Internet Gold Reports Financial Results For The Second Quarter Of 2013

Internet Gold – Golden Lines Ltd. (NASDAQ Global Market and TASE: IGLD) today reported its financial results for the second quarter ended June 30, 2013.

Bezeq’s results: For the second quarter of 2013, the Bezeq Group reported revenues of NIS 2.4 billion ($ 650 million) and operating profit of NIS 744 million ($ 206 million). Bezeq’s EBITDA for the second quarter totaled NIS 1.1 billion ($ 296 million), representing an EBITDA margin of 46%. Net income for the period attributable to the shareholders of Bezeq totaled NIS 473 million ($ 131 million). Bezeq's cash flow from operating activities during the period totaled NIS 1.1 billion ($ 305 million).

Cash Position: As of June 30, 2013, Internet Gold’s unconsolidated cash and cash equivalents totaled NIS 291 million ($ 80 million), its unconsolidated gross debt was NIS 1 billion ($ 291 million) and its unconsolidated net debt was NIS 762 million ($ 211 million).

Internet Gold's Unconsolidated Balance Sheet Data*
In millions         Convenience        
translation into
U.S. dollars
(Note A)
June 30, June 30, June 30, December 31,
2013 2013 2012 2012
NIS US$ NIS NIS
Short term liabilities 147 41 149 138
Long term liabilities 906 250 1,012 895
Total liabilities 1,053 291 1,161 1,033
Cash and cash equivalents 291 80 322 179
Total net debt 762 211 839 854

* Does not include the balance sheet of B Communications.

Dividend from Bezeq: On May 13, 2013, Internet Gold's subsidiary, B Communications Ltd., received two dividend payments from Bezeq which together totaled NIS 421 million ($ 116 million). These dividend payments included a current dividend of NIS 266 million ($ 73 million), representing B Communications’ share of Bezeq’s net profit for the second half of 2012, and a special dividend of NIS 155 million ($ 43 million), representing B Communications’ share of the fifth installment of six special dividend payments declared by Bezeq and approved by its shareholders in 2011.

Internet Gold’s Second Quarter Financial Results

Internet Gold's consolidated revenues for the second quarter of 2013 were NIS 2.4 billion ($ 650 million), a 9.4% decrease compared with NIS 2.6 billion reported in the second quarter of 2012. For both the current and the prior-year periods, Internet Gold’s consolidated revenues consisted entirely of Bezeq’s revenues.

During the second quarter of 2013, B Communications recorded net amortization expenses related to its Bezeq purchase price allocation (“Bezeq PPA”) of NIS 157 million ($ 43 million) in its consolidated financial statements. From April 14, 2010, the date of the acquisition of its interest in Bezeq, until June 30, 2013, B Communications has amortized approximately 55% of the total Bezeq PPA. The Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment. If, for any reason, B Communications finds it necessary or appropriate to make adjustments to amounts already expensed, it may result in significant changes to its audited financial reports, as well as to future financial statements.

Internet Gold’s financial expenses, net: Internet Gold’s unconsolidated net financial expenses for the second quarter of 2013 were NIS 18 million ($ 5 million). These expenses consisted primarily of expenses related to its publicly-traded debentures, which totaled NIS 19 million ($ 5 million).

Internet Gold's net income attributable to shareholders for the second quarter of 2013 totaled NIS 8 million ($ 2 million), compared to a net loss of NIS 95 million in the second quarter of 2012.

Internet Gold’s Unconsolidated Financial Results
In millions         Convenience        
translation into
U.S. dollars
(Note A)
Three-month Three-month Three-month
period ended period ended period ended Year ended
June 30, June 30, June 30, December 31,
2013 2013 2012 2012
NIS US$ NIS NIS
Revenues - - - -
Financial expenses (18 ) (5 ) (31 ) (60 )
Other expenses (1 ) - (1 ) (14 )

Interest in BCOM's net income (loss)
27   7   (63 ) 37  
Net income (loss) 8   2   (95 ) (37 )
 

Comments of Management

Commenting on the results, Doron Turgeman, CEO of Internet Gold, said, “During the quarter we improved our liquidity by our sale of 12% of B Communications Ltd.’s Ordinary Shares for NIS 125 million. Based on our current work plan, we believe our cash balances will be sufficient to service our debt until the end of 2015. Our base asset, Bezeq, has strengthened in the recent period and with a long-term perspective, we believe that we will benefit from its future upside value. Looking forward we will continue our efforts to strengthen our financial stability and liquidity with the goal of improving our financial position.”

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