Partner Communications:
-- Company Posts Strong Growth in All Financial Parameters
-- Net Income up 50.4% Compared With Q2 2005
Partner Communications Company Ltd. ("Partner")
(Nasdaq:PTNR)(LSE:PCCD)(TASE:PTNR), a leading Israeli mobile
communications operator, today announced its results for the second
quarter of 2006. Partner reported Q2 2006 revenues of NIS 1,372.9
million (US$ 309.2 million), EBITDA of NIS 473.2 million (US$ 106.6
million), equivalent to 34.5% of total revenue, and net income of NIS
174.2 million (US$ 39.2 million).
Commenting on the results, Partner's CEO, Amikam Cohen, said: "We
are very pleased with our second quarter results which showed further
improvements in key financial and operational results. The progress we
continue to make in promoting our 3G network is very encouraging for
future growth potential, and the acquisition of Med-1's transmission
business will enable us to reduce future costs and introduce
additional products and services.
We are proud that Partner Communications was recently included in
the new NASDAQ Global Select Market, an additional recognition of the
Company's commitment to its shareholders to maintain the highest
financial and liquidity requirements as well as world-class corporate
governance standards."
Q2 2006 vs. Q2 2005 Comparison
-0-
*T
Q2 2005 Q2 2006 Change
Revenues (NIS millions) 1,250.9 1,372.9 9.8%
EBITDA (NIS millions) 420.8 473.2 12.4%
Operating Profit (NIS millions) 251.8 311.5 23.7%
Net Income (NIS millions) 115.8 174.2 50.4%
Cash flow from operating activities net of
investing activities (NIS millions) 132.8 230.5 73.5%
Subscribers (thousands) 2,409.0 2,585.0 7.3%
Estimated Market Share (%) 32.0 32.0 -
Quarterly Churn Rate (%) 3.6 3.8 5.6%
Average Monthly Usage per Subscriber
(minutes) 296.0 306.7 3.6%
Average Monthly Revenue per Subscriber (NIS) 157.0 158.3 0.8%
-------------------------------------------- -------- -------- ------
*T
Financial Review
Partner's Q2 2006 revenues amounted to NIS 1,372.9 million (US$
309.2 million), up 9.8% compared with NIS 1,250.9 million in Q2 2005
and also up 3.5% compared with NIS 1,326.6 million in Q1 2006. The
rise in total revenues compared with both Q2 2005 and Q1 2006 resulted
primarily from growth in service revenues (NIS 1,244.5 million (US$
280.3 million) in Q2 2006, up by 8.6% from NIS 1,145.6 million in Q2
2005, and by 5.1% from NIS 1,184.2 million in Q1 2006). Both increases
reflected the growth in the subscriber base and in the average number
of minutes of use, but were partially offset by the full quarterly
effect of the approximate 7% reduction in interconnection tariffs that
went into effect in March 2006.
Equipment revenues increased by 22.1% from NIS 105.2 million in Q2
2005 to NIS 128.5 million (US$ 28.9 million) in Q2 2006. The increase
was driven by an increase in the average revenue per handset sale
primarily as a result of the increased proportion of 3G handsets sold
compared with 2G handsets. Compared with Q1 2006, equipment revenues
decreased by 9.8%, primarily as a result of a decrease in the number
of 2G sales to new and upgrading subscribers.
Content and data revenues in Q2 2006 accounted for 8.9% of total
revenues and 9.9% of service revenues, up from 7.3% of total revenues
and 8.0% of service revenues in Q2 2005, despite the mandated 49%
reduction in SMS interconnection tariffs which went into effect in
March 2006, and a slight decrease from 9.0% of total revenues and
10.1% of service revenues in Q1 2006. Compared with Q2 2005, non-SMS
data and content revenues increased in Q2 2006 by 41.4%.
The cost of revenues related to services amounted to NIS 772.5
million (US$ 174.0 million) in Q2 2006, an increase of 5.9% from NIS
729.5 million in Q2 2005, and of 3.7% from NIS 744.7 million in Q1
2006. The increase from both quarters was principally due to higher
variable airtime costs resulting from the growth in total number of
minutes.
In Q2 2006, the cost of revenues related to equipment increased by
7.3% to NIS 169.4 million (US$ 38.2 million) compared to NIS 157.9
million in Q2 2005. The rise was primarily driven by a higher average
cost of handsets sold, explained by the increased proportion of 3G
handsets sold compared with 2G handsets. Compared with Q1 2006, the
cost of revenues related to equipment in Q2 2006 decreased by 18.3%
from NIS 207.4 million, principally a reflection of the decrease in
the number of 2G handsets sold.
Gross profit on services increased by 13.4% from NIS 416.1 million
in Q2 2005 to NIS 472.0 million (US$ 106.3 million) in Q2 2006, and by
7.4% from NIS 439.5 million in Q1 2006. Gross loss on equipment
totaled NIS 41.0 million (US$ 9.2 million) in Q2 2006, a decrease of
22.2% from NIS 52.7 million in Q2 2005 and a decrease of 36.9% from
NIS 65.0 million in Q1 2006.
Overall, gross profit in Q2 2006 amounted to NIS 431.0 million
(US$ 97.1 million), representing a gross margin of 31.4% of total
revenues, up 18.6% from NIS 363.4 million in Q2 2005 and up 15.1% from
NIS 374.5 million in Q1 2006.
Selling and marketing expenses were NIS 75.6 million (US$ 17.0
million) in Q2 2006, an increase of 15.5% from NIS 65.4 million in Q2
2005 and an increase of 32.0% from NIS 57.3 million in Q1 2006. The
increase compared with Q2 2005 was primarily due to higher
distribution costs and advertising activity. Compared with Q1 2006,
the increase was due to the timing of advertising campaigns.
In Q2 2006, general and administrative expenses totaled NIS 44.0
million (US$ 9.9 million), a decrease of 4.8% from NIS 46.2 million in
Q2 2005 and approximately equivalent to NIS 43.7 million in Q1 2006.
Overall, operating profit in the second quarter of 2006 was NIS
311.5 million (US$ 70.2 million), or 22.7% of total revenues, an
increase of 23.7% from NIS 251.8 million or 20.1% of total revenues in
Q2 2005, and an increase of 13.9% from NIS 273.5 million or 20.6% of
total revenues in Q1 2006. Quarterly EBITDA in Q2 2006 increased to
NIS 473.2 million or US$ 106.6 million, compared with NIS 420.8
million in Q2 2005 and NIS 438.6 million in Q1 2006. The EBITDA margin
was 34.5% of total revenues in Q2 2006, compared with 33.6% in Q2 2005
and 33.1% in Q1 2006.
Financial expenses in Q2 2006 were NIS 61.2 million (US$ 13.8
million), a decrease of 26.1% from NIS 82.8 million in Q2 2005,
primarily reflecting lower interest expenses resulting from the
refinancing of the Company's long term debt with lower cost CPI linked
shekel-denominated debt, despite the average higher debt levels in Q2
2006. Compared with Q1 2006, financial expenses increased by 58.4%
from NIS 38.6 million, principally explained by a NIS 24.6 million
expense resulting from the higher CPI level in Q2 2006 of 1.2%
compared with 0.1% in Q1 2006. As of June 30, 2006, the Company held
CPI forward contracts covering approximately 65% of its CPI exposure
to changes.
Q2 2006 net income amounted to NIS 174.2 million (US$ 39.2
million), representing an increase of 50.4% from NIS 115.8 million in
Q2 2005, and an increase of 8.6% from NIS 160.4 million in Q1 2006.
Based on the average number of shares outstanding during the
quarter, basic earnings per share or ADS were NIS 1.14 (26 US cents)
in Q2 2006, up 56.2% from NIS 0.73 in Q2 2005 resulting from the 50.4%
increase in net income and the lower average shares outstanding
following the share repurchase in 2005. Compared with Q1 2006, basic
earnings per share or ADS were up 8.6% in Q2 2006 from NIS 1.05 in Q1
2006. Fully diluted earnings per share or ADS in Q2 2006 were NIS 1.13
(25 US cents), up from NIS 0.72 in Q2 2005 and from NIS 1.05 in Q1
2006.
Funding and Investing Review
In Q2 2006, cash flows generated from operating activities, net of
cash flows from investing activities, totaled NIS 230.5 million (US$
51.9 million), a 73.5% increase compared with NIS 132.8 million in Q2
2005, and a 236.9% increase compared with NIS 68.4 million in Q1 2006.
The increase compared with Q2 2005 resulted from higher operating cash
flows together with lower payments for investments in fixed assets.
Compared with Q1 2006, the increase was primarily attributable to an
increase in operating cash flows.
Net investment in fixed assets in Q2 2006 totaled NIS 76.6 million
(US$ 17.3 million), a decrease of 45.0% from NIS 139.4 million in Q2
2005 and an increase of 13.2% from NIS 67.7 million in Q1 2006.
On July 6th, 2006, Partner completed the acquisition of the
transmission activity of MED1 I.C.-1 (1999) Ltd., including
approximately 900 kilometers of transmission fiber, for cash
consideration of approximately US$15 million.
The Board of Directors has approved the distribution of an interim
quarterly cash dividend for Q2 2006 of NIS 0.45 per share
(approximately NIS 70 million or US$ 15.8 million) to shareholders and
ADS holders on record as of August 17th, 2006. The Company will pay
dividend on September 04, 2006.
Operational Review
As of June 30, 2006 the Company reported an active subscriber base
of approximately 2,585,000, consisting of approximately 557,000
business subscribers, accounting for 21% of the base, approximately
1,260,000 postpaid private subscribers, or 49% of the base, and
approximately 768,000 prepaid subscribers, or 30% of the base. Of the
Company's subscriber base at the end of Q2 2006, approximately 165,000
were 3G subscribers. We estimate our total market share at the end of
Q2 2006 to have been around 32%.
The Company's net active subscriber base grew by approximately
25,000 in Q2 2006, including a net increase in active 3G subscribers
of approximately 35,000 (including both new subscribers and migrating
subscribers from 2G). The Q2 2006 increase in the overall subscriber
base was lower than the increases of 37,000 and 31,000 in Q2 2005 and
Q1 2006 respectively, due primarily to the highly penetrated nature of
the market. The quarterly churn rate increased from 3.6% in Q2 2005 to
3.8% in Q2 2006, and decreased from 4.2% compared to Q1 2006.
In Q2 2006, the average minutes of use per subscriber amounted to
307 minutes per month, compared with 296 minutes in Q2 2005 and 301
minutes in Q1 2006. ARPU (Average Revenue per User) in Q2 2006 was
approximately NIS 158 (US$ 36), roughly equivalent to NIS 157 in Q2
2005, but higher than NIS 152 in Q1 2006.
Outlook and Guidance
Commenting on the Company's results, Alan Gelman, Partner's Chief
Financial Officer, said: "The results this quarter were particularly
strong, with improvements in all key margins, and strong service
revenues and usage patterns from both 2G and 3G subscribers."
Commenting on the Company's outlook, Mr. Gelman said, "In light of
the Company's performance over the past two quarters, we are updating
our guidance for the second half of the year, and now expect the
improved trends of the first half to continue through the second half
of the year, the qualification being that total equipment subsidies
may be higher depending on 3G handset availability and prices.
Regarding the impact of the current regional hostilities, based on
current information and assuming hostilities cease in the near term,
we do not believe the impact on results will be significant. However,
service revenues may rise as a result of increased usage, while new
subscriber activations may be dampened."
Conference Call Details
Partner Communications will hold a conference call to discuss the
company's second-quarter results on Thursday, July 27, 2006, at 18:00
Israel local time (11AM EST). This conference call will be broadcast
live over the Internet and can be accessed by all interested parties
through our investor relations web site at
http://www.investors.partner.co.il.
To listen to the broadcast, please go to the web site at least 15
minutes prior to the start of the call to register, download and
install any necessary audio software. For those unable to listen to
the live broadcast, an archive of the call will be available via the
Internet (at the same location as the live broadcast) shortly after
the call ends, and until midnight of August 3, 2006.
About Partner Communications
Partner Communications Company Ltd. (Partner) is a leading Israeli
mobile communications operator providing GSM/ GPRS/ UMTS services and
wire free applications under the orange(TM) brand. The Company
commenced full commercial operations in January 1999 and, through its
network, provides quality service and a range of features to 2.585
million subscribers in Israel. The Company launched its 3G service in
2004. The Company launched its 3G service in 2004. Partner's ADSs are
quoted on The NASDAQ Global Select Market(TM) and on the Tel Aviv
Stock Exchange under the symbol PTNR. The shares are also traded on
the London Stock Exchange under the symbol PCCD.
Partner is a subsidiary of Hutchison Telecommunications
International Limited (Hutchison Telecom). Hutchison Telecom is a
leading listed telecommunications operator (SEHK: 2332; NYSE: HTX)
focusing on dynamic markets. It currently offers mobile and fixed-line
telecommunication services in Hong Kong, and operates or is rolling
out mobile telecommunication services in India, Israel, Macau,
Thailand, Sri Lanka, Ghana, Indonesia and Vietnam.
For more information about Partner, see
www.investors.partner.co.il
Note: This report 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. We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to risks, uncertainties and
assumptions about Partner.
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 quarterly report
regarding our future performance, plans to increase revenues or
margins or preserve or expand market share in existing or new markets,
reduce expenses and any statements regarding other future events or
our future prospects, are forward-looking statements.
Because such statements involve risks and uncertainties, actual
results may differ materially from the results currently expected.
Factors that could cause such differences include, but are not limited
to:
-- the effects of the high degree of regulation in the
telecommunications market in which we operate;
-- regulatory developments relating to tariffs, including
interconnect tariffs;
-- the difficulties associated with obtaining all permits
required for building and operating of antenna sites;
-- the requirement to indemnify planning committees in respect of
claims made against them relating to the depreciation of
property values or to alleged health damages resulting from
antenna sites;
-- alleged health risks related to antenna sites and use of
telecommunication devices;
-- the effects of vigorous competition in the market in which we
operate and for more valuable customers, which may decrease
prices charged, increase churn and change our customer mix,
profitability and average revenue per user, and the response
of competitors to industry and regulatory developments;
-- uncertainties about the degree of growth in the number of
consumers in Israel using wireless personal communications
services and the growth in the Israeli population;
-- the risks associated with the implementation of a third
generation (3G) network and business strategy, including risks
relating to the operations of new systems and technologies,
potential unanticipated costs, uncertainties regarding the
adequacy of suppliers on whom we must rely to provide both
network and consumer equipment and consumer acceptance of the
products and services to be offered, and the risk that the use
of internet search engines by our 3G customers will be
restricted;
-- the risks associated with technological requirements,
technology substitution and changes and other technological
developments;
-- the impact of existing and new competitors in the market in
which we compete, including competitors that may offer less
expensive products and services, desirable or innovative
products, technological substitutes, or have extensive
resources or better financing;
-- regulatory developments related to the implementation of
number portability;
-- fluctuations in foreign exchange rates;
-- the possibility of the market in which we compete being
impacted by changes in political, economic or other factors,
such as monetary policy, legal and regulatory changes or other
external factors over which we have no control;
-- the availability and cost of capital and the consequences of
increased leverage; and
-- the results of litigation filed or that may be filed against
us,
as well as the risks discussed in Risk Factors, Information on the
Company and Operating and Financial Review and Prospects in form 20-F
filed with the SEC on May 18, 2006. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in
this report might not occur.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
These financial results were prepared in accordance with U.S.
GAAP.
The convenience translations of the Nominal New Israeli Shekel
(NIS) figures into US Dollars were made at the rate of exchange
prevailing at June 30th, 2006: US $1.00 equals NIS 4.440. The
translations were made purely for the convenience of the reader.
Earnings before interest, taxes, depreciation, amortization,
exceptional items and capitalization of intangible assets ('EBITDA')
is presented because it is a measure commonly used in the
telecommunications industry and is presented solely in order to
improve the understanding of the Company's operating results and to
provide further perspective on these results. EBITDA, however, should
not be considered as an alternative to operating income or net income
for the year as an indicator of the operating performance of the
Company. Similarly, EBITDA should not be considered as an alternative
to cash flows from operating activities as a measure of liquidity.
EBITDA is not a measure of financial performance under generally
accepted accounting principles and may not be comparable to other
similarly titled measures for other companies. EBITDA may not be
indicative of the historic operating results of the Company; nor is it
meant to be predictive of potential future results.
Reconciliation between our cash flows from operating activities
and EBIDTA is presented in the attached summary financial results.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED BALANCE SHEETS
-0-
*T
Convenience
translation into
New Israeli shekels U.S. dollars
--------------------- ---------------------
December December
June 30, 31, June 30, 31,
2006 2005 2006 2005
----------- --------- ----------- ---------
(Unaudited) (Audited) (Unaudited) (Audited)
----------- --------- ----------- ---------
In thousands
-------------------------------------------
Assets
CURRENT ASSETS:
Cash and cash
equivalents 31,881 4,008 7,180 903
Accounts receivable:
Trade 890,766 795,156 200,623 179,089
Other 105,437 97,128 23,747 21,875
Inventories 102,775 209,323 23,148 47,145
Deferred income taxes 38,354 65,361 8,638 14,721
---------- ---------- ---------- ----------
Total current
assets 1,169,213 1,170,976 263,336 263,733
---------- ---------- ---------- ----------
INVESTMENTS AND LONG-TERM
RECEIVABLES:
Accounts receivables -
trade 253,156 189,013 57,017 42,570
Funds in respect of
employee rights upon
retirement 78,072 75,443 17,584 16,992
---------- ---------- ---------- ----------
331,228 264,456 74,601 59,562
---------- ---------- ---------- ----------
FIXED ASSETS, net of
accumulated
depreciation and
amortization 1,651,328 1,768,895 371,921 398,400
---------- ---------- ---------- ----------
LICENSE AND DEFERRED
CHARGES,
net of amortization 1,275,807 1,321,167 287,344 297,560
---------- ---------- ---------- ----------
DEFERRED INCOME TAXES 85,290 86,505 19,209 19,484
---------- ---------- ---------- ----------
4,512,866 4,611,999 1,016,411 1,038,739
========== ========== ========== ==========
*T
-0-
*T
Convenience
translation into
New Israeli shekels U.S. dollars
--------------------- ---------------------
December December
June 30, 31, June 30, 31,
2006 2005 2006 2005
----------- --------- ----------- ---------
(Unaudited) (Audited) (Unaudited) (Audited)
----------- --------- ----------- ---------
In thousands
-------------------------------------------
Liabilities and
shareholders' equity
CURRENT LIABILITIES:
Current maturities of
long-term
liabilities 36,987 34,464 8,330 7,762
Accounts payable and
accruals:
Trade 506,123 665,542 113,992 149,897
Other 190,627 231,480 42,934 52,135
Related party -
trade 7,923 10,513 1,784 2,368
Dividend payable 105,590 44,996 23,782 10,134
----------- ----------- ---------- ----------
Total current
liabilities 847,250 986,995 190,822 222,296
----------- ----------- ---------- ----------
LONG-TERM LIABILITIES:
Bank loans, net of
current maturities 474,075 665,974 106,774 149,994
Notes payable 2,047,730 2,022,257 461,200 455,463
Liability for
employee rights upon
retirement 106,542 102,238 23,996 23,027
Other liabilities 17,877 19,184 4,026 4,321
----------- ----------- ---------- ----------
Total long-term
liabilities 2,646,224 2,809,653 595,996 632,805
----------- ----------- ---------- ----------
Total
liabilities 3,493,474 3,796,648 786,818 855,101
----------- ----------- ---------- ----------
SHAREHOLDERS' EQUITY:
Share capital -
ordinary shares of
NIS 0.01 par
value: authorized -
December 31, 2005
and June 30, 2006 -
235,000,000
shares; issued and
outstanding -
December 31, 2005
152,528,288
shares and June 30,
2006 153,811,212
shares 1,538 1,525 346 343
Capital surplus 2,426,485 2,388,425 546,506 537,934
Accumulated deficit (1,408,631) (1,574,599) (317,259) (354,639)
----------- ----------- ---------- ----------
Total
shareholders'
equity 1,019,392 815,351 229,593 183,638
----------- ----------- ---------- ----------
4,512,866 4,611,999 1,016,411 1,038,739
=========== =========== ========== ==========
*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-0-
*T
New Israeli shekels
-----------------------
6 month 3 month
period period
ended ended
June 30, June 30,
----------- ---------
2006 2005 2006 2005
----- ----- ----- ----- ------ ------
(Unaudited)
-------------------------------------
In thousands (except per share data)
-------------------------------------
REVENUES - net:
Services 2,428,700 2,278,067 1,244,492 1,145,642
Equipment 270,889 233,276 128,453 105,233
------------ ------------ ------------ -----------
2,699,589 2,511,343 1,372,945 1,250,875
------------ ------------ ------------ -----------
COST OF REVENUES:
Services 1,517,218 1,472,857 772,469 729,525
Equipment 376,873 339,442 169,445 157,949
------------ ------------ ------------ -----------
1,894,091 1,812,299 941,914 887,474
------------ ------------ ------------ -----------
GROSS PROFIT 805,498 699,044 431,031 363,401
SELLING AND
MARKETING EXPENSES 132,829 122,805 75,579 65,442
GENERAL AND
ADMINISTRATIVE
EXPENSES 87,645 87,713 43,963 46,203
------------ ------------ ------------ -----------
OPERATING PROFIT 585,024 488,526 311,489 251,756
FINANCIAL EXPENSES
- net 99,805 133,680 61,176 82,826
------------ ------------ ------------ -----------
INCOME BEFORE TAXES
ON INCOME 485,219 354,846 250,313 168,930
TAXES ON INCOME 151,577 114,519 76,076 53,096
------------ ------------ ------------ -----------
INCOME BEFORE
CUMULATIVE EFFECT
OF A CHANGE
IN ACCOUNTING
PRINCIPLES 333,642 240,327 174,237 115,834
CUMULATIVE EFFECT,
AT BEGINNING OF
YEAR, OF A
CHANGE IN
ACCOUNTING
PRINCIPLES 1,012
------------ ------------ ------------ -----------
NET INCOME FOR THE
PERIOD 334,654 240,327 174,237 115,834
============ ============ ============ ===========
EARNINGS PER SHARE
("EPS") :
Basic:
Before
cumulative
effect 2.18 1.40 1.14 0.73
Cumulative
effect 0.01
------------ ------------ ------------ -----------
2.19 1.40 1.14 0.73
============ ============ ============ ===========
Diluted:
Before
cumulative
effect 2.17 1.38 1.13 0.72
Cumulative
effect 0.01
------------ ------------ ------------ -----------
2.18 1.38 1.13 0.72
============ ============ ============ ===========
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 153,124,740 171,425,42 153,427,136 158,703,072
============ ============ ============ ===========
Diluted 153,759,920 173,634,795 154,345,180 160,780,744
============ ============ ============ ===========
Convenience translation
into U.S. dollars
-------------
6 3
month month
period period
ended ended
June June
30, 30,
--
2006 2006
REVENUES - net:
Services 547,005 280,291
Equipment 61,011 28,931
------------ ------------
608,016 309,222
------------ ------------
COST OF REVENUES:
Services 341,716 173,980
Equipment 84,882 38,163
------------ ------------
426,598 212,143
------------ ------------
GROSS PROFIT 181,418 97,079
SELLING AND
MARKETING EXPENSES 29,916 17,022
GENERAL AND
ADMINISTRATIVE
EXPENSES 19,740 9,902
------------ ------------
OPERATING PROFIT 131,762 70,155
FINANCIAL EXPENSES
- net 22,478 13,778
------------ ------------
INCOME BEFORE TAXES
ON INCOME 109,284 56,377
TAXES ON INCOME 34,139 17,134
------------ ------------
INCOME BEFORE
CUMULATIVE EFFECT
OF A CHANGE
IN ACCOUNTING
PRINCIPLES 75,145 39,243
CUMULATIVE EFFECT,
AT BEGINNING OF
YEAR, OF A
CHANGE IN
ACCOUNTING
PRINCIPLES 228
------------ ------------
NET INCOME FOR THE
PERIOD 75,373 39,243
============ ============
EARNINGS PER SHARE
("EPS") :
Basic:
Before
cumulative
effect 0.49 0.26
Cumulative
effect (a)
------------ ------------
0.49 0.26
============ ============
Diluted:
Before
cumulative
effect 0.49 0.25
Cumulative
effect (a)
------------ ------------
0.49 0.25
============ ============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
Basic 153,124,740 153,427,136
============ ============
Diluted 153,759,920 154,345,180
============ ============
*T
(a) Representing an amount less than 0.01$
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-0-
*T
Convenience
translation
into
New Israeli U.S.
shekels dollars
----------- -----------
6 month 6 month
period period
ended June ended June
30, 30,
-----------
2006 2005 2006
----- ----- -----------
(Unaudited)
-----------------------
In thousands
-----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the period 334,654 240,327 75,373
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 321,273 336,672 72,359
Amortization of deferred compensation
related to employee stock option
grants, net 11,448 6,977 2,578
Liability for employee rights upon
retirement 4,304 3,834 969
Accrued interest and exchange and
linkage differences on long-term
liabilities 29,681 64,813 6,685
Deferred income taxes 28,222 111,791 6,356
Income tax benefit in respect of
exercise of option granted to
employees 2,729
Capital loss on sale of fixed assets 420
Cumulative effect, at beginning
of year, of a change in
accounting principles (1,012) (228)
Changes in operating assets and
liabilities:
Increase in accounts receivable:
Trade (159,753) (115,176) (35,981)
Other (8,309) (14,661) (1,872)
Decrease in accounts payable and
accruals:
Related Parties (2,590) (584)
Trade (114,388) (23,253) (25,763)
Other (46,268) (60,874) (10,420)
Decrease in inventories 106,548 12,999 23,997
Increase in asset retirement
obligations 802 228 181
Amount carried to deferred charges (13,224)
--------- ----------- --------
Net cash provided by operating
activities 504,612 553,602 113,650
--------- ----------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (175,130) (295,095) (39,444)
Purchase of additional spectrum (27,988) (41,539) (6,304)
Proceeds from sale of fixed assets 16
Funds in respect of employee rights
upon retirement (2,629) (2,395) (592)
--------- ----------- --------
Net cash used in investing
activities (205,747) (339,013) (46,340)
--------- ----------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Financial lease undertaken 15,832
Repayment of capital lease (2,453) (552)
Repurchase of company's shares (1,091,841)
Issuance of notes payable under a
prospects, net of issuance costs 1,929,540
Proceeds from exercise of stock
options granted to employees 27,637 20,628 6,225
Dividend Paid (102,677) - (23,125)
Repayment of long term bank loans (193,499) (841,171) (43,581)
--------- ----------- --------
Net cash provided by (used in)
financing activities (270,992) 32,988 (61,033)
--------- ----------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 27,873 247,577 6,277
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 4,008 4,611 903
--------- ----------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD 31,881 252,188 7,180
========= =========== ========
*T
Supplementary information on investing and financing activities
not involving cash flows
At June 30, 2006, and 2005, trade payables include NIS 73 million
($ 16 million) (unaudited) and NIS 141million (unaudited) in respect
of acquisition of fixed assets (in 2005 including additional
spectrum), respectively.
At June 30, 2006 dividend payable of approximately NIS 106 million
($ 24 million) (unaudited) is outstanding.
These balances will be given recognition in these statements upon
payment.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
RECONCILIATION BETWEEN OPERATING CASH FLOWS AND EBITDA
-0-
*T
Convenience
New Israeli shekels translation
into
U.S. dollars
------------------- ------------
6 Month
6 Month Period Period
Ended Ended June
June 30, 30,
------------------- ------------
2006 2005 2006
---------- -------- ------------
(Unaudited)
--------------------------------
In thousands
--------------------------------
Net cash provided by operating
activities 504,612 553,602 113,651
Liability for employee rights upon
retirement (4,304) (3,834) (969)
Accrued interest and exchange and
linkage differences on long-term
liabilities (29,681) (64,813) (6,685)
Amount carried to differed charges 13,224
Increase in accounts receivable:
Trade 159,753 115,176 35,981
Other (excluding tax provision) 131,664 14,661 29,654
Decrease in accounts payable and
accruals:
Trade 114,388 23,253 25,763
Shareholder - current account 2,590 584
Other 46,268 60,874 10,420
Decrease in inventories (106,548) (12,999) (23,997)
Decrease in Assets Retirement
Obligation (802) (228) (181)
Financial expenses (b) 93,849 122,554 21,136
--------- ------- -------
EBITDA 911,789 821,470 205,357
--------- ------- -------
*T
* The convenience translation of the New Israeli Shekel (NIS)
figures into US dollars was made at the exchange prevailing at June
30, 2006 : US $1.00 equals 4.44 NIS.
(b) Financial expenses excluding any charge for the amortization
of pre-launch financial costs.
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
-0-
*T
New Israeli shekels
-----------------------------------------------------
3 month period ended
-----------------------------------------------------
September December
June 30, 30, 31, March 31, June 30,
2005 2005 2005 2006 2006
---------- --------- ---------- --------- -----------
(Unaudited)
-----------------------------------------------------
In thousands
-----------------------------------------------------
Revenues - net 1,250,875 1,352,322 1,259,274 1,326,644 1,372,945
Cost of Revenues 887,474 1,023,828 930,225 952,177 941,914
---------- ---------- ---------- ---------- ----------
Gross Profit 363,401 328,494 329,049 374,467 431,031
Selling and
Marketing
expenses 65,442 72,105 77,990 57,250 75,579
General and
Administrative
Expenses 46,203 45,222 47,846 43,682 43,963
---------- ---------- ---------- ---------- ----------
Operating Profit 251,756 211,167 203,213 273,535 311,489
Financial
Expenses - net 82,826 148,782 62,986 38,629 61,176
---------- ---------- ---------- ---------- ----------
Income Before
Taxes on Income 168,930 62,385 140,227 234,906 250,313
Taxes on Income 53,096 31,441 56,938 75,501 76,076
---------- ---------- ---------- ---------- ----------
Income Before
Cumulative
Effect of a
Change in
Accounting
Principles 115,834 30,944 83,289 159,405 174,237
Cumulative
Effect, at
the Beginning
of the Year,
of a Change
in Accounting
Principles 1,012
Net Income for
the Period 115,834 30,944 83,289 160,417 174,237
========== ========== ========== ========== ==========
*T
PARTNER COMMUNICATIONS COMPANY LTD.
(An Israeli Corporation)
SUMMARY OPERATING DATA
-0-
*T
Q2 2005 Q2 2006
--------------------------------------------- ----------- -----------
Subscribers (in thousands) 2,409 2,585
--------------------------------------------- ----------- -----------
Estimated share of total Israeli mobile
telephone subscribers 32% 32%
--------------------------------------------- ----------- -----------
Churn rate in quarter 3.6% 3.8%
--------------------------------------------- ----------- -----------
Average monthly usage in quarter per
subscriber (minutes) 296 307
--------------------------------------------- ----------- -----------
Average monthly revenue in year per
subscriber, including in-roaming revenue
(NIS) 157 158
--------------------------------------------- ----------- -----------
Number of 2G operational base stations (in
parenthesis number of micro sites out of
total number of base stations) 2,260 (716) 2,298 (710)
--------------------------------------------- ----------- -----------
*T
