Kenon Holdings Ltd. Files 20-F with Financial Updates and Asset Valuations

TL;DR

Kenon Holdings Ltd. disclosed its 2023 20-F filing, detailing asset valuations, business combination considerations, and unrecognized losses.

AI Summary

Kenon Holdings Ltd. (KEN) filed a Foreign Annual Report (20-F) with the SEC on March 26, 2024. Kenon Holdings Ltd. filed its 20-F report for the fiscal year ending December 31, 2023. The company applied IFRS 3, allocating fair value to facilities and an electricity supply license, determined by an independent appraiser using the income approach. Key assumptions for cash flow forecasts included electricity/gas prices and a post-tax discount rate of 8%-8.75% for certain assets amortized over 27 years. A cash payment of NIS 270 million (~$75 million) plus deferred consideration (present value NIS 285 million, ~$79 million) was part of a business combination. Additional share of losses of $271 million from ZIM were unrecognized as the carrying amount was reduced to zero as of December 31, 2023.

Why It Matters

For investors and stakeholders tracking Kenon Holdings Ltd., this filing contains several important signals. The detailed asset valuation methods and assumptions provide insight into how Kenon Holdings accounts for its significant infrastructure and energy assets. The disclosure of unrecognized losses from ZIM highlights potential past investments that have not met expectations, impacting the company's reported financial position.

Risk Assessment

Risk Level: medium — Kenon Holdings Ltd. shows moderate risk based on this filing. The filing contains complex accounting treatments for business combinations and asset valuations, including significant assumptions for future cash flows, which could be subject to change and impact reported values.

Analyst Insight

Investors should review the detailed notes on asset valuation and business combinations to understand the underlying assumptions and potential risks associated with Kenon Holdings' reported asset values.

Key Numbers

• 20231231 — Fiscal Year End (Period of report)
• 20240326 — Filing Date (Date the 20-F was filed)
• 8%-8.75% — Discount Rate (Nominal post-tax discount rate for cash flow forecasts)
• 27 years — Amortization Period (Amortization period for certain reclassified assets)
• NIS 270 million — Cash Consideration (Part of a business combination)
• NIS 285 million — Deferred Consideration (PV) (Part of a business combination)
• $271 million — Unrecognized Losses (From ZIM as of December 31, 2023)
• 5.75%-6.25% — Discount Rate (Nominal post-tax discount rate for cash flow forecasts)

Key Players & Entities

• Kenon Holdings Ltd. (company) — Filer of the 20-F report
• ZIM (company) — Company from which losses were unrecognized
• NIS 270 million (dollar_amount) — Cash payment in a business combination
• $75 million (dollar_amount) — Approximate USD equivalent of NIS 270 million
• NIS 285 million (dollar_amount) — Present value of deferred consideration
• $79 million (dollar_amount) — Approximate USD equivalent of NIS 285 million
• $271 million (dollar_amount) — Unrecognized share of losses from ZIM
• CPV Valley (company) — Entity for which collateral was provided

FAQ

Risk Factors

• Asset Valuation Assumptions [medium — financial]: The fair value of assets and licenses is determined using methods like the income approach and discounted cash flow, relying on assumptions about future electricity/gas prices and discount rates.
• Business Combination Accounting [medium — financial]: The company applies IFRS 3 to business combinations, allocating fair value to acquired assets and licenses, which involves significant estimates and judgments.
• Unrecognized Losses [medium — financial]: Significant unrecognized losses from investments, such as $271 million from ZIM, indicate potential impairments and impact the carrying value of investments.

Filing Documents

• zk2431142.htm (20-F) — 7914KB
• exhibit_1-1.htm (EX-1.1) — 390KB
• exhibit_8-1.htm (EX-8.1) — 13KB
• exhibit_12-1.htm (EX-12.1) — 16KB
• exhibit_12-2.htm (EX-12.2) — 16KB
• exhibit_13-1.htm (EX-13.1) — 7KB
• exhibit_15-1.htm (EX-15.1) — 6KB
• exhibit_15-2.htm (EX-15.2) — 3KB
• exhibit_15-3.htm (EX-15.3) — 3KB
• image00001.jpg (GRAPHIC) — 2KB
• image0.jpg (GRAPHIC) — 12KB
• img101_v3.jpg (GRAPHIC) — 13KB
• img102_v3.jpg (GRAPHIC) — 4KB
• img103_v3.jpg (GRAPHIC) — 17KB
• img107_v3.jpg (GRAPHIC) — 2KB
• img108_v3.jpg (GRAPHIC) — 2KB
• img104_v3.jpg (GRAPHIC) — 5KB
• img105_v3.jpg (GRAPHIC) — 7KB
• img106_v3.jpg (GRAPHIC) — 4KB
• image00004.jpg (GRAPHIC) — 176KB
• image4.jpg (GRAPHIC) — 104KB
• image00008.jpg (GRAPHIC) — 196KB
• image00003.jpg (GRAPHIC) — 28KB
• image00010.jpg (GRAPHIC) — 307KB
• image00002.jpg (GRAPHIC) — 13KB
• 0001178913-24-001078.txt ( ) — 35748KB
• ken-20231231.xsd (EX-101.SCH) — 402KB
• ken-20231231_cal.xml (EX-101.CAL) — 142KB
• ken-20231231_def.xml (EX-101.DEF) — 814KB
• ken-20231231_lab.xml (EX-101.LAB) — 2543KB
• ken-20231231_pre.xml (EX-101.PRE) — 1111KB
• zk2431142_htm.xml (XML) — 7814KB

Item 18

Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No TABLE OF CONTENTS PART I ITEM 1. Identity of Directors, Senior Management and Advisers 1 A. Directors and Senior Management 1 B. Advisers 1 C. Auditors 1 ITEM 2. Offer Statistics and Expected Timetable 1 A. Offer Statistics 1 B. Methods and Expected Timetable 1 ITEM 3. Key Information 1 A. Reserved 1 B. Capitalization and Indebtedness 1 C. Reasons for the Offer and Use of Proceeds 1 D.

Risk Factors

Risk Factors 1 ITEM 4. Information on the Company 59 A. History and Development of the Company 59 B. Business Overview 59 C. Organizational Structure 144 D. Property, Plants and Equipment 144 ITEM 4A. Unresolved Staff Comments 144 ITEM 5. Operating and Financial Review and Prospects 144 A. Operating Results 165 B. Liquidity and Capital Resources 171 C. Research and Development, Patents and Licenses, Etc. 184 D. Trend Information 185 E. Critical Accounting Estimates 187 F. Disclosure of Registrant's Action to Recover Erroneously Awarded Compensation 187 ITEM 6. Directors, Senior Management and Employees 187 A. Directors and Senior Management 187 B. Compensation 190 C. Board Practices 190 D. Employees 193 E. Share Ownership 193 ITEM 7. Major Shareholders and Related Party Transactions 194 A. Major Shareholders 194 B. Related Party Transactions 194 C. Interests of Experts and Counsel 195 ITEM 8. Financial Information 195 A. Consolidated Statements and Other Financial Information 195 B. Significant Changes 195 ITEM 9. The Offer and Listing 195 A. Offer and Listing Details 195 B. Plan of Distribution 195 C. Markets 195 D. Selling Shareholders 196 E.

Dilution

Dilution 196 F. Expenses of the Issue 196 ITEM 10. Additional Information 196 A. Share Capital 196 B. Constitution 196 C. Material Contracts 209 D. Exchange Controls 209 E. Taxation 209 F. Dividends and Paying Agents 216 G. 216 H. Documents on Display 216 I. Subsidiary Information 216 J. Annual Report to Security Holder 216 ITEM 11.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 216 ITEM 12.

Description of Securities Other than Equity Securities

Description of Securities Other than Equity Securities 217 A. Debt Securities 217 B. Warrants and Rights 217 C. Other Securities 217 D. American Depositary Shares 217 i PART II ITEM 13. Defaults, Dividend Arrearages and Delinquencies 217 ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 217 ITEM 15.

Controls and Procedures

Controls and Procedures 217 ITEM 16. RESERVED 218 ITEM 16A. Audit Committee Financial Expert 218 ITEM 16B. Code of Ethics 218 ITEM 16C. Principal Accountant Fees and Services 219 ITEM 16D. Exemptions from the Listing Standards for Audit Committees 219 ITEM 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 219 ITEM 16F. Change in Registrant's Certifying Accountant 220 ITEM 16G. Corporate Governance 220 ITEM 16H. Mine Safety Disclosure 220 ITEM 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection 220 ITEM 16J. Insider Trading Policies 220 ITEM 16K. Cybersecurity 220 ITEM 17.

Financial Statements

Financial Statements 221 ITEM 18.

Financial Statements

Financial Statements 221 ITEM 19. Exhibits 221 ii INTRODUCTION AND USE OF CERTAIN TERMS We have prepared this annual report using a number of conventions, which you should consider when reading the information contained herein. In this annual report, the "Company," "we," "us" and "our" shall refer to Kenon Holdings Ltd., or Kenon, and each of our subsidiaries and associated companies, collectively, as the context may require, including: "CPV" means the CPV Group (i.e., CPV Power Holdings LP, Competitive Power Ventures Inc. and CPV Renewable Energy Company Inc.), a business engaged in the development, construction and management of power plants running conventional energy (powered by natural gas) and renewable energy in the United States, which was acquired in January 2021 by CPV Group LP, an entity in which OPC indirectly holds a 70% interest; OPC Energy Ltd. ("OPC"), an owner, developer and operator of power generation facilities in the Israeli and United States power markets, in which Kenon has an approximately 55% interest; Qoros Automotive Co., Ltd. ("Qoros"), a Chinese automotive company based in China, in which Kenon, through its 100%-owned subsidiary Quantum (as defined below), has a 12% interest; and ZIM Integrated Shipping Services, Ltd. ("ZIM"), an Israeli global container shipping company, in which Kenon has an approximately 21% interest. This annual report uses the following conventions: "Ansonia" means Ansonia Holdings Singapore B.V., a company organized under the laws of Singapore, which owns approximately 62% of the outstanding shares of Kenon; "Chery" means Chery Automobile Co. Ltd., a supplier to and shareholder of Qoros; "IC" means Israel Corporation Ltd., an Israeli corporation traded on the Tel Aviv Stock Exchange, or the "TASE," and Kenon's former parent company; "IC Power" means IC Power Ltd., formerly IC Power Pte. Ltd, a Singaporean company and a wholly-owned subsidiary of Kenon; "Inkia" means Inkia Energy Limited, a Berm

View Full Filing

View this 20-F filing on SEC EDGAR