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B Communications Reports Financial Results For the First Quarter of 2016
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PR Newswire
RAMAT GAN, Israel, May 26, 2016
RAMAT GAN, Israel, May 26, 2016 /PRNewswire/ -- B Communications Ltd. (NASDAQ Global Select Market and TASE: BCOM), a holding company with a controlling interest in Israel's largest telecommunications provider, Bezeq, The Israel Telecommunication Corp. (TASE: BEZQ), today reported its financial results for the first quarter of 2016.
"During the quarter, we continued to execute our business plan, declaring a dividend that is in line with expectations, while continuing to reduce our leverage," said Doron Turgeman, CEO of B Communications. "Our sale of 4.2% of Bezeq's outstanding shares during the first quarter improved our debt structure and created a significant improvement in our Company's debt service and leverage ratios as reflected at the local notch-up we received from Midroog, the local rating agency which is the Israeli subsidiary of Moodys. Our equity increased to more than NIS 1.7 billion and our retained earnings is NIS 731 million as of March 31, 2016. Those significant changes in our balance sheet allowed us to return capital to our shareholders with a dividend that will be paid next month and reflects an 11% yield."
Dividend Distribution: On May 25, 2016, the Company's Board of Directors declared a cash dividend of NIS 355 million ($94 million), or NIS 11.88 ($3.15) per share. The dividend will be payable to all of the Company's shareholders of record at the end of the NASDAQ trading day on June 15, 2016. The payment date will be June 29, 2016. The actual amount of dividends to be paid in US dollars will be converted from NIS based upon the representative rate of exchange published by the Bank of Israel on June 15, 2015.
Tender Offer: On May 26, 2016 the Company also announced that its wholly-owned subsidiary, B Communications (SP4) LP (the "Offeror"), has invited holders of the Company's 7⅜% Senior Secured Notes due 2021 (the "Notes") to submit tenders to purchase their Notes for cash within a purchase price range between $1.00 to $1.07, in each case inclusive, per $1.00 nominal amount of Notes (the "Purchase Price Range"), on the terms and subject to the conditions contained in its Tender Offer Memorandum dated May 26, 2016 (the "Statement").
Subject to a minimum tender of $1.00 in principal amount of Notes per holder, the amount in cash in U.S. dollars to be paid for each US$1.00 principal amount of the Notes accepted for purchase pursuant to the Tender Offer will be determined in accordance with the modified Dutch auction procedures subject to a purchase price for Notes tendered within the Purchase Price Range such that the total amount payable to tendering holders (excluding accrued and unpaid interest thereon up to but not including the Payment Date ("Accrued Interest")) for all Notes accepted for purchase (if any) pursuant to the Tender Offer will be $ 244 million aggregate principal amount of Notes (or such lesser amount of Notes as are validly tendered and not validly withdrawn), subject to rounding and pro ration. The purchase of the Notes (if any) under the Tender Offer with will be made from funds made available by the Company, including cash-on-hand and the net cash proceeds from the Company's sale of 115,500,000 ordinary shares of Bezeq in February 2016.
Dividend from Bezeq: On March 16, 2016, the Board of Directors of Bezeq resolved to recommend to the general meeting of its shareholders the distribution of a cash dividend of NIS 776 million ($206 million), representing Bezeq's profits for the second half of 2015. The dividend will be paid on May 30, 2016 to shareholders of record as of May 17, 2016. B Communications' share of the dividend distribution is NIS 204 million ($54 million).
Bezeq's Results: For the first quarter of 2016, the Bezeq Group reported revenues of NIS 2.56 billion ($680 million) and operating profit of NIS 574 million ($152 million). Bezeq's EBITDA for the first quarter totaled NIS 1.0 billion ($272 million), representing an EBITDA margin of 40%. Net profit for the period attributable to Bezeq's shareholders totaled NIS 288 million ($76 million). Bezeq's cash flow from operating activities during the period totaled NIS 922 million ($245 million).
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Notes Repurchase Program: On August 10, 2014 the Company announced that its Board of Directors had approved the buyback of up to $50 million of the Company's Notes. On January 20, 2016, the Company announced the completion of its $50 million repurchase program and the approval by its Board of Directors to extend and increase the program by an additional $50 million. Through May 26, 2016, the Company purchased a total of $65 million par value of the Notes.
Private Placement of Series B Debentures: On April 4, 2016, the Company completed the private placement of NIS 148 million par value of its Series B Debentures to Israeli institutional investors for an aggregate consideration of approximately NIS 162 million ($43 million). The private placement was carried out as an increase to the outstanding Series B Debentures, which were first issued in September 2010 and have identical terms. The net proceeds of the private placement increased the Company's unrestricted cash.
Equity Attributable to Shareholders: As of March 31, 2016 the total equity attributable to shareholders totaled NIS 1.74 billion ($462 million) including NIS 731 million ($194 million) of retained earnings. The significant increase in the equity attributable to shareholders and retained earnings resulted from the sale by the Company of 4.2% of Bezeq's outstanding shares in February 2016, which generated positive difference between the change in the carrying amount of non-controlling interests and the net consideration received from the sale. In compliance with IFRS10, the difference was recognized directly in equity.
Cash and Debt Position: As of March 31, 2016, B Communications' unconsolidated cash and cash equivalents and short term investments, totaled NIS 1.5 billion ($405 million) and its financial liabilities totaled NIS 3.2 billion ($861 million) including NIS 2.6 billion ($698 million) of the Notes, NIS 525 million ($140 million) of Series B Debentures (both include accrued interest and unamortized premiums, discounts and debt issuance costs), and a NIS 88 million ($23 million) tax liability.
B Communications' Unconsolidated Balance Sheet Data (In millions)
| | | | Convenience |
| | | | translation into |
| | | | U.S. dollars |
| | | | (Note A) |
| | March 31, | March 31, | March 31, |
| | 2015 | 2016 | 2016 |
| | NIS | NIS | US$ |
| Financial liabilities | | | |
| 7⅜% Senior Secured Notes (1) | 2,866 | 2,630 | 698 |
| Series B Debentures | 698 | 525 | 140 |
| Tax liability | 136 | 88 | 23 |
| Total | 3,700 | 3,243 | 861 |
| | | | |
| Liquidity balances | | | |
| Lockbox account(2) | 419 | 1,145 | 304 |
| Unrestricted cash(3) | 551 | 382 | 101 |
| Total | 970 | 1,527 | 405 |
| | |||
| (1) The Notes balance is the sum of (a) the NIS amount equivalent (NIS 2,561 million) of the $725 million hedge that was established on the date the Notes were issued, (b) $10.4 million (the residual balance of our Notes that was not hedged) multiplied by the representative rate of exchange as of March 31, 2016 (NIS 3.766 = U.S. $1.00) and (c) accrued interest and unamortized debt issuance costs. | |||
| | |||
| (2) Lockbox account - one or more accounts designated as a lockbox account and maintained by B Communications (SP-2) Ltd. (or any of its successors) and pledged as collateral to the security agent for the benefit of the holders of the Notes. Amounts from prior periods are shown as comparative data and reflect amounts that were maintained by B Communications (SP-2) Ltd. but not in a lockbox account. | |||
| | |||
| (3) Unrestricted cash - any funds, property or assets (including any property or assets acquired with or earned on such unrestricted cash) not expressly required by the terms of the Indenture for the secured Notes to be deposited in or allocated to the lockbox account and any other funds with respect to which the Indenture expressly provides constitute unrestricted cash, including proceeds from indebtedness permitted to be incurred under the Indenture which are not otherwise expressly required by the terms of the Indenture to be deposited in or allocated to the lockbox account; provided that no specified shares or collateral shall constitute unrestricted cash. | |||
B Communications First Quarter Consolidated Financial Results
B Communications' consolidated revenues for the first quarter of 2016 totaled NIS 2.6 billion ($680 million), a 17.7% increase compared to the NIS 2.2 billion reported in the first quarter of 2015. The increase resulted from the full consolidation of DBS Satellite Services (1998) Ltd. (referred to herein by its trade name, YES) as of the second quarter of 2015. For both the current and the prior-year periods, B Communications' consolidated revenues consisted entirely of Bezeq's revenues.
B Communications' consolidated operating income for the first quarter of 2016 totaled NIS 474 million ($126 million), a 6.3% decrease compared to NIS 506 million reported in the first quarter of 2015.
B Communications' consolidated net income for the first quarter of 2016 totaled NIS 160 million ($42 million), a 47.7% decrease compared with NIS 306 million reported in the first quarter of 2015.
B Communications First Quarter Unconsolidated Financial Results
As of March 31, 2016, B Communications held approximately 26.3% of Bezeq's outstanding shares. B Communications' interest in Bezeq's net income for the first quarter of 2016 totaled NIS 80 million ($21 million), compared to NIS 143 million (based on the Company's then 31% ownership interest in Bezeq as of March 31, 2015), reported in the first quarter of 2015.
During the first quarter of 2016, B Communications recorded net amortization expenses of NIS 10 million ($3 million) related to its Bezeq purchase price allocation ("Bezeq PPA"). The decrease in net amortization expenses in the first quarter is a result of both a one-time adjustment of the deferred tax liability resulting from the reduction in the Israeli corporate tax by 1.5% and the decrease in the Company's ownership interest in Bezeq to 26.34%, which will also reduce the Company's future net amortization expenses. From April 14, 2010, the date of the acquisition of its interest in Bezeq, until March 31, 2016, B Communications has amortized approximately 72% of the total Bezeq PPA. The Bezeq PPA amortization expense is a non-cash expense that is subject to adjustment.
B Communications' unconsolidated net financial expenses for the first quarter of 2016 totaled NIS 90 million ($23 million) compared to net financial expenses of NIS 65 million in the first quarter of 2015. Financial expenses during the first quarter of 2016 included NIS 78 million ($20 million) related to the Company's publicly traded Series B Debentures and the Notes, and financial expenses of NIS 12 million ($3 million) generated by short term investments.
B Communications' net loss attributable to shareholders for the first quarter of 2016 was NIS 23 million ($6 million) compared to net income of NIS 48 million in the first quarter of 2015.
| In millions | | Convenience | | |
| | | translation into | | |
| | | U.S. dollars | | |
| | | (Note A) | | |
| | Three-month | Three-month | Three-month | |
| | period ended | period ended | period ended | Year ended |
| | March 31, | March 31, | March 31, | December 31, |
| | 2016 | 2016 | 2015 | 2015 |
| | NIS | US$ | NIS | NIS |
| Revenues | - | - | - Werbung Mehr Nachrichten zur B COMMUNICATIONS LTD. Aktie kostenlos abonnieren
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