SINGAPORE, Sept. 9, 2024 /PRNewswire/ -- Kenon Holdings Ltd. KEN KEN ("Kenon") announces its results for Q2 2024 and additional updates.

Q2 and Recent Highlights

Kenon

OPC

, a U.S. private equity infrastructure fund, has agreed to invest in CPV Renewable Power LP (" "), a wholly-owned subsidiary of CPV Group LP (" "), for 33.33% of the ordinary equity interests in CPV Renewable. In July 2024, OPC announced that capacity price for power plants of CPV in the PJM market was set at $269.92 /MW-day, a significant increase compared to the prior price.

/MW-day, a significant increase compared to the prior price. Financial results:

ZIM

: ZIM reported a net profit in Q2 2024 of $373 million , as compared to net loss of $213 million in Q2 2023.

, as compared to net loss of in Q2 2023. ZIM reported Adjusted EBITDA1 in Q2 2024 of $766 million , as compared to $275 million in Q2 2023.

Discussion of Results for the Three Months ended June 30, 2024

OPC

The following discussion of OPC's results of operations is derived from OPC's consolidated financial statements, as translated into US dollars.

Summary Financial Information of OPC

For the three months ended June 30,

2024 2023

$ millions

Revenue 181 165 Cost of sales (excluding depreciation and amortization) (129) (129)

Finance expenses, net (23) (16)

Share in profit of associated companies, net 4 4

Loss for the period (7) (11)

Attributable to:

Equity holders of OPC (4) (6)

Non-controlling interest (3) (5)

companies)[3] 66 47

For details of OPC's results by segment, please refer to Appendix A.

OPC's Revenue by Geography

For the three months ended June 30,

2024

2023

$ millions

Israel

146

147

U.S.

35

18

Total

181

165

OPC's revenue increased by $16 million in Q2 2024 as compared to Q2 2023. Excluding the impact of translating OPC's revenue from NIS to USD[4], OPC's revenue increased by $19 million in Q2 2024 as compared to Q2 2023.

OPC's revenue from the sale of electricity to private customers is derived from electricity sold at the generation component tariffs, as published by the Israeli Electricity Authority ("EA"), with some discount. Accordingly, the generation component tariffs generally affect the prices paid by customers under Power Purchase Agreements of OPC-Rotem and OPC-Hadera. The weighted-average generation component tariff in Q2 2024 was NIS 30.07 per KW hour, which is approximately 1% lower than the weighted-average generation component tariff in Q2 2023 of NIS 30.39 per KW hour.

Set forth below is a discussion of significant changes in OPC's revenue between Q2 2024 and Q2 2023.

Revenue from sale of energy to the System Operator and to other suppliers – Such revenues increased by $5 million in Q2 2024 as compared to Q2 2023 primarily due to the consolidation of results of the Tzomet Power Plant which was consolidated at the end of Q2 2023;

– Such revenues increased by in Q2 2024 as compared to Q2 2023 primarily due to the consolidation of results of the Tzomet Power Plant which was consolidated at the end of Q2 2023; Revenue from availability payments – Such revenues increased by $11 million in Q2 2024 as compared to Q2 2023, primarily as a result of the commencement of commercial operations of the Tzomet Power Plant at the end of Q2 2023;

– Such revenues increased by in Q2 2024 as compared to Q2 2023, primarily as a result of the commencement of commercial operations of the Tzomet Power Plant at the end of Q2 2023; Other revenue – Such revenues decreased by $5 million in Q2 2024 as compared to Q2 2023 primarily due to the sale of electricity prior to commercial operation of Tzomet Power Plant in Q2 2023; and

– Such revenues decreased by in Q2 2024 as compared to Q2 2023 primarily due to the sale of electricity prior to commercial operation of Tzomet Power Plant in Q2 2023; and Revenue from sale of renewable energy in U.S. – Such revenues increased by $9 million primarily due to the consolidation of results of Maple Hill and Stagecoach starting in Q4 2023 and Q2 2024, respectively.

Cost of Sales (Excluding Depreciation and Amortization)

For the three months ended June 30,

2024

2023

$ millions

Israel

110

118

U.S.

19

11

Total

129

129

OPC's cost of sales (excluding depreciation and amortization) remained at $129 million in Q2 2023, the same as in Q2 2024. Excluding the impact of translating OPC's cost of sales (excluding depreciation and amortization) from NIS to USD[4], OPC's cost of sales (excluding depreciation and amortization) increased by $3 million in Q2 2024 as compared to Q2 2023. Set forth below is a discussion of significant changes in cost of sales between Q2 2024 and Q2 2023.

Natural gas and diesel oil consumption in Israel – Increased by $5 million in Q2 2024 as compared to Q2 2023. Excluding the impact of translating OPC's cost of sales (excluding depreciation and amortization) from NIS to USD, such costs increased by $6 million primarily due to an increase of $8 million from the consolidation of results of the Tzomet Power Plant at the end of Q2 2023, offset by a decrease of $3 million as a result of the commencement of delivery of gas from Energean from Q2 2023;

Increased by in Q2 2024 as compared to Q2 2023. Excluding the impact of translating OPC's cost of sales (excluding depreciation and amortization) from NIS to USD, such costs increased by primarily due to an increase of from the consolidation of results of the Tzomet Power Plant at the end of Q2 2023, offset by a decrease of as a result of the commencement of delivery of gas from Energean from Q2 2023; Other operating expenses in Israel – Increased by $4 million in Q2 2024 as compared to Q2 2023. Excluding the impact of translating OPC's cost of sales (excluding depreciation and amortization) from NIS to USD, such costs increased by $3 million primarily due to the consolidation of results of the Tzomet Power Plant which was consolidated at the end of Q2 2023; and

Increased by in Q2 2024 as compared to Q2 2023. Excluding the impact of translating OPC's cost of sales (excluding depreciation and amortization) from NIS to USD, such costs increased by primarily due to the consolidation of results of the Tzomet Power Plant which was consolidated at the end of Q2 2023; and Expenses for acquisition of energy in Israel – Decreased by $7 million in Q2 2024 as compared to Q2 2023 primarily due to a decrease in customer consumption.

Finance Expenses, net

Finance expenses, net increased by $7 million in Q2 2024, as compared to Q2 2023, primarily due to an increase in interest expense from the commencement of commercial operations of the Tzomet Power Plant of $6 million.

Share of Profit of Associated Companies, net

For further details of the results of associated companies of CPV, see OPC's immediate report published on the Tel Aviv Stock Exchange ("TASE") on August 19, 2024 and the convenience English translations furnished by Kenon on Form 6-K on August 19, 2024.

Liquidity and Capital Resources

As of June 30, 2024, OPC had cash and cash equivalents of $192 million (excluding restricted cash), restricted cash of $17 million (including restricted cash used for debt service), and total outstanding consolidated indebtedness of $1,458 million, consisting of $100 million of short-term indebtedness and $1,358 million of long-term indebtedness. As of June 30, 2024, a substantial portion of OPC's debt was denominated in NIS.

Business and Other Developments

Equity Investment in CPV Renewable

In August 2024, OPC announced that subsidiaries of CPV entered into agreements with Harrison Street, a U.S. private equity infrastructure fund, pursuant to which Harrison Street agreed to invest $300 million in CPV Renewable for 33.33% of the ordinary equity interests in CPV Renewable. The details of the investment are discussed in more detail in Kenon's Form 6-K dated August 18, 2024.

Results of PJM auctions

In July 2024, OPC reported that PJM announced the results of capacity auctions for the 12-month period from summer 2025 until summer 2026, in which the capacity price relevant to CPV's power plants was set at $269.92/MW-day (the "Capacity Price"), a significant increase of the Capacity Price compared to the previous one and compared to the capacity price for the period summer 2024/summer 2025. For further details, see Kenon's Form 6-K dated July 31, 2024.

Successful bid in Israel Land Authority tender to build solar facilities

In July 2024, OPC announced that further to a previous successful bid by a subsidiary of OPC in a tender by the Israel Land Authority ("ILA") to design and build electricity generation facilities using photovoltaic technology (the "Previous Tender"), OPC's subsidiary was declared the winning bidder in a further tender (the "Tender") of the ILA for the design of, and option to acquire lease rights in, land for the construction of renewable energy electricity generation facilities using photovoltaic technology, combined with storage, with respect to two areas that are adjacent to the areas that OPC's subsidiary won in the Previous Tender (collectively, the "Areas"). OPC's subsidiary's bids were NIS 890 million (approximately $236 million), in the aggregate for the Areas.

OPC announced that if the successful bid in the Tender is exercised and subject to development procedures, OPC believes that it will be possible to promote a consolidated project that will amount to between 475 MW and 535 MW and aggregated storage capacity of between 2,695 MWh and 2,825 MWh for a total estimated cost (including cost of the land) of between NIS 4.4 billion and NIS 4.9 billion (approximately $1.2 billion and $1.3 billion).

CPV Agreement to Increase Stakes in Two Power Plants

In July 2024, OPC announced that CPV executed a non-binding Memorandum of Understanding with a binding exclusivity period of 90 days ("MOU") with one party and a purchase and sale agreement with another party to purchase significant interests in CPV Shore Holdings, LLC ("Shore") (which may result in CPV owning up to approximately 70% of Shore, if the acquisition is completed) and in CPV Maryland, LLC ("Maryland") (which may result in CPV owning up to approximately 75% of Maryland, if the acquisition is completed).

OPC announced that the total amount required in connection with the transactions, if completed, is expected by OPC to be approximately $210 million to $240 million, the main portion of which is in connection with the increase in ownership interest contemplated by the MOU. For more detail, see Kenon's Form 6-K dated July 21, 2024.

Gnrgy update

ZIM

Announcement of Q2 2024 Dividend and Updated Full-Year 2024 Guidance

Discussion of ZIM's Results[2] for Q2 2024

ZIM carried approximately 952 thousand TEUs in Q2 2024, representing an 11% increase as compared to Q2 2023, in which ZIM carried approximately 860 thousand TEUs. The average freight rate in Q2 2024 was $1,674 per TEU, as compared to $1,193 per TEU in Q2 2023.

ZIM's revenues increased by approximately 48% in Q2 2024 to approximately $1.9 billion, as compared to approximately $1.3 billion in Q2 2023, primarily due to an increase in freight rates as well as in carried volume.

ZIM's operating profit and net profit in Q2 2024 was $468 million and $373 million, respectively, as compared to operating loss and net loss of $168 million and $213 million, respectively, in Q2 2023. ZIM's Adjusted EBITDA[1] in Q2 2024 was $766 million, as compared to $275 million in Q2 2023.

Additional Kenon Updates

Kenon's (stand-alone) Liquidity and Capital Resources

As of June 30, 2024, Kenon's stand-alone cash and cash equivalents was $557 million. As of September 9, 2024, Kenon's stand-alone cash and cash equivalents was $445 million (not including proceeds from the ZIM dividend announced in August 2024, which have not yet been received). There is no material debt at the Kenon level.

Share Repurchase Plan

Update on arbitration proceeding against the Republic of Peru

As previously announced in October 2023, an award was made in favor of Kenon and its wholly-owned subsidiary IC Power Ltd. ("IC Power") in the amount of $110.7 million in damages together with $5.1 million in fees and costs plus pre- and post-award interest (the "ICSID Award") in connection with the International Centre for Settlement of Investment Disputes ("ICSID") arbitration proceeding under the Free Trade Agreement between Singapore and the Republic of Peru ("Peru"). Also as previously announced in May 2024, the arbitration tribunal issued its Decision on the Requests for Rectification and Clarification (the "Decision") whereby the arbitration tribunal ruled that pre- and post-award interest on the ICSID Award shall be payable at a rate of 6.91%, compounding annually. As a result, as of August 31, 2024, pre- and post-award interest on the ICSID Award is approximately $63.4 million, for a total ICSID Award of approximately $179.2 million. Interest will continue to accrue until the ICSID Award is paid.

The ICSID has provided Kenon and IC Power with Peru's application for the partial annulment to the ICSID Award (the "ICSID Annulment Application").

Pursuant to the ICSID Convention, the Chair of ICSID's Administrative Council will appoint an ad hoc committee of three persons to decide on the ICSID Annulment Application. The ICSID Annulment Application requested a stay on the enforcement of the ICSID Award, which shall be stayed until the ad hoc committee decides to lift the stay of enforcement or decides the ICSID Annulment Application. The ICSID Annulment Application challenges some of the arbitral tribunal's findings on law in the ICSID Award and certain procedural decisions made during the arbitration.

Qoros update

As previously disclosed, in February 2024, the China International Economic and Trade Arbitration Commission ("CIETAC") issued a final award (the "CIETAC Award") in favor of Kenon's wholly-owned subsidiary Quantum (2007) LLC ("Quantum") with respect to arbitral proceedings initiated by Quantum in 2021 against an entity related to Shenzhen Baoneng Investment Group Co., Ltd. ("Baoneng Group"), which holds 63% of Qoros (the "Qoros Majority Shareholder"), and Baoneng Group in connection with the agreement for the sale of Quantum's remaining 12% interest in Qoros to the Majority Qoros Shareholder. As previously reported, the tribunal ruled that the Qoros Majority Shareholder and Baoneng Group are obligated to pay Quantum approximately RMB 1.9 billion (approximately $268 million) comprising the purchase price set forth in the sale agreement (as adjusted for inflation) of approximately RMB 1.7 billion (approximately $239 million), together with pre-award and post-award interest, legal fees and expenses.

Also as previously disclosed, an entity related to Baoneng Group had undertaken to take action to prevent enforcement of the pledge over the 12% equity interest in Qoros owned by Quantum and to indemnify Quantum against losses in connection with any such enforcement, and Baoneng Group had provided a guarantee of this obligation. Kenon had filed a claim against Baoneng Group in the Shenzhen Intermediate People's Court relating to a breach of this guarantee by Baoneng Group, which was then transferred to the Supreme People's Court of China for trial. Kenon previously disclosed in June 2024 that the Supreme People's Court of China has upheld Kenon's claim for specific performance against Baoneng Group, ordering Baoneng Group to open an escrow account on behalf of Kenon and to deposit approximately RMB 1.4 billion (approximately $193 million) into the escrow account (the "Guarantee Award").

In July 2024, Baoneng Group filed an application with the Beijing No. 4 Intermediate Court (the "Beijing Court") to set aside the CIETAC Award (the "Set Aside Application"). Kenon has been advised by external counsel from the People's Republic of China that there are limited grounds for setting aside such arbitral awards. In accordance with the laws of the People's Republic of China, the Beijing Court has two months within which to issue its decision regarding the Set Aside Application. The Guarantee Award would not be affected by any decision of the Beijing Court regarding Baoneng Group's application to set aside the CIETAC Award.

Any value that could be realized in respect of these proceedings is subject to significant risks and uncertainties, including risks relating to enforcement and collection in respect of these proceedings and other risks and uncertainties.

About Kenon

Kenon has interests in the following businesses:

OPC (54.5% interest) – a leading owner, operator and developer of power generation facilities in the Israeli and U.S. power markets; and

ZIM (16.5[5]% interest) – an international shipping company.

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

4. The table and corresponding comparison of Q2 2024 compared to Q2 2023 excluding the impact of translating OPC's results from NIS to USD were converted using an average exchange rate of $0.2707/NIS, the average exchange rate in effect for the three months ended June 30, 2024.

Contact Info

Kenon Holdings Ltd.

Deepa Joseph

Chief Financial Officer

deepaj@kenon-holdings.com

+65 9669 4761

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SOURCE Kenon Holdings Ltd.

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