Internet Gold Reports Financial Results For The First Quarter of 2013

  Internet Gold Reports Financial Results For The First Quarter of 2013

   - Net income attributable to shareholders for the first quarter of 2013
                    totaled NIS 24 million ($7 million) -

Business Wire

RAMAT GAN, Israel -- May 13, 2013

Internet Gold – Golden Lines Ltd. (NASDAQ Global Market and TASE: IGLD) today
reported its financial results for the first quarter ended March 31, 2013.

Bezeq’s results: For the first quarter of 2013, the Bezeq Group reported
revenues of NIS 2.4 billion ($ 659 million) and operating profit of NIS 761
million ($ 209 million). Bezeq’s EBITDA for the first quarter totaled NIS 1.1
billion ($ 299 million), representing an EBITDA margin of 45%. Net income for
the period attributable to the shareholders of Bezeq totaled NIS 497 million
($ 136 million). Bezeq's cash flow from operating activities totaled NIS 972
million ($ 266 million) during the first quarter of 2013.

Cash Position: As of March 31, 2013,  Internet Gold’s unconsolidated cash and
cash equivalents totaled NIS 166 million ($ 16 million), its unconsolidated
gross debt was NIS 1 billion ($ 283 million) and its unconsolidated net debt
was NIS 865 million ($ 237 million).

Internet Gold's Unconsolidated Balance Sheet Data*
                                                             
In millions                        Convenience
                                   translation into
                                   U.S. dollars
                                   (Note A)
                       March 31,   March 31,          March 31,   December 31,
                       2013        2013               2012        2012
                       NIS         US$                NIS         NIS
Short term             134         37                 133         138
liabilities
Long term              897         246                998         895
liabilities
Total liabilities      1,031       283                1,131       1,033
Cash and cash          166         46                 325         179
equivalents
Total net debt         865         237                806         854

* Does not include the balance sheet of B Communications.

Dividends from Bezeq: On May 13, 2013, Internet Gold's subsidiary, B
Communications Ltd., is expected to receive two dividend payments from Bezeq
which together total NIS 421 million ($ 115 million). These dividend payments
include a current dividend of NIS 266 million ($ 73 million), representing B
Communications’ share of Bezeq’s net profit for the second half of 2012, and a
special dividend of NIS 155 million ($ 42 million), representing B
Communications’ share of the fifth installment of six special dividend
payments declared by Bezeq and approved by its shareholders in 2011.

Internet Gold’s First Quarter Financial Results

Internet Gold's consolidated revenues for the first quarter of 2013 were NIS
2.4 billion ($ 659 million), a 12% decrease compared with NIS 2.7 billion
reported in the first quarter of 2012. For both the current and the prior-year
periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s
revenues.

During the first quarter of 2013, B Communications recorded net amortization
expenses related to its Bezeq purchase price allocation (“Bezeq PPA”) of NIS
186 million ($ 51 million) in its consolidated financial statements.  From
April 14, 2010, the date of the acquisition of its interest in Bezeq, until
March 31, 2013, B Communications has amortized approximately 53% of the total
Bezeq PPA. The Bezeq PPA amortization expense is a non-cash expense that is
subject to adjustment. If, for any reason, B Communications finds it necessary
or appropriate to make adjustments to amounts already expensed, it may result
in significant changes to its audited financial reports, as well as to future
financial statements.

Internet Gold’s financial expenses, net: Internet Gold’s unconsolidated net
financial expenses for the first quarter of 2013 were NIS 11 million ($ 3
million). These expenses consisted primarily of expenses related to its
publicly traded debentures, which totaled NIS 14 million ($ 4 million) that
were offset by financial income of NIS 3 million ($ 1 million) generated from
short term investments.

Internet Gold's net income attributable to shareholders for the first quarter
of 2013 totaled NIS 24 million ($ 7 million), compared to NIS 3 million
reported in the first quarter of 2012.

Internet Gold’s Unconsolidated Financial Results
                                                              
In millions                         Convenience
                                    translation
                                    into
                                    U.S. dollars
                                    (Note A)
                     Three-month    Three-month     Three-month
                     period ended   period ended    period ended   Year ended
                     March 31,      March 31,       March 31,      December
                                                                   31,
                     2013           2013            2012           2012
                     NIS            US$             NIS            NIS
Revenues             -              -               -              -
Financial expenses   (11)           (3)             (9)            (60)
Other expenses       (1)            -               (1)            (14)
Interest in BCOM's   36             10              13             37
net income
Net income (loss)    24             7               3              (37)

Comments of Management

Commenting on the results, Doron Turgeman, CEO of Internet Gold said, “The
first quarter of 2013 was another stable period for Bezeq, demonstrating the
cash flow-generating power of its formidable position in Israel’s
telecommunications market. We currently have sufficient cash reserves on hand
to service our debt until September 2014 and we will continue our efforts to
strengthen our financial stability and liquidity with the goal of improving
our debt and equity positions.”

Bezeq Group Results (Consolidated)

To provide further insight into its results, the Company is providing the
following summary of the consolidated financial report of the Bezeq Group for
the first quarter ended March 31, 2013. For a full discussion of Bezeq’s
results for the first quarter of 2013, please refer to its website:
http://ir.bezeq.co.il.

Bezeq Group (consolidated)          Q1 2013        Q1 2012       % change
                                     (NIS millions)
Revenues                             2,405           2,740          -12.2%
Operating profit                     761             850            -10.5%
EBITDA                               1,089           1,208          -9.9%
EBITDA margin                        45.3%           44.1%
Net profit attributable to           497             582            -14.6%
Bezeq shareholders
Diluted EPS (NIS)                   0.18           0.21          -14.3%
Cash flow from operating             972             998            -2.6%
activities
Payments for investments, net        246             413            -40.4%
Free cash flow ^1                   726            585           24.1%
Net debt/EBITDA (end of period)      1.68            1.37
^2
Net debt/shareholders' equity       2.46           2.05          
(end of period)
                                                                    
^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 first quarter of 2013 amounted to NIS 2.41
billion ($ 659 million) compared with NIS 2.74 billion in the corresponding
quarter of 2012, a decrease of 12.2%. The reduction in the Bezeq Group
revenues was primarily due to a decrease in revenues from the cellular
segment, specifically due to a reduction in revenues from handset sales
(decrease of NIS 160 million) together with a decrease in revenues from
cellular services (decrease of NIS 120 million). In addition, revenues from
the fixed-line segment decreased NIS 70 million.

Operating profit of the Bezeq Group in the first quarter of 2013 amounted to
NIS 761 million ($ 209 million) compared with NIS 850 million in the
corresponding quarter of 2012, a decrease of 10.5%. Earnings before interest,
taxes, depreciation and amortization (EBITDA) of the Bezeq Group in the first
quarter of 2013 amounted to NIS 1.09 billion ($ 299 million) (EBITDA margin of
45.3%) compared with NIS 1.21 billion (EBITDA margin of 44.1%) in the
corresponding quarter of 2012, a decrease of 9.9%. Net profit attributable to
Bezeq shareholders amounted to NIS 497 million ($ 136 million) compared with
NIS 582 million in the corresponding quarter of 2012, a decrease of 14.6%. The
decline in profitability metrics was primarily due to a decrease in
profitability in the cellular segment as a result of increased competition in
the sector.

Cash flow from operating activities of the Bezeq Group in the first quarter of
2013 amounted to NIS 972 million ($ 266 million) compared with NIS 998 million
in the corresponding quarter of 2012, a decrease of 2.6%. Free cash flow of
the Bezeq Group in the first quarter of 2013 amounted to NIS 726 million ($
199 million) compared with NIS 585 million in the corresponding quarter of
2012, an increase of 24.1%. The increase in free cash flow was due the
completion of major infrastructure projects initiated in prior years,
specifically the NGN and submarine cable.

Net financial debt of the Bezeq Group was NIS 7.30 billion ($ 2.0 billion) at
March 31, 2013 compared with NIS 6.65 billion as at March 31, 2012.

Notes:

A. Convenience Translation to Dollars: For the convenience of the reader,
certain of the reported NIS figures of March 31, 2013 have been presented in
millions of U.S. dollars, translated at the representative rate of exchange as
of March 31, 2013 (NIS 3.648 = U.S. Dollar 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:
BZEQ). 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)
                                                                 
                                            Convenience
                                            translation
                                            into
                                            U.S. dollars
                                            (Note A)
                                March 31    March 31       March 31   March 31
                                2013        2013           2012       2012
                                NIS         US$            NIS        NIS
                                                                      
Assets
Cash and cash equivalents       643         176            1,509      764
Investments, including
derivative financial
instruments                     2,192       601            1,978      1,655
Trade receivables, net          2,875       788            3,130      2,927
Other receivables               407         111            357        329
Inventory                       148         41             225        123
Assets classified as            251         69             168        164
held-for-sale
                                                                      
Total current assets            6,516       1,786          7,367      5,962
                                                                      
Investments, including
derivative financial
instruments                     93          25             101        90
Long-term trade and other       950         261            1,442      1,074
receivables
Property, plant and             6,676       1,830          7,076      6,911
equipment
Intangible assets               7,037       1,929          7,824      7,252
Deferred and other expenses     391         107            410        384
Investment in
equity-accounted investee
(mainly loans)                  1,024       281            1,041      1,005
Deferred tax assets             62          17             *191       *128
                                                                      
Total non-current assets        16,233      4,450          18,085     16,844
                                                                      
Total assets                    22,749      6,236          25,452     22,806
                                                                      
*Restated following the retrospective application of the amendment to IAS
19, Employee Benefits.


Internet Gold – Golden Lines Ltd.

Condensed Consolidated Statements of Financial Position as at (cont’d)

(In millions)

                                          Convenience            
                                            translation
                                            into
                                            U.S. dollars
                                            (Note A)
                                March 31    March 31       March 31   March 31
                                2013        2013           2012       2012
                                NIS         US$            NIS        NIS
                                                                      
Liabilities
Short-term bank credit,
current maturities
of long-term liabilities and    1,602       439            1,216      1,707
debentures
Trade payables                  652         179            895        793
Other payables, including
derivative
financial instruments           872         239            1,043      746
Dividend payable                677         186            677        669
Current tax liabilities         626         172            570        588
Provisions                      126         34             181        145
Employee benefits               230         63             *351       *251
Total current liabilities       4,785       1,312          4,933      4,899
                                                                      
Debentures                      5,773       1,583          6,375      5,913
Bank loans                      6,416       1,759          6,835      6,422
Loans from institutions and     538         147            541        540
others
Dividend payable                -           -              645        -
Employee benefits               259         71             *247       *260
Other liabilities               80          22             77         67
Provisions                      67          18             69         66
Deferred tax liabilities        1,092       299            1,319      1,159
Total non-current               14,225      3,899          16,108     14,427
liabilities
                                                                      
Total liabilities               19,010      5,211          21,041     19,326
                                                                      
Equity
Total equity attributable to
equity holders
of the Company                  (68)        (19)           *(34)      *(92)
Non-controlling interests       3,807       1,044          *4,445     *3,572
                                                                      
Total equity                    3,739       1,025          4,411      3,480
                                                                      
Total liabilities and equity    22,749      6,236          25,452     22,806
                                                                      
*Restated following the retrospective application of the amendment to IAS
19, Employee Benefits.


Internet Gold – Golden Lines Ltd.

Condensed Consolidated Statements of Income for the

(In millions, except per share data)
                                                               
                                      Convenience
                                      translation
                                      into
                                      U.S. dollars
                                      (Note A)
                       Three-month    Three-month    Three-month
                       period ended   period ended   period ended   Year ended
                       March 31       March 31       March 31       December
                                                                    31
                       2013           2013           2012           2012
                       NIS            US$            NIS            NIS
                                                                    
Revenues               2,405          659            2,740          10,278
                                                                    
Cost and expenses
Depreciation and       563            154            755            2,367
amortization
Salaries               501            137            512            *1,980
General and            889            244            1,083          3,997
operating expenses
Other operating
expenses (income),     (41)           (11)           -              (1)
net
                                                                    
                       1,912          524            2,350          8,343
                                                                    
Operating income       493            135            390            1,935
                                                                    
Financing expenses,    75             21             19             *415
net
                                                                    
Income after
financing
expenses, net          418            114            371            1,520
                                                                    
Share of losses in
equity-accounted       40             11             58             245
investee
                                                                    
Income before income   378            103            313            1,275
tax
                                                                    
Income tax             136            37             131            *556
                                                                    
Net income for the     242            66             182            719
period
                                                                    
                                                                    
Income (loss)
attributable to:
Owners of the          24             6              3              *(37)
company
Non-controlling        218            60             179            *756
interests
                                                                    
Net income for the     242            66             182            719
period
                                                                    
Earnings (loss) per
share
Basic income (loss)    1.30           0.36           0.16           (1.97)
per share
Diluted income         1.30           0.36           0.15           (2.01)
(loss) per share
                                                                    
*Restated following the retrospective application of the amendment to IAS
19, Employee Benefits.


Internet Gold – Golden Lines Ltd.

Reconciliation for NON-IFRS Measures

EBITDA

The following is a reconciliation of the Bezeq Group operating income to
EBITDA:

In millions
                                                                 
                                     Convenience
                                     translation
                                     into
                                     U.S. dollars
                                     (Note A)
                    Three-month      Three-month      Three-month
                    period ended     period ended     period ended    Year
                                                                      ended
                    March 31         March 31         March 31        December
                                                                      31
                    2013             2013             2012            2012
                    NIS              US$              NIS             NIS
                                                                      
Operating income    761              209              850             *3,041
Depreciation and    328              90               358             1,436
amortization
                                                                      
EBITDA              1,089            299              1,208           4,471
                                                                      
*Restated following the retrospective application of the amendment to IAS
19, Employee Benefits.


Free Cash Flow

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

In millions
                                                              
                                    Convenience
                                    translation
                                    into
                                    U.S. dollars
                                    (Note A)
                     Three-month    Three-month     Three-month
                     period ended   period ended    period ended   Year ended
                     March 31       March 31        March 31       December 31
                     2013           2013            2012           2012
                     NIS            US$             NIS            NIS
                                                                   
Cash flow from
operating            972            266             998            4,014
activities
Purchase of
property, plant      (245)          (67)            (385)          (1,271)
and equipment
Investment in
intangible assets    (44)           (12)            (75)           (269)
and deferred
expenses
Proceeds from the
sale of property,    43             12              47             305
plant and
equipment
                                                                   
Free cash flow       726            199             585            2,779

Contact:

Internet Gold – Golden Lines Ltd.
Idit Cohen – IR Manager
idit@igld.com / Tel: +972-3-924-0000
or
Investor relations contacts:
Mor Dagan - Investor Relations
mor@km-ir.co.il / Tel: +972-3-516-7620
 
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