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)
- Total Revenues: NIS 897 million
(US$ 233 million), a decrease of 14%
- Service Revenues: NIS 692
million (US$ 180 million), a decrease of 9%
- Equipment Revenues: NIS 205
million (US$ 53 million), a decrease of 29%
- Operating Expenses
(OPEX)2: NIS 572 million (US $ 149 million), a
decrease of 5%
- Adjusted EBITDA: NIS 228 million
(US$ 59 million), a decrease of 3%
- Adjusted EBITDA Margin: 25% of
total revenues, compared with 23%
- Profit for the period: NIS 26
million (US$ 7 million), an increase of 189%
- Net Debt2: NIS
1,964 million (US$ 511 million), a decrease of NIS 662 million
- Free Cash Flow (before
interest)2: NIS 160 million (US$ 42 million), an
increase of NIS 136 million
- Cellular ARPU: NIS 65 (US$ 17),
a decrease of 7%
- Cellular Subscriber Base:
approximately 2.7 million at quarter-end, a decrease of 2%
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
Revenues
715
852
-16%
236
242
-2%
(54)
(50)
897
1,044
-14%
Service Revenues
527
581
-9%
219
226
-3%
(54)
(50)
692
757
-9%
Equipment Revenues
188
271
-31%
17
16
+6%
- -
205
287
-29%
Operating Profit
31
26
+19%
36
41
-12%
- -
67
67
0%
Adjusted EBITDA
155
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,
2016
2015 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
LIABILITIES
Current 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
settlement
agreement 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 settlement
agreement 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 0.01
par value: authorized – December 31,
2015
and June 2016 – 235,000,000 shares;
issued and outstanding - 2 2 1
December 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 cost
December 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 shekels
Convenience 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 43
Selling and marketingexpenses
232 193 105 96 60 27
General and administrativeexpenses
128 91 61 46 33 16
Income 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 0.04
Weighted average number of
shares outstanding (inthousands)
Basic 156,091 156,077 156,092 156,077 156,091 156,092 Diluted
157,605 156,082 157,669 156,079 157,605 157,669
PARTNER COMMUNICATIONS COMPANY LTD.(An
Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTSOF
COMPREHENSIVE INCOME
New Israeli shekels
Convenience 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
millions
Profit for the period
40 34 26 9 10 7
Other comprehensive income
for the period, net of income
tax
-
-
-
-
-
-
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD
40
34
26 9 10 7
PARTNER 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 Reconciliation
for
consolidation
Consolidated Cellular
segment
Fixed line segment Reconciliation
for
consolidation
Consolidated
Segment revenue - Services
1,060
342
1,402
1,149
367
1,516
Inter-segment revenue - Services
10
99
(109)
11
91 (102) Segment revenue - Equipment
432
40
472
548
34
582
Total revenues
1,502
481
(109)
1,874
1,708
492
(102)
2,098
Segment cost of revenues – Services
851
302
1,153
942
319
1,261
Inter-segment cost of revenues- Services
98
11
(109)
90
12
(102)
Segment cost of revenues - Equipment
342
32
374
433
23
456
Cost of revenues
1,291
345
(109)
1,527
1,465
354
(102)
1,717
Gross profit
211
136
347
243
138
381
Operating expenses
301
59
360
228
56
284
Income with respect to settlement
agreement with Orange
108 108 Other income, net
24
2
26
25
1
26
Operating profit
42
79
121
40
83
123
Adjustments to presentation of
Adjusted
EBITDA
–Depreciation and amortization
230
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, net
52
64
- Income tax expenses
29
25
- Other (1)
24
8
Profit for the period
40
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 for
consolidation
Consolidated Cellular
segment
Fixed line
segment
Reconciliation for
consolidation
Consolidated Segment revenue - Services 521 171 692
576
181
757
Inter-segment revenue - Services 6 48 (54)
5
45
(50)
Segment revenue - Equipment 188 17 205
271
16
287
Total revenues 715 236 (54) 897
852
242
(50)
1,044
Segment cost of revenues – Services 415 152 567
472
156
628
Inter-segment cost of revenues- Services 48 6 (54)
44
6
(50)
Segment cost of revenues - Equipment 149 14 163
209
11
220
Cost of revenues 612 172 (54) 730
725
173
(50)
848
Gross profit 103 64 167
127
69
196
Operating expenses 137 29 166
114
28
142
Income with respect to settlement
agreement with Orange
54 54 Other income, net 11 1
12
13
13
Operating profit 31 36
67
26
41
67
Adjustments to presentation of Adjusted
EBITDA
–Depreciation and amortization 113 37 150
131
35
166
–Other (1) 11
*
11
3
*
3
Adjusted EBITDA (2) 155 73 228
160
76
236
Reconciliation of Adjusted EBITDA to
profit for the period
- Depreciation and amortization 150
166
- Finance costs, net 28
46
- Income tax expenses 13
12
- Other (1) 11
3
Profit for the period 26
9
* 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 98
CASH 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 OF
PERIOD
926 663 241
CASH 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 settlement
agreement 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) 31
Operating
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
98
Income 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) 3,736
3,683
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
Partner Communications (NASDAQ:PTNR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Partner Communications (NASDAQ:PTNR)
Historical Stock Chart
From Apr 2023 to Apr 2024