Market Overview

Partner Communications Reports First Quarter 2019 Results1

Share:

Adjusted EBITDA2 Totaled NIS 197
Million

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

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

First quarter 2019 highlights (compared with first quarter 2018)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Q1 2019 compared to Q4 2018

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

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

Adjusted EBITDA 172 197

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

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

(22)

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

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

285 280

Decrease of 5 thousand subscribers

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

Key Financial Results Q1 2019
compared to Q1 2018

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

Key Operating Indicators

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

Partner Consolidated Results

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

644

  583   -9%

225

  252   +12%

(43)

  (41)

826

  794   -4%
Service Revenues

466

441 -5%

202

224 +11%

(43)

(41)

625

624 -0%
Equipment Revenues

178

142 -20%

23

28 +22% - -

201

170 -15%
Operating Profit

22

9

-59%

10

0 - -

32

9 -72%
Adjusted EBITDA  

134

  150   +12%  

43

  47   +9%   -   -  

177

  197   +11%

Financial Review

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cellular Segment Operational Review

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

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

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

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

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

Funding and Investing Review

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

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

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

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

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

Change in PHI's governance from the beginning
of 2019

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

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

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

IFRS 16

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

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

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

Conference Call Details

Partner will hold a conference call on Thursday, May 30, 2019 at 10.00AM
Eastern Time / 5.00PM Israel Time.

To join the call, please dial the following numbers (at least 10 minutes
before the scheduled time):

International: +972.3.918.0685

North America toll-free: +1.866.860.9642

A live webcast of the call will also be available on Partner's Investors
Relations website at: www.partner.co.il/en/Investors-Relations/lobby/

If you are unavailable to join live, the replay of the call will be
available from May 30, 2019 until June 14, 2019, at the following
numbers:

International: +972.3.925.5929

North America toll-free: +1.888.254.7270

In addition, the archived webcast of the call will be available on
Partner's Investor Relations website at the above address for
approximately three months.

Forward-Looking 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 expected benefits of the Company's strategy to
provide value to its customers in all areas of its business; the
expectation to increase the Company's differentiation and competitive
advantage by establishing a private customer service division; the
Company's strategy to continue its leadership in telecommunication
technologies with continued significant investments in the Company's
fiber optics infrastructure; and the Company's preparations regarding
its future debt recycling in anticipation of the Company's expected
funding requirements for the years through 2021. In addition, all
statements other than statements of historical fact included in this
press release regarding our future performance are forward-looking
statements. We have based these forward-looking statements on our
current knowledge and our present beliefs and expectations regarding
possible future events. These forward-looking statements are subject to
risks, uncertainties and assumptions, including, whether quality offers,
attractive service bundles or low prices offered by the Company's
competitors might prevent the Company from attracting and retaining
customers; whether market conditions will support the Company's goal to
create differentiation and a competitive advantage by establishing a
private customer service division; whether the Company's financial
resources and technological capabilities in fiber optics will enable it
to continue to lead in telecommunication technology, and whether such
leadership might be challenged by capabilities developed by competitors
or by changes occurring in the regulatory environment; and whether
unanticipated demands on the Company's financial resources might cause
the preparations for future debt recycling to fall short of the
Company's needs. Future results may differ materially from those
anticipated herein. For further information regarding risks,
uncertainties and assumptions about Partner, trends in the Israeli
telecommunications industry in general, the impact of current global
economic conditions and possible regulatory and legal developments, and
other risks we face, see "Item 3. Key Information - 3D. Risk Factors",
"Item 4. Information on the Company", "Item 5. Operating and Financial
Review and Prospects", "Item 8. Financial Information - 8A. Consolidated
Financial Statements and Other Financial Information - 8A.1 Legal and
Administrative Proceedings" and "Item 11. Quantitative and Qualitative
Disclosures about Market Risk" in the Company's Annual Reports on Form
20-F filed with the SEC, as well as its immediate reports on Form 6-K
furnished to the SEC. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

The quarterly
financial results presented in this press release are unaudited
financial results.

The results were prepared in accordance
with IFRS, other than the non-GAAP financial measures presented in the
section, "Use of Non-GAAP Financial Measures".

The financial information is presented in NIS millions (unless
otherwise stated) and the figures presented are rounded accordingly.

The convenience translations of the New Israeli Shekel (NIS) figures
into US Dollars were made at the rate of exchange prevailing at March
31, 2019: US $1.00 equals NIS 3.632. The translations were made purely
for the convenience of the reader.

Use of Non-GAAP Financial Measures

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

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

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin (%)

 

Adjusted EBITDA:

Profit (Loss)

add

Income tax expenses,

Finance costs, net,

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

 

Adjusted EBITDA margin (%):

Adjusted EBITDA

divided by

Total revenues

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

Cash flows from operating activities

deduct

Cash flows from investing activities

add

Short-term investment in (proceeds from) deposits

deduct

Lease payments

  Cash flows from operating activities

deduct

Cash flows from investing activities

Total Operating Expenses (OPEX)   Total Operating Expenses:

Cost of service revenues

add

Selling and marketing expenses

add

General and administrative expenses

deduct

Depreciation and amortization expenses,

Other expenses (mainly amortization of employee share based
compensation)

 

Sum of:

Cost of service revenues,

Selling and marketing expenses,

General and administrative expenses

 

Net Debt   Net Debt:

Current maturities of notes payable and borrowings

add

Notes payable

add

Borrowings from banks and others

deduct

Cash and cash equivalents

deduct

Short-term deposits

  Sum of:

Current maturities of notes payable and borrowings,

Notes payable,

Borrowings from banks and others

About Partner Communications

Partner Communications Company Ltd. is a leading Israeli provider of
telecommunications services (cellular, fixed-line telephony, internet
services and TV services). Partner's ADSs are quoted on the NASDAQ
Global Select Market™ and its shares are traded on the Tel Aviv Stock
Exchange (NASDAQ and TASE: PTNR).
For more information about
Partner, see: http://www.partner.co.il/en/Investors-Relations/lobby

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

 





New Israeli Shekels

 

Convenience
translation
into U.S.
Dollars

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

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

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

 





New Israeli Shekels

 

Convenience
translation into
U.S.
Dollars

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

par value: authorized - December 31, 2018

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

issued and outstanding -

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

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

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

 

New Israeli Shekels

 

Convenience
translation into
U.S.
Dollars

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

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

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

 

New Israeli Shekels
 

Convenience
translation into
U.S.
Dollars

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

Profit for the period

9 2 1
Other comprehensive income

for the period, net of income taxes

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

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

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

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

Cellular
segment

 

Fixed-line
segment

 

Elimination
 

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

 

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

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

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

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

Cellular
segment

 

Fixed-line
segment

 

Elimination
 

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

Segment Adjusted EBITDA (2)

134 43
 
 
 

 

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

Reconciliation of segments subtotal Adjusted EBITDA to profit for
the period

Segments subtotal Adjusted EBITDA (2)

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

(1) Mainly amortization of employee share based compensation.
(2)
Adjusted EBITDA as reviewed by the CODM represents Earnings Before
Interest (finance costs, net), Taxes, Depreciation and Amortization
(including amortization of intangible assets, deferred expenses-right of
use and impairment charges) and Other expenses (mainly amortization of
share based compensation). Adjusted EBITDA is not a financial measure
under IFRS and may not be comparable to other similarly titled measures
for other companies. Adjusted EBITDA may not be indicative of the
Group's historic operating results nor is it meant to be predictive of
potential future results. The usage of the term "Adjusted EBITDA" is to
highlight the fact that the Amortization includes amortization of
deferred expenses – right of use and amortization of employee share
based compensation and impairment charges.
(3) Operating expenses
include selling and marketing expenses, general and administrative
expenses.

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

 

New Israeli Shekels

 

Convenience
translation
into
U.S.
Dollars

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

CASH FLOWS FROM INVESTING ACTIVITIES:

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

CASH FLOWS FROM FINANCING ACTIVITIES:

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

DECREASE IN CASH AND CASH EQUIVALENTS

(464) (121) (34)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

867 416 115

CASH AND CASH EQUIVALENTS AT END OF PERIOD

403 295 81

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

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

Appendix - Cash generated from operations and supplemental information

 

New Israeli Shekels

 

Convenience
translation
into
U.S.
Dollars

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

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

At March 31, 2019 and 2018, trade and other payables include NIS 189
million ($52 million) and NIS 142 million, respectively, in respect of
acquisition of intangible assets and property and equipment; payments in
respect thereof are presented in cash flows from investing activities.
These
balances are recognized in the cash flow statements upon payment.

Reconciliation of Non-GAAP Measures:

Adjusted Free Cash Flow

 

 

New Israeli Shekels

 

Convenience
translation
into
U.S.
Dollars

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

(14)

(15) (4)

Total Operating Expenses (OPEX)

 

New Israeli Shekels

 

Convenience
translation
into
U.S.
Dollars

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

(1) Mainly amortization of employee share based compensation.

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

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

NIS M unless otherwise stated  

Q1' 17

 

Q2' 17

 

Q3' 17

 

Q4' 17

 

Q1' 18

 

Q2' 18

 

Q3' 18

 

Q4' 18

 

Q1' 19

     

2017

 

2018

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

(43)

 

(43)

 

(42)

 

(45)

 

(43)

 

(44)

 

(42)

 

(42)

 

(41)

     

(173)

 

(171)

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

64

 

59

 

50

 

34

 

43

 

46

 

56

 

53

 

47

     

207

 

198

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

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

Disclosure for notes holders as of March 31, 2019

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

Series  

Original
issuance
date

 

Principal on
the date of
issuance

  As of 31.03.2019   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            
D   25.04.10

04.05.11*

  400

146

  327   327   **   328   1.477%

 

(MAKAM+1.2%)

  30.12.17   30.12.21  

30.03, 30.06,
30.09, 30.12

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

(1) (3)

  20.07.17

12.12.17*

04.12.18*

  255

389

150

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

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

G

(2) (3)

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

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

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

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

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

Notes Rating Details*

Series   Rating Company  

Rating as of
31.03.2019 and
30.05.2019 (1)

 

Rating
assigned upon
issuance of the
Series

 

Recent date of
rating as of
31.03.2019 and
30.05.2019

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

10/2010, 09/2012,

12/2012, 06/2013,

07/2014, 07/2015,

07/2016, 07/2017,

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

04/2019

  ilAA-/Stable, ilAA-/Stable,

ilAA-/Negative, ilAA-/Watch Neg,

ilAA-/Negative, ilAA-/Stable,

ilAA-/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable,

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

ilA+/Stable

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

12/2017, 01/2018,

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

04/2019

  ilA+/Stable, ilA+/Stable,

ilA+/Stable, ilA+/Stable,

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

ilA+/Stable

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

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

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

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

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

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

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

    Principal payments  

Gross interest
payments (without
deduction of tax)

   

ILS linked
to CPI

 

ILS not linked
to CPI

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

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

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

    Principal payments  

Gross interest
payments (without
deduction of tax)

   

ILS linked
to CPI

 

ILS not linked
to CPI

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

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

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

    Principal payments  

Gross interest
payments (without
deduction of tax)

   

ILS linked
to CPI

 

ILS not linked
to CPI

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

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

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

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

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