|By Business Wire||
|November 8, 2012 06:21 AM EST||
B Communications Ltd. (NASDAQ Global Market: BCOM)(TASE: BCOM) today reported its financial results for the third quarter ended September 30, 2012.
Bezeq’s Results: For the third quarter of 2012, the Bezeq Group reported revenues of NIS 2.5 billion ($ 638 million) and operating profit of NIS 667 million ($ 171 million). Bezeq’s EBITDA for the third quarter totaled NIS 1 billion ($ 262 million), representing an EBITDA margin of 41%. Net income for the period attributable to the shareholders of Bezeq totaled NIS 342 million ($ 87 million). Bezeq's cash flow from operating activities totaled NIS 1 billion ($ 262 million) during the third quarter of 2012.
Dividend from Bezeq: On October 10, 2012, B Communications received two dividend payments from Bezeq which together totaled NIS 464 million ($ 119 million). These dividend payments included a current dividend of NIS 309 million ($ 79 million), representing B Communications’ share of Bezeq’s net profit for the first half of 2012, and a special dividend of NIS 155 million ($ 40 million), representing B Communications’ share of the fourth installment of six special dividend payments declared by Bezeq and approved by its shareholders last year.
Cash Position: As of September 30, 2012, B Communications’ unconsolidated cash and cash equivalents (including dividend receivable) totaled NIS 853 million ($ 218 million), its unconsolidated total debt was NIS 4.2 billion ($ 1.1 billion), and its net debt totaled NIS 3.3 billion ($ 849 million).
B Communications’ Unconsolidated Balance Sheet Data*
|September 30,||December 31,||September 30,||December 31,|
|(NIS millions)||($ millions)|
|Short term liabilities||470||526||120||134|
|Long term liabilities||3,705||3,874||947||991|
|Cash and cash equivalents||389||354||99||91|
|Total net debt||3,322||4,046||849||1,034|
* Does not include the balance sheet of Bezeq.
B Communications’ Third Quarter Consolidated Financial Results
B Communications’ revenues for the third quarter of 2012 were NIS 2,494 million ($ 638 million), a 15% decrease compared with NIS 2,917 million ($ 746 million) reported in the third quarter of 2011. For both the current and the prior-year periods, B Communications’ revenues consisted entirely of its share of Bezeq’s revenues.
B Communications’ net loss attributable to shareholders for the third quarter totaled NIS 55 million ($ 14 million), compared to NIS 31 million ($ 8 million) reported in the third quarter of 2011. This reflects the impact of two significant expenses:
Amortization of tangible and identifiable intangible assets resulting from the Bezeq acquisition: According to the rules of business combination accounting, the total purchase price of the Bezeq acquisition was allocated to Bezeq’s tangible and identifiable intangible assets based on their estimated fair values as determined by an analysis performed by an independent valuation firm. B Communications is amortizing certain of the acquired identifiable intangible assets in accordance with the economic benefit expected from such assets using an accelerated method of amortization.
|During the third quarter of 2012, B Communications recorded amortization expenses related to the Bezeq purchase price allocation (“Bezeq PPA”) of NIS 307 million ($78 million), net. From the Bezeq acquisition date (April 14, 2010) until the end of the reporting quarter, B Communications has amortized approximately 53% of the total Bezeq PPA. It expects to amortize an additional 5% in the fourth quarter of 2012.|
|The Company's Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment. If, for any reason, the Company finds it necessary or appropriate to make adjustments to amounts already expensed, it may result in significant changes to future financial statements.|
Financial expenses: B Communications’ unconsolidated financial expenses for the third quarter totaled NIS 65 million ($ 17 million). These expenses consisted primarily of NIS 64 million ($ 16 million) of interest and CPI linkage expense on the long-term loans incurred to finance the Bezeq acquisition and NIS 14 million ($ 4 million) of expenses related to the Company’s debentures. These expenses were offset by financial income of NIS 13 million ($ 3 million) generated by our short term investments. The significant financial expenses recorded in the third quarter were due primarily to high CPI linkage expenses attributed to the 0.85% increase in the Israeli CPI, to which approximately half of B Communications’ total debt is linked.
B Communications’ Unconsolidated Financial Results
|Quarter ended September 30,||Quarter ended September 30,|
|(NIS millions)||(US$ millions)|
|PPA amortization, net||(95)||(107)||(24)||(27)|
|Interest in Bezeq's net income||106||171||27||43|
Comments of Management
Commenting on the results, Doron Turgeman, CEO of B Communications' said, “The third quarter of 2012 was another stable period for Bezeq, demonstrating the cash flow-generating power of its formidable position in Israel’s telecommunications market. Due to the continued uninterrupted payment of both regular and special dividends, including the latest installment which we received last month, we have succeeded in building our cash reserves to their current strong level, and are on track with plans to continue expanding our financial stability and liquidity in the quarters to come. Despite current conditions in the Israeli capital market, as a long-term communications player with loans that are not burdened by share price-related covenants, we are able to manage our cash position entirely according to plan, relying upon steady and visible cash flow to fulfill all loan commitments while continuing to accelerate our repayments.”
Bezeq Group Results (Consolidated)
To provide further insight into its results, the Company has provided the following summary of the consolidated financial report of the Bezeq Group’s quarter ended September 30, 2012. For a full discussion of Bezeq’s results for the quarter, please refer to http://ir.bezeq.co.il.
|Bezeq Group (consolidated)||
|Net profit attributable to Company shareholders||342||550||-37.8%|
|Diluted EPS (NIS)||0.13||0.20||-35.0%|
|Cash flow from operating activities||1,024||882||16.1%|
|Payments for investments, net||270||374||-27.8%|
|Free cash flow 1||754||508||48.4%|
|Net debt/EBITDA (end of period) 2||1.64||1.24|
|Net debt/shareholders' equity (end of period)||3.69||2.93|
|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.|
Revenues of the Bezeq Group in the third quarter of 2012 amounted to NIS 2.49 billion compared with NIS 2.92 billion in the corresponding quarter of 2011, a decrease of 14.5%. Most of the decrease in the Bezeq Group's revenues was due to lower revenues from the sale of cellular handsets and the erosion of revenues from cellular services.
Operating profit of the Bezeq Group in the third quarter of 2012 amounted to NIS 667 million, compared with NIS 944 million in the corresponding quarter of 2011, a decrease of 29.3%. Earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter of 2012 amounted to NIS 1.03 billion (EBITDA margin of 41.1%), compared with NIS 1.30 billion (EBITDA margin of 44.6%) in the corresponding quarter of 2011, a decrease of 21.1%. Net profit attributable to Bezeq shareholders in the third quarter of 2012 amounted to NIS 342 million compared with NIS 550 million in the corresponding quarter of 2011, a decrease of 37.8%. The decrease in profitability metrics was primarily due to a decrease in profitability in the cellular segment as well as lower capital gains from real estate and copper sales in the Fixed-line segment compared to the corresponding quarter of 2011.
Cash flow from operating activities in the third quarter of 2012 amounted to NIS 1.02 billion compared with NIS 882 million in the corresponding quarter of 2011, an increase of 16.1% mainly due to improved working capital in the cellular segment. Free cash flow in the third quarter of 2012 amounted to NIS 754 million compared with NIS 508 million in the corresponding quarter of 2011, an increase of 48.4%. The increase in free cash flow was due to an increase in cash flow from operating activities as well as the completion of large infrastructure projects initiated in prior years.
Gross capital expenditures (CAPEX), in the third quarter of 2012 amounted to NIS 346 million compared with NIS 437 million in the corresponding quarter of 2011, a decrease of 20.8%. The Bezeq Group's CAPEX to consolidated sales ratio in the third quarter of 2012 was 13.9%, compared with 15.0% in the corresponding quarter of 2011.
As of September 30, 2012, gross financial debt of the Bezeq Group was NIS 8.94 billion, compared with NIS 9.61 billion as of September 30, 2011. The net financial debt of the Bezeq Group was NIS 7.19 billion compared with NIS 5.99 billion as of September 30, 2011. At the end of September 2012, the Bezeq Group's net financial debt to EBITDA ratio was 1.64, compared with 1.24 at the end of September 2011.
Convenience Translation to Dollars: For the convenience of the reader, certain of the reported NIS figures of September 30, 2012 have been presented in millions of U.S. dollars, translated at the representative rate of exchange as of September 30, 2012 (NIS 3.912 = 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.
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 our 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.|
About B Communications Ltd.
B Communications is a telecommunications-oriented holding company and its primary holding is its controlling interest in Bezeq, The Israel Telecommunication Corp., Israel’s largest telecommunications provider (TASE: BZEQ). B Communications shares are traded on NASDAQ and the TASE under the symbol BCOM For more information please visit the following Internet sites:
This press release contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, general business conditions in the industry, changes in the regulatory and legal compliance environments, the failure to manage growth and other risks detailed from time to time in B Communications' filings with the Securities Exchange Commission. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.
B Communications Ltd.
|Consolidated Statement of Financial Position|
|September 30||September 30||September 30||December 31|
|Cash and cash equivalents||679||173||1,595||1,369|
|Investments including derivatives||1,456||372||2,411||1,284|
|Assets classified as held-for-sale||164||42||102||158|
|Total current assets||5,753||1,470||7,550||6,369|
|Investments including derivatives||94||24||115||119|
|Long-term trade and other receivables||1,193||305||1,594||1,499|
|Property, plant and equipment||6,811||1,741||7,392||7,143|
|Deferred and other expenses||406||104||385||412|
|Investments in equity-accounted investee|
|Deferred tax assets||144||37||218||223|
|Total non-current assets||16,821||4,300||19,077||18,540|
B Communications Ltd.
|Consolidated Statement of Financial Position (cont’d)|
|September 30||September 30||September 30||December 31|
Short-term bank credit, current maturities of long-term liabilities and debentures
|Other payables including derivatives||741||189||997||784|
|Current tax liabilities||564||144||521||499|
|Total current liabilities||4,897||1,251||6,159||4,660|
|Loans from institutions and others||546||140||548||544|
|Deferred tax liabilities||1,107||283||1,249||1,426|
|Total non-current liabilities||13,931||3,561||15,339||15,246|
|Total equity attributable to equity holders|
|of the Company||833||213||914||936|
|Total liabilities and equity||22,574||5,770||26,627||24,909|
B Communications Ltd.
|Consolidated Statements of Income|
|(In millions, except per share data)|
|Nine months period ended||Three months period ended||Year ended|
|September 30||September 30||December 31|
|Cost and expenses|
|Depreciation and amortization||2,267||579||2,113||757||194||715||2,984|
|General and operating expenses||3,015||771||3,447||963||246||1,183||4,462|
|Other operating expenses, net||52||13||283||19||5||1||326|
|Finance expenses, net||287||73||401||107||27||162||498|
Income after financing expenses, net
Share in losses of equity-accounted investee
|Income before income tax||447||114||654||44||11||241||773|
|Income (loss) attributable to:|
|Owners of the Company||(105)||(27)||(98)||(55)||(14)||(31)||(219)|
|Net loss per share, basic||(3.53)||(0.90)||(3.39)||(1.84)||(0.47)||(1.10)||(7.34)|
|Net loss per share, diluted||(3.55)||(0.91)||(3.44)||(1.84)||(0.47)||(1.11)||(7.38)|
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
Sep. 1, 2015 03:00 AM EDT Reads: 456
Skeuomorphism usually means retaining existing design cues in something new that doesn’t actually need them. However, the concept of skeuomorphism can be thought of as relating more broadly to applying existing patterns to new technologies that, in fact, cry out for new approaches. In his session at DevOps Summit, Gordon Haff, Senior Cloud Strategy Marketing and Evangelism Manager at Red Hat, discussed why containers should be paired with new architectural practices such as microservices rathe...
Sep. 1, 2015 01:00 AM EDT Reads: 407
SYS-CON Events announced today that G2G3 will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based on a collective appreciation for user experience, design, and technology, G2G3 is uniquely qualified and motivated to redefine how organizations and people engage in an increasingly digital world.
Aug. 31, 2015 11:00 PM EDT Reads: 499
Any Ops team trying to support a company in today’s cloud-connected world knows that a new way of thinking is required – one just as dramatic than the shift from Ops to DevOps. The diversity of modern operations requires teams to focus their impact on breadth vs. depth. In his session at DevOps Summit, Adam Serediuk, Director of Operations at xMatters, Inc., will discuss the strategic requirements of evolving from Ops to DevOps, and why modern Operations has begun leveraging the “NoOps” approa...
Aug. 31, 2015 10:30 PM EDT Reads: 398
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome,” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Aug. 31, 2015 09:00 PM EDT Reads: 368
Organizations from small to large are increasingly adopting cloud solutions to deliver essential business services at a much lower cost. According to cyber security experts, the frequency and severity of cyber-attacks are on the rise, causing alarm to businesses and customers across a variety of industries. To defend against exploits like these, a company must adopt a comprehensive security defense strategy that is designed for their business. In 2015, organizations such as United Airlines, Sony...
Aug. 31, 2015 07:15 PM EDT Reads: 483
The Internet of Things is in the early stages of mainstream deployment but it promises to unlock value and rapidly transform how organizations manage, operationalize, and monetize their assets. IoT is a complex structure of hardware, sensors, applications, analytics and devices that need to be able to communicate geographically and across all functions. Once the data is collected from numerous endpoints, the challenge then becomes converting it into actionable insight.
Aug. 31, 2015 07:00 PM EDT
Puppet Labs has announced the next major update to its flagship product: Puppet Enterprise 2015.2. This release includes new features providing DevOps teams with clarity, simplicity and additional management capabilities, including an all-new user interface, an interactive graph for visualizing infrastructure code, a new unified agent and broader infrastructure support.
Aug. 31, 2015 06:30 PM EDT Reads: 522
Consumer IoT applications provide data about the user that just doesn’t exist in traditional PC or mobile web applications. This rich data, or “context,” enables the highly personalized consumer experiences that characterize many consumer IoT apps. This same data is also providing brands with unprecedented insight into how their connected products are being used, while, at the same time, powering highly targeted engagement and marketing opportunities. In his session at @ThingsExpo, Nathan Trel...
Aug. 31, 2015 06:00 PM EDT Reads: 243
Amazon and Google have built software-defined data centers (SDDCs) that deliver massively scalable services with great efficiency. Yet, building SDDCs has proven to be a near impossibility for ‘normal’ companies without hyper-scale resources. In his session at 17th Cloud Expo, David Cauthron, founder and chief executive officer of Nimboxx, will discuss the evolution of virtualization (hardware, application, memory, storage) and how commodity / open source hyper converged infrastructure (HCI) so...
Aug. 31, 2015 04:45 PM EDT
In their Live Hack” presentation at 17th Cloud Expo, Stephen Coty and Paul Fletcher, Chief Security Evangelists at Alert Logic, will provide the audience with a chance to see a live demonstration of the common tools cyber attackers use to attack cloud and traditional IT systems. This “Live Hack” uses open source attack tools that are free and available for download by anybody. Attendees will learn where to find and how to operate these tools for the purpose of testing their own IT infrastructu...
Aug. 31, 2015 04:30 PM EDT Reads: 461
The web app is agile. The REST API is agile. The testing and planning are agile. But alas, data infrastructures certainly are not. Once an application matures, changing the shape or indexing scheme of data often forces at best a top down planning exercise and at worst includes schema changes that force downtime. The time has come for a new approach that fundamentally advances the agility of distributed data infrastructures. Come learn about a new solution to the problems faced by software organ...
Aug. 31, 2015 04:30 PM EDT
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
Aug. 31, 2015 03:15 PM EDT
IBM’s Blue Box Cloud, powered by OpenStack, is now available in any of IBM’s globally integrated cloud data centers running SoftLayer infrastructure. Less than 90 days after its acquisition of Blue Box, IBM has integrated its Blue Box Cloud Dedicated private-cloud-as-a-service into its broader portfolio of OpenStack® based solutions. The announcement, made today at the OpenStack Silicon Valley event, further highlights IBM’s continued support to deliver OpenStack solutions across all cloud depl...
Aug. 31, 2015 03:00 PM EDT Reads: 249
Red Hat is investing in Tesora, the number one contributor to OpenStack Trove Database as a Service (DBaaS) also ranked among the top 20 companies contributing to OpenStack overall. Tesora, the company bringing OpenStack Trove Database as a Service (DBaaS) to the enterprise, has announced that Red Hat and others have invested in the company as a part of Tesora's latest funding round. The funding agreement expands on the ongoing collaboration between Tesora and Red Hat, which dates back to Febr...
Aug. 31, 2015 02:45 PM EDT Reads: 378