Kenon Holdings Reports First Quarter 2015 Results

May 27, 2015, 08:15 ET from Kenon Holdings Ltd.

SINGAPORE, May 27, 2015 /PRNewswire/ -- Kenon Holdings Ltd. (NYSE: KEN, TASE: KEN) announces its results for the first quarter in 2015 as well as additional updates.

Key Highlights

  • 100% of Kenon's shareholders voting in its extraordinary general meeting approved a capital reduction in respect of Kenon's proposed distribution of some, or all, of its holdings in Tower to its shareholders, representing a key step in the furtherance of Kenon's strategy.
  • IC Power's net income in Q1 2015 was $18 million; net income attributable to the shareholder of IC Power was $12 million.
  • IC Power's EBITDA in Q1 2015 was $79 million.
  • ICP continued to develop its key projects: CdA (a 510 MW hydro project in Peru) and Samay, (a 600 MW thermoelectric project in Peru). As of March 31, 2015, CdA and Samay have invested $706 million and $154 million in their construction and have achieved a total construction advancement of 73% and 54%, respectively.
  • Kenon and Chery continue to support Qoros. In April 2015, Kenon approved RMB400 million ($64m) of shareholder loans to Qoros and RMB175 million ($28m) of guarantees of debt, plus related fees, subject to a similar commitment from Chery.
  • ZIM's operating profit and net profit in Q1 2015 was approximately $40 million and $11 million, respectively.

Discussion of Results for Q1 2015

Set forth below is a discussion of Kenon's results of operations by business segment. Kenon's consolidated results of operations essentially comprise the results of IC Power Ltd. ("IC Power" or "ICP"). 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.

ICP

Revenues

ICP's revenues in Q1 2015 were $322 million, as compared to $325 million in Q1 2014. IC Power's results consist of the results of Inkia Energy Limited ("Inkia") and OPC Rotem ("OPC").

Inkia's revenues in Q1 2015, as compared to Q1 2014, reflected the following:

  • $54 million increase generated from assets acquired by Inkia during 2014;
  • A $15 million YoY (year-over-year) reduction at Kallpa to $108 million, primarily as a result of the expiration of a short-term PPA which resulted in (a) a $7 million decrease in the energy volume sold, which was partially offset by a 10% increase in the average energy price charged by Kallpa and (b) a $5 million reduction in capacity sales;
  • A $12 million YoY reduction at Nejapa as a result of the decline in energy prices due to lower heavy fuel prices; and
  • A $9 million YoY decline at CEPP, primarily as a result of the expiration of CEPP´s PPA in September 2014.

OPC's revenues decreased YoY by $21 million, primarily as a result of a lower generation component tariff and a strengthening of the U.S. Dollar versus the New Israeli Shekel.

Cost of Sales

ICP's cost of sales in Q1 2015 was $230 million, as compared to $224 million in Q1 2014.

Inkia's cost of sales in Q1 2015, as compared to Q1 2014, reflected the following:

  • A $45 million increase as a result of assets acquired by Inkia during 2014;
  • A $10 million decline at Kallpa, primarily as a result of a $12 million decline in spot energy and capacity purchases and a $3 million decline in transmission charges, which were partially offset by a $5 million maintenance expense for scheduled maintenance on Kallpa I;
  • A $8 million decline in Nejapa's cost of sales as a result of a decline in fuel prices; and
  • A $6 million decline in CEPP's cost of sales, due to a decline in CEPP's purchase of energy as a result of its PPA expiration in September 2014.

OPC's cost of sales declined by $8 million due to a lower generation component tariff and a strengthening of the U.S. Dollar versus the New Israeli Shekel.

EBITDA

ICP's EBITDA was $79 million in Q1 2015, as compared to $94 million in Q1 2014. This change resulted primarily from:

  • A $1 million decline in Inkia's EBITDA from $56 million in Q1 2015 due primarily to (i) a $5 million decrease in Kallpa's EBITDA, resulting from a $5 million maintenance expense for scheduled maintenance of Kallpa I and (ii) a $4 million decrease in CEPP's EBITDA as a result of the expiration of CEPP's PPA in September 2014, which was partially offset by $8 million EBITDA generated by the assets acquired by Inkia during 2014; and
  • A decline in OPC's EBITDA as a result of lower tariffs and exchange rate effects due to a strengthening of the U.S. Dollar versus the New Israeli Shekel.

Net Income

ICP's net income was $18 million in Q1 2015, as compared to $63 million in Q1 2014. The difference was primarily a result of the following: (i) a $21 million decline in ICP's operating income, (ii) recognition in Q1 2014 of a $24 million gain on bargain purchase in connection with ICP's Nicaragua acquisitions, (iii) recognition in Q1 2014 of $6 million net income from the associated company, Edgel, which was sold in Q3 2014, and (iv) a $6 million decline in income tax expense reflecting a decline in operating results in Q1 2015.

Financial Information

For IC Power's consolidated statement of income and a summary of IC Power's statement of cash flows and statement of financial position for the periods under review, see Appendix B. See Appendix C for the definition of IC Power's EBITDA, which is a non-IFRS financial measure, and for a reconciliation to IC Power's net income. For summary financial information of Inkia's subsidiaries and associates for the three months ended March 31, 2015, see Appendix D.

Trend Information

The decline in IC Power's EBITDA reflects a decline in the price of energy charged by OPC to its customers, which resulted from the implementation of a lower generation component tariff in Israel. The lower tariff has also resulted in a decrease in OPC's margins, and as this tariff is expected to remain at this level for the foreseeable future, this effect on margins is expected to continue.

Since March 31, 2015, IC Power's key operations in Latin America and the Caribbean have exceeded their relative performance in Q1 2015. IC Power expects the improved performance from these key operations to partially offset the declines in OPC's EBITDA and margins resulting from the lower tariff.

Qoros

Set forth below is a discussion of the results of Qoros, a China-based automotive company in which we own a 50% interest (a subsidiary of Chery, a Chinese state-controlled holding and large automobile manufacturing company owns the remaining 50%). The discussion below reflects 100% of Qoros' operations and contains conversions of certain RMB amounts into U.S. Dollars at rates of 6.2:1 RMB/U.S. Dollar; Kenon recognizes 50% of Qoros' results under "share in income from associates."

Financial Information

For Qoros' consolidated statement of profit or loss and other comprehensive income and statement of financial position for the periods under review, see Appendix E.

Revenues

Qoros had revenues of RMB293 million ($47m) in Q1 2015, as compared to RMB125 million ($20m) in Q1 2014, primarily resulting from an increase in the number of vehicles sold.

Cost of Sales

Qoros' costs of sales were RMB319 million ($51m) in Q1 2015, as compared to costs of sale of RMB114 million ($18m) in Q1 2014, reflecting a continued ramp-up of Qoros' operations.

Research and Development Expenses

Qoros continues to invest in the research and development of its next vehicle model scheduled for launch, the Qoros 5 SUV. Qoros had research and development expenses of RMB79 million ($13m) in Q1 2015, as compared to research and development expenses of RMB44 million ($7m) in Q1 2014.

Selling and Distribution Expenses

Qoros had selling and distribution expenses of RMB100 million ($16m) in Q1 2015, as compared to selling and distribution expenses of RMB175 million ($28m) in Q1 2014, reflecting the fact that Qoros did not launch any vehicle models in Q1 2015.

Administration Expenses

Qoros had administration expenses of RMB138 million ($22m) in Q1 2015, as compared to administration expenses of RMB118 million ($19m) in Q1 2014.

Finance Costs, Net

Qoros had finance costs of RMB83 million ($13m) in Q1 2015, as compared to finance costs of RMB26 million ($4m) in Q1 2014, due to an increase in its total debt outstanding.

Trend Information

Qoros sold approximately 2,500 cars in Q1 2015 (1,100 of which were sold in March) and sold approximately 1,300 vehicles in April.

The overall passenger vehicle market in China has continued to grow in Q1 with an 11% YOY growth rate. However, this growth was unevenly distributed by brand origin; the JV brands have experienced a decline in sales growth, as compared to the Chinese brands that have increased their market share. As a result, some OEMs have started offering price reductions, discounts, including rebates, to stimulate purchases of their vehicles. Qoros is evaluating appropriate measures to address these market conditions.

ZIM

In the first quarter of 2015, ZIM recorded operating income and net profit of $40 million and $11 million, respectively, as compared to an operating loss and net loss of $8 million and $63 million, respectively, in the first quarter of 2014. ZIM's improved results, following its restructuring in July 2014, are primarily the result of a decrease in operating expenses and a decline in financing expenses, partially offset by a decrease in income, mainly as a result of a decline in carried TEUs. ZIM publishes its results on its website. For more information on its performance in the first quarter of 2015, see www.ZIM.com. This website, and any information referenced therein, is not incorporated by reference herein.

Tower / Gains from Changes in Interest Held in Associates

During Q1 2015, approximately $162 million of Tower's outstanding Series F Bonds were converted into ordinary shares of Tower, decreasing the aggregate amount of Tower's Series F Bonds outstanding from $197 million to $35 million. As a result of the above described and other conversions and exercises of Tower's securities, Kenon's stake in Tower decreased from approximately 31% to approximately 24% and Kenon recognized a dilution gain of $32 million during Q1 2015.

Liquidity and Capital Resources

Kenon (Unconsolidated)

During the three months ended March 31, 2015, Kenon drew $45 million from its $200 million credit facility from Israel Corporation Ltd. In April 2015, Kenon drew an additional $65 million from this credit facility in connection with its approval of proposed investments in Qoros. As a result, the total drawings outstanding under the facility are $110 million.

As of March 31, 2015, Kenon's unconsolidated cash, gross debt, and net debt (a non-IFRS financial measure, which is defined as total debt minus cash) were $10 million, $46 million and $36 million, respectively.

IC Power

As of March 31, 2015, ICP's financial liabilities (excluding payables and derivative instruments) amounted to $2,322 million, ICP had cash, cash equivalents, short term deposits and restricted cash of $631 million, and ICP's net financial liabilities (a non-IFRS financial measure, which is defined as financial liabilities minus monetary assets) amounted to $1,691 million.

Qoros

As of March 31, 2015, Qoros had loans and borrowings of RMB7.4 billion ($1.2b), including RMB1.6 billion ($300m) of short-term shareholder loans, and current cash and cash equivalents of RMB268 million ($43m).

Business Developments

ICP

  • Kanan, the Panamanian subsidiary of ICP, successfully transported two barges to Panama during Q1 2015 and expects to commence commercial operations in Panama by September 2015.
  • On May 6, 2015, IC Power signed a Memorandum of Understanding with Hadera Paper Ltd. regarding the construction of a 120 MW cogeneration natural gas power plant which will supply electricity and steam in Israel. IC Power will pay $15 million to complete the transaction. Additional investments by ICP will be required to enable ICP to complete construction of the power plant.
  • Update on projects under construction:
    • CdA As of March 31, 2015, CdA has received proceeds of $462 million from the $591 million available debt facilities for this project. As of March 31, 2015, CdA has invested an aggregate $706 million in the project and has achieved a total construction advancement of 73%. CdA is expected to commence commercial operation in the second half of 2016. As a result of the settlement with the CdA EPC contractors, the estimated cost of the CdA Project is not expected to exceed $950 million, depending upon CdA's final utilization of the $50 million contingency incorporated within the original $910 million budget for the project.
    • Samay As of March 31, 2015, Samay has received $153 million in proceeds from the $311 million financing facility for this project. In April 2015, Samay drew an additional $99 million from credit facility, increasing the aggregate amount drawn to $252 million. As of March 31, 2015, Samay has invested an aggregate $154 million in the project and has achieved a total construction advancement of 54%. ICP estimates that the project will reach commercialization in mid-2016. The cost of the construction of the open-cycle power station is not expected to exceed $380 million.

Qoros

Car Sales

Qoros sold approximately 2,500 cars in Q1 2015 (1,100 of which were sold in March 2015), as compared to approximately 2,450 cars and 900 cars sold in the three months ended December 31, 2014 and March 31, 2014, respectively. In April 2015, Qoros sold approximately 1,300 cars.

Dealerships

As of March 31, 2015, there were 78 Qoros dealerships, 16 additional dealerships under construction, and signed Memorandums of Understanding with respect to the development of 13 additional dealerships.

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.

New CEO

In February 2015, Phil Murtaugh, a well-known leader in the global automotive industry, was appointed Chief Executive Officer at Qoros. Mr. Murtaugh has extensive experience in managing brands both in China and internationally. He has been based in China for nearly 16 years, as President of GM China leading the successful launch and expansion of GM brands, as Executive Vice President at SAIC Motors leading their international operations, and as CEO of the Asia Operation at Chrysler Group.

Investments by Kenon in 2015

Qoros' shareholders continue to support Qoros' development.

In February 2015, Kenon made a shareholder loan to Qoros of RMB400 million ($64m). For further information, see Kenon's Report on Form 6-K, dated as of February 11, 2015.

In April 2015, Kenon approved RMB400 million ($64m) of shareholder loans to Qoros and RMB175 million ($28m) of guarantees of debt, plus related fees, in each case subject to similar commitments from Chery. For further information, see Kenon's Report on Form 6-K, dated as of April 30, 2015.

Investors' Conference Call

Kenon's management will host a conference call for investors and analysts on May 27, 2015. To participate, please call one of the following teleconferencing numbers:

US: 1-888-668-9141

UK: 0-800-917-5108

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 newly-incorporated 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;
  • Tower (24% of the currently outstanding shares of Tower) – a global foundry manufacturer, with shares traded on NASDAQ and the TASE; 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 Kenon's provision of a loan to Qoros and Kenon's guarantee of certain of Qoros' indebtedness, subject to similar commitments from Chery, statements about a proposed distribution (the "Proposed Distribution") of all, or a portion, of Kenon's interest in Tower, statements about IC Power's proposed acquisition of a power plant which is expected to supply electricity and steam in Israel, the expected cost and expected timing of completion of IC Power's existing construction projects, the expected and the anticipated business results of such projects, statements about Kenon's strategy and other non-historical matters, including statements about ICP'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 Kenon's forward-looking statements. Such risks include risks relating to the conditions relating to Kenon's or Chery's provision of loans to Qoros and/or guarantees of Qoros' debt, a failure by Kenon to complete the Proposed Distribution, a failure by IC Power to consummate its proposed transaction with Hadera Paper Ltd., a failure by IC Power to complete the construction of its various power plants under construction on a timely basis or at all, 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

Zongda Huang

Associate Director, Business Development & IR

huangz@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

Kenon Holdings Ltd

Unaudited condensed consolidated statements of financial position

March 31 2015

December 31

2014

$ Thousands

Current assets

Cash and cash equivalents

486,807

610,056

Short-term investments and deposits

194,478

226,830

Trade receivables, net

179,300

181,358

Other current assets

70,268

59,064

Income tax receivable

3,536

3,418

Inventories

59,463

55,335

Total current assets

993,852

1,136,061

Non-current assets

Investments in associated companies

476,238

435,783

Deposits, loans and other receivables, including financial instruments

92,784

74,658

Deferred taxes, net

35,811

42,609

Property, plant and equipment, net

2,621,486

2,502,787

Intangible assets

144,391

144,671

Total non-current assets

3,370,710

3,200,508

Total assets

4,364,562

4,336,569

Kenon Holdings Ltd

Unaudited condensed consolidated statements of financial position, continued

March 31 2015

December 31 2014

$ Thousands

Current liabilities

Loans and debentures

163,056

161,486

Trade payables

174,942

144,488

Other payables, including derivative

86,913

114,165

Provisions

79,373

69,882

Income tax payable

4,570

6,766

Total current liabilities

508,854

496,787

Non-current liabilities

Loans

1,527,868

1,528,930

Debentures

683,372

686,942

Derivative instruments

26,224

21,045

Deferred taxes, net

129,318

130,983

Employee benefits

6,417

6,219

Other non-current liabilities

10,145

10,072

Total non-current liabilities

2,383,344

2,384,191

Total liabilities

2,892,198

2,880,978

Equity

Share capital

1,281,272

Parent company investment

1,240,727

Translation reserve

(2,712)

28,440

Capital reserve

4,107

(25,274)

Accumulated losses

(6,633)

Equity attributable to owners of the Company

1,276,034

1,243,893

Holders of non-controlling interests

196,330

211,698

Total equity

1,472,364

1,455,591

Total liabilities and equity

4,364,562

4,336,569

Kenon Holdings Ltd

Unaudited condensed consolidated statements of profit or loss

For the Three Months ended

March 31 2015

March 31 2014

$ Thousands

Revenue

322,158

324,825

Cost of sales and services (excluding depreciation)

(230,364)

(223,563)

Depreciation

(25,615)

(22,910)

Gross profit

66,179

78,352

Other income

524

2,376

Gain from bargain purchase

23,651

Dilution gains from reductions in equity interest held in associates

32,425

2,277

Selling, general and administrative expenses

(26,108)

(19,894)

Other expenses

(473)

(119)

Operating profit from continuing operations

72,547

86,643

Financing expenses

(25,714)

(21,886)

Financing income

8,206

420

Financing expenses, net

(17,508)

(21,466)

Share in losses of associated companies, net of tax

(33,701)

(12,938)

Profit from continuing operations before income taxes

21,338

52,239

Tax expenses

(11,305)

(16,969)

Profit for the period from continuing operations

10,033

35,270

Loss for the period from discontinued operations

(59,865)

Profit/(loss) for the period

10,033

(24,595)

Attributable to:

Kenon's shareholders

4,520

(33,490)

Non-controlling interests

5,513

8,895

Profit/(loss) for the period

10,033

(24,595)

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

Basic/Diluted profit (loss) per share

0.09

(0.46)

Basic/Diluted profit per share from continuing operations

0.09

0.66

Basic/Diluted loss per share from discontinued operations

(1.12)

Kenon Holdings Ltd

Unaudited condensed consolidated statements of cash flows

For the Three Months ended

March 31 2015

March 31 2014

$ Thousands

Cash flows from operating activities

Profit/(loss) for the period

10,033

(24,595)

Adjustments:

Depreciation and amortization

29,210

61,528

Gain on bargain purchase

(23,651)

Financing expenses, net

17,508

68,250

Share in losses of associated companies, net of tax

33,701

10,597

Gain from changes in interest held in associates

(32,425)

(2,277)

Other capital loss/(gains), net

144

(790)

Share-based payments

(653)

152

Taxes on income

11,305

23,136

68,823

112,350

Change in inventories

(4,119)

(9,475)

Change in trade and other receivables

(18,652)

(39,490)

Change in trade and other payables

(13,801)

43,319

Change in provisions and employee benefits

11,423

10,987

43,674

117,691

Income taxes paid, net

(9,323)

(20,741)

Dividends received from investments in associates

637

1,208

Net cash provided by operating activities

34,988

98,158

Kenon Holdings Ltd

Unaudited condensed consolidated statements of cash flows, continued

For the Three Months ended

March 31 2015

March 31 2014

$ Thousands

Cash flows for investing activities

Proceeds from sale of property, plant and equipment

28

12,578

Short-term deposits and loans, net

31,581

(54,678)

Business combinations

(29,166)

Investment in associated company

(64,360)

(40,788)

Acquisition of property, plant and equipment*

(128,447)

(80,283)

Acquisition of intangible assets

(1,547)

(3,930)

Interest received

1,310

1,124

Payments for derivative investments used for hedging, net

(125)

Settlement of derivatives

(212)

Net cash used in investing activities

(161,435)

(195,480)

Cash flows from financing activities

Dividend paid to non-controlling interests

(1,744)

(3,608 )

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

9,216

Receipt of long-term loans and issuance of debentures

45,000

245,237

Repayment of long-term loans and debentures

(26,142)

(82,103 )

Purchase of non-controlling interest

(20,000)

Short-term credit from banks and others, net

(1,454)

29,102

Contribution from parent company

34,271

46,479

Interest paid

(19,737)

(57,156)

Net cash provided by financing activities

10,194

187,167

(Decrease) Increase in cash and cash equivalents

(116,253)

89,845

Cash and cash equivalents at beginning of the period

610,056

670,751

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

(6,996)

(2,117)

Cash and cash equivalents at end of the period

486,807

758,479

Significant non-cash investing and financing activity during the quarter relating to the transfer of certain business interests to Kenon Holdings Ltd from Israel Corporation Ltd.

* Mainly assets acquired by I.C. Power for the construction of projects in Cerro del Aguila and Samay facilities during the three months ended March 31, 2015.

Segment Information

I.C. Power*

Qoros**

Other

Adjustments

Total

$ Thousands

For the three months ended March 31, 2015:

Sales to external customers

319,072

225

319,297

Intersegment sales

2,861

2,861

321,933

225

322,158

Elimination of intersegment sales

(2,861)

2,861

Total sales

319,072

225

2,861

322,158

EBITDA

79,504

22,253

101,757

Depreciation and amortization

29,079

131

29,210

Financing income

(1,560 )

(9,329)

2,683

(8,206)

Financing expenses

23,095

5,302

(2,683)

25,714

Other items:

Share in losses (income) of associated companies

8

35,760

(2,067)

33,701

50,622

35,760

(5,963)

80,419

Profit/(loss) before taxes

28,882

(35,760 )

28,216

21,338

Taxes on income

11,305

11,305

Profit/(loss) for the period from continuing operations

17,577

(35,760 )

28,216

10,033

* The total assets and liabilities of I.C. Power are $3,834,311 thousand and $2,844,685 thousand at March 31, 2015, respectively.

** Associated company

I.C. Power*

Qoros**

Other

Adjustments

Total

$ Thousands

For the three months ended March 31, 2014:

Sales to external customers

321,326

321,326

Intersegment sales

3,499

3,499

324,825

324,825

Elimination of intersegment sales

(3,499)

3,499

Total sales

321,326

3,499

324,825

EBITDA

94,090

(7,154)

86,936

Depreciation and amortization

22,910

1,034

23,944

Financing income

(995 )

(4,142)

4,717

(420)

Financing expenses

25,169

1,434

(4,717)

21,886

Other items:

Gain on bargain purchase

(23,651)

(23,651)

Share in (income) losses of associated companies

(9,362 )

29,353

(7,053)

12,938

14,071

29,353

(8,727)

34,697

Profit/(loss) before taxes

80,019

(29,353 )

1,573

52,239

Taxes on income

16,989

(20)

16,969

Profit/(loss) for the period from continuing operations

63,030

(29,353 )

1,593

35,270

* The total assets and liabilities of I.C. Power are $3,518,066 thousand and $2,611,739 thousand at March 31, 2014, respectively.

** Associated company

Information Regarding Associated Companies

A. Carrying amounts of investments in associated companies

As at

March 31, 2015

As at

December 31, 2014

$ Thousands

ZIM

195,136

191,069

Tower

43,296

14,061

Qoros

229,018

221,038

Others

8,788

9,615

476,238

435,783

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

For the three months ended

March 31, 2015

March 31, 2014

$ Thousands

ZIM

4,967

Tower

(2,900)

8,018

Qoros

(35,461)

(29,353)

Others

(307)

8,397

(33,701)

(12,938)

Appendix A

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

Three Months Ended March 31,

2015

2014

(in millions of USD)

Profit / (loss) attributable to Kenon's shareholders

5

(33)

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

IC Power

12

58

Qoros

(35)

(29)

Tower

(3)

8

ZIM

3

(63)

Gains from changes in interest held in associates

32

2

Other

(4)

(9)

Appendix B

IC Power's Consolidated Statement of Income

For the three month period ended

March 31

2015

2014

(Unaudited)

(Unaudited)

$ million

$ million

Continuing Operations

Sales

322

325

Cost of sales (excluding depreciation and amortization)

(230)

(224)

General, selling and administrative expenses

(13)

(9)

Depreciation and amortization

(29)

(23)

Other income, net

-

2

Operating income

50

71

Financing expenses, net

21

22

Share in income of associated companies

-

1

Gain on bargain purchase

-

24

Income before taxes from continuing operations

29

74

Taxes on income

(11)

(17)

Net income from continuing operations

18

57

Discontinued operations

Net income from discontinued operations, net of tax

-

6

Net income for the period

18

63

Attributable to:

Equity holders of the Company

12

55

Non-controlling interest

6

8

Net income for the period

18

63

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

Three Months Ended

March 31,

2015

2014

(in millions of USD)

Cash flows provided by operating activities

$ 44

$ 90

Cash flows used in investing activities

(97)

(143 )

Cash flows provided by (used in) financing activities

(69 )

152

Increase (decrease) in cash and cash equivalents

$ (122 )

$ 99

Cash and cash equivalents at end of the period

$ 455

$ 615

Investments in property, plant and equipment

128

70

Total depreciation and amortization

29

23

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

As at

March 31, 2015

March 31, 2014

(in millions of USD)

Total financial liabilities1

$ 2,322

$ 1,942

Total monetary assets2

631

622

Total equity attributable to the owners

796

708

Total assets

$ 3,834

$ 3,518

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

Appendix C

IC Power's Non-IFRS Financial Measures

This press release, including the financial tables, presents 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 "EBITDA" for each period as net income (loss) for the period, before depreciation and amortization, finance expenses (net), and income tax expense, excluding share in income from associated companies, net of tax, recognized negative goodwill, and net income from discontinued operations, net of tax. 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. EBITDA is not intended to represent funds available for dividends or other discretionary uses by us because those funds may be required for debt service, capital expenditures, working capital and other commitments and contingencies. 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 IC Power's business that could have a significant effect on our profit/(loss), such as financial expenses, taxes, depreciation, capital expenses and other related charges. Set forth below is a reconciliation of IC Power's profit (loss) to EBITDA for the periods presented. Other companies may calculate EBITDA differently, and therefore this presentation of EBITDA may not be comparable to other similarly titled measures used by other companies.

Three Months Ended

March 31,

2015

2014

(In USD million)

Net income for the period

$ 18

$ 63

Depreciation and amortization

29

23

Finance expenses (net)

21

22

Income tax expense

11

17

Share in income from associates, net of tax

-

(1)

Recognized negative goodwill

-

(24)

Net income from discontinued operations, net of tax

-

(6)

EBITDA

$ 79

$ 94

Appendix D

Summary Financial Information of Inkia's Subsidiaries and Associates

Three Months Ended March 31, 2015

Entity1

Ownership Interest (%)

Revenues

Cost of Sales

EBITDA2

Outstanding debt3

(in millions of USD, unless otherwise stated)

Operating Companies

Kallpa

75

$ 108

$ 72

$ 34

$ 446

COBEE

100

11

4

5

80

Central Cardones

87

4

1

3

47

Nejapa4

100

25

23

1

-

CEPP

97

10

8

1

30

JPPC5

100

11

10

-

7

Colmito

100

10

8

1

19

ICPNH6

61-65

27

16

10

106

Surpetroil7

60

2

1

-

3

Puerto Quetzal8

100

24

23

-

26

Inkia &others9

100

2

2

1

1,054

Total Inkia subsidiaries

$ 234

$ 168

$ 56

$ 1,818

Investments

Pedregal

21

$ 10

$ 9

$ 1

$ 14

Total investments

$ 10

$ 9

$ 1

$ 14

1. Does not reflect the summary financial information of (i) Inkia, IC Power's primary holding company, and other holdings and (ii) Cenergica, a wholly-owned subsidiary that maintains a fuel depot and marine terminal in El Salvador.

2. "EBITDA" for each entity is defined as income (loss) for the period before depreciation and amortization, finance expenses, net, income tax expense (benefit) and asset write-off, excluding share in income from associates measurement to fair value of our-existing share, negative goodwill and the Edegel sale.

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. 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. 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 EBITDA for Inkia and its main subsidiaries for the three months ended March 31, 2015:

Kallpa

COBEE

Central Cardones

Nejapa

CEPP

JPPC

(in millions of USD)

Income (loss) for the period

$ 8

$ 2

$ 1

$ (1)

$ -

$ (1)

Depreciation and amortization

13

1

1

1

1

1

Finance expenses, net

10

1

1

-

(1)

-

Income tax expense (benefit)

3

1

-

1

1

-

Share in income from associates, net

-

-

-

-

-

-

EBITDA

$ 34

5

$ 3

$ 1

$ 1

$ -

Colmito

ICPNH

Surpetroil

Puerto Quetzal

Inkia and others

Total

(in millions of USD)

Income (loss) for the period

$ 1

$ 5

$ (1)

$ (1)

$ (8)

$ 5

Depreciation and amortization

-

2

-

-

3

23

Finance expenses, net

-

2

1

1

6

21

Income tax expense

-

1

-

-

-

7

Share in income from associates, net

-

-

-

-

-

-

EBITDA

$ 1

$ 10

$ -

$ -

$ 1

$ 56

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

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

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

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

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

9. Outstanding debt includes Inkia for $447 million, CdA for $462 million and Samay for $145 million.

Appendix E

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

In thousands of RMB

For the three months ended

31 March 2015

31 March 2014

Revenue

293,493

125,274

Cost of sales

(319,315)

(113,557)

Gross profit

(25,822)

11,717

Other income

5,531

2,854

Research and development expenses

(78,962)

(43,611)

Selling and distribution expenses

(100,183)

(174,961)

Administrative expenses

(138,276)

(118,352)

Other expenses

(21,770)

(9,914)

Loss from operation

(359,482)

(332,267)

Finance income

4,438

6,312

Finance costs

(87,063)

(31,918)

Net finance (cost)/income

(82,625)

(25,606)

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

(13)

-

Loss before tax

(442,120)

(357,873)

Income tax expense

(148)

(51)

Loss for the period

(442,268)

(357,924)

Other comprehensive income

Items that are or may be reclassified to profit or loss

Foreign operations – foreign currency translation differences, net of nil tax

(230)

41

Other comprehensive income for the period, net of nil tax

(230)

41

Total comprehensive income for the period

(422,498)

(357,883)

Qoros' Condensed Consolidated Statement of Financial Position (Unaudited)

In thousands of RMB

At 31 March

At 31 December

2015

2014

Assets

Property, plant and equipment

4,090,193

4,039,948

Intangible assets

4,744,917

4,638,364

Prepayments for purchase of equipment

96,807

117,922

Lease prepayments

207,025

208,128

Trade and other receivables

92,712

96,533

Equity-accounted investees

1,784

2,025

Non-current assets

9,233,438

9,102,920

Inventories

240,531

197,522

Trade and other receivables

839,641

729,906

Prepayments

85,567

154,655

Pledged deposits

161,519

290,840

Cash and cash equivalents

267,625

752,088

Current assets

1,594,883

2,125,011

Total assets

10,828,321

11,227,931

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

In thousands of RMB

At 31 March

At 31 December

2015

2014

Equity

Paid-in capital

6,531,840

6,531,840

Reserves

(256)

(26)

Accumulated losses

(6,102,809)

(5,660,541)

Total equity

428,775

871,273

Liabilities

Loans and borrowings

4,009,114

3,928,224

Finance lease liabilities

79

479

Deferred income

177,336

179,982

Provision

16,753

12,971

Non-current liabilities

4,203,282

4,121,656

Loans and borrowings

3,381,540

3,374,660

Trade and other payables

2,787,900

2,833,459

Finance lease liabilities

1,564

1,541

Deferred income

25,260

25,342

Current liabilities

6,196,264

6,235,002

Total liabilities

10,399,546

10,356,658

Total equity and liabilities

10,828,321

11,227,931

SOURCE Kenon Holdings Ltd.



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