RAMAT GAN, Israel, May 26,
2016 /PRNewswire/ -- Internet Gold – Golden Lines Ltd.
(NASDAQ Global Select Market and TASE: IGLD) today reported its
financial results for the quarter ended March 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 Corp., Israel's largest telecommunications provider
(TASE: BEZQ).
Commenting on the results, Doron
Turgeman, CEO of Internet Gold said, "Today's decision
by
B Communications' board of directors to declare a cash dividend of
NIS 11.88 per share is great news for
us. Upon receipt of the NIS 230
million dividend on June 29,
2016 our leverage level will decline significantly. 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 May 25, 2016, B Communications' board of
directors declared a cash dividend of NIS
355 million ($94 million), or
NIS 11.88 ($3.15) per share. Internet Gold expects to
receive its distributive share of approximately NIS 230 million ($61
million) on June 29, 2016.
Bezeq's Results: For the first quarter of 2016, the Bezeq
Group reported revenues of NIS 2.56
billion ($680 million) and
operating profit of NIS 574 million
($152 million). Bezeq's EBITDA for
the first quarter totaled NIS 1.0
billion ($272 million),
representing an EBITDA margin of 40%. Net profit for the period
attributable to Bezeq's shareholders totaled NIS 288 million ($76
million). Bezeq's cash flow from operating activities during
the period totaled NIS 922 million
($245 million).
Cash and Debt Position: As of March 31, 2016, Internet Gold's
unconsolidated cash and cash equivalents and short term investments
totaled NIS 169 million ($45 million), its unconsolidated gross debt was
NIS 933 million ($248 million) and its unconsolidated net debt was
NIS 764 million ($203 million).
Internet Gold's Unconsolidated Balance Sheet Data
(1)
In
millions
|
|
|
Convenience
|
|
|
|
|
|
|
|
translation
into
|
|
|
|
|
|
|
|
U.S.
dollars
|
|
|
|
|
|
|
|
(Note
A)
|
|
|
|
|
|
March
31,
|
|
March
31,
|
|
March
31,
|
|
December
31,
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
NIS
|
|
US$
|
|
NIS
|
|
NIS
|
Short term
liabilities
|
140
|
|
37
|
|
198
|
|
153
|
Long term
liabilities
|
793
|
|
211
|
|
923
|
|
926
|
Total
liabilities
|
933
|
|
248
|
|
1,121
|
|
1,079
|
Cash and cash
equivalents
|
169
|
|
45
|
|
295
|
|
277
|
Net debt
|
764
|
|
203
|
|
826
|
|
802
|
|
|
|
|
|
|
|
|
(1) Does not include the consolidated balance
sheet of B Communications and its subsidiaries.
Sale of B Communications Shares: On January 14, 2016, the Company sold 575,000
ordinary shares of B Communications, representing approximately
1.92% of B Communications' issued and outstanding shares. The total
proceeds from the sale amounted to approximately NIS 56 million ($15
million). As a result of the sale, the Company now holds
approximately 65% of the outstanding shares of B
Communications.
Equity Attributable to Shareholders: As of March 31, 2016 the total equity attributable to
shareholders totaled NIS 364 million
($97 million). The significant
increase in the equity attributable to shareholders resulted mainly
from the sale of 4.2% of Bezeq's outstanding shares by B
Communications in February 2016,
which generated a positive difference between the change in the
carrying amount of non-controlling interests and the net
consideration received by B Communications from the sale. In
compliance with IFRS10 the difference was recognized directly in
the equity of B Communications. Internet Gold's equity was
increased by its share in B Communications' equity.
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 First Quarter Consolidated Financial
Results:
Internet Gold's consolidated revenues for the first quarter of
2016 totaled NIS 2.6 billion
($680 million), a 17.7% increase
compared to the NIS 2.2 billion
reported in the first quarter of 2015. The increase resulted from
the full consolidation of DBS Satellite Services (1998) Ltd.
(referred to herein by its trade name YES) as of 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 first
quarter of 2016 totaled NIS 472
million ($125 million), a 6.5%
decrease compared to NIS 505 million
reported in the first quarter of 2015.
Internet Gold's consolidated net income for the first quarter of
2016 totaled NIS 143 million
($38 million), a 52.6% decrease
compared with NIS 302 million
reported in the first quarter of 2015.
Internet Gold's First Quarter Unconsolidated Financial
Results:
As of March 31, 2016 Internet Gold
held approximately 65% of the outstanding shares of B
Communications. Internet Gold's interest in B Communications' net
loss for the first quarter of 2016 totaled NIS 15 million ($4
million), compared with its share in B Communications' net
income of NIS 32 million in the first
quarter of 2015.
Internet Gold's unconsolidated net financial expenses for the
first quarter of 2016 totaled NIS 15
million ($4 million) compared
with NIS 3 million in the first
quarter of 2015. These expenses consist of interest and CPI linkage
expenses related to its publicly-traded debentures.
Internet Gold's loss attributable to shareholders for the first
quarter of 2016 totaled NIS 32
million ($8 million) compared
with net income attributable to its shareholders of NIS 28 million in the first quarter of 2015.
In
millions
|
|
|
|
|
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
translation
|
|
|
|
|
|
Three-month
|
|
into
|
|
Three-month
|
|
|
|
period
ended
|
|
U.S.
dollars
|
|
period
ended
|
|
Year
ended
|
|
March
31,
|
|
(Note
A)
|
|
March
31,
|
|
December
31,
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
NIS
|
|
US$
|
|
NIS
|
|
NIS
|
Revenues
|
-
|
|
-
|
|
-
|
|
-
|
Financial expenses,
net
|
(15)
|
|
(4)
|
|
(3)
|
|
(60)
|
Income tax
benefit
|
-
|
|
-
|
|
-
|
|
11
|
Operating
expenses
|
(2)
|
|
-
|
|
(1)
|
|
(4)
|
Interest in BCOM's
net income (loss)
|
(15)
|
|
(4)
|
|
32
|
|
140
|
Net income
(loss)
|
(32)
|
|
(8)
|
|
28
|
|
87
|
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 March 31, 2016. For a full discussion of Bezeq's
results for the quarter ended March 31,
2016, please refer to its website:
http://ir.bezeq.co.il.
Bezeq Group
(consolidated)
|
Q1 2016
|
Q1 2015
|
%
change
|
|
(NIS
millions)
|
|
|
|
|
|
Revenues
|
2,559
|
2,174
|
17.7%
|
Operating
profit
|
574
|
636
|
(9.7%)
|
EBITDA
|
1,023
|
953
|
7.3%
|
EBITDA
margin
|
40.0%
|
43.8%
|
|
Net
profit
|
288
|
463
|
(37.8%)
|
Diluted EPS
(NIS)
|
0.10
|
0.17
|
(41.2%)
|
Cash flow from
operating activities
|
922
|
961
|
(4.1%)
|
Payments for
investments
|
345
|
368
|
(6.3%)
|
Free cash flow
1
|
619
|
606
|
2.1%
|
Net debt/EBITDA (end
of period) 2
|
2.04
|
1.84
|
|
|
|
|
|
1Free cash
flow is defined as cash flow from operating activities less net
payments for investments.
|
2EBITDA in
this calculation refers to the trailing twelve months.
|
Revenues of the Bezeq Group in the first quarter of
2016 were NIS 2.56 billion
($680 million) compared with
NIS 2.17 billion in the corresponding
quarter of 2015, an increase of 17.7%. The increase was due to the
consolidation of NIS 439 million
($117 million) of YES revenues in the
first quarter of 2016. The increase was partially offset by lower
revenues at Pelephone.
Salary expenses of the Bezeq Group in the first quarter of 2016
were NIS 513 million ($136 million), compared with NIS 439 million in the corresponding quarter of
2015, an increase of 16.9%. The increase was mainly a result of the
consolidation of NIS 61 million
($16 million) of YES salary expenses
in the first quarter of 2016.
Operating expenses of the Bezeq Group in the first quarter of
2016 were NIS 1.02 billion
($270 million), compared with
NIS 799 million in the corresponding
quarter of 2015, an increase of 27.4%. The increase was a
result of the consolidation of NIS 245
million ($65 million) of YES
operating expenses in the first quarter of 2016. The increase was
partially offset by a decrease in operating expenses at
Pelephone.
Depreciation and amortization expenses of the Bezeq Group in the
first quarter of 2016 were NIS 449
million ($119 million)
compared with NIS 317 million in the
corresponding quarter of 2015, an increase of 41.6%. The
increase was due to the consolidation of NIS
76 million ($20 million) of
depreciation and amortization expenses of YES in the first quarter
of 2016 and from the amortization of purchase price allocation
costs incurred from Bezeq's gaining control over YES.
The Bezeq Group had other operating expenses of NIS 5 million ($1
million) in the first quarter of 2016 compared with other
income of NIS 17 million in the
corresponding quarter of 2015. Other operating expenses in the
first quarter of 2016 were impacted by the recording of a
NIS 14 million ($4 million) expense for a collective labor
agreement at Bezeq International.
Operating profit of the Bezeq Group in the first quarter of 2016
was NIS 574 million ($152 million) compared with NIS 636 million in the corresponding quarter of
2015, a decrease of 9.7%. EBITDA of the Bezeq Group in the first
quarter of 2016 was NIS 1.02 billion
(EBITDA margin of 40.0%) ($272
million) compared with NIS 953
million (EBITDA margin of 43.8%) in the corresponding
quarter of 2015, an increase of 7.3%.
Financing expenses, net of the Bezeq Group in the first quarter
of 2016 amounted to NIS 102 million
($27 million) compared with
NIS 37 million in the corresponding
quarter of 2015, an increase of 175.7%. The increase was due to an
increase in financing expenses of Bezeq Fixed-Line and the
consolidation of NIS 19 million of
YES financing expenses in the first quarter of 2016, while
financing income of NIS 21 million
from shareholder loans to YES, which were recorded in the
corresponding quarter of 2015 were not included in the first
quarter of 2016 as a result of the consolidation of YES.
Tax expenses of the Bezeq Group in the first quarter of 2016
were NIS 183 million ($49 million) compared with NIS 152 million in the corresponding quarter of
2015, an increase of 20.4%. Tax expenses were impacted by the
decrease in the Israeli corporate tax rate from 26.5% to 25%
beginning January 1, 2016, which
resulted the record of NIS 64 million
($17 million) deferred tax expenses
as an update to its deferred tax asset.
Net profit attributable to Bezeq shareholders in the first
quarter of 2016 was NIS 288 million
($76 million) compared with
NIS 463 million in the corresponding
quarter of 2015, a decrease of 37.8%.
Cash flow from operating activities of the Bezeq Group in the
first quarter of 2016 was NIS 922
million ($245 million)
compared with NIS 961 million in the
corresponding quarter of 2015, a decrease of 4.1%. The decrease was
primarily due to lower operating cash flows at Pelephone, primarily
as a result of changes in working capital, which were largely
offset by the consolidation of NIS 158
million ($42 million) of cash
flows from the operating activities of YES in the first quarter of
2016.
Payments for investments (Capex) of the Bezeq Group in the first
quarter of 2016 were NIS 345 million
($92 million) compared with
NIS 368 million in the corresponding
quarter of 2015, a decrease of 6.3%. The decrease in Bezeq Group
investments was accomplished despite the consolidation of
NIS 59 million of investments by
YES.
Free cash flow of the Bezeq Group in the first quarter of 2016
was NIS 619 million ($164 million) compared with NIS 606 million in the corresponding quarter of
2015, an increase of 2.1%.
Net financial debt of the Bezeq Group was NIS 8.83 billion ($2.3
billion) as of March 31, 2016
compared with NIS 8.20 billion as of
March 31, 2015. As of March 31, 2016, the Bezeq Group's net financial
debt to EBITDA (last twelve months) ratio was 2.04, compared with
1.84 as of March 31, 2015.
Notes:
A. Convenience Translation to Dollars: For
the convenience of the reader, certain of the reported NIS figures
of March 31, 2016 have been presented
in millions of U.S. dollars, translated at the representative rate
of exchange as of March 31, 2016
(NIS 3.766 = 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.
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)
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
December
31,
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
|
NIS
|
|
US$
|
|
NIS
|
|
NIS
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
1,233
|
|
327
|
|
1,207
|
|
619
|
Restricted
cash
|
|
715
|
|
190
|
|
17
|
|
155
|
Investments,
including derivatives
|
|
1,524
|
|
405
|
|
3,750
|
|
1,774
|
Trade receivables,
net
|
|
2,042
|
|
542
|
|
2,290
|
|
2,058
|
Other
receivables
|
|
317
|
|
84
|
|
359
|
|
286
|
Inventory
|
|
123
|
|
33
|
|
87
|
|
115
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
5,954
|
|
1,581
|
|
7,710
|
|
5,007
|
|
|
|
|
|
|
|
|
|
Long-term trade and
other receivables
|
|
662
|
|
176
|
|
542
|
|
674
|
Property, plant and
equipment
|
|
7,171
|
|
1,904
|
|
7,365
|
|
7,197
|
Intangible
assets
|
|
6,986
|
|
1,855
|
|
7,483
|
|
7,118
|
Deferred expenses and
investments
|
|
568
|
|
151
|
|
696
|
|
643
|
Broadcasting
rights
|
|
456
|
|
121
|
|
460
|
|
25
|
Investment in
equity-accounted investee
|
|
23
|
|
6
|
|
29
|
|
456
|
Deferred tax
assets
|
|
1,104
|
|
293
|
|
1,170
|
|
1,290
|
|
|
|
|
|
|
|
|
|
Total non-current
assets
|
|
16,970
|
|
4,506
|
|
17,745
|
|
17,403
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
22,924
|
|
6,087
|
|
25,455
|
|
22,410
|
Internet Gold –
Golden Lines Ltd.
|
|
Condensed
Consolidated Statements of Financial Position as at
|
|
(In
millions)
|
|
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
|
translation
into
|
|
|
|
|
|
|
|
|
U.S.
dollars
|
|
|
|
|
|
|
|
|
(Note A)
|
|
|
|
|
|
|
March 31,
|
|
March 31,
|
|
March 31,
|
|
December
31,
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
|
NIS
|
|
US$
|
|
NIS
|
|
NIS
|
Liabilities
|
|
|
|
|
|
|
|
|
Bank loans and credit
and debentures
|
|
2,380
|
|
632
|
|
2,231
|
|
2,219
|
Trade and other
payables
|
|
1,921
|
|
510
|
|
2,119
|
|
1,717
|
Related
party
|
|
206
|
|
55
|
|
898
|
|
233
|
Current tax
liabilities
|
|
711
|
|
189
|
|
747
|
|
705
|
Provisions
|
|
88
|
|
23
|
|
84
|
|
100
|
Employee
benefits
|
|
380
|
|
101
|
|
274
|
|
378
|
Total current
liabilities
|
|
5,686
|
|
1,510
|
|
6,353
|
|
5,352
|
|
|
|
|
|
|
|
|
|
Bank loans and
debentures
|
|
12,396
|
|
3,291
|
|
14,617
|
|
13,215
|
Employee
benefits
|
|
238
|
|
63
|
|
238
|
|
240
|
Other
liabilities
|
|
262
|
|
70
|
|
283
|
|
227
|
Provisions
|
|
46
|
|
12
|
|
69
|
|
46
|
Deferred tax
liabilities
|
|
665
|
|
177
|
|
807
|
|
729
|
Total non-current
liabilities
|
|
13,607
|
|
3,613
|
|
16,014
|
|
14,457
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
19,293
|
|
5,123
|
|
22,367
|
|
19,809
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Total equity
attributable to equity holders
|
|
|
|
|
|
|
|
|
of the
Company
|
|
364
|
|
97
|
|
(150)
|
|
(93)
|
Non-controlling
interests
|
|
3,267
|
|
867
|
|
3,238
|
|
2,694
|
|
|
|
|
|
|
|
|
|
Total
equity
|
|
3,631
|
|
964
|
|
3,088
|
|
2,601
|
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
22,924
|
|
6,087
|
|
25,455
|
|
22,410
|
Internet Gold –
Golden Lines Ltd.
|
|
Condensed
Consolidated Statements of Income as at
|
|
(In million except
per share data)
|
|
|
Three months period
ended
|
|
Year ended
|
|
March 31,
|
|
December
31,
|
|
|
|
Convenience
|
|
|
|
|
|
|
|
Translation
into
|
|
|
|
|
|
|
|
U.S.
dollars
|
|
|
|
|
|
|
|
(Note A)
|
|
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
2015
|
|
NIS
|
|
US$
|
|
NIS
|
|
NIS
|
Revenues
|
2,559
|
|
680
|
|
2,174
|
|
9,985
|
|
|
|
|
|
|
|
|
Cost and
expenses
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
545
|
|
145
|
|
439
|
|
2,131
|
Salaries
|
514
|
|
137
|
|
439
|
|
1,960
|
General and operating
expenses
|
1,023
|
|
272
|
|
802
|
|
3,878
|
Other operating
(income) expenses, net
|
5
|
|
1
|
|
(11)
|
|
3
|
|
|
|
|
|
|
|
|
|
2,087
|
|
555
|
|
1,669
|
|
7,972
|
|
|
|
|
|
|
|
|
Operating
income
|
472
|
|
125
|
|
505
|
|
2,013
|
|
|
|
|
|
|
|
|
Financing expenses,
net
|
207
|
|
55
|
|
100
|
|
595
|
|
|
|
|
|
|
|
|
Income after
financing expenses, net
|
265
|
|
70
|
|
405
|
|
1,418
|
|
|
|
|
|
|
|
|
Share in (income)
losses of equity-
|
|
|
|
|
|
|
|
accounted
investee
|
1
|
|
*
|
|
(16)
|
|
(12)
|
|
|
|
|
|
|
|
|
Income before
income tax
|
264
|
|
70
|
|
421
|
|
1,430
|
|
|
|
|
|
|
|
|
Income tax
|
121
|
|
32
|
|
119
|
|
347
|
|
|
|
|
|
|
|
|
Net income for the
period
|
143
|
|
38
|
|
302
|
|
1,083
|
|
|
|
|
|
|
|
|
Income (loss)
attributable to:
|
|
|
|
|
|
|
|
Owners of the
Company
|
(32)
|
|
(8)
|
|
28
|
|
87
|
Non-controlling interests
|
175
|
|
46
|
|
274
|
|
996
|
|
|
|
|
|
|
|
|
Net income for the
period
|
143
|
|
38
|
|
302
|
|
1,083
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss),
basic
|
(1.67)
|
|
(0.44)
|
|
1.44
|
|
3.97
|
|
|
|
|
|
|
|
|
Net income (loss),
diluted
|
(1.67)
|
|
(0.44)
|
|
1.42
|
|
3.90
|
|
* Represents an
amount less than US$1.
|
Internet Gold –
Golden Lines Ltd.
|
|
|
|
|
Reconciliation for
NON-IFRS Measures
|
|
|
|
|
EBITDA
|
|
|
|
|
The following is a
reconciliation of the Bezeq Group's operating income to
EBITDA:
|
|
|
|
|
(In
millions)
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
Convenience
|
|
|
|
|
|
translation
|
|
|
|
|
|
into
|
|
|
|
|
|
U.S.
dollars
|
|
|
|
|
|
(Note
A)
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
NIS
|
|
US$
|
|
NIS
|
|
|
|
|
|
|
Operating
income
|
574
|
|
153
|
|
636
|
Depreciation and
amortization
|
449
|
|
119
|
|
317
|
|
|
|
|
|
|
EBITDA
|
1,023
|
|
272
|
|
953
|
|
|
|
|
|
|
Free Cash
Flow
|
|
|
|
|
|
|
|
The following table
shows the calculation of the Bezeq Group's free cash
flow:
|
|
|
|
|
(In
millions)
|
|
|
|
|
Three months ended
March 31,
|
|
|
|
Convenience
|
|
|
|
|
|
translation
|
|
|
|
|
|
into
|
|
|
|
|
|
U.S.
dollars
|
|
|
|
|
|
(Note
A)
|
|
|
|
2016
|
|
2016
|
|
2015
|
|
NIS
|
|
US$
|
|
NIS
|
|
|
|
|
|
|
Cash flow from
operating activities
|
922
|
|
245
|
|
961
|
Purchase of property,
plant and equipment
|
(294)
|
|
(78)
|
|
(302)
|
Investment in
intangible assets and deferred expenses
|
(51)
|
|
(14)
|
|
(66)
|
Proceeds from the
sale of property, plant and equipment
|
42
|
|
11
|
|
13
|
|
|
|
|
|
|
Free cash
flow
|
619
|
|
164
|
|
606
|
|
|
|
|
|
|
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 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 financial statements as of March 31, 2016 and for the quarter then ended
(which have not been reviewed), reflect that the Company had equity
of NIS 364 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 April 1, 2016 until December 31, 2016, January
1, 2017 until December 31,
2017 and January 1, 2018 until
March 31, 2018, 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 report 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 period
from April 1, 2016 until December 31, 2016
|
|
For the period
from January 1, 2017 until December 31, 2017
|
|
For the period
from January 1, 2018 until March 31, 2018
|
|
NIS
millions
|
|
NIS
millions
|
|
NIS
millions
|
Opening
balance:
|
|
|
|
|
|
Cash and cash
equivalents (1)
|
5
|
|
40
|
|
40
|
|
|
|
|
|
|
Independent
sources:
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Proceeds from the
sale of marketable securities (3)(4)
|
-
|
|
81
|
|
51
|
Cash provided by
investing activities
|
-
|
|
81
|
|
51
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from
increasing Series D Debentures
|
-
|
|
-
|
|
100
|
Cash provided by
financing activities
|
-
|
|
-
|
|
100
|
|
|
|
|
|
|
Sources from
Subsidiary:
|
|
|
|
|
|
Dividends from
subsidiary (2,5)
|
230
|
|
97
|
|
-
|
|
|
|
|
|
|
Projected
uses:
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Investments in
marketable securities (3)(4)
|
(167)
|
|
-
|
|
-
|
Cash provided by
investing activities
|
(167)
|
|
-
|
|
-
|
|
|
|
|
|
|
Cash flows used in
operating activities (6)
|
(3)
|
|
(4)
|
|
(1)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Repayments of
debentures (7)
|
-
|
|
(128)
|
|
(128)
|
Interest payments
(7)
|
(25)
|
|
(46)
|
|
(22)
|
Cash used in
financing activities
|
(25)
|
|
(174)
|
|
(150)
|
|
|
|
|
|
|
Closing
balance:
|
|
|
|
|
|
Cash and cash
equivalents (1)
|
40
|
|
40
|
|
40
|
|
|
|
|
|
|
Assumptions and explanations pertaining to the above table:
(1) Cash flows include the Company's projected cash
flows 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) On May 26, 2016, B
Communications' board of directors declared a cash dividend of
NIS 355 million. The Company expects
to receive its distributive share of approximately NIS 230 million on June
29, 2016.
(3) 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 April 1, 2016, the
Company's investments in marketable securities totaled NIS 164 million and by March 31, 2018 this balance is expected to be
NIS 210 million.
As of March 31, 2016, cash, cash
equivalents and current investments in marketable securities
totaled NIS 169 million. These liquid
balances can be converted to cash in a short period of time and are
a source for debt service.
(4) For the purposes of calculating cash flows from
investments in marketable securities, the Company assumed an annual
yield of 2% 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 period.
The following are the benchmarks used by the Company and a
sensitivity analysis of the above assessments:
A. In 2015 and in 2014 the Company generated yields of
0.9% and 2.4%, 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 – nine month profit
(loss)
|
|
9
|
|
(4)
|
2 – annual profit
(loss)
|
|
15
|
|
(6)
|
3 – three month
profit (loss)
|
|
3
|
|
(1)
|
(5) 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 505 million by March
31, 2018. This assumption is based on market forecasts of
the estimated net profits of Bezeq and on management'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 and the decrease in the B Communications'
ownership interest in Bezeq to 26.34% in February 2016. From April
14, 2010, the date of B Communications' acquisition of its
interest in Bezeq, until March 31,
2016, B Communications has amortized approximately 72% of
the total Bezeq PPA.
B Communications does not have a dividend distribution policy.
Nevertheless, the Company assumes that there is a high probability
that B Communications will continue to distribute most of its
retained earnings balance as a dividend, based, among other things,
on B Communications' dividend distributions in December 2013, June
2015, September 2015 and
December 2015 and the dividend
distribution that will be paid in June
2016. 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 has historically
acted and that it will distribute most of its retained earnings
balance, so long as it 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.
(6) 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.
(7) The repayment of principal and interest are
based on the repayment schedule for the Company's outstanding
debentures and an assumed 1% annual increase in the Consumer Price
Index in 2016, 2017 and in 2018.
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 shares in B
Communications 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. Examples of this
ability to sell shares of B Communications are the sale of to
Norisha Holdings Ltd.in 2013 and the sale of 575,000 shares in
private transactions with institutional investors in January 2016.
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/internet-gold-reports-its-financial-results-for-the-first-quarter-of-2016-300275381.html
SOURCE Internet Gold - Golden Lines Ltd.