NETANYA, Israel, November 13, 2012 /PRNewswire/ --
------------------------
Cellcom Israel presents a
substantial improvement in free cash
flow[1]for the third quarter, totaling
NIS 414 million, a 58% increase in
comparison to the third quarter last year
Cellcom Israel continues the
implementation of the efficiency plan and presents savings at an
annual rate of approximately NIS
480 million[2]
Cellcom Israel reports a net
addition of approximately 5,000
cellular subscribers thanks to the success of "Cellcom
Total", a communications solution
combining cellular and landline
services, and the beginning of IDF
subscribers' transfer to our network
----
Third Quarter 2012
Highlights[3] (compared with the third quarter
2011):
- Free cash flow[1] totaled NIS 414 million ($106
million), a 58% increase
- Total Revenues totaled NIS 1,448
million ($370 million), a 13%
decrease
- Service revenues totaled NIS 1,148 million ($293
million), a 3.8% decrease
- EBITDA[1] totaled NIS
430 million ($110 million), a
19.9% decrease
- EBITDA margin 29.7%, down from 32.3%
- Operating profit totaled NIS 239
million ($61 million), a 31.5%
decrease
- Net income totaled NIS 124
million ($32 million), a 37.7%
decrease
- Cellular Subscriber base totaled approx. 3.338 million
at the end of September 2012
--------------------------------------------------
1. Please see "Use of Non-IFRS financial measures" section in
this press release.
2. Based on a comparison of third quarter 2012 expenses to
fourth quarter 2011 expenses.
3. The Company consolidated financial results for the third
quarter 2012 include the results of Netvision Ltd., or Netvision,
for the full quarter, while the consolidated financial results for
the third quarter 2011 include Netvision's results for September 2011 only (due to the completion of
Netvision's acquisition by the Company on August 31, 2011).
Cellcom Israel Ltd. (NYSE: CEL
TASE: CEL) ("Cellcom Israel", the "Company"), announced
today its financial results for the third quarter of 2012. Revenues
for the third quarter 2012 totaled NIS 1,448
million ($370 million); EBITDA
for the third quarter 2012 totaled NIS 430
million ($110 million), or
29.7% of total revenues; and net income for the third quarter 2012
totaled NIS 124 million ($32 million). Basic earnings per share for the
third quarter 2012 totaled NIS 1.25
($0.32).
Commenting on the results, Nir
Sztern, Chief Executive
Officer, said, "We are pleased with
the implementation of the Company's strategy: the merger of
Netvision, operational excellence, and our strengthening as a
communications group.
The Company has taken aggressive efficiency measures, which led,
so far, to an annual savings run rate of approximately NIS 480 million[2], while focusing on
operational excellence. It is our intention to continue the
efficiency measures in the fourth quarter this year, as well as in
2013.
We continue to leverage and expand the comprehensive services we
provide as a communications group, addressing all customer
segments, and seeing great success with our "Cellcom Total"
marketing plan, which was launched in July of this year, followed
by "Cellcom Total for Businesses", a beneficial, comprehensive
communications package for small and medium businesses. At the same
time, we witness Netvision's contribution to the Company's success,
presenting a third quarter EBITDA of NIS 75
million, through leveraging Cellcom-Netvision synergies, and
reducing cost redundancies between the companies".
Regarding market competition, Nir Sztern noted: "In the third
quarter, the Company recruited approximately 5,000 net new
subscribers. This is an impressive achievement in light of the
intense competition. The positive net adds is a result of the
"Cellcom Total" success as well as the beginning of IDF
subscribers' transfer to our network, whereas the majority of the
IDF subscribers will be joining in the following quarters. This
quarter, the Company also presented a record growth of private
landline telephony subscribers.
We will continue to strengthen Cellcom Israel's position as a
leading communications group, by leveraging future opportunities,
such as the wireline wholesale market and entering new areas of
activity, such as cellular credit card and the examination of entry
into IPTV".
Yaacov
Heen, Chief Financial
Officer, commented: "As we anticipated in
the previous quarter, we continue to see the Company's revenue
erosion due to the transfer of subscribers to the new marketing
plans, launched during the second and third quarters of 2012, in
response to the heightened competition. Furthermore, we expect this
erosion to continue in the fourth quarter as well. Yet, we continue
the implementation of efficiency measures in order to continue the
adjustment of our expense structure to revenue levels.
The focus on cost reduction and the reduction in inventory
levels and handset sales, have led to an improvement in our free
cash flow for the third quarter of 2012, which totaled NIS 414 million. The Company's cash balance and
future cash generation, will enable us to serve our debt during
2013, without having to raise additional debt.
The Company's Board of Directors decided not to distribute a
dividend for the third quarter of 2012, in order to strengthen the
Company's balance sheet at this time of market uncertainty. The
Board of directors will re-evaluate its decision in the coming
quarters as market conditions develop, and taking into
consideration the Company's needs".
Main Consolidated Financial Results
(financial data for Q3/2011, includes Netvision's results for
September 2011 only):
Q3/2012 Q3/2011 (*) % Change Q3/2012 Q3/2011
million US$
(convenience
million NIS translation)
Total revenues 1,448 1,665 (13.0%) 370.1 425.6
Operating profit 239 349 (31.5%) 61.1 89.2
Net income 124 199 (37.7%) 31.7 50.9
Free cash flow 414 262 58.0% 105.8 67.0
EBITDA 430 537 (19.9%) 109.9 137.3
EBITDA, as percent of
total revenues 29.7% 32.3% (8.0%)
(*) Since the merger transaction with Netvision was completed on
August 31, 2011, Q3/2011 consolidated
financial results include Netvision's results for September 2011 only.
Main Financial Data by Companies:
Cellcom Israel without Consolidation
adjustments Consolidated
Netvision Netvision (*) results
Change
Q3/2012 Q3/2011 (%) Q3/2012 Q3/2012
Total
revenues 1,187 1,567 (24.3%) 291 (30) 1,448
Total
service
revenues
[4] 902 1,101 (18.1%) 276 (30) 1,148
Equipment
revenues 285 466 (38.8%) 15 - 300
Operating
profit 220 350 (37.1%) 45 (26) 239
EBITDA 355 517 (31.3%) 75 - 430
EBITDA, as
percent of
total
revenues 29.9% 33.0% (9.4%) 25.8% - 29.7%
(*)Include elimination of inter-company revenues between Cellcom
Israel and Netvision, and amortization expenses attributable to the
merger.
--------------------------------------------------
4. Including revenues from content, SMS and value added
services. The Company has ceased to detail separately the revenues
from content, SMS and value added services, since most of the
marketing plans which are sold nowadays include service packages
which include unlimited air time minutes and SMS as well as
cellular surfing.
Main Performance Indicators (data refers
to cellular subscribers only):
Change
Q3/2012 Q3/2011 (%)
Cellular subscribers at
the end of period (in
thousands) 3,338 3,391 (1.6%)
Churn Rate for cellular
subscribers (in %) 8.6% 5.7% 50.9%
Monthly cellular ARPU[5]
(in NIS) 86.7 105.1 (17.5%)
Average Monthly cellular
MOU (in minutes) 399 357 11.7%
Financial Review (financial data for Q3/2011,
includes Netvision's results for September
2011 only)
Revenues for the third quarter of 2012 totaled
NIS 1,448 million ($370 million), a 13% decrease compared to
NIS 1,665 million ($426 million) in the third quarter last year. The
decrease in revenues is attributed to a 36.4% decrease in equipment
revenues, which totaled NIS 300
million ($77 million) in the
third quarter 2012 as compared to NIS 472
million ($121 million) in the
third quarter last year, as well as to a 3.8% decrease in service
revenues, which totaled NIS 1,148
million ($293 million) in the
third quarter 2012 as compared to NIS 1,193
million ($305 million) in the
third quarter last year. Netvision's contribution to total revenues
for the third quarter of 2012 totaled NIS
261 million ($67 million)
excluding inter-company revenues. Excluding Netvision's
contribution, total revenues decreased by 24.3% compared with the
third quarter last year.
The decrease in service revenues is primarily attributed
to the ongoing erosion in the price of cellular services, resulting
from the intensified competition in the market. Most of this
decrease was offset by an increase in Netvision's contribution to
service revenues, which totaled NIS 246
million ($63 million)
(excluding inter-company revenues) in the third quarter of 2012, as
compared to NIS 92 million
($24 million) in the third quarter of
2011. The increase in Netvision's contribution to service revenues
was mainly due to the consolidation of Netvision's results for
September 2011 only in the third
quarter of 2011 (following the completion of the merger transaction
with Netvision on August 31, 2011),
while in the third quarter of 2012 we consolidated Netvision's
results for the full quarter. After elimination of Netvision's
contribution to service revenues, service revenues for the third
quarter of 2012 decreased by 18.1% as compared to the third quarter
last year. As noted in the previous quarter, the Company has ceased
to detail separately the revenues from content, SMS and value added
services, since most of the marketing plans, which are currently
sold, include service packages which include unlimited air time
minutes and SMS as well as cellular surfing.
--------------------------------------------------
5. Including revenues from national roaming services and hosting
services to operators on the Company's communications networks.
Equipment revenues decreased 36.4%, from NIS 472 million ($121
million) in the third quarter last year, to NIS 300 million ($77
million) in the third quarter 2012. The decrease in
equipment revenues resulted mainly from a significant decrease in
the number of cellular handsets, which were sold in the third
quarter of 2012 as compared to the third quarter last year.
Netvision's contribution to equipment revenues for the third
quarter of 2012 totaled NIS 15
million ($4 million). After
elimination of Netvision's contribution to equipment revenues,
equipment revenues for the third quarter of 2012 decreased by 38.8%
as compared to the third quarter last year.
Cost of revenues for the third quarter of 2012 decreased
3.1% to NIS 853 million ($218 million) compared to NIS 880 million ($225
million) in the third quarter of 2011. Netvision's
contribution to cost of revenues for the third quarter of 2012
totaled NIS 190 million ($49 million) (after elimination of inter-company
expenses of NIS 30 million
($8 million)). After elimination of
Netvision's contribution, cost of revenues decreased 18.1% and
totaled NIS 663 million ($169 million) in the third quarter of 2012,
compared to NIS 810 million
($207 million) in the third quarter
last year. This decline in cost of revenues after elimination of
Netvision's contribution primarily resulted from a significant
decrease in cellular handsets cost due to a decrease in the number
of handsets sold during the third quarter of 2012 as compared with
the third quarter last year. The decrease in cost of revenues also
resulted from a decrease in cost of content services and in cost of
cellular handsets repair services due to efficiency measures
implemented in these areas, as well as a decrease in depreciation
and amortization expenses, and a decrease in royalties expenses
paid to the Ministry of Communications due to the reduction in
royalties' rate and in revenues, which are subject to
royalties.
Gross profit for the third quarter of 2012 decreased
24.2% to NIS 595 million
($152 million), compared to
NIS 785 million ($201 million) in the third quarter of 2011. Gross
profit margin for the third quarter 2012 decreased to 41.1% from
47.1% in the third quarter last year.
Selling, Marketing, General
and Administrative Expenses ("SG&A expenses") for the third
quarter of 2012 decreased 18.2% to NIS 356
million ($91 million),
compared to NIS 435 million
($111 million) in the third quarter
of 2011. SG&A expenses excluding Netvision's contribution
decreased 24.6%. The decrease in SG&A expenses after
elimination of Netvision's contribution mainly resulted from a
decrease in payroll expenses and sales commissions, mainly due to
efficiency measures, and in amortization expenses related to
capitalized sales commissions, as well as a decrease in advertising
expenses. Netvision's contribution to SG&A expenses for the
third quarter of 2012 amounted to NIS 50
million ($13 million),
including amortization expenses of intangible assets, attributable
to the merger, in the amount of NIS 26
million ($7 million).
Operating profit for the third quarter of
2012 totaled NIS 239 million
($61 million), compared to
NIS 349 million ($89 million) in the third quarter last year, a
31.5% decrease.
EBITDA for the third quarter of 2012 decreased 19.9% to
NIS 430 million ($110 million) representing 29.7% of total
revenues, compared to NIS 537 million
($137 million) represented 32.3% of
total revenues in the third quarter 2011. Netvision's contribution
to EBITDA for the third quarter 2012 totaled NIS 75 million ($19
million). EBITDA as a percent of total revenues for the
third quarter of 2012 after elimination of Netvision's contribution
to EBITDA and total revenues totaled 29.9%.
Financing expenses, net for the third
quarter of 2012 totaled NIS 64
million ($16 million),
compared to NIS 90 million
($23 million) in the third quarter
last year, a 28.9% decrease. This decrease resulted from three main
elements: (1) a gain from Israeli Consumer Price Index ("CPI")
hedging transactions in the third quarter of 2012 due to an
increase in inflation expectations, as compared to a loss from such
hedging transactions in the third quarter of 2011 due to a decrease
in inflation expectations in that quarter; (2) income from foreign
currency differences related to trade payables balances in the
third quarter of 2012, which resulted from an appreciation of 0.3%
of the NIS against the US dollar, as compared to expenses from such
foreign currency differences in the third quarter of 2011, which
resulted from a depreciation of 8.7% of the NIS against the US
dollar in that quarter; and (3) an increase in interest income,
related to cellular handsets sales, in the third quarter of 2012 as
compared to the third quarter last year. These three impacts were
partially offset by an increase in interest expenses, associated
with the Company's debentures, due to the higher debt level and the
increased inflation, as well as by a decrease in gain from currency
hedging transactions, resulted from the appreciation of the NIS
against the US dollar in the third quarter of 2012, compared to the
depreciation of the NIS against the US dollar in the third quarter
last year.
Net Income for the third quarter of 2012 totaled
NIS 124 million ($32 million), compared to NIS 199 million ($51
million) in the third quarter last year, a 37.7%
decrease.
Basic earnings per share for the third quarter of 2012
totaled NIS 1.25 ($0.32), compared to NIS
2.00 ($0.51) in the third
quarter 2011.
Operating Review (data refers to cellular subscribers
only)
New Cellular Subscribers - at the end of September 2012, the Company had approximately
3.338 million cellular subscribers. During the third quarter of
2012, the Company's cellular subscriber base increased by
approximately 5,000 net subscribers.
In the third quarter of 2012, the Company added approximately
19,000 net new 3G cellular subscribers to its 3G subscriber base,
reaching approximately 1.449 million 3G subscribers at the end of
September 2012, representing 43.4% of
the Company's total cellular subscriber base, an increase from the
37.8% 3G subscribers represented of total subscribers at the end of
September 2011.
The Churn Rate of cellular subscribers in the third
quarter 2012 was 8.6%, compared to 5.7% in the third quarter last
year. The increase in the churn rate mainly resulted from the
increased competition in the market following the entrance of the
new operators during the second quarter 2012.
Average monthly cellular Minutes of Use per subscriber
("MOU") in the third quarter 2012 totaled 399 minutes,
compared to 357 minutes in the third quarter 2011, an increase of
11.7%.
The monthly cellular Average Revenue per User (ARPU) for
the third quarter of 2012 decreased 17.5% and totaled NIS 86.7 ($22.2),
compared to NIS 105.1 ($26.9) in the third quarter last year. The
decrease is attributed to the ongoing price erosion. ARPU includes
revenues from national roaming services and hosting services to
operators on the Company's communications networks.
Financing and Investment Review (financial
data for Q3/2011, includes Netvision's results for September 2011 only)
Cash Flow
Free cash flow for the third quarter of 2012 increased by
58% and totaled NIS 414 million
($106 million), compared to
NIS 262 million ($67 million) generated in the third quarter of
2011. The increase in free cash flow mainly resulted from a
decrease in payments to vendors, primarily those related to
handsets purchases due to a decrease in handsets sales in the third
quarter of 2012 as compared to the third quarter last year, which
was partially offset by a decrease in receipts from customers,
which resulted from the decrease in total revenues in the third
quarter of 2012 as compared to the third quarter last year.
Total Equity
Total Equity as of September 30,
2012 amounted to NIS 400
million ($102 million),
primarily consisting of accumulated undistributed retained
earnings.
Capital expenditure
The Company's accrual capital expenditure for the third quarter
of 2012, totaled NIS 99 million
($25 million) (including, among
others, investment in information systems and software), compared
to NIS 134 million ($34 million) in the third quarter of 2011. The
decrease primarily resulted from a difference in timing of
investments between the quarters.
Dividend
On November 12, 2012, the
Company's board of directors decided not to declare a cash dividend
for the third quarter of 2012. In making its decision, the board of
directors considered the Company's dividend policy and business
status and determined, that although the Company can satisfy its
existing and foreseeable obligations with a dividend distribution,
given the continued intensified competition and substantial changes
in pricing and their continued current and expected adverse effect
on the Company's results of operations, the Company should wait for
the competitive situation to clarify, to strengthen the Company's
balance sheet and not distribute a dividend at this time. The board
of directors will re-evaluate its decision in future quarters. No
future dividend declaration is guaranteed and is subject to the
Company's board of directors' sole discretion, as detailed in the
Company's annual report for the year ended December 31, 2011 on Form 20-F, under "Item 8 -
Financial Information - Dividend Policy".
Debentures
For information regarding the Company's summary of financial
undertakings and details regarding the Company's outstanding
debentures as of September 30, 2012,
see "Disclosure for Debenture Holders" section in this press
release.
Other developments during the third
quarter of 2012 and subsequent to the end of the reporting
period
Regulation
In August 2012, the proposed
amendment to the Communications Law, setting gradually increasing
financial sanctions on communication operators, for breach of their
licenses, the amount of which shall be calculated as a percentage
of the operator's income and based on the gravity of the breach,
was enacted.
For additional details see the Company's most recent annual
report on Form 20-F for the year ended December 31, 2011, under "Item 3. Key Information
- D. Risk Factors - Risks related to our business - We operate in a
heavily regulated industry, which can harm our results of
operations".
Changes in Senior Management
Mr. Ran Harpaz resigned from his office as vice president of
Information Technology of the Company effective October 2012. Mr. Harpaz is replaced by Mr.
Jack Oster, as of November 2012.
Jack Oster served as senior
director of global delivery centers and global shared services
centers as part of global IT management team of Teva Pharmaceutical
Industries Ltd from 2007 to November
2012. From 2005 - 2007 Mr. Oster served as Vice
President of Business Applications solutions of Yael Software Ltd.
From 2000 - 2005 Mr. Oster served as Senior Manager as part of the
management consulting group of KPMG Consulting. Mr. Oster holds a
B.Sc. in industrial engineering from Tel-Aviv
University and graduated the Executive MBA program from
Kellogg-Recanati.
Conference Call Details
The Company will be hosting a conference call on Tuesday, November 13, 2012 at 9:00 am EST, 6:00 am
PST, 14:00 UK time, 16:00 Israel time. On the call, management will
review and discuss the results, and will be available to answer
questions. To participate, please either access the live webcast on
the Company's website, or call one of the following
teleconferencing numbers below. Please begin placing your
calls at least 10 minutes before the conference call commences. If
you are unable to connect using the toll-free numbers, please try
the international dial-in number.
US Dial-in Number: 1-888-668-9141
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0610
International Dial-in Number: +972-3-918-0610
at: 9:00 am EST; 6:00 am PST; 14:00 UK time; 16:00 Israel Time
To access the live webcast of the conference call, please
access the investor relations section of Cellcom Israel's website:
http://www.cellcom.co.il. After the call, a replay of the
call will be available under the same investor relations
section.
About Cellcom Israel
Cellcom Israel Ltd., established in 1994, is the leading Israeli
cellular provider; Cellcom Israel provides its approximately 3.338
million subscribers (as at September 30,
2012) with a broad range of value added services including
cellular and landline telephony, roaming services for tourists in
Israel and for its subscribers
abroad and additional services in the areas of music, video, mobile
office etc., based on Cellcom Israel's technologically advanced
infrastructure. The Company operates an HSPA 3.5 Generation network
enabling advanced high speed broadband multimedia services, in
addition to GSM/GPRS/EDGE networks. Cellcom Israel offers
Israel's broadest and largest
customer service infrastructure including telephone customer
service centers, retail stores, and service and sale centers,
distributed nationwide. Through its broad customer service network
Cellcom Israel offers technical support, account information,
direct to the door parcel delivery services, internet and fax
services, dedicated centers for hearing impaired, etc. Cellcom
Israel further provides through its wholly owned subsidiaries
internet connectivity services and international calling services,
as well as landline telephone communication services in
Israel, in addition to data
communication services. Cellcom Israel's shares are traded both on
the New York Stock Exchange (CEL) and the Tel Aviv Stock Exchange
(CEL). For additional information please visit the Company's
website http://www.cellcom.co.il
Forward-Looking Statements
The following information contains, or may be deemed to contain
forward-looking statements (as defined in the U.S. Private
Securities Litigation Reform Act of 1995 and the Israeli Securities
Law, 1968). In some cases, you can identify these statements by
forward-looking words such as "may," "might," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict,"
"potential" or "continue," the negative of these terms and other
comparable terminology. These forward-looking statements, which are
subject to risks, uncertainties and assumptions about us, may
include projections of our future financial results, our
anticipated growth strategies and anticipated trends in our
business. These statements are only predictions based on our
current expectations and projections about future events. There are
important factors that could cause our actual results, level of
activity, performance or achievements to differ materially from the
results, level of activity, performance or achievements expressed
or implied by the forward-looking statements. Factors that could
cause such differences include, but are not limited to: changes to
the terms of our license, new legislation or decisions by the
regulator affecting our operations, new competition and changes in
the competitive environment, the outcome of legal proceedings to
which we are a party, particularly class action lawsuits, our
ability to maintain or obtain permits to construct and operate cell
sites, and other risks and uncertainties detailed from time to time
in our filings with the U.S. Securities and Exchange Commission,
including under the caption "Risk Factors" in our Annual Report for
the year ended December 31, 2011.
Although we believe the expectations reflected in the
forward-looking statements contained herein are reasonable, we
cannot guarantee future results, level of activity, performance or
achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of any of these
forward-looking statements. We assume no duty to update any of
these forward-looking statements after the date hereof to conform
our prior statements to actual results or revised expectations,
except as otherwise required by law.
The Company prepares its financial statements in accordance with
International Financial Reporting Standards (IFRS), as issued by
the International Accounting Standards Board (IASB). 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
3.912 = US$ 1 as published by
the Bank of Israel for
September 30, 2012.
Use of non-IFRS financial measures
EBITDA is a non-IFRS measure and is defined as income
before financing income (expenses), net; other income (expenses),
net; income tax; depreciation and amortization and share based
payments. This is an accepted measure in the communications
industry. The Company presents this measure as an additional
performance measure as the Company believes that it enables us to
compare operating performance between periods and companies, net of
any potential differences which may result from differences in
capital structure, taxes, age of fixed assets and related
depreciation expenses. EBITDA should not be considered in
isolation, or as a substitute for operating income, any other
performance measures, or cash flow data, which were prepared in
accordance with Generally Accepted Accounting Principles as
measures of profitability or liquidity. EBITDA does not take into
account debt service requirements, or other commitments, including
capital expenditures, and therefore, does not necessarily indicate
the amounts that may be available for the Company's use. In
addition, EBITDA may not be comparable to similarly titled measures
reported by other companies, due to differences in the way these
measures are calculated. See the reconciliation between the net
income and the EBITDA presented at the end of this Press
Release.
Free cash flow is a non-IFRS measure and is defined as
the net cash provided by operating activities minus the net cash
used in investing activities excluding short-term investment in
tradable debentures and deposits and proceeds from sales of such
debentures (including interest received in relation to such
debentures) and deposits. See the reconciliation note in this Press
Release.
Financial tables
follow
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Interim
Statements of Financial position
Convenience
translation
Into
U.S. dollar
September September September December
30, 30, 30, 31,
2011 2012 2012 2011
NIS NIS US$ NIS
millions millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Audited)
Assets
Cash and cash equivalents 869 1,139 291 920
Current investments,
including derivatives 479 493 126 290
Trade receivables 1,862 1,912 489 1,859
Other receivables 87 87 22 93
Inventory 135 125 32 170
Total current assets 3,432 3,756 960 3,332
Trade and other receivables 1,282 1,291 330 1,337
Property, plant and
equipment, net 2,141 2,084 533 2,168
Intangible assets, net 1,720 1,552 397 1,680
Deferred tax assets 37 60 15 40
Total non-current assets 5,180 4,987 1,275 5,225
Total assets 8,612 8,743 2,235 8,557
Liabilities
Short-term credit and
current maturities of
long-term loans and
debentures 681 1,142 292 674
Trade payables and accrued
expenses 1,016 859 220 1,026
Current tax liabilities 58 114 29 69
Provisions 112 169 43 148
Other payables, including
derivatives 478 424 109 547
Dividend declared 232 - - 189
Total current liabilities 2,577 2,708 693 2,653
Long-term loans from banks 23 10 3 19
Debentures 5,464 5,399 1,380 5,452
Provisions 21 21 5 21
Other long-term liabilities 84 35 9 41
Liability for employee
rights upon retirement, net - 13 3 10
Deferred tax liabilities 151 157 40 174
Total non- current
liabilities 5,743 5,635 1,440 5,717
Total liabilities 8,320 8,343 2,133 8,370
Equity attributable to
owners of the Company
Share capital 1 1 - 1
Cash flow hedge reserve - 3 1 7
Retained earnings 287 395 101 175
Non-controlling interest 4 1 - 4
Total equity 292 400 102 187
Total liabilities and equity 8,612 8,743 2,235 8,557
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Interim
Statements of Income
Year
Three-month period ended
Nine-month period ended ended December
September 30, September 30, 31,
Convenience Convenience
translation translation
into US into US
dollar dollar
2011 2012 2012 2011 2012 2012 2011
US$ US$ NIS
NIS millions millions NIS millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues 4,481 4,531 1,158 1,665 1,448 370 6,506
Cost of
revenues (2,434) (2,590) (662) (880) (853) (218) (3,408)
Gross profit 2,407 1,941 496 785 595 152 3,098
Selling and
marketing
expenses (700) (671) (172) (259) (215) (55) (990)
General and
administrative
expenses (489) (474) (121) (176) (141) (36) (685)
Other expenses,
net (1) - - (1) - - (1)
Operating
profit 1,217 796 203 349 239 61 1,422
Financing
income 87 149 39 35 66 17 116
Financing
expenses (319) (366) (94) (125) (130) (33) (409)
Financing
expenses, net (232) (217) (55) (90) (64) (16) (293)
Profit before
taxes on income 985 579 148 259 175 45 1,129
Taxes on income (236) (161) (41) (60) (51) (13) (304)
Profit for the
period 749 418 107 199 124 32 825
Profit for the
period
attributable
to:
Owners of the
Company 749 418 107 199 124 32 824
Non-controlling
interests - - - - - - 1
Profit for the
period 749 418 107 199 124 32 825
Earnings per
share
Basic earnings
per share in
NIS 7.53 4.20 1.07 2.00 1.25 0.32 8.28
Diluted
earnings per
share in NIS 7.53 4.20 1.07 2.00 1.25 0.32 8.28
Cellcom Israel
Ltd.
(An Israeli Corporation)
Condensed Consolidated Interim
Statements of Cash Flows
Year
ended
Nine-month period ended Three-month period ended December
September 30, September 30, 31,
Convenience Convenience
translation translation
into into
US dollar US dollar
2011 2012 2012 2011 2012 2012 2011
US$ US$ NIS
NIS millions millions NIS millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows
from
operating
activities
Profit for
the period 749 418 107 199 124 32 825
Adjustments
for:
Depreciation
and
amortization 519 579 148 183 190 48 738
Share based
payment 4 4 1 3 1 - 6
Loss (gain)
on sale of
property,
plant and
equipment 1 - - 1 (1) - -
Income tax
expense 236 161 41 60 51 13 304
Financing
expenses,
net 232 217 55 90 64 16 293
Other
expenses
(income) - - - - (1) - 2
Changes in
operating
assets and
liabilities:
Change in
inventory (31) 41 11 7 3 1 (67)
Change in
trade
receivables
(including
long-term
amounts) (515) 64 16 (189) 98 25 (585)
Change in
other
receivables
(including
long-term
amounts) 43 (42) (11) 49 - - 61
Change in
trade
payables,
accrued
expenses and
provisions 166 (30) (8) 48 59 15 146
Change in
other
liabilities
(including
long-term
amounts) 13 (13) (3) 1 (29) (7) (52)
Proceeds
from
(payments
for)
derivative
hedging
contracts,
net (15) 17 4 (6) 9 2 (14)
Income tax
paid (292) (165) (42) (86) (48) (12) (325)
Income tax
received - 15 4 - - - -
Net cash
from
operating
activities 1,110 1,266 323 360 520 133 1,332
Cellcom Israel Ltd.
(An Israeli Corporation)
Condensed Consolidated Interim
Statements of Cash Flows (cont'd)
Year
ended
Nine-month period ended Three-month period ended December
September 30, September 30, 31,
Convenience Convenience
translation translation
into into
US dollar US dollar
2011 2012 2012 2011 2012 2012 2011
US$ US$ NIS
NIS millions millions NIS millions millions millions
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flows
from
investing
activities
Acquisition
of property,
plant, and
equipment (219) (376) (96) (84) (92) (24) (333)
Acquisition
of
intangible
assets (75) (82) (21) (23) (30) (8) (99)
Acquisition
of
subsidiary,
net of cash
acquired (1,458) - - (1,458) - - (1,458)
Change in
current
investments,
net 3 (204) (52) (4) 468 120 197
Proceeds
from
(payments
for) other
derivative
contracts,
net (7) 11 3 2 8 2 1
Proceeds
from sale of
property,
plant and
equipment 2 3 1 - 2 1 3
Interest
received 27 24 6 7 16 4 33
Loan to
equity
accounted
investee - - - - 1 - -
Proceeds
from sale of
shares in a
consolidated
company - 7 2 - - - -
Net cash
from (used
in)
investing
activities (1,727) (617) (157) (1,560) 373 95 (1,656)
Cash flows
from
financing
activities
Proceeds
from
(payments
for)
derivative
contracts,
net 11 (11) (3) 1 (5) (1) 11
Repayment of
long-term
loans from
banks - (9) (2) - (5) (1) (4)
Repayment of
debentures (354) (661) (169) (179) (182) (47) (354)
Proceeds
from
issuance of
debentures,
net of
issuance
costs 2,165 992 253 1,132 - - 2,165
Dividend
paid (626) (391) (100) (292) (130) (33) (858)
Interest
paid (243) (350) (89) (120) (168) (43) (245)
Net cash
from (used
in)
financing
activities 953 (430) (110) 542 (490) (125) 715
Cash balance
presented
under assets
held for
sales/ Cash
outflow due
to sale of
assets held
for sale - - - - - - (4)
Changes in
cash and
cash
equivalents 336 219 56 (658) 403 103 387
Cash and
cash
equivalents
at beginning
of the
period 533 920 235 1,527 736 188 533
Cash and
cash
equivalents
at end of
the period 869 1,139 291 869 1,139 291 920
Cellcom Israel
Ltd.
(An Israeli Corporation)
Reconciliation for Non-IFRS
Measures
EBITDA
The following is a reconciliation of net income to EBITDA:
Year
ended
Three-month period ended December
September 30, 31,
Convenience
translation
into US
dollar
2011 2012 2012 2011
NIS NIS US$ NIS
millions millions millions millions
Profit for the period 199 124 32 825
Taxes on income 60 51 13 304
Financing income (35) (66) (17) (116)
Financing expenses 125 130 33 409
Other expenses 2 - - 1
Depreciation and amortization 183 190 48 738
Share based payments 3 1 - 6
EBITDA 537 430 110 2,167
Free Cash Flow
The following table shows the calculation of free cash flow:
Year
ended
Three-month period ended
December
September 30, 31,
Convenience
translation
into US
dollar
2011 2012 2012 2011
NIS NIS US$ NIS
millions millions millions millions
Cash flows from operating
activities 360 520 133 1,332
Cash flows from investing
activities (*) (102) 373 95 (*)(198)
Short-term Investment in
(sale of) tradable debentures
and deposits (**) 4 (479) (122) (197)
Free cash flow 262 414 106 937
(*) After elimination of the net cash flows used for the
acquisition of Netvision in the amount of NIS 1,458 million (net of cash acquired in the
amount of NIS 120 million).
(**) Including interest received in relation to such
debentures.
Cellcom Israel
Ltd.
Disclosure for debenture holders as of September
30,2012
Aggregation of the information regarding the debenture series
issued by the company(1), in million NIS
Principal
Original on the
Issuance Date of
Series Date Issuance As of 30.09.2012
Principal Debenture
Linked Interest Balance
Balance Principal Accumulated Value in Market
on Trade Balance in Books Books(2) Value
22/12/05
10/01/06*
A(4) 31/05/06* 1,065 0 0 0 0 0
22/12/05
02/01/06*
05/01/06*
10/01/06*
B(4)
** 31/05/06* 925.102 925.102 1,101.919 42.924 1,144.844 1,202.910
07/10/07
C 03/02/08* 326 36.222 42.096 0.155 42.251 43.104
07/10/07
03/02/08*
06/04/09*
30/03/11*
D ** 18/08/11* 2,423.075 2,423.075 2,816.017 36.438 2,852.455 3,011.882
06/04/09
30/03/11*
E ** 18/08/11* 1,798.962 1,499.135 1,499.135 68.796 1,567.931 1,593.731
F(4)
(5) **
20/03/12 714.802 714.802 729.923 1.496 731.419 719.663
G(4)
(5) 20/03/12 285.198 285.198 285.198 0.906 286.104 284.171
Total 7,538.139 5,883.534 6,474.289 150.714 6,625.004 6,855.461
Trustee
Principal Interest
As of 13.11.2012 Interest Repayment Dates Repayment Contact
Series Rate(fixed) (3) Dates Linkage Details
Principal Linked
Balance Principal
on Trade Balance From To
Reznik,
Paz, Nevo
Trusts Ltd.
Accountant
Yossi
Reznik. 14
Yad Haruzim
St., Tel
January 5 Aviv.
and July Linked Tel:
A(4) 0 0 5.00% 05.07.08 05.07.12 5 to CPI 03-6393311.
Hermetic
Trust
(1975) Ltd.
Meirav Ofer
Oren. 113
Hayarkon
St.,
Tel Aviv.
B(4) Linked Tel:
** 925.102 1,101.919 5.30% 05.01.13 05.01.17 January 5 to CPI 03-5274867.
Reznik,
Paz, Nevo
Trusts Ltd.
Accountant
Yossi
Reznik. 14
Yad Haruzim
St., Tel
March 1 Aviv.
and
September Linked Tel:
C 36.222 42.096 4.60% 01.03.09 01.03.13 1 to CPI 03-6393311.
Hermetic
Trust
(1975) Ltd.
Meirav Ofer
Oren. 113
Hayarkon
St.,
Tel Aviv.
Linked Tel:
D ** 2,423.075 2,816.017 5.19% 01.07.13 01.07.17 July 1 to CPI 03-5274867.
Hermetic
Trust
(1975) Ltd.
Meirav Ofer
Oren. 113
Hayarkon
St., Tel
Not Aviv. Tel:
E ** 1,499.135 1,499.135 6.25% 05.01.12 05.01.17 January 5 linked 03-5274867.
Strauss
Lazar Trust
Company
(1992) Ltd
17 Yizhak
January 5 Sadeh St.,
F(4) Tel Aviv.
(5) ** and July Linked Tel: 03-
714.802 729.923 4.35% 05.01.17 05.01.20 5 to CPI 6237777
Strauss
Lazar Trust
Company
(1992) Ltd
17 Yizhak
January 5 Sadeh St.,
Tel Aviv.
G(4) and July Not Tel: 03-
(5) 285.198 285.198 6.74% 05.01.17 05.01.19 5 linked 6237777
Total 5,883.534 6,474.289
Comments:
(1) In the reported period, the company fulfilled all terms of
the debentures. The company also fulfilled all terms of the
Indentures. Debentures F and G financial covenants - as
of September 30, 2012 the net leverage (net debt to
EBITDA ratio- see definition in the Company's annual report for the
year ended December 31, 2011 on Form
20-F, under "Item 5. Operating and Financial Review and Prospects -
B. Liquidity and Capital Resources - Debt Service - Shelf
prospectus") was 2.70. (2) Including interest accumulated in
books. (3) Annual payments, excluding series A, C, F and G
debentures in which the payments are semi annual. (4) Regarding
Debenture series A, B, F and G- the company undertook not to create
any pledge on its assets, as long as debentures are not fully
repaid, subject to certain exclusions. (5) Regarding Debenture
series F and G - the company has the right for early redemption
under certain terms (see the Company's annual report for the year
ended December 31, 2011 on Form 20-F,
under "Item 5. Operating and Financial Review and Prospects- B.
Liquidity and Capital Resources - Debt Service - Shelf
prospectus").
(*) On these dates additional debentures of the series were
issued, the information in the table refers to the full series.
(**) Series B, D, E and F are material, which represent 5% or
more of the total liabilities of the Company, as presented in the
financial statements.
Cellcom Israel
Ltd.
Disclosure for debenture holders as of September 30,2012 (cont.)
Debentures rating details*
Additional
ratings
between
original
issuance
and the
Rating recent
assigned Recent date of
Rating as upon date of rating as
of Rating as issuance rating as of
Rating 30.9.2012 of of the of 13.11.2012
Series Company (1) 13.11.2012 Series 13.11.2012 (2)
Date Rating
5/2006,
9/2007,
1/2008,
10/2008,
3/2009,
9/2010,
8/2011,
1/2012,
3/2012,
S&P 5/2012, AA-,
B Ma'alot AA- AA- AA- Nov-12 11/2012 AA,AA- (2)
1/2008,
10/2008,
3/2009 ,
9/2010,
8/2011,
1/2012,
3/2012,
S&P 5/2012, AA-,
C Ma'alot AA- AA- AA- Nov-12 11/2012 AA,AA- (2)
1/2008,
10/2008,
3/2009 ,
9/2010,
8/2011,
1/2012,
3/2012,
S&P 5/2012, AA-,
D Ma'alot AA- AA- AA- Nov-12 11/2012 AA,AA- (2)
9/2010,
8/2011,
1/2012,
3/2012,
S&P 5/2012,
E Ma'alot AA- AA- AA Nov-12 11/2012 AA,AA- (2)
S&P 5/2012,
F Ma'alot AA- AA- AA Nov-12 11/2012 AA,AA- (2)
S&P 5/2012,
G Ma'alot AA- AA- AA Nov-12 11/2012 AA,AA- (2)
- In May 2012, S&P Ma'alot
updated the Company's rating from an "ilAA/negative" to an
"ilAA-/negative".
- In September 2007, S&P
Ma'alot issued a notice that the AA- rating for debentures issued
by the Company was in the process of recheck with positive
implications (Credit Watch Positive). In October 2008, S&P Ma'alot issued a notice
that the AA- rating for debentures issued by the Company is in the
process of recheck with stable implications (Credit Watch Stable).
This process was withdrawn upon assignment of AA rating in
March 2009. In August 2011, S&P Ma'alot issued a notice that
the AA rating for debentures issued by the Company is in the
process of recheck with negative implications (Credit Watch
Negative). In May 2012, S&P
Ma'alot updated the Company's rating from an "ilAA/negative" to an
"ilAA-/negative". In November 2012,
S&P Ma'alot affirmed the Company's rating of "ilAA-/negative".
For details regarding the rating of the debentures see S&P
Ma'alot's report dated November 4,
2012.
* A securities rating is not a recommendation to buy, sell or
hold securities. Ratings may be subject to suspension, revision or
withdrawal at any time, and each rating should be evaluated
independently of any other rating.
Cellcom Israel
Ltd.
Summary of Financial Undertakings (according to repayment
dates) as of September
30,2012
a. Debentures issued to the public by the Company and held by
the public, excluding such debentures held by the Company's parent
company, by a controlling shareholder, by companies controlled by
them, or by companies controlled by the Company, based on the
Company's "solo" financial data (in thousand NIS).
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked to Euro
to CPI CPI Dollar Other
First year 783,950 290,927 - - - 336,536
Second year 744,678 290,927 - - - 278,571
Third year 744,678 290,927 - - - 221,509
Fourth year 744,678 290,927 - - - 164,585
More than five
years 1,467,130 571,295 - - - 159,785
Total 4,485,114 1,735,004 - - - 1,160,985
b. Private debentures and other non-bank credit, excluding such
debentures held by the Company's parent company, by a controlling
shareholder, by companies controlled by them, or by companies
controlled by the Company, based on the Company's "solo" financial
data (in thousand NIS) - None
c. Credit from banks in Israel
based on the Company's "solo" financial data (in thousand NIS) -
None
d. Credit from banks abroad based on the Company's "solo"
financial data (in thousand NIS) - None
e. Total of sections a - d above, total credit from banks,
non-bank credit and debentures based on the Company's "solo"
financial data (in thousand NIS).
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked to Euro
to CPI CPI Dollar Other
First year 783,950 290,927 - - - 336,536
Second year 744,678 290,927 - - - 278,571
Third year 744,678 290,927 - - - 221,509
Fourth year 744,678 290,927 - - - 164,585
More than five
years 1,467,130 571,295 - - - 159,785
Total 4,485,114 1,735,004 - - - 1,160,985
f. Out of the balance sheet Credit exposure based on the
Company's "solo" financial data - None
g. Out of the balance sheet Credit exposure of all the Company's
consolidated companies, excluding companies that are reporting
corporations and excluding the Company's data presented in section
f above (in thousand NIS) - None
Cellcom Israel Ltd.
Summary of Financial Undertakings (according to repayment
dates) as of September
30,2012 (cont.)
h. Total balances of the credit from banks, non-bank credit and
debentures of all the consolidated companies, excluding companies
that are reporting corporations and excluding Company's data
presented in sections a - d above (in thousand NIS).
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked Euro
to CPI to CPI Dollar Other
First year - 16,367 - - - 1,333
Second year - 5,041 - - - 603
Third year - 5,041 - - - 303
Fourth year - 26 - - - -
More than five
years - - - - - -
Total - 26,475 - - - 2,239
- Total balances of credit granted to the Company by the parent
company or a controlling shareholder and balances of debentures
offered by the Company held by the parent company or the
controlling shareholder (in thousand NIS).
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked Euro
to CPI to CPI Dollar Other
First year - 12 - - - 4
Second year - 12 - - - 3
Third year - 12 - - - 2
Fourth year - 12 - - - 1
More than five
years - 12 - - - 1
Total - 58 - - - 11
j. Total balances of credit granted to the Company by companies
held by the parent company or the controlling shareholder, which
are not controlled by the Company, and balances of debentures
offered by the Company held by companies held by the parent company
or the controlling shareholder, which are not controlled by the
Company (in thousand NIS).
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked Euro
to CPI to CPI Dollar Other
First year 41,734 8,888 - - - 13,652
Second year 38,909 8,888 - - - 11,000
Third year 38,909 8,888 - - - 8,412
Fourth year 38,909 8,888 - - - 5,826
More than five
years 46,380 13,719 - - - 3,858
Total 204,842 49,721 - - - 42,749
Cellcom Israel Ltd.
Summary of Financial Undertakings (according to repayment
dates) as of September
30,2012 (cont.)
k. Total balances of credit granted to the Company by
consolidated companies and balances of debentures offered by the
Company held by the consolidated companies (in thousand NIS)
Gross
interest
payments
(without
deduction
Principal payments of tax)
ILS not
ILS linked linked Euro
to CPI to CPI Dollar Other
First year - - - - - 1,234
Second year - 26,371 - - - 1,234
Third year - - - - - -
Fourth year - - - - - -
More than five
years - - - - - -
Total - 26,371 - - - 2,468
Company Contact
Yaacov Heen
Chief Financial Officer
investors@cellcom.co.il
Tel: +972-52-998-9755
IR Contacts
Porat Saar
CCG Investor Relations Israel & US
cellcom@ccgisrael.com
Tel: +1-646-233-2161
SOURCE Cellcom Israel Ltd.