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Name | Symbol | Market | Type |
---|---|---|---|
Partner Communications Company Ltd | NASDAQ:PTNR | NASDAQ | Depository Receipt |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.61 | 5.78 | 10.13 | 0 | 01:00:00 |
ADJUSTED EBITDA2 IN THE SECOND QUARTER TOTALED NIS 228 MILLION
NET DEBT DECLINED TO NIS 1.96 BILLION
Second quarter 2016 highlights (compared with second quarter 2015)
Partner Communications Company Ltd. (“Partner” or the “Company”) (NASDAQ:PTNR) (TASE:PTNR), a leading Israeli communications provider, announced today its results for the quarter ended June 30, 2016.
Commenting on the second quarter 2016 results, Mr. Isaac Benbenisti, CEO of Partner, noted:
“During the second quarter we continued with the implementation of the Company's vision to transform into a comprehensive communications company. We are currently unifying the systems of 012 Smile and Partner, a process that includes the gradual transfer of all our fixed-line customers to the Partner brand.
We announced our intention to promote the deployment of an independent fixed-line infrastructure using fiber optics, and we began a field test around a month ago in which we connected the first residential internet customers to Partner's fiber network at a speed of up to one Gigabit per second (Gbps). Over the last few weeks we have been promoting this issue with the Ministry of Communications and we expect to receive the support of the regulator to establish an advanced fixed-line infrastructure that will both open the market to competition and narrow the gap in internet speeds and available technologies for the Israeli communications consumer, compared to the rest of the world.
In parallel, we are working towards entry into the television broadcast market while taking into account the changing needs of the consumer in the digital era. We await the implementation of the Filber Committee recommendations with respect to the ‘must sell’ requirement for sports content and linear broadcast channels over the internet. The implementation of these steps, along with other steps, will enable the opening of the television market to competition and lead to lower prices for consumers.
In the second quarter we continued to successfully expand our cellular Post-Paid customer base, marking the fourth consecutive quarter of growth in the cellular post-paid subscriber base. This positive trend can be attributed, among others, to the significant steps we are taking in our customer service, including the expansion of available platforms for digital support and customer service, with an emphasis on the social networking platforms.”
Mr. Ziv Leitman, Partner's Chief Financial Officer, commented on the second quarter results of 2016 as compared to the first quarter results of 2016:
“During the second quarter of 2016, the competition in the cellular market continued to erode service revenues, however, to a lesser extent than in previous quarters.
The churn rate for cellular subscribers stood at 9.8% in the second quarter of 2016 compared to 11.2% in the previous quarter and 10.9% in the second quarter of 2015. We continue to see a decrease in Post-Paid subscriber churn which reached the lowest level since mid-2013.
Cellular ARPU in the second quarter of 2016 totaled NIS 65, a decline of NIS 2 from the first quarter of 2016, mainly reflecting the decline in revenues related to the network Right of Use Agreement with Hot Mobile, which was partially offset by an increase in seasonal roaming revenues as well as one-time service revenue items.
Revenues and gross profit from equipment sales in the second quarter of 2016 decreased by NIS 62 million and NIS 14 million respectively, compared to the previous quarter. The decreases were primarily due to a decline in the amount of sales, largely resulting from tightening of the Company's customer credit policy.
Operating expenses (OPEX)3 decreased by NIS 40 million compared with the previous quarter, primarily reflecting the decline in sales and marketing expenses and the impact of the network sharing agreement, which began in the second quarter of 2016, initiating the implementation of the cost sharing mechanism between the Company and Hot Mobile.
Adjusted EBITDA3 in the second quarter of 2016 increased by NIS 6 million (3%), compared with the previous quarter. The increase mainly reflected the decline in operating expenses, which was partially offset by the decline in service revenues and the decline in gross profit from equipment sales.
Finance costs, net, totaled NIS 28 million in the reported quarter, an increase of NIS 4 million compared to the previous quarter, reflecting higher linkage costs resulting from the increase in CPI, partially offset by lower early debt repayment costs and higher gains from foreign exchange movements.
Profit for the second quarter of 2016 totaled NIS 26 million compared with NIS 14 million in the previous quarter. The increase largely reflected the increase in operating profit.
Cash capital expenditures (CAPEX payments)3 in the second quarter of 2016 totaled NIS 57 million compared to NIS 48 million in the previous quarter, an increase of 19%.
Free cash flow (before interest payments)3 in the reported quarter totaled NIS 160 million, compared with NIS 114 million in the previous quarter. The increase in free cash flow primarily reflected the first installment, in an amount of NIS 35 million, of the lump sum of NIS 250 million under the Network Sharing Agreement with Hot Mobile, which is expected to be paid fully during 2016, as well as a decrease in other operating working capital items.
As of June 30, 2016, net debt3 amounted to approximately NIS 1.96 billion (total short and long term debt and current maturities of NIS 2.88 billion less cash and cash equivalents of NIS 0.92 billion).
In April 2016 the Company repurchased part of its Series C Notes in the amount of approximately NIS 62 million, this being the final purchase under the October 2015 buy-back plan.”
Key Financial Results
NIS Million (except EPS) Q2'16 Q2'15 % Change Revenues 897 1,044 -14% Cost of revenues 730 848 -14% Gross profit 167 196 -15% Operating profit 67 67 0% Profit for the period 26 9 +189% Earnings per share (basic, NIS) 0.17 0.06 +183% Free cash flow (before interest payments) 160 24 +567%Key Operating Indicators
Q2'16 Q2'15 Change Adjusted EBITDA (NIS million)228
236
-3%
Adjusted EBITDA (as a % of total revenues)25%
23%
+2
Cellular Subscribers (end of period, thousands)2,700
2,747
-47
Quarterly Cellular Churn Rate (%)9.8%
10.9%
-1.1
Monthly Average Revenue per Cellular User (ARPU) (NIS)65
70
-5
Partner Consolidated Results
Cellular Segment Fixed-Line Segment Elimination Consolidated NIS Million Q2'16 Q2'15 Change % Q2'16 Q2'15 Change % Q2'16 Q2'15 Q2'16 Q2'15 Change % Total Revenues715
852
-16%
236
242
-2%
(54)
(50)
897
1,044
-14%
Service Revenues527
581
-9%
219
226
-3%
(54)
(50)
692
757
-9%
Equipment Revenues188
271
-31%
17
16
+6%
- -205
287
-29%
Operating Profit31
26
+19%
36
41
-12%
- -67
67
0%
Adjusted EBITDA155
160
-3%
73
76
-4%
--
228
236
-3%
Financial Review
In Q2 2016, total revenues were NIS 897 million (US$ 233 million), a decrease of 14% from NIS 1,044 million in Q2 2015.
Service revenues in Q2 2016 totaled NIS 692 million (US$ 180 million), a decrease of 9% from NIS 757 million in Q2 2015.
Service revenues for the cellular segment in Q2 2016 were NIS 527 million (US$ 137 million), a decrease of 9% from NIS 581 million in Q2 2015. The decrease was mainly the result of the decline in revenues related to the ending of the network Right of Use Agreement with Hot Mobile as well as the continued price erosion of Post-Paid and Pre-Paid cellular services due to the competitive market conditions, partially offset by one-time service revenue items.
Service revenues for the fixed-line segment in Q2 2016 totaled NIS 219 million (US$ 57 million), a decrease of 3% from NIS 226 million in Q2 2015. The decrease mainly reflected lower revenues from international calls services.
Equipment revenues in Q2 2016 totaled NIS 205 million (US$ 53 million), a decrease of 29% from NIS 287 million in Q2 2015. The decrease largely reflected a decline in the amounts of cellular and other devices and accessories sold.
Gross profit from equipment sales in Q2 2016 was NIS 42 million (US$ 11 million), compared with NIS 67 million in Q2 2015, a decrease of 37%, again largely reflecting the reduction in the amount of sales.
Operating expenses (OPEX) totaled NIS 572 million (US$ 149 million) in Q2 2016, a decrease of 5% or NIS 29 million from Q2 2015. The decrease largely reflected the decline in payroll and related expenses, as well as a decline in cellular network-related operating expenses following the implementation of the cost sharing mechanism under the Network Sharing Agreement with Hot Mobile, and lower expenses related to payments to other communications providers, partially offset by higher advertising and marketing expenses and expenses related to bad debts and doubtful accounts. Operating expenses including depreciation and amortization expenses in Q2 2016 increased by 5% compared with Q2 2015.
In Q2 2016 the Company continued to record income with respect to the settlement agreement with Orange in an amount of NIS 54 million (US$ 14 million). The income resulted from advance payments received from Orange during 2015 in a total amount of €90 million. As set forth in the settlement agreement, the advance payments are to be recognized and reconciled evenly on a quarterly basis over a period until the second quarter of 2017, against contingent marketing, sales, customer services and other expenses to be incurred over this period.
Adjusted EBITDA in Q2 2016 totaled NIS 228 million (US$ 59 million), a decrease of 3% from NIS 236 million in Q2 2015.
Adjusted EBITDA for the cellular segment was NIS 155 million (US$ 40 million) in Q2 2016, a decrease of 3% from NIS 160 million in Q2 2015. The decrease principally reflected the decreases in service revenues and in gross profit from equipment sales, which were partially offset by the income with respect to the settlement agreement with Orange and by the decrease in operating expenses. As a percentage of total cellular revenues, Adjusted EBITDA margin for the cellular segment in Q2 2016 was 22%, compared with 19% in Q2 2015.
Adjusted EBITDA for the fixed-line segment was NIS 73 million (US$ 19 million) in Q2 2016, a decrease of 4% from NIS 76 million in Q2 2015. The decrease also mainly reflected the decreases in service revenues and in gross profit from equipment sales, which were partially offset by the decrease in operating expenses. As a percentage of total fixed-line revenues, Adjusted EBITDA margin for the fixed line segment in Q2 2016 was 31%, no change from Q2 2015.
Operating profit for Q2 2016 was NIS 67 million (US$ 17 million), no change from Q2 2015.
Finance costs, net in Q2 2016 were NIS 28 million (US$ 7 million), a decrease of 39%, compared with NIS 46 million in Q2 2015. The decrease was mainly due to lower CPI (Consumer Price Index) linkage expenses as a result of the smaller increase in the CPI level, as well as higher gains from foreign exchange movements in Q2 2016.
Income tax expenses for Q2 2016 were NIS 13 million (US$ 3 million), an increase of 8% compared with NIS 12 million in Q2 2015, reflecting the increase in profit before tax.
Profit in Q2 2016 totaled NIS 26 million (US$ 7 million), an increase of 189% compared with NIS 9 million in Q2 2015.
Based on the weighted average number of shares outstanding during Q2 2016, basic earnings per share or ADS, was NIS 0.17 (US$ 0.04), compared to NIS 0.06 in Q2 2015.
Cellular Segment Operational Review
At the end of the second quarter of 2016, the Company's cellular subscriber base (including mobile data and 012 Mobile subscribers) was approximately 2.7 million, including approximately 2.19 million Post-Paid subscribers or 81% of the base, and approximately 509 thousand Pre-Paid subscribers, or 19% of the subscriber base.
During the second quarter of 2016, the cellular subscriber base increased by approximately 8 thousand subscribers. The Post-Paid subscriber base increased by approximately 17 thousand subscribers, while the Pre-Paid subscriber base declined by approximately 9 thousand subscribers.
The quarterly churn rate for cellular subscribers in Q2 2016 was 9.8%, compared with 10.9% in Q2 2015, reflecting a decrease in the churn of Post-Paid subscribers, which was partially offset by an increase in the churn of Pre-Paid subscribers.
Total cellular market share (based on the number of subscribers) at the end of Q2 2016 was estimated to be approximately 27%, unchanged from Q2 2015.
The monthly Average Revenue per User (“ARPU”) for cellular subscribers in Q2 2016 was NIS 65 (US$ 17), a decrease of 7% from NIS 70 in Q2 2015. The decrease in ARPU mainly reflected the decline in revenues related to the network Right of Use Agreement with Hot Mobile as well as the continued price erosion of Post-Paid and Pre-Paid cellular services due to the competitive market conditions, partially offset by one-time service revenue items.
Funding and Investing Review
In Q2 2016, cash flow generated from operating activities before interest payments (NIS 217 million), net of cash flow used for investing activities (NIS 57 million) (‘Free Cash Flow (before interest)’), totaled NIS 160 million (US$ 42 million), an increase of 567% from NIS 24 million in Q2 2015, reflecting both an increase in cash generated from operations and a decrease in CAPEX payments.
Cash generated from operations increased by 61% to NIS 217 million (US$ 57 million) in Q2 2016 from NIS 135 million in Q2 2015. The increase in cash generated from operations reflected both the first installment, in an amount of NIS 35 million, of the lump sum of NIS 250 million under the Network Sharing Agreement with Hot Mobile (which is expected to be paid fully during 2016), and the decrease in operating assets, which was mainly explained by the decrease in equipment sales under installment payment plans.
Cash capital expenditures (CAPEX payments) totaled NIS 57 million (US$ 15 million) in Q2 2016, a decrease of 49% from NIS 111 million in Q2 2015.
Net debt at the end of Q2 2016 amounted to NIS 1,964 million (US$ 511 million), compared with NIS 2,626 million at the end of Q2 2015, a decrease of NIS 662 million.
Conference Call Details
Partner will hold a conference call on Wednesday, August 17, 2016 at 10.00AM Eastern Time / 5.00PM Israel Time.To join the call, please dial the following numbers (at least 10 minutes before the scheduled time):International: +972.3.918.0664North America toll-free: +1.888.668.9141A live webcast of the call will also be available on Partner's Investors Relations website at: www.partner.co.il/en/Investors-Relations/lobby/If you are unavailable to join live, the replay of the call will be available from August 17, 2016 until August 24, 2016, at the following numbers:International: +972.3.925.5937North America toll-free: +1.877.456.0009In addition, the archived webcast of the call will be available on Partner's Investor Relations website at the above address for approximately three months.
Forward-Looking StatementsThis press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as “estimate”, “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “project”, “goal”, “target” and similar expressions often identify forward-looking statements but are not the only way we identify these statements. Specific statements have been made regarding (i) the unification of the Group's systems and a gradual transfer of the Company's fixed-line customers to the Partner brand; (ii) the Company's intention to promote the deployment of an independent fixed-line infrastructure using fiber optics, and the Company's expectation to receive the regulator's support to establish the said infrastructure and insofar as the Company's expectation will not be realized, this may have an adverse effect on the Company's business, the results of operations and on the market competition;(iii) the Company's intention to enter into the television broadcast market and the expectation for the implementation of the Filber Committee conclusions and recommendations regarding the regulation of the broadcast market, including with respect to the ‘must sell’ requirement for sport content and liner broadcast channels over the internet and insofar as these events will not occur, this might have an adverse effect on the Company's entrance into the television broadcast market and its ability to open the market for competition and reduce prices for consumers, and (iv) anticipated future cash payments from Hot Mobile. In addition, all statements other than statements of historical fact included in this press release regarding our future performance are forward-looking statements.
We have based these forward-looking statements on our current knowledge and our present beliefs and expectations regarding possible future events. These forward-looking statements are subject to risks, uncertainties and assumptions, including, as regards in particular the statements identified above, (i) the current lack of visibility as to the implementation of the Filber Committee conclusions and recommendations regarding the regulation of the broadcast market; (ii) any unanticipated technological, technical or other difficulty which might arise in connection with the Group's systems unification and the transfer to the Partner brand,(iii) operational, regulatory, financial or other unanticipated difficulties, which could prevent the Company from promoting the deployment of an independent fixed-line infrastructure using fiber optics, and (iv) the risk of non-compliance by Hot Mobile, for financial or other reasons, with its contractual obligations to Partner to make the anticipated cash payments. Future results may differ materially from those anticipated herein. For further information regarding risks, uncertainties and assumptions about Partner, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments, and other risks we face, see “Item 3. Key Information - 3D. Risk Factors”, “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects”, “Item 8 Financial Information - 8A. Consolidated Financial Statements and Other Financial Information - 8A.1 Legal and Administrative Proceedings” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Reports on Form 20-F filed with the SEC, as well as its immediate reports on Form 6-K furnished to the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.The quarterly financial results presented in this press release are unaudited financial results.The results were prepared in accordance with IFRS, other than the non-GAAP financial measures presented below.The financial information is presented in NIS millions (unless otherwise stated) and the figures presented are rounded accordingly.
The convenience translations of the New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at June 30, 2016: US $1.00 equals NIS 3.846. The translations were made purely for the convenience of the reader.
Use of Non-GAAP Financial Measures‘Adjusted EBITDA’ represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and amortization of share based compensation) and impairment charges, as a measure of operating profit. Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures provided by other companies. Adjusted EBITDA may not be indicative of the Company’s historic operating results nor is it meant to be predictive of potential future results. Adjusted EBITDA is presented solely to enhance the understanding of our operating results. We use the term “Adjusted EBITDA” to highlight the fact that amortization includes amortization of deferred expenses – right of use and employee share-based compensation expenses, but Adjusted EBITDA is fully comparable to EBITDA information which has been previously provided by Partner for prior periods.'Cash capital expenditures' or 'CAPEX payments' represent cash flows used in acquisition of property and equipment and acquisition of intangible assets.'Capital Expenditures (additions)' represents additions to property and equipment and intangible assets.'Net Debt' represents notes payable and borrowings form banks and others including current maturities less cash and cash equivalents.'Free Cash Flow (before interest)' represents cash flows from operating activities before interest payments, net of cash flows used for investment activities.'Free Cash Flow (after interest)' represents cash flows from operating activities before interest payments, net of cash flows used for investment activities and net of interest paid.'Operating Expenses (OPEX)' represents cost of service revenues, selling, marketing and administrative expenses net of depreciation, amortization, impairment charges and other expenses (mainly employee share based compensation expenses).
About Partner Communications
Partner Communications Company Ltd. is a leading Israeli provider of communications services (cellular, fixed-line telephony and internet services) under the Partner brand and the 012 Smile brand. Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and its shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).For more information about Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
New Israeli Shekels
Conveniencetranslation into U.S.Dollars
June 30, December 31, June 30, 20162015 2016 (Unaudited) (Audited) (Unaudited) In millions CURRENT ASSETS Cash and cash equivalents 916 926 238 Trade receivables 1,088 1,057 283 Other receivables and prepaid expenses 40 47 10 Deferred expenses – right of use 33 33 9 Inventories 82 120 21 Income tax receivable 2
2,159 2,185 561 NON CURRENT ASSETS Trade Receivables 434 492 113 Deferred expenses – right of use 37 20 10 Property and equipment 1,291 1,414 336 Licenses and other intangible assets 863 956 224 Goodwill 407 407 106 Deferred income tax asset 40 49 10 Prepaid expenses and other 3 3 1 3,075 3,341 800 TOTAL ASSETS 5,234 5,526 1,361
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
New Israeli Shekels
Conveniencetranslationinto U.S. Dollars
June 30, December 31, June 30, 2016 2015 2016 (Unaudited) (Audited) (Unaudited) In millions CURRENT LIABILITIESCurrent maturities of notes payable and borrowings
and current borrowings
447 554 116 Trade payables 674 715 175 Payables in respect of employees 76 77 20 Other payables (mainly institutions) 28 45 8 Income tax payable 55 52 14 Deferred income with respect to settlementagreement with Orange
217 217 56 Deferred revenues from HOT mobile 27 7 Other deferred revenues 28 28 8 Provisions 81 77 21 1,633 1,765 425 NON CURRENT LIABILITIES Notes payable 1,085 1,190 282 Borrowings from banks and others 1,348 1,357 350 Liability for employee rights upon retirement, net 31 34 8 Dismantling and restoring sites obligation 35 36 9 Deferred income with respect to settlementagreement with Orange
108 Other non-current liabilities 15 16 4 Deferred income tax liability 3 1 2,517 2,741 654 TOTAL LIABILITIES 4,150 4,506 1,079 EQUITY Share capital – ordinary shares of NIS 0.01par value: authorized – December 31, 2015
and June 2016 – 235,000,000 shares;
issued and outstanding - 2 2 1December 31, 2015 – *156,087,456 shares
June 30, 2016 – *156,096,891 shares
Capital surplus 1,102 1,102 286 Accumulated retained earnings 331 267 86 Treasury shares, at costDecember 31, 2015 – **4,461,975 shares
June 30, 2016 –** 4,460,939 shares
(351)
(351)
(91)
TOTAL EQUITY 1,084 1,020 282 TOTAL LIABILITIES AND EQUITY 5,234 5,526 1,361* Net of treasury shares.** Including restricted shares in amount of 2,887,798 and 2,911,806 as of June 30, 2016 and December 31, 2015 respectively held by trustee under the Company's Equity Incentive Plan, such shares will become outstanding upon completion of vesting conditions.
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
New Israeli shekelsConvenience translation into U.S. dollars
6 monthperiod ended June 30
3 monthperiod ended June 30
6 month period ended June 30,
3 month period ended June 30,
2016 2015 2016 2015 2016 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) In millions (except per share data) Revenues, net 1,874 2,098 897 1,044 487 233 Cost of revenues 1,527 1,717 730 848 397 190 Gross profit 347 381 167 196 90 43Selling and marketingexpenses
232 193 105 96 60 27General and administrativeexpenses
128 91 61 46 33 16Income with respect to settlement
agreement with Orange
108
54
28
14
Other income, net 26 26 12 13 7 3 Operating profit 121 123 67 67 32 17 Finance income 14 7 6 3 3 2 Finance expenses 66 71 34 49 17 9 Finance costs, net 52 64 28 46 14 7 Profit before income tax 69 59 39 21 18 10 Income tax expenses 29 25 13 12 8 3 Profit for the period 40 34 26 9 10 7 Earnings per share Basic 0.26 0.22 0.17 0.06 0.06 0.04 Diluted 0.26 0.22 0.17 0.06 0.06 0.04Weighted average number of shares outstanding (inthousands)
Basic 156,091 156,077 156,092 156,077 156,091 156,092 Diluted 157,605 156,082 157,669 156,079 157,605 157,669PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTSOF COMPREHENSIVE INCOME
New Israeli shekelsConvenience translationinto U.S. dollars
6 monthperiod ended June 30, 3 monthperiod ended June 30, 6 month period ended June 30, 3 month period ended June 30, 2016 2015 2016 2015 2016 2016 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) In millionsProfit for the period
40 34 26 9 10 7 Other comprehensive incomefor the period, net of income tax
-
-
-
-
-
-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
4034
26 9 10 7PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)SEGMENT INFORMATION & Adjusted EBITDA reconciliation
New Israeli Shekels
New Israeli Shekels
Six months ended June 30, 2016
Six months ended June 30, 2015
In millions (Unaudited)
In millions (Unaudited)
Cellularsegment
Fixed line segment Reconciliationfor
consolidation
Consolidated Cellularsegment
Fixed line segment Reconciliationfor
consolidation
Consolidated
Segment revenue - Services1,060
342
1,402
1,149
367
1,516
Inter-segment revenue - Services10
99
(109)
11
91 (102) Segment revenue - Equipment432
40
472
548
34
582
Total revenues1,502
481
(109)
1,874
1,708
492
(102)
2,098
Segment cost of revenues – Services851
302
1,153
942
319
1,261
Inter-segment cost of revenues- Services98
11
(109)
90
12
(102)
Segment cost of revenues - Equipment342
32
374
433
23
456
Cost of revenues1,291
345
(109)
1,527
1,465
354
(102)
1,717 Gross profit211
136
347
243
138
381
Operating expenses301
59
360
228
56
284
Income with respect to settlement
agreement with Orange
108 108 Other income, net24
2
26
25
1
26
Operating profit42
79
121
40
83
123
Adjustments to presentation of Adjusted
EBITDA
–Depreciation and amortization230
75
305
260
72
332
–Other (1)25
(1)
24
8
8
Adjusted EBITDA (2)297
153
450
308
155
463
Reconciliation of Adjusted EBITDA to
profit for the period
- Depreciation and amortization
305
332
- Finance costs, net52
64
- Income tax expenses29
25
- Other (1)
24
8
Profit for the period40
34
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)SEGMENT INFORMATION & Adjusted EBITDA reconciliation
New Israeli Shekels New Israeli Shekels Three months ended June 30, 2016 Three months ended June 30, 2015 In millions (Unaudited) In millions (Unaudited) Cellular segment Fixed line segment Reconciliation forconsolidation
Consolidated Cellularsegment
Fixed linesegment
Reconciliation forconsolidation
Consolidated Segment revenue - Services 521 171 692576
181
757
Inter-segment revenue - Services 6 48 (54)5
45
(50)
Segment revenue - Equipment 188 17 205271
16
287
Total revenues 715 236 (54) 897852
242
(50)
1,044
Segment cost of revenues – Services 415 152 567472
156
628
Inter-segment cost of revenues- Services 48 6 (54)44
6
(50)
Segment cost of revenues - Equipment 149 14 163209
11
220
Cost of revenues 612 172 (54) 730725
173
(50)
848
Gross profit 103 64 167127
69
196
Operating expenses 137 29 166114
28
142
Income with respect to settlement
agreement with Orange
54 54 Other income, net 11 112
13
13
Operating profit 31 3667
26
41
67
Adjustments to presentation of Adjusted EBITDA
–Depreciation and amortization 113 37 150131
35
166
–Other (1) 11*
113
*
3
Adjusted EBITDA (2) 155 73 228160
76
236
Reconciliation of Adjusted EBITDA to
profit for the period
- Depreciation and amortization 150166
- Finance costs, net 2846
- Income tax expenses 1312
- Other (1) 113
Profit for the period 269
* Representing an amount of less than 1 million.(1) Mainly amortization of employee share based compensation.(2) Adjusted EBITDA as reviewed by the CODM represents Earnings Before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use, amortization of share based compensation and impairment charges), as a measure of operating profit. Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies. Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges.
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
New Israeli Shekels
Conveniencetranslation into U.S. Dollars
6 months endedJune 30, 2016 2015 2016 (Unaudited) (Unaudited) (Unaudited) In millions CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations (Appendix) 391 311 101 Income tax paid (12) (27) (3) Net cash provided by operating activities 379 284 98CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (71) (137) (18) Acquisition of intangible assets (34) (102) (9) Interest received * 1 *Proceeds from (repayment of) derivative financialinstruments, net
* (1) * Net cash used in investing activities (105) (239) (27)
CASH FLOWS FROM FINANCING ACTIVITIES:
Interest paid (66) (65) (17) Current borrowings received 24 6 Non-current borrowings received 475 Repayment of non-current borrowings (7) (177) (2) Repayment of notes payable (235) (61) Net cash provided by (used in) financing activities (284) 233 (74)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(10) 278 (3) CASH AND CASH EQUIVALENTS AT BEGINNING OFPERIOD
926 663 241CASH AND CASH EQUIVALENTS AT END OF PERIOD
916 941 238* Representing an amount of less than 1 million.
PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSAppendix - Cash generated from operations and supplemental information
New Israeli Shekels
Conveniencetranslation into U.S. Dollars
6 months endedJune 30,
2016 2015 2016 (Unaudited) (Unaudited) (Unaudited) In millions Cash generated from operations: Profit for the period 40 34 10 Adjustments for: Depreciation and amortization 290 314 75 Amortization of deferred expenses - Right of use 14 18 4 Employee share based compensation expenses 24 8 6 Liability for employee rights upon retirement, net (3) (1) (1) Finance costs, net (2) (5) (1) Change in fair value of derivative financial instruments * (2) * Interest paid 66 65 17 Interest received * (1) * Deferred income taxes 11 * 3 Income tax paid 12 27 3 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable: Trade 27 (145) 7 Other 7 (7) 2 Increase (decrease) in accounts payable and accruals: Trade (9) 24 (2) Other payables (21) (23) (6) Provisions 4 (3) 1 Deferred income with respect to settlementagreement with Orange
(108) (28) Deferred revenues from HOT Mobile 27 7 Other deferred revenues * (8) * Increase in deferred expenses - Right of use (31) (14) (8) Current income tax liability 6 2 2 Decrease (increase) in inventories 37 28 10 Cash generated from operations 391 311 101* Representing an amount of less than 1 million.
At June 30, 2016 and 2015, trade and other payables include NIS 95 million ($25 million) and NIS 109 million, respectively, in respect of acquisition of intangible assets and property and equipment; payments in respect thereof are presented in cash flows from investing activities.These balances are recognized in the cash flow statements upon payment.
Reconciliation of Non-GAAP Measures:
Free Cash Flow before and after interest paid
New Israeli Shekels
Conveniencetranslation into U.S. Dollars
3 months ended June 30,
2016 2015 2016 (Unaudited) (Unaudited) (Unaudited) In millions Net cash provided by operating activities 217 135 57 Net cash used in investing activities (57) (111) (15) Free Cash Flow (before interest) 160 24 42 Interest paid (41) (52) (11) Free Cash Flow (after interest) 119 (28) 31Operating Expenses (OPEX)
New Israeli Shekels
Conveniencetranslation into U.S. Dollars
3 months ended June 30,
2016 2015 2016 (Unaudited) (Unaudited) (Unaudited) In millions Cost of revenues – Services 567 628 148 Selling and marketing expenses 105 96 27 General and administrative expenses 61 46 16 Depreciation and amortization (150) (166) (39) Other (1) (11) (3) (3)OPEX
572 601 149(1) Mainly amortization of employee share based compensation.
Key Financial and Operating Indicators (unaudited)*
NIS M unless otherwise stated Q2' 14 Q3' 14 Q4' 14 Q1' 15 Q2' 15 Q3' 15 Q4' 15 Q1' 16 Q2' 16 2014 2015 Cellular Segment Service Revenues 667 658 613 579 581 587 550 543 527 2,618 2,297 Cellular Segment Equipment Revenues 218 218 282 277 271 234 269 244 188 938 1,051 Fixed-Line Segment Service Revenues 248 259 250 232 226 225 223 222 219 1,004 906 Fixed-Line Segment Equipment Revenues 7 22 18 18 16 12 22 23 17 54 68 Reconciliation for consolidation (53) (55) (55) (52) (50) (52) (57) (55) (54) (214) (211) Total Revenues 1,087 1,102 1,108 1,054 1,044 1,006 1,007 977 897 4,400 4,111 Gross Profit from Equipment Sales 58 64 61 59 67 52 61 56 42 228 239 Operating Profit (Loss) 118 110 73 56 67 32 (48) 54 67 400 107 Cellular Segment Adjusted EBITDA 211 191 161 148 160 137 152 142 155 762 597 Fixed-Line Segment Adjusted EBITDA 80 91 88 79 76 59 65 80 73 334 279 Total Adjusted EBITDA 291 282 249 227 236 196 217 222 228 1,096 876 Adjusted EBITDA Margin (%) 27% 26% 22% 22% 23% 19% 22% 23% 25% 25% 21% OPEX 642 657 630 604 601 650 608 612 572 2,590 2,463 Impairment charges on operating profit 98 98Income with respect to settlement agreement
with Orange 23 38 54 54 61 Finance costs, net 49 50 36 18 46 40 39 24 28 159 143 Profit (loss) 46 40 24 25 9 (9) (65) 14 26 162 (40) Capital Expenditures (cash) 99 129 90 128 111 64 56 48 57 432 359 Capital Expenditures (additions) 93 118 145 50 84 51 86 34 40 434 271 Free Cash Flow Before Interest 192 112 71 21 24 291 230 114 160 520 566 Free Cash Flow After Interest 123 106 21 8 (28) 277 172 89 119 389 429 Net Debt 2,735 2,637 2,612 2,581 2,626 2,355 2,175 2,079 1,964 2,612 2,175 Cellular Subscriber Base (Thousands) 2,914 2,894 2,837 2,774 2,747 2,739 2,718 2,692 2,700 2,837 2,718 Post-Paid Subscriber Base (Thousands) 2,138 2,145 2,132 2,112 2,112 2,136 2,156 2,174 2,191 2,132 2,156 Pre-Paid Subscriber Base (Thousands) 776 749 705 662 635 603 562 518 509 705 562 Cellular ARPU (NIS) 76 76 71 69 70 71 67 67 65 75 69 Cellular Churn Rate (%) 11.4% 12.0% 11.5% 12.7% 10.9% 10.8% 11.1% 11.2% 9.8% 47% 46% Number of Employees (FTE) 3,7363,683
3,575 3,535 3,354 3,017 2,882 2,827 2,740 3,575 2,882* See footnote 2 regarding use of non-GAAP measures.
1 The quarterly financial results are unaudited.2 For the definition of this and other Non-GAAP financial measures, see “Use of Non-GAAP Financial Measures”.3 See footnote 2.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160816006380/en/
Partner CommunicationsZiv Leitman, Tel: +972-54-781-4951Chief Financial OfficerorLiat Glazer Shaft, Tel: +972-54-781-5051Head of Investor Relations and Corporate ProjectsE-mail: investors@partner.co.il
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