Comments of Management
Commenting on the results, Doron Turgeman, the CEO of Internet Gold, said, “Our significant progress over the past two years demonstrates the soundness in the structure of our work plan and of the capital structure that our subsidiary B Communications' negotiated with our lending banks. We believe that our loan agreements, which do not have any loan to value covenants, have been advantageous to our Company. We are obviously well aware of the unfavorable state of the financial and capital markets in Israel, as well as of the recent decline in Bezeq’s share price – a decline that we believe is temporary. Despite this environment, as a long term communications player, we will continue to manage our business according to plan and with the reliable strong cash flow we are confident that we will be able to fulfill all our loan commitments.”
Bezeq Group Results (Consolidated)
To provide further insight into its results, the Company has provided the following summary of the Bezeq Group’s consolidated financial report for the quarter ended June 30, 2012. For a full discussion of the Bezeq Group’s results for the quarter, please refer to http://ir.bezeq.co.il.
|Bezeq Group (consolidated)||Q2 2012||Q2 2011||Change|
|Net profit attributable to Company shareholders||415||585||-29.1||%|
|Diluted EPS (NIS)||0.15||0.21||-28.6||%|
|Cash flow from operating activities||990||670||47.8||%|
|Payments for investments, net||360||406||-11.3||%|
|Free cash flow 1||630||264||138.6||%|
|Net debt/EBITDA (end of period) 2||1.69||1.33|
|Net debt/shareholders' equity (end of period)||3.06||2.66|
|1||Free cash flow is defined as cash flows from operating activities less net payments for investments.|
|2||EBITDA in this calculation refers to the trailing twelve months.|
|A.||Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures of June 30, 2012 have been presented in millions of U.S. dollars, translated at the representative rate of exchange as of June 30, 2012 (NIS 3.923 = U.S. Dollar 1.00). The U.S. Dollar ($) amounts presented should not be construed as representing amounts receivable or payable in U.S. Dollars or convertible into U.S. Dollars, unless otherwise indicated.|
|B.||Use of non-IFRS Measurements: We and the Bezeq Group’s management regularly use supplemental non-IFRS financial measures internally to understand, manage and evaluate its business and make operating decisions. We believe these non-IFRS financial measures provide consistent and comparable measures to help investors understand the Bezeq Group’s current and future operating cash flow performance.|
|These non-IFRS financial measures may differ materially from the non-IFRS financial measures used by other companies.|
|EBITDA is a non-IFRS financial measure generally defined as earnings before interest, taxes, depreciation and amortization. The Bezeq Group defines EBITDA as net income before financial income (expenses), net, impairment and other charges, expenses recorded for stock compensation in accordance with IFRS 2, income tax expenses and depreciation and amortization. We present the Bezeq Group’s EBITDA as a supplemental performance measure because we believe that it facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure, tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age of, and depreciation expenses associated with, fixed assets (affecting relative depreciation expense).|
|EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations or cash flow data prepared in accordance with IFRS as a measure of profitability or liquidity. EBITDA does not take into account our debt service requirements and other commitments, including capital expenditures, and, accordingly, is not necessarily indicative of amounts that may be available for discretionary uses. In addition, EBITDA, as presented in this press release, may not be comparable to similarly titled measures reported by other companies due to differences in the way that these measures are calculated.|
|Reconciliation between the Bezeq Group’s results on an IFRS and non-IFRS basis is provided in a table immediately following the Bezeq Group's consolidated results. Non-IFRS financial measures consist of IFRS financial measures adjusted to exclude amortization of acquired intangible assets, as well as certain business combination accounting entries. The purpose of such adjustments is to give an indication of the Bezeq Group’s performance exclusive of non-cash charges and other items that are considered by management to be outside of its core operating results. The Bezeq Group’s non-IFRS financial measures are not meant to be considered in isolation or as a substitute for comparable IFRS measures, and should be read only in conjunction with its consolidated financial statements prepared in accordance with IFRS.|
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