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012 012 Golden (WI)

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Share Name Share Symbol Market Type Share ISIN Share Description
012 Golden (WI) LSE:012 London Ordinary Share IL0010965288 ORDS ILS0.10 (WI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.00 -
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
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B Communications Reports Financial Results for the Second Quarter of 2016

04/08/2016 11:55am

PR Newswire (US)


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RAMAT GAN, Israel, Aug. 4, 2016 /PRNewswire/ -- B Communications Ltd. (NASDAQ Global Select Market and TASE: BCOM), a holding company with a controlling interest in Israel's largest telecommunications provider, Bezeq, The Israel Telecommunication Corp. (TASE: BEZQ), today reported its financial results for the second quarter of 2016.

"During the first half of 2016, we continued to execute our business plan by paying an 11% dividend to our shareholders while continuing to reduce our LTV[1] ratio to 35%. We intend to continue to improve our debt structure in order to create more value for our shareholders in the quarters ahead," said Doron Turgeman, CEO of B Communications.

Dividend Distribution: On May 25, 2016, the Company's Board of Directors declared a cash dividend of NIS 355 million ($92 million), or NIS 11.88 ($3.09) per share. The dividend was paid to the Company's shareholders on June 29, 2016.

Tender Offer: On May 26, 2016, the Company announced that its wholly-owned subsidiary, B Communications (SP4) LP, had invited holders of the Company's 7⅜% Senior Secured Notes due 2021 (the "Notes") to submit tenders to purchase their Notes for cash within a purchase price range of $1.00 to $1.07 per $1.00 nominal amount of Notes. On June 27, the tender offer expired and the clearing price for the tender offer was $1.07 per $1.00 par value of the Notes. The aggregate par value of the Notes tendered and purchased by B Communications (SP4) LP was approximately $18.6 million.

Dividend from Bezeq: On May 30, 2016, Bezeq distributed NIS 776 Million ($202 million) to shareholders of record as of May 17, 2016. B Communications' share of the dividend distribution was NIS 204 million ($53 million).

On August 3, 2016, the Board of Directors of Bezeq resolved to recommend to the general meeting of its shareholders the distribution of a cash dividend of NIS 665 million ($173 million), representing Bezeq's profits for the first half of 2016. The dividend will be paid on October 6, 2016 to shareholders of record as of September 20, 2016. B Communications' share of the dividend distribution is anticipated to be NIS 175 million ($46 million).

Notes Repurchase Program: On August 10, 2014 the Company announced that its Board of Directors had approved the buyback of up to $50 million of its Notes. On January 20, 2016, the Company announced the completion of the $50 million repurchase program and the approval by its Board of Directors to extend and increase the program by an additional $50 million. Through August 4, 2016, the Company purchased a total of $83 million par value of the Notes (including the Notes that were tendered in connection with the Company's tender offer that expired in June 2016).

Cash and Debt Position: As of June 30, 2016, B Communications' unconsolidated liquidity balances (comprised of cash and cash equivalents and short term investments) totaled NIS 1.35 billion ($351 million) and its financial liabilities totaled NIS 3.27 billion ($849 million) including NIS 2.5 billion ($650 million) of the Notes, NIS 696 million ($181 million) of Series B Debentures (both include accrued interest and unamortized premiums, discounts and debt issuance costs), and a NIS 71 million ($18 million) tax liability.

 

B Communications' Unconsolidated Balance Sheet Data


(In millions)


Convenience





translation into





U.S. dollars





(Note A)




June 30,

June 30,

June 30,

December 31,


2016

2016

2015

2015


NIS

US$

NIS

NIS

Financial liabilities





7⅜% Senior Secured Notes (1)

2,500

650

2,770

2,718

Series B Debentures

696

181

710

710

Tax liability

71

18

117

79

Total debt

3,267

849

3,597

3,507






Liquidity balances





Lockbox account(2)

1,096

285

456

532

Unrestricted cash(3)

252

66

510

421

Total liquidity

1,348

351

966

953






Net debt

1,919

498

2,631

2,554


(1) The NIS amount equivalent to $717 million par value of the Notes which were hedged on the date the Notes were issued plus accrued interest and unamortized debt issuance costs.

(2) Lockbox account - one or more accounts designated as a lockbox account and maintained by B Communications (SP-2) Ltd. (or any of its successors) and pledged as collateral to the security agent for the benefit of the holders of the Notes. Amounts from prior periods are shown as comparative data and reflect amounts that were maintained by B Communications (SP-2) Ltd. but not in a lockbox account.

(3) Unrestricted cash - any funds, property or assets (including any property or assets acquired with or earned on such unrestricted cash) not expressly required by the terms of the Indenture for the secured Notes to be deposited in or allocated to the lockbox account and any other funds with respect to which the Indenture expressly provides constitute unrestricted cash, including proceeds from indebtedness permitted to be incurred under the Indenture which are not otherwise expressly required by the terms of the Indenture to be deposited in or allocated to the lockbox account; provided that no specified shares or collateral shall constitute unrestricted cash.

 

 

B Communications Unconsolidated Sources and Uses


(In millions)


Convenience



translation into



U.S. dollars



(Note A)


NIS

US$




Net debt as of December 31, 2015

2,554

664




Dividends received from Bezeq

(204)

(53)

Net proceeds from the sale of Bezeq shares

(978)

(254)

Financial expenses, net

134

35

Loss from purchase of Notes

25

7

Tax provision

28

7

Operating expenses

5

1

Dividend distributions to shareholders

355

92




Net debt as of June 30, 2016

1,919

499

 

B Communications Second Quarter Consolidated Financial Results

B Communications' consolidated revenues for the second quarter of 2016 totaled NIS 2.5 billion ($653 million), a 3.5% decrease compared to the NIS 2.6 billion reported in the second quarter of 2015. For both the current and the prior-year periods, B Communications' consolidated revenues consisted entirely of Bezeq's revenues.

B Communications' consolidated operating income for the second quarter of 2016 totaled NIS 517 million ($134 million), a 15.5% decrease compared to NIS 612 million reported in the second quarter of 2015.

B Communications' consolidated net income for the second quarter of 2016 totaled NIS 264 million ($69 million), a 0.8% decrease compared with NIS 266 million reported in the second quarter of 2015.

B Communications Second Quarter Unconsolidated Financial Results

As of June 30, 2016, B Communications held approximately 26.3% of Bezeq's outstanding shares. B Communications' interest in Bezeq's net income for the second quarter of 2016 totaled NIS 99 million ($26 million), compared to NIS 148 million reported in the second quarter of 2015 (based on the Company's then 31% ownership interest in Bezeq as of June 30, 2015).

During the second quarter of 2016, B Communications recorded net amortization expenses of NIS 19 million ($5 million) related to its Bezeq purchase price allocation ("Bezeq PPA"). The decrease in the Company's ownership interest in Bezeq to 26.34% will reduce the Company's future net amortization expenses. From April 14, 2010, the date of the acquisition of its interest in Bezeq, until June 30, 2016, B Communications has amortized approximately 73% of the total Bezeq PPA. The Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment.

B Communications' unconsolidated net financial expenses for the second quarter of 2016 totaled NIS 38 million ($10 million) compared to net financial expenses of NIS 85 million in the second quarter of 2015. Financial expenses during the second quarter of 2016 included NIS 53 million ($14 million) related to the Company's publicly traded Series B Debentures and Notes. These expenses were partially offset by financial income of NIS 15 million ($4 million) generated by short term investments.

B Communications' net income attributable to shareholders for the second quarter of 2016 was NIS 40 million ($10 million) compared to net income of NIS 21 million in the second quarter of 2015.

 

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,


2016

2016

2015

2015


NIS

US$

NIS

NIS

Revenues

-

-

-

-

Financing expenses, net

(38)

(10)

(85)

(293)

Operating and tax expenses

(2)

(1)

(2)

(8)

Income tax benefit

-

-

-

101

PPA amortization, net

(19)

(5)

(40)

(119)

Interest in Bezeq's net income

99

26

148

529

Net income

40

10

21

210

 

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 quarter ended June 30, 2016. For a full discussion of Bezeq's results for the quarter ended June 30, 2016, please refer to its website: http://ir.bezeq.co.il.

 

Bezeq Group (consolidated)

Q2 2016

Q2 2015

  % change


(NIS millions)






Revenues

2,511

2,603

(3.5%)

Operating income

616

794

(22.4%)

Operating margin

24.5%

30.5%


Net income

377

482

(21.8%)

EBITDA

1,056

1,245

(15.2%)

EBITDA margin

42.1%

47.8%


Diluted EPS (NIS)

0.14

0.17

(17.6%)

Cash flow from operating activities

870

840

3.6%

Payments for investments

387

511

(24.3%)

Free cash flow 1

539

413

30.5%

Net debt

9,254

9,543

(3.0%)

Net debt/EBITDA (end of period) 2

2.24

2.30






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 2016 were NIS 2.51 billion ($653 million) compared to NIS 2.60 billion in the corresponding quarter of 2015, a decrease of 3.5%. The decrease was due to lower revenues in all of the Bezeq Group's segments (primarily at Pelephone).

Salary expenses of the Bezeq Group in the second quarter of 2016 were NIS 495 million ($128 million) compared to NIS 497 million in the corresponding quarter of 2015, a decrease of 0.4%.

Operating expenses of the Bezeq Group in the second quarter of 2016 were NIS 972 million ($253 million) compared to NIS 1.00 billion in the corresponding quarter of 2015, a decrease of 3.0%.  The decrease was primarily due to a reduction in interconnect payments to telecom operators and lower building maintenance expenses.

Other operating income of the Bezeq Group in the second quarter of 2016 amounted to NIS 12 million ($3 million) compared to NIS 141 million in the corresponding quarter of 2015. Other operating income was impacted by the recording of capital gains from the sale of fixed assets in the amount of NIS 148 million in the second quarter of 2015.

Operating income of the Bezeq Group in the second quarter of 2016 was NIS 616 million ($160 million) (operating margin of 24.5%) compared to NIS 794 million (operating margin of 30.5%) in the corresponding quarter of 2015, a decrease of 22.4%.

Tax expenses of the Bezeq Group in the second quarter of 2016 were NIS 133 million ($35 million) compared to NIS 183 million in the corresponding quarter of 2015, a decrease of 27.3%. The decrease in tax expenses was primarily due to a reduction in profit before tax as well as a decrease in the corporate tax rate from 26.5% to 25% beginning January 1, 2016.

Net income of the Bezeq Group in the second quarter of 2016 was NIS 377 million ($98 million) compared to NIS 482 million in the corresponding quarter of 2015, a decrease of 21.8%.

EBITDA of the Bezeq Group in the second quarter of 2016 was NIS 1.06 billion ($275 million) (EBITDA margin of 42.1%) compared to NIS 1.25 billion (EBITDA margin of 47.8%) in the corresponding quarter of 2015, a decrease of 15.2%.

Payments for investments (Capex) of the Bezeq Group in the second quarter of 2016 were NIS 387 million ($101 million) compared to NIS 511 million in the corresponding quarter of 2015, a decrease of 24.3%. The decrease was primarily due to the payment of NIS 96 million by Pelephone to the Ministry of Communications for LTE 4G frequencies in the second quarter of 2015.

Cash flow from operating activities of the Bezeq Group in the second quarter of 2016 was NIS 870 million ($226 million), compared to NIS 840 million in the corresponding quarter of 2015, an increase of 3.6%. The increase was primarily due to an improvement in working capital.

Free cash flow of the Bezeq Group in the second quarter of 2016 was NIS 539 million ($140 million) compared to NIS 413 million in the corresponding quarter of 2015, an increase of 30.5%. 

Total debt of the Bezeq Group was NIS 11.5 billion ($3 billion) as of June 30 2016 compared to NIS 11.4 billion as of June 30, 2015. Net debt of the Bezeq Group was NIS 9.25 billion ($2.41 billion) as of June 30, 2016 compared to NIS 9.54 billion as of June 30, 2015.

Notes:

A. Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures of June 30, 2016 have been presented in millions of U.S. dollars, translated at the representative rate of exchange as of June 30, 2016 (NIS 3.846 = U.S. $ 1.00). The U.S. dollar ($) amounts presented should not be construed as representing amounts receivable or payable in U.S. dollars or convertible into U.S. dollars, unless otherwise indicated.

B. Use of non-IFRS Measurements: We and the Bezeq Group's management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. We believe these non-IFRS financial measures provide consistent and comparable measures to help investors understand the Bezeq Group's current and future operating cash flow performance. These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.

In the press release and accompanying supplemental information, we use the following non-IFRS financial measures: EBITDA, LTV, net debt and free cash flow.

Management of the Company believes that free cash flow (defined as net cash flow from operating activities, less net capital expenditures) is an important measure of its liquidity as well as its ability to service long-term debt, fund future growth and to provide a return to shareholders. We also believe this free cash flow definition does not have any material limitations.

The following non-IFRS measures are provided because management believes these measurements are useful for investors and financial institutions to analyze and compare companies on the basis of operating performance:

  • EBITDA - defined as net income plus net interest expense, provision for income taxes, depreciation and  amortization;
  • Free Cash Flow (FCF) - defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net;
  • Net debt - reflects the Company's long and short term liabilities minus cash and cash equivalents and short term investments; and
  • LTV (loan to value) - defined as the ratio of our unconsolidated net debt to market value of the Company's holdings in Bezeq as of the balance sheet date.

Reconciliations between the Bezeq Group's results on an IFRS and non-IFRS basis with respect to these non-IFRS measurements are provided in tables immediately following the Company's consolidated results. The 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 holding company with a controlling interest in Israel's largest telecommunications provider, Bezeq, The Israel Telecommunication Corp. (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 
http://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,



2016

2016

2015

2015



NIS

US$

NIS

NIS

Assets






Cash and cash equivalents


1,357

353

865

581

Restricted cash


658

171

29

155

Investments


1,584

412

1,897

1,535

Trade receivables, net


2,029

527

2,256

2,058

Other receivables


239

63

244

286

Inventory


109

28

96

115







Total current assets


5,976

1,554

5,387

4,730







Long-term trade and other receivables


647

168

656

674

Property, plant and equipment


7,120

1,851

7,345

7,197

Intangible assets


6,859

1,784

*7,419

7,118

Deferred expenses and investments


636

165

537

643

Broadcasting rights


455

118

471

456

Investment in equity-accounted investee


21

6

28

25

Deferred tax assets


1,099

286

*1,194

1,279







Total non-current assets


16,837

4,378

17,650

17,392







Total assets


22,813

5,932

23,037

22,122


* Reclassified

 

 

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,



2016

2016

2015

2015



NIS

US$

NIS

NIS

Liabilities






Bank loans and credit and debentures


2,184

568

2,110

2,089

Trade and other payables


1,607

418

1,820

1,694

Related party


208

54

*217

233

Current tax liabilities


698

182

777

705

Provisions


90

23

90

100

Employee benefits


370

96

272

378

Total current liabilities


5,157

1,341

5,286

5,199







Bank loans and debentures


12,716

3,307

12,890

12,290

Employee benefits


239

62

238

240

Other liabilities


252

66

202

227

Provisions


46

12

70

46

Deferred tax liabilities


667

173

805

729

Total non-current liabilities


13,920

3,620

14,205

13,532







Total liabilities


19,077

4,961

19,491

18,731







Equity






Total equity attributable to equity holders of the Company


1,426

371

972

1,045



Non-controlling interests


2,310

600

2,574

2,346







Total equity


3,736

971

3,546

3,391







Total liabilities and equity


22,813

5,932

23,037

22,122


* Reclassified

 

 


B Communications Ltd.


Condensed Consolidated Statements of Income for the





Year ended


Six months period ended June 30,

Three months period ended June 30,

December 31,



Convenience



Convenience





translation



translation





into



into





U.S. dollars



U.S. dollars





(Note A)



(Note A)




2016

2016

2015

2016

2016

2015

2015


NIS

US$

NIS

NIS

US$

NIS

NIS









Revenues

5,070

1,318

4,777

2,511

653

2,603

9,985









Cost and expenses








Depreciation and amortization

1,083

281

1,011

538

140

572

2,131

Salaries

1,008

262

937

494

129

498

1,958

General and operating expenses

1,995

519

1,804

974

253

1,003

3,876

Other operating income, net

(7)

(2)

(93)

(12)

(3)

(82)

3










4,079

1,060

3,659

1,994

519

1,991

7,968









Operating income

991

258

1,118

517

134

612

2,017









Financing expenses, net

335

87

306

143

37

209

535









Income after financing








 expenses, net

656

171

812

374

97

403

1,482









Share of income (loss) in








 equity-accounted investee

(2)

(1)

16

(1)

*

-

12









Income before income tax

654

170

828

373

97

403

1,494









Income tax

230

60

256

109

28

137

358









Net income for the period

424

110

572

264

69

266

1,136









Income (loss) attributable to:








Owners of the company

17

4

69

40

10

21

210

Non-controlling interests

407

106

503

224

59

245

926









Net income for the period

424

110

572

264

69

266

1,136









Earnings per share








Net income (loss), basic

0.59

0.15

2.31

1.35

0.35

0.72

7.04

Net income (loss), diluted

0.59

0.15

2.27

1.35

0.35

0.70

6.97









* Represents an amount less than US$1.

 

 

 

Bezeq, The Israel Telecommunication Corp.



Reconciliation for NON-IFRS Measures

EBITDA



The following is a reconciliation of the Bezeq Group's net income to EBITDA:



(In millions)

Three months period ended June 30,



Convenience




translation




into




U.S. dollars




(Note A)



2016

2016

2015


NIS

US$

NIS





Net income

377

98

482

Income tax

133

35

183

Share of loss in equity-accounted investee

1

-

-

Financing expenses, net

105

27

129

Depreciation and amortization

440

115

451





EBITDA

1,056

275

1,245





 

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.

 

 

 

Bezeq, The Israel Telecommunication Corp.

Reconciliation for NON-IFRS Measures



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)



2016

2016

2015


NIS

US$

NIS





Cash flow from operating activities

870

226

840

Purchase of property, plant and equipment

(317)

(82)

(363)

Investment in intangible assets and deferred expenses

(70)

(18)

(148)

Proceeds from the sale of property, plant and equipment

56

14

84





Free cash flow

539

140

413





 

Free cash flow is a financial index which is not based on IFRS. Free cash flow is defined as cash from operating activities less cash for the purchase/sale of property, plant and equipment, and intangible assets, net. The Company presents free cash flow as an additional index for assessing its business results and cash flows because the Company believes that free cash flow is an important liquidity index that reflects cash resulting from ongoing operations after cash investments in infrastructure and other fixed and intangible assets.

Net Debt

The following table shows the calculation of the Bezeq Group's net debt:

 

(In millions)

As at June 30,



Convenience




translation




into




U.S. dollars




(Note A)



2016

2016

2015


NIS

US$

NIS





Non-current bank loans and debentures

1,958

509

1,924

Short term bank loans and credit and debentures

9,546

2,482

9,444

Cash and cash equivalents

(1,338)

(348)

(826)

Investments

(912)

(237)

(999)





Net debt

9,254

2,406

9,543





 

Net debt reflects long and short term liabilities minus cash and cash equivalents and investments.

[1] LTV (loan to value) ratio is calculated as B Communications' unconsolidated net debt as a percentage of the market value of its shareholdings in Bezeq as of June 30, 2016.

For further information, please contact:
Idit Cohen – IR Manager
idit@igld.com / Tel: +972-3-924-0000

Investor relations contacts:
Hadas Friedman – Investor Relations
Hadas@km-ir.co.il / Tel: +972-3-516-7620

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/b-communications-reports-financial-results-for-the-second-quarter-of-2016-300309150.html

SOURCE B Communications Ltd.

Copyright 2016 PR Newswire

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