SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2015
INTERNET GOLD-GOLDEN
LINES LTD.
(Name of Registrant)
2 Dov Friedman Street, Ramat Gan 5250301,
Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant
files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F
☐
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant
is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Indicate by check mark whether by furnishing
the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to
Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No
☒
If "Yes" is marked, indicate below
the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _____________
Internet Gold-Golden Lines Ltd.
EXPLANATORY NOTE
The following exhibit is attached:
| EXHIBIT
NO. |
|
DESCRIPTION |
| |
|
|
| 99.1 |
|
Internet Gold Reports its Financial Results for
the Third Quarter of 2015.
|
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
| |
INTERNET GOLD-GOLDEN LINES LTD. |
| |
(Registrant) |
| |
|
|
| |
By |
/s/ Doron Turgeman |
| |
|
Doron Turgeman |
| |
|
Chief Executive Officer |
Date: November 19, 2015
EXHIBIT INDEX
| EXHIBIT
NO. |
|
DESCRIPTION |
| |
|
|
| 99.1 |
|
Internet Gold Reports its Financial Results for
the Third Quarter of 2015.
|
4
Exhibit 99.1
Internet
Gold Reports its Financial Results for
the Third Quarter of 2015
-
Third Dividend during 2015 is expected from B Communications on December 23, 2015 -
Ramat
Gan, Israel – November 19, 2015 – Internet Gold – Golden Lines Ltd. (NASDAQ Global Select Market and TASE:
IGLD) today reported its financial results for the quarter ended September 30, 2015. Internet Gold’s holds the controlling
interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds the controlling interest in Bezeq, The Israel Telecommunication
Corp., Israel’s largest telecommunications provider (TASE: BEZQ).
Commenting
on the results, Doron Turgeman, CEO of Internet Gold said, “During the last few years, we have focused on improving
our debt structure and our financial strength. We feel very comfortable with both our current Loan to Value and liquidity
metrics. Today's decision by B Communications' board of directors to declare a cash dividend in the amount of NIS 1.27 per
share, is very good news for us and we expect to receive NIS 25 million on December 23, 2015. It's the third consecutive
quarter that BCOM distributed a dividend to its shareholders. We are very pleased with the results of our B Communications
subsidiary and with Bezeq, which continues to generate a steady return that enhances our overall financial position and
capabilities.”
Dividend
from B Communications: On November 19, 2015, B Communications' board of directors declared a cash dividend in the amount of
NIS 38 million ($10 million) or NIS 1.27 ($0.32) per share. Internet Gold expects to receive its distributive share of approximately
NIS 25 million ($6 million) on December 23, 2015. On September 29, 2015, Internet Gold received a cash dividend totaling NIS 15
million ($4 million) from B Communications as part of the NIS 22 million ($6 million) or NIS 0.73 ($0.19) per share dividend paid
by BCOM.
On
August 30, 2015, the Board of Directors of Bezeq resolved to recommend to the general meeting of shareholders the distribution
of a cash dividend of NIS 933 million ($238 million) representing Bezeq’s profits for the first half of 2015, excluding
its NIS 12 million ($3 million) revaluation gain arising from its gaining control over Yes. The dividend was paid on October 26,
2015 to shareholders of record as of October 12, 2015. B Communications’ share of the dividend distribution was NIS 286
million ($73 million).
Bezeq’s
Results: For the third quarter of 2015, the Bezeq Group reported revenues of NIS 2.60 billion ($663 million) and operating
profit of NIS 652 million ($166 million). Bezeq’s EBITDA for the third quarter totaled NIS 1.11 billion ($283 million),
representing an EBITDA margin of 42.6%. Net profit for the period attributable to Bezeq’s shareholders totaled NIS 407 million
($104 million). Bezeq's cash flow from operating activities during the period totaled NIS 1,050 million ($268 million).
Cash
and Debt Position: As of September 30, 2015, Internet Gold’s unconsolidated cash and cash equivalents and short
term investments totaled NIS 316 million ($81 million), its unconsolidated gross debt was NIS 1.1 billion ($289 million) and its
unconsolidated net debt was NIS 816 million ($208 million).
Internet
Gold's Unconsolidated Balance Sheet Data (1)
In millions
| |
| | |
| | |
Convenience | | |
| |
| | |
| | |
| | |
translation into | | |
| |
| | |
| | |
| | |
U.S. dollars | | |
| |
| | |
| | |
| | |
(Note A) | | |
| |
| | |
September 30, | | |
September 30, | | |
September 30, | | |
December 31, | |
| | |
2014 | | |
2015 | | |
2015 | | |
2014 | |
| | |
NIS | | |
NIS | | |
US$ | | |
NIS | |
| Short term liabilities | |
| 59 | | |
| 202 | | |
| 52 | | |
| 82 | |
| Long term liabilities | |
| 1,134 | | |
| 930 | | |
| 237 | | |
| 1,062 | |
| Total liabilities | |
| 1,193 | | |
| 1,132 | | |
| 289 | | |
| 1,144 | |
| Cash and cash equivalents | |
| 392 | | |
| 316 | | |
| 81 | | |
| 322 | |
| Total net debt | |
| 801 | | |
| 816 | | |
| 208 | | |
| 822 | |
| (1) |
Does not include the consolidated balance sheet of B Communications and
its subsidiaries. |
Internet
Gold's Cash Management: Internet Gold manages its cash balances according to an investment policy that was approved by its
board of directors. The investment policy seeks to preserve principal and maintain adequate liquidity while maximizing the income
received from investments without significantly increasing the risk of loss. According to Internet Gold's investment policy approximately
80% of its funds must be invested in investment-grade securities.
Internet
Gold’s Third Quarter Consolidated Financial Results
Internet
Gold's consolidated revenues for the third quarter of 2015 totaled NIS 2.6 billion ($663 million), a 16.6% increase compared with
NIS 2.23 billion reported in the third quarter of 2014. The increase resulted from the full consolidation
of Yes, beginning in the second quarter of 2015. For both the current and the prior-year
periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.
Internet
Gold's consolidated operating income for the third quarter of 2015 totaled NIS 525 million ($134 million), a 1.9% increase compared
with NIS 515 million reported in the third quarter of 2014.
Internet
Gold's consolidated net income for the third quarter of 2015 totaled NIS 236 million ($60 million), a 19.2% increase compared
with NIS 198 million reported in the third quarter of 2014.
Internet
Gold’s Third Quarter Unconsolidated Financial Results
As
of September 30, 2015 Internet Gold held approximately 67% of B Communications outstanding shares. Accordingly, Internet Gold's
interest in B Communications’ net income for the third quarter of 2015 totaled NIS 25 million ($6 million), compared with
its share in B Communications' net loss of NIS 1 million in the third quarter of 2014.
Internet
Gold’s unconsolidated net financial expenses for the third quarter of 2015 totaled NIS 22 million ($5 million) compared
with NIS 20 million in the third quarter of 2014. These expenses consist of interest and CPI linkage expenses related to its publicly-traded
debentures.
Internet
Gold's net income attributable to shareholders for the third quarter of 2015 totaled NIS 2 million ($1 million) compared with
a loss attributable to its shareholders of NIS 22 million in the third quarter of 2014.
In millions
| |
| | |
| | |
Convenience | | |
| |
| | |
| | |
| | |
translation | | |
| |
| | |
Three-month | | |
Three-month | | |
into | | |
| |
| | |
period ended | | |
period ended | | |
U.S. dollars | | |
Year ended | |
| | |
September 30, | | |
September 30, | | |
(Note A) | | |
December 31, | |
| | |
2014 | | |
2015 | | |
2015 | | |
2014 | |
| | |
NIS | | |
NIS | | |
US$ | | |
NIS | |
| Revenues | |
| - | | |
| - | | |
| - | | |
| - | |
| Financial expenses, net | |
| (20 | ) | |
| (22 | ) | |
| (5 | ) | |
| (83 | ) |
| Operating expenses | |
| (1 | ) | |
| (1 | ) | |
| - | | |
| (4 | ) |
| Interest in BCOM's net income (loss) | |
| (1 | ) | |
| 25 | | |
| 6 | | |
| (16 | ) |
| Net income (loss) | |
| (22 | ) | |
| 2 | | |
| 1 | | |
| (103 | ) |
Bezeq
Group Results (Consolidated)
To
provide further insight into its results, the Company is providing the following summary of the consolidated financial report
of the Bezeq Group for the third quarter ended September 30, 2015. For a full discussion of Bezeq’s results for the third
quarter ended September 30, 2015, please refer to its website: http://ir.bezeq.co.il.
| Bezeq Group (consolidated) | |
Q3 2015 | | |
Q3 2014 | | |
% change | |
| | |
(NIS millions) | | |
| |
| Revenues | |
| 2,602 | | |
| 2,232 | | |
| 16.6 | % |
| Operating profit | |
| 652 | | |
| 671 | | |
| -2.8 | % |
| EBITDA | |
| 1,109 | | |
| 998 | | |
| 11.1 | % |
| EBITDA margin | |
| 42.6 | % | |
| 44.7 | % | |
| | |
| Net profit | |
| 407 | | |
| 428 | | |
| -4.9 | % |
| Diluted EPS (NIS) | |
| 0.15 | | |
| 0.16 | | |
| -6.3 | % |
| Cash flow from operating activities | |
| 1,050 | | |
| 950 | | |
| 10.5 | % |
| Payments for investments | |
| 427 | | |
| 322 | | |
| 32.6 | % |
| Free cash flow 1 | |
| 645 | | |
| 700 | | |
| -7.9 | % |
| Net debt/EBITDA (end of period) 2 | |
| 2.10 | | |
| 1.40 | | |
| | |
1
Free cash flow is defined as cash flow from operating activities less net payments for investments.
2
EBITDA in this calculation refers to the trailing twelve months.
Revenues
of the Bezeq Group in the third quarter of 2015 amounted to NIS 2.60 billion ($663 million) compared with NIS 2.23 billion in
the corresponding quarter of 2014, an increase of 16.6%. The increase was related to the consolidation of NIS 446 million ($114
million) of Yes revenues 15, in addition to an increase in the revenues of Bezeq Fixed-Line and Bezeq International. The increases
were partially offset by lower revenues at Pelephone.
Salary
expenses of the Bezeq Group in the third quarter of 2015 amounted to NIS 506 million ($129 million) compared with NIS 437 million
in the corresponding quarter of 2014, an increase of 15.8%. The increase was due to the consolidation of NIS 69 million ($18 million)
of Yes salary expenses. The increase was partially offset by a decrease in the salary expenses of Pelephone due to continued streamlining
efforts.
Operating
expenses of the Bezeq Group in the third quarter of 2015 amounted to NIS 1.00 billion ($255 million) compared with NIS 822 million
in the corresponding quarter of 2014, an increase of 21.7%. The increase was due to the consolidation of NIS 225 million ($57
million) of Yes operating expenses of. The increase was partially offset by a decrease in the operating expenses of Pelephone
and Bezeq Fixed-Line due to continued streamlining procedures.
Depreciation
and amortization expenses of the Bezeq Group in the third quarter of 2015 amounted to NIS 457 million ($116 million) compared
with NIS 327 million in the corresponding quarter of 2014, an increase of 39.8%. The increase was due to the consolidation of
NIS 78 million ($20 million) of Yes depreciation and amortization expenses in the third quarter of 2015, as well as from the amortization
of purchase price allocation costs incurred from Bezeq’s gaining control over Yes.
Other
operating income of the Bezeq Group in the third quarter of 2015 amounted to NIS 13 million ($3 million) compared with NIS 25
million in the corresponding quarter of 2014, a decrease of 48.0%. The decrease in other operating income was due to lower capital
gains from real estate sales.
Operating
profit of the Bezeq Group in the third quarter of 2015 amounted to NIS 652 million ($166 million) compared with NIS 671 million
in the corresponding quarter of 2014, a decrease of 2.8%. Earnings before interest, taxes, depreciation and amortization (EBITDA)
of the Bezeq Group in the third quarter of 2015 amounted to NIS 1.11 billion ($283 million) (EBITDA margin of 42.6%) compared
with NIS 998 million (EBITDA margin of 44.7%) in the corresponding quarter of 2014, an increase of 11.1%.
Net
Financial expenses of the Bezeq Group in the third quarter of 2015 amounted to NIS 100 million ($25 million) compared with NIS
39 million in the corresponding quarter of 2014, an increase of 156.4%. The increase was primarily due to financing income of
NIS 61 million ($16 million) from shareholder loans to Yes, which were recorded in the corresponding quarter of 2014.
Net
profit of the Bezeq Group in the third quarter of 2015 amounted to NIS 407 million ($104 million) compared with NIS 428 million
in the corresponding quarter of 2014, a decrease of 4.9%.
Cash
flow from operating activities of the Bezeq Group in the third quarter of 2015 amounted to NIS 1.05 billion ($268 million) compared
with NIS 950 million in the corresponding quarter of 2014, an increase of 10.5%. The increase in cash flow from operating activities
was primarily due to the consolidation of NIS 145 million ($37 million) of cash flows from the operating activities of Yes, as
well as an increase in cash flow from Bezeq Fixed-Line, which was partially offset by lower cash flow from Pelephone due to a
decrease in profitability and changes in working capital.
Payments
for investments (Capex) of the Bezeq Group in the third quarter of 2015 amounted to NIS 427 million ($109 million) compared with
NIS 322 million in the corresponding quarter of 2014, an increase of 32.6%. The increase in investments was primarily due to the
consolidation of NIS 75 million ($19 million) of Yes investments, as well as an increase in investments by Bezeq Fixed-Line.
Free
cash flow of the Group in the third quarter of 2015 amounted to NIS 645 million ($164 million) compared with NIS 700 million in
the corresponding quarter of 2014, a decrease of 7.9%.
Net
financial debt of the Bezeq Group amounted to NIS 8.93 billion ($2.28 billion) at September 30, 2015 compared with NIS 6.27 billion
as of September 30, 2014. At September 30, 2015, the Bezeq Group's net financial debt to EBITDA ratio was 2.10, compared with
1.40 on September 30, 2014.
Notes:
| A. | Convenience
Translation to Dollars: For the convenience of the reader, certain of the reported
NIS figures of September 30, 2015 have been presented in millions of U.S. dollars, translated
at the representative rate of exchange as of September 30, 2015 (NIS 3.923 = U.S. $1.00).
The U.S. dollar ($) amounts presented should not be construed as representing amounts
receivable or payable in U.S. dollars or convertible into U.S. dollars, unless otherwise
indicated. |
| B. | Use
of non-IFRS Measurements: We and the Bezeq Group’s management regularly use
supplemental non-IFRS financial measures internally to understand, manage and evaluate
its business and make operating decisions. We believe these non-IFRS financial measures
provide consistent and comparable measures to help investors understand the Bezeq Group’s
current and future operating cash flow performance. These non-IFRS financial measures
may differ materially from the non-IFRS financial measures used by other companies. |
EBITDA
is a non-IFRS financial measure generally defined as earnings before interest, taxes, depreciation and amortization. The Bezeq
Group defines EBITDA as net income before financial income (expenses), net, impairment and other charges, expenses recorded for
stock compensation in accordance with IFRS 2, income tax expenses and depreciation and amortization. We present the Bezeq Group’s
EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period
to period and company to company by backing out potential differences caused by variations in capital structure, tax positions
(such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated
with, fixed assets (affecting relative depreciation expense).
EBITDA
should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared
in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements
and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be
available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly
titled measures reported by other companies due to differences in the way that these measures are calculated.
Reconciliation
between the Bezeq Group’s results on an IFRS and non-IFRS basis is provided in a table immediately following the Company's
consolidated results. Non-IFRS financial measures consist of IFRS financial measures adjusted to exclude amortization of acquired
intangible assets, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication
of the Bezeq Group’s performance exclusive of non-cash charges and other items that are considered by management to be outside
of its core operating results. The Bezeq Group’s non-IFRS financial measures are not meant to be considered in isolation
or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements
prepared in accordance with IFRS.
About
Internet Gold
Internet
Gold is a telecommunications-oriented holding company which is a controlled subsidiary of Eurocom Communications Ltd. Internet
Gold’s primary holding is its controlling interest in B Communications Ltd. (TASE and Nasdaq: BCOM), which in turn holds
the controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE:
BEZQ). Internet Gold’s shares are traded on NASDAQ and the TASE under the symbol IGLD. For more information, please visit
the following Internet sites:
www.igld.com
www.bcommunications.co.il
www.ir.bezeq.co.il
Forward-Looking
Statements
This
press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual
results to differ materially from these forward-looking statements include, but are not limited to, general business conditions
in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed
from time to time in B Communications' filings with the Securities Exchange Commission. These documents contain and identify other
important factors that could cause actual results to differ materially from those contained in our projections or forward-looking
statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking
statement.
For
further information, please contact:
Idit
Cohen - IR Manager
idit@igld.com
/ Tel: +972-3-924-0000
Investor
relations contacts:
Hadas
Friedman - Investor Relations
Hadas@km-ir.co.il/
Tel: +972-3-516-7620
Internet
Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Financial Position as at
(In
millions)
| | |
| | |
Convenience | | |
| | |
| |
| | |
| | |
translation into | | |
| | |
| |
| | |
| | |
U.S. dollars | | |
| | |
| |
| | |
| | |
(Note A) | | |
| | |
| |
| | |
September 30, | | |
September 30, | | |
September 30, | | |
December 31, | |
| | |
2015 | | |
2015 | | |
2014 | | |
2014 | |
| | |
NIS | | |
US$ | | |
NIS | | |
NIS | |
| Assets | |
| | | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| 1,071 | | |
| 273 | | |
| 1,642 | | |
| 732 | |
| Restricted cash | |
| 8 | | |
| 2 | | |
| 4 | | |
| 65 | |
| Investments, including derivatives | |
| 2,281 | | |
| 581 | | |
| 3,540 | | |
| 3,406 | |
| Trade receivables, net | |
| 2,203 | | |
| 562 | | |
| 2,224 | | |
| 2,227 | |
| Other receivables | |
| 219 | | |
| 56 | | |
| 289 | | |
| 242 | |
| Inventory | |
| 90 | | |
| 23 | | |
| 83 | | |
| 96 | |
| Assets classified as held-for-sale | |
| 23 | | |
| 6 | | |
| 144 | | |
| 52 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total current assets | |
| 5,895 | | |
| 1,503 | | |
| 7,926 | | |
| 6,820 | |
| | |
| | | |
| | | |
| | | |
| | |
| Investments, including derivatives | |
| 307 | | |
| 78 | | |
| 85 | | |
| 271 | |
| Long-term trade and other receivables | |
| 643 | | |
| 164 | | |
| 567 | | |
| 566 | |
| Property, plant and equipment | |
| 7,302 | | |
| 1,861 | | |
| 6,491 | | |
| 6,572 | |
| Intangible assets | |
| 7,482 | | |
| 1,907 | | |
| 6,037 | | |
| 5,908 | |
| Deferred and other expenses | |
| 364 | | |
| 93 | | |
| 369 | | |
| 364 | |
| Broadcasting rights | |
| 458 | | |
| 117 | | |
| - | | |
| - | |
| Investment in equity-accounted investee | |
| 27 | | |
| 7 | | |
| 1,043 | | |
| 1,057 | |
| Deferred tax assets | |
| 860 | | |
| 219 | | |
| 6 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | |
| Total non-current assets | |
| 17,443 | | |
| 4,446 | | |
| 14,598 | | |
| 14,738 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
| 23,338 | | |
| 5,949 | | |
| 22,524 | | |
| 21,558 | |
Internet
Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Financial Position as at
(In
millions)
| | |
| | |
Convenience | | |
| | |
| |
| | |
| | |
translation into | | |
| | |
| |
| | |
| | |
U.S. dollars | | |
| | |
| |
| | |
| | |
(Note A) | | |
| | |
| |
| | |
September 30, | | |
September 30, | | |
September 30, | | |
December 31, | |
| | |
2015 | | |
2015 | | |
2014 | | |
2014 | |
| | |
NIS | | |
US$ | | |
NIS | | |
NIS | |
| Liabilities | |
| | |
| | |
| | |
| |
| Bank loans and credit and debentures | |
| 2,325 | | |
| 593 | | |
| 1,562 | | |
| 1,561 | |
| Trade payables | |
| 949 | | |
| 242 | | |
| 573 | | |
| 664 | |
| Related party | |
| 101 | | |
| 26 | | |
| - | | |
| - | |
| Other payables including derivatives | |
| 966 | | |
| 246 | | |
| 869 | | |
| 757 | |
| Dividend payable | |
| 647 | | |
| 165 | | |
| 876 | | |
| - | |
| Current tax liabilities | |
| 801 | | |
| 204 | | |
| 728 | | |
| 671 | |
| Provisions | |
| 87 | | |
| 22 | | |
| 124 | | |
| 62 | |
| Employee benefits | |
| 268 | | |
| 68 | | |
| 358 | | |
| 259 | |
| Total current liabilities | |
| 6,144 | | |
| 1,566 | | |
| 5,090 | | |
| 3,974 | |
| | |
| | | |
| | | |
| | | |
| | |
| Bank loans and debentures | |
| 13,604 | | |
| 3,468 | | |
| 13,598 | | |
| 13,419 | |
| Employee benefits | |
| 259 | | |
| 66 | | |
| 231 | | |
| 233 | |
| Other liabilities | |
| 212 | | |
| 54 | | |
| 188 | | |
| 262 | |
| Provisions | |
| 70 | | |
| 18 | | |
| 69 | | |
| 69 | |
| Deferred tax liabilities | |
| 761 | | |
| 194 | | |
| 865 | | |
| 835 | |
| Total non-current liabilities | |
| 14,906 | | |
| 3,800 | | |
| 14,951 | | |
| 14,818 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total liabilities | |
| 21,050 | | |
| 5,366 | | |
| 20,041 | | |
| 18,792 | |
| | |
| | | |
| | | |
| | | |
| | |
| Equity | |
| | | |
| | | |
| | | |
| | |
| Total equity attributable to equity holders of the Company | |
| (165 | ) | |
| (42 | ) | |
| (218 | ) | |
| (183 | ) |
| Non-controlling interests | |
| 2,453 | | |
| 625 | | |
| 2,701 | | |
| 2,949 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total equity | |
| 2,288 | | |
| 583 | | |
| 2,483 | | |
| 2,766 | |
| | |
| | | |
| | | |
| | | |
| | |
| Total liabilities and equity | |
| 23,338 | | |
| 5,949 | | |
| 22,524 | | |
| 21,558 | |
Internet
Gold – Golden Lines Ltd.
Condensed
Consolidated Statements of Income as at
(In
million except per share data)
| | |
Nine months period ended | | |
| | |
Three months period ended | | |
Year ended | |
| | |
September 30, | | |
| | |
September 30, | | |
December 31, | |
| | |
| | |
Convenience | | |
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Convenience | | |
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| |
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translation | | |
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translation | | |
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into | | |
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into | | |
| | |
| |
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| | |
U.S. dollars | | |
| | |
| | |
U.S. dollars | | |
| | |
| |
| | |
| | |
(Note A) | | |
| | |
| | |
(Note A) | | |
| | |
| |
| | |
2015 | | |
2015 | | |
2014 | | |
2015 | | |
2015 | | |
2014 | | |
2014 | |
| | |
NIS | | |
US$ | | |
NIS | | |
NIS | | |
US$ | | |
NIS | | |
NIS | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
7,379 | | |
1,881 | | |
6,793 | | |
2,602 | | |
663 | | |
2,232 | | |
9,055 | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Cost and expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Depreciation and amortization | |
| 1,588 | | |
| 405 | | |
| 1,422 | | |
| 577 | | |
| 147 | | |
| 481 | | |
| 1,873 | |
| Salaries | |
| 1,445 | | |
| 368 | | |
| 1,328 | | |
| 507 | | |
| 129 | | |
| 437 | | |
| 1,771 | |
| General and operating expenses | |
| 2,808 | | |
| 716 | | |
| 2,519 | | |
| 1,003 | | |
| 256 | | |
| 824 | | |
| 3,371 | |
| Other operating income, net | |
| (103 | ) | |
| (26 | ) | |
| (561 | ) | |
| (10 | ) | |
| (3 | ) | |
| (25 | ) | |
| (535 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| 5,738 | | |
| 1,463 | | |
| 4,708 | | |
| 2,077 | | |
| 529 | | |
| 1,717 | | |
| 6,480 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating income | |
| 1,641 | | |
| 418 | | |
| 2,085 | | |
| 525 | | |
| 134 | | |
| 515 | | |
| 2,575 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Financing expenses, net | |
| 511 | | |
| 130 | | |
| 667 | | |
| 176 | | |
| 45 | | |
| 152 | | |
| 694 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income after financing | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| expenses, net | |
| 1,130 | | |
| 288 | | |
| 1,418 | | |
| 349 | | |
| 89 | | |
| 363 | | |
| 1,881 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Share of loss (income) in equity-accounted
investee |
|
|
(15 |
) |
|
|
(4 |
) |
|
|
132 |
|
|
|
1 |
|
|
|
* |
|
|
|
34 |
|
|
|
170 |
|
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income before income tax | |
| 1,145 | | |
| 292 | | |
| 1,286 | | |
| 348 | | |
| 89 | | |
| 329 | | |
| 1,711 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income tax | |
| 368 | | |
| 94 | | |
| 525 | | |
| 112 | | |
| 29 | | |
| 131 | | |
| 667 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income for the period | |
| 777 | | |
| 198 | | |
| 761 | | |
| 236 | | |
| 60 | | |
| 198 | | |
| 1,044 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Income (loss) attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Owners of the company | |
| 17 | | |
| 4 | | |
| (134 | ) | |
| 2 | | |
| 1 | | |
| (22 | ) | |
| (103 | ) |
| Non-controlling interests | |
| 760 | | |
| 194 | | |
| 895 | | |
| 234 | | |
| 59 | | |
| 220 | | |
| 1,147 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income for the period | |
| 777 | | |
| 198 | | |
| 761 | | |
| 236 | | |
| 60 | | |
| 198 | | |
| 1,044 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Earnings per share | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss), basic | |
| 0.90 | | |
| 0.23 | | |
| (7.02 | ) | |
| 0.09 | | |
| 0.02 | | |
| (1.20 | ) | |
| (5.38 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (loss), diluted | |
| 0.84 | | |
| 0.22 | | |
| (7.11 | ) | |
| 0.07 | | |
| 0.02 | | |
| (1.22 | ) | |
| (5.50 | ) |
*
Represents an amount less than US$1.
Internet
Gold – Golden Lines Ltd.
Reconciliation
for NON-IFRS Measures
EBITDA
The
following is a reconciliation of the Bezeq Group’s operating income to EBITDA:
(In millions)
| |
Three months period ended | |
| | |
September 30, | |
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Convenience | | |
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translation | | |
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into | | |
| |
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| | |
U.S. dollars | | |
| |
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(Note A) | | |
| |
| | |
2015 | | |
2015 | | |
2014 | |
| | |
NIS | | |
US$ | | |
NIS | |
| | |
| | | |
| | | |
| | |
| Operating income | |
| 652 | | |
| 166 | | |
| 671 | |
| Depreciation and amortization | |
| 457 | | |
| 117 | | |
| 327 | |
| | |
| | | |
| | | |
| | |
| EBITDA | |
| 1,109 | | |
| 283 | | |
| 998 | |
Free
Cash Flow
The
following table shows the calculation of the Bezeq Group’s free cash flow:
(In millions)
| |
Three months period ended | |
| | |
September 30, | |
| | |
| | |
Convenience | | |
| |
| | |
| | |
translation | | |
| |
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| | |
into | | |
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| | |
| | |
U.S. dollars | | |
| |
| | |
| | |
(Note A) | | |
| |
| | |
2015 | | |
2015 | | |
2014 | |
| | |
NIS | | |
US$ | | |
NIS | |
| Cash flow from operating activities | |
| 1,050 | | |
| 268 | | |
| 950 | |
| Purchase of property, plant and equipment | |
| (373 | ) | |
| (95 | ) | |
| (272 | ) |
| Investment in intangible assets and deferred expenses | |
| (54 | ) | |
| (14 | ) | |
| (50 | ) |
| Proceeds from the sale of property, plant and equipment | |
| 22 | | |
| 5 | | |
| 72 | |
| | |
| | | |
| | | |
| | |
| Free cash flow | |
| 645 | | |
| 164 | | |
| 700 | |
Designated
Disclosure with Respect to the Company's Projected Cash Flows
In
accordance with the "hybrid model disclosure requirements" promulgated by the Israeli Securities Authority that are
applicable to Internet Gold - Golden Lines Ltd. (the "Company"), the following is a report of the Company’s projected
cash flows (the "report") and a disclosure of the examination by the Company’s board of directors of the Company’s
liquidity in accordance with regulations 10(b)(1)(d) and 10(b)(14) of the Securities Regulations (Immediate and Periodic Notices)
5730-1970:
| ● | The
Company’s un-reviewed financial statements as of September 30, 2015, and for the
quarter then ended, reflect that the Company had an equity deficit of NIS 165 million
as of such date. |
| | | |
| ● | The
Company’s board of directors reviewed the Company’s outstanding debt obligations,
its existing and anticipated cash resources and needs that were included in the framework
of the projected cash flow report for the periods from October 1, 2015 until December
31, 2015, January 1, 2016 until December 31, 2016 and January 1, 2017 until September
30, 2017, described below. The board of directors also examined the assumptions and projections
that were included in the report and determined that such assumptions and projections
are reasonable and appropriate. |
| | | |
| ● | Based
on the foregoing, the Company’s board of directors determined that the Company
does not have a liquidity problem and that for the duration of the periods covered by
the projected cash flows statement there is no reasonable doubt that the Company will
not meet its existing and anticipated liabilities when due. |
The
following is the projected cash flow of the Company and the assumptions upon which it is based:
| | |
For the period from October 1, 2015 until December 31, 2015 | | |
For the period from January 1, 2016 until December 31, 2016 | | |
For the period from January 1, 2017 until September 30, 2017 | |
| | |
NIS millions | | |
NIS millions | | |
NIS millions | |
| Opening balance: | |
| | |
| | |
| |
| Cash and cash equivalents (1) | |
34 | | |
30 | | |
30 | |
| Independent sources: | |
| | | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | | |
| | |
| Proceeds from the sale of marketable securities (2)(3) | |
| 36 | | |
| 89 | | |
| 111 | |
| Cash provided by investing activities | |
| 36 | | |
| 89 | | |
| 111 | |
| | |
| | | |
| | | |
| | |
| Sources from Subsidiary: | |
| | | |
| | | |
| | |
| Dividends from subsidiary (4) | |
| 25 | | |
| 98 | | |
| 71 | |
| | |
| | | |
| | | |
| | |
| Projected uses: | |
| | | |
| | | |
| | |
| Cash flows used in operating activities (5) | |
| (1 | ) | |
| (4 | ) | |
| (3 | ) |
| | |
| | | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | | |
| | |
| Repayments of debentures (6) | |
| (61 | ) | |
| (131 | ) | |
| (132 | ) |
| Interest payments (6) | |
| (3 | ) | |
| (52 | ) | |
| (47 | ) |
| Cash used in financing activities | |
| (64 | ) | |
| (183 | ) | |
| (179 | ) |
| | |
| | | |
| | | |
| | |
| Closing balance: | |
| | | |
| | | |
| | |
| Cash and cash equivalents (1) | |
| 30 | | |
| 30 | | |
| 30 | |
Assumptions
and explanations pertaining to the above table:
| (1) | Cash
flows include the Company’s projected cash flows and do not include the consolidation
of projected cash flows from the Company’s subsidiary, B Communications Ltd. (“B
Communications”) or from Bezeq - The Israel Telecommunications Corp. Ltd. (“Bezeq”). |
| | | |
| (2) | In
addition to the cash balances it maintains, the Company also invests in low-risk, high
liquidity marketable securities that are used to finance its operations. The Company’s
investment policy was reviewed by the Company’s audit committee and by a credit
rating agency. At least 80% of the Company's portfolio is invested in securities rated
at a local rating of AA- and higher. As of October 1, 2015, the Company’s investments
in marketable securities totaled NIS 282 million and by September 30, 2017 this balance
is expected to be NIS 57 million. |
| | | As
of September 30, 2015, cash, cash equivalents and current investments in marketable securities
totaled NIS 316 million. These liquid balances can be converted to cash in a short period
of time and are a source for debt service. The Company’s cash, cash equivalents
and current investments in marketable securities are sufficient for the service of the
Company's debt through February 2017. |
| | | |
| (3) | For
the purposes of calculating cash flows from investments in marketable securities, the
Company assumed an annual yield of 3% on the average balance of its investments in marketable
securities during the period. This assumption is based on the Company's conservative
investment policy, as well as on yields historically achieved by the Company from its
investments in marketable securities and on management’s assessment of the probability
of achieving such yield during the future periods covered by the projected cash flows
statement. |
| | | |
| | | The
following are the benchmarks used by the Company and a sensitivity analysis of the above
assessments: |
| A. | In
2014 and in 2013 the Company generated yields of 2.4% and 5.5%, respectively, on its
cash and marketable securities portfolio. The Company does not anticipate that there
will be any material changes to its investment policy in the projected periods. |
| | | |
| B. | The
following table shows the expected profit in NIS millions from investments in cash and
marketable securities in the projected periods under a scenario of a 5% annual yield
and a scenario of a -2% annual yield: |
| (4) | Assumption
of the receipt of dividends from B Communications during the period covered by the projected
cash flows statement is based on the following: |
According
to what it believes to be a conservative estimate, the Company’s management anticipates that B Communications will distribute
accumulated dividends of at least NIS 292 million by September 30, 2017. This assumption is based on market forecasts of the estimated
net profits of Bezeq and on the Company's estimation of B Communications’ anticipated retained earnings during the projected
periods. These estimates are derived, among other things, from B Communications' projected financing expenses and its projected
purchase price allocation amortization expenses with respect to its acquisition of the controlling interest in Bezeq ("Bezeq
PPA") that are non-cash expenses. Future Bezeq PPA amortization expenses are expected to decrease significantly because of
the accelerated depreciation method that was adopted by B Communications at the time of its acquisition of the controlling interest
in Bezeq. From April 14, 2010, the date of B Communications' acquisition of its interest in Bezeq, until September 30, 2015, B
Communications has amortized approximately 70% of the total Bezeq PPA.
The
dividend assumption stated in the distribution estimate above, does not differ materially from that reported in the previous quarter.
The Company's management made only an internal update of the timing of distributions between the projected periods.
B
Communications does not have a dividend distribution policy. Nevertheless, the Company assumes that there is a high probability
that B Communications will distribute most of its retained earnings balance as a dividend, based, among other things, on B Communications’
(i) dividend distributions in December 2013, June 2015, September 2015 and to be paid in December 2015. The Company believes that
the probability of future dividend distributions by B Communications has improved and is supported by the unrestricted cash mechanism
provision in its Senior Secured Notes that were issued in February 2014 that allows the use of funds that are not pledged to the
holders of the Senior Secured Notes.
Accordingly,
the Company’s management believes that B Communications will act in the same manner as it did in November 2013 and May,
August and November 2015, and that it will distribute most of its retained earnings balance, so long as B Communications will
have sufficient resources to service its debt for a period of at least 18 months and that the distribution meets the criteria
for distributions under Israeli law. This assumption does not contradict the restrictions on distributing dividends under applicable
law and other restrictions applicable to B Communications.
| (5) | The
cash flows from the Company’s current operations include the administrative operating
costs and costs associated with the Company being a dual-listed company traded on the
NASDAQ Global Select Market and on the Tel Aviv Stock Exchange. |
| | | |
| (6) | The
repayment of principal and interest are based on the repayment schedule for the Company’s
outstanding debentures, in addition to an assumed 0% annual increase in the Consumer
Price Index in 2015, an assumed 1.5% annual increase in the Consumer Price Index in 2016
and an assumed 2% annual increase in the Consumer Price Index in 2017. |
The
Company has additional cash generating abilities that for conservative reasons were not taken in to account in preparing the projected
cash flow detailed above. The following describes the Company's assumptions regarding these scenarios:
| A. | All
of the Company's B Communications shares are free and clear of any encumbrance. If necessary,
the Company can sell some of these shares, and will still remain the controlling shareholder
of B Communications. An example of this ability to sell shares of B Communications is
the sale of shares to Norisha Holdings Ltd. in 2013. |
| B. | The
Company has financial flexibility and quick access to capital markets that enable it
to raise funds within a short period of time. This is evident from the debenture issuances
and debenture series exchanges that the Company completed in recent years. |
The
Company’s board of directors has reviewed the Company’s liabilities, its existing and anticipated cash resources and
needs that were included in the framework of the projected cash flow report, examined their scope and feasibility, as well as
the timing of their receipt, and found that all such assumptions and the projections were reasonable and appropriate.
The
Company’s board of directors examined the Company’s anticipated resources and liabilities, and considering the financial
data in the above cash flow report and management’s explanations of such data determined that the Company does not have
a liquidity problem and that for the duration of the projected period for which cash flow information has been provided there
is no reasonable doubt that the Company will not meet its existing and anticipated liabilities when due.
The
information detailed above, concerning the Company’s cash flow forecast, and particularly concerning the projected dividend
and yield on securities, are forward looking information as defined in the Securities Law, 5728-1968. This information includes
forecasts, subjective assessments, estimates, etc. and is based, among other things, on objective market forecasts and reviews
issued to the public, and relies, among other things, on the company management’s past experience. Furthermore, some of
such information is based on future data and internal estimates by the Company’s management made at the current time, and
there is no certainty that they will materialize, in whole or in part, due to factors that are not in the Company’s control.
It is hereby clarified that there is a likelihood that said forward looking information will not be realized, in whole or in part,
both with respect to the Company’s forecasts and with respect to the working assumptions on which they are based.
15
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