Market Overview

Partner Communications Reports Second Quarter 2018 Results(1)

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ADJUSTED EBITDA2 TOTALED NIS 172
MILLION

CELLULAR POST-PAID SUBSCRIBERS BASE INCREASED BY 9 THOUSAND

CELLULAR ARPU, EXCLUDING A ONE-TIME PROVISION, TOTALED NIS 59
COMPARED TO NIS 58 IN Q1 2018

ISAAC BENBENISTI, PARTNER CEO SAID: "WITHIN THE FIRST YEAR OF
COMMERCIAL LAUNCH, PARTNER TV IS DISRUPTING THE MULTI-CHANNEL TV MARKET
AND TODAY OVER 100,000 HOUSEHOLDS ARE CONNECTED TO THE SERVICE.
PARTNER
TV IS THE FASTEST GROWING TV SERVICE IN ISRAEL. IN ADDITION, WE HAVE
MADE SUBSTANTIAL PROGRESS ON OUR FIBER OPTIC INFRASTRUCTURE DEPLOYMENT,
REACHING OVER 170,000 HOUSEHOLDS IN DOZENS OF CITIES THROUGHOUT ISRAEL,
WITH FIBER INFRASTRUCTURE ENABLING SPEEDS OF UP TO 1,000 MBPS."

IN ACCORDANCE WITH THE COMPANY'S ORDINARY SHARES BUY-BACK PLAN IN A
TOTAL AMOUNT OF UP TO NIS 200 MILLION, THE COMPANY'S BOARD OF DIRECTORS
APPROVED THE REPURCHASE OF A SECOND TRANCHE IN AN AGGREGATE AMOUNT OF UP
TO NIS 50 MILLION

Second quarter 2018 highlights (compared with second quarter 2017)

  • Total Revenues: NIS 797 million (US$ 218 million), a
    decrease of 1%
  • Service Revenues: NIS 620 million (US$ 170 million), a
    decrease of 4%
  • Equipment Revenues: NIS 177 million (US$ 48 million), an
    increase of 11%
  • Total Operating Expenses (OPEX2):
    NIS 492 million (US$ 135 million), an increase of 4%
  • Adjusted EBITDA: NIS 172 million (US$ 47 million), a
    decrease of 36%
  • Adjusted EBITDA Margin2:
    22% of total revenues compared with 33%
  • Profit for the Period: NIS 2 million (US$ 1 million), a
    decrease of NIS 44 million
  • Net Debt2: NIS 893
    million (US$ 245 million), a decrease of NIS 188 million
  • Adjusted Free Cash Flow (before interest) 2:
    NIS 55 million (US$ 15 million), a decrease of NIS 153 million
  • Cellular ARPU: NIS 57 (US$ 16), a decrease of 8%
  • Cellular Subscriber Base: approximately 2.65 million at
    quarter-end, a decrease of 1%
  • TV Subscriber Base: 83 thousand households at quarter-end

Partner
Communications Company Ltd.
("Partner" or the "Company")
(NASDAQ and TASE: PTNR), a leading Israeli communications provider,
announced today its results for the quarter ended June 30, 2018.

Commenting on the second quarter 2018 results, Mr. Isaac Benbenisti,
CEO of Partner noted
:

"This is the twelfth consecutive quarter in which we report growth in
our cellular Post-Paid subscriber base. In the second quarter we
continued to grow in Post-Paid subscribers with a net add of 9 thousand
subscribers, totaling 25 thousand net adds of Post-Paid subscribers
since the beginning of the year. In the second quarter of 2018, we
expanded the VoLTE (Voice over LTE) implementation in Partner's core
cellular network and we continue to lead the market with added value
offerings, unique services, wide network deployment and excellent
customer service for the group's customers.

A year ago, we started the commercial phase of two strategic activities
– TV services and internet based on independent optic fiber
infrastructure. Within only one year, Partner TV caused a disruption in
the multi-channel TV market and today over 100,000 households are
already connected to the service. Partner TV is the fastest growing TV
service in Israel thanks to, among other reasons, the innovative viewing
experience that it provides to viewers. In July, we launched the
wholesale market service based on HOT's infrastructure, with bundle and
triple offerings, and with this the company was the first to offer
internet services over all the main platforms including optic fiber, LTE
and the infrastructures of Bezeq and HOT. The launch of the wholesale
market service based on HOT's infrastructure eases the transition from
cable service to Partner's advanced TV service.

At the same time, Partner continues to deploy fiber optic infrastructure
independently throughout Israel at a faster deployment rate compared to
other companies, as part of the deployment of Partner Fiber, which we
announced a year ago. We have already reached more than 170,000
households in dozens of cities, with fiber infrastructure enabling
speeds of up to 1,000 mbps and with attractive offers which also
incorporate Partner TV.

In addition, as part of the company's strategy, we continue to examine
new potential growth engines, among others, in the fintech and finance
industries, including through a company acquisition or independent,
organic activity."

Mr. Tamir Amar, Partner's Chief Financial Officer, commented on
the second quarter 2018 results:

"The second quarter of 2018 was characterized by increased competition
in the cellular market with the entry of a sixth operator to the market,
as reflected in the increase in the level of subscriber porting between
operators and overall price pressures in the cellular market - although
these trends have slowed since the peak in May. Partner experienced an
increase in the quarterly cellular churn rate which increased to 10%.
Nevertheless, even under current competitive market conditions, Partner
reported an increase in the Post-Paid cellular subscriber base of 9
thousand in the second quarter. In addition, our cellular ARPU,
excluding a one-time provision, totaled NIS 59, an increase of NIS 1
compared with the first quarter of the year.

In the fixed-line segment, Partner continued to report growth with
recruitment of TV subscribers, and this growth engine, together with
growth in internet services (including the impact of revenues from optic
fiber subscribers) resulted in a quarterly net growth in revenues of NIS
8 million compared to the first quarter of 2018. This is the fourth
consecutive quarter in which we report revenue growth from fixed line
services, and compared to the second quarter of 2017, fixed line
services revenues increased by 9%.

Free Cash Flow for the quarter totaled NIS 55 million, following
investments in our fiber optic infrastructure and TV service -
investments which we believe will constitute growth engines for the
Company in the coming years. The rapid growth rate in Partner TV
households is already reflected in revenue growth. In addition, the
accelerated fiber deployment, reflected by a growth of over 25 thousand
households from the end of the second quarter, with a reach of 145
thousand households, and until today, with a reach of over 170 thousand
households, supports our TV offering and improves the economic returns
compared with the wholesale market service which is implemented today,
in addition to the technological advantages of this infrastructure
compared to the alternatives.

On the debt side, we ended the quarter with a net debt of less than NIS
0.9 billion, and the effect of the decline in our debt during the past
year, as well as the decrease in our average interest rate, is reflected
in a decrease in our finance expenses. Our strong balance sheet
structure continues to offer us the ability to examine additional growth
opportunities and opportunities that differentiate us from our
competitors.

In addition, last week we completed the first tranche under our share
buyback plan with the repurchase of approximately 3.6 million of the
Company's shares, in an amount of NIS 50 million (including
commissions), at an average price of NIS 13.75 per share which reflects
a yield of approximately 2.2% to our shareholders."

NIS Million

 

Q2'18

 

Q1'18

 

Comments

Service Revenues   620   625  

Excluding a one-time provision for a class action in cellular
service revenues,
service revenues would have increased to
NIS
635 million, reflecting growth in fixed line service
revenues

Equipment Revenues 177 201
Total Revenues 797 826
Gross profit from equipment sales 37 43
OPEX 492 498
Adjusted EBITDA 172 177

The decline resulted from the decline in service revenues
(mainly
as a result of a provision for a class action) and in
gross
profit from equipment, partially offset by a decline in
OPEX

Profit for the Period 2 9
Capital Expenditures (additions) 98 113
Adjusted free cash flow (before interest payments) 55 21 The increase mainly reflected a decrease in CAPEX
Net Debt   893   919    
   

Q2'18

 

Q1'18

 

Comments

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

  2,345   2,336   Increase of 9 thousand subscribers
Cellular Pre-Paid Subscribers

 

 

 

(end of period, thousands)

300

331

Decrease of 31 thousand subscribers

Monthly Average Revenue per
Cellular User (ARPU) (NIS)

57 58

The decline resulted from a provision for a class action,
excluding
which ARPU would have been NIS 59

Quarterly Cellular Churn Rate (%)   10.0%   8.8%   Increase in both Post-Paid and Pre-Paid churn rates

Key Financial Results

NIS MILLION (except EPS)   Q2'18   Q2'17   % Change
Revenues   797   805   -1%
Cost of revenues 661 637 +4%
Gross profit 136 168 -19%
Operating profit 22 118 -81%
Profit for the period 2 46 -96%
Earnings per share (basic, NIS) 0.01 0.29
Adjusted free cash flow (before interest)   55   208   -74%

Key Operating Indicators

    Q2'18   Q2'17   Change
Adjusted EBITDA (NIS million)   172   269   -36%
Adjusted EBITDA (as a % of total revenues) 22% 33% -11
Cellular Subscribers (end of period, thousands) 2,645 2,662 -17
Quarterly Cellular Churn Rate (%) 10.0% 9.0% +1.0
Monthly Average Revenue per Cellular User (ARPU) (NIS)   57   62   -5

Partner Consolidated Results

  Cellular Segment   Fixed-Line Segment   Elimination   Consolidated
NIS Million   Q2'18   Q2'17  

Change
%

  Q2'18   Q2'17  

Change
%

  Q2'18   Q2'17   Q2'18   Q2'17  

Change
%

Total Revenues 611   642   -5% 230   206   +12%

(44)

 

(43)

797   805   -1%
Service Revenues 454 497 -9% 210 192 +9%

(44)

(43)

620 646 -4%
Equipment Revenues 157 145 +8% 20 14 +43% 177 159 +11%
Operating Profit 12 93 -87% 10 25 -60% 22 118 -81%
Adjusted EBITDA   126   210   -40%   46   59   -22%           172   269   -36%

Financial Review

In Q2 2018, total revenues were NIS 797 million (US$ 218
million), a decrease of 1% from NIS 805 million in Q2 2017.

Service revenues in Q2 2018 totaled NIS 620 million (US$ 170
million), a decrease of 4% from NIS 646 million in Q2 2017.

Service revenues for the cellular segment in Q2 2018 totaled NIS
454 million (US$ 124 million), a decrease of 9% from NIS 497 million in
Q2 2017. The decrease was mainly the result of the continued price
erosion of cellular services (both Post-Paid and Pre-Paid) due to the
continued competitive market conditions, and a one-time provision in an
amount of NIS 15 million in respect to a class action. Excluding the
one-time provision, service revenues would have decreased by 6%.

Service revenues for the fixed-line segment in Q2 2018 totaled
NIS 210 million (US$ 58 million), an increase of 9% from NIS 192 million
in Q2 2017. The increase reflected the revenues from TV services (which
started in Q3 2017) and internet services, which were partially offset
principally by the decline in revenues from international calling
services.

Equipment revenues in Q2 2018 totaled NIS 177 million (US$ 48
million), an increase of 11% from NIS 159 million in Q2 2017, largely
reflecting higher volumes of equipment sales as well as a change in the
product mix.

Gross profit from equipment sales in Q2 2018 was NIS 37
million (US$ 10 million), compared with NIS 33 million in Q2 2017, an
increase of 12%, mainly reflecting the higher sales volumes and higher
profit margins from sales due to a change in the product mix.

Total operating expenses (‘OPEX') totaled NIS 492 million (US$
135 million) in Q2 2018, an increase of 4% or NIS 20 million from Q2
2017. The increase mainly reflected the additional expenses relating to
the Company's TV service and the growth in internet services. In
addition, Q2 2018 OPEX included a one-time cancellation of a provision
for a class action in an amount of NIS 8 million. Including depreciation
and amortization expenses and other expenses (mainly amortization of
employee share based compensation), OPEX in Q2 2018 increased by 3%
compared with Q2 2017.

Operating profit for Q2 2018 was NIS 22 million (US$ 6 million),
a decrease of 81% compared with NIS 118 million in Q2 2017. See Adjusted
EBITDA analysis for each segment below.

Adjusted EBITDA in Q2 2018 totaled NIS 172 million (US$ 47
million), a decrease of 36% from NIS 269 million in Q2 2017. As a
percentage of total revenues, Adjusted EBITDA in Q2 2018 was 22%
compared with 33% in Q2 2017.

Adjusted EBITDA for the cellular segment was NIS 126 million (US$
35 million) in Q2 2018, a decrease of 40% from NIS 210 million in Q2
2017, mainly reflecting the decrease in cellular service revenues and
the fact that since Q3 2017 the Company does not record any income with
respect to the settlement agreement with Orange. As a percentage of
total cellular segment revenues, Adjusted EBITDA for the cellular
segment in Q2 2018 was 21% compared with 33% in Q2 2017.

Adjusted EBITDA for the fixed-line segment was NIS 46 million
(US$ 13 million) in Q2 2018, a decrease of 22% from NIS 59 million in Q2
2017, mainly reflecting the increase in OPEX, partially offset by the
increase in service revenues. As a percentage of total fixed-line
segment revenues, Adjusted EBITDA for the fixed-line segment in Q2 2018
was 20%, compared with 29% in Q2 2017.

Finance costs, net in Q2 2018 were NIS 13 million (US$ 4
million), a decrease of 76% compared with NIS 54 million in Q2 2017. The
decrease largely reflected one-time early repayment expenses recorded in
Q2 2017 as well as lower interest expenses in view of the lower debt
level and lower average debt interest rate.

Income tax expenses for Q2 2018 were NIS 7 million (US$ 2
million), compared with NIS 18 million in Q2 2017.

Profit in Q2 2018 was NIS 2 million (US$ 1 million), compared
with NIS 46 million in Q2 2017, a decrease of NIS 44 million.

Based on the weighted average number of shares outstanding during Q2
2018, basic earnings per share or ADS, was NIS 0.01 (US$ 0.003),
compared to basic earnings per share of NIS 0.29 in Q2 2017.

Cellular Segment Operational Review

At the end of Q2 2018, the Company's cellular subscriber base
(including mobile data and 012 Mobile subscribers) was approximately
2.65 million, including approximately 2.35 million Post-Paid subscribers
or 89% of the base, and approximately 300 thousand Pre-Paid subscribers,
or 11% of the subscriber base.

During the second quarter of 2018, the cellular subscriber base
decreased by approximately 22 thousand subscribers. The Post-Paid
subscriber base increased by approximately 9 thousand subscribers, while
the Pre-Paid subscriber base decreased by approximately 31 thousand
subscribers.

The quarterly churn rate for cellular subscribers in Q2 2018 was
10.0%, compared with 9.0% in Q2 2017.

The cellular market share (based on the number of subscribers) at
the end of Q2 2018 was estimated to be approximately 25%, compared to
26% in Q2 2017.

The monthly Average Revenue per User ("ARPU") for cellular
subscribers in Q2 2018 was NIS 57 (US$ 16), a decrease of 8% from NIS 62
in Q2 2017. The decrease mainly reflected the continued price erosion in
key cellular services due to the competition in the cellular market and
a one time provision for a class action in an amount of NIS 15 million.
Excluding the effect of the provision recorded in Q2 2018, ARPU would
have been NIS 59.

Funding and Investing Review

In Q2 2018, Adjusted Free Cash Flow totaled NIS 55 million (US$
15 million), a decrease of 74% from NIS 208 million in Q2 2017.

Cash generated from operations decreased by 44% to NIS 159
million (US$ 44 million) in Q2 2018 from NIS 284 million in Q2 2017. The
decrease mainly reflected the decrease in Adjusted EBITDA and the
smaller decrease in operating assets and liabilities, and in particular
in trade receivables.

Cash capital expenditures (‘CAPEX payments'), as represented by
cash flows used for the acquisition of property and equipment and
intangible assets, were NIS 104 million (US$ 28 million) in Q2 2018, an
increase of 37% from NIS 76 million in Q2 2017. The increase mainly
reflected the increase in investments related to the fiber optic
infrastructure deployment and TV services.

The level of Net Debt at the end of Q2 2018 amounted to NIS 893
million (US$ 245 million), compared with NIS 1,081 million at the end of
Q2 2017, a decrease of NIS 188 million.

Other Developments

Further to the Company's announcement on August 6, 2018 of the
completion of the first tranche of the Company's Buy-back Plan ("the
Plan"), the Company's Board of Directors approved on August 14, 2018,
the repurchase of a second tranche, in accordance with the Plan, of up
to an aggregate amount of NIS 50 million of the Company's ordinary
shares.

IFRS 16

IFRS 16, Leases ("the Standard"), was issued in January 2016 and
will supersede IAS 17 Leases. The Standard is mandatory for financial
years commencing on or after January 1, 2019, and early application is
permitted. The Company will adopt the standard from its mandatory
adoption date of January 1, 2019 (transition date).

The Standard removes the distinction between operating and finance
leases for lessees. Under the new Standard, with certain exceptions, the
assets (the right to use the leased item) and the financial liabilities
to pay rentals will be recognized in our Statement of Financial
Position, and are expected to be material. The accounting for lessors
will not change significantly. In our Statement of Income, finance costs
on the financial liabilities and depreciation expenses related to the
rights-of-use assets will be recognized in place of rental expenses. In
our Statement of Cash Flows, rental payments will be recognized as
repayment of the financial liabilities and will be presented as cash
used in financing activities in place of cash provided by operating
activities. The implementation of the new Standard is expected to
have a material positive impact on our operating profit and Adjusted
EBITDA. Our profit is not expected to be materially affected.

The Company is in the process of implementing the required adjustments
into the Company's information systems. The Company is currently unable
to quantify the impact of the implementation of the Standard.

The Company plans to apply the Standard using the modified retrospective
approach and will not restate comparative amounts for the years prior to
the transition date. Any transitional adjustments will be recognized in
retained earnings with the cumulative effect as of the transition date.

Conference Call Details

Partner will hold a conference call on Wednesday, August 15, 2018 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: +972.3.918.0691

North America toll-free: +1.866.229.7198

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 15, 2018 until September 19, 2018, at the
following numbers:

International: +972.3.925.5945

North America toll-free: +1.866.276.1485

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 examination of new
potential growth engines, among others in the fintech and financial
sectors, including through company acquisitions or independent, organic
activity; the belief that the investment in the Company's fiber optic
infrastructure and TV service will constitute growth engines for the
Company in the coming years; the support of the accelerated fiber
deployment of our TV offering and its improvement on the economic
returns compared with the wholesale market service as well as its
technological advantages compared to the alternatives; and the Company's
plan to continue and repurchase its shares under its buyback plan. 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, the availability of financing to enable the Company to pursue
the anticipated pace and volume of the Company's fiber optic
infrastructure deployment; the
absence of changes in the competitive
and regulatory environment which would prevent the Company from
continuing its accelerated optic fiber infrastructure deployment; the
Company's ability to continue its commercial success and maintain
investment and operating costs permitting it to realize the anticipated
benefits from the investment in the Company's fiber optic infrastructure
and TV service; whether the Company will have the financial resources
needed to continue to increase the number of customers served by its
fiber optic infrastructure; as well as the risks entailed in the entry
into new sectors and markets. 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, 2018:
US $1.00 equals NIS 3.65. 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

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,
2018 2017 2018
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT ASSETS
Cash and cash equivalents 366 867 100
Short-term deposits 291 150 80
Trade receivables 728 808 200
Other receivables and prepaid expenses 47 48 13
Deferred expenses – right of use 45 43 12
Inventories 74 93 20
1,551 2,009 425
 
NON CURRENT ASSETS
Trade receivables 235 232 64
Prepaid expenses and other 6 5 2
Deferred expenses – right of use 157 133 43
Property and equipment 1,165 1,180 319
Intangible and other assets 656 697 180
Goodwill 407 407 112
Deferred income tax asset 48 55 13
2,674 2,709 733
 
TOTAL ASSETS 4,225 4,718 1,158

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,
2018 2017 2018
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT LIABILITIES
Current maturities of notes payable and borrowings 358 705

98

Trade payables 696 787 191
Payables in respect of employees 88 91 24
Other payables (mainly institutions) 21 31 6
Income tax payable 54 50 15
Deferred revenues from HOT mobile 31 31 8
Other deferred revenues 39 41 11
Provisions 71 75 19
1,358 1,811 372
NON CURRENT LIABILITIES
Notes payable 975 975 267
Borrowings from banks and others 217 243 59
Liability for employee rights upon retirement, net 41 40 11
Dismantling and restoring sites obligation 21 27 6
Deferred revenues from HOT mobile 148 164 42
Other non-current liabilities 27 24 7
1,429 1,473 392
 
TOTAL LIABILITIES 2,787 3,284 764
 
EQUITY
Share capital - ordinary shares of NIS 0.01

par value: authorized - December 31, 2017

and June 30, 2018 - 235,000,000 shares;

issued and outstanding -

2 2 1
December 31, 2017 –*168,243,913 shares
June 30, 2018 – *167,273,930 shares
Capital surplus 1,151 1,164 315
Accumulated retained earnings 510 491 140
Treasury shares, at cost
December 31, 2017 – **2,850,472 shares
June 30, 2018 – **3,821,809 shares (225) (223) (62)
TOTAL EQUITY 1,438 1,434 394
TOTAL LIABILITIES AND EQUITY 4,225 4,718 1,158

* Net of treasury shares.
** Including, restricted shares in
amount of 1,376,381 and 1,310,457 as of and December 31, 2017 and June
30, 2018, respectively, held by a trustee under the Company's Equity
Incentive Plan, such shares may become outstanding upon completion of
vesting conditions.

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

      New Israeli shekels          

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,
2018   2017 2018   2017 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions (except per share data)
Revenues, net 1,623 1,608 797 805 445 218
Cost of revenues 1,349 1,291   661 637 370 181
Gross profit 274 317 136 168 75 37
 

Selling and marketing
expenses

143 119 75 62 39 21

General and administrative

expenses 91 100 46 50 25 12
Income with respect to
settlement agreement
with Orange 108 54
Other income, net 14 17   7 8 4 2
Operating profit 54 223 22 118 15 6
Finance income 3 1 1 1 1
Finance expenses 34 78   14 55 10 4
Finance costs, net 31 77   13 54 9 4
Profit before income tax 23 146 9 64 6 2
Income tax expenses 12 36   7 18 3 1
Profit for the period 11 110   2 46 3 1
 
Earnings per share

Basic

0.06 0.70   0.01 0.29 0.02 0.003
Diluted 0.06 0.69   0.01 0.29 0.02 0.003

Weighted
average number of shares
outstanding

(in thousands)

Basic 168,319 157,746   168,291 158,442 168,319 168,291
Diluted 169,207 159,555   169,098 159,970 169,207 169,098

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,
2018   2017

2018

  2017 2018 2018
(Unaudited) (Unaudited)

(Unaudited)

(Unaudited) (Unaudited) (Unaudited)

In millions

Profit for the period

11 110 2 46 3 1
Other comprehensive income

for the period, net of income tax

- - - - - -
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 11 110 2 46 3 1

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

   
New Israeli Shekels New Israeli Shekels
Six months ended June 30, 2018 Six months ended June 30, 2017
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

911

334

1,245

977

309

1,286

Inter-segment revenue - Services

9

78

(87)

9

77

(86)

Segment revenue - Equipment

335

43

 

378

290

32

 

322

Total revenues

1,255

455

(87)

1,623

1,276

418

(86)

1,608

Segment cost of revenues – Services

717

334

1,051

735

293

 

1,028

Inter-segment cost of revenues- Services

78

9

(87)

76

10

(86)

Segment cost of revenues - Equipment

266

32

 

298

240

23

 

263

Cost of revenues

1,061

375

(87)

1,349

1,051

326

(86)

1,291

Gross profit

194

80

274

225

92

317

Operating expenses (3)

173

61

234

181

38

219

Income with respect to settlement

agreement with Orange

108

108

Other income, net

13

1

14

16

1

17

Operating profit

34

20

54

168

55

223

Adjustments to presentation of segment

Adjusted EBITDA

–Depreciation and amortization

219

69

218

68

–Other (1)

7

 

11

 
Segment Adjusted EBITDA (2)

260

89

397

123

Reconciliation of segment subtotal Adjusted

EBITDA to profit for the period

Segments subtotal Adjusted EBITDA (2)

349

520

- Depreciation and amortization

(288)

(286)

- Finance costs, net

(31)

(77)

- Income tax expenses

(12)

(36)

- Other (1)

(7)

(11)

Profit for the period

11

110

 

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

   
New Israeli Shekels New Israeli Shekels
Three months ended June 30, 2018 Three months ended June 30, 2017
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

450

170

620

493

153

646

Inter-segment revenue - Services

4

40

(44)

4

39

(43)

Segment revenue - Equipment

157

20

 

177

145

14

 

159

Total revenues

611

230

(44)

797

642

206

(43)

805

Segment cost of revenues – Services

352

169

521

363

148

511

Inter-segment cost of revenues- Services

40

4

(44)

38

5

(43)

Segment cost of revenues - Equipment

126

14

 

140

117

9

 

126

Cost of revenues

518

187

(44)

661

518

162

(43)

637

Gross profit

93

43

136

124

44

 

168

Operating expenses (3)

87

34

121

93

19

112

Income with respect to settlement

agreement with Orange

54

54

Other income, net

6

1

7

8

 

8

Operating profit

12

10

22

93

25

118

Adjustments to presentation of segment

Adjusted EBITDA

–Depreciation and amortization

110

36

109

35

–Other (1)

4

 

8

(1)

Segment Adjusted EBITDA (2)

126

46

210

59

Reconciliation of segment subtotal Adjusted

EBITDA to profit for the period

Segments subtotal Adjusted EBITDA (2)

172

269

- Depreciation and amortization

(146)

(144)

- Finance costs, net

(13)

(54)

- Income tax expenses

(7)

(18)

- Other (1)

(4)

(7)

Profit for the period

2

46

 

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

 

(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,
2018   2017   2018

(Unaudited)

(Unaudited)

(Unaudited)

In millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash generated from operations (Appendix) 317 493 87
Income tax paid (1) (2) *
Net cash provided by operating activities 316 491 87

CASH FLOWS FROM INVESTING ACTIVITIES:

Acquisition of property and equipment (167) (86) (46)
Acquisition of intangible and other assets (75) (72) (21)
Proceeds from (investment in) short-term deposits, net (141) 452 (39)
Interest received 1
Proceeds from (repayment of) derivative financial instruments, net * *
Consideration received from sales of property and equipment 2   1
Net cash provided by (used in) investing activities (381) 295 (105)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

Share issuance 190
Acquisition of treasury shares (15) (4)
Interest paid (46) (75) (13)
Repayment of non-current borrowings (375) (720) (103)
Net cash used in financing activities (436)

(605)

(120)
 
 
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (501) 181 (138)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 867 716 238

CASH AND CASH EQUIVALENTS AT END OF PERIOD

366 897 100

* 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,
2018   2017 2018
(Unaudited) (Unaudited) (Unaudited)
In millions
 
Cash generated from operations:
Profit for the period 11 110 3
Adjustments for:
Depreciation and amortization 267 268 73
Amortization of deferred expenses - Right of use 21 18 6
Employee share based compensation expenses 8 11 2
Liability for employee rights upon retirement, net 1 (3) *
Finance costs, net (1) * *
Change in fair value of derivative financial instruments (1)
Interest paid 46 75 13
Interest received (1)
Deferred income taxes 6 2 2
Income tax paid 1 2 *
Changes in operating assets and liabilities:
Decrease in accounts receivable:
Trade 77 215 21
Other 3
Decrease in accounts payable and accruals:
Trade (61) (12) (17)
Other payables (14) (43) (4)
Provisions (4) (2) (1)
Deferred income with respect to settlement
agreement with Orange (108)
Deferred revenues from HOT mobile (16) (15) (4)
Other deferred revenues (1) 2 *
Increase in deferred expenses - Right of use (47) (61) (13)
Current income tax 4 33 1
Decrease in inventories

19

* 5
Cash generated from operations 317 493 87

* Representing an amount of less than 1 million.

At June 30, 2018 and 2017, trade and other payables include NIS 136
million ($37 million) and NIS 101 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,

2018 2017 2018 2017 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions
Net cash provided by operating activities 316 491 159 284 87 43
Net cash used in investing activities (381) 295 (95) 174 (105) (26)
Short-term investment in deposits 141 (452) (9) (250) 39 (2)
Adjusted Free Cash Flow 76 334 55 208 21 15
 
Interest paid (46) (75) (11)

(58)

(13) (3)
Adjusted Free Cash Flow After Interest 30

259

44

150

8

12

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,

 

2018 2017 2018 2017 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions
Cost of revenues – Services 1,051 1,028 521 511 288 143
Selling and marketing expenses 143 119 75 62 39 21
General and administrative expenses 91 100 46 50 25 12
Depreciation and amortization (2) (288) (286) (146) (144) (79) (40)
Other (1) (7) (11) (4) (7) (2) (1)
OPEX

990

950

492

472

271 135

(1) Mainly amortization of employee share based compensation.

Key Financial and Operating Indicators
(unaudited)
*

NIS M unless otherwise stated   Q1' 16   Q2' 16   Q3' 16   Q4' 16   Q1' 17   Q2' 17   Q3' 17   Q4' 17   Q1' 18   Q2' 18       2016   2017
Cellular Segment Service Revenues   543   527   531   498   489   497   514   478   466   454       2,099   1,978
Cellular Segment Equipment Revenues   244   188   139   158   145   145   138   182   178   157       729   610
Fixed-Line Segment Service Revenues   222   219   220   205   194   192   194   197   202   210       866   777
Fixed-Line Segment Equipment Revenues   23   17   12   11   18   14   22   22   23   20       63   76
Reconciliation for consolidation   (55)   (54)   (53)   (51)   (43)   (43)   (42)   (45)   (43)   (44)       (213)   (173)
Total Revenues   977   897   849   821   803   805   826   834   826   797       3,544   3,268
Gross Profit from Equipment Sales   56   42   28   18   26   33   43   40   43   37       144   142
Operating Profit   54   67   64   8   105   118   92   0   32   22       193   315
Cellular Segment Adjusted EBITDA   142   155   156   109   187   210   189   124   134   126       562   710
Fixed-Line Segment Adjusted EBITDA   80   73   64   55   64   59   50   34   43   46       272   207
Total Adjusted EBITDA   222   228   220   164   251   269   239   158   177   172       834   917
Adjusted EBITDA Margin (%)   23%   25%   26%   20%   31%   33%   29%   19%   21%   22%       24%   28%
OPEX   612   572   570   570   478   472   477   519   498   492       2,324   1,946
Income with respect to settlement agreement                            
with Orange   54   54   55   54   54   54                       217   108
Finance costs, net   24   28   30   23   23   54   15   88   18   13       105   180
Profit (loss)   14   26   19   (7)   64   46   54   (50)   9   2       52   114
Capital Expenditures (cash)   48   57   44   47   82   76   105   113   138   104       196   376
Capital Expenditures (additions)   34   40   44  

84

  58   78   107   174   113   98       202   417
Adjusted Free Cash Flow   114   160   215   269   126   208   202   63   21   55       758   599
Adjusted Free Cash Flow (after interest)   89   119   201   241   109   150   192   (17)   (14)   44       650   434
Net Debt   2,079   1,964   1,768   1,526   1,415   1,081   887   906   919   893       1,526   906
Cellular Subscriber Base (Thousands)   2,692   2,700   2,693   2,686   2,658   2,662   2,677   2,674   2,667   2,645       2,686   2,674
Post-Paid Subscriber Base (Thousands)   2,174   2,191   2,215   2,241   2,259   2,273   2,306   2,320   2,336   2,345       2,241   2,320
Pre-Paid Subscriber Base (Thousands)   518   509   478   445   399   389   371   354   331   300       445   354
Cellular ARPU (NIS)   67   65   66   62   61   62   64   59   58   57       65   62
Cellular Churn Rate (%)   11.2%   9.8%   9.7%   9.4%   9.8%   9.0%   9.3%   9.9%   8.8%   10.0%       40%   38%
Number of Employees (FTE)   2,827   2,740   2,742   2,686   2,580   2,582   2,696   2,797   2,778   2,808       2,686   2,797

* See footnote 2 regarding use of non-GAAP measures. Figures from 2017
include impact of adoption of IFRS15.

Disclosure for notes holders as of June 30, 2018

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

Series  

Original
issuance
date

 

Principal on
the date of
issuance

  As of 30.06.2018   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

    From   To            
C   25.04.10

24.02.11*

  200

444

  196   215   4   219   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

  437   437   1   441   1.328%

 

(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.

F

(1)

  20.07.17

12.12.17

  255

389

  644   644   **   634   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, the Company issued Series F Notes in a principal
amount of NIS 255 million. In December 11, 2017, the Company issued an
additional Series F Notes in a principal amount of NIS 389 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, 2018, the
ratio of Net Debt to Adjusted EBITDA was 1.2. Additional stipulations
regarding Series F Notes mainly include: 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.
In the reporting
period, the Company was in compliance with all financial covenants and
obligations and no cause for early repayment occurred.
In September
2017, December 2017 and January 2018, the Company entered into
agreements with Israeli institutional investors to issue in December
2018, December 2019 and December 2019, respectively, in the framework of
a private placement, additional Series F notes, in an aggregate
principal amount of NIS 150 million, NIS 100 million and NIS 127
million, respectively. S&P Maalot has rated the additional deferred
issuances with an 'ilA+' rating. For additional details see the
Company's press releases dated September 13 and 17, 2017, December 27,
2017 and January 9, 2018.
(2) 'MAKAM' is a variable interest based
on the yield of 12 month government bonds issued by the government of
Israel. The interest rate is updated on a quarterly basis.
(*) On
these dates additional Notes of the series were issued. The information
in the table refers to the full series.
(**) Representing an amount
of less than NIS 1 million.

Disclosure for Notes holders as of June 30, 2018 (cont.)

Notes Rating Details*

Series  

Rating
Company

 

Rating as of
30.06.2018
and 15.08.2018 (1)

 

Rating
assigned upon
issuance of
the Series

 

Recent date of
rating as of
30.06.2018 and
15.08.2018

 

Additional ratings between the original issuance date and the
recent date of
rating (2)

        Date Rating
C  

S&P
Maalot

  ilA+   ilAA-   08/2018 07/2010, 09/2010,

10/2010, 09/2012,

12/2012, 06/2013,

07/2014, 07/2015,

07/2016, 07/2017,

08/2018

ilAA-/Stable, ilAA-/Stable,

ilAA-/Negative, ilAA-/Watch Neg,

ilAA-/Negative, ilAA-/Stable,

ilAA-/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable,

ilA+/Stable

D  

S&P
Maalot

  ilA+   ilAA-   08/2018
E  

S&P
Maalot

  ilA+   ilAA-   08/2018  
F  

S&P
Maalot

  ilA+   ilA+   08/2018   07/2017, 09/2017

12/2017, 01/2018,

08/2018

ilA+/Stable, ilA+/Stable

ilA+/Stable, ilA+/Stable,

ilA+/Stable

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

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

* 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, 2018

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   214,634   109,228   -   -   -   27,858
Second year   -   238,035   -   -   -   17,701
Third year   -   238,035   -   -   -   13,403
Fourth year   -   238,035   -   -   -   9,105
Fifth year and on   -   257,613   -   -   -   8,347
Total   214,634   1,080,946   -   -   -   76,414

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

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

   

Principal payments

 

Gross interest
payments (without
deduction of tax)

   

ILS linked
to CPI

 

ILS not linked
to CPI

 

  Euro   Dollar   Other  
First year   -   33,419   -   -   -   5,933
Second year   -   52,132   -   -   -   4,823
Third year   -   52,132   -   -   -   3,542
Fourth year   -   52,132   -   -   -   2,282
Fifth year and on   -   60,185   -   -   -   1,412
Total   -   250,000   -   -   -   17,992

Summary of Financial Undertakings (according to repayment dates) as
of June 30, 2018 (cont.)

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

e. Total of sections a - d above, total credit from banks, non-bank
credit and notes based on the Company's "Solo" financial data (in
thousand NIS).

    Principal payments  

Gross interest
payments (without
deduction of tax)

   

ILS linked
to CPI

 

ILS not linked to
CPI

  Euro   Dollar   Other  
First year   214,634   142,647   -   -   -   33,791
Second year   -   290,167   -   -   -   22,524
Third year   -   290,167   -   -   -   16,945
Fourth year   -   290,167   -   -   -   11,387
Fifth year and on   -   317,798   -   -   -   9,759
Total   214,634   1,330,946   -   -   -   94,406

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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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
.

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