B Communications Reports its Financial Results for the Third Quarter of 2013

  B Communications Reports its Financial Results for the Third Quarter of 2013

    - Announces Dividend Distribution of NIS 102 Million ($ 29 Million) -

Business Wire

RAMAT GAN, Israel -- November 7, 2013

B Communications Ltd. (NASDAQ Global Market and TASE: BCOM) 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,  B Communications’ unconsolidated
cash and cash equivalents totaled NIS 1.36 billion ($ 384 million), its
unconsolidated total debt was NIS 4.07 billion ($ 1.15 billion), and its net
debt totaled NIS 2.71 billion ($ 767 million).

                                                               
B Communications’ 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       587         166              470         587
Long term liabilities        3,482       984              3,705       3,511
Total liabilities            4,069       1,150            4,175       4,098
Dividend receivable          -           -                464         -
Cash and cash                1,359       384              389         694
equivalents
Total net debt               2,710       766              3,322       3,404
                                                                      
* Does not include the balance sheet of Bezeq.

Dividend from Bezeq: On September 15, 2013, B Communications 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.

B Communications’ Third Quarter Financial Results

B Communications’ 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, B Communications’ 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”) in its
consolidated financial statements of NIS 198 million ($ 56 million).  From
April 14, 2010, the date of the acquisition of its interest in Bezeq, until
September 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.

B Communications’ financial expenses, net: B Communications’ unconsolidated
net financial expenses for the third quarter of 2013 totaled NIS 62 million ($
18 million). These expenses consisted primarily of NIS 62 million ($ 18
million) of interest and CPI linkage expenses on the long-term loans incurred
to finance the Bezeq acquisition and expenses of NIS 14 million ($ 4 million)
related to its publicly-traded debentures. These expenses were offset in part
by financial income of NIS 11 million ($ 3 million) generated by short term
investments.

B Communications’ net income attributable to shareholders for the third
quarter of 2013 was NIS 15 million ($ 4 million), compared to a net loss of
NIS 55 million in the third 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
                      September      September 30,   September      December
                      30,                            30,            31,
                                     2013
                      2013                           2012           2012
                      NIS            US$             NIS            NIS
Revenues              -              -               -              -
Financing             (62     )      (18      )      (65     )      (239   )
expenses, net
Other and
income tax            (1      )      -               (1      )      (48    )
expenses
PPA
amortization,         (61     )      (17      )      (95     )      (234   )
net
Interest in
Bezeq's net           139           39             106           567    
income
Net income            15            4              (55     )      46     
(loss)

Dividend

On November 7, 2013, the Company's board of directors declared a cash dividend
in the amount of NIS 3.41 per share, and in the aggregate amount of
approximately NIS 102 million (approximately $ 0.96 per share and
approximately $ 29 million in the aggregate, based on the representative rate
of exchange on September 30, 2013. The actual US$ amount for dividend paid in
US$ will be converted from NIS based upon the representative rate of exchange
published by the Bank of Israel on November 18, 2013). The dividend will be
payable to all of the Company’s shareholders of record at the end of the
trading day on the NASDAQ Global Market on November 18, 2013. The payment date
will be December 3, 2013.

Comments of Management

Commenting on the results, Mr. Doron Turgeman, B Communications’ CEO, stated,
“We are very pleased with the quarter’s results, the fourth consecutive
quarter in which we have reported net income. Now, after three successful
years during which we decreased the Company’s debt from NIS 5.3 billion when
we acquired Bezeq (in April 2010) to just NIS 2.7 million as of the end of the
third quarter, we are advancing to the next phase. The financing agreement
modification that we announced yesterday will provide us with a more
convenient loan repayment schedule and increase our financial flexibility.
This, together with the increase in liquidity that we achieved as a result of
our recent issuance of NIS 180 million of additional Series B debt, will bring
a significant improvement to our financial position and to our future cash
flow.”

Mr. Turgeman continued, “As a concrete demonstration of our confidence, the
Board today decided to distribute a significant dividend for the first time.
We see dividends as one of the ways of creating shareholder value over the
long term.”

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
A.    representative 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 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:
BEZQ). 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)
                               September   September 30   September   December
                               30          2013           30          31
                               2013                       2012        2012
                               NIS         US$            NIS         NIS
Assets
Cash and cash                  1,012       286            679         757
equivalents
Investments, including
derivative financial
instruments                    1,603       453            1,456       1,484
Trade receivables, net         2,791       789            3,044       2,927
Other receivables              345         98             261         330
Inventory                      122         34             149         123
Assets classified as           221         63             164         164
held-for-sale
                                                                      
Total current assets           6,094       1,723          5,753       5,785
                                                                      
Investments, including
derivative financial
instruments                    90          25             94          90
Long-term trade and            701         198            1,193       1,074
other receivables
Property, plant and            6,584       1,862          6,811       6,911
equipment
Intangible assets              6,778       1,918          7,189       7,252
Deferred and other             389         110            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              15,635      4,420          16,821      16,844
assets
                                                                      
Total assets                   21,729      6,143          22,574      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)
                             September    September 30    September   December
                             30                           30          31
                             2013         2013            2012        2012
                             NIS          US$             NIS         NIS
Liabilities
Short-term bank
credit, current
maturities
of long-term
liabilities and              1,484        419             934         1,582
debentures
Trade payables               629          178             772         792
Other payables,
including derivative
financial                    849          240             801         734
instruments
Dividend payable             -            -               1,366       669
Current tax                  774          219             564         588
liabilities
Provisions                   124          35              172         145
Employee benefits            248          70              288         * 251
Total current                4,108        1,161           4,897       4,761
liabilities
                                                                      
Debentures                   5,555        1,571           5,043       5,018
Bank loans                   6,184        1,748           6,524       6,422
Loans from
institutions and             549          155             546         540
others
Dividend payable             -            -               326         -
Employee benefits            258          73              228         *260
Other liabilities            81           23              86          67
Provisions                   67           19              71          66
Deferred tax                 1,082        306             1,107       1,159
liabilities
Total non-current            13,776       3,895           13,931      13,532
liabilities
                                                                      
Total liabilities            17,884       5,056           18,828      18,293
                                                                      
Equity
Total equity
attributable to
equity holders
of the Company               1,075        304             833         *960
Non-controlling              2,770        783             2,913       *3,376
interests
                                                                      
Total equity                 3,845        1,087           3,746       4,336
                                                                      
Total liabilities            21,729       6,143           22,574      22,629
and 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)

                    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               1,435     406           1,528     465       132           511       *1,978
General and
operating              2,610     738           3,015     890       252           963       3,995
expenses
Other operating
(income)
expenses, net          (30   )   (8      )     52       (1    )   -             19       (11    )
                                                                                           
                       5,523    1,562        6,862    1,881    533           2,250    8,329  
                                                                                           
Operating income       1,631     461           967       517       145           244       1,949
                                                                                           
Financing              241      68           287      97       27            107      *355
expenses, net
                                                                                           
Income after
financing
expenses, net          1,390     393           680       420       118           137       1,594
                                                                                           
Share in losses
of
equity-accounted       195      55           233      88       25            93       245    
investee
                                                                                           
Income before          1,195     338           447       332       93            44        1,349
income tax
                                                                                           
Income tax             428      121          279      143      40            75       *556
                                                                                           
Net income
(loss) for the         767      217          168      189      53            (31   )   793    
period
                                                                                           
Income (loss)
attributable to:
Owners of the          116       33            (105  )   15        4             (55   )   *46
Company
Non-controlling        651      184          273      174      49            24       *747
interests
                                                                                           
Net income
(loss) for the         767      217          168      189      53            (31   )   793    
period
                                                                                           
Earnings per
share
                                                                                           
Net income             3.87     1.09         (3.53 )   0.50     0.14          (1.84 )   1.52   
(loss), basic
                                                                                           
Net income             3.83     1.08         (3.55 )   0.48     0.14          (1.84 )   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
                                        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               (270  )   (76     )      (309  )
equipment
Investment in intangible assets and           (50   )   (14     )      (58   )
deferred expenses
Proceeds from the sale of property,           53       15            97    
plant and equipment
                                                                       
Free cash flow                                876      248           754   

Contact:

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