B Communications Reports Financial Results for the Second Quarter of 2013

  B Communications Reports Financial Results for the Second Quarter of 2013

  *3rd consecutive quarter of significant net income, totaling NIS 34M ($9M)
    -

Business Wire

RAMAT GAN, Israel -- August 5, 2013

B Communications Ltd. (NASDAQ Global Market and TASE: BCOM) today reported its
financial results for the second quarter ended June 30, 2013.

Bezeq’s Results: For the second quarter of 2013, the Bezeq Group reported
revenues of NIS 2.4 billion ($ 650 million) and operating profit of NIS 744
million ($ 206 million). Bezeq’s EBITDA for the second quarter totaled NIS 1.1
billion ($ 296 million), representing an EBITDA margin of 46%. Net income for
the period attributable to the shareholders of Bezeq totaled NIS 473 million
($ 131 million). Bezeq's cash flow from operating activities during the period
totaled NIS 1.1 billion ($ 305 million).

Cash Position: As of June 30, 2013,  B Communications’ unconsolidated cash and
cash equivalents totaled NIS 745 million ($ 206 million), its unconsolidated
total debt was NIS 3.8 billion ($ 1.1 billion), and its net debt totaled NIS
3.1 billion ($ 857 million).

B Communications’ Unconsolidated Balance Sheet Data*

In millions                     Convenience                
                                    translation into
                                    U.S. dollars
                                    (Note A)
                         June 30,   June 30,           June 30,   December 31,
                         2013       2013               2012       2012
                         NIS        US$                NIS        NIS
Short term               560        155                431        587
liabilities
Long term                3,284      908                3,689      3,511
liabilities
Total liabilities        3,844      1,063              4,120      4,098
Cash and cash            745        206                400        694
equivalents
Total net debt           3,099      857                3,720      3,404

* Does not include the balance sheet of Bezeq.

Dividend from Bezeq: On May 13, 2013, B Communications received two dividend
payments from Bezeq which together totaled NIS 421 million ($ 116 million).
These dividend payments included 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 ($ 43 million),
representing B Communications’ share of the fifth installment of six special
dividend payments declared by Bezeq and approved by its shareholders in 2011.

B Communications’ Second Quarter Financial Results

B Communications’ consolidated revenues for the second quarter of 2013 were
NIS 2.4 billion ($ 650 million), a 9.4% decrease compared with NIS 2.6 billion
reported in the second quarter of 2012. For both the current and the
prior-year periods, B Communications’ consolidated revenues consisted entirely
of Bezeq’s revenues.

During the second quarter of 2013, B Communications recorded net amortization
expenses related to its Bezeq purchase price allocation (“Bezeq PPA”) of NIS
157 million ($ 43 million) in its consolidated financial statements.  From
April 14, 2010, the date of the acquisition of its interest in Bezeq, until
June 30, 2013, B Communications has amortized approximately 55% 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.

B Communications’ financial expenses, net: B Communications’ unconsolidated
net financial expenses for the second quarter of 2013 totaled NIS 62 million
($ 17 million). These expenses consisted primarily of NIS 56 million ($ 15
million) of interest and CPI linkage expenses on the long-term loans incurred
to finance the Bezeq acquisition and expenses of NIS 13 million ($ 4 million)
related to its publicly-traded debentures. These expenses were offset in part
by financial income of NIS 7 million ($ 2 million) generated by short term
investments.

Unconsolidated net financial expenses in the second quarter of 2013 decreased
by 42.6% compared with the second quarter of 2012. The decrease is primarily
attributable to lower interest and CPI linkage expenses due to the reduction
in the amount of the outstanding bank debt that was incurred to purchase the
Company’s controlling interest in Bezeq. In addition, lower inflation levels
and floating interest rates in the second quarter of 2013 compared to the
second quarter of 2012 contributed to the decrease in interest and CPI linkage
expenses.

B Communications’ net income attributable to shareholders for the second
quarter of 2013 totaled NIS 34 million ($ 9 million), compared to a net loss
of NIS 79 million in the second quarter of 2012.

B Communications’ 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
                      June 30,       June 30,        June 30,       December
                                                                    31,
                      2013          2013           2012          2012   
                      NIS            US$             NIS            NIS
Revenues              -              -               -              -
Financing             (62      )     (17      )      (108     )     (239   )
expenses, net
Other and
income tax            (2       )     (1       )      -              (48    )
expenses
PPA
amortization,         (49      )     (14      )      (100     )     (234   )
net
Interest in
Bezeq's net           147           41             129           567    
income
Net income            34            9              (79      )     46     
(loss)

Comments of Management

Commenting on the results, Doron Turgeman, CEO of B Communications' said, “The
first half of 2013 was another stable period for Bezeq and continued strong
operating results. With the continued on-schedule receipt of dividends from
Bezeq, we have continued building our cash reserves and have recorded a third
consecutive quarter of significant net income. We are currently examining a
number of offers for re-structuring some of our outstanding loans as a key to
improving our financial position while improving our repayment schedule and
financial flexibility.”

Bezeq Group Results (Consolidated)

To provide further insight into its results, the Company is providing the
following summary of the consolidated financial report of the Bezeq Group for
the second quarter ended June 30, 2013. For a full discussion of Bezeq’s
results for the second quarter of 2013, please refer to its website:
http://ir.bezeq.co.il.

Bezeq Group (consolidated)           Q2 2013     Q2 2012     % change  
                                        (NIS millions)
Revenues                                2,351        2,595        -9.4      %
Operating profit                        744          746          -0.3      %
EBITDA                                  1,070        1,104        -3.1      %
EBITDA margin                           45.5   %     42.5   %
Net profit attributable to              473          415          14.0      %
Company shareholders
Diluted EPS (NIS)                    0.17       0.15       13.3      %
Cash flow from operating                1,102        990          11.3      %
activities
Payments for investments,               178          360          -50.6     %
net
Free cash flow ^1                    924        630        46.7      %
Net debt/EBITDA (end of                 1.83         1.69
period) ^2
Net debt/shareholders'               3.09       3.07       
equity (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 second quarter of 2013 amounted to NIS 2.35
billion ($ 650 million) compared with NIS 2.60 billion in the corresponding
quarter of 2012, a decrease of 9.4%. The reduction in the Bezeq Group revenues
was primarily due to a decrease in revenues from the cellular segment
revenues.

The Bezeq Group's focused policy of initiating streamlining and efficiency
measures in all segments, both in salaries and in general operating expenses
moderated the decline in EBITDA. The decrease in depreciation expenses and the
reduction in financing expenses contributed to the stability of operating
profit and the increase in net profit.

Operating profit of the Bezeq Group in the second quarter of 2013 amounted to
NIS 744 million ($ 206 million) compared with NIS 746 million in the
corresponding quarter of 2012, a decrease of 0.3%.

Earnings before interest, taxes, depreciation and amortization (EBITDA) of the
Bezeq Group in the second quarter of 2013 amounted to NIS 1.07 billion ($ 296
million) (EBITDA margin of 45.5%) compared with NIS 1.10 billion (EBITDA
margin of 42.5%) in the corresponding quarter of 2012, a decrease of 3.1%.

Net profit attributable to Bezeq shareholders amounted to NIS 473 million ($
131 million) compared with NIS 415 million in the corresponding quarter of
2012, an increase of 14.0%.

The second quarter results again show record levels of free cash flow. Cash
flow from operating activities of the Bezeq Group in the second quarter of
2013 amounted to NIS 1.10 billion ($ 305 million) compared with NIS 990
million in the corresponding quarter of 2012, an increase of 11.3%. Free cash
flow in the second quarter of 2013 amounted to NIS 924 million ($ 255 million)
compared with NIS 630 million in the corresponding quarter of 2012, an
increase of 46.7%. The increase in free cash flow was due to increased income
from the sale of real estate and copper together with stabilization of lower
levels of capital expenditures compared with the previous five years during
which Bezeq completed the NGN and submarine cable projects.

Net financial debt of the Bezeq Group was NIS 7.93 billion ($ 2.2 billion) at
June 30, 2013 compared with NIS 7.90 billion as of June 30, 2012.

Bezeq Group Dividend Announcement

In accordance with the Bezeq Group dividend policy, its Board of Directors
recommended the distribution of 100% of profits for the first half of 2013 as
a cash dividend to shareholders of NIS 969 million ($268 million). Together
with the aforementioned semi-annual dividend, the Bezeq Group will make the
sixth and final payment of the special dividend of NIS 500 million ($138
million). The total dividend to be distributed will be NIS 1.469 billion ($406
million) (approximately NIS 0.54 per share). The semi-annual dividend, which
is subject to shareholder approval, would be payable together with the special
dividend on September 15, 2013. The ex-dividend date is September 3, 2013.

Notes:

         Convenience Translation to Dollars: For the convenience of the
         reader, certain of the reported NIS figures of June 30, 2013 have
         been presented in millions of U.S. dollars, translated at the
A.    representative rate of exchange as of June 30, 2013 (NIS 3.618 = 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.
         
         Use of non-IFRS Measurements: We and the Bezeq Group’s management
         regularly use supplemental non-IFRS financial measures internally to
B.       understand, manage and evaluate our 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 B Communications Ltd.

B Communications is a telecommunications-oriented holding company and its
primary holding is its controlling interest in Bezeq, The Israel
Telecommunication Corp., Israel’s largest telecommunications provider (TASE:
BZEQ). B Communications shares are traded on NASDAQ and the TASE under the
symbol BCOM. For more information please visit the following Internet sites:

www.bcommunications.co.il
www.ir.bezeq.co.il
www.eurocom.co.il
www.igld.com

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.


B Communications Ltd.
Condensed Consolidated Statements of Financial Position as at
(In millions)
                                     Convenience            
                                         translation
                                         into
                                         U.S. dollars
                                         (Note A)
                               June 30   June 30         June 30   December 31
                               2013      2013            2012      2012
                               NIS       US$             NIS       NIS
Assets
Cash and cash                  646       179             634       757
equivalents
Investments, including
derivative financial           2,105     582             996       1,484
instruments
Trade receivables, net         2,863     791             3,115     2,927
Other receivables              339       94              347       330
Inventory                      142       39              206       123
Assets classified as           241       67              163       164
held-for-sale
                                                                   
Total current assets           6,336     1,752           5,461     5,785
                                                                   
Investments, including
derivative financial           89        25              95        90
instruments
Long-term trade and            817       226             1,324     1,074
other receivables
Property, plant and            6,626     1,831           6,966     6,911
equipment
Intangible assets              6,937     1,917           7,487     7,252
Deferred and other             394       108             409       384
expenses
Investment in
equity-accounted               1,015     281             1,019     1,005
investee (mainly loans)
Deferred tax assets            66        18              *172      *128
                                                                   
Total non-current assets       15,944    4,406           17,472    16,844
                                                                   
Total assets                   22,280    6,158           22,933    22,629
                                                                   
* Restated following the retrospective application of the amendment to IAS 19,
Employee Benefits.


B Communications Ltd.
Condensed Consolidated Statements of Financial Position as at (cont’d)
(In millions)

                                     Convenience            
                                         translation
                                         into
                                         U.S. dollars
                                         (Note A)
                               June 30   June 30         June 30   December 31
                               2013      2013            2012      2012
                               NIS       US$             NIS       NIS
Liabilities
Short-term bank credit,
current maturities
of long-term liabilities       1,497     414             1,060     1,582
and debentures
Trade payables                 686       190             901       792
Other payables,
including derivative
financial instruments          669       185             719       734
Dividend payable               338       93              669       669
Current tax liabilities        732       202             572       588
Provisions                     124       34              174       145
Employee benefits              273       75              *318      *251
Total current                  4,319     1,193           4,413     4,761
liabilities
                                                                   
Debentures                     5,420     1,498           5,105     5,018
Bank loans                     6,227     1,721           6,515     6,422
Loans from institutions        542       150             545       540
and others
Dividend payable               -         -               322       -
Employee benefits              256       71              *246      *260
Other liabilities              86        24              83        67
Provisions                     67        19              70        66
Deferred tax liabilities       1,056     292             1,210     1,159
Total non-current              13,654    3,775           14,096    13,532
liabilities
                                                                   
Total liabilities              17,973    4,968           18,509    18,293
                                                                   
Equity
Total equity
attributable to equity
holders
of the Company                 1,052     290             *886      *960
Non-controlling                3,255     900             *3,538    *3,376
interests
                                                                   
Total equity                   4,307     1,190           4,424     4,336
                                                                   
Total liabilities and          22,280    6,158           22,933    22,629
equity
                                                                   
* Restated following the retrospective application of the amendment to IAS 19,
Employee Benefits.


B Communications Ltd.
Condensed Consolidated Statements of Income for the
(In millions, except per share data)
                                                                                     
                       Six months period ended             Three months period ended         Year
                                                                                             ended
                       June 30                             June 30                           December
                                                                                             31
                                Convenience                     Convenience 
                                 translation                       translation
                                 into                              into
                                 U.S.                              U.S.
                                 dollars                           dollars
                       2013      2013          2012        2013    2013          2012        2012
                       NIS       US$           NIS         NIS     US$           NIS         NIS
Revenues               4,756     1,315         5,335       2,351   650           2,595       10,278
                                                                                             
Cost and
expenses
Depreciation and       1,008     279           1,510       516     143           785         2,367
amortization
Salaries               969       268           1,017       469     130           505         *1,978
General and
operating              1,720     475           2,051       831     230           969         3,995
expenses
Other operating
(income)
expenses, net          (29   )   (8      )     33         12      3             33         (11    )
                                                                                             
                       3,668    1,014        4,611      1,828   506           2,292      8,329  
                                                                                             
Operating income       1,088     301           724         523     144           303         1,949
                                                                                             
Financing              144      40           180        79      22            172        *355   
expenses, net
                                                                                             
Income after
financing
expenses, net          944       261           544         444     122           131         1,594
                                                                                             
Share in losses
of
equity-accounted       107      30           141        67      18            83         245    
investee
                                                                                             
Income before          837       231           403         377     104           48          1,349
income tax
                                                                                             
Income tax             279      77           204        126     35            67         *556   
                                                                                             
Net income
(loss) for the         558      154          199        251     69            (19   )     793    
period
                                                                                             
Income (loss)
attributable to:
Owners of the          95        26            (50   )     34      9             (79   )     *46
Company
Non-controlling        463      128          249        217     60            60         *747   
interests
                                                                                             
Net income
(loss) for the         558      154          199        251     69            (19   )     793    
period
                                                                                             
Earnings per
share
                                                                                             
Net income             3.16     0.87         (1.69 )     1.12    0.31          (2.66 )     1.52   
(loss), basic
                                                                                             
Net income             3.16     0.87         (1.70 )     1.11    0.30          (2.66 )     1.49   
(loss), diluted
                                                                                                    
* Restated following the retrospective application of the amendment to IAS 19, Employee Benefits.


B Communications Ltd.
Reconciliation for NON-IFRS Measures
EBITDA
The following is a reconciliation of the Bezeq Group’s operating income to
EBITDA:
In millions

                                    Three months period ended
                                       June 30
                                                   Convenience    
                                                    translation
                                                    into
                                                    U.S. dollars
                                                    (Note A)
                                       2013         2013               2012
                                       NIS          US$                NIS
                                                                       
Operating income                       744          206                746
Depreciation and                       326          90                 358
amortization
                                                                       
EBITDA                                 1,070        296                1,104
                                                                       
* 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’s free cash flow:
In millions

                                            Three months period ended
                                               June 30
                                                        Convenience  
                                                         translation
                                                         into
                                                         U.S. dollars
                                                         (Note A)
                                               2013     2013          2012 
                                               NIS       US$            NIS
                                                                        
Cash flow from operating activities            1,102     305            990
Purchase of property, plant and                (252  )   (70      )     (315 )
equipment
Investment in intangible assets and            (49   )   (14      )     (67  )
deferred expenses
Proceeds from the sale of property,            123      34            22   
plant and equipment
                                                                        
Free cash flow                                 924      255           630  

Contact:

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