- Third Dividend during 2015 is expected
from B Communications on December 23, 2015 -
Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market
and TASE: IGLD) today reported its financial results for the
quarter ended September 30, 2015. Internet Gold’s 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).
Commenting on the results, Doron Turgeman, CEO of Internet Gold
said, “During the last few years, we have focused on improving our
debt structure and our financial strength. We feel very comfortable
with both our current Loan to Value and liquidity metrics. Today's
decision by B Communications' board of directors to declare a cash
dividend in the amount of NIS 1.27 per share, is very good news for
us and we expect to receive NIS 25 million on December 23, 2015.
It's the third consecutive quarter that BCOM distributed a dividend
to its shareholders. We are very pleased with the results of our B
Communications subsidiary and with Bezeq, which continues to
generate a steady return that enhances our overall financial
position and capabilities.”
Dividend from B Communications: On November 19, 2015, B
Communications' board of directors declared a cash dividend in the
amount of NIS 38 million ($10 million) or NIS 1.27 ($0.32) per
share. Internet Gold expects to receive its distributive share of
approximately NIS 25 million ($6 million) on December 23, 2015. On
September 29, 2015, Internet Gold received a cash dividend totaling
NIS 15 million ($4 million) from B Communications as part of the
NIS 22 million ($6 million) or NIS 0.73 ($0.19) per share dividend
paid by BCOM.
On August 30, 2015, the Board of Directors of Bezeq resolved to
recommend to the general meeting of shareholders the distribution
of a cash dividend of NIS 933 million ($238 million) representing
Bezeq’s profits for the first half of 2015, excluding its NIS 12
million ($3 million) revaluation gain arising from its gaining
control over Yes. The dividend was paid on October 26, 2015 to
shareholders of record as of October 12, 2015. B Communications’
share of the dividend distribution was NIS 286 million ($73
million).
Bezeq’s Results: For the third quarter of 2015, the Bezeq
Group reported revenues of NIS 2.60 billion ($663 million) and
operating profit of NIS 652 million ($166 million). Bezeq’s EBITDA
for the third quarter totaled NIS 1.11 billion ($283 million),
representing an EBITDA margin of 42.6%. Net profit for the period
attributable to Bezeq’s shareholders totaled NIS 407 million ($104
million). Bezeq's cash flow from operating activities during the
period totaled NIS 1,050 million ($268 million).
Cash and Debt Position: As of September 30, 2015,
Internet Gold’s unconsolidated cash and cash equivalents and short
term investments totaled NIS 316 million ($81 million), its
unconsolidated gross debt was NIS 1.1 billion ($289 million) and
its unconsolidated net debt was NIS 816 million ($208 million).
Internet Gold's Unconsolidated Balance
Sheet Data (1)
In millions
Conveniencetranslation
intoU.S. dollars(Note A)
September 30, September 30,
September 30, December 31, 2014 2015
2015 2014 NIS NIS US$ NIS
Short term liabilities 59
202 52 82 Long term
liabilities 1,134
930 237 1,062 Total liabilities
1,193
1,132 289 1,144 Cash and cash equivalents 392
316 81 322 Total net debt 801
816 208
822
(1) Does not include the consolidated
balance sheet of B Communications and its subsidiaries.
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 approximately 80% of its funds must be invested
in investment-grade securities.
Internet Gold’s Third Quarter Consolidated Financial
Results
Internet Gold's consolidated revenues for the third quarter of
2015 totaled NIS 2.6 billion ($663 million), a 16.6% increase
compared with NIS 2.23 billion reported in the third quarter of
2014. The increase resulted from the full consolidation of Yes,
beginning 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 third
quarter of 2015 totaled NIS 525 million ($134 million), a 1.9%
increase compared with NIS 515 million reported in the third
quarter of 2014.
Internet Gold's consolidated net income for the third quarter of
2015 totaled NIS 236 million ($60 million), a 19.2% increase
compared with NIS 198 million reported in the third quarter of
2014.
Internet Gold’s Third Quarter Unconsolidated Financial
Results
As of September 30, 2015 Internet Gold held approximately 67% of
B Communications outstanding shares. Accordingly, Internet Gold's
interest in B Communications’ net income for the third quarter of
2015 totaled NIS 25 million ($6 million), compared with its share
in B Communications' net loss of NIS 1 million in the third quarter
of 2014.
Internet Gold’s unconsolidated net financial expenses for the
third quarter of 2015 totaled NIS 22 million ($5 million) compared
with NIS 20 million in the third quarter of 2014. 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
third quarter of 2015 totaled NIS 2 million ($1 million) compared
with a loss attributable to its shareholders of NIS 22 million in
the third quarter of 2014.
In millions
ConveniencetranslationintoU.S.
dollars(Note A)
Three-monthperiod
endedSeptember 30,
Three-monthperiod
endedSeptember 30,
Year endedDecember 31,
2014 2015 2015 2014 NIS
NIS US$ NIS Revenues
- -
- - Financial expenses, net (20)
(22)
(5) (83) Operating expenses (1)
(1) -
(4) Interest in BCOM's net income (loss) (1)
25
6 (16) Net income (loss) (22)
2 1
(103)
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 third quarter ended September 30,
2015. For a full discussion of Bezeq’s results for the third
quarter ended September 30, 2015, please refer to its website:
http://ir.bezeq.co.il.
Bezeq Group (consolidated)
Q3 2015
Q3 2014 %
change
(NIS millions)
Revenues 2,602 2,232 16.6 % Operating profit 652 671
-2.8 % EBITDA 1,109 998 11.1 % EBITDA margin 42.6 % 44.7 % Net
profit 407 428 -4.9 % Diluted EPS (NIS)
0.15 0.16 -6.3 %
Cash flow from operating activities 1,050 950 10.5 % Payments for
investments 427 322 32.6 % Free cash flow 1
645 700
-7.9 % Net debt/EBITDA (end of period) 2
2.10 1.40
1 Free cash flow is defined as cash flow
from operating activities less net payments for investments.
2 EBITDA in this calculation refers to the
trailing twelve months.
Revenues of the Bezeq Group in the third quarter of 2015
amounted to NIS 2.60 billion ($663 million) compared with NIS 2.23
billion in the corresponding quarter of 2014, an increase of 16.6%.
The increase was related to the consolidation of NIS 446 million
($114 million) of Yes revenues 15, in addition to an increase in
the revenues of Bezeq Fixed-Line and Bezeq International. The
increases were partially offset by lower revenues at Pelephone.
Salary expenses of the Bezeq Group in the third quarter of 2015
amounted to NIS 506 million ($129 million) compared with NIS 437
million in the corresponding quarter of 2014, an increase of 15.8%.
The increase was due to the consolidation of NIS 69 million ($18
million) of Yes salary expenses. The increase was partially offset
by a decrease in the salary expenses of Pelephone due to continued
streamlining efforts.
Operating expenses of the Bezeq Group in the third quarter of
2015 amounted to NIS 1.00 billion ($255 million) compared with NIS
822 million in the corresponding quarter of 2014, an increase of
21.7%. The increase was due to the consolidation of NIS 225 million
($57 million) of Yes operating expenses of. The increase was
partially offset by a decrease in the operating expenses of
Pelephone and Bezeq Fixed-Line due to continued streamlining
procedures.
Depreciation and amortization expenses of the Bezeq Group in the
third quarter of 2015 amounted to NIS 457 million ($116 million)
compared with NIS 327 million in the corresponding quarter of 2014,
an increase of 39.8%. The increase was due to the consolidation of
NIS 78 million ($20 million) of Yes depreciation and amortization
expenses in the third quarter of 2015, as well as from the
amortization of purchase price allocation costs incurred from
Bezeq’s gaining control over Yes.
Other operating income of the Bezeq Group in the third quarter
of 2015 amounted to NIS 13 million ($3 million) compared with NIS
25 million in the corresponding quarter of 2014, a decrease of
48.0%. The decrease in other operating income was due to lower
capital gains from real estate sales.
Operating profit of the Bezeq Group in the third quarter of 2015
amounted to NIS 652 million ($166 million) compared with NIS 671
million in the corresponding quarter of 2014, a decrease of 2.8%.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) of the Bezeq Group in the third quarter of 2015 amounted
to NIS 1.11 billion ($283 million) (EBITDA margin of 42.6%)
compared with NIS 998 million (EBITDA margin of 44.7%) in the
corresponding quarter of 2014, an increase of 11.1%.
Net Financial expenses of the Bezeq Group in the third quarter
of 2015 amounted to NIS 100 million ($25 million) compared with NIS
39 million in the corresponding quarter of 2014, an increase of
156.4%. The increase was primarily due to financing income of NIS
61 million ($16 million) from shareholder loans to Yes, which were
recorded in the corresponding quarter of 2014.
Net profit of the Bezeq Group in the third quarter of 2015
amounted to NIS 407 million ($104 million) compared with NIS 428
million in the corresponding quarter of 2014, a decrease of
4.9%.
Cash flow from operating activities of the Bezeq Group in the
third quarter of 2015 amounted to NIS 1.05 billion ($268 million)
compared with NIS 950 million in the corresponding quarter of 2014,
an increase of 10.5%. The increase in cash flow from operating
activities was primarily due to the consolidation of NIS 145
million ($37 million) of cash flows from the operating activities
of Yes, as well as an increase in cash flow from Bezeq Fixed-Line,
which was partially offset by lower cash flow from Pelephone due to
a decrease in profitability and changes in working capital.
Payments for investments (Capex) of the Bezeq Group in the third
quarter of 2015 amounted to NIS 427 million ($109 million) compared
with NIS 322 million in the corresponding quarter of 2014, an
increase of 32.6%. The increase in investments was primarily due to
the consolidation of NIS 75 million ($19 million) of Yes
investments, as well as an increase in investments by Bezeq
Fixed-Line.
Free cash flow of the Group in the third quarter of 2015
amounted to NIS 645 million ($164 million) compared with NIS 700
million in the corresponding quarter of 2014, a decrease of
7.9%.
Net financial debt of the Bezeq Group amounted to NIS 8.93
billion ($2.28 billion) at September 30, 2015 compared with NIS
6.27 billion as of September 30, 2014. At September 30, 2015, the
Bezeq Group's net financial debt to EBITDA ratio was 2.10, compared
with 1.40 on September 30, 2014.
Notes:
A.
Convenience Translation to Dollars:
For the convenience of the reader, certain of the reported NIS
figures of September 30, 2015 have been presented in millions of
U.S. dollars, translated at the representative rate of exchange as
of September 30, 2015 (NIS 3.923 = 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.
B.
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.
EBITDA is a non-IFRS financial measure generally defined as
earnings before interest, taxes, depreciation and amortization. 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.
Reconciliation between the Bezeq Group’s results on an IFRS and
non-IFRS basis is provided in a table immediately following the
Company's consolidated results. Non-IFRS financial measures consist
of IFRS financial measures adjusted to exclude amortization of
acquired intangible assets, as well as certain business combination
accounting entries. The purpose of such adjustments is to give an
indication of the Bezeq Group’s performance exclusive of non-cash
charges and other items that are considered by management to be
outside of its core operating results. The Bezeq Group’s 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.
Internet Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Financial Position as at
(In millions)
Conveniencetranslation
intoU.S. dollars(Note A)
September 30, September 30,
September 30, December 31, 2015 2015
2014 2014 NIS US$ NIS NIS
Assets
Cash and cash equivalents
1,071 273 1,642 732
Restricted cash
8 2 4 65 Investments, including
derivatives
2,281 581 3,540 3,406 Trade receivables,
net
2,203 562 2,224 2,227 Other receivables
219 56 289 242 Inventory
90 23 83 96
Assets classified as held-for-sale
23 6 144 52
Total current assets
5,895 1,503 7,926 6,820 Investments, including
derivatives
307 78 85 271 Long-term trade and other
receivables
643 164 567 566 Property, plant and
equipment
7,302 1,861 6,491 6,572 Intangible assets
7,482 1,907 6,037 5,908 Deferred and other expenses
364 93 369 364 Broadcasting rights
458
117 - - Investment in equity-accounted investee
27
7 1,043 1,057 Deferred tax assets
860 219 6 -
Total non-current assets
17,443 4,446 14,598 14,738
Total assets
23,338 5,949 22,524 21,558
Internet Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Financial Position as at
(In millions)
Conveniencetranslation
intoU.S. dollars(Note A)
September 30, September 30,
September 30, December 31, 2015
2015 2014 2014 NIS
US$ NIS NIS
Liabilities
Bank loans and credit and debentures
2,325 593 1,562
1,561 Trade payables
949 242 573 664 Related party
101 26 - - Other payables including derivatives
966 246 869 757 Dividend payable
647
165 876 - Current tax liabilities
801 204 728
671 Provisions
87 22 124 62 Employee benefits
268 68 358 259
Total current liabilities
6,144 1,566 5,090 3,974
Bank loans and debentures
13,604 3,468 13,598
13,419 Employee benefits
259 66 231 233 Other
liabilities
212 54 188 262 Provisions
70
18 69 69 Deferred tax liabilities
761
194 865 835
Total non-current liabilities
14,906 3,800 14,951 14,818
Total liabilities
21,050 5,366 20,041 18,792
Equity
Total equity attributable to equity holders of the Company
(165 ) (42 ) (218 ) (183 )
Non-controlling interests
2,453 625
2,701 2,949
Total equity
2,288 583 2,483 2,766
Total liabilities and equity
23,338 5,949 22,524 21,558
Internet Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Income as at
(In million except per share
data)
Nine months period
endedSeptember 30,
Three months period
endedSeptember 30,
Year endedDecember 31,
ConveniencetranslationintoU.S.
dollars(Note A)
ConveniencetranslationintoU.S.
dollars(Note A)
2015 2015
2014 2015 2015
2014 2014 NIS US$
NIS NIS US$ NIS NIS
Revenues 7,379 1,881 6,793
2,602 663 2,232 9,055
Cost and expenses Depreciation and
amortization
1,588 405 1,422
577 147
481 1,873 Salaries
1,445 368 1,328
507
129 437 1,771 General and operating expenses
2,808
716 2,519
1,003 256 824 3,371 Other operating
income, net
(103 ) (26 ) (561 )
(10 ) (3 ) (25 ) (535 )
5,738 1,463 4,708
2,077
529 1,717 6,480
Operating income 1,641 418 2,085
525
134 515 2,575 Financing expenses, net
511
130 667
176 45
152 694
Income after financing expenses,
net
1,130 288 1,418
349 89 363 1,881
Share of loss (income) in equity-accounted
investee
(15 ) (4 ) 132
1
* 34 170
Income before income
tax 1,145 292 1,286
348 89 329
1,711 Income tax
368 94 525
112 29 131 667
Net income for the period 777
198 761
236 60 198
1,044
Income (loss) attributable to:
Owners of the company
17 4 (134 )
2 1
(22 ) (103 ) Non-controlling interests
760 194
895
234 59 220
1,147
Net income for the period 777
198 761
236 60
198 1,044
Earnings per share
Net income (loss), basic 0.90
0.23 (7.02 )
0.09 0.02
(1.20 ) (5.38 )
Net income (loss), diluted
0.84 0.22 (7.11 )
0.07
0.02 (1.22 ) (5.50 )
* Represents an amount less than US$1.
Internet Gold – Golden Lines Ltd.
Reconciliation
for NON-IFRS Measures
EBITDA
The following is a reconciliation of the
Bezeq Group’s operating income to EBITDA:
(In millions)
Three months period
endedSeptember 30,
ConveniencetranslationintoU.S.
dollars(Note A)
2015 2015
2014 NIS US$ NIS Operating
income
652 166 671 Depreciation and amortization
457 117 327 EBITDA
1,109 283 998
Free Cash Flow
The following table shows the calculation
of the Bezeq Group’s free cash flow:
(In millions)
Three months period
endedSeptember 30,
ConveniencetranslationintoU.S.
dollars(Note A)
2015 2015
2014 NIS US$ NIS
Cash flow from operating activities
1,050 268 950
Purchase of property, plant and equipment
(373 )
(95 ) (272 ) Investment in intangible assets and
deferred expenses
(54 ) (14 ) (50 )
Proceeds from the sale of property, plant and equipment
22
5 72 Free cash flow
645
164 700
Designated Disclosure
with Respect to the Company's Projected Cash Flows
In accordance with the "hybrid model disclosure requirements"
promulgated by the Israeli Securities Authority that are applicable
to Internet Gold - Golden Lines Ltd. (the "Company"), the following
is a report of the Company’s projected cash flows (the "report")
and a disclosure of the examination by the Company’s board of
directors of the Company’s liquidity in accordance with regulations
10(b)(1)(d) and 10(b)(14) of the Securities Regulations (Immediate
and Periodic Notices) 5730-1970:
- The Company’s un-reviewed financial
statements as of September 30, 2015, and for the quarter then
ended, reflect that the Company had an equity deficit of NIS 165
million as of such date.
- The Company’s board of directors
reviewed the Company’s outstanding debt obligations, its existing
and anticipated cash resources and needs that were included in the
framework of the projected cash flow report for the periods from
October 1, 2015 until December 31, 2015, January 1, 2016 until
December 31, 2016 and January 1, 2017 until September 30, 2017,
described below. The board of directors also examined the
assumptions and projections that were included in the report and
determined that such assumptions and projections are reasonable and
appropriate.
- Based on the foregoing, the Company’s
board of directors determined that the Company does not have a
liquidity problem and that for the duration of the periods covered
by the projected cash flows statement there is no reasonable doubt
that the Company will not meet its existing and anticipated
liabilities when due.
The following is
the projected cash flow of the Company and the assumptions upon
which it is based:
For the periodfrom October
1,2015 untilDecember 31, 2015
For the periodfrom January
1,2016 untilDecember 31, 2016
For the periodfrom January
1,2017 untilSeptember 30, 2017
NIS millions NIS millions NIS millions
Opening
balance:
Cash and cash equivalents (1) 34
30 30
Independent
sources:
Cash flows from investing activities: Proceeds from the sale
of marketable securities (2)(3) 36 89 111
Cash provided by investing activities 36
89 111
Sources from
Subsidiary:
Dividends from subsidiary (4) 25
98 71
Projected
uses:
Cash flows used in operating activities (5) (1
) (4 ) (3 ) Cash flows
from financing activities: Repayments of debentures (6) (61 )
(131 ) (132 ) Interest payments (6) (3 ) (52 ) (47 )
Cash used
in financing activities (64 ) (183
) (179 )
Closing
balance:
Cash and cash equivalents (1) 30
30 30
Assumptions and explanations pertaining to
the above table:
(1) Cash flows include the Company’s projected cash flows and do
not include the consolidation of projected cash flows from the
Company’s subsidiary, B Communications Ltd. (“B Communications”) or
from Bezeq - The Israel Telecommunications Corp. Ltd. (“Bezeq”).
(2) In addition to the cash balances it maintains, the Company also
invests in low-risk, high liquidity marketable securities that are
used to finance its operations. The Company’s investment policy was
reviewed by the Company’s audit committee and by a credit rating
agency. At least 80% of the Company's portfolio is invested in
securities rated at a local rating of AA- and higher. As of October
1, 2015, the Company’s investments in marketable securities totaled
NIS 282 million and by September 30, 2017 this balance is expected
to be NIS 57 million.
As of September 30, 2015, cash, cash
equivalents and current investments in marketable securities
totaled NIS 316 million. These liquid balances can be converted to
cash in a short period of time and are a source for debt service.
The Company’s cash, cash equivalents and current investments in
marketable securities are sufficient for the service of the
Company's debt through February 2017.
(3) For the purposes of calculating cash flows from investments in
marketable securities, the Company assumed an annual yield of 3% on
the average balance of its investments in marketable securities
during the period. This assumption is based on the Company's
conservative investment policy, as well as on yields historically
achieved by the Company from its investments in marketable
securities and on management’s assessment of the probability of
achieving such yield during the future periods covered by the
projected cash flows statement.
The following are the benchmarks used by the Company and a
sensitivity analysis of the above assessments:
A. In 2014 and in 2013 the Company generated yields of 2.4% and
5.5%, respectively, on its cash and marketable securities
portfolio. The Company does not anticipate that there will be any
material changes to its investment policy in the projected periods.
B. The following table shows the expected profit in NIS millions
from investments in cash and marketable securities in the projected
periods under a scenario of a 5% annual yield and a scenario of a
-2% annual yield:
Period Annual yield
5 % -2 % 1 – three month profit (loss)
3 (1 ) 2 – annual profit (loss) 10 (4 ) 3 – nine
month profit (loss) 3 (1 ) (4)
Assumption of the receipt of dividends
from B Communications during the period covered by the projected
cash flows statement is based on the following:According to what it
believes to be a conservative estimate, the Company’s management
anticipates that B Communications will distribute accumulated
dividends of at least NIS 292 million by September 30, 2017. This
assumption is based on market forecasts of the estimated net
profits of Bezeq and on the Company's estimation of B
Communications’ anticipated retained earnings during the projected
periods. These estimates are derived, among other things, from B
Communications' projected financing expenses and its projected
purchase price allocation amortization expenses with respect to its
acquisition of the controlling interest in Bezeq ("Bezeq PPA") that
are non-cash expenses. Future Bezeq PPA amortization expenses are
expected to decrease significantly because of the accelerated
depreciation method that was adopted by B Communications at the
time of its acquisition of the controlling interest in Bezeq. From
April 14, 2010, the date of B Communications' acquisition of its
interest in Bezeq, until September 30, 2015, B Communications has
amortized approximately 70% of the total Bezeq PPA.The dividend
assumption stated in the distribution estimate above, does not
differ materially from that reported in the previous quarter. The
Company's management made only an internal update of the timing of
distributions between the projected periods.B Communications does
not have a dividend distribution policy. Nevertheless, the Company
assumes that there is a high probability that B Communications will
distribute most of its retained earnings balance as a dividend,
based, among other things, on B Communications’ (i) dividend
distributions in December 2013, June 2015, September 2015 and to be
paid in December 2015. The Company believes that the probability of
future dividend distributions by B Communications has improved and
is supported by the unrestricted cash mechanism provision in its
Senior Secured Notes that were issued in February 2014 that allows
the use of funds that are not pledged to the holders of the Senior
Secured Notes.Accordingly, the Company’s management believes that B
Communications will act in the same manner as it did in November
2013 and May, August and November 2015, and that it will distribute
most of its retained earnings balance, so long as B Communications
will have sufficient resources to service its debt for a period of
at least 18 months and that the distribution meets the criteria for
distributions under Israeli law. This assumption does not
contradict the restrictions on distributing dividends under
applicable law and other restrictions applicable to B
Communications.
(5) The cash flows from the Company’s current operations include
the administrative operating costs and costs associated with the
Company being a dual-listed company traded on the NASDAQ Global
Select Market and on the Tel Aviv Stock Exchange. (6) The repayment
of principal and interest are based on the repayment schedule for
the Company’s outstanding debentures, in addition to an assumed 0%
annual increase in the Consumer Price Index in 2015, an assumed
1.5% annual increase in the Consumer Price Index in 2016 and an
assumed 2% annual increase in the Consumer Price Index in 2017.
The Company has additional cash
generating abilities that for conservative reasons were not taken
in to account in preparing the projected cash flow detailed above.
The following describes the Company's assumptions regarding these
scenarios:
A. All of the Company's B Communications shares are free and
clear of any encumbrance. If necessary, the Company can sell some
of these shares, and will still remain the controlling shareholder
of B Communications. An example of this ability to sell shares of B
Communications is the sale of shares to Norisha Holdings Ltd. in
2013. B. The Company has financial flexibility and quick access to
capital markets that enable it to raise funds within a short period
of time. This is evident from the debenture issuances and debenture
series exchanges that the Company completed in recent years.
The Company’s board of directors has reviewed the Company’s
liabilities, its existing and anticipated cash resources and needs
that were included in the framework of the projected cash flow
report, examined their scope and feasibility, as well as the timing
of their receipt, and found that all such assumptions and the
projections were reasonable and appropriate.
The Company’s board of directors examined the Company’s
anticipated resources and liabilities, and considering the
financial data in the above cash flow report and management’s
explanations of such data determined that the Company does not have
a liquidity problem and that for the duration of the projected
period for which cash flow information has been provided there is
no reasonable doubt that the Company will not meet its existing and
anticipated liabilities when due.
The information detailed above, concerning the Company’s cash
flow forecast, and particularly concerning the projected dividend
and yield on securities, are forward looking information as defined
in the Securities Law, 5728-1968. This information includes
forecasts, subjective assessments, estimates, etc. and is based,
among other things, on objective market forecasts and reviews
issued to the public, and relies, among other things, on the
company management’s past experience. Furthermore, some of such
information is based on future data and internal estimates by the
Company’s management made at the current time, and there is no
certainty that they will materialize, in whole or in part, due to
factors that are not in the Company’s control. It is hereby
clarified that there is a likelihood that said forward looking
information will not be realized, in whole or in part, both with
respect to the Company’s forecasts and with respect to the working
assumptions on which they are based.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151119005561/en/
Internet Gold – Golden Lines Ltd.Idit Cohen,
+972-3-924-0000IR Manageridit@igld.comorInvestor
relations:Hadas Friedman, +972-3-516-7620Hadas@km-ir.co.il
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