Kenon Holdings Ltd
NYSE:KEN
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Kenon Holdings Ltd
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Ladies and gentlemen, thank you for standing by. Welcome to the Kenon Holdings Ltd. conference call to discuss the first quarter 2019 results of Kenon. [Operator Instructions] As a reminder, this conference is being recorded. Kenon published its press release with Q1 results earlier today. The press release as well as summary financial information of Kenon and OPC have been publicly submitted to the Securities and Exchange Commission on Form 6-K. These documents can be accessed from the SEC's website and have been filed with the Tel Aviv Stock Exchange and are available on the company's website.
With us on the call today are the management of Kenon and OPC Energy. This includes Mr. Robert Rosen, CEO of Kenon; Mr. Mark Hasson, CFO of Kenon; and Mr. Giora Almogy, CEO of OPC.
Rob will first provide an update on Kenon. Giora will then provide an update on OPC, followed by Mark, who will discuss the financial results of Kenon. We will then open the call for the question-and-answer session, followed by a concluding statement by Rob.
Before we start, I'd like to point out that this conference call may contain forward-looking statements, including statements regarding expected events, developments or the expected performance of the company and its subsidiaries and associated companies, including those statements identified as forward-looking in Kenon's Q1 2019 results release. These statements are only estimates or plans, and there is no guarantee that they will in fact occur. Actual events or results may differ materially from those projected, including as a result of changing market trends as well as other risks and uncertainties identified in the Risk Factors section of the company's annual report on Form 20-F filed with the Securities and Exchange Commission and in the section entitled Caution Concerning Forward-Looking Statements in the earnings release.
In addition, this conference call contains non-IFRS measure, including OPC's EBITDA. For the definition of such terms and a reconciliation to their most directly comparable IFRS measures, see Exhibit 99.2 to the Form 6-K furnished to the SEC today. The Form 6-K is available on the SEC website as well as Kenon's website.
And with that, I will now hand the call over to Rob. Rob, please go ahead.
Thank you, operator. I'd like to welcome all of you, and thank you for joining us today for our investor conference call to discuss Kenon's first quarter 2019 results. It's been a relatively short time since our last call, so with your permission I'll get started right away.
Starting with Qoros, earlier this year we announced an agreement to sell 12% of our remaining stake in Qoros to a majority shareholder for approximately $227 million. We have made significant progress in the approval process for this transaction and continue to progress in order to obtain the remaining required approvals. As a reminder, Kenon has the right to cause Qoros' majority shareholder to purchase our remaining equity stake in Qoros for a similar amount.
In terms of operational results, Qoros reported that the entity introduced by the majority shareholder, which made significant purchases during 2018, paused their purchases in Q1 2019, and only resumed orders in Q2 2019 as per their internal plan.
Qoros also reported that orders from dealers were negatively impacted this quarter by the change in regulation in some provinces in China and by the generally challenging auto market conditions in China. As a result, Qoros saw a substantial decline in wholesale sales in the quarter, selling approximately 800 cars in the first quarter.
I would like to hand the call over to Giora to discuss the business developments and results of OPC. Giora, go ahead, please.
Thanks, Rob. So in OPC, in terms of business development, we're constructing in Hadera a 148-megawatt cogeneration plant with a total investment of approximately $275 million, which are NIS 1 billion. As of March 31st, we have invested in aggregate of $230 million, and we expect to reach commercial operation in the fourth quarter of this year. This takes into account the delay that occurred during the commissioning of the plant due to a faulty component in the power plant that was discovered during commissioning. OPC Hadera is entitled to compensation from the EPC contractor for the delay in the completion and furthermore, we have insurance coverage for the loss of profit.
In Tzomet, OPC is developing a 396 open cycle project in Israel, and in April this year, we obtained a conditional license from the Electricity Authority in Israel. In terms of financial results for the quarter, the sales of OPC were NIS 354 million compared to NIS 350 million in the previous quarter last year. Please note that the result of OPC are published in shekels and are slightly different than those published by Kenon due to fluctuations in the exchange rate.
OPC's revenues therefore in dollar terms were $97 million in the first quarter compared to $101 million in the first quarter of 2018. In terms of EBITDA, the first quarter EBITDA was $30 million as compared to $35 million in the previous quarter. Our net profit for the quarter was $14 million compared to our net profit of $16 million in the first quarter of 2018. That ends my summary, and I'd now hand over to Mark, Kenon's CFO, for the financial summary. Mark, please go ahead.
Thanks, Giora. Kenon's consolidated results are largely made up of the consolidated results of OPC, which Giora has just described. The results of Qoros and ZIM are reflected under the results from associates. In Q1 2019, Kenon incurred a net loss of $7 million, and you can find additional details in our 6-K, which was filed earlier today.
In terms of liquidity and capital resources, as of March 31, 2019, Kenon's cash balance was $35 million, and Kenon does not have any material debt.
Finally, as a reminder, Kenon is the beneficiary of a 4-year deferred payment agreement, reflecting deferred consideration from the sale of its Inkia power businesses in 2017. Amounts under this agreement accrue interest at a rate of 8% per annum. As of March 31, 2019, the total amount payable to Kenon is $193 million.
That ends our summary, and we will now be happy to take your questions. Operator?
[Operator Instructions] There are no questions at this time. Mr. Rosen, would you like to make a concluding statement?
Thank you, operator. On behalf of the management of Kenon Holdings, I would like to thank you all for your interest in our company. If you have any further questions after this call, please feel free to contact Kenon's Investor Relations team, whose contact details are on the press release. I thank you again and farewell from me. Have a nice day.
Thank you. This concludes the Kenon Holdings conference call. Thank you for your participation. You may go ahead and disconnect.