Partner Communications Reports Second Quarter 2017 Results1

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ADJUSTED EBITDA2 TOTALED NIS 252 MILLION

OPEX2 TOTALED NIS 489 MILLION, A DECLINE OF NIS 83 MILLION FROM Q2 2016

ADJUSTED FREE CASH FLOW2 TOTALED NIS 208 MILLION

Second quarter 2017 highlights (compared with second quarter 2016)

  • Total Revenues: NIS 805 million (US$ 230 million), a decrease of 10%
  • Service Revenues: NIS 646 million (US$ 185 million), a decrease of 7%
  • Equipment Revenues: NIS 159 million (US$ 45 million), a decrease of 22%
  • Total Operating Expenses (OPEX): NIS 489 million (US$ 140 million), a decrease of 15%
  • Adjusted EBITDA: NIS 252 million (US$ 72 million), an increase of 11%
  • Adjusted EBITDA Margin2: 31% of total revenues compared with 25%
  • Profit for the Period: NIS 34 million (US$ 10 million), an increase of 31%
  • Net Debt2: NIS 1,081 million (US$ 309 million), a decrease of NIS 883 million
  • Adjusted Free Cash Flow (before interest): NIS 208 million (US$ 59 million), an increase of NIS 48 million
  • Cellular ARPU: NIS 62 (US$ 18), a decrease of 5%
  • Cellular Subscriber Base: approximately 2.66 million at quarter-end, a decrease of 1%

1 The quarterly financial results are unaudited.
2 For the definition of this and other Non-GAAP financial measures, see "Use of Non-GAAP Financial Measures" in this press release.

Partner Communications Company Ltd. ("Partner" or the "Company") (NASDAQ and TASE: PTNR), a leading Israeli communications operator, announced today its results for the quarter ended June 30, 2017.

Commenting on the second quarter 2017 results, Mr. Isaac Benbenisti, CEO of Partner noted:

"The second quarter results portray a net increase in the number of cellular subscribers, continued efficiency measures implemented in the Company and an increase in operating profit.

In the last quarter, we continued to establish our leadership in the cellular segment, and we reported an increase in the number of Post-Paid subscribers, who account for 85% of the Company's cellular subscriber base, for the eighth consecutive quarter. We continue to deploy 4.5G network throughout the country and at the same time we continue to implement MIMO 4X4 technology in our cellular network, which will enable us to offer cellular internet at speeds of up to 400 Mbps. In addition, we continue to develop additional capabilities for Partner's unique IoT (Internet of Things) Pro network, which are for private use and adapted to the specific needs of business subscribers.

We opened the second half of 2017 with the initial marketing of Partner TV services and triple services which include internet and fixed-line telephony, in addition to TV. Over 20,000 consumers have requested to join Partner TV, reflecting the strong interest in the Israeli market to switch to a more advanced TV service at a more attractive price. In the last two weeks we have already begun installations in the homes of consumers. In addition, the localized launch of Netflix in Israel, and our partnership with the world's leading internet television network, will enable us to offer a unique value-added offering to Partner TV customers.

Last week we revealed additional news, with the announcement regarding the expansion of Partner's fiber optic network, which enables private customers, already at this point in time, internet services at speeds of up to 1,000Mbps and we have already reached tens of thousands of households. In the coming months we plan to significantly expand our deployments within the cities with a reach of additional tens of thousands of homes using Partner's fiber infrastructure. This is in addition to growing numbers of business customers already enjoying the advantages of Partner's fiber optic network, which is deployed in central business areas in various cities in Israel and is connected to economic centers worldwide.

The positive quarterly results, together with the successful launch of Partner TV and the progress in fiber deployment, are the result of long-term plans that we started over two years ago, designed to provide our customers with added value across the variety of communication services we offer as a comprehensive communications group."

Mr. Dudu Mizrahi, Partner's Chief Financial Officer, commented on the second quarter results of 2017:

"The past months at Partner have been characterized by activity in a wide range of operational and financial areas, and continued efficiency measures in the Company, all alongside the planning of future investments by the Company.

During the last quarter, the Company's cellular subscriber base grew by 4 thousand subscribers, with the Post-Paid subscribers increasing by 14 thousand subscribers while the Pre-Paid subscribers base declined by 10 thousand subscribers. An increase in the size of the subscriber base together with an increase in ARPU, as a result of seasonality and price stability in calls and data packages, resulted in a quarterly increase in revenues from cellular services.

In the equipment sales operations, the steps that we have taken in the past few months resulted in an improvement in gross profit from equipment sales to NIS 33 million with profitability of 21% compared to gross profit of NIS 26 million and profitability of 16% in the first quarter of 2017.

Further, in the second quarter, following the trend we have seen in previous quarters, we continued to reduce the Company's OPEX, which contributed to the improvement in the Company's EBITDA compared to the previous quarter as well as to the parallel quarter last year. In the second quarter of 2017, the higher EBITDA was a result of the growth in service revenues, the improvement in gross profit from equipment sales and the continued decline in OPEX.

We continue to report strong adjusted free cash flow before interest payments, which totaled NIS 208 million in the second quarter of 2017, an increase of 30% compared to the second quarter of 2016 and a 65% increase compared to the first quarter of 2017.

With respect to financing, during the past quarter we took a number of steps including a capital raise of approximately NIS 190 million, early repayments of loans from banks and financial institutions in a total amount of NIS 700 million in June and NIS 175 million in July, while at the same time raising new debt by issuing bonds in an amount of approximately NIS 255 million in July. These measures strengthened the Company's balance sheet and will reduce the Company's finance expenses, in order to enable us to realize Partner's strategic plans."

     

NIS Million

 

Q2'17

 

Q1'17

 

Comments

Service Revenues 646 640
Equipment Revenues 159 163 Decrease in fixed-line equipment sales
Total Revenues 805 803
Gross profit from equipment sales 33 26 Change in product mix with increase in profit margins
OPEX 489 496
Adjusted EBITDA 252 233
Profit for the Period 34 51 Finance expenses in Q2 2017 included one-time early repayment expense of NIS 25 million
Capital Expenditures (additions) 61 40
Adjusted free cash flow (before interest payments) 208 126
Net Debt   1,081   1,415   Decline in debt results from positive free cash flow and capital raise of approximately NIS 190 million
 
     
   

Q2'17

 

Q1'17

 

Comments

Cellular Post-Paid Subscribers (end of period, thousands) 2,273 2,259

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

389 399
Monthly Average Revenue per Cellular User (ARPU) (NIS) 62 61 Increase as a result of seasonality and price stability in call and data packages
Quarterly Cellular Churn Rate (%)   9.0%   9.8%   Decline in churn rate of both Post-Paid subscribers and Pre-Paid subscribers
 

Key Financial Results

NIS MILLION (except EPS)   Q2'17   Q2'16   % Change
Revenues   805   897   -10%
Cost of revenues 637 730 -13%
Gross profit 168 167 +1%
Operating profit 103 67 +54%
Profit for the period 34 26 +31%
Earnings per share (basic, NIS) 0.21 0.17 +24%
Adjusted free cash flow (before interest)   208   160   +30%
 

Key Operating Indicators

    Q2'17   Q2'16   Change
Adjusted EBITDA (NIS million)   252  

228

  +11%
Adjusted EBITDA (as a % of total revenues) 31%

25%

+6
Cellular Subscribers (end of period, thousands) 2,662

2,700

-38
Quarterly Cellular Churn Rate (%) 9.0%

9.8%

-0.8
Monthly Average Revenue per Cellular User (ARPU) (NIS)   62  

65

  -3
 

Partner Consolidated Results

  Cellular Segment   Fixed-Line Segment   Elimination   Consolidated
NIS Million   Q2'17   Q2'16   Change %   Q2'17   Q2'16   Change %   Q2'17   Q2'16   Q2'17   Q2'16   Change %
Total Revenues 642   715   -10% 206  

236

  -13% (43)  

(54)

805  

897

  -10%
Service Revenues 497

527

-6% 192

219

-12% (43)

(54)

646

692

-7%
Equipment Revenues 145

188

-23% 14

17

-18% - - 159

205

-22%
Operating Profit 81

31

+161% 22

36

-39% - - 103

67

+54%
Adjusted EBITDA   196  

155

  +26%   56  

73

  -23%   -   -   252  

228

  +11%
 

Financial Review

In Q2 2017, total revenues were NIS 805 million (US$ 230 million), a decrease of 10% from NIS 897 million in Q2 2016.

Service revenues in Q2 2017 totaled NIS 646 million (US$ 185 million), a decrease of 7% from NIS 692 million in Q2 2016.

Service revenues for the cellular segment in Q2 2017 totaled NIS 497 million (US$ 142 million), a decrease of 6% from NIS 527 million in Q2 2016. The decrease was mainly the result of two factors, the continued price erosion of cellular services (both Post-Paid and Pre-Paid) due to the continued competitive market conditions and one-time revenue items in Q2 2016.

Service revenues for the fixed-line segment in Q2 2017 totaled NIS 192 million (US$ 55 million), a decrease of 12% from NIS 219 million in Q2 2016. The decrease reflected the continuing decrease in revenues from international calls as well as other fixed line services.

Equipment revenues in Q2 2017 totaled NIS 159 million (US$ 45 million), a decrease of 22% from NIS 205 million in Q2 2016, largely reflecting a decrease in the volume of equipment sales.

Gross profit from equipment sales in Q2 2017 was NIS 33 million (US$ 9 million), compared with NIS 42 million in Q2 2016, a decrease of 21%, mainly reflecting the decrease in the volume of equipment sales.

Total operating expenses (‘OPEX') totaled NIS 489 million (US$ 140 million) in Q2 2017, a decrease of 15% or NIS 83 million from Q2 2016. The decrease mainly reflected a decline in expenses related to the cellular network as well as a decrease in other expenses reflecting the impact of various efficiency measures undertaken as part of a long-term plan to reduce the Company's cost base. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q2 2017 decreased by 13% compared with Q2 2016, mainly for the same reasons as above.

In Q2 2017, the Company recorded income with respect to the settlement agreement regarding the Orange brand in an amount of NIS 54 million (US$ 15 million), unchanged from Q2 2016. Q2 2017 is the last quarter the Company will record income with respect to the settlement agreement regarding the Orange brand.

Other income, net, totaled NIS 8 million (US$ 2 million) in Q2 2017, compared to NIS 12 million in Q2 2016, a decrease of 33%, mainly reflecting a decrease in income from the unwinding of trade receivables.

Operating profit for Q2 2017 was NIS 103 million (US$ 29 million), an increase of 54% compared with NIS 67 million in Q2 2016.

Adjusted EBITDA in Q2 2017 totaled NIS 252 million (US$ 72 million), an increase of 11% from NIS 228 million in Q2 2016. As a percentage of total revenues, Adjusted EBITDA in Q2 2017 was 31% compared with 25% in Q2 2016.

Adjusted EBITDA for the cellular segment was NIS 196 million (US$ 56 million), in Q2 2017, an increase of 26% from NIS 155 million in Q2 2016, reflecting the decrease in OPEX partially offset by a decrease in service revenues and gross profit from equipment sales. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q2 2017 was 31% compared with 22% in Q2 2016.

Adjusted EBITDA for the fixed-line segment was NIS 56 million (US$ 16 million) in Q2 2017, a decrease of 23% from NIS 73 million in Q2 2016, reflecting the decrease in service revenues, partially offset by a decrease in OPEX and an increase in gross profit from equipment sales. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q2 2017 was 27%, compared with 31% in Q2 2016.

Finance costs, net in Q2 2017 were NIS 54 million (US$ 15 million), an increase of 93% compared with NIS 28 million in Q2 2016, largely a result of one-time early repayment expenses of NIS 25 million in Q2 2017.

Income taxes for Q2 2017 were NIS 15 million (US$ 4 million), compared with NIS 13 million in Q2 2016.

Profit in Q2 2017 was NIS 34 million (US$ 10 million), compared with a profit of NIS 26 million in Q2 2016, an increase of 31%.

Based on the weighted average number of shares outstanding during Q2 2017, basic earnings per share or ADS, was NIS 0.21 (US$ 0.06), compared to basic earnings per share of NIS 0.17 in Q2 2016.

Cellular Segment Operational Review

At the end of Q2 2017, the Company's cellular subscriber base (including mobile data and 012 Mobile subscribers) was approximately 2.66 million including approximately 2.27 million Post-Paid subscribers or 85% of the base, and approximately 389 thousand Pre-Paid subscribers, or 15% of the subscriber base.

During the second quarter of 2017, the cellular subscriber base increased by approximately 4 thousand subscribers. The Post-Paid subscriber base increased by approximately 14 thousand subscribers, while the Pre-Paid subscriber base declined by approximately 10 thousand subscribers.

The quarterly churn rate for cellular subscribers in Q2 2017 was 9.0%, compared with 9.8% in Q2 2016. The decline in churn rate reflected a decline in both Post-Paid and Pre-Paid subscriber churn.

Total cellular market share (based on the number of subscribers) at the end of Q2 2017 was estimated to be approximately 26%, unchanged from Q2 2016.

The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q2 2017 was NIS 62 (US$ 18), a decrease of 5% from NIS 65 in Q2 2016. The decrease mainly reflected the continued price erosion in key cellular services due to the persistent competition in the cellular market and one-time revenue items recorded in Q2 2016.

Funding and Investing Review

In Q2 2017, Adjusted Free Cash Flow totaled NIS 208 million (US$ 59 million), an increase of 30% from NIS 160 million in Q2 2016.

Cash generated from operations increased by 24% to NIS 268 million (US$ 77 million) in Q2 2017 from NIS 217 million in Q2 2016. The increase mainly reflected the increase in Adjusted EBITDA and the smaller decrease in operating assets and liabilities, which was mainly explained by the significant decrease in the volume of equipment sales under long-term payment plans.

Cash capital expenditures (‘CAPEX payments'), as represented by cash flows used for the acquisition of property and equipment and intangible assets, were NIS 60 million (US$ 17 million) in Q2 2017, an increase of 5% from NIS 57 million in Q2 2016.

The level of Net Debt at the end of Q2 2017 amounted to NIS 1,081 million (US$ 309 million), compared with NIS 1,964 million at the end of Q2 2016.

Business Developments

Further to the Company's previous reports, regarding its intentions to early repay borrowings from banks and institutions, in June 2017 the Company repaid borrowings in a total amount of NIS 700 million (US$ 200 million) (borrowings C, D, E, F, G & H) and in July 2017 an additional amount of NIS 175 million (US$ 50 million) (borrowings G & I).

As previously reported by the Company on June 18, 2017, the Company issued shares of the Company. The total net consideration received was approximately NIS 190 million (US$ 54 million).

As previously reported by the Company on July 20, 2017, the Company issued new Notes (Series F), traded on TASE, in a principal amount of NIS 255 million (US$ 73 million), repayable in five equal annual installments in the years 2020 through 2024. The principal bears fixed annual interest of 2.16%, payable on a semiannual basis starting December 2017.

Regulatory Developments

In May 2017, the Ministry of Communications published its decision regarding the requirement of Bezeq to offer its telephony services to other operators in a resale format as of July 2017, instead of the planned full wholesale telephony services which was scheduled to begin in May 2015. The price paid to Bezeq by the operators for the resale telephony is suggested by the Ministry to be set substantially higher than the prices set for the planned full wholesale telephony product.

According to the decision, the date of implementation of the full wholesale telephony service has been postponed at the latest by July 18, 2018. However, the Ministry will consider whether to extend the temporary resale arrangement or to make it permanent in light of the competitive situation over the coming year.

The Ministry allowed interested parties to present their positions regarding the prices set for the resale format and the Company filed its response with the Ministry. The Company argued for lower tariffs for the resale telephony product and insisted that this arrangement can only be a temporary arrangement. The Minister committed that any possible change to the price (that may result from the hearing) would be applied retroactively.

In addition, in June 2017 the Ministry of Communications published the maximum tariffs for HOT's wholesale bit-stream internet access service. The Ministry has yet to publish its decisions regarding several critical issues which have so far delayed the actual implementation of this wholesale market. In addition, HOT has failed to implement some aspects of the service and these await enforcement by the Ministry. Therefore, there is no clear deadline for the implementation of the service.

IFRS 15

In May 2014, a new revenue recognition standard was issued (IFRS 15). The new standard is effective for annual reporting periods beginning on or after January 1, 2018, according to its transition provisions. Earlier application is permitted.

The Company has identified a number of relevant issues. Currently the most significant issue identified is the treatment of the costs of obtaining contracts with customers which, under the new standard, are to be capitalized under certain conditions, while currently these costs are generally recognized as incurred. According to the standard, sale commissions and incentives paid to employees and resellers for obtaining contracts with customers will be recognized as assets, and amortized to profit or loss when the related goods and services are transferred to the customers. The capitalization of these costs of obtaining contracts is expected to have a material positive effect on our results of operations in the coming years, which is expected to be leveled off in later years.

In addition, the Company is in the process of preparing for the implementation of the requirement of the standard to allocate revenues to performance obligations identified, including preparing for the application of the portfolio approach under certain conditions, establishing customer groupings and other related issues.

The Company is making progress in implementing the required adjustments into the Company's information systems which are expected to be completed in the third quarter of 2017. The Company aims to adopt the standard as early as possible, subject to the completion of the required adjustments to the information systems.

The Company plans to apply the standard according to the modified retrospective approach. Under this approach, entities will recognize transitional adjustments in retained earnings on the date of initial application, i.e. without restating the comparative period; and applying the new rules to contracts that are not completed as of the date of initial application.

The Company is currently unable to quantify the impact of the implementation of IFRS 15.

Conference Call Details

Partner will hold a conference call on Wednesday, August 16, 2017 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: +972.3.918.0610

North America toll-free: +1.888.668.9141

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 August 16, 2017 until September 06, 2017, at the following numbers:

International: +972.3.925.5941

North America toll-free: +1.877.456.0009

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 Statements

This 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 Company's continued investment and development in its cellular network to offer its customers additional capabilities for Partner's IoT Pro network and higher internet speeds; the anticipated unique value-added offerings to Partner TV customers; the planned deployments of Partner's fiber optic infrastructure to reach additional tens of thousands of homes; the expected reduction in the Company's finance expenses and strengthened ability to realize our strategic plans as a result of refinancing measures taken by the Company and the expected material positive effect on our results of operations in the coming years as a result of the capitalization of the costs of securing contracts which is expected to be leveled off in later years. 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: (i) technological, technical or other operational difficulties that might delay or block the Company from: continuing to invest and develop its cellular network and fiber optic infrastructure to achieve the stated objectives; (ii) whether the Company will have the financial resources and commercial strategies which allow it to successfully offer its customers unique value-added offerings in the TV market and bundled services or reach the targeted expansion in the number of customers served by its fiber optic infrastructure; and the extent to which the Company's finance expenses will be and remain reduced and its results operations improved as a result, respectively, of the refinancing measures taken and the capitalization of the costs of securing contracts. The 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 June 30, 2017: US $1.00 equals NIS 3.496. 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

  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

* Adjusted EBITDA is fully comparable with EBITDA measure which was provided in reports for prior periods.

**Adjusted Free Cash Flow measure is fully comparable to Free Cash Flow measure which was provided in reports for prior periods.

About Partner Communications

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

 

Convenience
translation
into U.S.
Dollars

June 30,   December 31, June 30,
2017 2016 2017
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT ASSETS
Cash and cash equivalents 897 716 257
Short-term deposits 452
Trade receivables 863 990 247
Other receivables and prepaid expenses 54 57 15
Deferred expenses – right of use 37 28 11
Inventories 96 96 27
1,947 2,339 557
 
NON CURRENT ASSETS
Trade receivables 245 333 70
Prepaid expenses and other 2 2 1
Deferred expenses – right of use 109 75 31
Property and equipment 1,125 1,207 322
Licenses and other intangible assets 711 793 203
Goodwill 407 407 116
Deferred income tax asset 45 41 13
2,644 2,858 756
 
TOTAL ASSETS 4,591 5,197 1,313
 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 



New Israeli Shekels

 

Convenience
translation
into U.S.
Dollars

June 30,   December 31, June 30,
2017 2016 2017
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT LIABILITIES
Current maturities of notes payable and borrowings 699 498 200
Trade payables 643 681 184
Payables in respect of employees 76 101 22
Other payables (mainly institutions) 10 28 3
Income tax payable 78 45 22
Deferred income with respect to settlement
agreement with Orange 108
Deferred revenues from HOT mobile 31 31 9
Other deferred revenues 39 38 11
Provisions 75 77 21
1,651 1,607 472
NON CURRENT LIABILITIES
Notes payable 649 646 186
Borrowings from banks and others 630 1,550 180
Liability for employee rights upon retirement, net 36 39 10
Dismantling and restoring sites obligation 28 35 8
Deferred revenues from HOT mobile 180 195 51
Other non-current liabilities 20 14 6
1,543 2,479 441
 
TOTAL LIABILITIES 3,194 4,086 913
 
EQUITY
Share capital - ordinary shares of NIS 0.01

par value: authorized - December 31, 2016

and June 30, 2017 - 235,000,000 shares;

issued and outstanding -

2 2 1
December 31, 2016 – *156,993,337 shares
June 30, 2017 – *167,296,026 shares
Capital surplus 1,218 1,034 348
Accumulated retained earnings 454 358 130

Treasury shares, at cost

  December 31, 2016 – **3,603,578 shares

  June 30, 2017 – **3,525,463 shares

(277) (283) (79)
TOTAL EQUITY 1,397 1,111 400
TOTAL LIABILITIES AND EQUITY 4,591 5,197 1,313

* Net of treasury shares.

** Including, restricted shares in amount of 2,143,957 and 2,061,201 as of June 30, 2017 and December 31, 2016 respectively held by trustee under the Company's Equity Incentive Plan, such shares will become outstanding upon completion of vesting conditions.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

New Israeli shekels

 

Convenience translation into U.S. dollars

6 month
period ended
June 30

 

3 month
period ended
June 30

6 month
period ended
June 30,

 

3 month
period ended
June 30,

2017   2016

2017

  2016 2017 2017
(Unaudited) (Unaudited)

(Unaudited)

(Unaudited) (Unaudited) (Unaudited)
In millions (except per share data)
Revenues, net 1,608 1,874 805 897 460 230
Cost of revenues 1,291 1,527 637 730 369 182

Gross profit

317 347 168 167 91 48
 
Selling and marketing expenses 151 232 77 105 43 22

General and administrative expenses

 

100 128 50 61 29 14
Income with respect to settlement agreement with Orange 108 108 54 54 31 15
Other income, net 17 26 8 12 5 2
Operating profit 191 121 103 67 55 29
Finance income 1 14 1 6 * *
Finance expenses 78 66 55 34 22 15
Finance costs, net 77 52 54 28 22 15
Profit before income tax 114 69 49 39 33 14
Income tax expenses 29 29 15 13 9 4
Profit for the period 85 40 34 26 24 10
 
Earnings per share
Basic 0.54 0.26 0.21 0.17 0.15 0.06
Diluted 0.54 0.26 0.21 0.17 0.15 0.06
Weighted average number of shares outstanding

(in thousands)

Basic 157,746 156,091 158,442 156,092 157,746 158,442
Diluted 159,555 157,605 159,970 157,669 159,555 159,970
 

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

  New Israeli shekels   Convenience translation into U.S. dollars
6 month
period ended
June 30,
  3 month
period ended
June 30,
6 month
period ended
June 30,
  3 month
period ended
June 30,
2017   2016 2017   2016 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions

Profit for the period

85 40 34 26 24 10
Other comprehensive income

for the period, net of income tax

- - - - - -
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 85 40 34 26 24 10
 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

  New Israeli Shekels     New Israeli Shekels
Six months ended June 30, 2017 Six months ended June 30, 2016
In millions (Unaudited) In millions (Unaudited)

Cellular
segment

 

Fixed line
segment

 

Reconciliation

for

consolidation

 

Consolidated

Cellular

segment

 

Fixed line

segment

 

Reconciliation

for

consolidation

  Consolidated
Segment revenue - Services

977

309

1,286

1,060

342

1,402

Inter-segment revenue - Services

9

77

(86)

10

99

(109)

Segment revenue - Equipment

290

32

 

322

432

40

 

472

Total revenues

1,276

418

(86)

1,608

1,502

481

(109)

1,874

Segment cost of revenues – Services

735

293

1,028

851

302

1,153

Inter-segment cost of revenues- Services

76

10

(86)

98

11

(109)

Segment cost of revenues - Equipment

240

23

 

263

342

32

 

374

Cost of revenues

1,051

326

(86)

1,291

1,291

345

(109)

1,527

Gross profit

225

92

317

211

136

347

Operating expenses (3)

207

44

251

301

59

360

Income with respect to settlement
agreement with Orange

108

108

108

108

Other income, net

16

1

17

24

2

26

Operating profit

142

49

191

42

79

121

Adjustments to presentation of segment
Adjusted EBITDA
–Depreciation and amortization

215

68

230

75

–Other (1)

11

 

25

(1)

Segment Adjusted EBITDA (2)

368

117

297

153

Reconciliation of segment subtotal Adjusted
EBITDA to profit for the period
Segments subtotal Adjusted EBITDA (2)

485

450

- Depreciation and amortization

(283)

(305)

- Finance costs, net

(77)

(52)

- Income tax expenses

(29)

(29)

- Other (1)

(11)

(24)

Profit for the period

85

40

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

  New Israeli Shekels     New Israeli Shekels
Three months ended June 30, 2017 Three months ended June 30, 2016
In millions (Unaudited) In millions (Unaudited)

Cellular
segment

 

Fixed line
segment

 

Reconciliation

for

consolidation

  Consolidated

Cellular

segment

 

Fixed line

segment

 

Reconciliation

for

consolidation

 

Consolidated

Segment revenue - Services

493

153

646

521 171 692
Inter-segment revenue - Services

4

39

(43)

6 48 (54)
Segment revenue - Equipment

145

14

 

159

188 17   205
Total revenues

642

206

(43)

805

715 236 (54) 897
Segment cost of revenues – Services

363

148

511

415 152 567
Inter-segment cost of revenues- Services

38

5

(43)

48 6 (54)
Segment cost of revenues - Equipment

117

9

 

126

149 14   163
Cost of revenues

518

162

(43)

637

612 172 (54) 730
Gross profit

124

44

168

103 64 167
Operating expenses (3)

105

22

127

137 29 166
Income with respect to settlement
agreement with Orange

54

54

54 54
Other income, net

8

 

8

11 1 12
Operating profit

81

22

103

31 36 67
Adjustments to presentation of segment
Adjusted EBITDA
–Depreciation and amortization

107

35

113 37
–Other (1)

8

(1)

11 *
Segment Adjusted EBITDA (2)

196

56

155 73
Reconciliation of segment subtotal Adjusted
EBITDA to profit for the period
Segments subtotal Adjusted EBITDA (2)

252

228
- Depreciation and amortization

(142)

(150)
- Finance costs, net

(54)

(28)
- Income tax expenses

(15)

(13)
- Other (1)

(7)

(11)
Profit for the period

34

26

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

(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; it is fully comparable to EBITDA information which has been previously provided for prior periods.
 
(3) Operating expenses include selling and marketing expenses and general and administrative expenses.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

New Israeli Shekels

 

Convenience
translation
into
U.S. Dollars

6 months ended
June 30,
2017   2016 2017
(Unaudited) (Unaudited) (Unaudited)
In millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations (Appendix) 464 391 134
Income tax paid (2) (12) (1)
Net cash provided by operating activities 462 379 133

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment (86) (71) (25)
Acquisition of intangible assets (43) (34) (12)
Proceeds from short-term deposits 452 129
Interest received 1 * *
Proceeds from (repayment of) derivative financial instruments, net * * *
Net cash provided by (used in) investing activities 324 (105) 92

 

CASH FLOWS FROM FINANCING ACTIVITIES:

Share issuance 190 54
Interest paid (75) (66) (21)
Current borrowings received 24
Repayment of non-current borrowings (720) (7) (206)
Repayment of notes payable   (235)  
Net cash used in financing activities (605) (284) (173)

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

181

(10)

52

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

716 926 205

CASH AND CASH EQUIVALENTS AT END OF PERIOD

897 916 257

* Representing an amount of less than 1 million.

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

 

Convenience
translation
into
U.S. Dollars

6 months ended
June 30,
2017   2016 2017
(Unaudited) (Unaudited) (Unaudited)
In millions
 
Cash generated from operations:
Profit for the period 85 40 24
Adjustments for:
Depreciation and amortization 265 290 76
Amortization of deferred expenses - Right of use 18 14 5
Employee share based compensation expenses 11 24 3
Liability for employee rights upon retirement, net (3) (3) (1)
Finance costs, net * (2) *
Change in fair value of derivative financial instruments (1) * *
Interest paid 75 66 21
Interest received (1) * *
Deferred income taxes (5) 11 (1)
Income tax paid 2 12 1
Changes in operating assets and liabilities:
Decrease in accounts receivable:
Trade 215 27 61
Other 3 7 1
Increase (decrease) in accounts payable and accruals:
Trade (8) (9) (2)
Other payables (41) (21) (11)
Provisions (2) 4 (1)
Deferred income with respect to settlement
agreement with Orange (108) (108) (31)
Deferred revenues from HOT mobile (15) 27 (4)
Other deferred revenues 2 * 1
Increase in deferred expenses - Right of use (61) (31) (17)
Current income tax 33 6 9
Decrease in inventories * 37 *
Cash generated from operations 464 391 134

* Representing an amount of less than 1 million.

At June 30, 2017 and 2016, trade and other payables include NIS 95 million ($27 million) and NIS 95 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

 

Convenience
translation into
U.S. Dollars

 

Convenience
translation into
U.S. Dollars

6 months

period ended
June 30,

 

6 months

period ended
June 30,

 

3 months

period ended

June 30,

 

3 months

period ended
June 30,

6 months

period ended

June 30,

3 months

period ended

June 30,

2017 2016 2017 2016 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions
Net cash provided by operating activities 462 379 268 217 132 77
Net cash used in investing activities 324 (105) 190 (57) 93 54
Short-term investment in deposits (452)   (250)   (129) (71)
Adjusted Free Cash Flow 334 274 208 160 96 60
 
Interest paid (75) (66) (58) (41) (22) (17)
Adjusted Free Cash Flow After Interest 259

208

150 119 75 43
 
     

Total Operating Expenses (OPEX)


New Israeli Shekels

Convenience
translation into
U.S. Dollars

Convenience
translation into
U.S. Dollars

6 months

period ended
June 30,

 

6 months

period ended
June 30,

 

3 months

period ended

June 30,

 

3 months

period ended
June 30,

6 months

period ended

June 30,

3 months

period ended

June 30,

2017 2016 2017 2016 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions
Cost of revenues – Services 1,028 1,153 511 567 294 146
Selling and marketing expenses 151 232 77 105 43 22
General and administrative expenses 100 128 50 61 29 14
Depreciation and amortization (2) (283) (305) (142) (150) (81) (41)
Other (1) (11) (24) (7) (11) (3) (1)
OPEX 985

1,184

489

572

282

140

(1) Mainly amortization of employee share based compensation.

(2) Including impairment charges.

Key Financial and Operating Indicators (unaudited)*

NIS M unless otherwise stated  

Q2' 15

 

Q3' 15

 

Q4' 15

 

Q1' 16

 

Q2' 16

 

Q3' 16

 

Q4' 16

 

Q1' 17

 

Q2' 17

   

2015

 

2016

Cellular Segment Service Revenues   581   587   550   543   527   531   498   489   497     2,297   2,099
Cellular Segment Equipment Revenues   271   234   269   244   188   139   158   145   145     1,051   729
Fixed-Line Segment Service Revenues   226   225   223   222   219   220   205   194   192     906   866
Fixed-Line Segment Equipment Revenues   16   12   22   23   17   12   11   18   14     68   63
Reconciliation for consolidation   (50)   (52)   (57)   (55)   (54)   (53)   (51)   (43)   (43)     (211)   (213)
Total Revenues   1,044   1,006   1,007   977   897   849   821   803   805     4,111   3,544
Gross Profit from Equipment Sales   67   52   61   56   42   28   18   26   33     239   144
Operating Profit (Loss)   67   32   (48)   54   67   64   8   88   103     107   193
Cellular Segment Adjusted EBITDA   160   137   152   142   155   156   109   172   196     597   562
Fixed-Line Segment Adjusted EBITDA   76   59   65   80   73   64   55   61   56     279   272
Total Adjusted EBITDA   236   196   217   222   228   220   164   233   252     876   834
Adjusted EBITDA Margin (%)   23%   19%   22%   23%   25%   26%   20%   29%   31%     21%   24%
OPEX   601   650   608   612   572   570   570   496   489     2,463   2,324
Impairment charges on operating profit           98                             98    
Income with respect to settlement agreement                        
with Orange       23   38   54   54   55   54   54   54     61   217
Finance costs, net   46   40   39   24   28   30   23   23   54     143   105
Profit (loss)   9   (9)   (65)   14   26   19   (7)   51   34     (40)   52
Capital Expenditures (cash)   111   64   56   48   57   44   47   69   60     359   196
Capital Expenditures (additions)   84   51   86   34   40   44  

84

  40   61     271   202
Adjusted Free Cash Flow   24   291   230   114   160   215   269   126   208     566   758
Adjusted Free Cash Flow (After Interest)   (28)   277   172   89   119   201   241   109   150     429   650
Net Debt   2,626   2,355   2,175   2,079   1,964   1,768   1,526   1,415   1,081     2,175   1,526
Cellular Subscriber Base (Thousands)   2,747   2,739   2,718   2,692   2,700   2,693   2,686   2,658   2,662     2,718   2,686
Post-Paid Subscriber Base (Thousands)   2,112   2,136   2,156   2,174   2,191   2,215   2,241   2,259   2,273     2,156   2,241
Pre-Paid Subscriber Base (Thousands)   635   603   562   518   509   478   445   399   389     562   445
Cellular ARPU (NIS)   70   71   67   67   65   66   62   61   62     69   65
Cellular Churn Rate (%)   10.9%   10.8%   11.1%   11.2%   9.8%   9.7%   9.4%   9.8%   9.0%     46%   40%
Number of Employees (FTE)   3,354   3,017   2,882   2,827   2,740   2,742   2,686   2,580   2,582     2,882   2,686

* See footnote 2 regarding use of non-GAAP measures.

Disclosure for notes holders as of June 30, 2017

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

Series  

Original
issuance
date

 

Principal on
the date of
issuance

  As of 30.06.2017   As of 20.07.2017   Interest rate  

Principal repayment
dates

 

Interest
repayment
dates

  Linkage  

Trustee contact
details

     

Principal
book value

 

Linked
principal book
value

 

Interest
accumulated
in books

 

Market
value

 

Principal
book value

 

Linked
principal
book value

    From   To            
C   25.04.10

24.02.11*

  200

444

  393   427   0   438           3.35%

+

CPI

  30.12.16   30.12.18   30.6, 30.12   Linked to CPI   Hermetic Trust (1975) Ltd.

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

D   25.04.10

04.05.11*

  400

146

  546   546   0   552           1.34%

 

(MAKAM+1.2%)

  30.12.17   30.12.21   30.3, 30.6, 30.9, 30.12   Variable interest MAKAM (2)   Hermetic Trust (1975) Ltd. Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.
E   25.04.10

04.05.11*

  400

535

  121   121   0   124           5.5%   30.12.13   30.12.17   30.6, 30.12   Not Linked   Mishmeret Trust Company Ltd. Rami Sebty. 48 Menachem Begin Rd. Tel

Aviv.Tel:03-6374355.

F

(1)

  20.07.17   255   N/A   N/A   N/A   N/A   255   255   2.16%   25.06.20   25.06.24   25.6, 25.12   Not Linked   Hermetic Trust (1975) Ltd.

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

(1) In July 2017, after the balance sheet date, the Company issued Series F Notes in a principal amount of NIS 255 million. Regarding Series F 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 June 30, 2017, the ratio of Net Debt to Adjusted EBITDA was 1.2. Additional stipulations regarding Series F Notes are as follows: shareholders' equity shall not decrease below NIS 400 million; 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.

The Company has additional financial covenants regarding its borrowings from financial institutions. See note 15 to the Company's 2016 annual financial statements.

In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.

(2) '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.

Disclosure for Notes holders as of June 30, 2017 (cont.)

Notes Rating Details*

Series   Rating Company   Rating as of 30.06.2017 and 15.08.2017 (1)   Rating assigned upon issuance of the Series   Recent date of rating as of 30.06.2017   Recent date of rating as of 15.08.2017   Additional ratings between original issuance and the recent date of rating as of 15.08.2017 (2)
            Date   Rating
C   S&P Maalot   ilA+   ilAA-   07/2016   07/2017 07/2010, 09/2010,

10/2010, 09/2012,

12/2012, 06/2013,

07/2014, 07/2015,

07/2016, 07/2017

  ilAA-/Stable, ilAA-/Stable,

ilAA-/Negative, ilAA-/Watch Neg,

ilAA-/Negative, ilAA-/Stable,

ilAA-/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable

D   S&P Maalot   ilA+   ilAA-   07/2016   07/2017
E   S&P Maalot   ilA+   ilAA-   07/2016   07/2017    
F   S&P Maalot   ilA+ (3)   ilA+   N/A   07/2017   07/2017   ilA+/Stable
 

(1) In July 2016 and July 2017, 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 July 2, 2017 and July 27, 2017.

(3) Notes Series F was issued in July 2017, after the balance sheet date. Series F rating was assigned at the issuance date.

* 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 June 30, 2017

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 interest
payments (without
deduction of tax)

    ILS linked to CPI   ILS not linked to CPI   Euro   Dollar   Other  
First year   213,573   230,506   -   -   -   20,657
Second year   213,573   109,228   -   -   -   8,416
Third year   -   109,228   -   -   -   3,661
Fourth year   -   109,228   -   -   -   2,197
Fifth year and on   -   109,228   -   -   -   732
Total   427,146   667,418   -   -   -   35,663

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 (in thousand NIS).

    Principal payments  

Gross interest
payments (without
deduction of tax)

    ILS linked to CPI   ILS not linked to CPI   Euro   Dollar   Other  
First year   -   257,045   -   -   -   34,055
Second year   -   142,500   -   -   -   25,441
Third year   -   163,333   -   -   -   18,748
Fourth year   -   140,833   -   -   -   11,785
Fifth year and on   -   183,333   -   -   -   8,857
Total   -   887,044   -   -   -   98,886

c. Credit from banks in Israel based on the Company's "Solo" financial data – None.

d. Credit from banks abroad based on the Company's "Solo" financial data – None.

Summary of Financial Undertakings (according to repayment dates) as of June 30, 2017 (cont.)

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 interest
payments (without
deduction of tax)

    ILS linked to CPI   ILS not linked to CPI   Euro   Dollar   Other  
First year   213,573   487,551   -   -   -   54,712
Second year   213,573   251,728   -   -   -   33,857
Third year   -   272,561   -   -   -   22,409
Fourth year   -   250,061   -   -   -   13,982
Fifth year and on   -   292,561   -   -   -   9,589
Total   427,146   1,554,462   -   -   -   134,549

f. Off-balance sheet Credit exposure based on the Company's "Solo" financial data (in thousand NIS) – 50,000 (Guarantees on behalf of an associate, 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

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