PTNR Partner Communications Company Ltd

Adjusted EBITDA2 Totaled NIS 197 Million

Net Debt2 Remained Below NIS 1 Billion with Net Debt to Adjusted EBITDA Ratio of 1.3

Partner’s CEO, Isaac Benbenisti, Noted: “Partner’s Fiber Optics Infrastructure Already Reaches More Than 400 Thousand Households in More Than Half of Israel’s Cities across the Country, and Partner TV Continues to Be the Fastest Growing Television Service in Israel with over 152 Thousand Subscribers.”

First quarter 2019 highlights (compared with first quarter 2018)

• Total Revenues: NIS 794 million (US$ 219 million), a decrease of 4%
• Service Revenues: NIS 624 million (US$ 172 million), approximately unchanged
• Equipment Revenues: NIS 170 million (US$ 47 million), a decrease of 15%
• Total Operating Expenses (OPEX)2: NIS 472 million (US$ 130 million), a decrease of 5%
• Adjusted EBITDA: NIS 197 million (US$ 54 million), an increase of 11%
• Adjusted EBITDA Margin2: 25% of total revenues compared with 21%
• Profit for the Period: NIS 2 million (US$ 1 million) a decrease of 78%
• Net Debt: NIS 977 million (US$ 269 million), an increase of NIS 58 million
• Adjusted Free Cash Flow (before interest)2: negative NIS 11 million (US$ -3 million), a decrease of NIS 32 million
• Cellular ARPU: NIS 56 (US$ 15), a decrease of 3%
• Cellular Subscriber Base: approximately 2.62 million at quarter-end, a decrease of 1%
• TV Subscriber Base: approximately 141 thousand subscribers at quarter-end, an increase of 76 thousand subscribers

Partner Communications Company Ltd. (“Partner” or the “Company”) (NASDAQ and TASE: PTNR), a leading Israeli communications provider, announced today its results for the quarter ended March 31, 2019.

Commenting on the results for the first quarter of 2019, Mr. Isaac Benbenisti, CEO of Partner noted:

“In a saturated communications market, Partner succeeded in starting the year 2019 with positive momentum. Partner’s fiber optics infrastructure already reaches more than 400 thousand households in more than half of Israel’s cities across the country, and Partner TV continues to be the fastest growing television service in Israel with over 152 thousand subscribers.

In the cellular segment, we continued to maintain a low rate of churn by focusing on existing customers. This strategy is also reflected in the moderate decrease in ARPU we recorded compared to the previous quarter and the corresponding quarter in 2018.

In recent months, we have focused on the strategy of providing value to Partner's customers in all areas of the Group's business: cellular, internet, television and the business division. This strategy is expected to bring results both on the revenue side and in increasing customer loyalty with respect to all lines of products and services.

As part of this strategy, we are establishing a dedicated customer service division that will handle all of our private customers’ needs, across cellular and fixed line segments. We believe that this will further strengthen Partner’s industry-leading level of service, and differentiate us from all other players in the communications market.

Alongside continued growth in television and accelerated deployment of the fiber optics infrastructure, we succeeded in maintaining a net debt level of under NIS 1 billion. Partner's financial strength offers us considerable flexibility for making strategic investments and for expanding activity in new and existing business areas.”

Mr. Tamir Amar, Partner's Chief Financial Officer, commented on the results:

“Partner closed another quarter characterized by significant competition in its operating segments, achieving relative stability in service revenues compared to the previous quarter, while continuing to grow its fixed line segment activity, both in the number of subscribers and in revenues. In the cellular segment, where competition continues to be high, we continued to maintain a relatively low churn rate, which was unchanged compared to the previous quarter and declined compared to the corresponding quarter last year, and relatively low ARPU erosion by, among other things, strategically focusing on customers that offer value for the Company.

At the beginning of January 2019, an amendment to the network sharing agreement between the Company and HOT Mobile was signed, as a result of which, from the beginning of this year, the accounting treatment for the jointly owned partnership with HOT mobile, PHI, is as a joint operation instead of through the equity method. Therefore, the Company's relative share (50%) in PHI's assets and liabilities was added to the Company's balance sheet. The change did not materially affect the Company's statement of income.

Starting with the first quarter of 2019, the Company adopted the new accounting standard IFRS 16 – Leases, as required under IFRS. IFRS 16 requires the recognition of lease liability for lease payments and a right-of-use asset, with respect to contracts that were previously accounted for as operating leases. In the first quarter of 2019, the impact of adopting IFRS 16 was an increase in Adjusted EBITDA for the quarter by NIS 39 million.

We concluded the quarter with Adjusted Free Cash Flow (before interest payments) of negative NIS 11 million. Cash flows from operating activities totaled NIS 213 million. Lease payments, presented in cash flows from financing activities, totaled NIS 39 million. CAPEX payments totaled NIS 185 million, reflecting the Company’s strategy to continue its leadership in telecommunications technologies with continued significant investment in the Company's fiber optics infrastructure. This investment is only made possible by Partner's strong balance sheet.

In addition, in recent months we have continued our preparations for our future debt recycling with the private placement of untradeable option warrants exercisable for the Company's Series G debentures, thereby arranging a significant portion of the Company's expected funding requirements for the years through 2021.”

Q1 2019 compared to Q4 2018

NIS Million   Q4’18   Q1’19   Comments Service Revenues   625   624   The decrease resulted from decreases in cellular service revenues as a result of seasonality and price erosion, partially offset by an increase in fixed-line segment service revenues Equipment Revenues 189 170 The decrease mainly reflected a lower volume of equipment sales Total Revenues 814 794 Gross profit from equipment sales 42 39 OPEX 502 472

Excluding the impact of IFRS 16, OPEX would have totaled NIS 511 million, an increase of NIS 9 million, mainly reflecting increased costs related to TV and internet services

Adjusted EBITDA 172 197

Excluding the impact of IFRS 16, Adjusted EBITDA would have totaled NIS 158 million, a decrease of NIS 14 million, mainly reflecting the increase in OPEX and the decrease in gross profit from equipment sales

Profit for the Period 19 2 The decrease in profit was mainly a result of the decrease in Adjusted EBITDA excluding the impact of IFRS 16 (this also reflects the fact that the increase in depreciation expenses and in finance costs, net, due to IFRS 16 was of similar magnitude to the increase in Adjusted EBITDA due to IFRS 16) Capital Expenditures (additions) 177 157 Adjusted free cash flow (before interest payments)

(22)

(11) Adjusted free cash flow increased mainly as a result of the increase in operating assets and liabilities partially offset by the decrease in Adjusted EBITDA (excluding the impact of IFRS 16) Net Debt   950   977         Q4’18   Q1’19   Comments Cellular Post-Paid Subscribers (end of period, thousands)   2,361   2,340   Decrease of 21 thousand subscribers

Cellular Pre-Paid Subscribers (end of period, thousands)

285 280

Decrease of 5 thousand subscribers

Monthly Average Revenue per Cellular User (ARPU) (NIS) 57 56 Quarterly Cellular Churn Rate (%)   8.5%   8.5%    

Key Financial Results Q1 2019 compared to Q1 2018

NIS MILLION (except EPS)   Q1'18   Q1'19   % Change Revenues   826   794   -4% Cost of revenues 688 677 -2% Gross profit 138 117 -15% Operating profit 32 9 -72% Profit for the period 9 2 -78% Earnings per share (basic, NIS) 0.05 0.01 Adjusted free cash flow (before interest)   21   (11)    

Key Operating Indicators

    Q1'18   Q1'19   Change Adjusted EBITDA (NIS million)   177   197   +11% Adjusted EBITDA margin (as a % of total revenues) 21% 25% +4 Cellular Subscribers (end of period, thousands) 2,649 2,620 -29 Quarterly Cellular Churn Rate (%) 8.9% 8.5% -0.4 Monthly Average Revenue per Cellular User (ARPU) (NIS)   58   56   -2

Partner Consolidated Results

  Cellular Segment   Fixed-Line Segment   Elimination   Consolidated NIS Million   Q1'18   Q1'19   Change %   Q1'18   Q1'19   Change %   Q1'18   Q1'19   Q1'18   Q1'19   Change % Total Revenues

644

  583   -9%

225

  252   +12%

(43)

  (41)

826

  794   -4% Service Revenues

466

441 -5%

202

224 +11%

(43)

(41)

625

624 -0% Equipment Revenues

178

142 -20%

23

28 +22% - -

201

170 -15% Operating Profit

22

9

-59%

10

0 - -

32

9 -72% Adjusted EBITDA  

134

  150   +12%  

43

  47   +9%   -   -  

177

  197   +11%

Financial Review

In Q1 2019, total revenues were NIS 794 million (US$ 219 million), a decrease of 4% from NIS 826 million in Q1 2018.

Service revenues in Q1 2019 totaled NIS 624 million (US$ 172 million), a decrease of NIS 1 million from NIS 625 million in Q1 2018.

Service revenues for the cellular segment in Q1 2019 totaled NIS 441 million (US$ 121 million), a decrease of 5% from NIS 466 million in Q1 2018. The decrease was mainly the result of the continued price erosion of cellular services (both Post-Paid and Pre-Paid) due to the continued competitive market conditions.

Service revenues for the fixed-line segment in Q1 2019 totaled NIS 224 million (US$ 62 million), an increase of 11% from NIS 202 million in Q1 2018. The increase reflected revenues from TV services and internet services, which were partially offset principally by the decline in revenues from international calling services.

Equipment revenues in Q1 2019 totaled NIS 170 million (US$ 47 million), a decrease of 15% from NIS 201 million in Q1 2018, mainly reflecting a lower volume of equipment sales and a change in product mix.

Gross profit from equipment sales in Q1 2019 was NIS 39 million (US$ 11 million), compared with NIS 43 million in Q1 2018, a decrease of 9%, mainly reflecting the decline in sales volumes, partially offset by higher profit margins from sales due to a change in the product mix.

Total operating expenses (‘OPEX’) totaled NIS 472 million (US$ 130 million) in Q1 2019, a decrease of 5% or NIS 26 million from Q1 2018. The decrease mainly reflected the effect of the implementation of IFRS 16 which totaled NIS 39 million, a decrease in credit losses, and a decrease in costs related to international calls. These decreases were partially offset by an increase in expenses relating to the growth in TV and internet services. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q1 2019 increased by 3% compared with Q1 2018.

Operating profit for Q1 2019 was NIS 9 million (US$ 2 million), a decrease of 72% compared with operating profit of NIS 32 million in Q1 2018. Excluding the adoption of IFRS 16, operating profit in Q1 2019 would have been NIS 4 million. See Adjusted EBITDA analysis for each segment below.

Adjusted EBITDA in Q1 2019 totaled NIS 197 million (US$ 54 million), an increase of 11% from NIS 177 million in Q1 2018. The impact of the adoption of IFRS 16 on Adjusted EBITDA in Q1 2019 was an increase of NIS 39 million and, therefore, excluding the impact of IFRS 16, Adjusted EBITDA would have been NIS 158 million. As a percentage of total revenues, Adjusted EBITDA in Q1 2019 was 25% compared with 21% in Q1 2018.

Adjusted EBITDA for the cellular segment was NIS 150 million (US$ 41 million) in Q1 2019, an increase of 12% from NIS 134 million in Q1 2018, mainly reflecting the impact of the adoption of IFRS 16 which increased cellular segment Adjusted EBITDA by NIS 34 million, and a decrease in cellular operating expenses (OPEX), which were partially offset by decreases in service revenues and in gross profit from cellular equipment sales. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q1 2019 was 26% compared with 21% in Q1 2018.

Adjusted EBITDA for the fixed-line segment was NIS 47 million (US$ 13 million) in Q1 2019, an increase of 9% from NIS 43 million in Q1 2018, reflecting the increases in fixed-line service revenues and in gross profit from equipment sales, partially offset by the increase in OPEX. The impact of the adoption of IFRS 16 in Q1 2019 on the Adjusted EBITDA for the fixed-line segment was an increase of NIS 5 million. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q1 2019 was 19%, unchanged from Q1 2018.

Finance costs, net in Q1 2019 were NIS 14 million (US$ 4 million), a decrease of 22% compared with NIS 18 million in Q1 2018. The decrease largely reflected the early loan repayment fee recorded in Q1 2018, partially offset by the impact of the adoption of IFRS 16 in Q1 2019, which resulted in an increase of NIS 5 million in finance costs.

Income tax expenses for Q1 2019 were an income of NIS 7 million (US$ 2 million), compared with expenses of NIS 5 million in Q1 2018, largely reflecting the loss before tax of NIS 5 million in Q1 2019 compared with profit before tax of NIS 14 million in Q1 2018.

Profit in Q1 2019 was NIS 2 million (US$ 1 million), compared with a profit of NIS 9 million in Q1 2018, a decrease of 78%. The impact of the adoption of IFRS 16 in Q1 2019 on profit was an immaterial decrease of NIS 1 million.

Based on the weighted average number of shares outstanding during Q1 2019, basic earnings per share or ADS, was NIS 0.01 (US$ 0.003), compared with basic earnings per share of NIS 0.05 in Q1 2018.

Cellular Segment Operational Review

At the end of Q1 2019, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions) was approximately 2.62 million, including approximately 2.34 million Post-Paid subscribers or 89% of the base, and approximately 280 thousand Pre-Paid subscribers, or 11% of the subscriber base.

During the first quarter of 2019, the cellular subscriber base decreased by approximately 26 thousand. The Pre-Paid subscriber base decreased by approximately 5 thousand, and the Post-Paid subscriber base decreased by approximately 21 thousand.

The quarterly churn rate for cellular subscribers in Q1 2019 was 8.5%, compared with 8.9% in Q1 2018.

Total cellular market share (based on the number of subscribers) at the end of Q1 2019 was estimated to be approximately 25%, unchanged from Q1 2018.

The monthly Average Revenue per User (“ARPU”) for cellular subscribers in Q1 2019 was NIS 56 (US$ 15), a decrease of 3% from NIS 58 in Q1 2018. The decrease mainly reflected the continued price erosion in key cellular services due to the competition in the cellular market.

Funding and Investing Review

In Q1 2019, Adjusted Free Cash Flow (including lease payments) totaled negative NIS 11 million (US$ -3 million), a decrease in Adjusted Free Cash Flow of NIS 32 from positive NIS 21 million in Q1 2018.

Cash generated from operating activities increased by 36% from NIS 157 million in Q1 2018 to NIS 213 million (US$ 59 million) in Q1 2019, mainly as a result of the adoption in Q1 2019 of IFRS 16, under which lease payments are recorded in cash flows from financing activities instead of in cash flows from operating activities, as well as the impact of the change in the accounting treatment of PHI, following the change in PHI’s governance (see below), where payments to PHI for Right of Use of PHI's assets which previously were recorded as cash flows from operating activities under "Increase in deferred expenses - right of use" are, as from Q1 2019, recorded as cash flows from investing activities under “Acquisition of property and equipment” and "Acquisition of intangible and other assets".

Lease payments, recorded in cash flows from financing activities under IFRS 16, totaled NIS 39 million in Q1 2019.

Cash capital expenditures (‘CAPEX payments’), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 185 million (US$ 51 million) in Q1 2019, an increase of 34% from NIS 138 million in Q1 2018, mainly reflecting the impact of the change in the accounting treatment of PHI, as described above, as well as increased investments in the fiber optics infrastructure.

The level of Net Debt at the end of Q1 2019 amounted to NIS 977 million (US$ 269 million), compared with NIS 919 million at the end of Q1 2018, an increase of NIS 58 million.

Change in PHI's governance from the beginning of 2019

At the beginning of January 2019, an amendment to the network sharing agreement between the Company and HOT Mobile was signed, as a result of which, control over the partnership, PHI, is now borne 50-50 by the Company and HOT Mobile, and each nominates an equal number of directors (three directors). Since, thereafter, decisions about the Relevant Activities of PHI require the unanimous consent of both the Company and HOT Mobile, PHI is considered a joint arrangement controlled by the Company and HOT Mobile (joint operation). Therefore, from the beginning of this year, PHI is accounted for as a joint operation by the Company, and the Company recognizes its share (50%) in the assets, liabilities, and expenses of PHI, instead of using the equity method for its PHI interest.

This change was mainly reflected in the Company's statement of financial position at the beginning of 2019, with increases in non-current right-of-use in leased assets of NIS 355 million, in current maturities of lease liabilities of NIS 65 million, and in non-current lease liabilities of NIS 290 million, and a recognition of property and equipment and intangible assets of NIS 142 million, instead of deferred expenses - right of use in PHI's assets. The change was also reflected in cash flows, where payments to PHI for Right of Use of PHI's assets which previously were recorded as cash flows from operating activities under "Increase in deferred expenses - right of use" are now recorded as cash flows from investing activities under “Acquisition of property and equipment” and "Acquisition of intangible and other assets". The change did not materially affect the Company's statement of income.

For additional details and implications, see note 9 to our consolidated financial statements for the year ended December 31, 2018 and Item 5A.1d in the Company’s Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on March 27, 2019.

IFRS 16

The new leases standard, IFRS 16, came into effect on January 1, 2019. The standard primarily affects the accounting for the Group’s operating leases. The Company applied the simplified transition approach and did not restate comparative amounts. As at January 1, 2019, the Company recognized in the statement of financial position (including Partner’s share in PHI's lease contracts) a Lease - right of use asset of NIS 656 million and a lease liability of NIS 683 million (current and non-current). The accumulated retained earnings decreased by NIS 21 million and the deferred income tax asset has changed in an immaterial amount.

In the first quarter of 2019, the impact of adopting IFRS 16 on the consolidated statement of income amounted to a decrease of NIS 39 million in operating expenses (OPEX), an increase of NIS 35 million in depreciation and amortization expenses and an increase of NIS 5 million in finance costs, net, which resulted in an immaterial increase in operating profit and an immaterial decrease in profit for the quarter. Adjusted EBITDA for the quarter increased by NIS 39 million, with Adjusted EBITDA for the cellular segment increasing by NIS 34 million and Adjusted EBITDA for the fixed-line segment increasing by NIS 5 million.

Lease payments made in the first quarter of 2019 in an amount of NIS 39 million were recorded in the statement of cash flows under the cash flows from financing activities instead of under cash flows from operating activities.

Conference Call Details

Partner will hold a conference call on Thursday, May 30, 2019 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: +972.3.918.0685

North America toll-free: +1.866.860.9642

A 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 May 30, 2019 until June 14, 2019, at the following numbers:

International: +972.3.925.5929

North America toll-free: +1.888.254.7270

In 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 the expected benefits of the Company's strategy to provide value to its customers in all areas of its business; the expectation to increase the Company's differentiation and competitive advantage by establishing a private customer service division; the Company's strategy to continue its leadership in telecommunication technologies with continued significant investments in the Company's fiber optics infrastructure; and the Company's preparations regarding its future debt recycling in anticipation of the Company's expected funding requirements for the years through 2021. 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, whether quality offers, attractive service bundles or low prices offered by the Company’s competitors might prevent the Company from attracting and retaining customers; whether market conditions will support the Company's goal to create differentiation and a competitive advantage by establishing a private customer service division; whether the Company's financial resources and technological capabilities in fiber optics will enable it to continue to lead in telecommunication technology, and whether such leadership might be challenged by capabilities developed by competitors or by changes occurring in the regulatory environment; and whether unanticipated demands on the Company's financial resources might cause the preparations for future debt recycling to fall short of the Company's needs. 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 in the section, “Use of Non-GAAP Financial Measures”.

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 March 31, 2019: US $1.00 equals NIS 3.632. The translations were made purely for the convenience of the reader.

Use of Non-GAAP Financial Measures

The following non-GAAP measures are used in this report. These measures are not financial measures under IFRS and may not be comparable to other similarly titled measures for other companies. Further, the measures may not be indicative of the Company’s historic operating results nor are meant to be predictive of potential future results.

Non-GAAP Measure   Calculation   Most Comparable IFRS Financial Measure Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin (%)

 

Adjusted EBITDA:

Profit (Loss)

add

Income tax expenses,

Finance costs, net,

Depreciation and amortization expenses (including amortization of intangible assets, deferred expenses-right of use and impairment charges),Other expenses (mainly amortization of share based compensation)

 

Adjusted EBITDA margin (%):

Adjusted EBITDA

divided by

Total revenues

  Profit (Loss) Adjusted Free Cash Flow   Adjusted Free Cash Flow:

Cash flows from operating activities

deduct

Cash flows from investing activities

add

Short-term investment in (proceeds from) deposits

deduct

Lease payments

  Cash flows from operating activities

deduct

Cash flows from investing activities

Total Operating Expenses (OPEX)   Total Operating Expenses:

Cost of service revenues

add

Selling and marketing expenses

add

General and administrative expenses

deduct

Depreciation and amortization expenses,

Other expenses (mainly amortization of employee share based compensation)

 

Sum of:

Cost of service revenues,

Selling and marketing expenses,

General and administrative expenses

 

Net Debt   Net Debt:

Current maturities of notes payable and borrowings

add

Notes payable

add

Borrowings from banks and others

deduct

Cash and cash equivalents

deduct

Short-term deposits

  Sum of:

Current maturities of notes payable and borrowings,

Notes payable,

Borrowings from banks and others

About Partner Communications

Partner Communications Company Ltd. is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony, internet services and TV services). 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

 

Conveniencetranslationinto U.S.Dollars

December 31,   March 31, March 31, 2018 2019* 2019* (Audited) (Unaudited) (Unaudited) In millions CURRENT ASSETS Cash and cash equivalents 416 295 81 Short-term deposits 303 83 Trade receivables 656 643 177 Other receivables and prepaid expenses 33 48 14 Deferred expenses – right of use 51 26 7 Inventories 98 100 28 1,254 1,415 390   NON CURRENT ASSETS Trade receivables 260 261 72 Prepaid expenses and other 4 3 1 Deferred expenses – right of use 185 84 23 Lease – right of use 612 169 Property and equipment 1,211 1,388 382 Intangible and other assets 617 597 164 Goodwill 407 407 112 Deferred income tax asset 38 45 12 2,722 3,397 935   TOTAL ASSETS 3,976 4,812 1,325

* See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

New Israeli Shekels

 

Conveniencetranslation intoU.S. Dollars

December 31,   March 31, March 31, 2018 2019** 2019** (Audited) (Unaudited) (Unaudited) In millions CURRENT LIABILITIES Current maturities of notes payable and borrowings 162 161 44 Trade payables 711 723 198 Payables in respect of employees 96 102 28 Other payables (mainly institutions) 10 13 4 Income tax payable 35 28 8 Lease liabilities 141 39 Deferred revenues from HOT mobile 31 31 9 Other deferred revenues 41 42 12 Provisions 64 58 16 1,150 1,299 358 NON CURRENT LIABILITIES Notes payable 1,013 1,237 341 Borrowings from banks and others 191 177 49 Liability for employee rights upon retirement, net 40 41 11 Dismantling and restoring sites obligation 13 Lease liabilities 526 145 Deferred revenues from HOT mobile 133 125 34 Other non-current liabilities 30 16 4 1,420 2,122 584   TOTAL LIABILITIES 2,570 3,421 942   EQUITY Share capital - ordinary shares of NIS 0.01

par value: authorized - December 31, 2018

and March 31, 2019 - 235,000,000 shares;

issued and outstanding -

2 2 1 December 31, 2018 –***162,628,397 shares March 31, 2019 – ***162,788,812 shares Capital surplus 1,102 1,090 300 Accumulated retained earnings 563 548 151 Treasury shares, at cost December 31, 2018 – ****8,560,264 shares March 31, 2019 – ****8,401,523 shares (261) (249) (69) Non-controlling interests * * * TOTAL EQUITY 1,406 1,391 383 TOTAL LIABILITIES AND EQUITY 3,976 4,812 1,325

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases. *** Net of treasury shares.**** Including restricted shares in amount of 1,210,833 and 1,178,882 as of December 31, 2018 and March 31, 2019, respectively, held by a trustee under the Company's Equity Incentive Plan, such shares may become outstanding upon completion of vesting conditions.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

New Israeli Shekels

 

Conveniencetranslation into U.S. Dollars

3 months ended March 31, 2018   2019** 2019** (Unaudited) (Unaudited) (Unaudited) In millions (except per share data) Revenues, net 826 794 219 Cost of revenues 688 677 186 Gross profit 138 117 33   Selling and marketing expenses 68 75 21 General and administrative expenses 45 39 11 Other income, net 7 6 2 Operating profit 32 9 3 Finance income 5 2 * Finance expenses 23 16 4 Finance costs, net 18 14 4 Profit (Loss) before income tax 14 (5) (1) Income tax expenses (income) 5 (7) (2) Profit for the period 9 2 1 Attributable to: Owners of the Company 9 2 1 Non-controlling interests   * * Profit for the period 9 2 1   Earnings per share Basic 0.05 0.01 0.003 Diluted 0.05 0.01 0.003   Weighted average number of shares outstanding (in thousands) Basic 168,346 162,730 162,730 Diluted 169,356 163,251 163,251

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTSOF COMPREHENSIVE INCOME

  New Israeli Shekels  

Conveniencetranslation into U.S. Dollars

3 months ended March 31, 2018   2019**   2019** (Unaudited) (Unaudited) (Unaudited) In millions

Profit for the period

9 2 1 Other comprehensive income

for the period, net of income taxes

- - - TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 9 2 1 Total comprehensive income attributable to: Owners of the Company 9 2 1 Non-controlling interests   * * TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 9 2 1

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

  New Israeli Shekels 3 months ended March 31, 2019** In millions (Unaudited)

Cellularsegment

 

Fixed-linesegment

  Elimination   Consolidated Segment revenue - Services 437 187 624 Inter-segment revenue - Services 4 37 (41) Segment revenue - Equipment 142 28   170 Total revenues 583 252 (41) 794   Segment cost of revenues - Services 347 199 546 Inter-segment cost of revenues - Services 37 4 (41) Segment cost of revenues - Equipment 113 18   131 Cost of revenues 497 221 (41) 677 Gross profit 86 31 117   Operating expenses (3) 82 32 114 Other income, net 5 1 6 Operating profit 9 * 9 Adjustments to presentation of segment Adjusted EBITDA –Depreciation and amortization 137 47 –Other (1) 4   Segment Adjusted EBITDA (2) 150 47      

 

New Israeli Shekels 3 months ended March 31, 2019** In millions (Unaudited) Reconciliation of segments subtotal Adjusted EBITDA to profit for the period Segments subtotal Adjusted EBITDA (2) 197 Depreciation and amortization (184) Finance costs, net (14) Income tax expenses 7 Other (1) (4) Profit for the period 2

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases. For the 3 months ended March 31, 2019 the impact of the adoption of IFRS 16 was an increase of NIS 39 million in the Adjusted EBITDA, an increase of NIS 34 million in the cellular segment Adjusted EBITDA and an increase of NIS 5 million in the fixed-line segment Adjusted EBITDA.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

  New Israeli Shekels 3 months ended March 31, 2018 In millions (Unaudited)

Cellularsegment

 

Fixed-linesegment

  Elimination   Consolidated Segment revenue - Services 461 164 625 Inter-segment revenue - Services 5 38 (43) Segment revenue - Equipment 178 23   201 Total revenues 644 225 (43) 826   Segment cost of revenues - Services 365 165 530 Inter-segment cost of revenues - Services 38 5 (43) Segment cost of revenues - Equipment 140 18   158 Cost of revenues 543 188 (43) 688 Gross profit 101 37 138   Operating expenses (3) 86 27 113 Other income, net 7   7 Operating profit 22 10 32 Adjustments to presentation of segment Adjusted EBITDA –Depreciation and amortization 109 33 –Other (1) 3  

Segment Adjusted EBITDA (2)

134 43      

 

New Israeli Shekels 3 months ended March 31, 2018 In millions (Unaudited)

Reconciliation of segments subtotal Adjusted EBITDA to profit for the period

Segments subtotal Adjusted EBITDA (2)

177 Depreciation and amortization (142) Finance costs, net (18) Income tax expenses (5) Other (1) (3) Profit for the period 9

(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 and impairment charges) and Other expenses (mainly amortization of share based compensation). 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.(3) Operating expenses include selling and marketing expenses, general and administrative expenses.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

New Israeli Shekels

 

ConveniencetranslationintoU.S. Dollars

3 months ended March 31, 2018   2019** 2019** (Unaudited) (Unaudited) (Unaudited) In millions CASH FLOWS FROM OPERATING ACTIVITIES: Cash generated from operations (Appendix) 157 213 59 Income tax paid * * * Net cash provided by operating activities 157 213 59

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment (98) (142) (39) Acquisition of intangible and other assets (40) (43) (12) Investment in short-term deposits, net (150) (303) (83) Interest received * * * Consideration received from sales of property and equipment 2 * * Net cash used in investing activities (286) (488) (134)

CASH FLOWS FROM FINANCING ACTIVITIES:

Lease payments (principal and interest) (39) (11) Interest paid (35) (4) (1) Proceeds from issuance of notes payable, net of issuance costs 223 61 Repayment of current borrowings (13) (4) Repayment of non-current borrowings (300) (13) (4) Net cash provided by (used in) financing activities (335) 154 41

DECREASE IN CASH AND CASH EQUIVALENTS

(464) (121) (34)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

867 416 115

CASH AND CASH EQUIVALENTS AT END OF PERIOD

403 295 81

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

PARTNER COMMUNICATIONS COMPANY LTD.(An Israeli Corporation)INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Appendix - Cash generated from operations and supplemental information

 

New Israeli Shekels

 

Conveniencetranslationinto U.S. Dollars

3 months ended March 31, 2018   2019** 2019** (Unaudited) (Unaudited) (Unaudited) In millions   Cash generated from operations: Profit for the period 9 2 1 Adjustments for: Depreciation and amortization 132 177 49 Amortization of deferred expenses - Right of use 10 7 2 Employee share based compensation expenses 4 4 1 Liability for employee rights upon retirement, net 1 1 * Finance costs, net (2) 5 1 Interest paid 35 4 1 Interest received * * * Deferred income taxes 3 * * Income tax paid * * * Changes in operating assets and liabilities: Decrease (increase) in accounts receivable: Trade 37 12 3 Other (7) (12) (3) Increase (decrease) in accounts payable and accruals: Trade (10) 40 11 Other payables (7) 7 2 Provisions (2) (6) (2) Deferred revenues from HOT mobile (8) (8) (2) Other deferred revenues 1 1 * Increase in deferred expenses - Right of use (27) (12) (3) Current income tax liability 2 (7) (2) Decrease (increase) in inventories (14) (2) * Cash generated from operations 157 213 59

* Representing an amount of less than 1 million.** See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

At March 31, 2019 and 2018, trade and other payables include NIS 189 million ($52 million) and NIS 142 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:

Adjusted Free Cash Flow

 

 

New Israeli Shekels

 

Conveniencetranslationinto U.S. Dollars

3 months ended March 31, 2018   2019* 2019* (Unaudited) (Unaudited) (Unaudited) In millions Net cash provided by operating activities 157 213 59 Net cash used in investing activities (286) (488) (134) Investment in short-term deposits, net 150 303 83 Lease payments   (39) (11) Adjusted Free Cash Flow 21 (11) (3) Interest paid (35) (4) (1) Adjusted Free Cash Flow After Interest

(14)

(15) (4)

Total Operating Expenses (OPEX)

 

New Israeli Shekels

 

Conveniencetranslationinto U.S. Dollars

3 months ended March 31, 2018   2019* 2019* (Unaudited) (Unaudited) (Unaudited) In millions Cost of revenues - Services 530 546 150 Selling and marketing expenses 68 75 21 General and administrative expenses 45 39 11 Depreciation and amortization (142) (184) (51) Other (1) (3) (4) (1) OPEX 498 472 130

(1) Mainly amortization of employee share based compensation.

* See section 'IFRS 16' above regarding the adoption of IFRS 16 - Leases.

Key Financial and Operating Indicators (unaudited) ****

NIS M unless otherwise stated  

Q1' 17

 

Q2' 17

 

Q3' 17

 

Q4' 17

 

Q1' 18

 

Q2' 18

 

Q3' 18

 

Q4' 18

 

Q1' 19

     

2017

 

2018

Cellular Segment Service Revenues   489   497   514   478   466   454   476   447   441       1,978   1,843 Cellular Segment Equipment Revenues   145   145   138   182   178   157   143   165   142       610   643 Fixed-Line Segment Service Revenues   194   192   194   197   202   210   220   220   224       777   852 Fixed-Line Segment Equipment Revenues   18   14   22   22   23   20   25   24   28       76   92 Reconciliation for consolidation  

(43)

 

(43)

 

(42)

 

(45)

 

(43)

 

(44)

 

(42)

 

(42)

 

(41)

     

(173)

 

(171)

Total Revenues   803   805   826   834   826   797   822   814   794       3,268   3,259 Gross Profit from Equipment Sales   26   33   43   40   43   37   44   42   39       142   166 Operating Profit*   105   118   92   0   32   22   48   14   9       315   116 Cellular Segment Adjusted EBITDA*   187   210   189   124   134   126   145   119   150       710   524 Fixed-Line Segment Adjusted EBITDA*  

64

 

59

 

50

 

34

 

43

 

46

 

56

 

53

 

47

     

207

 

198

Total Adjusted EBITDA*   251   269   239   158   177   172   201   172   197       917   722 Adjusted EBITDA Margin (%)*   31%   33%   29%   19%   21%   22%   24%   21%   25%       28%   22% OPEX*   478   472   477   519   498   492   504   502   472       1,946   1,996 Income with respect to settlement agreement                           with Orange   54   54                                   108     Finance costs, net*   23   54   15   88   18   13   10   12   14       180   53 Profit (Loss)*   64   46   54   (50)   9   2   26   19   2       114   56 Capital Expenditures (cash)   82   76   105   113   138   104   117   143   185       376   502 Capital Expenditures (additions)   58   78   107   174   113   98   111   177   157       417   499 Adjusted Free Cash Flow   126   208   202   63   21   55   70   (22)   (11)       599   124 Adjusted Free Cash Flow (after interest)   109   150   192   (17)   (14)   44   62   (37)   (15)       434   55 Net Debt   1,415   1,081   887   906   919   893   898   950   977       906   950 Cellular Subscriber Base (Thousands)**   2,658   2,662   2,677   2,662   2,649   2,623   2,630   2,646   2,620       2,662   2,646 Post-Paid Subscriber Base (Thousands)**   2,259   2,273   2,306   2,308   2,318   2,323   2,333   2,361   2,340       2,308   2,361 Pre-Paid Subscriber Base (Thousands)   399   389   371   354   331   300   297   285   280       354   285 Cellular ARPU (NIS)   61   62   64   59   58   57   60   57   56       62   58 Cellular Churn Rate (%)**   9.8%   9.0%   9.3%   9.9%   8.9%   10.1%   8.0%   8.5%   8.5%       38%   35% Number of Employees (FTE)***   2,580   2,582   2,696   2,797   2,778   2,808   2,821   2,782   2,897       2,797   2,782

* Figures from 2019 include impact of adoption of IFRS 16. See also section 'IFRS 16' above.** As from Q4 2018, M2M subscriptions are included in the post-paid subscriber base on a standardized basis. This change had the effect of increasing the Post-Paid subscriber base at December 31, 2018, by approximately 34 thousand subscribers. See also ‘Cellular Segment Operational Review’ section.*** Number of employees (FTE) from 2019 includes the number of FTE of PHI on a basis proportional to Partner's share in the company (50%).****See footnote 2 regarding use of non-GAAP measures.

Disclosure for notes holders as of March 31, 2019

Information regarding the notes series issued by the Company, in million NIS

Series  

Originalissuancedate

 

Principal onthe date ofissuance

  As of 31.03.2019   Interest rate  

Principal repaymentdates

 

Interestrepayment dates

  Linkage   Trustee contact details      

Principalbook value

 

Linked principalbook value

 

Interest accumulatedin books

  Market value     From   To             D   25.04.10

04.05.11*

  400

146

  327   327   **   328   1.477%

 

(MAKAM+1.2%)

  30.12.17   30.12.21  

30.03, 30.06,30.09, 30.12

  Variable interest MAKAM (4)   Hermetic Trust (1975) Ltd. Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553. F

(1) (3)

  20.07.17

12.12.17*

04.12.18*

  255

389

150

  794   794   5   792   2.16%   25.06.20   25.06.24   25.06, 25.12   Not Linked   Hermetic Trust (1975) Ltd.

Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.

G

(2) (3)

  06.01.19   225   225   225   2   231   4%   25.06.22   25.06.27   25.06   Not Linked   Hermetic Trust (1975) Ltd.

Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.

(1) In December 2018, the Company issued an additional Series F Notes in a principal amount of NIS 150 million. In December 2017 and January 2018, the Company entered into agreements with Israeli institutional investors to issue in December 2019, in the framework of a private placement, additional Series F notes, in an aggregate principal amount of NIS 227 million. S&P Maalot has rated the additional deferred issuances with an 'ilA+' rating. For additional details see the Company's press releases dated September 13 and 17, 2017, December 27, 2017 and January 9, 2018.(2) In January 2019, the Company issued Series G Notes in a principal amount of NIS 225 million.In April 2019, the Company issued in a private placement 2 series of untradeable option warrants that are exercisable for the Company's Series G debentures. The exercise period of the first series is between July 1, 2019 and May 31, 2020 and of the second series is between July 1, 2020 and May 31, 2021. The Series G debentures that will be allotted upon the exercise of an option warrant will be identical in all their rights to the Company's Series G debentures immediately upon their allotment, and will be entitled to any payment of interest or other benefit, the effective date of which is due after the allotment date. The debentures that will be allotted as a result of the exercise of option warrants will be registered on the TASE. The total amount received by the Company on the allotment date of the option warrants is NIS 37 million. The total consideration expected to the Company in respect of the allotment of the option warrants and in respect of their full exercise (and assuming that there will be no change to the exercise price) is approximately NIS 323.7 million. For additional details see the Company's press release dated April 17, 2019.(3) Regarding Series F and G Notes, the Company is required to comply with a financial covenant that the ratio of Net Debt to Adjusted EBITDA shall not exceed 5. Compliance will be examined and reported on a quarterly basis. For the definitions of Net Debt and Adjusted EBITDA see 'Use of non-GAAP measures' section above. For the purpose of the covenant, Adjusted EBITDA is calculated as the sum total for the last 12 month period, excluding adjustable one-time items. As of March 31, 2019, the ratio of Net Debt to Adjusted EBITDA was 1.3. Additional stipulations regarding Series F and G Notes mainly include: shareholders' equity shall not decrease below NIS 400 million and NIS 600 million, respectively; the Company shall not create floating liens subject to certain terms; the Company has the right for early redemption under certain conditions; the Company shall pay additional annual interest of 0.5% in the case of a two-notch downgrade in the Notes rating and an additional annual interest of 0.25% for each further single-notch downgrade, up to a maximum additional interest of 1%; the Company shall pay additional annual interest of 0.25% during a period in which there is a breach of the financial covenant. In any case, the total maximum additional interest for Series F and G, shall not exceed 1.25% or 1%, respectively. For more information see the Company’s Annual Report on Form 20-F for the year ended December 31, 2018.In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.(4) 'MAKAM' is a variable interest based on the yield of 12 month government bonds issued by the government of Israel. The interest rate is updated on a quarterly basis.

* On these dates additional Notes of the series were issued. The information in the table refers to the full series.** Representing an amount of less than NIS 1 million.

Disclosure for Notes holders as of March 31, 2019 (cont.)

Notes Rating Details*

Series   Rating Company  

Rating as of31.03.2019 and30.05.2019 (1)

 

Ratingassigned uponissuance of theSeries

 

Recent date ofrating as of31.03.2019 and30.05.2019

  Additional ratings between the original issuance date and the recent date of rating (2)           Date   Rating D   S&P Maalot   ilA+   ilAA-   01/2019 and 04/2019   07/2010, 09/2010,

10/2010, 09/2012,

12/2012, 06/2013,

07/2014, 07/2015,

07/2016, 07/2017,

08/2018, 11/2018, 12/2018, 01/2019

04/2019

  ilAA-/Stable, ilAA-/Stable,

ilAA-/Negative, ilAA-/Watch Neg,

ilAA-/Negative, ilAA-/Stable,

ilAA-/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable, ilA+/Stable, ilA+/Stable,

ilA+/Stable

F   S&P Maalot   ilA+   ilA+   01/2019 and 04/2019   07/2017, 09/2017,

12/2017, 01/2018,

08/2018, 11/2018, 12/2018, 01/2019

04/2019

  ilA+/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable, ilA+/Stable, ilA+/Stable,

ilA+/Stable

G (3)   S&P Maalot   ilA+   ilA+   01/2019 and 04/2019   12/2018, 01/2019, 04/2019   ilA+/Stable, ilA+/Stable, ilA+/Stable

(1) In August 2018, S&P Maalot affirmed the Company's rating of “ilA+/Stable”.

(2) For details regarding the rating of the notes see the S&P Maalot report dated August 13, 2018.

(3) In January 2019, the Company issued Series G Notes in a principal amount of NIS 225 million.

* A securities rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to suspension, revision or withdrawal at any time, and each rating should be evaluated independently of any other rating

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2019

a. Notes issued to the public by the Company and held by the public, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data (in thousand NIS).

    Principal payments  

Gross interestpayments (withoutdeduction of tax)

   

ILS linkedto CPI

 

ILS not linkedto CPI

  Euro   Dollar   Other   First year   -   109,228   -   -   -   25,779 Second year   -   268,035   -   -   -   27,284 Third year   -   268,035   -   -   -   22,216 Fourth year   -   181,307   -   -   -   17,576 Fifth year and on   -   520,113   -   -   -   37,480 Total   -   1,346,718   -   -   -   130,335

b. Private notes and other non-bank credit, excluding such notes held by the Company's parent company, by a controlling shareholder, by companies controlled by them, or by companies controlled by the Company, based on the Company's "Solo" financial data – None.

c. Credit from banks in Israel based on the Company's "Solo" financial data (in thousand NIS).

    Principal payments  

Gross interestpayments (withoutdeduction of tax)

   

ILS linkedto CPI

 

ILS not linkedto CPI

  Euro   Dollar   Other   First year   -   52,132   -   -   -   5,145 Second year   -   52,132   -   -   -   3,859 Third year   -   52,132   -   -   -   2,600 Fourth year   -   44,779   -   -   -   1,332 Fifth year and on   -   28,439   -   -   -   536 Total   -   229,614   -   -   -   13,472

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2019 (cont.)

d. Credit from banks abroad based on the Company's "Solo" financial data – None.e. Total of sections a - d above, total credit from banks, non-bank credit and notes based on the Company's "Solo" financial data (in thousand NIS).

    Principal payments  

Gross interestpayments (withoutdeduction of tax)

   

ILS linkedto CPI

 

ILS not linkedto CPI

  Euro   Dollar   Other   First year   -   161,360   -   -   -   30,924 Second year   -   320,167   -   -   -   31,143 Third year   -   320,167   -   -   -   24,816 Fourth year   -   226,086   -   -   -   18,908 Fifth year and on   -   548,552   -   -   -   38,016 Total   -   1,576,332   -   -   -   143,807

f. Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) – 50,000 (Guarantees on behalf of a joint arrangement, without expiration date).g. Off-balance sheet Credit exposure of all the Company's consolidated companies, excluding companies that are reporting corporations and excluding the Company's data presented in section f above – None.h. Total balances of the credit from banks, non-bank credit and notes of all the consolidated companies, excluding companies that are reporting corporations and excluding Company's data presented in sections a - d above - None.i. Total balances of credit granted to the Company by the parent company or a controlling shareholder and balances of notes offered by the Company held by the parent company or the controlling shareholder - None.j. Total balances of credit granted to the Company by companies held by the parent company or the controlling shareholder, which are not controlled by the Company, and balances of notes offered by the Company held by companies held by the parent company or the controlling shareholder, which are not controlled by the Company – None.k. Total balances of credit granted to the Company by consolidated companies and balances of notes offered by the Company held by the consolidated companies - None.

1 The quarterly financial results are unaudited. The Company has applied the standard IFRS 16 – Leases, from January 1, 2019. The effects of the application of the standard on the quarterly financial results are provided in this press release, and in particular in the section “IFRS 16”. The impact of the adoption of IFRS 16 on Adjusted EBITDA in Q1 2019 was an increase of NIS 39 million.

2 For the definition of this and other Non-GAAP financial measures, see “Use of Non-GAAP Financial Measures” in this press release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190529006055/en/

Tamir AmarChief Financial OfficerTel: +972-54-781-4951E-mail: investors@partner.co.il