Archive for the ‘pr’ Category

Internet Gold – Golden Lines Will Issue NIS 26 Million Par Value of its Series D Debentures in Exchange for NIS 23 Million Par Value of its Series C Debentures

Sunday, October 22nd, 2017

Internet Gold – Golden Lines Will Issue NIS 26 Million Par Value of its Series D Debentures in Exchange for NIS 23 Million Par Value of its Series C Debentures

 

Ramat-Gan, Israel, October 19, 2017 – Internet Gold – Golden Lines Ltd. (the “Company”, Internet Gold”) (NASDAQ and TASE: IGLD), today announced that the Company conducted a private placement of NIS 26,043,252 par value of its Series D Debentures to certain institutional, “qualified” and private investors in Israel in exchange for NIS  23,462,389 par value of its outstanding Series C Debentures.

 

The private placement was structured as an increase to the outstanding Series D Debentures of the Company, which were first issued in March 2014. Upon completion of the exchange offer, an aggregate principal amount of NIS 40,507,570 par value of Series C Debentures will remain outstanding.

 

The Series C Debentures purchased by the Company will be cancelled and the remaining outstanding debentures of both series will continue to trade on the Tel Aviv Stock Exchange.

 

The terms of the newly issued Series D Debentures will be identical to the terms of the Series D Debentures that were issued in March 2014.

 

The newly issued Series D Debentures will be listed on the Tel Aviv Stock Exchange (“TASE”), subject to approval by TASE, and initial re-sales will be restricted by applicable securities laws.

 

The exchange of the Debentures was conducted as a private placement to several “classified”/”institutional” investors and “qualified” investors (as defined under the exemptions of section 15 of the Securities Law, 5728-1968 and the First Schedule of The Securities Law), and to a number of private investors – all pursuant to Regulation S under the U.S. Securities Act of 1933. The securities have not been registered under the Securities Act and may not be offered or sold in the United States or to U.S. persons unless they are registered under the Securities Act or an exemption from registration is available.

 

Midroog Ltd., an Israeli rating company, has confirmed that the issuance of the new Series D Debentures will not affect the current rating of the outstanding Series D Debentures.

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission.  These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.  Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620


 

 

 

 

 

 

Internet Gold – Golden Lines Will Issue NIS 201 Million Par Value of its Series D Debentures in Exchange for NIS 181 Million Par Value of its Series C Debentures

Tuesday, October 3rd, 2017

Internet Gold – Golden Lines Will Issue NIS 201 Million Par Value of its Series D Debentures in Exchange for NIS 181 Million Par Value of its Series C Debentures

 

Ramat-Gan, Israel, October 3, 2017 – Internet Gold – Golden Lines Ltd. (the “Company”, Internet Gold”) (NASDAQ and TASE: IGLD), today announced that the Company conducted a private placement of NIS 201,371,696 par value of its Series D Debentures to certain institutional, “qualified” and private investors in Israel in exchange for NIS 181,415,942 par value of its outstanding Series C Debentures.

 

The private placement was structured as an increase to the outstanding Series D Debentures of the Company, which were first issued in March 2014. Upon completion of the exchange offer, an aggregate principal amount of NIS 63,969,960 par value of Series C Debentures will remain outstanding.

 

The Series C Debentures purchased by the Company will be cancelled and the remaining outstanding debentures of both series will continue to trade on the Tel Aviv Stock Exchange.

 

The terms of the newly issued Series D Debentures will be identical to the terms of the Series D Debentures that were issued in March 2014.

 

The newly issued Series D Debentures will be listed on the Tel Aviv Stock Exchange (“TASE”), subject to approval by TASE, and initial re-sales will be restricted by applicable securities laws.

 

The exchange of the Debentures was conducted as a private placement to several “classified”/”institutional” investors and “qualified” investors (as defined under the exemptions of section 15 of the Securities Law, 5728-1968 and the First Schedule of The Securities Law), and to a number of private investors – all pursuant to Regulation S under the U.S. Securities Act of 1933. The securities have not been registered under the Securities Act and may not be offered or sold in the United States or to U.S. persons unless they are registered under the Securities Act or an exemption from registration is available.

 

Midroog Ltd., an Israeli rating company, has confirmed that the issuance of the new Series D Debentures will not affect the current rating of the outstanding Series D Debentures.

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold Reports its Financial Results for the Second Quarter of 2017

Thursday, August 31st, 2017

Internet Gold Reports its Financial Results for the Second Quarter of 2017

 

– Net profit of The Bezeq Group for The Second Quarter of 2017of NIS 358 Million, Business as Usual –

– Net Profit Attributable to Shareholders of Internet Gold for the Second Quarter of 2017of NIS 14 Million

 

Ramat Gan, Israel – August 31, 2017 – Internet Gold – Golden Lines Ltd. (“the Company”) (NASDAQ Global Select Market and TASE: IGLD) today reported its financial results for the second quarter of 2017. Internet Gold holds the controlling interest in B Communications Ltd. (TASE and NASDAQ: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corporation Ltd. (TASE: BEZQ).

 

“We are very pleased with the results of both B Communications and Bezeq, which continues to generate a steady return. With full confidence in Bezeq dividend generating power, we will continue our efforts to improve both our debt and equity positions.” said Doron Turgeman, CEO of Internet Gold.

 

ISA Investigation: The Company has been reporting the events concerning the investigation by the Israel Securities Authority (“ISA”) relating to alleged improprieties surrounding the Yes-Bezeq deal. As reported, the investigation appears to focus on Bezeq’s 2015 acquisition of the remaining ownership interest in its satellite TV unit, Yes, from its parent company Eurocom Communications. As previously reported the Company’s Chairman and other senior officers at Yes were remanded to house arrest for a period of time and later barred from communicating on certain issues related to the investigation. In addition, following initial reports about the investigation, civil claims with motions to certify the claims as class action lawsuits were filed in Israel against the Company, Bezeq and others. The Company is currently evaluating the claims and its course of action.

 

Debt and Liquidity Balances

 

As of June 30, 2017, Internet Gold’s unconsolidated liquidity balances comprised of cash and cash equivalents and short term investments totaled NIS 216 million ($62 million), its unconsolidated total debt was NIS 811 million ($232 million) and its unconsolidated net debt was NIS 595 million ($170 million).

 

(In millions) June 30, June 30, June 30, December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS
         
Series C debentures 261 75 386 389
Series D debentures 550 157 554 551
CPI forward 6 6
Total debt 811 232 946 946
         
Cash and cash equivalents 10 3 238 48
Short-term investments 206 59 163 334
Total liquidity 216 62 401 382
         
Net debt 595 170 545 564
         

 

 

Internet Gold’s Second Quarter Consolidated Financial Results

 

Internet Gold’s consolidated revenues for the second quarter of 2017 totaled NIS 2.46 billion ($705 million), a 1.9% decrease compared to the NIS 2.51 billion reported in the second quarter of 2016. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

 

Internet Gold’s consolidated operating profit for the second quarter of 2017 totaled NIS 466 million ($134 million), a 9.7% decrease compared with NIS 516 million reported in the second quarter of 2016.

 

Internet Gold’s consolidated net profit for the second quarter of 2017 totaled NIS 236 million ($68 million), a 6.3% decrease compared with NIS 252 million reported in the second quarter of 2016.

 

Internet Gold’s net profit attributable to shareholders for the second quarter of 2017 totaled NIS 14 million ($4 million) compared with NIS 14 million for the second quarter of 2016.

 

Internet Gold’s Second Quarter Unconsolidated Financial Results

 

)In millions( Three months ended June 30, Year ended December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS
         
Financial expenses, net (14) (4) (11) (44)
Operating expenses (1) (1) (5)
Interest in BCOM’s net profit (loss) 29 8 26 (153)
Net profit (loss) 14 4 14 (202)

 

As of June 30, 2017, Internet Gold held approximately 65% of B Communications’ outstanding shares. Accordingly, Internet Gold’s interest in B Communications’ net profit for the second quarter of 2017 totaled NIS 29 million ($8 million) compared with NIS 26 million in the second quarter of 2016.

 

Internet Gold’s unconsolidated net financial expenses in the second quarter of 2017 totaled NIS 14 million ($4 million) compared with NIS 11 million in the second quarter of 2016. These expenses consist of NIS 13 million ($4 million) of interest and CPI linkage expenses related to the Company’s publicly-traded debentures and of NIS 1 million ($300 thousands) of financial expenses generated by short term investments.

 

Internet Gold’s unconsolidated net profit for the second quarter of 2017 totaled NIS 14 million ($4 million) compared with NIS 14 million for the second quarter of 2016.

 

The Bezeq Group Results (Consolidated)

 

To provide further insight into its results, the Company is providing the following summary of the consolidated financial report of the Bezeq Group for the second quarter ended June 30, 2017. For a full discussion of Bezeq’s results for the second quarter ended June 30, 2017, please refer to its website: http://ir.bezeq.co.il.

 

 

Revenues of the Bezeq Group in the second quarter of 2017 were NIS 2.46 billion ($705 million) compared to NIS 2.51 billion in the corresponding quarter of 2016, a decrease of 1.9%. The decrease was due to lower revenues at Bezeq Fixed-Line, Pelephone and Yes partially offset by an increase in revenues at Bezeq International.

 

Salary expenses of the Bezeq Group in the second quarter of 2017 were NIS 494 million ($139 million) compared to NIS 495 million in the corresponding quarter of 2016, a decrease of 0.2%.

 

Operating expenses of the Bezeq Group in the second quarter of 2017 were NIS 973 million ($278 million) compared to NIS 972 million in the corresponding quarter of 2016, an increase of 0.1%.

 

Other operating income, net of the Bezeq Group in the second quarter of 2017 amounted to NIS 1 million ($300 thousands) compared to NIS 12 million in the corresponding quarter of 2016. Other operating income, net was impacted due to timing differences in the sale of real estate at Bezeq Fixed-Line in the second quarter of 2017.

 

Depreciation and amortization expenses of the Bezeq Group in the second quarter of 2017 were NIS 424 million ($121 million) compared to NIS 440 million in the corresponding quarter of 2016, a decrease of 3.6%. The decrease was primarily due to a reduction in depreciation expenses at Bezeq Fixed-Line as well as a reduction in PPA amortization expenses recorded in connection with the increased ownership interest in Yes.

 

Operating profit of the Bezeq Group in the second quarter of 2017 was NIS 573 million ($164 million) compared to NIS 616 million in the corresponding quarter of 2016, a decrease of 7.0%.

 

 

 

Financing expenses, net of the Bezeq Group in the second quarter of 2017 amounted to NIS 102 million ($29 million) compared to NIS 105 million in the corresponding quarter of 2016, a decrease of 2.9%. The decrease in financing expenses was primarily due a decrease in the estimated second contingent consideration in relation to the acquisition of Yes of NIS 84 million ($24 million). This amount was partially offset by an update in the estimated fair value of advanced payments made by the Bezeq Group to Eurocom DBS of NIS 57 million ($16 million), increased financing expenses at Yes as well as financing expenses of NIS 13 million recognized in connection with the exchange of Yes debentures for Bezeq Fixed-Line debentures.

 

Tax expenses of the Bezeq Group in the second quarter of 2017 were NIS 111 million ($32 million) compared to NIS 133 million in the corresponding quarter of 2016, a decrease of 16.5%. The decrease was due a decrease in the Israeli corporate tax rates from 25% in 2016 to 24% in 2017.

 

Net profit of the Bezeq Group in the second quarter of 2017 was NIS 358 million ($102 million) compared to NIS 377 million in the corresponding quarter of 2016, a decrease of 5.0%.

 

EBITDA of the Bezeq Group in the second quarter of 2017 was NIS 997 million ($285 million) (EBITDA margin of 40.5%) compared to NIS 1.056 billion (EBITDA margin of 42.1%) in the corresponding quarter of 2016, a decrease of 5.6%.

 

Cash flow from operating activities of the Bezeq Group in the second quarter of 2017 was NIS 875 million ($250 million) compared to NIS 870 million in the corresponding quarter of 2016, an increase of 0.6%.

 

Payments for investments (Capex) of the Bezeq Group in the second quarter of 2017 was NIS 406 million ($116 million) compared to NIS 387 million in the corresponding quarter of 2016, an increase of 4.9%.

 

Free cash flow of the Bezeq Group in the second quarter of 2017 was NIS 487 million ($139 million) compared to NIS 539 million in the corresponding quarter of 2016, a decrease of 9.6%. The decrease was primarily due to a decrease in proceeds from the sale of real estate in the amount of NIS 38 million ($11 million).

 

Total debt of the Bezeq Group as of June 30, 2017 was NIS 11.5 billion ($3.3 billion) compared to NIS 11.5 billion as of June 30, 2016.

 

Net debt of the Bezeq Group was NIS 9.6 billion ($2.75 billion) as of June 30, 2017 compared to NIS 9.3 billion as of June 30, 2016.

 

Net debt to EBITDA (trailing twelve months) ratio of the Bezeq Group as of June 30, 2017, was 2.43, compared to 2.24 as of June 30, 2016.

 

Notes:

 

Convenience translation to U.S Dollars

 

Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.496 = US$ 1 as published by the Bank of Israel for June 30, 2017.

 

 

Use of non-IFRS financial measures

 

We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. The following non-IFRS measures are provided in the press release and accompanying supplemental information because management believes these measurements provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance and are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

 

  • EBITDA – defined as net profit plus income tax expenses, share of loss in equity accounted investee, net financing expenses and depreciation and amortization;
  • EBITDA trailing twelve months – defined as net profit plus income tax expenses, share of loss in equity accounted investee, net financing expenses and depreciation and amortization during last twelve months;
  • Net debt – defined as long and short term bank loans and debentures minus cash and cash equivalents and short term investments;
  • Net debt to EBITDA ratio – defined as net debt divided by the trailing twelve months EBITDA;
  • Free Cash Flow (FCF) – defined as cash from operating activities less cash used for the purchase/sale of property, plant and equipment, and intangible assets, net.

These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.

We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense).

 

EBITDA should not be considered in isolation or as a substitute for net profit or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

 

Management of Bezeq believes that free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net.

 

Bezeq also uses net debt and the net debt to EBITDA trailing twelve months ratio to analyze its financial capacity for further leverage and in analyzing the company’s business and financial condition. Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

 

Reconciliations between the Bezeq Group’s results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company’s consolidated results. The non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS.

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

    June 30, June 30, June 30, December 31,
    2017 2017 2016 2016
    NIS US$ NIS NIS

 

Current assets          
Cash and cash equivalents   1,958           560 1,595 810
Restricted cash               –   658
Investments   503           144 1,747 1,240
Trade receivables, net   1,991 570 2,029 2,000
Other receivables   349 100 210 217
Related party   56 16 29
Inventory   105 30 109 106
Total current assets   4,962 1,420 6,377 4,373
           
Non-current assets          
Trade and other receivables   507 146 647 644
Property, plant and equipment   7,049 2,016 7,120 7,072
Intangible assets   6,314 1,806 6,859 6,534
Deferred expenses and investments   448 128 636 447
Broadcasting rights   456 130 455 432
Investment in equity-accounted investee   12 3 21 18
Deferred tax assets   1,015 290 1,099 1,007
Total non-current assets    15,801 4,519 16,837 16,154
           
Total assets    20,763 5,939 23,214 20,527
           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

    June 30, June 30, June 30, December 31,
    2017 2017 2016 2016
    NIS US$ NIS NIS

 

Current liabilities          
Bank loans and credit and debentures   1,314 375 2,314 2,181
Trade and other payables   1,634 467 1,627 1,661
Related party   208 32
Current tax liabilities   119 34 698 138
Provisions   79 23 90 80
Employee benefits   318 91 370 315
Total current liabilities         3,464          990 5,307 4,407
           
Non-current liabilities          
Bank loans and debentures        13,437 3,843 13,511 12,241
Employee benefits             259 74 239 258
Other liabilities             251            72 252 244
Provisions              48 14 46 47
Deferred tax liabilities             541 155 667 593
Total non-current liabilities       14,536       4,158 14,715 13,383
           
Total liabilities       18,000       5,148 20,022 17,790
           
Equity          
Attributable to shareholders of the Company             216 62 379 194
Non-controlling interests          2,547 729 2,813 2,543
Total equity         2,763          791 3,192 2,737
           
Total liabilities and equity       20,763       5,939 23,214 20,527

 


        

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Income for the

 

(In millions, except per share data)

      Year ended
  Six months period ended June 30, Three months period ended June 30, December 31,
  2017 2017 2016 2017 2017 2016 2016
  NIS US$ NIS NIS US$ NIS NIS

 

 

Revenues 4,916 1,406 5,070 2,463 705 2,511 10,084
               
Costs and expenses              
Depreciation and amortization 1,053 302 1,083 525 150 538 2,161
Salaries 998 285 1,008 494 141 494 2,017
General and operating expenses 1,938 554 1,998 976 279 975 4,024
Other operating expenses              
  (income), net 1 (7) 2 1 (12) 21
               
  3,990 1,141 4,082 1,997 571 1,995 8,223
               
Operating profit 926 265 988 466 134 516 1,861
               
Financing expenses, net 288 82 361 143 41 154 975
               
Profit after financing              
 expenses, net 638 183 627 323 93 362 886
               
Share of loss in              
 equity-accounted investee 4 1 2 2 1 1 5
               
Profit before income tax 634 182 625 321 92 361 881
               
Income tax expenses 174 50 230 85 24 109 442
               
Net profit for the period 460 132 395 236 68 252 439
               
Profit (loss) attributable to:              
Shareholders of the Company 24 7 (18) 14 4 14 (202)
Non-controlling interests 436 125 413 222 64 238 641
               
Net Profit for the period 460 132 395 236 68 252 439
               
Earnings (loss) per share              
Basic 1.26 0.36 (0.93) 0.71 0.20 0.72 (10.52)
Diluted 1.26 0.36 (0.93) 0.71 0.20 0.72 (10.52)
               

 

 

 

 

 

 

 

 

 

 

Reconciliation for NON-IFRS Measures

 

EBITDA

 

The following is a reconciliation of the Bezeq Group’s net profit to EBITDA:

 

(In millions) Three month period ended June 30, Trailing twelve months ended June 30,
  2017 2017 2016 2017 2017 2016
  NIS US$ NIS NIS US$ NIS
             
Net profit 358 102 377 1,287 368 1,441
Income tax expenses 111 32 133 533 152 579
Share of loss in equity-   accounted investee 2 1 1 7 2 6
Financing expenses, net 102 29 105 443 127 304
Depreciation and amortization 424 121 440 1,702 487 1,805
             
EBITDA 997 285 1,056 3,972 1,136 4,135

 

 

Net Debt

 

The following table shows the calculation of the Bezeq Group’s net debt:

 

(In millions) As at June 30,
  2017 2017 2016
  NIS US$ NIS
       
Short term bank loans and credit and debentures 958 274 1,958
Non-current bank loans and debentures 10,561 3,020 9,546
Cash and cash equivalents (1,854) (530) (1,338)
Investments (19) (5) (912)
       
Net debt 9,646 2,759 9,254
       

 

 

Net Debt to Trailing Twelve Months EBITDA Ratio

 

The following table shows the calculation of the Bezeq Group’s net debt to EBITDA trailing twelve months ratio:

 

(In millions) As at June 30,
  2017 2017 2016
  NIS US$ NIS
       
Net debt 9,646 2,759 9,254
       
Trailing twelve months EBITDA 3,972 1,136 4,135
       
Net debt to EBITDA ratio 2.43 2.43 2.24

 

 


 

Reconciliation for NON-IFRS Measures

 

Free Cash Flow

 

The following table shows the calculation of the Bezeq Group’s free cash flow:

 

 

(In millions) Three month period ended June 30,
  2017 2017 2016
  NIS US$ NIS
       
Cash flow from operating activities 875 250 870
Purchase of property, plant and equipment (303) (87) (317)
Investment in intangible assets and deferred expenses (103) (29) (70)
Proceeds from the sale of property, plant and equipment 18 5 56
       
Free cash flow 487 139  539

 

 

Loan to Value (LTV)

 

The following table shows the calculation of IGLD’s loan to value ratio:

 

 

(In millions) As at June 30,
  2017
  NIS
   
IGLD’s unconsolidated net debt 595
   
Market value of B Communications share held by IGLD 1,171
   
IGLD’s LTV 50.8%

 

 

Net Asset Value (NAV)

 

The following table shows the calculation of IGLD’s net asset value:

 

 

(In millions) As at June 30,
  2017
  NIS
   
Market value of B Communications share held by IGLD 1,171
   
IGLD’s unconsolidated net debt               595
   
IGLD’s NAV 576

 

 

Designated Disclosure with Respect to the Company’s Projected Cash Flows

 

In connection with the issuance of the Series D Debentures in 2014, we undertook to comply with the “hybrid model disclosure requirements” as determined by the Israeli Securities Authority and as described in the prospectus governing our Series D Debentures.

 

This model provides that in the event certain financial “warning signs” exist, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Series D Debentures.

 

In examining the existence of warning signs as of June 30, 2017, our board of directors noted that our consolidated financial statements (unaudited) as well as our separate internal (unpublished) unaudited financial information as of and for the three moths period ended June 30, 2017 reflect that we had a continuing negative cash flow from operating activities of NIS 1 million in the second quarter of 2017.

 

The Israeli regulations provide that the existence of a continuing negative cash flow from operating activities could be deemed to be a “warning sign” unless our board of directors determines that the possible “warning sign” does not reflect a liquidity problem.

 

Such continuing negative cash flow from operating activities results from the general operating expenses of the Company of NIS 1 million in the second quarter of 2017 and due to the fact that the Company, as a holding company, does not have any cash inflows from operating activities. Our main source of cash inflows is generated from dividends (classified as cash flow from investing activities) or debt issuances (classified as cash flow from financing activities). We did not have any such inflows in the second quarter of 2017.

 

Such continuing negative cash flow from operating activities does not effect our liquidity in any manner. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of the continuing negative cash flow from operating activities, as mentioned above, does not reflect a liquidity problem.

 

 

 

 

 

 

 

 

 

 


 

Internet Gold’s Unconsolidated Balance Sheet

 

(In millions) June 30, June 30, June 30, December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS
Current assets        
Cash and cash equivalents 10 3 238 48
Short-term investments 206 59 163 334
Other receivables 1
Total current assets 216 62 402 382
         
Non-current assets        
Investment in an investee (*) 811 232 924 758
         
Total assets 1,027 294 1,326 1,140
         
Current liabilities        
Current maturities of debentures 130 37 130 130
Other payables 13 4 22 21
Total current liabilities 143 41 152 151
         
Non-current liabilities        
Debentures 668 191 795 795
         
Total liabilities 811 232 947 946
         
Total equity 216 62 379 194
         
Total liabilities and equity 1,027 294 1,326 1,140

 

(*) Investment in B Communications.

 

Unconsolidated figures as of June 30, 2017:

 

  • Unconsolidated Total equity represents 21% of unconsolidated total balance sheet.
  • Unconsolidated LTV ratio is 50.8%.
  • The ratio of cash and cash equivalents plus short-term investments plus dividend receivable from B Communication and market value of B Communications shares over the control permit (approximately 14.78% of B Communications outstanding shares) to unconsolidated current maturities of debentures is 3.37.
  • Internet Gold’s NAV is NIS 576 million.

 

 

Midroog Ltd. Assigns an A3.il Local Rating with a Stable Outlook to Internet Gold’s New Series E Debentures

Monday, June 5th, 2017
 

Midroog Ltd. Assigns an A3.il Local Rating with a Stable Outlook to Internet Gold’s New Series E Debentures.

Ramat Gan, Israel, June 4, 2017 – Internet Gold – Golden Lines Ltd. (the “Company”, Internet Gold”) (NASDAQ and TASE: IGLD), today announced that Midroog Ltd. assigned an A3.il local rating with a stable outlook for a new issuance in an aggregate amount of up to NIS 200 million par value of the Company’s new Series E Debentures.

As previously reported, the Company is examining the possibility of a new issuance of unsecured Series E Debentures to Israeli “classified”/”institutional” investors. If issued, the Series E Debentures will be listed on the TACT-Institutional System maintained by The Tel Aviv Stock Exchange Ltd. (“TASE”), subject to approval by the TASE.

The above description of Midroog’s report is only a short summary of the main points and it should not be relied upon as a complete description of the full report. The full and report can be viewed at http://maya.tase.co.il.

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in Internet Gold’s filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

Investor relations contacts:

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold – Golden Lines Ltd. is Considering a New Issuance of Unsecured Debentures to Israeli Institutional Investors

Thursday, June 1st, 2017

 

Internet Gold – Golden Lines Ltd. is Considering a New Issuance of Unsecured Debentures to Israeli Institutional Investors

Ramat Gan, Israel, June 1, 2017 – Internet Gold – Golden Lines Ltd. (the “Company”, Internet Gold”) (NASDAQ and TASE: IGLD), today announced that the Company is examining the possibility of a new issuance of unsecured debentures (the “Series E Debentures”) to Israeli “classified”/”institutional” investors (as defined under the exemptions of section 15 of the Securities Law, 5728-1968 and the First Schedule of The Securities Law) (and which are not “U.S. persons”, as such term is defined in Regulation S under the Securities Act of 1933), in an aggregate amount of approximately NIS 150 million par value.

If issued, the Series E Debentures will be listed on the TACT-Institutional System maintained by The Tel Aviv Stock Exchange Ltd. (“TASE”), subject to approval by the TASE.

The Series E Debentures may not be resold in the United States or to any “U.S. person” absent registration under the Securities Act or the availability of an applicable exemption from the registration requirements under the Securities Act.

According to the proposed offering, the principal of the Series E Debentures will be payable in six installments, consisting of: (a) five equal installments, each equal to 10% of the principal of the Series E Debentures, payable on December 15 of each of the years 2019 to 2023 (inclusive); and (b) one installment of 50% of the principal of the Series E Debentures, payable on December 15, 2024. It is expected that the Series E Debentures will bear annual interest at a fixed rate to be determined in an interest-rate auction.

The offering is also subject to the confirmation by Midroog Ltd., an Israeli rating company.

“The new issuance is being executed, among else, in anticipation of the implementation of the Israeli Concentration Law and to enable the Company to finance its activities through non-public registered instruments under the law’s requirements. In accordance with our Initial assessments, this issuance phase is the beginning of a process which will be finalized until the second half of 2019, among else, with the required shares delisting from the TASE and/or the merger of the Company with it’s Subsidiary, under the Israeli Concentration Law” said Doron Turgeman, the CEO of Internet Gold – Golden Lines.

Attached to this report a draft of the Debenture and the lien account document.

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in Internet Gold’s filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

Investor relations contacts:

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold Reports its Financial Results for the First Quarter 2017

Thursday, May 18th, 2017

Internet Gold Reports its Financial Results for the First Quarter 2017

 

– Net Profit Attributable to Shareholders of NIS 10 Million in the First Quarter of 2017 –

 

Ramat Gan, Israel – May 18, 2017 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market and TASE: IGLD) today reported its financial results for the first quarter of 2017. Internet Gold holds the controlling interest in B Communications Ltd. (TASE and NASDAQ: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corporation Ltd. (TASE: BEZQ).

 

“We are very pleased with the results of both B Communications and Bezeq, which continues to generate a steady return that enhances our overall financial position and capabilities,” said Doron Turgeman, CEO of Internet Gold.

 

Debt and Liquidity Balances: As of March 31, 2017, Internet Gold’s unconsolidated liquidity balances comprised of cash and cash equivalents and short term investments totaled NIS 219 million ($60 million), its unconsolidated total debt was NIS 798 million ($220 million) and its unconsolidated net debt was NIS 579 million ($160 million).

 

Internet Gold’s Unconsolidated Debt and Liquidity Balances (1)

 

(In millions) March 31, March 31, March 31, December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS
Short term liabilities 133 37 140 151
Long term liabilities 665 183 793 795
Total debt 798 220 933 946
Liquidity balances 219 60 169 382
Net debt 579 160 764 564
         

 

  • Does not include the debt or liquidity balances of B Communications and its subsidiaries.

 

Internet Gold’s First Quarter Consolidated Financial Results

 

Internet Gold’s consolidated revenues for the first quarter of 2017 totaled NIS 2.5 billion ($675 million), a 4.1% decrease compared to the NIS 2.6 billion reported in the first quarter of 2016. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

 

Internet Gold’s consolidated operating profit for the first quarter of 2016 totaled NIS 460 million ($127 million), a 2.5% decrease compared with NIS 472 million reported in the first quarter of 2016.

 

Internet Gold’s consolidated net profit for the first quarter of 2017 totaled NIS 224 million ($62 million), a 56.6% increase compared with NIS 143 million reported in the first quarter of 2016. The increase in net profit in the first quarter of 2017 was mainly due to B Communications’ lower net financial expenses resulted from the refinance of its debt in the third quarter of 2016.

 

 

Internet Gold’s First Quarter Unconsolidated Financial Results

 

As of March 31, 2017, Internet Gold held approximately 65% of B Communications’ outstanding shares. Accordingly, Internet Gold’s interest in B Communications’ net profit for the first quarter of 2017 totaled NIS 25 million ($7 million) compared with a net loss of NIS 15 million in the first quarter of 2016.

 

Internet Gold’s unconsolidated net financial expenses for the first quarter of 2017 totaled NIS 14 million ($4 million) compared with NIS 15 million in the first quarter of 2016. These expenses consist of NIS 12 million ($3 million) of interest and CPI linkage expenses related to Internet Gold’s publicly-traded debentures and of NIS 2 million ($1 million) of financial expenses generated by short term investments.

 

Internet Gold’s net profit attributable to shareholders for the first quarter of 2017 totaled NIS 10 million ($3 million) compared with a loss attributable to shareholders of NIS 32 million in the first quarter of 2016. The net profit in the first quarter of 2017 was mainly due to B Communications’ lower net financial expenses resulting from the refinance of its debt in the third quarter of 2016.

 

)In millions( Three months ended March 31, Year ended December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS
         
Financial expenses, net (14) (4) (15) (44)
Operating expenses (1) (2) (5)
Interest in BCOM’s net profit (loss) 25 7 (15) (155)
Net profit (loss) 10 3 (32) (204)

 

Bezeq Group Results (Consolidated)

 

To provide further insight into its results, the Company is providing the following summary of the consolidated financial report of the Bezeq Group for the first quarter ended March 31, 2017. For a full discussion of Bezeq’s results for the first quarter ended March 31, 2017, please refer to its website: http://ir.bezeq.co.il.

 

 

Revenues of the Bezeq Group in the first quarter of 2017 were NIS 2.45 billion ($675 million) compared to NIS 2.56 billion in the corresponding quarter of 2016, a decrease of 4.1%. The decrease was due to lower revenues in all of the Bezeq Group segments.

 

Salary expenses of the Bezeq Group in the first quarter of 2017 were NIS 504 million ($139 million) compared to NIS 513 million in the corresponding quarter of 2016, a decrease of 1.8%.

 

Operating expenses of the Bezeq Group in the first quarter of 2017 were NIS 959 million ($264 million) compared to NIS 1.02 billion in the corresponding quarter of 2016, a decrease of 5.8%. The decrease was primarily due to a reduction in expenses in all of the Bezeq Group segments, primarily at Pelephone and was impacted by the early adoption of accounting standard IFRS 15 whereby dealer commissions are capitalized.

 

Other operating income, net of the Bezeq Group in the first quarter of 2017 amounted to NIS 4 million ($1 million) compared to other operating expenses, net of NIS 5 million in the corresponding quarter of 2016. Other operating income, net was impacted by the collective labor agreement at Bezeq International in the corresponding quarter of 2016 as well as the reduction in capital gains from the sale of fixed assets at Bezeq Fixed-Line in the first quarter of 2017.

 

Depreciation and amortization expenses of the Bezeq Group in the first quarter of 2017 were NIS 428 million ($118 million) compared to NIS 449 million in the corresponding quarter of 2016, a decrease of 4.7%. The decrease was due to a reduction in depreciation and amortization expenses at Pelephone due to the termination of depreciation of the CDMA network as well as other assets.

 

Operating profit of the Bezeq Group in the first quarter of 2017 was NIS 566 million ($156 million) compared to NIS 574 million in the corresponding quarter of 2016, a decrease of 1.4%.

 

Financing expenses, net of the Bezeq Group in the first quarter of 2017 amounted to NIS 101 million ($28 million) compared to NIS 102 million in the corresponding quarter of 2016, a decrease of 1.0%.

 

Tax expenses of the Bezeq Group in the first quarter of 2017 were NIS 113 million ($31 million) compared to NIS 183 million in the corresponding quarter of 2016, a decrease of 38.3%. The decrease in tax expenses was due to a reduction in the tax asset and the recognition of deferred tax expenses in the corresponding quarter of 2016 in the amount of NIS 64 million resulting from a decrease in corporate tax rates in Israel from 26.5% to 25%.

 

Net profit of the Bezeq Group in the first quarter of 2017 was NIS 350 million ($96 million) compared to NIS 288 million in the corresponding quarter of 2016, an increase of 21.5%. The increase in net profit was primarily due to the aforementioned decrease in tax expenses.

 

EBITDA of the Bezeq Group in the first quarter of 2017 was NIS 994 million ($274 million) (EBITDA margin of 40.5%) compared to NIS 1.023 billion (EBITDA margin of 40.0%) in the corresponding quarter of 2015, a decrease of 2.8%.

 

Cash flow from operating activities of the Bezeq Group in the first quarter of 2017 was NIS 826 million ($227 million) compared to NIS 922 million in the corresponding quarter of 2016, a decrease of 10.4%. The decrease was primarily due to changes in working capital.

 

Payments for investments (Capex) of the Bezeq Group in the first quarter of 2017 was NIS 380 million ($105 million) compared to NIS 345 million in the corresponding quarter of 2016, an increase of 10.1%.

 

Free cash flow of the Bezeq Group in the first quarter of 2017 was NIS 456 million ($126 million) compared to NIS 619 million in the corresponding quarter of 2016, a decrease of 26.3%.

 

Total debt of the Bezeq Group as of March 31, 2017 was NIS 10.7 billion ($2.9 billion) compared to NIS 10.6 billion as of March 31, 2016.

 

Net debt of the Bezeq Group was NIS 9.33 billion ($2.57 billion) as of March 31, 2017 compared to NIS 8.83 billion as of March 31, 2016.

 

Net debt to EBITDA (trailing twelve months) ratio of the Bezeq Group as of March 31, 2017, was 2.32, compared to 2.04 as of March 31, 2016.

 

Notes:

 

Convenience translation to U.s Dollars

 

Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.632 = US$ 1 as published by the Bank of Israel for March 31, 2017.

 

Use of non-IFRS financial measures

 

We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. The following non-IFRS measures are provided in the press release and accompanying supplemental information because management believes these measurements provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance and are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

 

  • EBITDA – defined as net profit plus income tax expenses, share of loss in equity accounted investee, net financing expenses and depreciation and amortization;
  • EBITDA trailing twelve months – defined as net profit plus income tax expenses, share of loss in equity accounted investee, net financing expenses and depreciation and amortization during last twelve months;
  • Net debt – defined as long and short term bank loans and debentures minus cash and cash equivalents and short term investments; and
  • Net debt to EBITDA ratio – defined as net debt divided by the trailing twelve months EBITDA.
  • Free Cash Flow (FCF) – defined as cash from operating activities less cash used for the purchase/sale of property, plant and equipment, and intangible assets, net;

These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.

We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense).

 

EBITDA should not be considered in isolation or as a substitute for net profit or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

 

Management of Bezeq believes that free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net.

 

Bezeq also uses net debt and the net debt to EBITDA trailing twelve months ratio to analyze its financial capacity for further leverage and in analyzing the company’s business and financial condition. Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

 

Reconciliations between the Bezeq Group’s results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company’s consolidated results. The non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS.

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Financial Position as at

 

(In millions)

 

    March 31, March 31, March 31, December 31,
    2017 2017 2016 2016
    NIS US$ NIS NIS

 

Current assets          
Cash and cash equivalents   810 223 1,233 810
Restricted cash   715
Investments   1,076 296 1,524 1,240
Trade receivables, net   1,976 544 2,042 2,000
Other receivables   334 92 299 217
Inventory   114 31 123 106
Total current assets   4,310 1,186 5,936 4,373
           
Non-current assets          
Trade and other receivables   595 163 662 644
Property, plant and equipment   7,078 1,949 7,189 7,072
Intangible assets   6,408 1,764 6,986 6,534
Deferred expenses and investments   460 127 568 447
Broadcasting rights   438 121 456 432
Investment in equity-accounted investee   14 4 23 18
Deferred tax assets   1,008 278 1,104 1,007
Total non-current assets   16,001 4,406 16,988 16,154
           
Total assets   20,311 5,592 22,924 20,527
           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Financial Position as at

 

(In millions)

 

    March 31, March 31, March 31, December 31,
    2017 2017 2016 2016
    NIS US$ NIS NIS

 

Current liabilities          
Bank loans and credit and debentures   1,950 537 2,380 2,181
Trade and other payables   1,746 481 1,921 1,661
Related party   6 2 206 32
Current tax liabilities   143 39 711 138
Provisions   81 22 88 80
Employee benefits   308 85 380 315
Total current liabilities   4,234 1,166 5,686 4,407
           
Non-current liabilities          
Bank loans and debentures   11,983 3,299 12,396 12,241
Employee benefits   260 72 238 258
Other liabilities   250 69 262 244
Provisions   47 13 46 47
Deferred tax liabilities   570 157 665 593
Total non-current liabilities   13,110 3,610 13,607 13,383
           
Total liabilities   17,344 4,776 19,293 17,790
           
Equity          
Attributable to shareholders of the Company   205 56 364 194
Non-controlling interests   2,762 760 3,267 2,543
Total equity   2,967 816 3,631 2,737
           
Total liabilities and equity   20,311 5,592 22,924 20,527

 


        

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Income for the

 

(In millions, except per share data)

 

        Year ended
  Three months ended March 31, December 31,
  2017 2017 2016 2016
  NIS US$ NIS NIS

 

 

Revenues 2,453 675 2,559 10,084
         
Costs and expenses        
Depreciation and amortization 528 145 545 2,161
Salaries 504 139 514 2,017
General and operating expenses 962 264 1,023 4,024
Other operating expense (income), net (1) 5 21
         
  1,993 548 2,087 8,223
         
Operating profit 460 127 472 1,861
         
Financing expenses, net 145 40 207 975
         
Profit after financing expenses, net 315 87 265 886
         
Share of loss in equity-accounted investee 2 1 1 5
         
Profit before income tax 313 86 264 881
         
Income tax expenses 89 24 121 442
         
Net profit for the period 224 62 143 439
         
Profit (loss) attributable to:        
shareholders of the Company 10 3 (32) (202)
Non-controlling interests 214 59 175 641
         
Net profit for the period 224 62 143 439
         
Earnings (loss) per share        
Basic 0.55 0.15 (1.67) (10.52)
Diluted 0.55 0.15 (1.67) (10.52)

 

 

 

 

 

 

 

Bezeq, The Israel Telecommunication Corporation Ltd.

Reconciliation for NON-IFRS Measures

 

EBITDA

 

The following is a reconciliation of the Bezeq Group’s net profit to EBITDA:

 

(In millions) Three month period ended March 31, Trailing twelve months ended March 31,
  2016 2017 2017 2016 2017 2017
  NIS NIS US$ NIS NIS US$
             
Net profit 288 350 96 1,546 1,306 359
Income tax 183 113 31 629 555 153
Share of loss in equity-   accounted investee 1 2 1 5 6 2
Financing expenses, net 102 101 28 328 446 123
Depreciation and amortization 449 428 118 1,816 1,718 473
             
EBITDA 1,023 994 274 4,324 4,031 1,110

 

 

Net Debt

 

The following table shows the calculation of the Bezeq Group’s net debt:

 

(In millions) As at March 31,
  2016 2017 2017
  NIS NIS US$
       
Short term bank loans and credit and debentures 2,073 1,594 439
Non-current bank loans and debentures 8,532 9,109 2,508
Cash and cash equivalents (1,221) (792) (218)
Investments (556) (578) (159)
       
Net debt 8,828 9,333 2,570
       

 

Net Debt to Trailing Twelve Months EBITDA Ratio

 

The following table shows the calculation of the Bezeq Group’s net debt to EBITDA trailing twelve months ratio:

 

(In millions) As at March 31,
  2016 2017 2017
  NIS NIS US$
       
Net debt 8,828 9,333 2,570
       
Trailing twelve months EBITDA 4,324 4,031 1,110
       
Net debt to EBITDA ratio 2.04  2.32  2.32

 

 


 

Bezeq, The Israel Telecommunication Corporation Ltd.

Reconciliation for NON-IFRS Measures

 

Free Cash Flow

 

The following table shows the calculation of the Bezeq Group’s free cash flow:

 

 

(In millions) Three month period ended March 31,
  2016 2017 2017
  NIS NIS US$
       
Cash flow from operating activities 922 826 227
Purchase of property, plant and equipment (294) (277) (76)
Investment in intangible assets and deferred expenses (51) (103) (28)
Proceeds from the sale of property, plant and equipment 42 10 3
       
Free cash flow  619  456  126

 

 


 

Designated Disclosure with Respect to the Company’s Projected Cash Flows

 

In connection with the issuance of the Series D Debentures in 2014, we undertook to comply with the “hybrid model disclosure requirements” as determined by the Israeli Securities Authority and as described in the prospectus governing our Series D Debentures.

 

This model provides that in the event certain financial “warning signs” exist, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Series D Debentures.

 

In examining the existence of warning signs as of March 31 2017, our board of directors noted that our consolidated financial statements (unaudited) as well as our separate internal (unpublished) unaudited financial information as of and for the quarter ended March 31, 2017 reflect that we had a continuing negative cash flow from operating activities of NIS 1 million for the first quarter of 2017.

 

The Israeli regulations provide that the existence of a continuing negative cash flow from operating activities could be deemed to be a “warning sign” unless our board of directors determines that the possible “warning sign” does not reflect a liquidity problem.

 

Such continuing negative cash flow from operating activities results from the general operating expenses of the Company of NIS 1 million for the first quarter of 2017 and due to the fact that the Company, as a holding company, does not have any cash inflows from operating activities. Our main source of cash inflows is generated from dividends (classified as cash flow from investing activities) or debt issuances (classified as cash flow from financing activities). We did not have any such inflows in the first quarter of 2017.

 

Such continuing negative cash flow from operating activities does not effect our liquidity in any manner. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of the continuing negative cash flow from operating activities, as mentioned above, does not reflect a liquidity problem.

 

 

 

Internet Gold Reports its Financial Results for the Fourth Quarter and Full Year 2016

Thursday, March 30th, 2017

Internet Gold Reports its Financial Results for the Fourth Quarter and Full Year 2016

 

– The Company Continued Its Deleveraging Process During 2016

 

Ramat Gan, Israel – March 30, 2017 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market and TASE: IGLD) today reported its financial results for the fourth quarter and year ended December 31, 2016. Internet Gold holds the controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corporation Ltd. (TASE: BEZQ).

 

Doron Turgeman, CEO of Internet Gold said: “2016 was a great year for Internet Gold, as the Company improved in all of its important debt parameters. With full confidence in B Communications’ dividend generating power and Bezeq’s 2017 guidance, which was released this morning, we intend to continue our efforts to improve both our debt and equity positions.”

 

Debt and Liquidity Balances: As of December 31, 2016, Internet Gold’s unconsolidated liquidity balances comprised of cash and cash equivalents and short term investments totaled NIS 382 million ($99 million), its unconsolidated total debt was NIS 946 million ($246 million) and its unconsolidated net debt was NIS 564 million ($147 million).

 

Internet Gold’s Unconsolidated Debt and Liquidity Balances (1)

 

(In millions) December 31, December 31, December 31,
  2015 2016 2016
  NIS NIS US$
Short term liabilities 153 151 39
Long term liabilities 926 795 207
Total debt 1,079 946 246
Liquidity balances 277 382 99
Net debt 802 564 147
       

 

  • Does not include the debt or liquidity balances of B Communications and its subsidiaries.

 

Internet Gold Unconsolidated Sources and Uses

 

(In millions) NIS US$
     
Net debt as of December 31, 2015 802 209
Dividends received from B Communications (230) (60)
Proceeds from the sale of B Communications shares (57) (14)
Financial expenses, net 44 11
Operating expenses 5 1
     
Net debt as of December 31, 2016 564 147

 

 

Internet Gold’s Fourth Quarter and Full Year Consolidated Financial Results

 

Internet Gold’s consolidated revenues for the fourth quarter of 2016 totaled NIS 2.5 billion ($651 million), a 3.9% decrease compared to the NIS 2.6 billion reported in the fourth quarter of 2015. For the full year 2016, Internet Gold’s revenues totaled NIS 10.1 billion ($2.6 billion), a 1.0% increase compared to NIS 10.0 billion reported in 2015. The increase in 2016 was due to the consolidation of Yes beginning in the second quarter of 2015, partially offset by a decrease in revenues in all of the Bezeq Group’s segments and primarily at Pelephone. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

 

Internet Gold’s consolidated operating profit for the fourth quarter of 2016 totaled NIS 368 million ($96 million), a 1.1% decrease compared with NIS 372 million reported in the fourth quarter of 2015. For the full year 2016, Internet Gold’s consolidated operating profit totaled NIS 1.84 billion ($479 million), an 8.4% decrease compared with NIS 2.01 billion reported in 2015.

 

Internet Gold’s consolidated net profit for the fourth quarter of 2016 totaled NIS 72 million ($19 million), a 76.4% decrease compared with NIS 306 million reported in the fourth quarter of 2015. For the full year 2016, Internet Gold’s consolidated net profit totaled NIS 426 million ($111 million), a 60.7% decrease compared with NIS 1.08 billion reported in 2015. The decrease was due to Bezeq’s lower net profit in 2016 compared with 2015 and due to one-time refinancing expenses recorded by B Communications related to its early redemption of its 7⅜% Senior Secured Notes (“Notes”).

 

Internet Gold’s Fourth Quarter and Full Year Unconsolidated Financial Results

 

As of December 31, 2016, Internet Gold held approximately 65% of B Communications’ outstanding shares. Accordingly, Internet Gold’s interest in B Communications’ net profit for the fourth quarter of 2016 totaled NIS 2 million ($1 million) compared with NIS 69 million in the fourth quarter of 2015. For the full year 2016, Internet Gold’s interest in B Communications’ net loss totaled NIS 153 million ($40 million) compared with its interest in B Communications’ net profit of NIS 140 million in 2015.

 

Internet Gold’s unconsolidated net financial expenses for the fourth quarter of 2016 totaled NIS 5 million ($2 million) compared with NIS 9 million in the fourth quarter of 2015. These expenses consist of NIS 11 million ($4 million) of interest and CPI linkage expenses related to Internet Gold’s publicly-traded debentures, which were partially offset by NIS 6 million ($2 million) of financial income generated by short term investments. For the full year 2016, Internet Gold’s unconsolidated net financial expenses totaled NIS 44 million ($11 million) compared with NIS 60 million in 2015. These expenses consisted of NIS 51 million ($13 million) of interest and CPI linkage expenses related to Internet Gold’s publicly-traded debentures, which were partially offset by NIS 7 million ($2 million) of financial income generated by short term investments.

 

Internet Gold’s loss attributable to shareholders for the fourth quarter of 2016 totaled NIS 4 million ($1 million) compared with net profit attributable to shareholders of NIS 70 million in the fourth quarter of 2015. For the full year 2016, Internet Gold’s loss attributable to shareholders totaled NIS 202 million ($53 million) compared with net profit of NIS 87 million in 2015. The loss in 2016 was due to Bezeq’s lower net profit in 2016 compared with 2015 and due to one-time refinancing expenses recorded by B Communications related to its early redemption of the Notes.

 

 

)In millions( Three months ended December 31, Year ended December 31,
  2015 2016 2016 2015 2016 2016
  NIS NIS US$ NIS NIS US$
Financial expenses, net (9) (5) (2) (60) (44) (11)
Income tax benefit 11 11
Operating expenses (1) (1) (4) (5) (2)
Interest in BCOM’s net            
profit (loss) 69 2 1 140 (153) (40)
Net loss 70 (4) (1) 87 (202) (53)

 

Bezeq Group Results (Consolidated)

 

To provide further insight into its results, the Company is providing the following summary of the consolidated financial report of the Bezeq Group for the fourth quarter and year ended December 31, 2016. For a full discussion of Bezeq’s results for the fourth quarter and full year ended December 2016, please refer to its website: http://ir.bezeq.co.il.

 

 

Revenues of the Bezeq Group in 2016 totaled NIS 10.08 billion ($2.62 billion) compared to NIS 9.99 billion in 2015, an increase of 1.0%. The increase was due to the consolidation of Yes beginning in the second quarter of 2015, which was partially offset by a decrease in revenues in all of the Bezeq Group segments and primarily at Pelephone.

 

Revenues of the Bezeq Group in the fourth quarter of 2016 were NIS 2.50 billion ($651 million), compared to NIS 2.61 billion in the corresponding quarter of 2015, a decrease of 3.9%. The decrease was due to lower revenues in all of the Bezeq Group segments and primarily at Pelephone.

 

Salary expenses of the Bezeq Group in 2016 totaled NIS 2.01 billion ($523 million) compared to NIS 1.96 billion in 2015, an increase of 2.8%. The increase was primarily due to the consolidation of Yes beginning in the second quarter of 2015.

 

Salary expenses of the Bezeq Group in the fourth quarter of 2016 were NIS 503 million ($131 million), compared to NIS 515 million in the corresponding quarter of 2015, a decrease of 2.3%.

 

Operating expenses of the Bezeq Group in 2016 totaled NIS 4.01 billion ($1.04 billion) compared to NIS 3.87 billion in 2015, an increase of 3.7%. The increase was primarily due to the consolidation of Yes beginning in the second quarter of 2015, partially offset by a decrease in expenses in most of the Bezeq Group segments and primarily at Pelephone.

 

Operating expenses of the Bezeq Group in the fourth quarter of 2016 were NIS 1.03 billion ($267 million) compared to NIS 1.07 billion in the corresponding quarter of 2015, a decrease of 3.7%. The decrease was primarily due to a reduction in interconnect fees and payments to telecom operators, and decreased terminal equipment and marketing expenses, which expenses were partially offset by an increase in content and sub-contractor expenses.

 

Other operating income, net of the Bezeq Group in 2016 was NIS nil compared with NIS 95 million in 2015. The decrease was primarily due to a reduction in capital gains from the sale of real estate at Bezeq Fixed-Line.

 

Other operating expenses, net of the Bezeq Group in the fourth quarter of 2016 amounted to NIS 33 million ($9 million), compared to NIS 76 million in the corresponding quarter of 2015. The decrease was due to a reduction in the provision for the early retirement of employees at Bezeq Fixed-Line.

 

Depreciation and amortization expenses of the Bezeq Group in 2016 totaled NIS 1.74 billion ($452 million) compared to NIS 1.68 billion in 2015, an increase of 3.3%. The increase was primarily due to the consolidation of Yes beginning in the second quarter of 2015 and the amortization of the surplus acquisition costs incurred as a result of the increase in Bezeq’s ownership interest in Yes to a controlling stake, which was partially offset by a reduction in depreciation expenses at Pelephone.

 

Depreciation and amortization expenses of the Bezeq Group in the fourth quarter of 2016 were NIS 408 million ($106 million), compared to NIS 459 million in the corresponding quarter of 2015, a decrease of 11.1%. The decrease was due to a reduction in depreciation and amortization expenses in all group segments.

 

Operating profit of the Bezeq Group in 2016 totaled NIS 2.32 billion ($604 million) compared to NIS 2.57 billion in 2015, a decrease of 9.7%. Operating profit of the Bezeq Group in the fourth quarter of 2016 was NIS 532 million ($138 million) compared to NIS 488 million in the corresponding quarter of 2015, an increase of 9.0%.

 

Financing expenses, net of the Bezeq Group in 2016 totaled NIS 447 million ($116 million), compared to NIS 263 million in 2015, an increase of 70.0%. Financing expenses, net of the Bezeq Group in the fourth quarter of 2016 amounted to NIS 136 million ($35 million) compared to financing income of NIS 3 million in the corresponding quarter of 2015. The increase was primarily due to the cancellation of a provision in 2015 for accumulated interest on taxes owed for prior years relating to financing income from Yes pursuant to an agreement with the Israeli Tax Authorities, as well as an increase in the provision for contingent consideration to Eurocom in the fourth quarter of 2016 in connection with the acquisition of Eurocom’s stake in Yes.

 

Tax expenses of the Bezeq Group in 2016 totaled NIS 625 million ($163 million) compared to NIS 598 million in 2015, an increase of 4.5%. The increase in tax expenses was due to a decrease in deferred tax asset resulting from a reduction in corporate tax rates in the amount of NIS 143 million ($37 million), partially offset by a decrease in tax expenses at Bezeq Fixed-Line.

 

Tax expenses of the Bezeq Group in the fourth quarter of 2016 were NIS 210 million ($55 million) compared to NIS 119 million in the corresponding quarter of 2015, an increase of 76.5%. The increase in tax expenses was due to the aforementioned recognition of the one-time deferred tax expense resulting from the reduction in corporate tax rates.

 

Net profit of the Bezeq Group in 2016 totaled NIS 1.24 billion ($324 million) compared to NIS 1.72 billion in 2015, a decrease of 27.7%.

 

Net profit of the Bezeq Group in the fourth quarter of 2016 was NIS 185 million ($48 million) compared to NIS 369 million in the corresponding quarter of 2015, a decrease of 49.9%.

 

EBITDA of the Bezeq Group in 2016 totaled NIS 4.06 billion ($1.06 billion) (EBITDA margin of 40.3%) compared to NIS 4.25 billion (EBITDA margin of 42.6%) in 2015, a decrease of 4.6%.

 

EBITDA of the Bezeq Group in the fourth quarter of 2016 was NIS 940 million ($244 million) (EBITDA margin of 37.5%) compared to NIS 947 million (EBITDA margin of 36.3%) in the corresponding quarter of 2015, a decrease of 0.7%.

 

Cash flow from operating activities of the Bezeq Group in 2016 totaled NIS 3.53 billion ($917 million) compared to NIS 3.74 billion in 2015, a decrease of 5.7%. The decrease was primarily due to changes in working capital partially offset by the consolidation of yes beginning in the second quarter of 2015.

 

Cash flow from operating activities of the Bezeq Group in the fourth quarter of 2016 was NIS 832 million ($216 million) compared to NIS 889 million in the corresponding quarter of 2015, a decrease of 6.4%.

 

Payments for investments (Capex) of the Bezeq Group in 2016 totaled NIS 1.42 billion ($368 million) compared to NIS 1.64 billion in 2015, a decrease of 13.4%. The decrease was due to a reduction in investments in all Bezeq Group segments and specifically at Pelephone, mainly due to payments made in 2015 for LTE 4G frequencies.

 

Capex of the Bezeq Group in the fourth quarter of 2016 was NIS 335 million ($87 million) compared to NIS 329 million in the corresponding quarter of 2015, an increase of 1.8%.

 

Free cash flow of the Bezeq Group in 2016 totaled NIS 2.25 billion ($585 million) compared to NIS 2.26 billion in 2015, a decrease of 0.4%.

 

Free cash flow of the Bezeq Group in the fourth quarter of 2016 was NIS 513 million ($133 million) compared to NIS 592 million in the corresponding quarter of 2015, a decrease of 13.3%.

 

Total debt of the Bezeq Group as of December 31, 2016 was NIS 11.0 billion ($2.8 billion) compared to NIS 10.7 billion as of December 31, 2015.

 

Net debt of the Bezeq Group was NIS 9.72 billion ($2.53 billion) as of December 31, 2016 compared to NIS 9.40 billion as of December 31, 2015.

 

Net debt to EBITDA (trailing twelve months) ratio of the Bezeq Group as of December 31, 2016, was 2.39, compared to 2.21 as of December 31, 2015.

 

Notes:

 

Convenience translation to U.s Dollars

 

Unless noted specifically otherwise, the dollar denominated figures were converted to US$ using a convenience translation based on the New Israeli Shekel (NIS)/US$ exchange rate of NIS 3.845 = US$ 1 as published by the Bank of Israel for December 31, 2016.

 

Use of non-IFRS financial measures

 

We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. The following non-IFRS measures are provided in the press release and accompanying supplemental information because management believes these measurements provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance and are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

 

  • EBITDA – defined as net profit plus net interest expense, provision for income taxes, depreciation and amortization;
  • EBITDA trailing twelve months – defined as net profit plus net interest expense, provision for income taxes, depreciation and amortization during last twelve months;
  • Net debt – defined as long and short term liabilities minus cash and cash equivalents and short term investments; and
  • Net debt to EBITDA ratio – defined as net debt divided by the trailing twelve months EBITDA.
  • Free Cash Flow (FCF) – defined as cash from operating activities less cash used for the purchase/sale of property, plant and equipment, and intangible assets, net;

These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.

The Bezeq Group defines EBITDA as net profit before financial income (expenses), net, impairment and other charges, expenses recorded for stock compensation in accordance with IFRS 2, income tax expenses and depreciation and amortization. We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense).

 

EBITDA should not be considered in isolation or as a substitute for net profit or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

Management of Bezeq believes that free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net.

 

Bezeq also uses net debt and the net debt to EBITDA trailing twelve months ratio to analyze its financial capacity for further leverage and in analyzing the company’s business and financial condition. Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

 

Reconciliations between the Bezeq Group’s results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company’s consolidated results. The non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS.

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Financial Position as at December 31,

 

(In millions)

 

    2015 2016 2016
    NIS NIS US$

 

Current assets        
Cash and cash equivalents   619 810 211
Restricted cash   155
Investments   1,774 1,240 323
Trade receivables, net   2,058 2,000 520
Other receivables   286 221 57
Inventory   115 106 28
         
Total current assets   5,007 4,377 1,139
         
Non-current assets        
Trade and other receivables   674 644 167
Property, plant and equipment   7,197 7,070 1,839
Intangible assets   7,118 6,509 1,693
Deferred expenses and investments   643 447 116
Broadcasting rights   456 432 112
Investment in equity-accounted investee   25 18 5
Deferred tax assets   1,290 1,007 262
         
Total non-current assets   17,403 16,127 4,194
         
Total assets   22,410 20,504 5,333
         

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Financial Position as at December 31, (cont’d)

 

(In millions)

 

    2015 2016 2016
    NIS NIS US$

 

Current liabilities        
Bank loans and credit and debentures   2,219 2,181 568
Trade and other payables   1,717 1,662 432
Related party   233 32 8
Current tax liabilities   705 134 35
Provisions   100 80 21
Employee benefits   378 315 82
Total current liabilities   5,352 4,404 1,146
         
Non-current liabilities        
Bank loans and debentures   13,215 12,241 3,184
Employee benefits   240 258 67
Other liabilities   227 244 63
Provisions   46 47 12
Deferred tax liabilities   729 587 153
Total non-current liabilities   14,457 13,377 3,479
         
Total liabilities   19,809 17,781 4,625
         
Equity        
Attributable to shareholders   (93) 193 50
Non-controlling interests   2,694 2,530 658
         
Total equity   2,601 2,723 708
         
Total liabilities and equity   22,410 20,504 5,333

 


        

Internet Gold – Golden Lines Ltd.

 

Consolidated Statements of Income for the Year Ended December 31,

 

(In millions, except per share data)

 

  2015 2016 2016
  NIS NIS US$

 

 

Revenues 9,985 10,084 2,623
       
Costs and expenses      
Depreciation and amortization 2,131 2,183 568
Salaries 1,960 2,012 523
General and operating expenses 3,878 4,026 1,047
Other operating expense, net 3 20 5
       
  7,972 8,241 2,143
       
Operating profit 2,013 1,843 480
       
Financing expenses, net 595 979 255
       
Profit after financing expenses, net 1,418 864 225
       
Share of loss (income) in equity-accounted investee (12) 5 1
       
Profit before income tax 1,430 859 224
       
Income tax 347 433 113
       
Net profit for the year 1,083 426 111
       
Profit (loss) attributable to:      
Owners of the company 87 (202) (53)
Non-controlling interests 996 628 164
       
Net profit for the year 1,083 426 111
       
Earnings (loss) per share      
Basic 3.97 (10.54) (2.74)
Diluted 3.90 (10.54) (2.74)

 

 

 

 

 

 

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

EBITDA

 

The following is a reconciliation of the Bezeq Group’s net profit to EBITDA:

 

(In millions) Three months ended December 31, Year ended December 31,
  2015 2016 2016 2015 2016 2016
  NIS NIS US$ NIS NIS US$
             
Net profit 369 185 48 1,721 1,244 324
Income tax 119 210 55 598 625 163
Share of loss (income) in equity-accounted investee 3 1 (12) 5 1
Financing expenses, net (3) 136 35 263 447 116
Depreciation and amortization 459 408 106 1,684 1,739 452
             
EBITDA 947 940 244 4,254 4,060 1,056

 

 

Net Debt

 

The following table shows the calculation of the Bezeq Group’s net debt:

 

(In millions) As at December 31,
  2015 2016 2016
  NIS NIS US$
       
Short term bank loans and credit and debentures 1,913 1,825 475
Non-current bank loans and debentures 8,800 9,128 2,374
Cash and cash equivalents (555) (648) (169)
Investments (762) (586) (152)
       
Net debt 9,396 9,719 2,528
       

 

 

Net Debt to Trailing Twelve Months EBITDA Ratio

 

The following table shows the calculation of the Bezeq Group’s net debt to EBITDA trailing twelve months ratio:

 

(In millions) As at December 31,
  2015 2016 2016
  NIS NIS US$
       
Net debt 9,396 9,719 2,528
       
Trailing twelve months EBITDA 4,254 4,060 1,056
       
Net debt to EBITDA ratio 2.21 2.39 2.39

 

 

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

 

Free Cash Flow

 

The following table shows the calculation of the Bezeq Group’s free cash flow:

 

 

(In millions) Three months ended December 31, Year ended December 31,
  2015 2016 2016 2015 2016 2016
  NIS NIS US$ NIS NIS US$
             
Cash flow from operating activities 889 832 216 3,740 3,526 917
Purchase of property, plant and equipment (286) (292) (76) (1,324) (1,193) (310)
Investment in intangible assets and deferred expenses (43) (43) (11) (311) (223) (58)
Proceeds from the sale of property, plant and equipment 32 16 4 151 138 36
             
Free cash flow 592 513 133 2,256 2,248 585
             

 

 

 

 


 

Designated Disclosure with Respect to the Company’s Projected Cash Flows

 

In connection with the issuance of the Series D Debentures in 2014, we undertook to comply with the “hybrid model disclosure requirements” as determined by the Israeli Securities Authority and as described in the prospectus governing our Series D Debentures.

 

This model provides that in the event certain financial “warning signs” exist, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Series D Debentures.

 

In examining the existence of warning signs as of December 31 2016, our board of directors noted that our consolidated financial statements (unaudited) as well as our separate internal (unpublished) unaudited financial information as of and for the quarter ended December 31, 2016 reflect that we had a continuing negative cash flow from operating activities of NIS 1 million for the fourth quarter of 2016.

 

The Israeli regulations provide that the existence of a continuing negative cash flow from operating activities could be deemed to be a “warning sign” unless our board of directors determines that the possible “warning sign” does not reflect a liquidity problem.

 

Such continuing negative cash flow from operating activities results from the general operating expenses of the Company of NIS 1 million for the fourth quarter of 2016 and due to the fact that the Company, as a holding company, does not have any cash inflows from operating activities. Our main source of cash inflows is generated from dividends (classified as cash flow from investing activities) or debt issuances (classified as cash flow from financing activities). We did not have any such inflows in the fourth quarter.

 

Such continuing negative cash flow from operating activities does not effect our liquidity in any manner. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of the continuing negative cash flow from operating activities, as mentioned above, does not reflect a liquidity problem.

 

 

 

Midroog Ltd. affirmed the A3.il Local Rating for Internet Gold’s Series C and D Debentures with a Stable Outlook

Tuesday, February 7th, 2017

Midroog Ltd. affirmed the A3.il Local Rating for Internet Gold’s Series C and D Debentures with a Stable Outlook

 

Ramat Gan, Israel – February 7, 2017 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Market and TASE: IGLD) today announced that Midroog Ltd., an Israeli rating company affiliated with Moody’s (“Midroog”), has affirmed an A3.il local rating of its Series C and D Debentures with a stable outlook.

 

Commenting on the news, Mr. Doron Turgeman, the Company’s CEO stated, “We are pleased with Midroog’s announcement. Our debt structure has significantly improved as indicated in the rating report, which speaks for itself. In the quarters ahead, we intend to continue our efforts to strengthen our financial stability and liquidity in order to improve our debt and equity positions.”

 

The following is a summary of primary considerations for the rating, as indicated by Midroog:

 

1. The Company’s rating is supported by its indirect control of Bezeq The Israel Telecommunication Corp. Ltd. (“Bezeq,” Aa2.il, stable outlook), which has a strong business and financial profile that also supports good dividend visibility on a significant scope. Bezeq’s rating serves as the starting point for rating the obligations of Internet Gold, which relies on the flow of dividends from B Communications Ltd. (“BCOM”), Bezeq’s parent company, for servicing its obligations. The gap between Internet Gold’s rating and Bezeq’s rating reflects the additional credit risk arising from the subordination of Internet Gold’s debt to both Bezeq’s and BCOM’s debt, as well as from Internet Gold’s dependency on dividends from BCOM.

 

2. Midroog estimates that the liquidity balances of Internet Gold, together with the expected dividends from BCOM, will support the Company’s debt service capacity during 2017-2018. Midroog’s base scenario for Internet Gold during 2017-2018 includes liquidity balances of NIS 376 million as of September 30, 2016 and expectations for cumulative dividends from BCOM of NIS 130 million, reflecting dividend distributions of NIS 200 million by BCOM to its shareholders.

 

3. During the years 2017-2018, Internet Gold expects to pay cumulative interest payments of NIS 86 million as well as cumulative principal payments of NIS 311 million. Midroog does not anticipate any distribution of dividends from Internet Gold to its shareholders. Thus, the debt service coverage ratio (DSCR), which relies mainly on the liquidity balances of the Company’s, is expected to be in the range of 1.4 and 2.5, respectively, in the years 2017-2018. Midroog also estimates that the Company will need to refinance its debt already during 2018 in order to service its debt from 2019 and onwards.

 

4. The Company’s financial leverage is commensurate with the rating and supports financial flexibility and refinancing capability. Financial flexibility is also supported by appropriate interest service coverage ratios that are expected to range between 1.3 and 1.5, respectively, in the years 2017-2018, as well as by the fact that all of the Company’s shares in B Communications are unpledged. On the other hand, the level of leverage is relatively volatile.

 

5. Midroog also stated that Internet Gold has a relatively good liquidity profile that supports the debt service capacity in the short term; however, the potential for full realization of the liquidity balances is relatively limited in its estimation in view of the bond series having different durations.

 

The above description of Midroog’s report is only a short summary of the main points and it should not be relied upon as a complete description of the full report. The full and report can be viewed at

http://maya.tase.co.il.

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

For further information, please contact:

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

Investor relations contacts:

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

 

Internet Gold Reports its Financial Results for the Third Quarter of 2016

Wednesday, November 23rd, 2016

Internet Gold Reports its Financial Results for the Third Quarter of 2016

 

– B Communications Improves its Debt Structure –

 

Ramat Gan, Israel – November 23, 2016 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market and TASE: IGLD) today reported its financial results for the third quarter ended September 30, 2016. Internet Gold holds the controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ).

 

Cash and Debt Position: As of September 30, 2016, Internet Gold’s unconsolidated liquidity balance (comprised of cash and cash equivalents and short term investments) totaled NIS 377 million ($100 million), its unconsolidated total debt was NIS 936 million ($249 million) and its unconsolidated net debt was NIS 559 million ($149 million).

 

Internet Gold’s Unconsolidated Balance Sheet Data (1)

 

(In millions)   Convenience    
    translation into    
    U.S. dollars    
    (Note A)    
  September 30, September 30, September 30, December 31,
  2016 2016 2015 2015
  NIS US$ NIS NIS
Short term liabilities 139 37 202 153
Long term liabilities 797 212 930 926
Total debt 936 249 1,132 1,079
Liquidity balance 377 100 316 277
Net debt 559 149 816 802
         

 

(1)   Does not include the consolidated balance sheet of B Communications and its subsidiaries.

 

Internet Gold’s Unconsolidated Sources and Uses

 

(In millions)   Convenience
    translation into
    U.S. dollars
    (Note A)
  NIS US$
     
Net debt as of December 31, 2015 802 214
     
Dividends received from B Communications (230) (61)
Proceeds from the sale of B Communications shares (56) (15)
Financial expenses, net 39 10
Operating expenses 4 1
     
Net debt as of September 30, 2016 559 149

 

 

B Communications’ Refinancing: On September 18, 2016, the Company’s subsidiary, B Communications, announced the completion of its successful issuance of approximately NIS 1.9 billion of Series C Debentures. The principal of the Series C Debentures, which is unlinked, will be payable in four equal annual installments payable on November 30 of each of the years 2020 through 2023 and one installment payable on November 30, 2024. Each of the first four installments will be equal to 7.5% of the principal amount of the aggregate amount of the Series C Debentures issued and the last installment will equal to 70% of such principal amount. The annual coupon of the Series C Debentures was set on 3.6% and will be denominated in NIS. The net proceeds from the offering were used to fully redeem B Communications’ outstanding $717 million       of 73/8% senior secured notes (the “Notes”). In addition, B Communications’ terminated the cross currency swap hedge transactions it entered into to hedge its exposure to fluctuations in the US$ exchange rate as a result of the Notes issuance.

 

Internet Gold’s Cash Management: Internet Gold manages its cash balances according to an investment policy that was approved by its board of directors. The investment policy seeks to preserve principal and maintain adequate liquidity while maximizing the income received from investments without significantly increasing the risk of loss. According to Internet Gold’s investment policy more than 80% of its funds must be invested in investment-grade securities. As of today, 83% of its funds are invested in investment-grade securities.

 

Internet Gold’s Third Quarter Consolidated Financial Results:

 

Internet Gold’s consolidated revenues for the third quarter of 2016 totaled NIS 2.5 billion ($668 million), a 3.5% decrease compared to the NIS 2.6 billion reported in the third quarter of 2015. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

 

Internet Gold’s consolidated operating income for the third quarter of 2016 totaled NIS 487 million ($130 million), a 7.2% decrease compared to NIS 525 million reported in the third quarter of 2015.

 

Internet Gold’s consolidated loss for the third quarter of 2016 totaled NIS 41 million ($11 million) compared with net income of NIS 236 million reported in the third quarter of 2015. The decrease resulted from B Communications’ loss in the third quarter of 2016, which included a one-time refinancing and associated expenses of NIS 270 million.

 

Internet Gold’s Third Quarter Unconsolidated Financial Results:

 

As of September 30, 2016 Internet Gold held approximately 65% of the outstanding shares of B Communications. Internet Gold’s interest in B Communications’ loss for the third quarter of 2016 totaled NIS 166 million ($44 million), compared with its share in B Communications’ net income of NIS 25 million in the third quarter of 2015. B Communications’ loss in the third quarter of 2016 included one-time refinancing and associated expenses of NIS 270 million.

 

Internet Gold’s unconsolidated net financial expenses for the third quarter of 2016 totaled NIS 13 million ($4 million) compared with NIS 22 million in the third quarter of 2015. These expenses consist mainly of interest and CPI linkage expenses related to its publicly-traded debentures.

 

Internet Gold’s loss attributable to shareholders for the third quarter of 2016 totaled NIS 180 million ($48 million) compared with net income attributable to shareholders of NIS 2 million in the third quarter of 2015.

 

In millions   Convenience    
    translation    
    into    
    U.S. dollars    
    (Note A)    
  Three-month Three-month Three-month  
  period ended period ended period ended Year ended
  September 30, September 30, September 30, December 31,
  2016 2016 2015 2015
  NIS US$ NIS NIS
Revenues
Financial expenses, net (13) (4) (22) (60)
Income tax benefit 11
Operating expenses (1) (1) (4)
Interest in BCOM’s net income (loss) (166) (44) 25 140
Net income (loss) (180) (48) 2 87

 

Commenting on the results, Doron Turgeman, CEO of Internet Gold said, “We expect that the successful refinance of B Communications’ debt will decrease its annual financial expenses and increase its net profit by approximately NIS 150 million starting in 2017. The new debt structure of B Communications will significantly improve our long term position and will help us to continue to create value for our shareholders in the quarters ahead,” concluded Mr. Turgeman.

 

Bezeq Group Results (Consolidated)

 

To provide further insight into its results, the Company is providing the following summary of the consolidated financial report of the Bezeq Group for the quarter ended September 30, 2016. For a full discussion of Bezeq’s results for the quarter ended September 30, 2016, please refer to its website: http://ir.bezeq.co.il.

 

 

Revenues of the Bezeq Group in the third quarter of 2016 were NIS 2.51 billion ($668 million) compared to NIS 2.60 billion in the corresponding quarter of 2015, a decrease of 3.5%. The decrease was due to lower revenues in all of the Bezeq Group’s segments (primarily at Pelephone).

 

Salary expenses of the Bezeq Group in the third quarter of 2016 were NIS 501 million ($133 million) compared to NIS 506 million in the corresponding quarter of 2015, a decrease of 1.0%.

 

Operating expenses of the Bezeq Group in the third quarter of 2016 were NIS 994 million ($265 million) compared to NIS 1.00 billion in the corresponding quarter of 2015, a decrease of 0.6%.  The decrease was primarily due to a reduction in interconnect fees and payments to telecom operators, terminal equipment and building maintenance expenses partially offset by an increase in content services, services by sub-contractors and marketing expenses.

 

Other operating income of the Bezeq Group in the third quarter of 2016 amounted to NIS 26 million ($7 million) compared to NIS 13 million in the corresponding quarter of 2015. The increase in other operating income was due to an increase in capital gains from the sale of fixed assets.

 

Operating income of the Bezeq Group in the third quarter of 2016 was NIS 599 million ($159 million) compared to NIS 652 million in the corresponding quarter of 2015, a decrease of 8.1%.

 

Tax expenses of the Bezeq Group in the third quarter of 2016 were NIS 99 million ($26 million) compared to NIS 144 million in the corresponding quarter of 2015, a decrease of 31.3%. The decrease in tax expenses was primarily due to a reduction in profit before tax as well as a decrease in the corporate tax rate from 26.5% to 25% beginning January 1, 2016, as well as a decrease in tax expenses in respect of prior years at Bezeq Fixed-Line.

 

Net income of the Bezeq Group in the third quarter of 2016 was NIS 394 million ($105 million) compared to NIS 407 million in the corresponding quarter of 2015, a decrease of 3.2%.

 

EBITDA of the Bezeq Group in the third quarter of 2016 was NIS 1.04 billion ($277 million) (EBITDA margin of 41.5%) compared to NIS 1.11 billion (EBITDA margin of 42.6%) in the corresponding quarter of 2015, a decrease of 6.1%.

 

The trailing twelve months EBITDA of the Bezeq Group as of September 30, 2016 was NIS 4.1 billion ($1.1 billion) compared to NIS 4.3 billion as of September 30, 2015, a decrease of 4.6%.

 

Payments for investments (Capex) of the Bezeq Group in the third quarter of 2016 were NIS 349 million ($93 million) compared to NIS 427 million in the corresponding quarter of 2015, a decrease of 18.3%.

 

Cash flow from operating activities of the Bezeq Group in the third quarter of 2016 was NIS 902 million ($240 million) compared to NIS 1.05 billion in the corresponding quarter of 2015, a decrease of 14.1%. The decrease was primarily due to increased payments for the retirement of employees at Bezeq Fixed-Line as well as changes in working capital.

 

Free cash flow of the Bezeq Group in the third quarter of 2016 was NIS 577 million ($154 million) compared to NIS 645 million in the corresponding quarter of 2015, a decrease of 10.5%.

 

Total debt of the Bezeq Group as of September 30, 2016 was NIS 11.2 billion ($3 billion) compared to NIS 11.1 billion as of September 30, 2015.

 

Net debt of the Bezeq Group was NIS 9.40 billion ($2.5 billion) as of September 30, 2016 compared to NIS 8.92 billion as of September 30, 2015.

 

Net debt to EBITDA (trailing twelve months) ratio of the Bezeq Group as of September 30, 2016 was 2.31 compared to 2.09 as of September 30, 2015.

 

Notes:

 

  1. Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures as of September 30, 2016 have been presented in millions of U.S. dollars, translated at the representative rate of exchange as of September 30, 2016 (NIS 3.758 = U.S. $1.00). The U.S. dollar ($) amounts presented should not be construed as representing amounts receivable or payable in U.S. dollars or convertible into U.S. dollars, unless otherwise indicated.

 

  1. Use of non-IFRS Measurements: We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. The following non-IFRS measures are provided in the press release and accompanying supplemental information because management believes these measurements provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance and are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

 

  • EBITDA – defined as net income plus net interest expense, provision for income taxes, depreciation and amortization;
  • EBITDA trailing twelve months – defined as net income plus net interest expense, provision for income taxes, depreciation and amortization during last twelve months;
  • Free Cash Flow (FCF) – defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net;
  • Net debt – defined as long and short term liabilities minus cash and cash equivalents and short term investments; and
  • Net debt to EBITDA ratio – defined as net debt divided by the trailing twelve months EBITDA.

These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies. The Bezeq Group defines EBITDA as net income before financial income (expenses), net, impairment and other charges, expenses recorded for stock compensation in accordance with IFRS 2, income tax expenses and depreciation and amortization. We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense).

 

EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

 

Management of Bezeq believes that free cash flow is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations. Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net.

 

Bezeq also uses net debt and the net debt to EBITDA trailing twelve months ratio to analyze its financial capacity for further leverage and in analyzing the company’s business and financial condition. Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

 

Reconciliations between the Bezeq Group’s results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company’s consolidated results. The non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS.

About Internet Gold

 

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

www.eurocom.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

      Convenience    
      translation into    
      U.S. dollars    
      (Note A)    
    September 30, September 30, September 30, December 31,
    2016 2016 2015 2015
    NIS US$ NIS NIS

 

Assets          
Cash and cash equivalents   1,012 269 1,071 619
Restricted cash   8 155
Investments   1,483 395 2,281 1,774
Trade receivables, net   1,998 532 2,203 2,058
Other receivables   228 61 242 286
Inventory   96 25 90 115
           
Total current assets   4,817 1,282 5,895 5,007
           
Long-term trade and other receivables   641 171 643 674
Property, plant and equipment   7,042 1,874 7,302 7,197
Intangible assets   6,724 1,789 *7,258 7,118
Deferred expenses and investments   463 123 671 643
Broadcasting rights   450 120 458 25
Investment in equity-accounted investee   20 5 27 456
Deferred tax assets   1,103 293 *1,200 1,290
           
Total non-current assets   16,443 4,375 17,559 17,403
           
Total assets   21,260 5,657 23,454 22,410

 

 

* Reclassified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

      Convenience    
      translation into    
      U.S. dollars    
      (Note A)    
    September 30, September 30, September 30, December 31,
    2016 2016 2015 2015
    NIS US$ NIS NIS

 

Liabilities          
Bank loans and credit and debentures   2,491 663 2,325  2,219
Trade and other payables   1,611 429 1,915  1,717
Related party   6 2 *217 233
Dividend payable   490 130 647
Current tax liabilities   223 59 801 705
Provisions   87 23 87 100
Employee benefits   280 74 268 378
Total current liabilities   5,188 1,380 6,260 5,352
           
Bank loans and debentures   12,226 3,254 13,604  13,215
Employee benefits   237 63 259 240
Other liabilities   257 68 212  227
Provisions   47 12 70  46
Deferred tax liabilities   645 172 761  729
Total non-current liabilities   13,412 3,569 14,906 14,457
           
Total liabilities   18,600 4,949 21,166 19,809
           
Equity          
Total equity attributable to equity          
holders of the Company   198 53 (165) (93)
Non-controlling interests   2,462 655 2,453 2,694
           
Total equity   2,660 708 2,288 2,601
           
Total liabilities and equity   21,260 5,657 23,454 22,410

 

 

* Reclassified

 


 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Income as at

 

(In million except per share data)

 

      Year ended
  Nine months period ended September 30, Three months period ended September 30, December 31,
    Convenience     Convenience    
    translation     translation    
    into     into    
    U.S. dollars     U.S. dollars    
    (Note A)     (Note A)    
  2016 2016 2015 2016 2016 2015 2015
  NIS US$ NIS NIS US$ NIS NIS

 

Revenues 7,580 2,017 7,379 2,510 668 2,602 9,985
               
Cost and expenses              
Depreciation and amortization 1,622 432 1,588 539 144 577  2,131
Salaries 1,509 401 1,445 501 133 507  1,960
General and operating expenses 2,995 797 2,808 997 265 1,003  3,878
Other operating loss (income), net (21) (6) (103) (14) (4) (10)  3
               
  6,105 1,624 5,738 2,023 538 2,077 7,972
               
Operating income 1,475 393 1,641 487 130 525 2,013
               
Financing expenses, net 816 218 511 455 121 176 595
               
Income after financing              
 expenses, net 659 175 1,130 32 9 349 1,418
               
Share of income (loss) in              
 equity-accounted investee (4) (1) 15 (2) (1) (1) 12
               
Income before income tax 655 174 1,145 30 8 348 1,430
               
Income tax 301 80 368 71 (19) 112 347
               
Net income (loss) for the period 354 94 777 (41) (11) 236 1,083
               
Income (loss) attributable to:              
Owners of the company (198) (53) 17 (180) (48) 2 87
Non-controlling interests 552 147 760 139 37 234 996
               
Net income (loss) for the period 354 94 777 (41) (11) 236 1,083
               
Earnings per share              
               
Net income (loss), basic (10.37) (2.76) 0.90 (9.43) (2.51) 0.09 3.97
               
Net income (loss), diluted (10.37) (2.76) 0.84 (9.43) (2.51) 0.07 3.90

 

 

 

 

 

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

EBITDA

 

The following is a reconciliation of the Bezeq Group’s net income to EBITDA:

 

 

(In millions) Three months period ended September 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Net income 394 105 407
Income tax 99 26 144
Share of loss in equity-accounted investee 2 1 1
Financing expenses, net 104 28 100
Depreciation and amortization 442 117 457
       
EBITDA 1,041 277 1,109
       

 

 

The following is a reconciliation of the Bezeq Group’s net income to EBITDA trailing twelve months:

 

 

(In millions) Trailing twelve months ended September 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Net income 1,428 380 1,768
Income tax 534 142 641
Share of loss in equity-accounted investee 7 2 23
Financing expenses, net 308 82 283
Depreciation and amortization 1,790 476 1,546
       
EBITDA trailing twelve months 4,067 1,082 4,261
       

 

 

 

 


 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

Net Debt

 

The following table shows the calculation of the Bezeq Group’s Net Debt:

 

(In millions) As at September 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Short term bank loans and credit and debentures 2,135 568 1,952
Non-current bank loans and debentures 9,111 2,424 9,125
Total debt 11,246 2,992 11,077
       
Cash and cash equivalents (938) (250) (1,030)
Investments (908) (241) (1,126)
       
Net debt 9,400 2,501 8,921
       

 

 

Net Debt to EBITDA Trailing Twelve Months Ratio

 

The following table shows the calculation of the Bezeq Group’s net debt to EBITDA trailing twelve months ratio:

 

(In millions) As at September 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Short term bank loans and credit and debentures 2,135 568 1,952
Non-current bank loans and debentures 9,111 2,424 9,125
Total debt 11,246 2,992 11,077
       
Cash and cash equivalents and investments 1,846 491 2,156
       
Net debt 9,400 2,501 8,921
       
Trailing twelve months EBITDA 4,067 1,082 4,261
       
Net debt to EBITDA ratio 2.31 2.31 2.09

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

 

Free Cash Flow

 

The following table shows the calculation of the Bezeq Group’s free cash flow:

 

   
(In millions) Three months period ended September 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Cash flow from operating activities 902 240 1,050
Purchase of property, plant and equipment (290) (77) (373)
Investment in intangible assets and deferred expenses (59) (15) (54)
Proceeds from the sale of property, plant and equipment 24 6 22
       
Free cash flow 577 154 645

 

 

 

 

 

 

 


 

Designated Disclosure with Respect to the Company’s Projected Cash Flows

 

In connection with the issuance of the Series D Debentures in 2014, we undertook to comply with the “hybrid model disclosure requirements” as determined by the Israeli Securities Authority and as described in the prospectus governing our Series D Debentures.

 

This model provides that in the event certain financial “warning signs” exist, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Series D Debentures.

 

In examining the existence of warning signs as of September 30 2016, our board of directors noted that our consolidated financial statements (unaudited) as well as our separate internal (unpublished) unaudited financial information as of and for the quarter ended September 30, 2016 reflect that we had a continuing negative cash flow from operating activities of NIS 1 million for the third quarter of 2016.

 

The Israeli regulations provide that the existence of a continuing negative cash flow from operating activities could be deemed to be a “warning sign” unless our board of directors determines that the possible “warning sign” does not reflect a liquidity problem.

 

Such continuing negative cash flow from operating activities results from the general operating expenses of the Company of NIS 1 million for the third quarter of 2016 and due to the fact that the Company, as a holding Company, does not have any cash inflows from operating activities. Our main source of cash inflows is generated from dividends (classified as cash flow from investing activities) or debt issuances (classified as cash flow from financing activities).

 

Such continuing negative cash flow from operating activities does not effect our liquidity in any manner. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of the continuing negative cash flow from operating activities, as mentioned above, does not reflect a liquidity problem.

Internet Gold Reports its Financial Results for the Second Quarter of 2016

Thursday, August 4th, 2016

Internet Gold Reports its Financial Results for the Second Quarter of 2016

 

– NIS 230 Million Dividend Received from B Communications –

 

Ramat Gan, Israel – August 4, 2016 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market and TASE: IGLD) today reported its financial results for the second quarter ended June 30, 2016. Internet Gold holds the controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ).

 

Dividend from B Communications: On May 25, 2016, B Communications’ board of directors declared a cash dividend of NIS 355 million ($92 million), or NIS 11.88 ($3.09) per share. Internet Gold received its distributive share of approximately NIS 230 million ($60 million) on June 29, 2016.

 

Cash and Debt Position: As of June 30, 2016, Internet Gold’s unconsolidated liquidity balance (comprised of cash and cash equivalents and short term investments) totaled NIS 401 million ($104 million), its unconsolidated total debt was NIS 946 million ($246 million) and its unconsolidated net debt was NIS 545 million ($142 million).

 

Internet Gold’s Unconsolidated Balance Sheet Data (1)

 

(In millions)   Convenience    
    translation into    
    U.S. dollars    
    (Note A)    
  June 30, June 30, June 30, December 31,
  2016 2016 2015 2015
  NIS US$ NIS NIS
Short term liabilities 151 39 215 153
Long term liabilities 795 207 927 926
Total debt 946 246 1,142 1,079
Liquidity balance 401 104 335 277
Net debt 545 142 807 802
         

 

(1)   Does not include the consolidated balance sheet of B Communications and its subsidiaries.

 

 

Internet Gold Unconsolidated Sources and Uses

 

(In millions)   Convenience
    translation into
    U.S. dollars
    (Note A)
  NIS US$
     
Net debt as of December 31, 2015 802 209
     
Dividends received from B Communications (230) (60)
Proceeds from the sale of B Communications shares (56) (15)
Financial expenses, net 26 7
Operating expenses 3 1
     
Net debt as of June 30, 2016 545 142

 

Internet Gold’s Cash Management: Internet Gold manages its cash balances according to an investment policy that was approved by its board of directors. The investment policy seeks to preserve principal and maintain adequate liquidity while maximizing the income received from investments without significantly increasing the risk of loss. According to Internet Gold’s investment policy more than 80% of its funds must be invested in investment-grade securities. As of today, 87% of the funds are invested in investment-grade securities.

 

Internet Gold’s Second Quarter Consolidated Financial Results:

 

Internet Gold’s consolidated revenues for the second quarter of 2016 totaled NIS 2.5 billion ($653 million), a 3.5% decrease compared to the NIS 2.6 billion reported in the second quarter of 2015. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

 

Internet Gold’s consolidated operating income for the second quarter of 2016 totaled NIS 516 million ($134 million), a 15.5% decrease compared to NIS 611 million reported in the second quarter of 2015.

 

Internet Gold’s consolidated net income for the second quarter of 2016 totaled NIS 252 million ($66 million), a 5.4% increase compared with NIS 239 million reported in the second quarter of 2015.

 

Internet Gold’s Second Quarter Unconsolidated Financial Results:

 

As of June 30, 2016 Internet Gold held approximately 65% of the outstanding shares of B Communications. Internet Gold’s interest in B Communications’ net income for the second quarter of 2016 totaled NIS 26 million ($7 million), compared with its share in B Communications’ net income of NIS 14 million in the second quarter of 2015.

 

Internet Gold’s unconsolidated net financial expenses for the second quarter of 2016 totaled NIS 11 million ($3 million) compared with NIS 26 million in the second quarter of 2015. These expenses consist of interest and CPI linkage expenses related to its publicly-traded debentures.

 

Internet Gold’s net income attributable to shareholders for the second quarter of 2016 totaled NIS 14 million ($4 million) compared with a loss attributable to shareholders of NIS 13 million in the second quarter of 2015.

 

In millions   Convenience    
    translation    
    into    
    U.S. dollars    
    (Note A)    
  Three-month Three-month Three-month  
  period ended period ended period ended Year ended
  June 30, June 30, June 30, December 31,
  2016 2016 2015 2015
  NIS US$ NIS NIS
Revenues
Financial expenses, net (11) (3) (26) (60)
Income tax benefit 11
Operating expenses (1) (1) (4)
Interest in BCOM’s net income 26 7 14 140
Net income (loss) 14 4 (13) 87

 

Commenting on the results, Doron Turgeman, CEO of Internet Gold said, “The NIS 230 million dividend which we received from B Communications on June 29, 2016 reduced our leverage level significantly with a LTV[1] ratio of 30% as of June 30, 2016. During the last 12 months we succeeded in reducing Internet Gold’s net debt by more than 32% from NIS 807 million to NIS 545 million. We are very pleased with our improved metrics and will continue to seek out additional ways to create value for our shareholders.”

 

Bezeq Group Results (Consolidated)

 

To provide further insight into its results, the Company is providing the following summary of the consolidated financial report of the Bezeq Group for the quarter ended June 30, 2016. For a full discussion of Bezeq’s results for the quarter ended June 30, 2016, please refer to its website: http://ir.bezeq.co.il.

 

Revenues of the Bezeq Group in the second quarter of 2016 were NIS 2.51 billion ($653 million) compared to NIS 2.60 billion in the corresponding quarter of 2015, a decrease of 3.5%. The decrease was due to lower revenues in all of the Bezeq Group’s segments (primarily at Pelephone).

 

Salary expenses of the Bezeq Group in the second quarter of 2016 were NIS 495 million ($128 million) compared to NIS 497 million in the corresponding quarter of 2015, a decrease of 0.4%.

 

Operating expenses of the Bezeq Group in the second quarter of 2016 were NIS 972 million ($253 million) compared to NIS 1.00 billion in the corresponding quarter of 2015, a decrease of 3.0%.  The decrease was primarily due to a reduction in interconnect payments to telecom operators and lower building maintenance expenses.

 

Other operating income of the Bezeq Group in the second quarter of 2016 amounted to NIS 12 million ($3 million), compared to NIS 141 million in the corresponding quarter of 2015. Other operating income was impacted by the recording of capital gains from the sale of fixed assets in the amount of NIS 148 million in the second quarter of 2015.

 

Operating income of the Bezeq Group in the second quarter of 2016 was NIS 616 million ($160 million) (operating margin of 24.5%) compared to NIS 794 million (operating margin of 30.5%) in the corresponding quarter of 2015, a decrease of 22.4%.

 

Tax expenses of the Bezeq Group in the second quarter of 2016 were NIS 133 million ($35 million) compared to NIS 183 million in the corresponding quarter of 2015, a decrease of 27.3%. The decrease in tax expenses was primarily due to a reduction in profit before tax as well as a             decrease in the corporate tax rate from 26.5% to 25% beginning on January 1, 2016.

 

Net income of the Bezeq Group in the second quarter of 2016 was NIS 377 million ($98 million) compared to NIS 482 million in the corresponding quarter of 2015, a decrease of 21.8%.

 

EBITDA of the Bezeq Group in the second quarter of 2016 was NIS 1.06 billion ($275 million) (EBITDA margin of 42.1%) compared to NIS 1.25 billion (EBITDA margin of 47.8%) in the corresponding quarter of 2015, a decrease of 15.2%.

 

Payments for investments (Capex) of the Bezeq Group in the second quarter of 2016 were NIS 387 million ($101 million) compared to NIS 511 million in the corresponding quarter of 2015, a decrease of 24.3%. The decrease was primarily due to the payment of NIS 96 million by Pelephone to the Ministry of Communication for LTE 4G frequencies in the second quarter of 2015.

 

Cash flow from operating activities of the Bezeq Group in the second quarter of 2016 was NIS 870 million ($226 million) compared to NIS 840 million in the corresponding quarter of 2015, an increase of 3.6%. The increase was primarily due to an increase in working capital.

 

Free cash flow of the Bezeq Group in the second quarter of 2016 was NIS 539 million ($140 million) compared to NIS 413 million in the corresponding quarter of 2015, an increase of 30.5%.

 

Total debt of the Bezeq Group was NIS 11.5 billion ($3 billion) as of June 30 2016 compared to NIS 11.4 billion as of June 30, 2015. Net debt of the Bezeq Group was NIS 9.25 billion ($2.41 billion) as of June 30, 2016 compared to NIS 9.54 billion as of June 30, 2015.

Notes:

 

  1. Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures as of June 30, 2016 have been presented in millions of U.S. dollars, translated at the representative rate of exchange as of June 30, 2016 (NIS 3.846 = U.S. $1.00). The U.S. dollar ($) amounts presented should not be construed as representing amounts receivable or payable in U.S. dollars or convertible into U.S. dollars, unless otherwise indicated.

 

  1. Use of non-IFRS Measurements: We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. We believe these non-IFRS financial measures provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance. These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.

 

In the press release and accompanying supplemental information, we use the following non-IFRS financial measures: EBITDA, LTV, net debt and free cash flow.

 

Management of the Company believes that free cash flow (defined as net cash flow from operating activities, less net capital expenditures) is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations.

 

The following non-IFRS measures are provided because management believes these measurements are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

 

  • EBITDA – defined as net income plus net interest expense, provision for income taxes, depreciation and amortization;
  • Free Cash Flow (FCF) – defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net;
  • Net debt – defined as long and short term liabilities minus cash and cash equivalents and short term investments; and
  • LTV (loan to value) – defined as the ratio of our unconsolidated net debt to market value of the Company’s holdings in B Communications as of the balance sheet date.

 

Reconciliations between the Bezeq Group’s results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company’s consolidated results. The non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS. 

 

About Internet Gold

Internet Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites:

 

www.igld.com

www.bcommunications.co.il

www.ir.bezeq.co.il

 

Forward-Looking Statements

 

This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications’ filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

For further information, please contact:

 

Idit Cohen – IR Manager

idit@igld.com / Tel: +972-3-924-0000

 

Investor relations contacts:

 

Hadas Friedman – Investor Relations

Hadas@km-ir.co.il/ Tel: +972-3-516-7620

 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

      Convenience    
      translation into    
      U.S. dollars    
      (Note A)    
    June 30, June 30, June 30, December 31,
    2016 2016 2015 2015
    NIS US$ NIS NIS

 

Assets          
Cash and cash equivalents   1,595 415 904 619
Restricted cash   658 171 29 155
Investments   1,747 454 2,192 1,774
Trade receivables, net   2,029 528 2,256 2,058
Other receivables   239 62 244 286
Inventory   109 28 96 115
           
Total current assets   6,377 1,658 5,721 5,007
           
Long-term trade and other receivables   647 168 656 674
Property, plant and equipment   7,120 1,851 7,345 7,197
Intangible assets   6,859 1,784 *7,419 7,118
Deferred expenses and investments   636 165 537 643
Broadcasting rights   455 118 471 25
Investment in equity-accounted investee   21 6 28 456
Deferred tax assets   1,099 286 *1,194 1,290
           
Total non-current assets   16,837 4,378 17,650 17,403
           
Total assets   23,214 6,036 23,371 22,410

 

* Reclassified

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Financial Position as at

 

(In millions)

 

      Convenience    
      translation into    
      U.S. dollars    
      (Note A)    
    June 30, June 30, June 30, December 31,
    2016 2016 2015 2015
    NIS US$ NIS NIS

 

Liabilities          
Bank loans and credit and debentures   2,314 602 2,301  2,219
Trade and other payables   1,627 423 1,839  1,717
Related party   208 54 *217 233
Current tax liabilities   698 182 777 705
Provisions   90 23 90 100
Employee benefits   370 96 272 378
Total current liabilities   5,307 1,380 5,496 5,352
           
Bank loans and debentures   13,511 3,513 13,817  13,215
Employee benefits   239 62 238 240
Other liabilities   252 66 208  227
Provisions   46 12 69  46
Deferred tax liabilities   667 173 805  729
Total non-current liabilities   14,715 3,826 15,137 14,457
           
Total liabilities   20,022 5,206 20,633 19,809
           
Equity          
Total equity attributable to equity          
holders of the Company   379 99 (159) (93)
Non-controlling interests   2,813 731 2,897 2,694
           
Total equity   3,192 830 2,738 2,601
           
Total liabilities and equity   23,214 6,036 23,371 22,410

 

* Reclassified

 


 

Internet Gold – Golden Lines Ltd.

 

Condensed Consolidated Statements of Income as at

 

(In million except per share data)

 

      Year ended
  Six months period ended June 30, Three months period ended June 30, December 31,
    Convenience     Convenience    
    translation     translation    
    into     into    
    U.S. dollars     U.S. dollars    
    (Note A)     (Note A)    
  2016 2016 2015 2016 2016 2015 2015
  NIS US$ NIS NIS US$ NIS NIS

 

Revenues 5,070 1,318 4,777 2,511 653 2,603 9,985
               
Cost and expenses              
Depreciation and amortization 1,083 281 1,011 538 140 572  2,131
Salaries 1,008 262 938 494 129 498  1,960
General and operating expenses 1,998 520 1,805 975 253 1,004  3,878
Other operating income (loss), net (7) (2) (93) (12) (3) (82)  3
               
  4,082 1,061 3,661 1,995 519 1,992 7,972
               
Operating income 988 257 1,116 516 134 611 2,013
               
Financing expenses, net 361 93 335 154 40 235 595
               
Income after financing              
 expenses, net 627 164 781 362 94 376 1,418
               
Share of income (loss) in              
 equity-accounted investee (2) (1) 16 (1) * 12
               
Income before income tax 625 163 797 361 94 376 1,430
               
Income tax 230 60 256 109 28 137 347
               
Net income for the period 395 103 541 252 66 239 1,083
               
Income (loss) attributable to:              
Owners of the company (18) (5) 15 14 4 (13) 87
Non-controlling interests 413 108 526 238 62 252 996
               
Net income for the period 395 103 541 252 66 239 1,083
               
Earnings per share              
               
Net income (loss), basic (0.93) (0.24) 0.82 0.72 0.19 (0.63) 3.97
               
Net income (loss), diluted (0.93) (0.24) 0.77 0.72 0.19 (0.65) 3.90

 

 

* Represents an amount less than US$1.

 

 

 

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

EBITDA

 

The following is a reconciliation of the Bezeq Group’s net income to EBITDA:

 

 

(In millions) Three months period ended June 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Net income 377 98 482
Income tax 133 35 183
Share of loss in equity-accounted investee 1
Financing expenses, net 105 27 129
Depreciation and amortization 440 115 451
       
EBITDA 1,056 275 1,245
       

 

 

The Bezeq Group defines EBITDA as net income before financial income (expenses), net, impairment and other charges, expenses recorded for stock compensation in accordance with IFRS 2, income tax expenses and depreciation and amortization. We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense). EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.

 

 

 

 

 


 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures

 

Free Cash Flow

 

The following table shows the calculation of the Bezeq Group’s free cash flow:

 

(In millions)  
  Three months period ended June 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Cash flow from operating activities 870 226 840
Purchase of property, plant and equipment (317) (82) (363)
Investment in intangible assets and deferred expenses (70) (18) (148)
Proceeds from the sale of property, plant and equipment 56 14 84
       
Free cash flow 539 140 413

 

Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net. The Company presents free cash flow as an additional index for assessing its business results and cash flows because the Company believes that free cash flow is an important liquidity index that reflects cash resulting from ongoing operations after cash investments in infrastructure and other fixed and intangible assets. 

Net Debt

 

The following table shows the calculation of the Bezeq Group’s Net Debt:

 

(In millions) As at June 30,
    Convenience  
    translation  
    into  
    U.S. dollars  
    (Note A)  
  2016 2016 2015
  NIS US$ NIS
       
Non-current bank loans and debentures 1,958 509 1,924
Short term bank loans and credit and debentures 9,546 2,482 9,444
Cash and cash equivalents (1,338) (348) (826)
Investments (912) (237) (999)
       
Net debt 9,254 2,406 9,543
       

 

Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

Designated Disclosure with Respect to the Company’s Projected Cash Flows

 

In connection with the issuance of the Series D Debentures in 2014, we undertook to comply with the “hybrid model disclosure requirements” as determined by the Israeli Securities Authority and as described in the prospectus governing our Series D Debentures.

 

This model provides that in the event certain financial “warning signs” exist, and for as long as they exist, we will be subject to certain disclosure obligations towards the holders of our Series D Debentures.

 

In examining the existence of warning signs as of June 30 2016, our board of directors noted that our consolidated financial statements (unaudited) as well as our separate internal (unpublished) unaudited financial information as of and for the quarter ended June 30, 2016 reflect that we had a continuing negative cash flow from operating activities of NIS 1 million for the second quarter of 2016.

 

The Israeli regulations provide that the existence of a continuing negative cash flow from operating activities could be deemed to be a “warning sign” unless our board of directors determines that the possible “warning sign” does not reflect a liquidity problem.

 

Such continuing negative cash flow from operating activities results from the general operating expenses of the Company of NIS 1 million for the second quarter of 2016 and due to the fact that the Company, as a holding Company, does not have any cash inflows from operating activities. Our main source of cash inflows is generated from dividends or debt issuances (both classified as cash flow from financing activities).

 

Such continuing negative cash flow from operating activities does not effect our liquidity in any manner. Our board of directors reviewed our financial position, outstanding debt obligations and our existing and anticipated cash resources and uses and determined that the existence of the continuing negative cash flow from operating activities, as mentioned above, does not reflect a liquidity problem.

 

 

[1] LTV (loan to value) ratio is calculated as Internet Gold’s unconsolidated net debt to market value of its holdings in B Communications as of June 30, 2016.