Internet Gold Reports Financial Results for the Second Quarter of 2013

  Internet Gold Reports Financial Results for the Second Quarter of 2013

   - Unconsolidated cash and cash equivalents totaled NIS 291 million ($ 80
                                  million) -

Business Wire

RAMAT GAN, Israel -- August 5, 2013

Internet Gold – Golden Lines Ltd. (NASDAQ Global Market and TASE: IGLD) 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,  Internet Gold’s unconsolidated cash and
cash equivalents totaled NIS 291 million ($ 80 million), its unconsolidated
gross debt was NIS 1 billion ($ 291 million) and its unconsolidated net debt
was NIS 762 million ($ 211 million).

Internet Gold's Unconsolidated Balance Sheet Data*

In millions                          Convenience             
                                         translation
                                         into
                                         U.S. dollars
                                         (Note A)
                            June 30,     June 30,          June       December
                                                           30,        31,
                            2013         2013              2012       2012
                            NIS          US$               NIS        NIS
Short term liabilities      147          41                149        138
Long term liabilities       906          250               1,012      895
Total liabilities           1,053        291               1,161      1,033
Cash and cash               291          80                322        179
equivalents
Total net debt              762          211               839        854

* Does not include the balance sheet of B Communications.

Dividend from Bezeq: On May 13, 2013, Internet Gold's subsidiary, B
Communications Ltd., 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.

Internet Gold’s Second Quarter Financial Results

Internet Gold's 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, Internet Gold’s 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.

Internet Gold’s financial expenses, net: Internet Gold’s unconsolidated net
financial expenses for the second quarter of 2013 were NIS 18 million ($ 5
million). These expenses consisted primarily of expenses related to its
publicly-traded debentures, which totaled NIS 19 million ($ 5 million).

Internet Gold's net income attributable to shareholders for the second quarter
of 2013 totaled NIS 8 million ($ 2 million), compared to a net loss of NIS 95
million in the second 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
                June 30,         June 30,          June 30,         December
                                                                    31,
                2013             2013              2012             2012
                NIS              US$               NIS              NIS
Revenues        -                -                 -                -
Financial       (18     )        (5      )         (31     )        (60    )
expenses
Other           (1      )        -                 (1      )        (14    )
expenses
Interest in
BCOM's net      27              7                (63     )        37     
income
(loss)
Net income      8               2                (95     )        (37    )
(loss)
                                                                           

Comments of Management

Commenting on the results, Doron Turgeman, CEO of Internet Gold, said, “During
the quarter we improved our liquidity by our sale of 12% of B Communications
Ltd.’s Ordinary Shares for NIS 125 million. Based on our current work plan, we
believe our cash balances will be sufficient to service our debt until the end
of 2015. Our base asset, Bezeq, has strengthened in the recent period and with
a long-term perspective, we believe that we will benefit from its future
upside value. Looking forward we will continue our efforts to strengthen our
financial stability and liquidity with the goal of improving our financial
position.”

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 Company            473         415         14.0   %
shareholders
Diluted EPS (NIS)                           0.17     0.15     13.3   %
Cash flow from operating activities           1,102       990         11.3   %
Payments for investments, net                 178         360         -50.6  %
Free cash flow ^1                           924      630      46.7   %
Net debt/EBITDA (end of period) ^2            1.83        1.69
Net debt/shareholders' equity (end of       3.09     3.07     
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 representative rate of
A.  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 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)
                            June 30     June 30           June 30     December
                                                                      31
                            2013        2013              2012        2012
                            NIS         US$               NIS         NIS
Assets
Cash and cash               778         215               639         764
equivalents
Investments, including
derivative financial        2,265       626               1,312       1,655
instruments
Trade receivables, net      2,863       791               3,116       2,927
Other receivables           337         93                345         329
Inventory                   142         39                206         123
Assets classified as        241         67                172         164
held-for-sale
                                                                      
Total current assets        6,626       1,831             5,790       5,962
                                                                      
Investments, including
derivative financial        89          25                95          90
instruments
Long-term trade and         817         227               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           15,944      4,407             17,472      16,844
assets
                                                                      
Total assets                22,570      6,238             23,262      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)
                        June 30      June 30           June 30      December
                                                                    31
                        2013         2013              2012         2012
                        NIS          US$               NIS          NIS
Liabilities
Short-term bank
credit, current
maturities of           1,621        448               1,185        1,707
long-term
liabilities and
debentures
Trade payables          686          190               901          793
Other payables,
including
derivative              707          196               743          746
financial
instruments
Dividend payable        339          94                669          669
Current tax             732          202               572          588
liabilities
Provisions              124          34                174          145
Employee benefits       273         75               *318        *251    
Total current           4,482       1,239            4,562       4,899   
liabilities
                                                                    
Debentures              6,327        1,747             6,117        5,913
Bank loans              6,227        1,721             6,515        6,422
Loans from
institutions and        542          150               545          540
others
Dividend payable        -            -                 322          -
Employee benefits       256          71                *246         *260
Other liabilities       86           24                83           67
Provisions              67           19                70           66
Deferred tax            1,055       292              1,210       1,159   
liabilities
Total non-current       14,560      4,024            15,108      14,427  
liabilities
                                                                    
Total liabilities       19,042      5,263            19,670      19,326  
                                                                    
Equity
Total equity
attributable to         (62    )     (17       )       *(125  )     *(92    )
equity holders of
the Company
Non-controlling         3,590       992              *3,717      *3,572  
interests
                                                                    
Total equity            3,528       975              3,592       3,480   
                                                                    
Total liabilities       22,570      6,238            23,262      22,806  
and equity

* 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)
                   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             971         268             1,018       470       130             506         *1,980
General and
operating            1,720       475             2,052       831       230             969         3,997
expenses
Other operating
(income)             (29   )     (8      )       33         12        3               33         (1     )
expenses, net
                                                                                                   
                     3,670      1,014          4,613      1,829     506             2,293      8,343  
                                                                                                   
Operating income     1,086       301             722         522       144             302         1,935
                                                                                                   
Financing            173        48             220        97        27              203        *415   
expenses, net
                                                                                                   
Income after
financing            913         253             502         425       117             99          1,520
expenses, net
                                                                                                   
Share in losses
of                   107        30             141        67        18              83         245    
equity-accounted
investee
                                                                                                   
Income before        806         223             361         358       99              16          1,275
income tax
                                                                                                   
Income tax           279        77             204        126       35              67         *556   
                                                                                                   
Net income
(loss) for the       527        146            157        232       64              (51   )     719    
period
                                                                                                   
Income (loss)
attributable to:
Owners of the        45          13              (82   )     8         2               (95   )     *(37   )
Company
Non-controlling      482        133            239        224       62              44         *756   
interests
                                                                                                   
Net income
(loss) for the       527        146            157        232       64              (51   )     719    
period
                                                                                                   
Earnings per
share
                                                                                                   
Net income           2.32       0.64           (4.28 )     0.34      0.09            (4.98 )     (1.97  )
(loss), basic
                                                                                                   
Net income           2.31       0.64           (4.30 )     0.34      0.09            (4.98 )     (2.01  )
(loss), diluted

* 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’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:

Internet Gold – Golden Lines 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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