Internet Gold Reports Financial Results for the Third Quarter of 2013 Maintaining sufficient liquidity for the coming years Business Wire RAMAT GAN, Israel -- November 7, 2013 Internet Gold – Golden Lines Ltd. (NASDAQ Global Market: IGLD)(TASE: IGLD) today reported its financial results for the third quarter ended September 30, 2013. Bezeq’s Results: For the third quarter of 2013, the Bezeq Group reported revenues of NIS 2.4 billion ($ 679 million) and operating profit of NIS 721 million ($ 204 million). Bezeq’s EBITDA for the third quarter totaled NIS 1.05 billion ($ 297 million), representing an EBITDA margin of 44%. Net income for the period attributable to Bezeq's shareholders totaled NIS 449 million ($ 127 million). Bezeq's cash flow from operating activities during the period totaled NIS 1.1 billion ($ 323 million). Cash Position: As of September 30, 2013, Internet Gold’s unconsolidated cash and cash equivalents totaled NIS 279 million ($ 79 million), its unconsolidated gross debt was NIS 1.1 billion ($ 301 million) and its unconsolidated net debt was NIS 786 million ($ 222 million). Internet Gold's Unconsolidated Balance Sheet Data* In millions Convenience translation into U.S. dollars (Note A) September September 30, September December 30, 30, 31, 2013 2013 2012 2012 NIS US$ NIS NIS Short term liabilities 144 41 147 138 Long term liabilities 921 260 1,023 895 Total liabilities 1,065 301 1,170 1,033 Cash and cash 279 79 312 179 equivalents Total net debt 786 222 858 854 * Does not include the balance sheet of B Communications. Dividend from Bezeq: On September 15, 2013, Internet Gold's subsidiary, B Communications Ltd., received two dividend payments from Bezeq which together totaled NIS 455 million ($ 129 million). These dividend payments included a current dividend of NIS 300 million ($ 85 million), representing B Communications’ share of Bezeq’s net profit for the first half of 2013, and a special dividend of NIS 155 million ($ 44 million), representing B Communications’ share of the sixth and last installment of the special dividend declared by Bezeq and approved by its shareholders in 2011. Internet Gold’s Third Quarter Financial Results Internet Gold's consolidated revenues for the third quarter of 2013 were NIS 2.4 billion ($ 679 million), a 3.8% decrease compared with NIS 2.5 billion reported in the third 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 third quarter of 2013, B Communications recorded net amortization expenses related to its Bezeq purchase price allocation (“Bezeq PPA”) of NIS 198 million ($ 56 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 57% 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 third quarter of 2013 totaled NIS 41 million ($ 12 million) compared with NIS 17 million in the third quarter of 2012. These expenses included NIS 29 million ($ 8 million) in payments to holders of the Company’s publicly-traded debentures, and a NIS 16 million ($ 3 million) non-cash expense related to the revaluation of Nurisha Holdings Ltd.’s option to purchase B Communications shares, which, in accordance with IAS 39, must be revalued each quarter until it vests in the second quarter of 2014. As non-cash items, any expense or income resulting from this revaluation do not affect the Company’s cash-flow. In addition, financial expenses were impacted by the third quarter’s 0.45% increase in inflation rates as compared to the third quarter of 2012, which increased payments due to the Company’s bond holders. These expenses were partially offset by financial income of NIS 4 million that resulted from the Company’s marketable securities. Internet Gold's net loss attributable to shareholders for the third quarter of 2013 was NIS 32 million ($ 9 million), a 48% improvement compared to a net loss of NIS 62 million in the third 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 September 30, September 30, September 30, December 31, 2013 2013 2012 2012 NIS US$ NIS NIS Revenues - - - - Financial (41 ) (12 ) (17 ) (60 ) expenses Other expenses (1 ) - (1 ) (14 ) Interest in BCOM's net 10 3 (44 ) 37 income (loss) Net income 32 9 (62 ) (37 ) (loss) Comments of Management Commenting on the results, Doron Turgeman, CEO of Internet Gold said, “The third quarter was another period of progress according to our long-term work plan. With the goal of increasing our liquidity, during the quarter we sold a portion of our B Communications shares and now have a cash balance that is sufficient, according to the assumptions of our current work plan, to fully service our debt until 2015. In addition, the dividend distribution that B Communications has recently announced will further increase our liquidity. In general, we continue to be very pleased with all aspects of the Bezeq acquisition, which continues to generates a steady return that enhances our overall financial position and capabilities. We remain exceedingly confident regarding Bezeq’s positioning in Israel’s communications market and continue to seek out appropriate high-potential opportunities further afield." 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 third quarter ended September 30, 2013. For a full discussion of Bezeq’s results for the third quarter of 2013, please refer to its website: http://ir.bezeq.co.il. Bezeq Group (consolidated) Q3 2013 Q3 2012 % change (NIS millions) Revenues 2,398 2,494 -3.8% Operating profit 721 667 8.1% EBITDA 1,050 1,026 2.3% EBITDA margin 43.8% 41.1% Net profit attributable to 449 342 31.3% Company shareholders Diluted EPS (NIS) 0.16 0.13 23.1% Cash flow from operating 1,143 1,024 11.6% activities Payments for investments, net 267 270 -1.1% Free cash flow ^1 876 754 16.2% Net debt/EBITDA (end of 1.97 1.64 period) ^2 ^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 third quarter of 2013 amounted to NIS 2.40 billion ($ 679 million) compared with NIS 2.49 billion in the corresponding quarter of 2012, a decrease of 3.8%. The reduction in Bezeq Group revenues was primarily due to a decrease in cellular segment revenues. Nevertheless, the Bezeq Group results reflect a moderation in the quarter-over-quarter decrease in Pelephone's revenues, relative stability in the revenues of Bezeq Fixed-line and an increase in the revenues of Bezeq International. The Bezeq Group's focused policy of initiating streamlining and efficiency measures in all segments, contributed to the increase in profitability metrics. Operating profit of the Bezeq Group in the third quarter of 2013 amounted to NIS 721 million ($ 204 million) compared with NIS 667 million in the corresponding quarter of 2012, an increase of 8.1%. Earnings before interest, taxes, depreciation and amortization (EBITDA) of the Bezeq Group in the third quarter of 2013 amounted to NIS 1.05 billion ($ 297 million) (EBITDA margin of 43.8%) compared with NIS 1.03 billion (EBITDA margin of 41.1%) in the corresponding quarter of 2012, an increase of 2.3%. Net profit attributable to Bezeq shareholders amounted to NIS 449 million ($127 million) compared with NIS 342 million in the corresponding quarter of 2012, an increase of 31.3%. The third quarter results again show record levels of operating cash flow and the second highest free cash flow in the last few years. Cash flow from operating activities of the Bezeq Group in the third quarter of 2013 amounted to NIS 1.14 billion ($ 323 million) compared with NIS 1.02 billion in the corresponding quarter of 2012, an increase of 11.6%. Free cash flow of the Bezeq Group in the third quarter of 2013 amounted to NIS 876 million ($ 248 million) compared with NIS 754 million in the corresponding quarter of 2012, an increase of 16.2%. Net financial debt of the Bezeq Group was NIS 8.58 billion ($ 2.43 billion) at September 30, 2013 compared with NIS 7.19 billion as of September 30, 2012. Notes: Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures of September 30, 2013 have been presented in millions of U.S. dollars, translated at the representative A. rate of exchange as of September 30, 2013 (NIS 3.537 = 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: BCOM)(Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit the following Internet sites: www.igld.com www.bcommunications.co.il www.ir.bezeq.co.il Forward-Looking Statements This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications' filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement. Internet Gold – Golden Lines Ltd. Condensed Consolidated Statements of Financial Position as at (In millions) Convenience translation into U.S. dollars (Note A) September September 30 September December 30 30 31 2013 2013 2012 2012 NIS US$ NIS NIS Assets Cash and cash equivalents 1,111 314 705 764 Investments, including derivative financial instruments 1,783 504 1,743 1,655 Trade receivables, net 2,791 790 3,044 2,927 Other receivables 344 99 259 329 Inventory 122 34 149 123 Assets classified as 221 62 172 164 held-for-sale Total current assets 6,372 1,802 6,072 5,962 Investments, including derivative financial instruments 90 25 94 90 Long-term trade and other 700 198 1,193 1,074 receivables Property, plant and 6,584 1,862 6,811 6,911 equipment Intangible assets 6,779 1,917 7,189 7,252 Deferred and other 389 109 406 384 expenses Investment in equity-accounted investee (mainly loans) 1,000 283 984 1,005 Deferred tax assets 93 26 144 *128 Total non-current assets 15,635 4,420 16,821 16,844 Total assets 22,007 6,222 22,893 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) September September 30 September December 30 30 31 2013 2013 2012 2012 NIS US$ NIS NIS Liabilities Short-term bank credit, current maturities of 1,609 455 1,057 1,707 long-term liabilities and debentures Trade payables 630 178 770 793 Other payables, including derivative financial 901 255 825 746 instruments Dividend payable - - 1,366 669 Current tax liabilities 774 219 564 588 Provisions 124 35 172 145 Employee benefits 248 70 288 *251 Total current liabilities 4,286 1,212 5,042 4,899 Debentures 6,476 1,831 6,066 5,913 Bank loans 6,184 1,748 6,524 6,422 Loans from institutions 549 155 546 540 and others Dividend payable - - 326 - Employee benefits 258 73 228 *260 Other liabilities 81 23 86 67 Provisions 67 19 71 66 Deferred tax liabilities 1,082 306 1,107 1,159 Total non-current 14,697 4,155 14,954 14,427 liabilities Total liabilities 18,983 5,367 19,996 19,326 Equity Total equity attributable to equity holders of the (89) (25) (185) *(92) Company Non-controlling interests 3,113 880 3,082 *3,572 Total equity 3,024 855 2,897 3,480 Total liabilities and 22,007 6,222 22,893 22,806 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) Nine months period ended Three months period ended Year ended September 30 September 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 7,154 2,023 7,829 2,398 678 2,494 10,278 Cost and expenses Depreciation and 1,508 426 2,267 527 149 757 2,367 amortization Salaries 1,438 407 1,530 466 132 512 *1,980 General and operating 2,610 738 3,016 890 251 964 3,997 expenses Other operating (income) (30) (8) 52 (1) - 19 (1) expenses, net 5,526 1,563 6,865 1,882 532 2,252 8,343 Operating income 1,628 460 964 516 146 242 1,935 Financing 311 88 344 138 39 124 *415 expenses, net Income after financing 1,317 372 620 378 107 118 1,520 expenses, net Share in losses of 195 55 233 88 25 92 245 equity-accounted investee Income before 1,122 317 387 290 82 26 1,275 income tax Income tax 428 121 279 143 40 75 *556 Net income (loss) for the 694 196 108 147 42 (49) 719 period Income (loss) attributable to: Owners of the 18 5 (144) (32) (9) (62) *(37) Company Non-controlling 676 191 252 179 51 13 *756 interests Net income (loss) for the 694 196 108 147 42 (49) 719 period Earnings per share Net income 0.75 0.21 (7.52) (1.68) (0.47) (3.24) (1.97) (loss), basic Net income 0.70 0.20 (7.55) (1.70) (0.48) (3.24) (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 September 30 Convenience translation into U.S. dollars (Note A) 2013 2013 2012 NIS US$ NIS Operating income 721 204 667 Depreciation and 329 93 359 amortization EBITDA 1,050 297 1,026 Free Cash Flow The following table shows the calculation of the Bezeq Group’s free cash flow: In millions Three months period ended September 30 Convenience translation into U.S. dollars (Note A) 2013 2013 2012 NIS US$ NIS Cash flow from operating activities 1,143 323 1,024 Purchase of property, plant and equipment (270) (76) (309) Investment in intangible assets and (50) (14) (58) deferred expenses Proceeds from the sale of property, plant 53 15 97 and equipment Free cash flow 876 248 754 Contact: Internet Gold Idit Cohen, IR Manager +972-3-924-0000 firstname.lastname@example.org or Investor relations contact: Mor Dagan, Investor Relations +972-3-516-7620 email@example.com
Internet Gold Reports Financial Results for the Third Quarter of 2013
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