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TheStreet Open House

Partner Communications Reports Second Quarter 2013 Results1

Stocks in this article: PTNR

Changes In the organizational structure of Partner's group and new appointments

On August 27, 2013, the Company's Board of Directors approved a change in the organizational structure of Partner's group, in which a Retail Division will be established and Mr. Zvika Shenfeld will be appointed as Vice President of the Retail Division, as of October 1, 2013. Mr. Zvika Shenfeld will be responsible for the development and establishment of the Partner Group's new retail activity.

In addition, the Board of Directors approved the appointment of Ms. Na'ama Gat as Vice President of the unified Marketing and Growth Engines Division of Partner's group. Her appointment will take effect on October 1, 2013. Ms. Gat served in a variety of senior managerial positions in the marketing arena in leading companies in Israel. In her last position, Ms. Gat served as Vice President and Manager of the Marketing and Business Development Division at Mizrahi Tefahot Bank. Ms. Gat holds a B.A. degree in Psychology and English literature from Haifa University and an M.A. degree in Marketing and advertising from Marquette University, USA.

Conference Call Details

Partner will hold a conference call on Wednesday, August 28, 2013 at 10.00 a.m . Eastern Time / 5.00 p.m. Israel Time .

Please call the following numbers (at least 10 minutes before the scheduled time) in order to participate: International: +972.3. 918.0610, North America toll-free: + 1.888.407.2553

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

If you are unavailable to join live, the replay numbers are:

International: +972.3.925.5921, North America: +1.888.782.4291

Both the replay of the call and the webcast will be available from August 28, 2013 until September 4, 2013.

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 "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. All statements other than statements of historical fact included in this press release regarding our future performance, plans to increase revenues or margins or preserve or expand market share in existing or new markets, plans to reduce expenses, and any statements regarding other future events or our future prospects, 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 about Partner, consumer habits and preferences in cellular telephone usage, trends in the Israeli telecommunications industry in general, the impact of current global economic conditions and possible regulatory and legal developments. For further information regarding of some of the 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 2012 Annual Report (20-F) filed with the SEC on March 19, 201 3. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur, and actual results may differ materially from the results anticipated. 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 financial results presented in this press release are unaudited financial results.

The results were prepared in accordance with IFRS, other than Adjusted EBITDA and free cash flow before interest payments, which are 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 Nominal New Israeli Shekel (NIS) figures into US Dollars were made at the rate of exchange prevailing at June 30, 2013: US $1.00 equals NIS 3.618. The translations were made purely for the convenience of the reader.

Use of Non-GAAP Financial Measures:

‘Adjusted EBITDA’ represents earnings before interest (finance costs, net), taxes, depreciation, amortization (including amortization of intangible assets, deferred expenses-right of use, and share based compensation expenses) and impairment charges, as a measure of operating profit. Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures in other companies. Adjusted EBITDA may not be indicative of the Company’s historic operating results nor is it meant to be predictive of potential future results. Adjusted EBITDA is presented solely to enhance the understanding of our operating results. We use the term “Adjusted EBITDA” to highlight the fact that amortization includes amortization of deferred expenses – right of use and employee share- based compensation expenses, but Adjusted EBITDA is fully comparable to EBITDA information which has been previously provided for prior periods. Reconciliation between our net cash flow from operating activities and Adjusted EBITDA on a consolidated basis is presented in the attached summary financial results.

About Partner Communications

Partner Communications Company Ltd. (" Partner") is a leading Israeli provider of telecommunications services (cellular, fixed-line telephony and internet services) under the orange™ brand and the 012 Smile brand. 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.orange.co.il/en/Investors-Relations/lobby/

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

   

New Israeli shekels

Convenience

translation into

U.S. dollars

June 30,   December 31, June 30,
2013 2012 2013
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT ASSETS
Cash and cash equivalents 513 548 142
Trade receivables 1,249 1,397 345
Other receivables and prepaid expenses 55 47 15
Deferred expenses- right of use 26 22 7
Inventories 106 98 30
Income tax receivable 3 7 1
Derivative financial instruments 1 1 *
1,953 2,120 540
 
NON CURRENT ASSETS
Trade Receivables 357 509 99
Deferred expenses- right of use 128 138 35
Property and equipment 1,846 1,990 510
Licenses and other intangible assets 1,180 1,217 326
Goodwill 407 407 112
Deferred income tax asset 24 36 7
3,942 4,297 1,089
 
TOTAL ASSETS 5,895 6,417 1,629
 

* Representing an amount less than 1 million

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

New Israeli shekels

Convenience

translation into

U.S. dollars

June 30,   December 31, June 30,
2013 2012 2013
(Unaudited) (Audited) (Unaudited)
In millions
CURRENT LIABILITIES
Current maturities of notes payable and bank borrowings 332 306 92
Trade payables 765 866 211
Parent group - trade 70
Payables in respect of employees 96 110 27
Other payables (mainly institutions) 49 59 13
Deferred revenue 40 40 11
Provisions 65 60 18
Income tax payable 22 6
Derivative financial instruments 16 14 5
1,385 1,525 383
 
NON CURRENT LIABILITIES
Notes payable 2,331 2,321 644
Bank borrowings 1,296 1,733 358
Liability for employee rights upon retirement, net 47 50 13
Dismantling and restoring sites obligation 29 28 8
Other non-current liabilities 9 10 2
Deferred tax liability 2 9 1
3,714 4,151 1,026
 
TOTAL LIABILITIES 5,099 5,676 1,409
 
EQUITY
Share capital - ordinary shares of NIS 0.01

par value: authorized - December 31, 2012,

and June 30, 2013 - 235,000,000 shares;

issued and outstanding -

2 2 1
December 31, 2012 – *155,645,708 shares
June 30, 2013 – *155,652,529 shares
Capital surplus 1,100 1,100 304
Accumulated earnings (deficit)

45

(10)

12

Treasury shares, at cost - December

31, 2012 and June 30, 2013 - 4,467,990 shares

 

(351) (351)

(97)

TOTAL EQUITY 796 741 220
TOTAL LIABILITIES AND EQUITY 5,895 6,417 1,629
 

* Net of treasury shares

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

   
New Israeli shekels

Convenience translation into U.S.

dollars

6 month period ended June 30   3 month period ended June 30 6 month period ended June 30,   3 month period ended June 30,
2013   2012 2013   2012 2013 2013
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions (except per share data)
Revenues, net 2,274 2,999 1,130 1,428 629 312
Cost of revenues 1,779 2,128 878 1,000 492 243
Gross profit 495 871 252 428 137 69
 
Selling and marketing expenses 235 302 117 148 65 32
General and administrative

expenses

107 133 54 65 30 15
Other income, net 44 57 21 30 12 6
Operating profit 197 493 102 245 54 28
Finance income 11 19 13 26 3 4
Finance expenses 131 147 84 99 36 23
Finance costs, net 120 128 71 73 33 19
Profit before income tax 77 365 31 172 21 9
Income tax expenses 26 99 11 52 7 3
Profit for the period 51 266 20 120 14 6
 
Earnings per share
Basic 0.33 1.71 0.13 0.77 0.09 0.04
Diluted 0.33 1.71 0.13 0.77 0.09 0.04
Weighted average number of shares outstanding (in thousands)
Basic 155,647 155,646 155,647 155,646 155,647 155,647
Diluted 156,051 155,668 156,098 155,647 156,051 156,098
 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

   
New Israeli shekels

Convenience translation into U.S.

dollars

6 month period ended June 30,   3 month period ended June 30, 6 month period ended June 30,   3 month period ended June 30,
2013   2012 2013   2012 2013 2013
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
In millions

Profit for the period

51 266 20 120 14 6

Other comprehensive income for the period, net of income tax

- (12) - (12) - -
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 51 254 20 108 14 6
 

PARTNER COMMUNICATIONS COMPANY LTD.

(An Israeli Corporation)

SEGMENT INFORMATION

   

 

New Israeli Shekels

New Israeli Shekels

 

Six months ended June 30, 2013

Six months ended June 30, 2012

 

In millions (Unaudited)

In millions (Unaudited)

Cellular segment   Fixed line segment   Reconciliation

for

consolidation

  Consolidated   Cellular segment   Fixed line segment   Reconciliation

for

consolidation

  Consolidated
Segment revenue - Services 1,435 476 1,911

1,898

556

2,454

Inter-segment revenue - Services 15 84 (99)

14

64

(78)

Segment revenue - Equipment 347 16   363

530

15

 

545

Total revenues 1,797 576 (99) 2,274

2,442

635

(78)

2,999

Segment cost of revenues – Services 1,042 387 1,429

1,216

442

1,658

Inter-segment cost of revenues- Services 82 17 (99)

64

14

(78)

Segment cost of revenues - Equipment 334 16   350

456

14

 

470

Cost of revenues 1,458 420 (99) 1,779

1,736

470

(78)

2,128

Gross profit

339

156 495

706

165

871

Operating expenses 271 71 342

317

118

435

Other income, net 43 1 44

57

 

57

Operating profit 111

86

197

446

47

493

Adjustments to presentation of Adjusted EBITDA
–Depreciation and amortization

269

78

347

279

83

362

–Other (1)

4

  4

5

1

6

Adjusted EBITDA

384

164

548

730

131

861

Reconciliation of Adjusted EBITDA to

profit before tax

- Depreciation and amortization 347

362

- Finance costs, net 120

128

- Other (1) 4

6

Profit before income tax

77

365

 

(1) Mainly employee share based compensation expenses.

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