, net of tax (excluding dividends received from discontinued operations), before depreciation and amortization, finance expenses, net, income tax expense (benefit) and asset write-off, and excluding share in income from associates, measurement to fair value of our-existing share, and negative goodwill.

Adjusted EBITDA is not recognized under IFRS or any other generally accepted accounting principles as measures of financial performance and should not be considered as substitutes for net income or loss, cash flow from operations or other measures of operating performance or liquidity determined in accordance with IFRS. Adjusted EBITDA is not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. Adjusted EBITDA presents limitations that impair its use as a measure of profitability since it does not take into consideration certain costs and expenses that result from each business that could have a significant effect on its net income, such as financial expenses, taxes, depreciation, capital expenses and other related charges.

The following table sets forth a reconciliation of net income (loss) to Adjusted EBITDA for IC Power's subsidiaries for the six months ended June 30, 2015:

 


Kallpa


CDA


Samay I


OPC


ICPNH


Puerto Quetzal


(in millions of USD)

Income (loss) for the year

24


(1)


(1)


13


8


1

Depreciation and amortization

25


-


-


12


5


2

Finance expenses, net

18


1


1


13


4


1

Income tax expense (benefit)

11


-


-


5


1


1

Adjusted EBITDA

78


-


-


43


18


5

 


Nejapa


Cenérgica


COBEE


Central
Cardones


Colmito


(in millions of USD)

Income (loss) for the year

2


1


5


2


1

Depreciation and amortization

3


-


2


2


-

Finance expenses, net

-


-


3


1


1

Income tax expense (benefit)

1


-


1


1


-

Adjusted EBITDA

6


1


11


6


2

 


CEPP


JPPC


Surpetroil


Inkia &
Other


IC Power &
Others


Total


Pedregal


(in millions of USD)

Income (loss) for the year

2


-


(1)


(11)


(2)


43


-

Depreciation and amortization

1


2


1


3


-


58


2

Finance expenses, net

(1)


-


1


10


-


53


-

Income tax expense

1


-


-


(2)


1


21


-

Adjusted EBITDA

3


2


1


-


(1)


175


2

 

2.        Includes short-term and long-term debt.

3.        Net debt is defined as total debt attributable to each of our subsidiaries, minus the cash and short term deposits and restricted cash of such companies. Net debt is not a measure of liabilities in accordance with IFRS. The tables below set forth a reconciliation of net debt to total debt for IC Power's subsidiaries.

 



Kallpa


CDA


Samay I


OPC


ICPNH


Puerto Quetzal


Nejapa


Cenérgica


Kanan




















(in millions of USD)



















Total debt

438


546


244


422


104


22


-


-


-

Cash

29


93


23


212


16


6


27


1


4

Net Debt

409


453


221


210


88


16


(27)


(1)


(4)

 


COBEE


Central Cardones


Colmito


CEPP


JPPC


Surpetroil


Inkia &
Other


ICP & Others


Total


Pedregal





















Total debt

79


47


18


25


7


3


448


111


2,514


13

Cash

25


4


2


1


4


1


146


27


621


7

Net Debt

54


43


16


24


3


2


302


84


1,893


6

 

4.        Through ICPNH, IC Power indirectly holds 65% interests in Corinto and Tipitapa Power and 61% interests in Amayo I and Amayo II.

5.        Figures include Puerto Quetzal and Poliwatt Limited (an IC Power subsidiary that performs administrative functions and maintains certain licenses on behalf of Puerto Quetzal).

6.        Figures include amounts related to Nejapa's branch and main office.

7.        Figures include JPPC and Private Power Operator Ltd. (an IC Power subsidiary that employs JPPC's employees and performs administrative-related functions).

8.        Figures include Surpetroil and Surenergy S.A.S ESP (an IC Power subsidiary that performs administrative functions and maintains certain licenses on behalf of Surpetroil).

9.        Outstanding debt includes Inkia for $448 million.

10.     Includes $12 million of outstanding IC Power debt and $99 million of ICPI debt.

 



Six Months Ended June 30, 2014





Entity


Ownership
Interest
(%)


Revenues


Cost of
Sales


Adjusted EBITDA1


Outstanding
debt2


Net debt3



(in millions of USD, unless otherwise stated)









Operating Companies







Peru segment













Kallpa


75


225


145


75


482


452

Assets in advance stages of construction













CdA


75


-


-


-


224


135

Samay I


75


-


-


-


-


(22)

Israel segment













OPC


80


202


141


56


481


340

Central America segment













ICPNH4


61-65


53


39


13


110


94

Nejapa5


71


69


62


6


4


(9)

Cenergica


100


14


12


2


1


-

Assets in advance stages of construction













Kanan


100


-


-


-


-


-

Other segment













COBEE


100


21


9


9


66


48

Central Cardones


87


5


1


3


50


47

Colmito


100


23


22


2


22


19

CEPP


97


40


30


8


32


29

JPPC6


100


7


6


-


9


7

Surpetroil7


60


2


1


1


5


5

Inkia & Other8


100


-


-


(7)


447


410

IC Power & Other9


100


-


-


-


102


74














Total


-


661


468


168


2,035


1,629

Pedregal


21


45


33


11


16


1

Total (Associated company)10


-


45


33


11


16


1














1.     "Adjusted EBITDA" for each entity is defined as net income, excluding net income from discontinued operations, net of tax (excluding dividends received from discontinued operations), before depreciation and amortization, finance expenses, net, income tax expense (benefit) and asset write-off, and excluding share in income from associates, measurement to fair value of our-existing share, and negative goodwill.

Adjusted EBITDA is not recognized under IFRS or any other generally accepted accounting principles as measures of financial performance and should not be considered as substitutes for net income or loss, cash flow from operations or other measures of operating performance or liquidity determined in accordance with IFRS. Adjusted EBITDA is not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. Adjusted EBITDA presents limitations that impair its use as a measure of profitability since it does not take into consideration certain costs and expenses that result from each business that could have a significant effect on its net income, such as financial expenses, taxes, depreciation, capital expenses and other related charges.

The following table sets forth a reconciliation of net income to Adjusted EBITDA for our subsidiaries for the six months ended June 30, 2014:

 


Kallpa


CDA


OPC


ICPNH


(in millions of USD)

Income (loss) for the year

25


(1)


21


6

Depreciation and amortization

22


-


13


3

Finance expenses, net

16


1


15


3

Income tax expense (benefit)

12


-


7


1

Adjusted EBITDA

75


-


56


13









 


Nejapa


Cenérgica


COBEE


Central Cardones


Colmito


(in millions of USD)

Income (loss) for the year

2


1


4


-


-

Depreciation and amortization

3


-


2


2


1

Finance expenses, net

-


-


2


1


1

Income tax expense (benefit)

1


1


1


-


-

Adjusted EBITDA

6


2


9


3


2

 


CEPP


Surpetroil


Inkia &
Other


IC Power &
Others


Total


Pedregal




(in millions of USD)

Income (loss) for the year

5


-


36


(20)


79


9

Depreciation and amortization

1


-


4


-


51


4

Finance expenses, net

-


-


13


15


67


1

Income tax expense

2


1


-


5


31


3

Share in income of associated companies

-


-


(2)


-


(2)


-

Recognized negative goodwill

-


-


(51)


-


(51)


-

Net income from discontinued operations, net of tax, excluding dividends received from discontinued operations

 

 

-


 

 

-


 

 

(7)


 

 

-


 

 

(7)


-

Adjusted EBITDA

8


1


(7)


-


168


17

2.     Includes short-term and long-term debt.

3.        Net debt is defined as total debt attributable to each of our subsidiaries, minus the cash and short term deposits and restricted cash of such companies. Net debt is not a measure of liabilities in accordance with IFRS. The tables below set forth a reconciliation of net debt to total debt for IC Power's subsidiaries.

 



Kallpa


CDA


Samay I


OPC


ICPNH


Puerto Quetzal


Nejapa


Cenérgica


















(in millions of USD)

















Total debt

482


224


-


481


110


-


4


1

Cash

30


89


22


141


16


-


13


1

Net Debt

452


135


(22)


340


94


-


(9)


-

 



COBEE


Central Cardones


Colmito


CEPP


JPPC


Surpetroil


Inkia &
Other


IC Power
& Others


Total


Pedregal






















(in millions of USD)





















Total debt

66


50


22


32


9


5


447


102


2,035


16

Cash

18


3


3


3


2


-


37


28


406


15

Net Debt

48


47


19


29


7


5


410


74


1,629


1

 

4.        Through ICPNH, IC Power indirectly holds 65% interests in Corinto and Tipitapa Power and 61% interests in Amayo I and Amayo II.

5.        Figures include amounts related to Nejapa's branch and main office.

6.        Figures include JPPC and Private Power Operator Ltd. (an IC Power subsidiary that employs JPPC's employees and performs administrative-related functions).

7.        Figures include Surpetroil and Surenergy S.A.S ESP (an IC Power subsidiary that performs administrative functions and maintains certain licenses on behalf of Surpetroil).

8.        Outstanding debt includes Inkia for $447 million.

9.        Includes $102 million of outstanding ICPI debt.

10.     Excludes IC Power's interest in Edegel, which IC Power sold in September 2014.

 



Year Ended December 31, 2014






Entity


Ownership
Interest
(%)


Revenues


Cost of
Sales


Adjusted EBITDA1


Outstanding
debt


Net debt2



(in millions of USD, unless otherwise stated)







Operating Companies







Peru segment













Kallpa


75


437


270


154


453


428

Assets in advance stages of construction













CdA


75


-


-


-


444


338

Samay I


75


-


-


-


145


11

Israel segment













OPC3


80


413


252


153


419


231

Central America segment













ICPNH4


61-65


125


98


22


108


92

Puerto Quetzal5


100


33


29


3


32


14

Nejapa6


71


132


119


11


-


(23)

Cenergica


100


18


14


4


-


(4)

Assets in advance stages of construction













Kanan


100


-


-


-


-


(4)

Other segment













COBEE


100


41


18


19


85


43

Central Cardones


87


11


2


7


48


44

Colmito


100


38


36


2


20


19

CEPP


97


73


56


16


30


22

JPPC7


100


41


39


1


8


4

Surpetroil8


60


9


3


5


3


2

Inkia & Other


100


1


-


1


4479


262

IC Power & Other10


100


-


-


(3)


10611


78














Total


-


1,372


936


395


2,348


1,557

Pedregal


21


80


62


17


15


3

Total (Associated Company) 12


-


80


62


17


15


3

 

1.        "Adjusted EBITDA" for each entity is defined as net income, excluding net income from discontinued operations, net of tax (excluding dividends received from discontinued operations), before depreciation and amortization, finance expenses, net, income tax expense (benefit) and asset write-off, and excluding share in income from associates, measurement to fair value of our existing share, and negative goodwill.

Adjusted EBITDA is not recognized under IFRS or any other generally accepted accounting principles as a measure of financial performance and should not be considered as a substitute for net income or loss, cash flow from operations or other measures of operating performance or liquidity determined in accordance with IFRS. Adjusted EBITDA is not intended to represent funds available for dividends or other discretionary uses because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. Adjusted EBITDA presents limitations that impair its use as a measure of profitability since it does not take into consideration certain costs and expenses that result from each business that could have a significant effect on its net income, such as financing expenses, taxes, depreciation, capital expenses and other related charges.

The following tables set forth a reconciliation of net income from continuing operations to Adjusted EBITDA for our subsidiaries for the year ended December 31, 2014:

 


Kallpa


CDA


Samay I


OPC


ICPNH


Puerto Quetzal


(in millions of USD)

Net income(i)

50


7(ii)


-


71


6


(1)

Depreciation and amortization

46


-


-


25


8


1

Finance expenses, net

35


-


-


31


7


1

Income tax expense (benefit)

23


(7)


-


26


1


2

Adjusted EBITDA

154


0


-


153


22


3

_____

(i) Reflects net income after elimination and consolidation of adjustments.

(ii) Non-operating income relating to swaps.

 


Nejapa


Cenérgica


COBEE


Central
Cardones


Colmito


(in millions of USD)

Net income(i)

4


2


9


(1)


-

Depreciation and amortization

5


1


4


4


1

Finance expenses, net

-


-


4


2


1

Income tax expense (benefit)

2


1


2


2


-

Adjusted EBITDA

11


4


19


7


2

_____

(i) Reflects net income after elimination and consolidation of adjustments.

 


CEPP


JPPC


Surpetroil


Inkia &
Other


IC Power &
Others


Total


Pedregal


(in millions of USD)

Net income(i)

9


(2)


2


131


(19)


268


7

Net income from discontinued operations, net of tax, excluding dividends received from discontinued operations(ii)

-


-


-


(131)


-


(113)


-

Depreciation and amortization

3


3


1


6


-


108


2

Finance expenses, net

1


1


1


23


12


119


-

Income tax expense

3


(1)


1


(8)


4


51


2

Asset write-off 

-


-


-


35


-


35


-

Share in income from associates 

-


-


-


(2)


-


(2)


-

Measurement to fair value of pre-existing share 

-


-


-


(3)


-


(3)


-

Negative Goodwill

-


-


-


(68)


-


(68)


-

Adjusted EBITDA

16


1


5


1


(3)


395


11

_____

(i) Reflects net income after elimination and consolidation of adjustments.

(ii) Excludes $15 million received from Edegel post-equity method accounting, which is reflected as "other income" in our discontinued operations for the period.

2.        Net debt is defined as total debt attributable to each of our subsidiaries, minus the cash and short term deposits and restricted cash of such companies. Net debt is not a measure of liabilities in accordance with IFRS. The tables below set forth a reconciliation of net debt to total debt for our subsidiaries.

 



Kallpa


CDA


Samay I


OPC


ICPNH


Puerto Quetzal


Nejapa


Cenérgica


Kanan


(in millions of USD)

Total debt

453


444


145


419


108


32


-


-


-

Cash

25


106


134


188


16


18


23


4


4

Net Debt

428


338


11


231


92


14


(23)


(4)


(4)

 


COBEE


Central Cardones


Colmito


CEPP


JPPC


Surpetroil


Inkia &
Other


ICP & Others


Total


Pedregal


(in millions of USD)

Total debt

85


48


20


30


8


3


447


106


2,348


15

Cash

42


4


1


8


4


1


185


28


791


2

Net Debt

43


44


19


22


4


2


262


78


1,557


3

3.        Reflects tariffs in 2014, which are higher than the applicable tariffs in 2015.

4.        Reflects 100% of ICPNH's financial results from the date of consolidation (March 2014). Through ICPNH, we indirectly hold 65% interests in Corinto and Tipitapa Power and 61% interests in Amayo I and Amayo II.

5.        Reflects 100% of Puerto Quetzal's financial results from the date of consolidation (September 2014). Figures include Puerto Quetzal and Poliwatt Limited (one of our subsidiaries that performs administrative functions and maintains certain licenses on behalf of Puerto Quetzal).

6.        In January 2015, we acquired Crystal Power's 29% stake in Nejapa in connection with the settlement of our shareholder dispute with Crystal Power. Figures include amounts related to Nejapa's branch and main office.

7.        Reflects 100% of JPPC's financial results from the date of consolidation (May 2014). Reflects 16% of JPPC's financial results prior to May 2014. Figures include JPPC and Private Power Operator Ltd (one of our subsidiaries that employs JPPC's employees and performs administrative-related functions).

8.        Reflects 100% of Surpetroil's financial results from the date of consolidation (March 2014). Figures include Surpetroil and Surenergy S.A.S ESP (one of our subsidiaries that performs administrative functions and maintains certain licenses on behalf of Surpetroil).

9.        Reflects Inkia's outstanding debt.

10.     Includes the results of Acter Holdings, which primarily consists of our proportionate share of Generandes' results of operations, which are reflected in our income statement as discontinued operations.

11.     Includes $12 million of outstanding ICP debt and $93 million of ICPI debt.

12.     Excludes IC Power's interest in Edegel, which IC Power sold in September 2014.


 



Appendix E







IC Power's Segment Information (Unaudited)

















Central

All other




Peru

Israel

America

Segments

Adjustments

Total


(in millions of USD)

For the six months
ended June 30, 2015







Continuing Operations







Sales

225

157

175

98

-

655

Cost of Sales

(139)

(112)

(140)

(67)

-

(458)

Depreciation and amortization

(25)

(12)

(10)

(12)

5

(54)

Gross profit

61

33

25

19

5

143








General, selling and administrative expenses

(8)

(3)

(6)

(14)

-

(31)

Other income,  net

-

1

-

4

-

5








Operating income

53

31

19

9

5

117








Financing expenses,  net

(20)

(13)

(5)

(15)

-

(53)

Share in losses (income) of associated companies

-

-

-

-

-

-








Income before taxes from continuing operations

33

18

14

(6)

5

64








Taxes on income

(11)

(5)

(3)

(1)

(1)

(21)








Net income from continuing operations

22

13

11

(7)

4

43

 













Central

All other




Peru

Israel

America

Segments

Adjustments

Total


(in millions of USD)

For the six months
ended June 30, 2014







Continuing Operations







Sales

225

202

136

98

-

661

Cost of Sales

(145)

(141)

(113)

(69)

-

(468)

Depreciation and amortization

(21)

(13)

(8)

(11)

5

(48)

Gross profit

59

48

15

18

5

145








General, selling and administrative expenses

(9)

(4)

(3)

(14)

-

(30)

Gain on bargain purchase

-

-

-

48

-

48

Measurement to fair value of pre-existing share

-

-

-

3

-

3

Other income,  net

3

-

-

(1)

-

2








Operating income

53

44

12

54

5

168








Financing expenses,  net

(17)

(15)

(3)

(32)

-

(67)

Share in losses (income) of associated companies

-

-

-

2

-

2








Income before taxes from continuing operations

36

29

9

24

5

103








Taxes on income

(12)

(8)

(2)

(8)

(1)

(31)








Net income from continuing operations

24

21

7

16

4

72








 













Central

All other




Peru

Israel

America

Segments

Adjustments

Total

2014

(in millions of USD)

Continuing Operations







Sales

437

413

308

214

-

1,372

Cost of Sales

(270)

(252)

(260)

(154)

-

(936)

Depreciation and amortization

(45)

(25)

(18)

(22)

9

(101)

Gross profit

122

136

30

38

9

335








General, selling and administrative expenses

(17)

(8)

(9)

(34)

-

(68)

Asset write-off

-

-

-

(35)

-

(35)

Gain on bargain purchase

-

-

-

68

-

68

Measurement to fair value of pre-existing share

-

-

-

3

-

3

Other income,  net

3

(1)

-

3

-

5








Operating income

108

127

21

43

9

308








Financing expenses,  net

(34)

(30)

(8)

(46)

(1)

(119)

Share in losses (income) of associated companies

-

-

-

2

-

2








Income before taxes from continuing operations

74

97

13

(1)

8

191








Taxes on income

(17)

(26)

(4)

(3)

(1)

(51)








Net income from continuing operations

57

71

9

(4)

7

140

 


Appendix F








Qoros' Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

(Unaudited)










For the six months ended


For the Three Months ended



30 June
    2015    


30 June
    2014    


30 June
    2015    


30 June
    2014    





(In thousands of
RMB)





Revenue


661,188


334,504


367,695


209,230

Cost of sales


(685,630)


(300,331)


(366,315)


(186,774)

Gross (loss)/profit


(24,442)


34,173


1,380


22,456










Other income


8,858


29,843


3,327


26,989

Research and development expenses


(150,651)


(162,385)


(71,689)


(118,774)

Selling and distribution expenses


(249,950)


(383,500)


(149,767)


(208,539)

Administrative expenses


(285,557)


(286,042)


(147,281)


(167,690)

Other expenses


(41,250)


(22,412)


(19,480)


(12,498)










Results from operating activities


(742,992)


(790,323)


(383,510)


(458,056)










Finance income


7,287


12,504


2,849


6,705

Finance costs


(182 541)


(66,778)


(95,478)


(35,373)










Net finance cost


(175,254)


(54,274)


(92,629)


(28,668)










Share of loss of equity-accounted investee, net of nil tax


(59)


-


(46)


-










Loss before income tax


(918,305)


(844,597)


(476,185)


(486,724)

Income tax expenses


(276)


(150)


(128)


(99)










Loss for the period


(918,581)


(844,747)


(476,313)


(486,823)

 


Qoros' Condensed Consolidated Statement of Financial Position (Unaudited)












30 June
2015


31 December 2014



(In thousands of RMB)






Assets





Property, plant and equipment


4,109,121


4,039,948

Intangible assets


4,809,070


4,638,364

Prepayments for purchase of equipment


98,044


117,922

Lease prepayments


205,922


208,128

Trade and other receivables


92,540


96,533

Equity-accounted investees


1,797


2,025






Non-current assets


9,316,494


9,102,920











Inventories


248,269


197,522

Available-for-sale financial assets


175,000


Trade and other receivables


891,769


729,906

Prepayments


58,360


154,655

Pledged deposits


234,751


290,840

Cash and cash equivalents


565,302


752,088






Current assets


2,173,451


2,125,011






Total assets


11,489,945


11 ,227,931






 



Qoros' Condensed Consolidated Statement of Financial Position (Continued) (Unaudited)














30 June
2015


31 December
2014




(In thousands of RMB)


Equity






Paid-in capital


6,531,840


6,531,840


Reserves


(205)


(26)


Accumulated losses


(6,579,122)


(5,660,541)








Total equity


(47,487)


871,273














Liabilities






Loans and borrowings


4,759,114


3,928,224


Finance lease liabilities



479


Deferred income


174,689


179,982


Provision


19,591


12,971








Non-current liabilities


4,953,394


4,121,656














Loans and borrowings


3,982,299


3,374,660


Trade and other payables


2,575,382


2,833,459


Finance lease liabilities


1,261


1,541


Deferred income


25,096


25,342








Current liabilities


6,584,038


6,235,002








Total liabilities


11,537,432


10,356,658








Total equity and liabilities


11,489 945


11,227,931


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kenon-holdings-reports-second-quarter-2015-results-300139025.html

SOURCE Kenon Holdings Ltd.

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