Market Overview

Partner Communications Reports First Quarter 2020 Results1

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ADJUSTED EBITDA2 TOTALED NIS 215 MILLION COMPARED TO NIS 197 MILLION IN Q1 2019

NET DEBT2 TOTALED NIS 673 MILLION AT QUARTER END

PARTNER TV SUBSCRIBER BASE REACHED 210 THOUSAND AS OF TODAY AND INCREASED BY 58 THOUSAND IN THE LAST 12 MONTHS

PARTNER'S FIBER OPTIC INFRASTRUCTURE REACHES OVER 625 THOUSAND HOUSEHOLDS ACROSS ISRAEL AS OF TODAY

First quarter 2020 highlights (compared with first quarter 2019)

  • Total Revenues: NIS 807 million (US$ 226 million), an increase of 2%
  • Service Revenues: NIS 629 million (US$ 176 million), an increase of 1%
  • Equipment Revenues: NIS 178 million (US$ 50 million), an increase of 5%
  • Total Operating Expenses (OPEX)2: NIS 460 million (US$ 129 million), a decrease of 3%
  • Adjusted EBITDA: NIS 215 million (US$ 60 million), an increase of 9%
  • Adjusted EBITDA Margin2: 27% of total revenues compared with 25%
  • Profit for the Period: NIS 10 million (US$ 3 million), an increase of 400%
  • Net Debt: NIS 673 million (US$ 189 million), a decrease of NIS 304 million since Q1 2019, and a decrease of NIS 284 million in the quarter
  • Adjusted Free Cash Flow (before interest)2: NIS 10 million (US$ 3 million), an increase of NIS 21 million
  • Cellular ARPU: NIS 53 (US$ 15), a decrease of 5%
  • Cellular Subscriber Base: approximately 2.68 million at quarter-end, an increase of 56 thousand subscribers since Q1 2019, and an increase of 19 thousand in the quarter
  • TV Subscriber Base: 200 thousand subscribers at quarter-end, an increase of 59 thousand subscribers since Q1 2019, and an increase of 12 thousand in the quarter

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, 2020.

Commenting on the results for the first quarter 2020, Mr. Isaac Benbenisti, CEO of Partner noted:

"We concluded the first quarter of 2020 with increases in the subscriber bases of the cellular segment and of Partner's growth engines with growth in the TV subscriber base and in fiber optic deployment, despite the impact of the coronavirus crisis.

By virtue of our financial strength, and together with responsible management of costs, the continued decline in our net debt with a successful equity raise at the beginning of the quarter, and the organizational flexibility which enabled a quick transition to working from home, we were well prepared for the crisis affecting the economy.

In the first quarter, we continued to grow in the cellular segment, with the addition of 19 thousand subscribers, and despite the decline in roaming revenues, we maintained relative stability in cellular service revenues this quarter with a decrease of only 3% from the preceding quarter.

In the fixed-line segment, revenues from fixed-line services continued to grow. A fiber optic infrastructure has proven to be essential at the national level, as demonstrated strongly during the period of restrictions on movement due to the coronavirus crisis, mainly in March and April. During this period, internet demand spiked by several dozen percent, which clearly demonstrates how critical communication infrastructures are to the economy and to the private and business consumer. For this reason, Partner's independent fiber optic infrastructure, which already reaches over 625 thousand households in Israel, provides a significant advantage to our customers.

Partner TV continues to grow more than any other

TV service in Israel, and as of today it totals 210 thousand subscribers, while we added 58 thousand new subscribers in the last year. In addition, we announced this month the expansion of Partner TV's strategic partnership with Netflix with the launch of joint TV packages, in a business model employed with only a few of Netflix's partners worldwide.

Partner's activities in the business sector focused in the first quarter on ensuring business continuity for our customers – organizations, authorities, large, medium, small and micro businesses – who accelerated the transition to advanced home-based work systems and intensified the implementation of information security systems and cloud services which Partner offers its customers. The changes in business practices in the economy and the need for advanced communications infrastructures and services support the continued growth of Partner's business sector activities.

As part of managing the current crisis, Partner has taken a series of steps aimed at addressing the effects of the coronavirus crisis, and is prepared for the day after, with the adjustment of the Company to the new reality.

This month, Partner was ranked by the CofaceBDI index as the best place to work in the Israeli communications market. The combination of a contented workforce, a clear corporate strategy and responsible financial management, is borne out in Partner's performance and achievements."

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

"The results for the first quarter of 2020 continued to reflect the trends of the past few quarters, with further growth in fixed-line segment revenues and profit, and further stabilization in the cellular market.

The coronavirus crisis began to have a harmful effect on our business from the beginning of March 2020. The near-complete cessation of international travel caused a significant decrease in revenues from roaming services, the closure of shopping malls adversely affected the volume of sales of equipment, and the expected increase in bad debts due to the crisis led to an increase in doubtful accounts expenses. Nevertheless, despite the fact that the crisis began to affect the business from the beginning of March, the overall impact on our results for the first quarter of 2020 was not significant, also reflecting the fact that the Company mitigated the impact with a set of rapidly implemented measures, including cutting costs and temporarily reducing the workforce by putting a significant number of employees on unpaid leave.

In the cellular segment, our subscriber base increased by 19 thousand subscribers in the first quarter, including an increase of 14 thousand Post-Paid subscribers, alongside a marginal increase in the churn rate, which increased from 7.2% in the previous quarter to 7.5% in this quarter, but decreased compared with 8.5% in the first quarter of 2019. ARPU totaled NIS 53 this quarter compared with NIS 55 in the previous quarter, the decrease largely reflecting the negative impact on roaming revenues from both the coronavirus crisis and seasonality effects.

Adjusted EBITDA this quarter totaled NIS 215 million, compared with NIS 217 million in the previous quarter. The stability in Adjusted EBITDA was achieved despite the impact of the coronavirus crisis and seasonality effects which were almost entirely offset by the refund of approximately NIS 20 million of surplus payments to Bezeq for access to the wholesale internet infrastructure during the years 2017 to 2019, in accordance with the Ministry of Communications' decision regarding the update of the wholesale market tariffs.

Adjusted Free Cash Flow (before interest) totaled NIS 10 million in the first quarter. CAPEX totaled NIS 151 million, reflecting the Company's continued efforts to expand the deployment of its fiber optic network and further penetration in the TV market. These investments continue to be possible as a result of Partner's financial stability and strong balance sheet, and have continued through the challenging period of the coronavirus crisis.

The level of net debt at the end of the first quarter stood at NIS 673 million, compared with NIS 957 million at the end of the previous quarter, a decrease of NIS 284 million which mainly reflected the Company's successful equity raise of NIS 276 million, net, in January 2020.

As of today, revenues from roaming services continue to be significantly constrained by the coronavirus crisis, the shopping malls have reopened to a large extent, and our employees who were on unpaid leave have returned to work. Looking ahead, the Company does not expect the coronavirus crisis to have a significant harmful effect on profit for the second quarter of 2020. The harmful impact on roaming services is expected to continue to a large extent through the second quarter, but its adverse effects on the business are expected to be mitigated by the cost cutting measures implemented by the Company. Looking further ahead, the Company cannot, at present, estimate the impact on the results for the year 2020 as a whole, since it will largely depend on the pace and extent of resumption of international travel and on the extent to which the Company is able to mitigate the adverse impact of the decrease in revenues from roaming services."

Q1 2020 compared with Q4 2019

NIS Million

Q4'19

Q1'20

Comments

Service Revenues

636

629

The decrease resulted from the decline in cellular service revenues as a result of the coronavirus crisis and seasonality partly offset by an increase in fixed-line segment service revenues

Equipment Revenues

198

178

The decrease reflected lower average prices due to a change in product mix, as well as the impact of the coronavirus crisis on sales

Total Revenues

834

807

 

Gross profit from equipment sales

37

37

 

OPEX

467

460

 

Adjusted EBITDA

217

215

Impact of coronavirus crisis and seasonality on service revenues was largely offset by refund from Bezeq of surplus payments made in 2017-2019 for access to wholesale internet infrastructure due to MoC decision

Profit for the Period

7

10

 

Capital Expenditures (additions)

129

129

 

Adjusted Free Cash Flow (before interest payments)

16

10

 

Net Debt

957

673

The decrease resulted mainly from the company's equity raise in January 2020 which totaled NIS 276 million net

 

Q4'19

Q1'20

Comments

Cellular Subscribers (end of period, thousands)

2,657

2,676

Increase of approx.14 thousand Post-Paid subscribers and 5 thousand Pre-Paid subscribers

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

55

53

 

Quarterly Cellular Churn Rate (%)

7.2%

7.5%

 

TV Subscribers (end of period, thousands)

188

200

 

Key Financial Results

NIS MILLION (except EPS)

Q1'19

Q1'20

% Change

Revenues

794

807

+2%

Cost of revenues

677

655

-3%

Gross profit

117

152

+30%

Operating profit

9

36

+300%

Profit for the period

2

10

+400%

Earnings per share (basic, NIS)

0.01

0.05

 

Adjusted Free Cash Flow (before interest)

(11)

10

 

Key Operating Indicators

 

Q1'19

Q1'20

Change

Adjusted EBITDA (NIS million)

197

215

+9%

Adjusted EBITDA margin (as a % of total revenues)

25%

27%

+2

Cellular Subscribers (end of period, thousands)

2,620

2,676

+56

Quarterly Cellular Churn Rate (%)

8.5%

7.5%

-1.0

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

56

53

-3

Partner Consolidated Results

 

Cellular Segment

Fixed-Line Segment

Elimination

Consolidated

NIS Million

Q1'19

Q1'20

Change %

Q1'19

Q1'20

Change %

Q1'19

Q1'20

Q1'19

Q1'20

Change %

Total Revenues

583

569

-2%

252

277

+10%

(41)

(39)

794

807

+2%

Service Revenues

441

423

-4%

224

245

+9%

(41)

(39)

624

629

+1%

Equipment Revenues

142

146

+3%

28

32

+14%

-

-

170

178

+5%

Operating Profit

9

13

+44%

0

23

 

-

-

9

36

+300%

Adjusted EBITDA

150

132

-12%

47

83

+77%

-

-

197

215

+9%

Financial Review

In Q1 2020, total revenues were NIS 807 million (US$ 226 million), an increase of 2% from NIS 794 million in Q1 2019.

Service revenues in Q1 2020 totaled NIS 629 million (US$ 176 million), an increase of 1% from NIS 624 million in Q1 2019.

Service revenues for the cellular segment in Q1 2020 totaled NIS 423 million (US$ 119 million), a decrease of 4% from NIS 441 million in Q1 2019. The decrease was mainly the result of the negative impact of the coronavirus crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions.

Service revenues for the fixed-line segment in Q1 2020 totaled NIS 245 million (US$ 69 million), an increase of 9% from NIS 224 million in Q1 2019. The increase mainly reflected higher revenues from TV and internet services, which were partially offset principally by a decline in revenues from international calling services.

Equipment revenues in Q1 2020 totaled NIS 178 million (US$ 50 million), an increase of 5% from NIS 170 million in Q1 2019, reflecting increases in sales volumes in both the cellular and fixed-line segments, despite the adverse impact of the coronavirus crisis.

Gross profit from equipment sales in Q1 2020 was NIS 37 million (US$ 10 million), compared with NIS 39 million in Q1 2019, a decrease of 5%, reflecting a change in the product mix which led to a decrease in the average profit per sale.

Total operating expenses (‘OPEX') totaled NIS 460 million (US$ 129 million) in Q1 2020, a decrease of 3% or NIS 12 million from Q1 2019. The decrease mainly reflected the recognition in Q1 2020 of the refund of approximately NIS 20 million of surplus payments to Bezeq for access to the wholesale internet infrastructure during the years 2017 to 2019, in accordance with the Ministry of Communications' decision regarding the update of the wholesale market tariffs and a decrease in marketing expenses and other operating expenses. These decreases were partially offset by an increase in credit losses mainly as a result of the coronavirus crisis, and an increase in expenses related to payments to operators. Including depreciation and amortization expenses and other expenses (mainly amortization of employee share based compensation), OPEX in Q1 2020 decreased by 4% or NIS 24 million compared with Q1 2019, mainly reflecting, in addition to the factors mentioned above, the decrease in depreciation expenses of NIS 15 million resulting from a change in the estimated useful life of the Company's cellular license which occurred in the fourth quarter of 2019.

Operating profit for Q1 2020 was 36 million (US$ 10 million), an increase of 300% compared with NIS 9 million in Q1 2019. The increase mainly resulted from the increase in Adjusted EBITDA (see Adjusted EBITDA analysis by segment below), as well as the decrease in depreciation expenses related to the Company's cellular license, as explained above.

In view of the coronavirus crisis, as part of the preparation of the financial statements as of March 31, 2020, the Company reviewed and made the necessary adjustments to its critical accounting estimates and judgments, with no material impact on the financial results, and also carried out impairment tests of both the fixed-line and cellular segments, determining that no impairment was required.

Adjusted EBITDA in Q1 2020 totaled NIS 215 million (US$ 60 million), an increase of 9% or NIS 18 million from NIS 197 million in Q1 2019. As a percentage of total revenues, Adjusted EBITDA in Q1 2020 was 27% compared with 25% in Q1 2019.

Adjusted EBITDA for the cellular segment was NIS 132 million (US$ 37 million) in Q1 2020, a decrease of 12% from NIS 150 million in Q1 2019, largely reflecting the decrease in cellular service revenues. As a percentage of total cellular segment revenues, Adjusted EBITDA for the cellular segment in Q1 2020 was 23% compared with 26% in Q1 2019.

Adjusted EBITDA for the fixed-line segment was NIS 83 million (US$ 23 million) in Q1 2020, an increase of 77% from NIS 47 million in Q1 2019, mainly reflecting both the increase in fixed-line segment service revenues and the impact of the refund from Bezeq in Q1 2020, as explained above. As a percentage of total fixed-line segment revenues, Adjusted EBITDA for the fixed-line segment in Q1 2020 was 30%, compared with 19% in Q1 2019.

Finance costs, net in Q1 2020 were NIS 19 million (US$ 5 million), an increase of 36% compared with NIS 14 million in Q1 2019. The increase largely reflected expenses from foreign exchange linkages in Q1 2020 compared with income from foreign exchange linkages in Q1 2019, as well as an increase in interest expenses due to the increase in the average debt level.

Income tax expenses for Q1 2020 were NIS 7 million (US$ 2 million), compared with income tax income of NIS 7 million in Q1 2019, largely reflecting the profit before income tax of NIS 17 million in Q1 2020 compared with loss before income tax of NIS 5 million in Q1 2019.

Profit in Q1 2020 was NIS 10 million (US$ 3 million), an increase of 400% compared with a profit of NIS 2 million in Q1 2019.

Based on the weighted average number of shares outstanding during Q1 2020, basic earnings per share or ADS, was NIS 0.05 (US$ 0.02), compared with basic earnings per share of NIS 0.01 in Q1 2019.

Cellular Segment Operational Review

At the end of Q1 2020, the Company's cellular subscriber base (including mobile data, 012 Mobile subscribers and M2M subscriptions included on an adjusted basis) was approximately 2.68 million, including approximately 2.38 million Post-Paid subscribers or 89% of the base, and approximately 296 thousand Pre-Paid subscribers, or 11% of the subscriber base.

During the first quarter of 2020, the cellular subscriber base increased by approximately 19 thousand. The Post-Paid subscriber base increased by approximately 14 thousand, and the Pre-Paid subscriber base increased by approximately 5 thousand.

Total cellular market share (based on the number of subscribers) at the end of Q1 2020 was estimated to be approximately 25%, unchanged from the end of Q1 2019.

The quarterly churn rate for cellular subscribers in Q1 2020 was 7.5%, compared with 8.5% in Q1 2019 and 7.2% in Q4 2019.

The monthly Average Revenue per User ("ARPU") for cellular subscribers in Q1 2020 was NIS 53 (US$ 15), a decrease of 5% from NIS 56 in Q1 2019, mainly the result of the impact of the coronavirus crisis on roaming service revenues and the continued price erosion of cellular services due to the continued competitive market conditions.

Funding and Investing Review

In Q1 2020, Adjusted Free Cash Flow (including lease payments) totaled NIS 10 million (US$ 3 million), an increase of NIS 21 million from a negative Adjusted Free Cash Flow of NIS 11 million in Q1 2019.

Cash generated from operating activities totaled NIS 204 million (US$ 58 million) in Q1 2020, a decrease of 4% from NIS 213 million in Q1 2019, reflecting the smaller decrease in operating assets and liabilities which more than offset the impact of the increase in Adjusted EBITDA.

Lease payments (principal and interest), recorded in cash flows from financing activities under IFRS 16, totaled NIS 43 million (US$ 12 million) in Q1 2020, an increase of NIS 4 million from 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 151 million (US$ 42 million) in Q1 2020, a decrease of 18% from NIS 185 million in Q1 2019, mainly reflecting lower expenditures on subscriber equipment and installation.

The level of Net Debt at the end of Q1 2020 amounted to NIS 673 million (US$ 189 million), compared with NIS 977 million at the end of Q1 2019, a decrease of NIS 304 million. The decrease mainly reflected the Company's share issuance in January 2020 for which the total net consideration received was approximately NIS 276 million.

Conference Call Details

Partner will hold a conference call on Wednesday, May 27, 2020 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: +1.888.407.2553

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 27, 2020 until June 10, 2020, at the following numbers:

International: +972.3.925.5927

North America toll-free: +1.877.456.0009

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

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, as amended, Section 21E of the US Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. Words such as "estimate", "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "project", "goal", "target" and similar expressions often identify forward-looking statements but are not the only way we identify these statements. In particular, this press release communicates our belief in the continued growth in our business sector activities, the possibility for mitigating the harmful effects to the Company's business resulting from the coronavirus crisis and preparing for the day after by adjusting the Company to the new reality, our ability to maintain Partner's position as the best place to work in the Israeli communications market, the sufficiency of our financial resources to continue efforts to expand the deployment of its fiber optic network and further penetrate the TV market, that the coronavirus crisis will not have a significant harmful effect on profit for the second quarter of 2020, the potential for the cost-cutting measures implemented by the Company to partially offset the adverse effects of the impact on roaming services in the second quarter. 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 in particular the severity and duration of the impact on our business of the current health crisis, especially on our customers' international travel (which impacts our income from roaming fees), on the closure and re-opening of shopping centers (which impacts our sales of services and equipment), on employee absences and disruptions in our equipment supply chain (which impact our ability to continue to provide services and sales of equipment), on future consumer habits for on-line or remote services, on issues which may arise with our employees in connection with cost-reduction efforts or working conditions, and on credit losses, which may increase. In light of the current unreliability of predictions as to the ultimate severity and duration of the health crisis, future results may differ materially from those currently anticipated. 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 preparation of interim condensed consolidated financial statements in conformity with IFRS requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Management based such estimates on historical experience, information available at the time, and assumptions believed to be reasonable under the circumstances and at such time, including the impact of extraordinary events such as the novel coronavirus ("COVID-19"). Actual results could differ from those estimates.

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, 2020: US $1.00 equals NIS 3.565. 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 (%)

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

divided by

Total revenues

Profit (Loss)

Adjusted Free Cash Flow

Net cash provided by operating activities

add

Net cash used in investing activities

deduct

Proceeds from (investment in) short-term

deposits, net

deduct

Lease principal payments

deduct

Lease interest payments

Net cash provided by operating activities

add

Net cash used in investing activities

Total Operating Expenses (OPEX)

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

Current maturities of notes payable and borrowings

add

Notes payable

add

Borrowings from banks

add

Financial liability at fair value

deduct

Cash and cash equivalents

deduct

Short-term deposits

Sum of:

Current maturities of notes payable and borrowings,

Notes payable,

Borrowings from banks,

Financial liability at fair value

Less

Sum of:

Cash and cash equivalents,

Short-term deposits

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,

 

 

2019

 

2020

 

2020

 

 

(Audited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

299

 

342

 

96

Short-term deposits

 

552

 

793

 

222

Trade receivables

 

624

 

570

 

160

Other receivables and prepaid expenses

 

39

 

42

 

11

Deferred expenses – right of use

 

26

 

27

 

8

Inventories

 

124

 

142

 

40

 

 

1,664

 

1,916

 

537

 

 

 

 

 

 

 

NON CURRENT ASSETS

 

 

 

 

 

 

Trade receivables

 

250

 

245

 

69

Deferred expenses – right of use

 

102

 

105

 

29

Lease – right of use

 

582

 

582

 

163

Property and equipment

 

1,430

 

1,436

 

403

Intangible and other assets

 

538

 

527

 

148

Goodwill

 

407

 

407

 

114

Deferred income tax asset

 

41

 

35

 

10

Prepaid expenses and other assets

 

1

 

*

 

*

 

 

3,351

 

3,337

 

936

 

 

 

 

 

 

 

TOTAL ASSETS

 

5,015

 

5,253

 

1,473

* Representing an amount of less than 1 million

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,

 

 

2019

 

2020

 

2020

 

 

(Audited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

CURRENT LIABILITIES

 

 

 

 

 

 

Current maturities of notes payable and borrowings

 

367

 

367

 

103

Trade payables

 

716

 

667

 

187

Payables in respect of employees

 

103

 

103

 

29

Other payables (mainly institutions)

 

23

 

33

 

9

Income tax payable

 

30

 

30

 

8

Lease liabilities

 

131

 

131

 

37

Deferred revenues from HOT mobile

 

31

 

31

 

9

Other deferred revenues

 

45

 

51

 

14

Provisions

 

43

 

38

 

11

 

 

1,489

 

1,451

 

407

NON CURRENT LIABILITIES

 

 

 

 

 

 

Notes payable

 

1,275

 

1,289

 

362

Borrowings from banks

 

138

 

125

 

35

Financial liability at fair value

 

28

 

27

 

8

Liability for employee rights upon retirement, net

 

43

 

40

 

11

Lease liabilities

 

486

 

480

 

135

Deferred revenues from HOT mobile

 

102

 

94

 

26

Provisions and other non-current liabilities

 

37

 

38

 

10

 

 

2,109

 

2,093

 

587

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

3,598

 

3,544

 

994

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Share capital - ordinary shares of NIS 0.01

par value: authorized - December 31, 2019

and March 31, 2020 - 235,000,000 shares;

issued and outstanding -

2

 

2

 

1

December 31, 2019 – ­*162,915,990 shares

 

 

 

 

 

March 31, 2020 – ­*182,592,284 shares

 

 

 

 

 

Capital surplus

 

1,077

 

1,326

 

371

Accumulated retained earnings

 

576

 

592

 

166

Treasury shares, at cost

December 31, 2019 – *­*8,275,837 shares

March 31, 2020 – *­*7,931,582 shares

 

(238)

 

(211)

 

(59)

TOTAL EQUITY

 

1,417

 

1,709

 

479

TOTAL LIABILITIES AND EQUITY

 

5,015

 

5,253

 

1,473

* Net of treasury shares.

** Including restricted shares in an amount of 1,247,583 and 1,029,963 as of December 31, 2019 and March 31, 2020, 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 period ended March 31,

   

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions (except per share data)

Revenues, net

 

794

 

807

 

226

Cost of revenues

 

677

 

655

 

184

Gross profit

 

117

 

152

 

42

 

 

 

 

 

 

 

Selling and marketing expenses

 

75

 

71

 

20

General and administrative expenses

 

39

 

51

 

14

Other income, net

 

6

 

6

 

2

Operating profit

 

9

 

36

 

10

Finance income

 

2

 

1

 

*

Finance expenses

 

16

 

20

 

5

Finance costs, net

 

14

 

19

 

5

Profit (loss) before income tax

 

(5)

 

17

 

5

Income tax expenses (income)

 

(7)

 

7

 

2

Profit for the period

 

2

 

10

 

3

Attributable to:

 

 

 

 

 

 

Owners of the Company

 

2

 

10

 

3

Non-controlling interests

 

*

 

 

 

 

Profit for the period

 

2

 

10

 

3

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

Basic

 

0.01

 

0.05

 

0.02

Diluted

 

0.01

 

0.05

 

0.02

Weighted average number of shares outstanding (in thousands)

 

 

 

 

 

 

Basic

 

162,730

 

181,230

 

181,230

Diluted

 

163,251

 

181,811

 

181,811

 

 

 

 

 

 

 

 

     

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME

 

 

New Israeli Shekels

 

Convenience translation into U.S. dollars

 

 

3 months period ended March 31,

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

   

 

Profit for the period

 

 

2

 

10

 

3

Other comprehensive income

for the period, net of income tax

 

-

 

2

 

*

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

 

2

 

12

 

3

Total comprehensive income attributable to:

 

 

 

 

 

 

Owners of the Company

 

2

 

12

 

3

Non-controlling interests

 

*

 

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

 

2

 

12

 

3

 

 

 

 

 

 

 

* Representing an amount of less than 1 million.

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM SEGMENT INFORMATION & ADJUSTED EBITDA RECONCILIATION

 

 

New Israeli Shekels

   

New Israeli Shekels

 

 

3 months period ended March 31, 2020

   

3 months period ended March 31, 2019

 

 

In millions (Unaudited)

   

In millions (Unaudited)

 

 

Cellular

 segment

 

Fixed line segment

 

Elimination

 

Consolidated

   

Cellular

 segment

 

Fixed line

 segment

 

Elimination

 

Consolidated

Segment revenue - Services

 

419

 

210

 

 

 

629

   

437

 

187

 

 

 

624

Inter-segment revenue - Services

 

4

 

35

 

(39)

 

 

   

4

 

37

 

(41)

 

 

Segment revenue - Equipment

 

146

 

32

 

 

 

178

   

142

 

28

 

 

 

170

Total revenues

 

569

 

277

 

(39)

 

807

   

583

 

252

 

(41)

 

794

Segment cost of revenues - Services

 

322

 

192

 

 

 

514

   

347

 

199

 

 

 

546

Inter-segment cost of revenues - Services

 

35

 

4

 

(39)

 

 

   

37

 

4

 

(41)

 

 

Segment cost of revenues - Equipment

 

119

 

22

 

 

 

141

   

113

 

18

 

 

 

131

Cost of revenues

 

476

 

218

 

(39)

 

655

   

497

 

221

 

(41)

 

677

Gross profit

 

93

 

59

 

 

 

152

   

86

 

31

 

 

 

117

Operating expenses (3)

 

85

 

37

 

 

 

122

   

82

 

32

 

 

 

114

Other income, net

 

5

 

1

 

 

 

6

   

5

 

1

 

 

 

6

Operating profit

 

13

 

23

 

 

 

36

   

9

 

*

 

 

 

9

Adjustments to presentation of  segment       

   Adjusted  EBITDA 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

    –Depreciation and amortization

 

115

 

60

 

 

 

 

   

137

 

47

 

 

 

 

    –Other (1)

 

4

 

 

 

 

 

 

   

4

 

 

 

 

 

 

Segment Adjusted EBITDA (2)

 

132

 

83

 

 

 

 

   

150

 

47

 

 

 

 

Reconciliation of  segment subtotal Adjusted EBITDA to profit for the period

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

Segments subtotal Adjusted EBITDA (2)

 

 

 

 

 

 

 

215

   

 

 

 

 

 

 

197

    -  Depreciation and amortization

 

 

 

 

 

 

 

(175)

   

 

 

 

 

 

 

(184)

    -  Finance costs, net

 

 

 

 

 

 

 

(19)

   

 

 

 

 

 

 

(14)

    -  Income tax income (expenses)

 

 

 

 

 

 

 

(7)

   

 

 

 

 

 

 

7

    -  Other (1)

 

 

 

 

 

 

 

(4)

   

 

 

 

 

 

 

(4)

Profit for the period

 

 

 

 

 

 

 

10

   

 

 

 

 

 

 

2

(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 and general and administrative expenses. * Representing an amount of less than 1 million.

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 period ended March 31,

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Cash generated from operations (Appendix)

 

213

 

204

 

58

Income tax paid

 

*

 

*

 

*

Net cash provided by operating activities

 

213

 

204

 

58

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Acquisition of property and equipment

 

(142)

 

(110)

 

(31)

Acquisition of intangible and other assets

 

(43)

 

(41)

 

(12)

Investment in short-term deposits, net

 

(303)

 

(241)

 

(68)

Net cash used in investing activities

 

(488)

 

(392)

 

(111)

 


CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Lease principal payments

 

(34)

 

(38)

 

(11)

Lease interest payments

 

(5)

 

(5)

 

(1)

Interest paid

 

(4)

 

(2)

 

(1)

Share issuance

 

 

 

276

 

78

Proceeds from issuance of notes payable, net of issuance costs

 

223

 

13

 

4

Repayment of non-current borrowings

 

(13)

 

(13)

 

(4)

Repayment of current borrowings

 

(13)

 

 

 

 

Net cash provided by financing activities

 

154

 

231

 

65

 


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

(121)

 

43

 

12

 

CASH AND CASH EQUIVALENTS AT BEGINNING

OF PERIOD

 

416

 

299

 

84

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

295

 

342

 

96

 

 

 

 

 

 

 

* 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

 

 

3 months period ended March 31,

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

 

 

 

 

 

 

 

Cash generated from operations:

 

 

 

 

 

 

Profit for the period

 

2

 

10

 

3

Adjustments for:

 

 

 

 

 

 

Depreciation and amortization

 

177

 

167

 

47

Amortization of deferred expenses - Right of use

 

7

 

8

 

2

Employee share based compensation expenses

 

4

 

4

 

1

Liability for employee rights upon retirement, net

 

1

 

(1)

 

*

Finance costs, net

 

*

 

1

 

*

Lease interest payments

 

5

 

5

 

2

Interest paid

 

4

 

2

 

1

Deferred income taxes

 

*

 

6

 

2

Income tax paid

 

*

 

*

 

*

Changes in operating assets and liabilities:

 

 

 

 

 

 

Decrease (increase) in accounts receivable:

 

 

 

 

 

 

Trade

 

12

 

59

 

16

Other

 

(12)

 

(2)

 

(1)

Increase (decrease) in accounts payable and accruals:

 

 

 

 

 

 

Trade

 

40

 

(29)

 

(8)

Other payables

 

7

 

11

 

3

Provisions

 

(6)

 

(5)

 

(2)

Deferred revenues from HOT mobile

 

(8)

 

(8)

 

(2)

Other deferred revenues

 

1

 

6

 

2

Increase in deferred expenses - Right of use

 

(12)

 

(12)

 

(3)

Current income tax

 

(7)

 

*

 

*

Decrease (increase) in inventories

 

(2)

 

(18)

 

(5)

Cash generated from operations

 

213

 

204

 

58

 

 

 

 

 

 

 

       

* Representing an amount of less than 1 million.

At March 31, 2020 and 2019, trade and other payables include NIS 118 million ($33 million) and NIS 189 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 period ended March 31,

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

Net cash provided by operating activities

 

213

 

204

 

58

Net cash used in investing activities

 

(488)

 

(392)

 

(111)

Investment in short-term deposits, net

 

303

 

241

 

68

Lease principal payments

 

(34)

 

(38)

 

(11)

Lease interest payments

 

(5)

 

(5)

 

(1)

Adjusted Free Cash Flow

 

(11)

 

10

 

3

Interest paid

 

(4)

 

(2)

 

(1)

Adjusted Free Cash Flow After Interest

 

(15)

 

8

 

2

Total Operating Expenses (OPEX)

 




New Israeli Shekels

 

Convenience translation into

U.S. Dollars

 

 

3 months period ended March 31,

 

 

2019

 

2020

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

In millions

Cost of revenues - Services

 

546

 

514

 

144

Selling and marketing expenses

 

75

 

71

 

20

General and administrative expenses

 

39

 

51

 

14

Depreciation and amortization

 

(184)

 

(175)

 

(49)

Other (1)

 

(4)

 

(1)

 

*

OPEX

 

472

 

460

 

129

  1. Mainly amortization of employee share based compensation.

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

NIS M unless otherwise stated

Q1' 18

Q2' 18

Q3' 18

Q4' 18

Q1' 19

Q2' 19

Q3' 19

Q4' 19

Q1' 20

2018

2019

Cellular Segment Service Revenues

466

454

476

447

441

453

466

438

423

1,843

1,798

Cellular Segment Equipment Revenues

178

157

143

165

142

115

142

172

146

643

571

Fixed-Line Segment Service Revenues

202

210

220

220

224

230

233

238

245

852

925

Fixed-Line Segment Equipment Revenues

23

20

25

24

28

24

25

26

32

92

103

Reconciliation for consolidation

(43)

(44)

(42)

(42)

(41)

(41)

(41)

(40)

(39)

(171)

(163)

Total Revenues

826

797

822

814

794

781

825

834

807

3,259

3,234

Gross Profit from Equipment Sales

43

37

44

42

39

35

33

37

37

 

166

144

Operating Profit*

32

22

48

14

9

22

26

30

36

116

87

Cellular Segment Adjusted EBITDA*

134

126

145

119

150

159

170

156

132

 

524

635

Fixed-Line Segment Adjusted EBITDA*

43

46

56

53

47

55

55

61

83

198

218

Total Adjusted EBITDA*

177

172

201

172

197

214

225

217

215

722

853

Adjusted EBITDA Margin (%)*

21%

22%

24%

21%

25%

27%

27%

26%

27%

22%

26%

OPEX*

498

492

504

502

472

472

474

467

460

 

1,996

1,885

Finance costs, net*

18

13

10

12

14

16

18

20

19

53

68

Profit*

9

2

26

19

2

3

7

7

10

56

19

Capital Expenditures (cash)

138

104

117

143

185

143

174

127

151

502

629

Capital Expenditures (additions)

113

98

111

177

157

142

150

129

129

 

499

578

Adjusted Free Cash Flow

21

55

70

(22)

(11)

31

13

16

10

124

49

Adjusted Free Cash Flow (after interest)

(14)

44

62

(37)

(15)

15

12

0

8

55

12

Net Debt

919

893

898

950

977

965

956

957

673

950

957

Cellular Subscriber Base (Thousands)**

2,649

2,623

2,630

2,646

2,620

2,616

2,651

2,657

2,676

2,646

2,657

Post-Paid Subscriber Base (Thousands)**

2,318

2,323

2,333

2,361

2,340

2,337

2,366

2,366

2,380

 

2,361

2,366

Pre-Paid Subscriber Base (Thousands)

331

300

297

285

280

279

285

291

296

 

285

291

Cellular ARPU (NIS)

58

57

60

57

56

58

59

55

53

58

57

Cellular Churn Rate (%)**

8.9%

10.1%

8.0%

8.5%

8.5%

7.9%

7.7%

7.2%

7.5%

35%

31%

Number of Employees (FTE)***

2,778

2,808

2,821

2,782

2,897

2,895

2,923

2,834

1,867

2,782

2,834

* Figures from 2019 include impact of adoption of IFRS 16 - Leases (see also report 20-F).

** 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.

*** From 2019, the number of employees (FTE) also includes the number of FTE of PHI on a proportional basis of Partner's share in the subsidiary (50%). Excluding employees on unpaid leave as of March 31, 2020.

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

Disclosure for notes holders as of March 31, 2020

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

Series

Original issuance date

Principal on the date of issuance

As of 31.03.2020

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

218

218

**

215

1.34%

 

(MAKAM+1.2%)

30.12.17

30.12.21

30.03, 30.06, 30.09, 30.12

Variable interest MAKAM (3)

Hermetic Trust (1975) Ltd. Merav Offer. 113 Hayarkon St., Tel Aviv. Tel: 03-5544553.

F

(2)

20.07.17

12.12.17*

04.12.18*

01.12.19*

255

389

150

226.75

1,021

1,021

6

1,039

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

(1) (2)

06.01.19

01.07.19*

28.11.19*

27.02.20*

225

38.5

86.5

15.1

365

365

11

398

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 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. For additional details see the Company's press release dated April 17, 2019. Following partial exercise of option warrants from the first series, in July 2019, November 2019 and February 2020, the Company issued Series G Notes in a principal amount of NIS 38.5 million, NIS 86.5 million and NIS 15.1 million, respectively. On May 31, 2020, following final exercise of option warrants from the first series, the Company will issue Series G Notes in a principal amount of NIS 84.8 million. As of today, the total future considerations expected to the Company in respect of the allotment of the option warrants from the second series (after the full exercise of option warrants from the first series) and in respect of their full exercise (and assuming that there will be no change to the exercise price) is approximately NIS 89 million.
  2. 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 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, 2020, the ratio of Net Debt to Adjusted EBITDA was 0.8. 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, 2019. In the reporting period, the Company was in compliance with all financial covenants and obligations and no cause for early repayment occurred.
  3. '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, 2020 (cont.)

Notes Rating Details*

Series

Rating Company

Rating as of 31.03.2020 and 27.05.2020 (1)

Rating assigned upon issuance of the Series

Recent date of rating as of 31.03.2020 and 27.05.2020

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

Date

Rating

D

S&P Maalot

ilA+

ilAA-

02/2020

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, 08/2019,

02/2020

ilAA-, ilAA-,ilAA-, ilAA-,

ilAA-, ilAA-,ilAA-, ilA+,

ilA+, ilA+,ilA+, ilA+,

ilA+, ilA+,ilA+, ilA+,

ilA+

F

S&P Maalot

ilA+

ilA+

02/2020

07/2017, 09/2017, 12/2017, 01/2018,

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

04/2019, 08/2019, 02/2020

ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+, ilA+,

ilA+, ilA+, ilA+

G (3)

S&P Maalot

ilA+

ilA+

02/2020

12/2018, 01/2019, 04/2019, 08/2019,

02/2020

ilA+, ilA+, ilA+, ilA+,

ilA+

(1) In August 2019, S&P Maalot has reaffirmed the Company's ilA+ credit rating and updated the Company's rating outlook to "Negative".

(2) For details regarding the rating of the notes see the S&P Maalot reports dated August 5, 2019 and February 27, 2020.

(3) In January 2019, the Company issued Series G Notes in a principal amount of NIS 225 million. In July 2019, November 2019 and February 2020, the Company issued additional Series G Notes in a principal amount of NIS 38.5 million, NIS 86.5 million and NIS 15.1 million, respectively. On May 31, 2020, following final exercise of option warrants from the first series, the Company will issue Series G Notes in a principal amount of NIS 84.8 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, 2020

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

-

313,385

-

-

-

37,187

Second year

-

313,385

-

-

-

31,195

Third year

-

240,667

-

-

-

25,628

Fourth year

-

240,667

-

-

-

19,758

Fifth year and on

-

496,237

-

-

-

38,747

Total

-

1,604,341

-

-

-

152,515

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

-

-

-

3,859

Second year

-

52,132

-

-

-

2,600

Third year

-

44,779

-

-

-

1,332

Fourth year

-

22,720

-

-

-

500

Fifth year and on

-

5,720

-

-

-

36

Total

-

177,483

-

-

-

8,327

Summary of Financial Undertakings (according to repayment dates) as of March 31, 2020 (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

-

365,517

-

-

-

41,046

Second year

-

365,517

-

-

-

33,795

Third year

-

285,446

-

-

-

26,960

Fourth year

-

263,387

-

-

-

20,258

Fifth year and on

-

501,957

-

-

-

38,783

Total

-

1,781,824

-

-

-

160,842

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.

In addition to the total credit above, Company's financial debt includes financial liability at fair value in respect of option warrants issued in May 2019. At March 31, 2020, this financial liability totals to an amount of NIS 27 million.

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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