(1) |
to re-appoint Kesselman & Kesselman, independent certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited group, as the Company's auditor for the period ending at the close of the next
annual general meeting;
|
(2) |
to discuss the auditor’s remuneration for the year ended December 31, 2019, as determined by the Audit Committee and by the Board of Directors, and the report of the Board of Directors with respect to the remuneration paid to the
auditor and its affiliates for the year ended December 31, 2019;
|
(3) |
to discuss the Company’s audited financial statements for the year ended December 31, 2019 and the report of the Board of Directors for such period;
|
(4) |
to re-elect the following directors to the Company’s Board of Directors until the close of the next annual general meeting: Mr. Richard Hunter, Mr. Yehuda Saban, Mr. Yossi Shachak,Mr. Arie (Arik) Steinberg and Mr. Ori Yaron, (the "Appointed Directors");
|
(5) |
to approve the appointment of Mr. Shlomo Zohar as a new independent director (bilty taluy);
|
(6) |
to approve the appointment of Ms. Roly Klinger as a new external director (Dahatz);
|
(7) |
to approve the appointment of Ms. Michal Marom-Brikman as a new external director (Dahatz) effective January 1, 2021; and
|
(8) |
to approve an amendment to the Company's Compensation Policy.
|
By Order of the Board of Directors
|
|
Hadar Vismunski-Weinberg, Adv.
|
|
Company Secretary
|
(1) |
to re-appoint Kesselman & Kesselman, independent certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited group, as the Company's auditor for the period ending at the close of the next
annual general meeting;
|
(2) |
to discuss the auditor’s remuneration for the year ended December 31, 2019, as determined by the Audit Committee and by the Board of Directors, and the report of the Board of Directors with respect to the remuneration paid to the
auditor and its affiliates for the year ended December 31, 2019;
|
(3) |
to discuss the Company’s audited financial statements for the year ended December 31, 2019 and the report of the Board of Directors for such period; and
|
(4) |
to re-elect the following directors to the Company’s Board of Directors until the close of the next annual general meeting: Mr. Richard Hunter, Mr. Yehuda Saban,Mr. Yossi Shachak, Mr. Arie (Arik) Steinberg and Mr. Ori Yaron (the "Appointed Directors");
|
(5) |
to approve the appointment of Mr. Shlomo Zohar as a new independent director (bilty taluy);
|
(6) |
to approve the appointment of Ms. Roly Klinger as a new external director (Dahatz);
|
(7) |
to approve the appointment of Ms. Michal Marom-Brikman as a new external director (Dahatz) effective January 1, 2021; and
|
(8) |
to approve amendments to the Company's Compensation policy.
|
1. |
“RESOLVED: to re-appoint the Company’s auditor, Kesselman & Kesselman, as the auditor of the Company for the period ending at the close of the next annual general meeting.”
|
2. |
“The remuneration of the auditor and its affiliates for the year 2019 as determined by the Audit Committee and by the Board of Directors and the report by the Board of Directors of the remuneration of the auditor and its affiliates
for the same period are hereby noted.”
|
Name
|
Position
|
|
Mr. Richard Hunter
|
Director
|
|
Mr. Yehuda Saban
|
Director
|
|
Mr. Yossi Shachak
|
Director
|
|
Mr. Arie (Arik) Steinberg
|
Director
|
|
Mr. Ori Yaron
|
Director
|
(i) |
“RESOLVED: to re-elect Mr. Richard Hunter, Mr. Yehuda Saban, Mr. Yossi Shahak, Mr. Arie (Arik) Steinberg and Mr. Ori Yaron to serve as directors of the Company until the close of the next
annual general meeting, unless their office becomes vacant earlier in accordance with the provisions of the Israeli Companies Law and the Company’s Articles of Association;
|
(ii) |
RESOLVED: this resolution is in the best interest of the Company.”
|
(i) |
“RESOLVED: to appoint Mr. Shlomo Zohar as an independent director (Bilty taluy) of the Company in accordance with the
Israeli Companies Law and regulations promulgated thereunder, commencing on October 29,2020; and
|
(ii) |
RESOLVED: this resolution is in the best interest of the Company.”
|
(i) |
“RESOLVED: to appoint Ms. Roly Klinger as an external director (Dahatz) of the Company for a term of three years in accordance with the Israeli
Companies Law and regulations promulgated thereunder, commencing on October 29,2020;
|
(ii) |
RESOLVED: this resolution is in the best interest of the Company.”
|
(i) |
“RESOLVED: to appoint Ms. Michal Marom-Brikman as an external director (Dahatz) of the Company for a term of three years in accordance with the
Israeli Companies Law and regulations promulgated thereunder, commencing on January 1, 2021; and
|
(ii) |
RESOLVED: this resolution is in the best interest of the Company.”
|
(i) |
“RESOLVED: to approve amendments to our Compensation Policy as set forth in "Annex C";
|
(ii) |
RESOLVED: this resolution is in the best interest of the Company.”
|
By Order of the Board of Directors
|
|
Hadar Vismunski-Weinberg, Adv.
|
|
Company Secretary
|
Page
|
|
A - 3 - A - 4
|
|
CONSOLIDATED FINANCIAL STATEMENTS:
|
|
A -5 - A - 6
|
|
A - 7
|
|
A - 8
|
|
A - 9
|
|
A - 10 - A - 11
|
|
A - 12 - A - 93
|
New Israeli Shekels |
Convenience translation into U.S. dollars
(note 2b3) |
|||||||||||||||
December 31,
|
||||||||||||||||
2018
|
2019**
|
|
2019**
|
|
||||||||||||
Note
|
In millions
|
|||||||||||||||
CURRENT ASSETS
|
||||||||||||||||
Cash and cash equivalents
|
416
|
299
|
87
|
|||||||||||||
Short-term deposits
|
6
|
552
|
160
|
|||||||||||||
Trade receivables
|
7
|
656
|
624
|
180
|
||||||||||||
Other receivables and prepaid expenses
|
33
|
39
|
11
|
|||||||||||||
Deferred expenses – right of use
|
12
|
51
|
26
|
7
|
||||||||||||
Inventories
|
8
|
98
|
124
|
36
|
||||||||||||
1,254
|
1,664
|
481
|
||||||||||||||
NON CURRENT ASSETS
|
||||||||||||||||
Trade receivables
|
7
|
260
|
250
|
72
|
||||||||||||
Deferred expenses – right of use
|
12
|
185
|
102
|
30
|
||||||||||||
Lease – right of use
|
19
|
582
|
168
|
|||||||||||||
Property and equipment
|
10
|
1,211
|
1,430
|
414
|
||||||||||||
Intangible and other assets
|
11
|
617
|
538
|
156
|
||||||||||||
Goodwill
|
13
|
407
|
407
|
118
|
||||||||||||
Deferred income tax asset
|
25
|
38
|
41
|
12
|
||||||||||||
Prepaid expenses and other assets
|
4
|
1
|
*
|
|||||||||||||
2,722
|
3,351
|
970
|
||||||||||||||
TOTAL ASSETS
|
3,976
|
5,015
|
1,451
|
Isaac Benbenishti
|
Tamir Amar
|
Barry Ben-Zeev (Woolfson)
|
||
Chief Executive Officer
|
Chief Financial Officer
|
Director
|
||
New Israeli Shekels |
Convenience translation into U.S. dollars
(note 2b3) |
|||||||||||||||
December 31,
|
||||||||||||||||
2018
|
2019**
|
|
2019**
|
|
||||||||||||
Note
|
In millions
|
|||||||||||||||
CURRENT LIABILITIES
|
||||||||||||||||
Current maturities of notes payable and borrowings
|
6,15
|
162
|
367
|
106
|
||||||||||||
Trade payables
|
711
|
716
|
206
|
|||||||||||||
Payables in respect of employees
|
96
|
103
|
30
|
|||||||||||||
Other payables (mainly institutions)
|
10
|
23
|
7
|
|||||||||||||
Income tax payable
|
35
|
30
|
9
|
|||||||||||||
Lease liabilities
|
19
|
131
|
38
|
|||||||||||||
Deferred revenues from HOT mobile
|
9,22
|
31
|
31
|
9
|
||||||||||||
Other deferred revenues
|
22
|
41
|
45
|
13
|
||||||||||||
Provisions
|
14
|
64
|
43
|
12
|
||||||||||||
1,150
|
1,489
|
430
|
||||||||||||||
NON CURRENT LIABILITIES
|
||||||||||||||||
Notes payable
|
6,15
|
1,013
|
1,275
|
369
|
||||||||||||
Borrowings from banks
|
6,15
|
191
|
138
|
40
|
||||||||||||
Financial liability at fair value
|
6,15
|
28
|
8
|
|||||||||||||
Liability for employee rights upon retirement, net
|
16
|
40
|
43
|
12
|
||||||||||||
Lease liabilities
|
19
|
486
|
141
|
|||||||||||||
Deferred revenues from HOT mobile
|
9,22
|
133
|
102
|
30
|
||||||||||||
Provisions and other non-current liabilities
|
14,22
|
43
|
37
|
11
|
||||||||||||
1,420
|
2,109
|
611
|
||||||||||||||
TOTAL LIABILITIES
|
2,570
|
3,598
|
1,041
|
|||||||||||||
EQUITY
|
21
|
|||||||||||||||
Share capital – ordinary shares of NIS 0.01 par value:
|
||||||||||||||||
authorized – December 31, 2018 and 2019 – 235,000,000
|
||||||||||||||||
shares; issued and outstanding -
|
2
|
2
|
1
|
|||||||||||||
December 31, 2018 – -***162,628,397 shares
|
||||||||||||||||
December 31, 2019 – ***162,915,990 shares
|
||||||||||||||||
Capital surplus
|
1,102
|
1,077
|
311
|
|||||||||||||
Accumulated retained earnings
|
563
|
576
|
167
|
|||||||||||||
Treasury shares, at cost –
|
||||||||||||||||
December 31, 2018 – ****8,560,264 shares
|
||||||||||||||||
December 31, 2019 – ****8,275,837 shares
|
(261
|
)
|
(238
|
)
|
(69
|
)
|
||||||||||
Non-controlling interests
|
*
|
|||||||||||||||
TOTAL EQUITY
|
1,406
|
1,417
|
410
|
|||||||||||||
TOTAL LIABILITIES AND EQUITY
|
3,976
|
5,015
|
1,451
|
Convenience
|
||||||||||||||||||||
translation
|
||||||||||||||||||||
into U.S. dollars
|
||||||||||||||||||||
New Israeli Shekels
|
(note 2b3)
|
|||||||||||||||||||
Year ended December 31,
|
||||||||||||||||||||
2017
|
2018
|
2019**
|
|
2019**
|
|
|||||||||||||||
Note
|
In millions (except earnings per share)
|
|||||||||||||||||||
Revenues, net
|
5,22
|
3,268
|
3,259
|
3,234
|
936
|
|||||||||||||||
Cost of revenues
|
5,22
|
2,627
|
2,700
|
2,707
|
783
|
|||||||||||||||
Gross profit
|
641
|
559
|
527
|
153
|
||||||||||||||||
Selling and marketing expenses
|
22
|
269
|
293
|
301
|
87
|
|||||||||||||||
General and administrative expenses
|
22
|
144
|
148
|
149
|
43
|
|||||||||||||||
Credit losses
|
7
|
52
|
30
|
18
|
5
|
|||||||||||||||
Income with respect to settlement
|
||||||||||||||||||||
agreement with Orange
|
18
|
108
|
||||||||||||||||||
Other income, net
|
23
|
31
|
28
|
28
|
8
|
|||||||||||||||
Operating profit
|
315
|
116
|
87
|
26
|
||||||||||||||||
Finance income
|
24
|
4
|
2
|
7
|
2
|
|||||||||||||||
Finance expenses
|
24
|
184
|
55
|
75
|
22
|
|||||||||||||||
Finance costs, net
|
24
|
180
|
53
|
68
|
20
|
|||||||||||||||
Profit before income tax
|
135
|
63
|
19
|
6
|
||||||||||||||||
Income tax expenses
|
25
|
21
|
7
|
*
|
*
|
|||||||||||||||
Profit for the year
|
114
|
56
|
19
|
6
|
||||||||||||||||
Attributable to:
|
||||||||||||||||||||
Owners of the Company
|
114
|
57
|
19
|
6
|
||||||||||||||||
Non-controlling interests
|
(1
|
)
|
*
|
*
|
||||||||||||||||
Profit for the year
|
114
|
56
|
19
|
6
|
||||||||||||||||
Earnings per share
|
||||||||||||||||||||
Basic
|
27
|
0.70
|
0.34
|
0.12
|
0.04
|
|||||||||||||||
Diluted
|
27
|
0.69
|
0.34
|
0.12
|
0.04
|
New Israeli Shekels |
Convenience translation into U.S. dollars
(note 2b3)
|
|||||||||||||||||||
Year ended December 31,
|
||||||||||||||||||||
2017
|
2018
|
2019**
|
|
2019**
|
|
|||||||||||||||
Note
|
In millions
|
|||||||||||||||||||
Profit for the year
|
114
|
56
|
19
|
6
|
||||||||||||||||
Other comprehensive income, items
|
||||||||||||||||||||
that will not be reclassified to profit or loss
|
||||||||||||||||||||
Remeasurements of post-employment benefit
|
||||||||||||||||||||
obligations
|
16
|
(2
|
)
|
1
|
(2
|
)
|
(1
|
)
|
||||||||||||
Income taxes relating to remeasurements of
|
||||||||||||||||||||
post-employment benefit obligations
|
25
|
1
|
*
|
*
|
*
|
|||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||
for the year, net of income taxes
|
(1
|
)
|
1
|
(2
|
)
|
(1
|
)
|
|||||||||||||
TOTAL COMPREHENSIVE INCOME
|
||||||||||||||||||||
FOR THE YEAR
|
113
|
57
|
17
|
5
|
||||||||||||||||
Total comprehensive income attributable to:
|
||||||||||||||||||||
Owners of the Company
|
113
|
58
|
17
|
5
|
||||||||||||||||
Non-controlling interests
|
(1
|
)
|
*
|
*
|
||||||||||||||||
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
|
113
|
57
|
17
|
5
|
Share capital
|
Non-controlling
interests
|
|||||||||||||||||||||||||||||||
Number of
|
Capital
|
Accumulated
|
Treasury
|
|||||||||||||||||||||||||||||
Shares**
|
Amount
|
surplus
|
earnings
|
shares
|
Total
|
Total equity
|
||||||||||||||||||||||||||
NIS In millions
|
||||||||||||||||||||||||||||||||
New Israeli Shekels:
|
||||||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2017
|
156,993,337
|
2
|
1,034
|
358
|
(283
|
)
|
1,111
|
1,111
|
||||||||||||||||||||||||
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2017
|
||||||||||||||||||||||||||||||||
Total comprehensive income for the year
|
113
|
113
|
113
|
|||||||||||||||||||||||||||||
Issuance of shares to shareholders (see note 21)
|
10,178,211
|
*
|
***190
|
|
190
|
190
|
||||||||||||||||||||||||||
Exercise of options and vesting of restricted shares granted to employees
|
1,072,365
|
(60
|
)
|
60
|
||||||||||||||||||||||||||||
Employee share-based compensation expenses
|
*
|
20
|
20
|
20
|
||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2017
|
168,243,913
|
2
|
1,164
|
491
|
(223
|
)
|
1,434
|
1,434
|
||||||||||||||||||||||||
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2018
|
||||||||||||||||||||||||||||||||
Profit for the year
|
56
|
56
|
(1
|
)
|
55
|
|||||||||||||||||||||||||||
Other comprehensive income for the year, net of income taxes
|
1
|
1
|
1
|
|||||||||||||||||||||||||||||
Exercise of options and vesting of restricted shares granted to employees
|
886,072
|
(62
|
)
|
62
|
||||||||||||||||||||||||||||
Employee share-based compensation expenses
|
15
|
15
|
15
|
|||||||||||||||||||||||||||||
Acquisition of treasury shares (note 21)
|
(6,501,588
|
)
|
(100
|
)
|
(100
|
)
|
(100
|
)
|
||||||||||||||||||||||||
Non-controlling interests on acquisition of subsidiary
|
1
|
1
|
||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2018
|
162,628,397
|
2
|
1,102
|
563
|
(261
|
)
|
1,406
|
*
|
1,406
|
|||||||||||||||||||||||
Adoption of IFRS 16 (notes 3 and 19)
|
(21
|
)
|
(21
|
)
|
(21
|
)
|
||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019
|
162,628,397
|
2
|
1,102
|
542
|
(261
|
)
|
1,385
|
*
|
1,385
|
|||||||||||||||||||||||
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2019
|
||||||||||||||||||||||||||||||||
Profit for the year
|
19
|
19
|
*
|
19
|
||||||||||||||||||||||||||||
Other comprehensive income for the year, net of income taxes
|
(2
|
)
|
(2
|
)
|
(2
|
)
|
||||||||||||||||||||||||||
Exercise of options and vesting of restricted shares granted to employees
|
287,593
|
(23
|
)
|
23
|
||||||||||||||||||||||||||||
Employee share-based compensation expenses
|
17
|
17
|
17
|
|||||||||||||||||||||||||||||
Transactions with non-controlling interests
|
(2
|
)
|
(2
|
)
|
*
|
(2
|
)
|
|||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2019
|
162,915,990
|
2
|
1,077
|
576
|
(238
|
)
|
1,417
|
-
|
1,417
|
|||||||||||||||||||||||
Convenience translation into U.S. Dollars (note 2b3):
|
||||||||||||||||||||||||||||||||
BALANCE AT DECEMBER 31 , 2018
|
162,628,397
|
1
|
319
|
163
|
(76
|
)
|
407
|
*
|
407
|
|||||||||||||||||||||||
Adoption of IFRS 16 (notes 3 and 19)
|
(6
|
)
|
(6
|
)
|
(6
|
)
|
||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019
|
162,628,397
|
1
|
319
|
157
|
(76
|
)
|
401
|
*
|
401
|
|||||||||||||||||||||||
CHANGES DURING THE YEAR ENDED DECEMBER 31, 2019
|
||||||||||||||||||||||||||||||||
Profit for the year
|
6
|
6
|
*
|
6
|
||||||||||||||||||||||||||||
Other comprehensive loss for the year, net of income taxes
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
||||||||||||||||||||||||||
Exercise of options and vesting of restricted shares granted to employees
|
287,593
|
(7
|
)
|
7
|
||||||||||||||||||||||||||||
Employee share-based compensation expenses
|
5
|
5
|
5
|
|||||||||||||||||||||||||||||
Transactions with non-controlling interests
|
(1
|
)
|
(1
|
)
|
*
|
(1
|
)
|
|||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2019
|
162,915,990
|
1
|
311
|
167
|
(69
|
)
|
410
|
-
|
410
|
New Israeli Shekels
|
Convenience translation into U.S. dollars
(note 2b3)
|
|||||||||||||||||||
Year ended December 31,
|
||||||||||||||||||||
2017
|
2018
|
2019**
|
|
2019**
|
|
|||||||||||||||
Note
|
In millions
|
|||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||||||
Cash generated from operations (Appendix)
|
1,002
|
627
|
838
|
241
|
||||||||||||||||
Income tax paid
|
(29
|
)
|
(2
|
)
|
(1
|
)
|
*
|
|||||||||||||
Net cash provided by operating activities
|
973
|
625
|
837
|
241
|
||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||||||
Acquisition of property and equipment
|
(223
|
)
|
(343
|
)
|
(462
|
)
|
(134
|
)
|
||||||||||||
Acquisition of intangible and other assets
|
(153
|
)
|
(159
|
)
|
(167
|
)
|
(48
|
)
|
||||||||||||
Acquisition of a business, net of cash acquired
|
(3
|
)
|
(1
|
)
|
||||||||||||||||
Proceeds from (investment in) short-term deposits, net
|
302
|
150
|
(552
|
)
|
(159
|
)
|
||||||||||||||
Interest received
|
24
|
2
|
1
|
1
|
*
|
|||||||||||||||
Consideration received from sales of property and equipment
|
23
|
*
|
3
|
2
|
1
|
|||||||||||||||
Payment for acquisition of subsidiary, net of cash acquired
|
(3
|
)
|
||||||||||||||||||
Net cash used in investing activities
|
(72
|
)
|
(351
|
)
|
(1,181
|
)
|
(341
|
)
|
||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||||||
Lease principal payments
|
19
|
(139
|
)
|
(39
|
)
|
|||||||||||||||
Lease interest payments
|
19
|
(20
|
)
|
(6
|
)
|
|||||||||||||||
Share issuance
|
21
|
190
|
||||||||||||||||||
Acquisition of treasury shares
|
21
|
(100
|
)
|
|||||||||||||||||
Proceeds from issuance of notes payable, net of issuance costs
|
6,15
|
650
|
150
|
562
|
164
|
|||||||||||||||
Proceeds from issuance of option warrants exercisable for notes payables
|
15
|
37
|
11
|
|||||||||||||||||
Interest paid
|
24
|
(165
|
)
|
(69
|
)
|
(37
|
)
|
(11
|
)
|
|||||||||||
Non-current borrowings received
|
6,15
|
350
|
||||||||||||||||||
Repayment of non-current borrowings
|
15
|
(1,332
|
)
|
(382
|
)
|
(52
|
)
|
(15
|
)
|
|||||||||||
Repayment of current borrowings
|
(13
|
)
|
(4
|
)
|
||||||||||||||||
Repayment of notes payable
|
15
|
(443
|
)
|
(324
|
)
|
(109
|
)
|
(32
|
)
|
|||||||||||
Transactions with non-controlling interests
|
(2
|
)
|
(1
|
)
|
||||||||||||||||
Net cash provided by (used in) financing activities
|
(750
|
)
|
(725
|
)
|
227
|
67
|
||||||||||||||
INCREASE (DECREASE) IN CASH AND CASH
|
||||||||||||||||||||
EQUIVALENTS
|
151
|
(451
|
)
|
(117
|
)
|
(33
|
)
|
|||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING
|
||||||||||||||||||||
OF YEAR
|
716
|
867
|
416
|
120
|
||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF
|
||||||||||||||||||||
YEAR
|
867
|
416
|
299
|
87
|
New Israeli Shekels |
Convenience translation into
U.S. dollars (note 2b3)
|
|||||||||||||||||||
Year ended December 31,
|
||||||||||||||||||||
2017
|
2018
|
2019**
|
|
2019**
|
|
|||||||||||||||
Note
|
In millions
|
|||||||||||||||||||
Cash generated from operations:
|
||||||||||||||||||||
Profit for the year
|
114
|
56
|
19
|
6
|
||||||||||||||||
Adjustments for:
|
||||||||||||||||||||
Depreciation and amortization
|
10,11
|
540
|
545
|
723
|
209
|
|||||||||||||||
Amortization of deferred expenses - Right of use
|
12
|
40
|
47
|
28
|
8
|
|||||||||||||||
Employee share based compensation expenses
|
21
|
20
|
15
|
17
|
5
|
|||||||||||||||
Liability for employee rights upon retirement, net
|
16
|
(1
|
)
|
1
|
1
|
*
|
||||||||||||||
Finance costs, net
|
24
|
(2
|
)
|
(7
|
)
|
5
|
1
|
|||||||||||||
Lease interest payments
|
19
|
20
|
6
|
|||||||||||||||||
Interest paid
|
24
|
165
|
69
|
37
|
11
|
|||||||||||||||
Interest received
|
24
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
*
|
||||||||||||
Deferred income taxes
|
25
|
(13
|
)
|
16
|
4
|
1
|
||||||||||||||
Income tax paid
|
25
|
29
|
2
|
1
|
*
|
|||||||||||||||
Capital loss from property and equipment
|
*
|
*
|
(2
|
)
|
(1
|
)
|
||||||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||||||
Decrease (increase) in accounts receivable:
|
||||||||||||||||||||
Trade
|
7
|
283
|
124
|
42
|
12
|
|||||||||||||||
Other
|
6
|
16
|
(1
|
)
|
*
|
|||||||||||||||
Increase (decrease) in accounts payable and accruals:
|
||||||||||||||||||||
Trade
|
69
|
(69
|
)
|
63
|
18
|
|||||||||||||||
Other payables
|
(3
|
)
|
(18
|
)
|
12
|
3
|
||||||||||||||
Provisions
|
14
|
(2
|
)
|
(11
|
)
|
(21
|
)
|
(6
|
)
|
|||||||||||
Deferred income with respect to settlement
|
||||||||||||||||||||
agreement with Orange
|
18
|
(108
|
)
|
|||||||||||||||||
Deferred revenues from HOT mobile
|
9
|
(31
|
)
|
(31
|
)
|
(31
|
)
|
(9
|
)
|
|||||||||||
Other deferred revenues
|
3
|
*
|
4
|
1
|
||||||||||||||||
Increase in deferred expenses - Right of use
|
12
|
(113
|
)
|
(107
|
)
|
(51
|
)
|
(15
|
)
|
|||||||||||
Current income tax
|
25
|
5
|
(15
|
)
|
(5
|
)
|
(1
|
)
|
||||||||||||
Decrease (increase) in inventories
|
8
|
3
|
(5
|
)
|
(26
|
)
|
(8
|
)
|
||||||||||||
Cash generated from operations:
|
1,002
|
627
|
838
|
241
|
Type of services
|
Area of service
|
License owner
|
Granted by
|
Valid through
|
Guarantees made
(NIS millions) |
|
(1)
|
Cellular
|
Israel
|
Partner Communications Company Ltd.
|
MOC
|
Feb, 2022
|
80
|
(2)
|
Cellular
|
West Bank
|
Partner Communications Company Ltd.
|
CA
|
Feb, 2022
|
4
|
(3)
|
Cellular infrastructure
|
Israel
|
P.H.I Networks (2015) Lp.
|
MOC
|
Aug, 2025
|
|
(4)
|
ISP
|
Israel
|
Partner Communications Company Ltd.
|
MOC
|
Mar, 2023
|
|
(5)
|
ISP
|
West Bank
|
Partner Communications Company Ltd.
|
CA
|
Mar, 2023
|
|
(6)
|
Fixed
(incl. ISP, ILD, NTP) |
Israel
|
Partner Land-line Communication Solutions - Limited Partnership
|
MOC
|
Jan, 2027
|
5
|
(7)
|
Fixed
(incl. ISP, ILD, NTP) |
West Bank
|
Partner Land-line Communication Solutions - Limited Partnership
|
CA
|
Jan, 2027
|
0.25
|
a. |
Basis of preparation of the financial statements
|
(1) |
Basis of preparation
|
(2) |
Use of estimates and judgments
|
b. |
Foreign currency translations
|
c. |
Interests in other entities
|
◾ |
012 Smile Telecom Ltd.
|
◾ |
012 Telecom Ltd.
|
◾ |
Partner Land-Line Communication Solutions - Limited Partnership
|
◾ |
Partner Future Communications 2000 Ltd. ("PFC")
|
◾ |
Get Cell Communication Products Limited Partnership
|
◾ |
Partner Business Communications Solution - Limited Partnership – not active
|
◾ |
Iconz Holdings Ltd.
|
d. |
Inventories
|
e. |
Property and equipment
|
e. |
Property and equipment (continued)
|
years
|
|
Communications network:
|
|
Physical layer and infrastructure
|
10 - 25 (mainly 15, 10)
|
Other Communication network
|
3 - 15 (mainly 5, 10, 15)
|
Computers, software and hardware for
|
|
information systems
|
3-10 (mainly 3-5)
|
Office furniture and equipment
|
7-15
|
Optic fibers and related assets
|
7-25 (mainly 25)
|
Subscribers equipment and installations
|
2 - 4
|
Property
|
25
|
f. |
Licenses and other intangible assets
|
(1) |
Licenses costs and amortization (see also note 1(c)):
|
(a) |
The licenses to operate cellular communication services were recognized at cost. Borrowing costs which served to finance the license fee - incurred until the commencement of utilization of the license - were capitalized to
cost of the license.
|
(b) |
Partner Land-line Communication solutions – limited partnership's license for providing fixed-line communication services is stated at cost.
|
f. |
Licenses and other intangible assets (continued)
|
(2) |
Computer software:
|
(3) |
Customer relationships:
|
(4) |
Capitalization of costs to obtaining customers contracts:
|
g. |
Deferred expenses - Right Of Use (ROU)
|
h. |
Goodwill
|
i. |
Impairment tests of non-financial assets with finite useful economic lives
|
j. |
Financial instruments
|
(1) |
FVTPL category:
|
k. |
Employee benefits
|
1. |
Defined contribution plan
|
l. |
Share based payments
|
m. |
Provisions
|
(1) |
In the ordinary course of business, the Group is involved in a number of lawsuits and litigations. The costs that may result from these lawsuits are only accrued for when it is probable that a liability, resulting from past
events, will be incurred and the amount of that liability can be quantified or estimated within a reasonable range. The amount of the provisions recorded is based on a case-by-case assessment of the risk level, and events
arising during the course of legal proceedings that may require a reassessment of this risk, and where applicable discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the liability. The Group's assessment of risk is based both on the advice of legal counsel and on the Group's estimate of the probable settlements amount that are expected to be incurred, if any. See also
note 20.
|
(2) |
The Company is required to incur certain costs in respect of a liability to dismantle and remove assets and to restore sites on which the assets were located. The dismantling costs are calculated according to best estimate
of future expected payments discounted at a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of
time is recognized as finance costs.
|
(3) |
Provisions for equipment warranties include obligations to customers in respect of equipment sold. Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is
determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of an outflow with respect to any item included in the same class of obligations may be small.
|
n. |
Revenues
|
1) |
Identifying the contract with the customer.
|
2) |
Identifying separate performance obligations in the contract.
|
3) |
Determining the transaction price.
|
4) |
Allocating the transaction price to separate performance obligations.
|
5) |
Recognizing revenue when the performance obligations are satisfied.
|
(a) |
Goods or services (or a bundle of goods or services) that are distinct; or
|
(b) |
A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer.
|
o. |
Leases
|
• |
Non-lease components: practical expedient by class of underlying asset not to separate non-lease components (services) from lease components and, instead, account for each lease
component and any associated non lease components as a single lease component.
|
• |
Discount rate: The lease payments are discounted using the lessee’s incremental borrowing rate, since the interest rate implicit in the lease cannot be readily determined. The
lessee’s incremental borrowing rate is the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with
similar terms, security and conditions. However, the Group is using the practical expedient of accounting together a portfolio of leases with similar characteristics provided that it is reasonably expected that the effects on
the financial statements of applying this standard to the portfolio would not differ materially from applying this Standard to the individual leases within that portfolio. And using a single discount rate to a portfolio of
leases with reasonably similar characteristics (such as leases with a similar remaining lease term for a similar class of underlying asset in a similar economic environment). The discount rates were estimated by management
with the assistance of an independent external expert.
|
• |
Low-value leases: The low-value leases practical expedient is applied and these leases are recognized on a straight-line basis as expense in profit or loss.
|
• |
fixed payments (including in-substance fixed payments), less any lease incentives receivable
|
• |
variable lease payment that are based on an index or a rate (such as CPI)
|
• |
amounts expected to be payable by the lessee under residual value guarantees
|
• |
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option
|
• |
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option (see also note 4(7)), and
|
• |
lease payments (principal and interest) to be made under reasonably certain extension options (see also note 4(7))
|
• |
the amount of the initial measurement of lease liability
|
• |
any lease payments made at or before the commencement date less any lease incentives received
|
• |
any initial direct costs (except for initial application), and
|
• |
restoration costs
|
p. |
Tax expenses
|
q. |
Share capital
|
r. |
Earnings Per Share (EPS)
|
• |
the lease liability was measured for leases previously classified as an operating leases under IAS 17 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the
date of initial application;
|
• |
accounting together a portfolio of leases with similar characteristics provided that it is reasonably expected that the effects on the financial statements of applying this standard to the portfolio would not differ
materially from applying this Standard to the individual leases within that portfolio. And using a single discount rate to a portfolio of leases with reasonably similar characteristics (such as leases with a similar remaining
lease term for a similar class of underlying asset in a similar economic environment);
|
• |
rely on its assessment of whether leases are onerous applying IAS 37 Provisions, Contingent Liabilities and Contingent Assets immediately before the date of initial application as an alternative to performing an impairment
review;
|
• |
not reassess whether a contract is, or contains, a lease at the date of initial application, and therefore IFRS 16 was not applied to contracts that were not previously identified as containing a lease.
|
• |
initial direct costs were excluded from the measurement of the right-of-use asset at the date of initial application;
|
• |
use hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease.
|
New Israeli Shekels in millions
|
||||||||||||
As at January 1, 2019
|
||||||||||||
Previous accounting policy
|
Effect of change
|
According to IFRS16 as reported
|
||||||||||
Non-current assets - Lease – right of use
|
-
|
656
|
656
|
|||||||||
Non-current assets - Deferred income tax asset
|
38
|
6
|
44
|
|||||||||
Current liabilities - Lease liabilities
|
-
|
137
|
137
|
|||||||||
Non-current liabilities - Lease liabilities
|
-
|
546
|
546
|
|||||||||
Equity
|
1,406
|
(21
|
)
|
1,385
|
New Israeli Shekels in millions
|
||||
Operating lease commitments (undiscounted) disclosed as at December 31, 2018
|
372
|
|||
Discounted using the lessee's incremental borrowing rate as of the date of initial application
|
328
|
|||
Group's share in PHI's lease liability (see note 9)
|
355
|
|||
Lease liability recognized as at January 1, 2019
|
683
|
|||
Of which are:
|
||||
Current lease liabilities
|
137
|
|||
Non-current liabilities
|
546
|
(1) |
Assessing the useful lives of non-financial assets:
|
(2) |
Assessing the recoverable amount for impairment tests of assets with finite useful lives:
|
Terminal growth rate
|
1.0%
|
After-tax discount rate
|
8.0%
|
Pre-tax discount rate
|
9.6%
|
(4) |
Assessing impairment of financial assets:
|
(5) |
Considering uncertain tax positions:
|
(6) |
Considering the likelihood of contingent losses and quantifying possible legal settlements:
|
(7) |
Determining leases term and discount rate:
|
New Israeli Shekels
|
||||||||||||||||
Year ended December 31, 2019*
|
||||||||||||||||
In millions
|
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services
|
1,783
|
777
|
2,560
|
|||||||||||||
Inter-segment revenue - Services
|
15
|
148
|
(163
|
)
|
||||||||||||
Segment revenue - Equipment
|
571
|
103
|
674
|
|||||||||||||
Total revenues
|
2,369
|
1,028
|
(163
|
)
|
3,234
|
|||||||||||
Segment cost of revenues - Services
|
1,367
|
810
|
2,177
|
|||||||||||||
Inter-segment cost of revenues- Services
|
147
|
16
|
(163
|
)
|
||||||||||||
Segment cost of revenues - Equipment
|
464
|
66
|
530
|
|||||||||||||
Cost of revenues
|
1,978
|
892
|
(163
|
)
|
2,707
|
|||||||||||
Gross profit
|
391
|
136
|
527
|
|||||||||||||
Operating expenses (3)
|
334
|
134
|
468
|
|||||||||||||
Other income, net
|
20
|
8
|
28
|
|||||||||||||
Operating profit
|
77
|
10
|
87
|
|||||||||||||
Adjustments to presentation of segment
|
||||||||||||||||
Adjusted EBITDA
|
||||||||||||||||
–Depreciation and amortization
|
542
|
209
|
||||||||||||||
–Other (1)
|
16
|
(1
|
)
|
|||||||||||||
Segment Adjusted EBITDA (2)
|
635
|
218
|
New Israeli Shekels
|
||||
Year ended December 31, 2019*
|
||||
In millions
|
||||
Reconciliation of segments subtotal Adjusted EBITDA to profit for the year
|
||||
Segments subtotal Adjusted EBITDA (2)
|
853
|
|||
Depreciation and amortization
|
(751
|
)
|
||
Finance costs, net
|
(68
|
)
|
||
Income tax expenses
|
** |
|
||
Other (1)
|
(15
|
)
|
||
Profit for the year
|
19
|
New Israeli Shekels
|
||||||||||||||||
Year ended December 31, 2018
|
||||||||||||||||
In millions
|
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services
|
1,827
|
697
|
2,524
|
|||||||||||||
Inter-segment revenue - Services
|
16
|
155
|
(171
|
)
|
||||||||||||
Segment revenue - Equipment
|
643
|
92
|
735
|
|||||||||||||
Total revenues
|
2,486
|
944
|
(171
|
)
|
3,259
|
|||||||||||
Segment cost of revenues - Services
|
1,435
|
696
|
2,131
|
|||||||||||||
Inter-segment cost of revenues- Services
|
154
|
17
|
(171
|
)
|
||||||||||||
Segment cost of revenues - Equipment
|
509
|
60
|
569
|
|||||||||||||
Cost of revenues
|
2,098
|
773
|
(171
|
)
|
2,700
|
|||||||||||
Gross profit
|
388
|
171
|
559
|
|||||||||||||
Operating expenses (3)
|
343
|
128
|
471
|
|||||||||||||
Other income, net
|
23
|
5
|
28
|
|||||||||||||
Operating profit
|
68
|
48
|
116
|
|||||||||||||
Adjustments to presentation of segment
|
||||||||||||||||
Adjusted EBITDA
|
||||||||||||||||
–Depreciation and amortization
|
442
|
150
|
||||||||||||||
–Other (1)
|
14
|
|||||||||||||||
Segment Adjusted EBITDA (2)
|
524
|
198
|
||||||||||||||
New Israeli Shekels
|
||||
Year ended December 31, 2018
|
||||
In millions
|
||||
Reconciliation of segments subtotal Adjusted EBITDA to profit for the year
|
||||
Segments subtotal Adjusted EBITDA (2)
|
722
|
|||
Depreciation and amortization
|
(592
|
)
|
||
Finance costs, net
|
(53
|
)
|
||
Income tax expenses
|
(7
|
)
|
||
Other (1)
|
(14
|
)
|
||
Profit for the year
|
56
|
|||
New Israeli Shekels
|
||||||||||||||||
Year ended December 31, 2017
|
||||||||||||||||
In millions
|
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services
|
1,960
|
622
|
2,582
|
|||||||||||||
Inter-segment revenue - Services
|
18
|
155
|
(173
|
)
|
||||||||||||
Segment revenue - Equipment
|
610
|
76
|
686
|
|||||||||||||
Total revenues
|
2,588
|
853
|
(173
|
)
|
3,268
|
|||||||||||
Segment cost of revenues - Services
|
1,470
|
613
|
2,083
|
|||||||||||||
Inter-segment cost of revenues- Services
|
154
|
19
|
(173
|
)
|
||||||||||||
Segment cost of revenues - Equipment
|
490
|
54
|
544
|
|||||||||||||
Cost of revenues
|
2,114
|
686
|
(173
|
)
|
2,627
|
|||||||||||
Gross profit
|
474
|
167
|
641
|
|||||||||||||
Operating expenses (3)
|
367
|
98
|
465
|
|||||||||||||
Income with respect to settlement
|
||||||||||||||||
agreement with Orange
|
108
|
108
|
||||||||||||||
Other income, net
|
29
|
2
|
31
|
|||||||||||||
Operating profit
|
244
|
71
|
315
|
|||||||||||||
Adjustments to presentation of segment
|
||||||||||||||||
Adjusted EBITDA
|
||||||||||||||||
–Depreciation and amortization
|
445
|
135
|
||||||||||||||
–Other (1)
|
21
|
1
|
||||||||||||||
Segment Adjusted EBITDA (2)
|
710
|
207
|
New Israeli Shekels
|
||||
Year ended December 31, 2017
|
||||
In millions
|
||||
Reconciliation of segments subtotal Adjusted EBITDA to profit for the year
|
||||
Segments subtotal Adjusted EBITDA (2)
|
917
|
|||
Depreciation and amortization
|
(580
|
)
|
||
Finance costs, net
|
(180
|
)
|
||
Income tax expenses
|
(21
|
)
|
||
Other (1)
|
(22
|
)
|
||
Profit for the year
|
114
|
(1) |
Mainly amortization of employee share based compensation.
|
(2) |
Adjusted EBITDA as reviewed by the CODM represents Earnings before Interest (finance costs, net), Taxes, Depreciation and Amortization (including amortization of intangible assets, deferred expenses-right of use and
impairment charges) and Other expenses (mainly amortization of share based compensation). Adjusted EBITDA is not a financial measure under IFRS and may not be comparable to other similarly titled measures for other companies.
Adjusted EBITDA may not be indicative of the Group's historic operating results nor is it meant to be predictive of potential future results. The usage of the term "Adjusted EBITDA" is to highlight the fact that the
Amortization includes amortization of deferred expenses – right of use and amortization of employee share based compensation and impairment charges.
|
(3) |
Operating expenses include selling and marketing expenses, general and administrative expenses and credit losses.
|
a. |
Financial risk factors
|
Exchange
|
Exchange
|
|||||||||||
rate of one
|
rate of one
|
Israeli
|
||||||||||
Dollar
|
Euro
|
CPI*
|
||||||||||
At December 31:
|
||||||||||||
2019
|
NIS 3.456
|
NIS 3.878
|
224.67 points
|
|||||||||
2018
|
NIS 3.748
|
NIS 4.292
|
223.33 points
|
|||||||||
2017
|
NIS 3.467
|
NIS 4.153
|
221.57 points
|
|||||||||
Increase (decrease) during the year:
|
||||||||||||
2019
|
(7.8)%
|
|
(9.6)%
|
|
0.6%
|
|
||||||
2018
|
8.1%
|
|
3.3%
|
|
0.8%
|
|
||||||
2017
|
(9.8)%
|
|
2.7%
|
|
0.4%
|
|
December 31, 2019
|
||||||||||||||||||||
In or linked to USD
|
In or linked to other foreign currencies
(mainly EURO) |
NIS unlinked |
Linked to the CPI |
Total
|
||||||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||||||
Current assets
|
||||||||||||||||||||
Cash and cash equivalents
|
35
|
264
|
299
|
|||||||||||||||||
Short term deposits
|
552
|
552
|
||||||||||||||||||
Trade receivables**
|
45
|
12
|
567
|
624
|
||||||||||||||||
Other receivables
|
15
|
15
|
||||||||||||||||||
Non- current assets
|
||||||||||||||||||||
Trade receivables
|
250
|
250
|
||||||||||||||||||
Total assets
|
80
|
12
|
1,648
|
-
|
1,740
|
|||||||||||||||
Current liabilities
|
||||||||||||||||||||
Current maturities of notes payable and
|
||||||||||||||||||||
borrowings
|
366
|
366
|
||||||||||||||||||
Trade payables**
|
194
|
12
|
493
|
17
|
716
|
|||||||||||||||
Payables in respect of employees
|
79
|
79
|
||||||||||||||||||
Other payables
|
12
|
12
|
||||||||||||||||||
Lease liabilities
|
1
|
130
|
131
|
|||||||||||||||||
Non- current liabilities
|
||||||||||||||||||||
Notes payable
|
1,276
|
1,276
|
||||||||||||||||||
Borrowings from banks
|
138
|
138
|
||||||||||||||||||
Financial liability at fair value
|
28
|
28
|
||||||||||||||||||
Lease liabilities
|
3
|
483
|
486
|
|||||||||||||||||
Total liabilities
|
198
|
12
|
2,392
|
630
|
3,232
|
In or linked to foreign currencies
|
||||
New Israeli Shekels in millions
|
||||
**Accounts that were set-off under enforceable netting arrangements
|
||||
Trade receivables gross amounts
|
126
|
|||
Set-off
|
(69
|
)
|
||
Trade receivables, net
|
57
|
|||
Trade payables gross amounts
|
275
|
|||
Set-off
|
(69
|
)
|
||
Trade payables, net
|
206
|
December 31, 2018
|
||||||||||||||||
In or linked to USD
|
In or linked to other foreign currencies
(mainly EURO) |
NIS unlinked
|
Total
|
|||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||
Current assets
|
||||||||||||||||
Cash and cash equivalents
|
*
|
*
|
416
|
416
|
||||||||||||
Trade receivables**
|
54
|
14
|
588
|
656
|
||||||||||||
Other receivables
|
11
|
11
|
||||||||||||||
Non- current assets
|
||||||||||||||||
Trade receivables
|
260
|
260
|
||||||||||||||
Total assets
|
54
|
14
|
1,275
|
1,343
|
||||||||||||
Current liabilities
|
||||||||||||||||
Current maturities of notes payable and
|
||||||||||||||||
borrowings
|
161
|
161
|
||||||||||||||
Trade payables**
|
126
|
14
|
571
|
711
|
||||||||||||
Payables in respect of employees
|
73
|
73
|
||||||||||||||
Other payables
|
1
|
1
|
||||||||||||||
Non- current liabilities
|
||||||||||||||||
Notes payable
|
1,012
|
1,012
|
||||||||||||||
Borrowings from banks
|
191
|
191
|
||||||||||||||
Total liabilities
|
126
|
14
|
2,009
|
2,149
|
||||||||||||
* Representing an amount of less than 1 million.
|
In or linked to foreign currencies
|
||||
New Israeli Shekels in millions
|
||||
**Accounts that were set-off under enforceable netting arrangements
|
||||
Trade receivables gross amounts
|
141
|
|||
Set-off
|
(73
|
)
|
||
Trade receivables, net
|
68
|
|||
Trade payables gross amounts
|
213
|
|||
Set-off
|
(73
|
)
|
||
Trade payables, net
|
140
|
New Israeli Shekels in millions
|
||||
Balance as at January 1, 2019
|
-
|
|||
Issuance
|
37
|
|||
Finance costs
|
7
|
|||
Exercise
|
(16
|
)
|
||
Balance as at December 31, 2019
|
28
|
2020
|
2021
|
2022
|
2023 to 2024
|
2025 and thereafter
|
Total
|
|||||||||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||||||||||
Principal payments of long term indebtedness:
|
||||||||||||||||||||||||
Notes payable series D
|
109
|
109
|
218
|
|||||||||||||||||||||
Notes payable series F
|
204
|
204
|
204
|
409
|
1,021
|
|||||||||||||||||||
Notes payable series G
|
35
|
70
|
245
|
350
|
||||||||||||||||||||
Borrowing P
|
30
|
30
|
29
|
89
|
||||||||||||||||||||
Borrowing Q
|
23
|
23
|
23
|
33
|
102
|
|||||||||||||||||||
Expected interest payments of
|
||||||||||||||||||||||||
long term borrowings and notes
|
||||||||||||||||||||||||
payables
|
41
|
33
|
27
|
34
|
24
|
159
|
||||||||||||||||||
Lease liabilities (undiscounted)
|
141
|
118
|
99
|
165
|
162
|
685
|
||||||||||||||||||
Trade and other payables
|
800
|
800
|
||||||||||||||||||||||
Total
|
1,348
|
517
|
417
|
711
|
431
|
3,424
|
c. |
Fair values of financial instruments
|
December 31, 2018
|
December 31, 2019
|
||||||||||||||||||||||||
Category
|
Carrying amount
|
Fair value
|
Interest rate used (***)
|
Carrying amount
|
Fair value
|
Interest rate used (***)
|
|||||||||||||||||||
New Israeli Shekels in millions
|
|||||||||||||||||||||||||
Assets
|
|||||||||||||||||||||||||
Cash and cash equivalents
|
AC
|
416
|
416
|
299
|
299
|
||||||||||||||||||||
Short term deposits
|
AC
|
552
|
552
|
||||||||||||||||||||||
Trade receivables
|
AC
|
916
|
916
|
4.52
|
%
|
874
|
876
|
4.00
|
%
|
||||||||||||||||
Other receivables (**)
|
AC
|
11
|
11
|
16
|
16
|
||||||||||||||||||||
Liabilities
|
|||||||||||||||||||||||||
Notes payable series D
|
AC
|
327
|
332
|
Market quote
|
218
|
219
|
Market quote
|
||||||||||||||||||
Notes payable series F
|
AC
|
794
|
786
|
Market quote
|
1,021
|
1,040
|
Market quote
|
||||||||||||||||||
Notes payable series G
|
AC
|
350
|
383
|
Market quote
|
|||||||||||||||||||||
Financial liability at fair value
|
FVTPL
|
||||||||||||||||||||||||
|
Level 3
|
28
|
28
|
||||||||||||||||||||||
Trade and other payables (**)
|
AC
|
785
|
785
|
800
|
800
|
||||||||||||||||||||
Borrowing P
|
AC
|
118
|
120
|
1.54
|
%
|
89
|
90
|
1.42
|
%
|
||||||||||||||||
Borrowing Q
|
AC
|
125
|
127
|
2.05
|
%
|
102
|
105
|
1.42
|
%
|
||||||||||||||||
Lease liabilities
|
AC
|
617
|
623
|
2.12
|
%
|
||||||||||||||||||||
Derivative financial instruments
|
FVTPL
|
||||||||||||||||||||||||
|
Level 2
|
*
|
*
|
*
|
*
|
(a) |
Composition:
|
New Israeli Shekels
|
||||||||
December 31
|
||||||||
2018
|
2019
|
|||||||
In millions
|
||||||||
Trade (current and non-current)
|
1,130
|
1,061
|
||||||
Deferred interest income (note 2(n))
|
(26
|
)
|
(25
|
)
|
||||
Allowance for credit loss
|
(188
|
)
|
(162
|
)
|
||||
916
|
874
|
|||||||
Current
|
656
|
624
|
||||||
Non – current
|
260
|
250
|
(b) |
Impairment of financial assets:
|
New Israeli Shekels
|
||||||||||||
Year ended
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Balance at beginning of year
|
190
|
193
|
188
|
|||||||||
Receivables written-off during the year as
|
||||||||||||
uncollectible
|
(49
|
)
|
(35
|
)
|
(44
|
)
|
||||||
Charge or expense during the year*
|
52
|
30
|
18
|
|||||||||
Balance at end of year
|
193
|
188
|
162
|
New Israeli Shekels
|
New Israeli Shekels
|
|||||||||||||||||||||||
December 31, 2018
|
December 31, 2019
|
|||||||||||||||||||||||
In millions
|
In millions
|
|||||||||||||||||||||||
verage expected loss rate
|
Gross
|
Allowance
|
Average expected loss rate
|
Gross
|
Allowance
|
|||||||||||||||||||
Not passed due
|
2
|
%
|
900
|
19
|
2
|
%
|
860
|
20
|
||||||||||||||||
Less than one year
|
56
|
%
|
94
|
53
|
54
|
%
|
107
|
58
|
||||||||||||||||
More than one year
|
85
|
%
|
136
|
116
|
89
|
%
|
94
|
84
|
||||||||||||||||
1,130
|
188
|
1,061
|
162
|
New Israeli Shekels
|
||||||||
December 31
|
||||||||
2018
|
2019
|
|||||||
In millions
|
||||||||
Handsets and devices
|
60
|
73
|
||||||
Accessories and other
|
6
|
10
|
||||||
Spare parts
|
23
|
26
|
||||||
ISP modems, routers, servers and related equipment
|
9
|
15
|
||||||
98
|
124
|
|||||||
Write-offs recorded
|
4
|
6
|
||||||
Cost of inventory recognized as expenses and included in cost of revenues for the year ended
|
586
|
539
|
||||||
Cost of inventory used as fixed assets
|
8
|
24
|
As at December 31, 2018
|
||||
PHI's accounts 100%:
|
NIS in millions
|
|||
Current assets
|
137
|
|||
Non-current assets
|
312
|
|||
Current liabilities
|
135
|
|||
Non-current liabilities
|
312
|
|||
Net assets
|
2
|
|||
Supplemental information relating to associates:
|
||||
Commitments for operating leases and operating
|
||||
expenses
|
781
|
|||
Commitments to purchase fixed assets
|
6
|
|||
Guarantees made to third parties
|
1
|
Year ended December 31, 2018
|
||||
PHI's accounts 100%:
|
NIS in millions
|
|||
Summarized statement of income
|
||||
Revenue
|
495
|
|||
Pre-tax Profit
|
-
|
|||
After-tax profit
|
-
|
|||
Total comprehensive income
|
-
|
|||
Reconciliation to carrying amount:
|
||||
Opening net assets of PHI
|
2
|
|||
Profit for the period
|
-
|
|||
Closing net assets of PHI
|
2
|
|||
Carrying amount in PHI's net assets: Group's share (50%)
|
1
|
New Israeli Shekels
|
||||||||
Year ended December 31
|
||||||||
2017
|
2018
|
|||||||
In millions
|
||||||||
Cost of revenues
|
45
|
70
|
New Israeli Shekels
|
||||||||
December 31,
|
||||||||
2017
|
2018
|
|||||||
In millions
|
||||||||
Deferred expenses - Right of use
|
95
|
131
|
||||||
Current assets (liabilities)
|
(43
|
)
|
(51
|
)
|
||||
Non-current investment in PHI
|
1
|
1
|
||||||
Other non-current assets (liabilities)
|
(7
|
)
|
(14
|
)
|
New Israeli Shekels in millions
|
||||||||||||
January 1, 2019
|
||||||||||||
Company's share (50%) in PHI's accounts**
|
Intercompany elimination
|
Total
|
||||||||||
CURRENT ASSETS
|
||||||||||||
Cash and cash equivalents
|
*
|
*
|
||||||||||
Current assets
|
69
|
(62
|
)
|
7
|
||||||||
NON CURRENT ASSETS
|
||||||||||||
Property and equipment and intangible assets
|
142
|
142
|
||||||||||
Lease – right of use
|
355
|
355
|
||||||||||
CURRENT LIABILITIES
|
||||||||||||
Current borrowings from banks
|
13
|
13
|
||||||||||
Trade payables and other current liabilities
|
55
|
55
|
||||||||||
Lease liabilities
|
65
|
65
|
||||||||||
NON CURRENT LIABILITIES
|
||||||||||||
Lease liabilities
|
290
|
290
|
||||||||||
Deferred revenues
|
142
|
(142
|
)
|
-
|
||||||||
EQUITY
|
1
|
(1
|
)
|
-
|
Communication network
|
Computers and information systems
|
Optic fibers and related assets
|
Subscribers equipment and installations
|
Property, leasehold improvements, furniture and equipment
|
Total
|
|||||||||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||||||||||
Cost
|
||||||||||||||||||||||||
Balance at January 1, 2017
|
2,003
|
207
|
508
|
29
|
134
|
2,881
|
||||||||||||||||||
Additions in 2017
|
55
|
7
|
97
|
109
|
6
|
274
|
||||||||||||||||||
Disposals in 2017
|
165
|
60
|
1
|
3
|
229
|
|||||||||||||||||||
Balance at December 31, 2017
|
1,893
|
154
|
604
|
138
|
137
|
2,926
|
||||||||||||||||||
Additions in 2018
|
48
|
11
|
122
|
146
|
10
|
337
|
||||||||||||||||||
Disposals in 2018
|
322
|
17
|
11
|
4
|
24
|
378
|
||||||||||||||||||
Balance at December 31, 2018
|
1,619
|
148
|
715
|
280
|
123
|
2,885
|
||||||||||||||||||
Share in PHI P&E included as of Jan 1, 2019
|
171
|
2
|
173
|
|||||||||||||||||||||
Additions in 2019
|
91
|
3
|
146
|
172
|
6
|
418
|
||||||||||||||||||
Disposals in 2019
|
193
|
12
|
1
|
8
|
7
|
221
|
||||||||||||||||||
Balance at December 31, 2019
|
1,688
|
141
|
860
|
444
|
122
|
3,255
|
||||||||||||||||||
|
||||||||||||||||||||||||
Accumulated depreciation
|
||||||||||||||||||||||||
Balance at January 1, 2017
|
1,224
|
146
|
218
|
7
|
79
|
1,674
|
||||||||||||||||||
Depreciation in 2017
|
204
|
22
|
36
|
24
|
15
|
301
|
||||||||||||||||||
Disposals in 2017
|
165
|
60
|
1
|
3
|
229
|
|||||||||||||||||||
Balance at December 31, 2017
|
1,263
|
108
|
253
|
31
|
91
|
1,746
|
||||||||||||||||||
|
||||||||||||||||||||||||
Depreciation in 2018
|
174
|
13
|
39
|
66
|
12
|
304
|
||||||||||||||||||
Disposals in 2018
|
321
|
17
|
11
|
3
|
24
|
376
|
||||||||||||||||||
Balance at December 31, 2018
|
1,116
|
104
|
281
|
94
|
79
|
1,674
|
||||||||||||||||||
Share in PHI P&E included as of Jan 1, 2019
|
33
|
1
|
34
|
|||||||||||||||||||||
Depreciation in 2019
|
170
|
13
|
45
|
99
|
9
|
336
|
||||||||||||||||||
Disposals in 2019
|
192
|
11
|
1
|
8
|
7
|
219
|
||||||||||||||||||
Balance at December 31, 2019
|
1,127
|
107
|
325
|
185
|
81
|
1,825
|
||||||||||||||||||
|
||||||||||||||||||||||||
Carrying amounts, net
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
At December 31, 2017
|
630
|
46
|
351
|
107
|
46
|
1,180
|
||||||||||||||||||
At December 31, 2018
|
503
|
44
|
434
|
186
|
44
|
1,211
|
||||||||||||||||||
At December 31, 2019
|
561
|
34
|
535
|
259
|
41
|
1,430
|
New Israeli Shekels
|
||||||||||||
Year ended December 31
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Cost additions include capitalization of salary and employee related expenses
|
33
|
38
|
39
|
|||||||||
Licenses
|
Costs of obtaining contracts with customers(2)
|
Trade name |
Customer relationships
|
Subscriber acquisition and retention costs
|
Computer
software(1)
|
Total
|
||||||||||||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||||||||||||||
Cost
|
||||||||||||||||||||||||||||
At January 1, 2017
|
2,123
|
-
|
73
|
276
|
13
|
634
|
3,119
|
|||||||||||||||||||||
Transition to IFRS 15(2)
|
2
|
(13
|
)
|
(11
|
)
|
|||||||||||||||||||||||
Additions in 2017
|
84
|
59
|
143
|
|||||||||||||||||||||||||
Disposals in 2017
|
73
|
128
|
201
|
|||||||||||||||||||||||||
At December 31, 2017
|
2,123
|
86
|
-
|
276
|
-
|
565
|
3,050
|
|||||||||||||||||||||
Additions in 2018
|
91
|
3
|
68
|
162
|
||||||||||||||||||||||||
Disposals in 2018
|
2
|
141
|
143
|
|||||||||||||||||||||||||
At December 31, 2018
|
2,123
|
175
|
3
|
276
|
-
|
492
|
3,069
|
|||||||||||||||||||||
Share in PHI's accounts included as of Jan 1, 2019
|
5
|
5
|
||||||||||||||||||||||||||
Additions in 2019
|
95
|
6
|
59
|
160
|
||||||||||||||||||||||||
Disposals in 2019
|
61
|
61
|
||||||||||||||||||||||||||
At December 31, 2019
|
2,123
|
270
|
3
|
282
|
-
|
495
|
3,173
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Accumulated amortization
|
||||||||||||||||||||||||||||
At January 1, 2017
|
1,676
|
-
|
62
|
237
|
11
|
340
|
2,326
|
|||||||||||||||||||||
Transition to IFRS 15(2)
|
(11
|
)
|
(11
|
)
|
||||||||||||||||||||||||
Amortization in 2017
|
88
|
15
|
11
|
18
|
107
|
239
|
||||||||||||||||||||||
Disposals in 2017
|
73
|
128
|
201
|
|||||||||||||||||||||||||
At December 31, 2017
|
1,764
|
15
|
-
|
255
|
-
|
319
|
2,353
|
|||||||||||||||||||||
Amortization in 2018
|
88
|
49
|
18
|
86
|
241
|
|||||||||||||||||||||||
Disposals in 2018
|
2
|
140
|
142
|
|||||||||||||||||||||||||
At December 31, 2018
|
1,852
|
62
|
-
|
273
|
-
|
265
|
2,452
|
|||||||||||||||||||||
Share in PHI's accounts included as of Jan 1, 2019
|
2
|
2
|
||||||||||||||||||||||||||
Amortization in 2019(3)
|
73
|
79
|
*
|
2
|
87
|
241
|
||||||||||||||||||||||
Disposals in 2019
|
60
|
66
|
||||||||||||||||||||||||||
At December 31, 2019
|
1,925
|
141
|
*
|
275
|
-
|
294
|
2,635
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Carrying amounts, net
|
||||||||||||||||||||||||||||
At December 31, 2017
|
359
|
71
|
-
|
21
|
-
|
246
|
697
|
|||||||||||||||||||||
At December 31, 2018
|
271
|
113
|
3
|
3
|
-
|
227
|
617
|
|||||||||||||||||||||
At December 31, 2019
|
198
|
129
|
3
|
7
|
-
|
201
|
538
|
New Israeli Shekels
|
||||||||||||
Year ended December 31
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
(1) Cost additions include capitalization of salary and employee related expenses
|
44
|
54
|
57
|
New Israeli Shekels in millions
|
||||
Cost
|
||||
Balance at January 1, 2017
|
516
|
|||
Additional payments in 2017
|
113
|
|||
Balance at December 31, 2017
|
629
|
|||
Additional payments in 2018
|
107
|
|||
Balance at December 31, 2018
|
736
|
|||
Share in PHI's accounts included as of Jan 1, 2019
|
(169
|
)
|
||
Additional payments in 2019
|
51
|
|||
Balance at December 31, 2019
|
618
|
|||
Accumulated amortization and impairment
|
||||
Balance at January 1, 2017
|
413
|
|||
Amortization in 2017
|
40
|
|||
Balance at December 31, 2017
|
453
|
|||
Amortization in 2018
|
47
|
|||
Balance at December 31, 2018
|
500
|
|||
Share in PHI's accounts included as of Jan 1, 2019
|
(38
|
)
|
||
Amortization in 2019
|
28
|
|||
Balance at December 31, 2019
|
490
|
|||
Carrying amount, net at December 31, 2017
|
176
|
|||
Carrying amount, net at December 31, 2018
|
236
|
|||
Current
|
51
|
|||
Non-current
|
185
|
|||
Carrying amount, net at December 31, 2019
|
128
|
|||
Current
|
26
|
|||
Non-current
|
102
|
(1) |
Goodwill impairment tests in the fixed-line segment
|
As of December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
Terminal growth rate
|
0.9
|
%
|
1.0
|
%
|
1.0
|
%
|
||||||
After-tax discount rate
|
9.3
|
%
|
9.5
|
%
|
8
|
%
|
||||||
Pre-tax discount rate
|
11.2
|
%
|
11.5
|
%
|
9.6
|
%
|
(2) |
Impairment tests of assets with finite useful lives
|
Legal claims
(see note 20) |
Equipment warranty
|
Dismantling and restoring sites obligation
|
Group's share in
PHI's provisions
(see note 9)
|
|||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||
Balance as at January 1, 2019
|
62
|
2
|
13
|
14
|
||||||||||||
Share in PHI's accounts included as of January 1, 2019
|
14
|
(14
|
)
|
|||||||||||||
Additions during the year
|
3
|
3
|
*
|
|||||||||||||
Finance costs
|
*
|
|||||||||||||||
Decrease during the year
|
(23
|
)
|
(4
|
)
|
(4
|
)
|
||||||||||
Balance as at December 31, 2019
|
42
|
1
|
23
|
-
|
||||||||||||
Non-current
|
23
|
-
|
||||||||||||||
Current
|
42
|
1
|
||||||||||||||
Balance as at December 31, 2018
|
62
|
2
|
13
|
14
|
||||||||||||
Non-current
|
13
|
14
|
||||||||||||||
Current
|
62
|
2
|
(1) |
Borrowings and Notes Payable
|
Annual interest rate
|
|
Notes payable series D
|
'Makam'(*) plus 1.2%
|
Notes payable series F (**)
|
2.16% fixed
|
Notes payable series G (***)
|
4% fixed
|
Borrowing P (received in 2017)
|
2.38% fixed
|
Borrowing Q (received in 2017)
|
2.5% fixed
|
(1) |
Borrowings and Notes Payable (continued):
|
Movements in 2019
|
||||||||||||||||||||||||||||
Non cash movements
|
||||||||||||||||||||||||||||
As at December 31, 2018 |
Cash flows
used in financing activities, net
|
Share in PHI's accounts included as at Jan. 1, 2019
|
Adoption of IFRS 16 as at Jan. 1, 2019
|
CPI adjustments and other
|
Against lease ROU asset
|
As at December 31, 2019
|
||||||||||||||||||||||
Current borrowings
|
(13
|
)
|
13
|
|||||||||||||||||||||||||
Non-current borrowings, including current maturities
|
243
|
(52
|
)
|
191
|
||||||||||||||||||||||||
Notes payable, including current maturities
|
1,123
|
453
|
13
|
1,589
|
||||||||||||||||||||||||
Financial liability at fair value
|
37
|
(9
|
)
|
28
|
||||||||||||||||||||||||
Interest payable
|
*
|
(37
|
)
|
45
|
8
|
|||||||||||||||||||||||
Lease liability
|
(159
|
)
|
683
|
20
|
73
|
617
|
||||||||||||||||||||||
1,366
|
229
|
13
|
683
|
69
|
73
|
2,433
|
Movement in 2018
|
||||||||||||||||
As at December 31, 2017 |
Cash flows used in financing activities, net
|
Non cash movements
|
As at December 31, 2018 |
|||||||||||||
CPI adjustments and other finance costs
|
||||||||||||||||
New Israeli Shekels in millions
|
||||||||||||||||
Non-current borrowings, including current maturities
|
625
|
(382
|
)
|
243
|
||||||||||||
Notes payable, including current maturities
|
1,298
|
(174
|
)
|
(1
|
)
|
1,123
|
||||||||||
Interest payable
|
21
|
(69
|
)
|
48
|
*
|
|||||||||||
1,944
|
(625
|
)
|
47
|
1,366
|
(2) |
Notes payable issuance
|
(3) |
Borrowings early repayments
|
(4) |
Notes payable issuance commitments
|
(5) |
Private placement of option warrants
|
(6) |
Financial covenants
|
(1) |
Defined contribution plan
|
(2) |
Defined benefit plan
|
New Israeli Shekels in millions
|
||||||||||||
Present value of obligation
|
Fair value of plan assets
|
Total
|
||||||||||
At January 1, 2018
|
139
|
(99
|
)
|
40
|
||||||||
Current service cost
|
11
|
11
|
||||||||||
Interest expense (income)
|
3
|
(1
|
)
|
2
|
||||||||
Employer contributions
|
(8
|
)
|
(8
|
)
|
||||||||
Benefits paid
|
(11
|
)
|
7
|
(4
|
)
|
|||||||
Remeasurements:
|
||||||||||||
Experience loss
|
2
|
2
|
||||||||||
Return on plan assets
|
(3
|
)
|
(3
|
)
|
||||||||
At December 31, 2018
|
144
|
(104
|
)
|
40
|
||||||||
Current service cost
|
12
|
12
|
||||||||||
Interest expense (income)
|
4
|
(2
|
)
|
2
|
||||||||
Employer contributions
|
(9
|
)
|
(9
|
)
|
||||||||
Benefits paid
|
(14
|
)
|
10
|
(4
|
)
|
|||||||
Remeasurements:
|
||||||||||||
Experience loss
|
4
|
4
|
||||||||||
Return on plan assets
|
(2
|
)
|
(2
|
)
|
||||||||
At December 31, 2019
|
150
|
(107
|
)
|
43
|
(2) |
Defined benefit plan (continued)
|
December 31
|
||||||||
2018
|
2019
|
|||||||
Interest rate weighted average
|
3.29
|
%
|
2.33
|
%
|
||||
Inflation rate weighted average
|
1.62
|
%
|
1.49
|
%
|
||||
Expected turnover rate
|
9%-56
|
%
|
9%-56
|
%
|
||||
Future salary increases
|
1%-6
|
%
|
1%-6
|
%
|
December 31, 2019
|
||||||||
NIS in millions
|
||||||||
Increase of 10% of the assumption
|
Decrease of 10% of the assumption
|
|||||||
Interest rate
|
(0.6
|
)
|
0.4
|
|||||
Expected turnover rate
|
0.1
|
(0.1
|
)
|
|||||
Future salary increases
|
0.5
|
(0.4
|
)
|
NIS in millions
|
||||
2020
|
25
|
|||
2021
|
22
|
|||
2022
|
12
|
|||
2023 and 2024
|
20
|
|||
2025 and thereafter
|
84
|
|||
163
|
(1) |
Under the Telegraph Regulations the Company is committed to pay an annual fixed fee for each frequency used. For the years 2017, 2018 and 2019 the Company recorded expenses in a total amount of approximately NIS 63 million,
NIS 76 million and NIS 79 million, respectively. Under the above Regulations should the Company choose to return a frequency, such payment is no longer due. Commencing August 2016, the total amount of frequency fees of both
the Company and Hot Mobile under the regulations are divided between the Company and Hot Mobile, through PHI ,according to the OPEX-CAPEX mechanism (see also note 9).
|
(2) |
At December 31, 2019, the Group is committed to acquire property and equipment and software elements for approximately NIS 36 million.
|
(3) |
At December 31, 2019, the Group is committed to acquire inventory in an amount of approximately NIS 136 million.
|
(4) |
Right of Use (ROU)
|
New Israeli Shekels in millions
|
||||
2020
|
51
|
|||
2021
|
49
|
|||
2022
|
47
|
|||
2023
|
6
|
|||
153
|
(5) |
Liens and guarantees
|
(6) |
Covenants and negative pledge – see note 15(6).
|
(7) |
See note 15(4) with respect of notes payable issuance commitments.
|
(8) |
Operating leases – see note 19.
|
(9) |
See note 9 with respect to network sharing and PHI's commitments.
|
(1) |
Buildings: The Group leases its headquarter facilities in Rosh Ha-ayin, Israel, with a total of approximately 51,177 gross square meters (including parking lots). The lease term is
until the end of 2024. The rental payments are linked to the Israeli CPI.
|
(2) |
Cell sites: Lease agreements in respect of cell sites and switching stations throughout Israel are for periods of two to ten years. The Company has an option to extend some of the
lease contract periods for up to ten years (including the original lease periods). Substantially all of the rental payments are linked to the Israeli CPI and a few are linked to the dollar. Some of the extension options
include an increase of the lease payment mostly in a range of 2%-10%. During 2018 and 2019 significant portion of cell sites were assigned to PHI.
|
(3) |
Vehicles: The Group leases vehicles are for periods of up to three years. The rental payments are linked to the Israeli CPI.
|
New Israeli Shekels in millions
|
||||||||||||||||
Lease right of use asset
|
Lease liability
|
|||||||||||||||
Buildings
|
Cell sites
|
Vehicles
|
||||||||||||||
Balance as at January 1, 2019
|
252
|
362
|
42
|
683
|
||||||||||||
Amortization charges
|
(41
|
)
|
(78
|
)
|
(27
|
)
|
||||||||||
Accretion of interest
|
20
|
|||||||||||||||
Non-cash movements
|
11
|
46
|
15
|
73
|
||||||||||||
Lease payments (principal) cash outflow
|
(139
|
)
|
||||||||||||||
Lease payments (interest) cash outflow
|
(20
|
)
|
||||||||||||||
Balance as at December 31, 2019
|
222
|
330
|
30
|
617
|
||||||||||||
Current
|
131
|
|||||||||||||||
Non-Current
|
222
|
330
|
30
|
486
|
New Israeli Shekels
|
|
December 31, 2018
|
|
In millions
|
|
2019
|
76
|
2020-2021
|
114
|
2022-2023
|
87
|
2024-2025
|
51
|
2026-2027
|
18
|
2028 and thereafter
|
26
|
372
|
New Israeli Shekels
|
|
December 31, 2017
|
|
In millions
|
|
2018
|
158
|
2019
|
100
|
2020
|
77
|
2021
|
59
|
2022-2023
|
100
|
2024-2025
|
52
|
2026-2027
|
13
|
2028 and thereafter
|
19
|
578
|
A. |
Claims
|
1. |
Consumer claims
|
Claim amount
|
Number of claims
|
Total claims amount (NIS million)
|
||||||
Up to NIS 100 million
|
17
|
430
|
||||||
NIS 101 - 400 million
|
4
|
1,050
|
||||||
NIS 401 million - NIS 1 billion
|
2
|
1,405
|
||||||
Unquantified claims
|
10
|
-
|
||||||
Total
|
33
|
2,885
|
1. |
On September 7, 2010, a claim and a motion to certify the claim as a class action were filed against Partner. The claim alleges that Partner unlawfully charged its customers for services of
various content providers which are sent through text messages (SMS). The total amount claimed from Partner was estimated by the plaintiffs to be approximately NIS 405 million. The claim was certified as a class action in
December 2016. In January 2017, the plaintiffs filed an appeal to the Supreme Court, regarding the definition of the group of customers. In November 2018, the Supreme Court dismissed the appeal and the claim was reverted
back to the District Court. In February 2020 a settlement agreement was filed for the Court's approval in an immaterial amount. Partner estimates that even if the claim will be decided in favor of the approved group of
customers (as defined by the District Court), the damages that Partner will be required to pay will be immaterial.
|
A. |
Claims (continued)
|
1. |
Consumer claims (continued)
|
2. |
On April 3, 2012, a claim and a motion to certify the claim as a class action were filed against Partner. The claim alleges that Partner breached its license conditions in connection with benefits provided to customers that
purchased handsets from third parties. The amount claimed in the lawsuit was estimated by the plaintiffs to be approximately NIS 22 million. In September 2014, the Court approved the motion and recognized the lawsuit as a
class action. In July 2017, the parties filed a request to the Court to approve a settlement agreement. In December 2019, the Court approved the settlement agreement which Partner is currently implementing. The damages that
Partner is required to pay are immaterial.
|
3. |
On November 12, 2015, a claim and a motion to certify the claim as a class action were filed against Partner. The claim alleges that Partner required their customers to purchase a router and/or a call adaptor and/or
terminal equipment as a condition for using its fixed-line telephony services, an action which would not be in accordance with the provisions of its licenses. The total amount claimed against Partner is estimated by the
plaintiff to be approximately NIS 116 million. In February 2019, the Court approved the request to certify the claim as a class action with certain changes. In March 2019, Partner filed an appeal of this decision. In February
2020, the Supreme Court dismissed the appeal request that was filed and the claim was reverted back to the District Court. Partner estimates that even if the claim will be decided in favor of the approved group of customers,
the damages that Partner will be required to pay will be immaterial.
|
4. |
On November 12, 2015, a claim and a motion to certify the claim as a class action were filed against 012 Smile. The claim alleges that 012 Smile required their customers to purchase a router and/or a call adaptor and/or
terminal equipment as a condition for using its fixed-line telephony services, an action which would not be in accordance with the provisions of its licenses. The total amount claimed against 012 Smile is estimated by the
plaintiff to be approximately NIS 64 million. In February 2019, the Court approved the request to certify the claim as a class action with certain changes. In March 2019, the Company filed an appeal of this decision. In
February 2020, the Supreme Court dismissed the appeal request that was filed and the claim was reverted back to the District Court. The Company estimates that even if the claim will be decided in favor of the approved group of
customers, the damages that the Company will be required to pay will be immaterial.
|
2. |
Employees and other claims
|
A. |
Claims (continued)
|
1. |
Consumer claims (continued)
|
B. |
Contingencies in respect of building and planning procedures
|
C. |
Investigation by the Israeli Tax Authority
|
a. |
Share capital:
|
b. |
Share based compensation to employees
|
(1) |
Description of the Equity Incentive Plan
|
- |
Exercise price adjustment: The exercise price of options shall be reduced in the following events: (1) dividend distribution other than in the ordinary course: by the gross dividend amount so distributed per share,
and (2) dividend distribution in the ordinary course: the exercise price shall be reduced by the amount of a dividend in excess of 40% of the Company’s net income for the relevant period per share, or by the gross dividend
amount so distributed per share ("Full Dividend Mechanism"), depending on the date of granting of the options.
|
- |
Cashless exercise: Most of the options may be exercised only through a cashless exercise procedure, while holders of other options may choose between cashless exercise and the regular option exercise procedure. In
accordance with such cashless exercise, the option holder would receive from the Company, without payment of the exercise price, only the number of shares whose aggregate market value equals the economic gain which the option
holder would have realized by selling all the shares purchased at their market price, net of the option exercise price.
|
(2) |
Information in respect of options and restricted shares granted under the Plan:
|
Through December 31, 2019
|
||||||||
Number of options
|
Number of RSAs
|
|||||||
Granted
|
35,072,795
|
5,509,554
|
||||||
Shares issued upon exercises and vesting
|
(6,528,031
|
)
|
(2,695,053
|
)
|
||||
Cancelled upon net exercises, expiration
|
||||||||
and forfeitures
|
(19,524,075
|
)
|
(1,584,037
|
)
|
||||
Outstanding
|
9,020,689
|
1,230,464
|
||||||
Of which:
|
||||||||
Exercisable
|
5,623,921
|
|||||||
Vest in 2020
|
1,632,797
|
678,379
|
||||||
Vest in 2021
|
1,145,182
|
371,076
|
||||||
Vest in 2022
|
618,789
|
181,009
|
(3) |
Options and RSAs status summary as of December 31, 2017, 2018 and 2019 and the changes therein during the years ended on those dates:
|
Year ended December 31
|
||||||||||||||||||||||||
2017
|
2018
|
2019
|
||||||||||||||||||||||
Number |
Weighted average
exercise price |
Number |
Weighted average
exercise price |
Number |
Weighted average
exercise price |
|||||||||||||||||||
Share Options:
|
NIS
|
NIS
|
NIS
|
|||||||||||||||||||||
Outstanding at the beginning of the year
|
11,285,901
|
29.14
|
8,708,483
|
29.67
|
9,697,266
|
28.19
|
||||||||||||||||||
Granted during the year
|
1,201,358
|
19.45
|
2,536,362
|
18.59
|
1,232,226
|
16.21
|
||||||||||||||||||
Exercised during the year
|
(1,906,991
|
)
|
17.38
|
(778,616
|
)
|
17.11
|
(70,824
|
)
|
16.62
|
|||||||||||||||
Forfeited during the year
|
(988,566
|
)
|
22.91
|
(307,055
|
)
|
18.79
|
(235,150
|
)
|
18.74
|
|||||||||||||||
Expired during the year
|
(883,219
|
)
|
43.10
|
(461,908
|
)
|
28.17
|
(1,602,829
|
)
|
46.64
|
|||||||||||||||
Outstanding at the end of the year
|
8,708,483
|
29.67
|
9,697,266
|
28.19
|
9,020,689
|
23.62
|
||||||||||||||||||
Exercisable at the end of the year
|
5,190,586
|
36.66
|
6,266,965
|
33.39
|
5,623,921
|
27.11
|
||||||||||||||||||
Shares issued during the year due exercises
|
319,259
|
94,276
|
3,166
|
|||||||||||||||||||||
RSAs:
|
||||||||||||||||||||||||
Outstanding at the beginning of the year
|
1,955,414
|
1,344,297
|
1,209,521
|
|||||||||||||||||||||
Granted during the year
|
507,146
|
813,310
|
397,476
|
|||||||||||||||||||||
Vested during the year
|
(753,106
|
)
|
(791,796
|
)
|
(284,427
|
)
|
||||||||||||||||||
Forfeited during the year
|
(365,157
|
)
|
(156,290
|
)
|
(92,106
|
)
|
||||||||||||||||||
Outstanding at the end of the year
|
1,344,297
|
1,209,521
|
1,230,464
|
Options granted in 2017
|
Options granted in 2018
|
Options granted in 2019
|
||||||||||
Weighted average fair value of options granted using the
|
||||||||||||
Black & Scholes option-pricing model – per option (NIS)
|
5.43
|
4.36
|
3.34
|
|||||||||
The above fair value is estimated on the grant date based on the following weighted average assumptions:
|
||||||||||||
Expected volatility
|
37.6
|
%
|
34.14
|
%
|
33.52
|
%
|
||||||
Risk-free interest rate
|
0.53
|
%
|
0.79
|
%
|
0.57
|
%
|
||||||
Expected life (years)
|
3
|
3.16
|
3
|
|||||||||
Dividend yield
|
*
|
*
|
*
|
b. |
Share based compensation to employees (continued)
|
Expire in
|
Number of share options
|
Weighted average exercise price in NIS
|
||||||
2020
|
2,218,316
|
37.35
|
||||||
2021
|
1,828,653
|
20.27
|
||||||
2022
|
607,657
|
23.50
|
||||||
2023
|
728,040
|
19.40
|
||||||
2024
|
2,405,797
|
18.60
|
||||||
2025
|
1,232,226
|
16.21
|
||||||
9,020,689
|
23.62
|
New Israeli Shekels in millions
|
||||||||
Deferred revenues from Hot mobile *
|
Other deferred revenues*
|
|||||||
Balance at January 1, 2018
|
195
|
46
|
||||||
Revenue recognized that was included in the contract liability balance at the beginning of the year
|
(31
|
)
|
(21
|
)
|
||||
Increases due to cash received, excluding amounts recognized as revenues during the year
|
-
|
20
|
||||||
Balance at December 31, 2018
|
164
|
45
|
||||||
Revenue recognized that was included in the contract liability balance at the beginning of the year
|
(31
|
)
|
(19
|
)
|
||||
Increases due to cash received, excluding amounts recognized as revenues during the year
|
-
|
27
|
||||||
Balance at December 31, 2019
|
133
|
53
|
Year ended December 31, 2019
New Israeli Shekels in millions |
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services to private customers
|
990
|
513
|
(87
|
)
|
1,416
|
|||||||||||
Segment revenue - Services to business customers
|
808
|
412
|
(76
|
)
|
1,144
|
|||||||||||
Segment revenue - Services revenue total
|
1,798
|
925
|
(163
|
)
|
2,560
|
|||||||||||
Segment revenue - Equipment
|
571
|
103
|
674
|
|||||||||||||
Total Revenues
|
2,369
|
1,028
|
(163
|
)
|
3,234
|
Year ended December 31, 2018
New Israeli Shekels in millions |
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services to private customers
|
1,045
|
418
|
(95
|
)
|
1,368
|
|||||||||||
Segment revenue - Services to business customers
|
798
|
434
|
(76
|
)
|
1,156
|
|||||||||||
Segment revenue - Services revenue total
|
1,843
|
852
|
(171
|
)
|
2,524
|
|||||||||||
Segment revenue - Equipment
|
643
|
92
|
735
|
|||||||||||||
Total Revenues
|
2,486
|
944
|
(171
|
)
|
3,259
|
Year ended December 31, 2017
New Israeli Shekels in millions |
||||||||||||||||
Cellular segment
|
Fixed-line segment
|
Elimination
|
Consolidated
|
|||||||||||||
Segment revenue - Services to private customers
|
1,126
|
320
|
(98
|
)
|
1,348
|
|||||||||||
Segment revenue - Services to business customers
|
852
|
457
|
(75
|
)
|
1,234
|
|||||||||||
Segment revenue - Services revenue total
|
1,978
|
777
|
(173
|
)
|
2,582
|
|||||||||||
Segment revenue - Equipment
|
610
|
76
|
686
|
|||||||||||||
Total Revenues
|
2,588
|
853
|
(173
|
)
|
3,268
|
(b) Cost of revenues
|
New Israeli Shekels
|
|||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Transmission, communication and content providers
|
738
|
742
|
746
|
|||||||||
Cost of equipment and accessories
|
519
|
543
|
500
|
|||||||||
Depreciation and amortization
|
477
|
457
|
603
|
|||||||||
Wages, employee benefits expenses and car maintenance
|
293
|
310
|
312
|
|||||||||
Costs of handling, replacing or repairing equipment
|
75
|
73
|
71
|
|||||||||
Operating lease, rent and overhead expenses
|
184
|
184
|
73
|
|||||||||
Network and cable maintenance
|
97
|
109
|
99
|
|||||||||
Internet infrastructure and service providers
|
95
|
143
|
173
|
|||||||||
IT support and other operating expenses
|
61
|
56
|
57
|
|||||||||
Amortization of deferred expenses - rights of use
|
40
|
47
|
28
|
|||||||||
Other
|
48
|
36
|
45
|
|||||||||
Total cost of revenues
|
2,627
|
2,700
|
2,707
|
(c) Selling and marketing expenses
|
New Israeli Shekels
|
|||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Wages, employee benefits expenses and car maintenance
|
106
|
111
|
102
|
|||||||||
Advertising and marketing
|
44
|
46
|
44
|
|||||||||
Selling commissions, net
|
29
|
27
|
28
|
|||||||||
Depreciation and amortization
|
54
|
77
|
106
|
|||||||||
Operating lease, rent and overhead expenses
|
23
|
19
|
4
|
|||||||||
Other
|
13
|
13
|
17
|
|||||||||
Total selling and marketing expenses
|
269
|
293
|
301
|
(d) General and administrative expenses
|
New Israeli Shekels
|
|||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Wages, employee benefits expenses and car maintenance
|
79
|
76
|
85
|
|||||||||
Professional fees
|
22
|
21
|
21
|
|||||||||
Credit card and other commissions
|
14
|
14
|
13
|
|||||||||
Depreciation
|
9
|
11
|
14
|
|||||||||
Other
|
20
|
26
|
16
|
|||||||||
Total general and administrative expenses
|
144
|
148
|
149
|
(e) Employee benefit expense
|
New Israeli Shekels
|
|||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Wages, employee benefits expenses and car maintenance,
|
||||||||||||
before capitalization
|
503
|
543
|
543
|
|||||||||
Less: expenses capitalized (notes 10, 11)
|
(77
|
)
|
(92
|
)
|
(96
|
)
|
||||||
Service costs: defined benefit plan (note 16(2))
|
15
|
11
|
12
|
|||||||||
Service costs: defined contribution plan (note 16(1))
|
17
|
20
|
23
|
|||||||||
Employee share based compensation expenses (note 21(b))
|
20
|
15
|
17
|
|||||||||
478
|
497
|
499
|
New Israeli Shekels
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Unwinding of trade receivables
|
27
|
25
|
23
|
|||||||||
Other income, net
|
4
|
3
|
5
|
|||||||||
31
|
28
|
28
|
New Israeli Shekels
|
||||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Net foreign exchange rate gains
|
2
|
*
|
4
|
|||||||||
Interest income from cash, cash equivalents and deposits
|
2
|
2
|
3
|
|||||||||
Finance income
|
4
|
2
|
7
|
|||||||||
|
||||||||||||
Interest expenses
|
171
|
47
|
40
|
|||||||||
CPI linkage expenses
|
4
|
3
|
*
|
|||||||||
Interest for lease liabilities
|
20
|
|||||||||||
Finance charges for financial liability
|
9
|
|||||||||||
Other finance costs
|
9
|
5
|
6
|
|||||||||
Finance expenses
|
184
|
55
|
75
|
|||||||||
180
|
53
|
68
|
a. |
Corporate income tax rates applicable to the Group
|
Balance of deferred tax asset (liability) in respect of
|
As at January 1, 2017
|
Charged to the income statement
|
Charged to other comprehensive income
|
As at December 31, 2017
|
Charged to the income statement
|
Charged to other comprehensive income
|
As at December 31, 2018
|
Charged to the income statement
|
Charged to other comprehensive income
|
Charged to retained earnings upon implementation of IFRS 16
|
As at December 31, 2019
|
|||||||||||||||||||||||||||||||||
Allowance for credit losses
|
45
|
*
|
45
|
(2
|
)
|
43
|
(4
|
)
|
39
|
|||||||||||||||||||||||||||||||||||
Provisions for employee rights
|
14
|
*
|
1
|
15
|
2
|
*
|
17
|
1
|
*
|
18
|
||||||||||||||||||||||||||||||||||
Depreciable fixed assets and software
|
(35
|
)
|
8
|
(27
|
)
|
8
|
(19
|
)
|
8
|
(11
|
)
|
|||||||||||||||||||||||||||||||||
Lease - Right-of-use assets
|
-
|
-
|
-
|
17
|
(151
|
)
|
(134
|
)
|
||||||||||||||||||||||||||||||||||||
Leases liabilities
|
-
|
-
|
-
|
(15
|
)
|
157
|
142
|
|||||||||||||||||||||||||||||||||||||
Intangibles, deferred expenses and carry forward losses
|
9
|
7
|
16
|
(24
|
)
|
(8
|
)
|
(11
|
)
|
(19
|
)
|
|||||||||||||||||||||||||||||||||
Options granted to employees
|
6
|
*
|
6
|
(1
|
)
|
5
|
1
|
6
|
||||||||||||||||||||||||||||||||||||
Other
|
2
|
(2
|
)
|
*
|
*
|
*
|
*
|
*
|
||||||||||||||||||||||||||||||||||||
Total
|
41
|
13
|
1
|
55
|
(17
|
)
|
*
|
38
|
(3
|
)
|
*
|
6
|
41
|
New Israeli Shekels
|
||||||||
December 31,
|
||||||||
2018
|
2019
|
|||||||
In millions
|
||||||||
Deferred tax assets
|
||||||||
Deferred tax assets to be recovered after more than 12 months
|
69
|
173
|
||||||
Deferred tax assets to be recovered within 12 months
|
52
|
85
|
||||||
121
|
258
|
|||||||
Deferred tax liabilities
|
||||||||
Deferred tax liabilities to be recovered after more than 12 months
|
64
|
164
|
||||||
Deferred tax liabilities to be recovered within 12 months
|
19
|
53
|
||||||
83
|
217
|
|||||||
Deferred tax assets, net
|
38
|
41
|
c. |
Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates applicable to companies in Israel (see (a) above), and the actual tax expense:
|
New Israeli Shekels
|
||||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
Profit before taxes on income,
|
||||||||||||
as reported in the income statements
|
135
|
63
|
19
|
|||||||||
Theoretical tax expense
|
32
|
14
|
4
|
|||||||||
Increase in tax resulting from disallowable deductions
|
8
|
9
|
5
|
|||||||||
Taxes on income in respect of previous years
|
(10
|
)
|
(15
|
)
|
(7
|
)
|
||||||
Temporary differences and tax losses for which no deferred income
|
||||||||||||
tax asset was recognized
|
(9
|
)
|
(1
|
)
|
(2
|
)
|
||||||
Income tax expenses
|
21
|
7
|
*
|
d. |
Taxes on income included in the income statements:
|
New Israeli Shekels
|
||||||||||||
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
In millions
|
||||||||||||
For the reported year:
|
||||||||||||
Current
|
44
|
6
|
3
|
|||||||||
Deferred, see (c) above
|
(4
|
)
|
17
|
4
|
||||||||
In respect of previous year:
|
||||||||||||
Current
|
(10
|
)
|
(15
|
)
|
(7
|
)
|
||||||
Deferred, see (c) above
|
(9
|
)
|
(1
|
)
|
||||||||
21
|
7
|
*
|
e. |
Tax assessments:
|
1) |
In 2017, the Company received final income tax assessments for the years 2014 and 2015.
|
2) |
In 2018, a Group's subsidiary received final income tax assessments for the years 2013 through 2016.
|
3) |
As a general rule, income tax self-assessments filed by two other subsidiaries through the year ended December 31, 2014 are, by law, now regarded as final.
|
f. |
Tax losses carried forward to future years:
|
a. |
Key management compensation
|
New Israeli Shekels
|
||||||||||||
Year ended December 31
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
Key management compensation expenses comprised
|
In millions
|
|||||||||||
Salaries and short-term employee benefits
|
21
|
22
|
27
|
|||||||||
Long term employment benefits
|
3
|
3
|
3
|
|||||||||
Employee share-based compensation
|
||||||||||||
expenses
|
11
|
9
|
12
|
|||||||||
35
|
34
|
42
|
New Israeli Shekels
|
||||||||
December 31,
|
||||||||
2018
|
2019
|
|||||||
Statement of financial position items - key management
|
In millions
|
|||||||
Current liabilities:
|
9
|
10
|
||||||
Non-current liabilities:
|
10
|
10
|
b. |
In the ordinary course of business, key management or their relatives may have engaged with the Company with immaterial transactions that are under normal market conditions.
|
c. |
Principal shareholder: S.B. Israel Telecom, an affiliate of Saban Capital Group LLC, a private investment firm, based in Los Angeles, California, specializing in the media, entertainment and
communications industries, is the registered owner of the shares in the Company’s share register. On November 11, 2019, S.B. Israel Telecom filed an amendment to its Schedule 13D with the SEC stating that it had no sole or
shared voting or dispositive power over any shares of the Company, and that as a result of the Receiver Appointment (as defined in the filed amendment), as of November 12, 2019, the Reporting Persons (as defined in the
filed amendment) ceased to beneficially own any ordinary shares of the Company. On November 12, 2019, the District Court of Tel Aviv ("the Court") issued a court order ("the Court Order") under which attorney Ehud Sol (the
“Receiver") was appointed as receiver for 49,862,800 of the Company's shares, representing as of March 1, 2020, approximately 27.16% of our issued and outstanding share capital and the largest block of shares held by a
single shareholder. The shares (the “Pledged Shares”) had been purchased by S.B. Israel Telecom Ltd. ("S.B. Israel Telecom") from Advent Investments Pte Ltd (“Advent”) in 2013; in connection with the purchase, S.B. Israel
Telecom assumed certain debt owed to Advent, and agreed that such debt would be secured by, among other things, the Pledged Shares. S.B. Israel Telecom defaulted on the payment, and on November 11, 2019, consented to
enforcement and foreclosure proceedings with respect to the Pledged Shares.
|
The Court Order was issued due to an application filed by Advent ("Advent's Application") and granted the Receiver substantial rights related to the Pledged Shares, including the right to
participate in our shareholders’ meetings, to vote the Pledged Shares, to receive dividends, and any contractual right related to the Pledged Shares, although as noted below, the Receiver may not sell or transfer the
Pledged Shares without the Court’s approval. Without derogating from those rights of the Receiver, S.B. Israel Telecom remains the holder of legal title to the Pledged Shares. On December 9, 2019, the Ministry of
Communications granted, within its powers, a permit to the Receiver to exercise means of control of the Company by himself. As a result, the Receiver has the power to substantially influence the nomination of the
Company’s Board of Directors and to play a preponderant if not decisive role in other decisions taken at meetings of our shareholders. For example, to the extent that the Company's discussions with Hot Telecom result
in the entry into the Proposed Transaction, the Receiver would have the power to block approval of the Proposed Transaction, which requires approval by holders of at least 75% of the Company’s shares, since the
Receiver has the right to vote over 27% of the shares. The Receiver is expected to hold such rights until the Pledged Shares are sold or transferred to Advent, actions that would require the Court’s approval according
to the Court Order and Advent's Application. S.B. Israel Telecom has agreed that it will not raise an objection to such a transfer to Advent if it occurs within 9 months of November 11, 2019, the date of its consent;
following such period, S.B. Israel Telecom may object to such transfer, particularly if it believes that the value of the Pledged Shares as of the proposed transfer date exceeds the amount of its defaulted debt to
Advent. The Receiver is to exercise the rights associated with the Pledged Shares based on its judgment and subject to the Court’s orders and approvals. The Receiver is not obligated to exercise such rights in the best
interests of the Company or its shareholders.
|
d. |
Holdings of approved Israeli shareholders in the Company: The provisions of the Company's cellular license require, among others, that the "founding shareholders or their approved substitutes",
as defined in the cellular license, hold at least 26% of the means of control in the Company, including 5% which must be held by Israeli shareholders (Israeli citizens and residents), who were approved as such by the
Minister of Communications. The controlling stake of the Phoenix Group (One of the Company’s approved Israeli shareholders) has been sold to foreign entities. On November 12, 2019, the Israeli Ministry of Communications
issued a temporary order (ending on November 1, 2020) amending the Company’s cellular license and reducing the percentage that the approved Israeli shareholders are required to hold by the amount of shares now held by the
foreign entities (from 5% down to 3.82% of the means of control in the Company). This temporary order will allow the Ministry and the Company to resolve the issue of holdings of approved Israeli shareholders in the Company
until the temporary order expires.
|
Year ended December 31,
|
||||||||||||
2017
|
2018
|
2019
|
||||||||||
Profit used for the computation of
|
||||||||||||
basic and diluted EPS attributable to the owners of the Company (NIS in millions)
|
114
|
57
|
19
|
|||||||||
Weighted average number of shares used
|
||||||||||||
in computation of basic EPS (in thousands)
|
162,733
|
165,979
|
162,831
|
|||||||||
Add - net additional shares from assumed
|
||||||||||||
exercise of employee stock options and restricted
|
||||||||||||
shared (in thousands)
|
1,804
|
983
|
777
|
|||||||||
Weighted average number of shares used in
|
||||||||||||
computation of diluted EPS (in thousands)
|
164,537
|
166,962
|
163,608
|
|||||||||
Number of options and restricted shares not taken into
|
||||||||||||
account in computation of diluted earnings per share,
|
||||||||||||
because of their anti-dilutive effect (in thousands)
|
5,650
|
9,609
|
8,952
|
New Israeli Shekels
|
||||||||
Year ended
December 31,
|
||||||||
2018
|
2019
|
|||||||
In millions
|
||||||||
Service revenues
|
2,524
|
2,560
|
||||||
Equipment revenues
|
735
|
674
|
||||||
Total revenues
|
3,259
|
3,234
|
||||||
Cost of revenues – Services
|
2,131
|
2,177
|
||||||
Cost of revenues – Equipment
|
569
|
530
|
||||||
Total Cost of revenues
|
2,700
|
2,707
|
||||||
Gross profit
|
559
|
527
|
6.1 |
Office Holders’ liability insurance, indemnity and the granting of release from liability are essential in order to ensure the recruitment and retention of Office Holders and directors who are the most suitable for the Company’s
needs, and who possess relevant qualifications and experience to hold office in the Company and on the Company’s Board of Directors. These are essential considering that, in today’s marketplace, Office Holders and directors of public
companies face greater liability exposures than ever before, particularly in public companies listed in multiple countries and subject to differing legal systems. The Company shall be allowed to insure the liability of its Office
Holders, to indemnify them or release them from liability, in conformity with the Companies Law and the Company’s Articles of Association.
|
6.2 |
The Company shall be allowed to engage in an office holders’ liability insurance policy (including directors and the Company’s CEO) of the Company and/or subsidiaries of the Company (including an insurance policy for the
ongoing activities and/or a particular event and/or activity and/or for the coverage of past activities including through a Runoff Policy and/or another policy of any type and kind) including Office Holders (and
directors) who are themselves, and/or whose relatives are, controlling shareholders of the Company and/or Office Holders for whom the Company’s controlling shareholders may have a personal interest in their inclusion in the insurance
policy, that will apply to serving Office Holders and/or that served or that will serve from time to time, for a number of periods of insurance, including their extension, during the period of the Compensation Policy, whether through
the purchase of new policies or through extensions or renewals of existing policies and/or policies that will be purchased in the future, whether with the same insurer or with another insurer in Israel and/or abroad, and all
under the conditions specified hereunder:
|
6.2.1 |
|
|
6.2.2 |
The Compensation Committee and the Board of Directors has approved the renewal of the insurance policy for a new period of insurance and has determined that no material changes were made in the insurance terms
|
6.2.3
|
To the extent that the policy is extended to cover claims against the Company itself (as opposed to claims against its Office Holders) relating to the Company's traded securities (Entity Coverage for Securities Claims), payment
arrangements for insurance benefits for this extension will be determined, where applicable, whereby the Office Holder's right to receive indemnification from the insurers will precede the Company's right.
|
6.3 |
In addition,
|
6.4 |
In addition, in the event of a public offering of the Company's securities, the Company may extend the insurance policy to cover such offering and/or to enter into a separate and dedicated Public Offering of Securities Insurance
policy
|
6.5 |
The Company's engagement in insurance policies as stated in respect of the liability of Office Holders is according to market conditions and is not expected to significantly affect the Company's profitability, assets
orliabilities.
|
6.6 |
The Company's engagement in insurance policies as stated in respect of the liability of Office Holders may only be approved by the Compensation Committee pursuant to Rule 1b1 of the Companies Regulations (Easements on transactions
with interested parties), 2000, or any provision that will replace it and it will not be brought again for additional approval of the Audit Committee, Board of Directors or the General Meeting of the Company.
|
6.6 |
The maximum advance undertaking of indemnity payable by the Company to all indemnified persons, pursuant to letters of indemnification to be granted to Office Holders as of the adoption date of the Policy, in respect of any
occurrence of the events specified in the appendix to the letter of indemnification, shall not exceed 25% of the shareholders’ equity according to the latest reviewed or audited financial statements approved by the Company’s Board of
Directors prior to the approval of payment of the indemnification.
|
6.7 |
The Company shall be allowed to indemnify any Office Holder retroactively in the broadest manner permitted pursuant to the Companies Law.
|
6.8 |
The Compensation Policy in no way diminishes the validity of previous decisions reached in the Company in conformity with the law regarding the granting of an advance undertaking of indemnity.
|
6.9 |
The Company shall be allowed to grant a release from liability in advance to the Company’s Office Holders in respect of a breach of a duty of care towards the Company pursuant to any law, including Office Holders of the Company who
themselves are, or their relatives are, the controlling shareholder, subject to the receipt of the approvals required by law. A release from the duty of care shall not apply in relation to a decision or transaction that a controlling
shareholder or any Office Holder in the Company (including another Office Holder than the Office Holder being granted the release) has a personal interest.
|
21.1 |
A holding of ten percent (10%) or more of any of the Means of Control in the Licensee will not be transferred, either directly or indirectly, either all at once or in parts, unless given the Minister’s prior written consent.
|
21.2 |
None of the said Means of Control, or a part of them, in the Licensee, may be transferred in any way, if as a result of the transfer, control in the Licensee will be transferred from one person to another, unless given the
Minister’s prior written consent.
|
21.3 |
No control shall be acquired, either direct or indirect, in the Licensee, and no person, whether on his/her own or together with his/her relative or with those acting with him/her on a regular basis, shall acquire in it ten percent
(10%) or more of any of the Means of Control in the Licensee, whether all at once or in parts, unless given the Minister’s prior written consent.
|
21.4 |
1Cancelled
|
21.5 |
2Despite the provisions of sub-clauses 21.1 and 21.3 above, should there occur a transfer or purchase of a percentage of Tradable Means of Control in the Licensee requiring consent under clauses 21.1 and 21.3 (other than
a transfer of purchase that results in a transfer of control), without the Minister’s consent having been sought, the Licensee shall report this to the Minister in writing, and shall make an application to the Minister to approve the
said transfer or purchase of the Means of Control in the Licensee, within 21 days of the date on which the Licensee became aware of such.
|
21.6 |
Neither the entry into an underwriting agreement relating to the issue or sale of securities to the public, the registration for trading on the securities exchange in Israel or overseas, nor the deposit or registration of
securities with a registration company or with a depository agent or a custodian for the purpose of registration of GDRs or ADRs or similar certificates relating to the issue or sale of securities to the public shall in and of
themselves be considered as a transfer of Means of Control in the Licensee3.
|
1 |
Amendment No. 52
|
2 |
Amendment No. 3
|
3 |
Amendment No. 4
|
21.7 | (a) |
Irregular Holdings shall be noted in the Licensee’s members register (the list of shareholders) stating the fact that they are irregular, immediately upon the Licensee’s becoming aware of this, and a notice of the registration
shall be given by the Licensee to the holder of such Irregular Holding and to the Minister.
|
(b) |
Irregular Holdings, noted as aforesaid in clause 21.7(a), shall not provide the holder with any rights, and shall be “dormant shares” as defined in Section 308 of the Companies Law 5759-1999, expect in the case of the receipt of a
dividend or any other distribution to shareholders (especially the right to participate in an allotment of rights calculated on the basis of holdings of Means of Control in the Licensee, although holdings accumulated as aforesaid
shall also be considered as Irregular Holdings), and therefore no action or claim of the activation of a right by virtue of the Irregular Holdings shall have any force, except in the case of the receipt of a dividend or any other
distribution as aforesaid.
|
(1) |
A shareholder who takes part in a vote during a meeting of shareholders shall advise the Licensee prior to the vote, or in the case of documentary voting on the voting document, whether his holdings in the Licensee or his voting
require consent under clauses 21 and 23 of the License or not; where a shareholder does not so advise, he may not vote and his vote shall not count.
|
(2) |
No director of the Licensee shall be appointed, elected or transferred from office by virtue of an Irregular Holding; should a director be appointed, elected or transferred from office as aforesaid, the said appointment, election
or transfer, as the case may be, shall be of no effect.
|
(3) |
Irregular Holdings shall not provide voting rights in the general meeting;
|
(c) |
The provisions of clause 21.7 shall be included in the Articles of Association of the Licensee, including the provisions of clause 21.9, mutatis mutandis.
|
21.8 |
For so long as the Articles of Association of the Licensee provide as set out in clause 21.7, and the Licensee acts in accordance with the provisions of clauses 21.5 and 21.7, and for so long as none of the holdings of Founding
Shareholders or their Substitutes4 reduces to less than 26% 5 6 7 of all Means of Control in the Licensee immediately prior to the listing of the shares for trade, and for so long as the
Articles of Association of the Licensee provide that a majority of the voting power in the general meeting of the Licensee may appoint all members of the Board of Directors of the Licensee, other than external directors required by
any law and/or the relevant Exchange Rules, the Irregular Holdings shall not, in and of themselves, give rise to a cause for the cancellation of the Licensee.
|
21.9 |
The provisions of clauses 21.5 through 21.8 shall not apply to the founding shareholders or their substitutes.11
|
4 |
Amendment No. 25
|
5 |
Amendment No. 9
|
6 |
Amendment No. 28
|
7 |
Amendment No. 31
|
8 |
Amendment No. 31
|
9 |
Amendment No. 105
|
10 |
Amendment No. 25
|
11 |
Amendment No. 31
|
22. |
Placing a Charge on Means of Control
|
22A. |
Israeli Requirement and Holdings of Founding Shareholders or their Substitutes12
|
22A.1. |
The total cumulative holdings of the "Founding Shareholders or their Substitutes", as defined in Article 21.8, (including anyone that is an “IsraeliEntity” as defined in Article 22.2A below, that purchased Means of Control from the
Licensee and received the Minister’s approval to be considered a founding shareholder or their substitute from the date set by the Minister), and are bound by an agreement for the fulfillment of the provisions of Article 22A of the
License (in this Article they will all be considered “Founding Shareholders or their Substitutes”) shall not be reduced to less than 26% of each of the Means of Control in the Licensee.
|
22A.2 |
(1) The total cumulative holdings of "Israeli Entities", one or more, that are considered as one of the Founding Shareholders or their Substitutes, from the total holdings of Founding Shareholders or their Substitutes as
set forth in Article 22A.1 above, shall not be reduced at all times to a rate of less than five percent (5%)13 of the total issued share capital and from each of the Means of Control in the Licensee. For this matter, the
issued share capital of the Licensee shall be calculated by deducting the number of “Dormant Shares” held by the Licensee.
|
12 |
Amendment No. 31-Amendment No. 31 will come into effect upon completion of all of the obligations set forth in article 22A and no later than 30 June 2005, in accordance with the
Ministry of Communications document 62/05-4031 dated 13 March 2005
|
(2)14 |
Sub-section (1) shall not apply if the Company was given an instruction in accordance with section 13 of the Law, at the request of the General Security Service, and the General Security Service confirmed that it includes
alternative requirements for this sub-section (1).
|
22A.3 |
At least one tenth (10%) of the members of the Board of Directors of the Licensee shall be appointed by the Israeli Entities as set forth in Article 22A.2. Notwithstanding the above-mentioned, for this matter- if the Board of
Directors of the Licensee shall consist of up to 14 members – at least one director shall be appointed by the Israeli entities as set forth in Article 22.2A above, if the Board of Directors of the Licensee shall consist of between 15
and 24 members-at least 2 directors shall be appointed by the Israeli entities as set forth in Article 22.2A above and so on and so forth. This Article shall not apply, if an instruction was given to the Licensee in accordance with
section 13 of the Law, as set forth in Article 22.2A(2).15
|
22A.4 |
The Licensee's Board of Directors shall appoint from among its members that have security clearance and security compatibility to be determined by the General Security Service (hereinafter: “ Directors with Clearance”) a
committee to be designated "the Committee for Security Matters", or CSM.
|
22A.5 |
Security matters that the Board of Directors or the Audit Committee of the Licensee shall be required to consider in accordance with the mandatory provisions of the Companies Law, 5759-1999, or in accordance with the mandatory
provisions of any other law that applies to the Licensee shall be discussed, if they need to be discussed by the Board of Directors or the Audit Committee, only in the presence of Directors with Clearance. Directors that do not have
security clearance shall not be allowed to participate in this Board of Directors or Audit Committee meeting and shall not be entitled to receive information or to review documents that relate to this matter. The legal quorum for such
meetings shall include only Directors with Clearance.
|
22A.6 |
The shareholders at a general meeting shall not be entitled to assume, delegate, transfer or exercise any of the authorities granted to another organ in the company, regarding security matters.
|
22A.7 |
(a) The Minister shall appoint an observer for the Board of Directors and committee meetings, who has security clearance and security compatibility that will be determined by the General Security Services.
|
22A.8
|
The provisions of Article 22A of the License shall be adopted in the Articles of Association of the Licensee.
|
23. |
Prohibition of Cross-Ownership
|
23.1 |
The Licensee, an Office Holder or an Interested Party in the Licensee, as well as an Office Holder in an Interested Party in the Licensee, shall not hold, either directly or indirectly, five percent (5%) or more of any Means of
Control in a Competing MRT Operator, and shall not serve as an Office Holder in a Competing MRT Operator or in an Interested Party in a Competing MRT Operator; for this matter, “Holding” includes holding as an agent.
|
23.2 |
Notwithstanding the provisions of Paragraph 23.1, the Minister may, based upon written request, permit an Office Holder in the Licensee to serve as an Office Holder in an Interested Party in a Competing MRT Operator, or permit an
Office Holder in an Interested Party in the Licensee to serve as an Office Holder in a Competing MRT Operator or in an Interested Party in a Competing MRT Operator, if he is satisfied, that this will not harm the competition in MRT
Services; the Minister may condition the granting of such permit on conditions that the Office Holder must fulfill for prevention of harm to the competition as aforesaid.
|
23.3 |
Notwithstanding the provisions of Paragraph 23.1, an Interested Party in the Licensee, which is a trust fund, an insurance company, an investment company or a pension fund, may hold up to ten percent (10%) of the Means of Control
in a Competing MRT Operator, and an Interested Party in a Competing MRT Operator, which is a trust fund, an insurance company, an investment company or a pension fund, may hold up to ten percent (10%) of the Means of Control in the
Licensee, provided it does not have a representative or an appointee on its behalf among the Office Holders of a Competing MRT Operator or of the Licensee, as the case may be, unless it is required to do so by law.
|
23.4 |
The Licensee, an Office Holder or an Interested Party in the Licensee, as well as an Office Holder in an Interested Party in the Licensee, will not control a Competing MRT Operator, and will not cause it, by any act or omission, to
be controlled by a Competing MRT Operator or by an Office Holder or an Interested Party in a Competing MRT Operator, or by an Office Holder in an Interested Party in a Competing MRT Operator, or by a person or corporation that
controls a Competing MRT Operator.
|
23.5 |
The rate of indirect holding in a corporation will be a product of the percentage of holdings in each stage of the chain of ownership, subject to what is set out in Paragraph 23.6; for example:
|
(A) |
‘A’ holds 40% in Company ‘B’;
|
(B) |
Company ‘B’ holds 40% in Company ‘C’;
|
(C) |
Company ‘C’ holds 25% in Company ‘D’;
|
(D) |
Therefore, Company ‘A’ holds, indirectly, 4% of Company ‘D’.
|
23.6 |
For the matter of this Paragraph and Paragraphs 14.1 (G) (6), (7), (8), (8a), (9) and 21.4, if a certain body (hereinafter: “the Controlling Body”) controls another body that has holdings, directly or indirectly, in the Licensee
(hereinafter: “the Controlled Body”), the Controlling Body, and also any other body controlled by the Controlling Body, will be attributed with the rate of holdings in the Licensee that the Controlled Body has, directly or indirectly;
according to the following examples:
|
A. |
Direct holdings:
|
(1) |
‘A’ holds 50% in Company ‘B’, and controls it;
|
(2) |
Company ‘B’ holds 50% in Company ‘C’, and controls it;
|
(3) |
Company ‘C’ holds 10% in the Licensee and does not control it;
|
(4) |
Therefore, notwithstanding that ‘A’s’ holdings in the Licensee in accordance with the instructions of Paragraph 5.6 are 2.5%, ‘A’ and also any body controlled by ‘A’ will be deemed as an Interested Party holding 10% in the
Licensee.
|
B. |
Indirect holdings:
|
(1) |
‘A’ holds 50% of Company ‘B’ and controls it;
|
(2) |
Company ‘B’ holds 40% of Company ‘C’ and controls it;
|
(3) |
Company ‘C’ holds 40% of Company ‘D’ and does not control it;
|
(4) |
Company ‘D’ holds 40% of the Licensee and does not control it;
|
(5) |
Therefore, ‘A’ and any body controlled by ‘A’ will be regarded as having a holding in the Licensee at the rate of holdings of Company ‘C’ in the Licensee, which is holdings of 16% (according to the method set out in Paragraph 23.5
for the calculation of the rate of indirect holdings in the absence of control), and in this manner, ‘A’ and any body controlled by ‘A’ is an Interested Party in the Licensee.
|
23.7 |
If a certain body has indirect holding in the Licensee, through two or more Interested Parties, then for the purpose of its definition as an Interested Party, and for the purpose of determining the rate of holding with regard to
this Paragraph, the greatest indirect rate of holding will be taken into account, and also any rate of holding that derives from the chain of holdings through which the said holding body is attributed with the holdings of corporations
controlled by it in accordance with the provisions of Paragraph 23.6; the rates of holdings that derive from two or more chains that will be taken into account as stated above, will be cumulative for the purpose of calculating the
rate of holdings.
|
23.8 |
The Minister may, in response to a written request, permit an Interested Party in the Licensee to hold, either directly or indirectly, five percent (5%) or more in any of the Means of Control of a Competing MRT Operator, if the
Minister is satisfied that this will not harm competition in the MRT field; 16the Minister may condition the granting of the said permit on a condition that the Interested Party in the Licensee or competing MRT Operator is
an Interested Party merely by virtue of the provisions of Article 23.6 .
|
24. |
Prohibition of Conflict of Interests
|
16 |
Amendment No. 10
|
1. |
Approval of the re-appointment of Kesselman & Kesselman, independent certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited group, as the Company's auditor for the period ending at the
close of the next annual general meeting;
|
2. |
Discussion of the auditor’s remuneration for the year ended December 31, 2019, as determined by the Audit Committee and by the Board of Directors, and the report of the Board of Directors with respect to the remuneration paid to the
auditor and its affiliates for the year ended December 31, 2019; and
|
3. |
Discussion of the Company’s audited financial statements for the year ended December 31, 2019 and the report of the Board of Directors for such period.
|
4. |
to re-elect the following directors to the Company’s Board of Directors until the close of the next annual general meeting: Mr. Richard Hunter, Mr. Yehuda Saban, Mr. Yossi Shachak, Mr. Arie (Arik)
Steinberg and Mr. Ori Yaron (the "Appointed Directors").
|
5. |
Appointment of Mr. Shlomi Zohar as an independent director (Bilty Taluy) of the Company in accordance with the Israeli Companies Law and regulations promulgated
thereunder, commencing on October 29, 2020;
|
RESOLVED: this resolution is in the best interest of the Company.”
|
6. |
Appointment of Ms. Roly Klinger as an external director (Dahatz) of the Company for a term of three years in accordance with the Israeli Companies Law and regulations
promulgated thereunder, commencing on October 29, 2020
|
7. |
Appointment of Ms. Marom-Brikman as an external director (Dahatz) of the Company for a term of three years in accordance
with the Israeli Companies Law and regulations promulgated thereunder, commencing on January 1, 2021
|
8. |
Approval of an amendment to the Company's Compensation Policy for Office Holders;
|
Item No.
|
Subject of the Resolution
|
Votea
|
In respect of appointment of an external director (dahatz) pursuant to sections 239(b) or 245(a1) of
the Israeli Companies Law - are you a “Controlling Party” in the Company, an “Interested Party”, having a “Personal Interest” in the appointment approval, a “Senior Office Holder” or an “Institutional Investor”b?
|
In respect of a transaction’s approval pursuant to sections 255 and 272 to 275 (the majority required for which is not
an ordinary majority) - do you have a “Personal Interest” in the resolution, are you a
“Controlling Party” in the Company, a “Senior Office Holder” or an “Institutional Investor”b?
|
||||
For
|
Against
|
Abstain
|
Yesc
|
No
|
Yesc
|
No
|
||
1)
|
Approval of the re-appointment of Kesselman & Kesselman, independent certified public accountants in Israel and a member of
PricewaterhouseCoopers International Limited group, as the Company's auditor for the period ending at the close of the next annual general meeting.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
2)
|
Discussion of the auditor’s remuneration for the year ended December 31, 2019, as determined by the Audit Committee and by the Board of
Directors, and the report of the Board of Directors with respect to the remuneration paid to the auditor and its affiliates for the year ended December 31, 2019.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
||
3)
|
Discussion of the Company’s audited financial statements for the year ended December 31, 2019 and the report of the Board of Directors for
such period.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
||
4)
|
Approval of the re-election of Mr. Richard Hunter, Mr. Yehuda Saban, Mr. Yossi Shachak, Mr. Arie (Arik) Steinberg and Mr. Ori Yaron to serve
as directors of the Company until the close of the next annual general meeting, unless their office become vacant earlier in accordance with the provisions of the Israeli Companies Law and the Company's Articles of Association.
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
5)
|
Approval of the appointment of Mr. Shlomo Zohar as a new independent director (bilty taluy).
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
6)
|
Approval of the appointment of Ms. Roly Klinger as a new external director (Dahatz);
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
|||||
7)
|
Approval of the appointment of Ms. Michal Marom-Brikman as a new external director (Dahatz)
effective January 1, 2021
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
|||||
8)
|
Approval of an amendment to the Company's Compensation Policy
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
a
|
If an X is not marked in either column, the vote shall be considered as an abstention on the relevant item. If an X is marked in more than one
column, the vote shall be disqualified.
|
b
|
Kindly provide details regarding the nature of the “Personal Interest” in the resolution, why do you constitute a “Controlling
Party” in the Company, if you are a “Senior Office Holder” or an “Institutional Investor” (as the case may be) at the designated space below the table. Detailing of “Personal Interest” in appointment approval not resulting from
linkage to the “Controlling Party” is not required. “Personal Interest” is defined in Section 1 of the Israeli Companies Law (1999), as amended (the “Israeli
Companies Law”) as a person’s personal interest in an act or a transaction of a company, including, without limitation, the personal interest of a person's relative and the personal interest of an entity in which the person
or the person's relative is an interested party. Holding shares in the applicable company does not give rise to a “Personal Interest”. “Personal Interest” includes, without limitation, a personal interest of a person voting by proxy
which was given by another person, even if the other person does not have a personal interest, and a person voting on behalf of a person having a personal interest will be deemed as having a personal interest, whether the voting
discretion is in the voter’s hands or not. The Israeli Companies Law refers for the definition of “Control” to Section 1 of the Israeli Securities Law (1968) (the “Securities Law”), defining “Control” as the ability to direct the activity of a company, except for ability stemming only from being a director or holding another position in that company, and it is presumed that a person or
entity is controlling a company if said person or entity “holds” (as defined therein) at least half of (i) the right to vote in the shareholders general meeting; or (ii) the right to appoint directors or the general manager of that
company. For approval of the resolutions regarding the detailed items, any shareholders holding 25% or more of the voting rights in a company will be deemed a “Controlling Party”. Two or more persons holding voting rights in a company
whereas each of them has a personal interest in approving a certain transaction would be deemed “holding together”. According to section 37 (d) of the Securities Law, a “Senior Office Holder”
is, generally, a general manager, chief executive officer, deputy managing director, deputy director general, all fulfilling such a role in the company even if his title is different, a director, or manager directly subordinated to
the general manager; as well as chairman of the board, an alternate director, an individual appointed under section 236 of the Israeli Companies Law on behalf of the corporation who is a director, controller, an internal auditor,
independent authorized signatory, and anyone fulfilling such a role, even if his job title is different, and a Senior Office Holder of a corporation controlled by the corporation, which has a significant impact on the corporation and
any individual employed by a corporation in another position, holding five percent or more of the nominal value of the issued share capital or voting rights. “Institutional Investor” - shall
have the meaning defined in section 1 of the Supervisory Regulations Control of Financial Services (Provident Funds) (Participation of a Managing Company at a General Meeting) (2009), and a managing company of a Joint Investment Trust
Fund as defined in the Joint Investment Trust Law (1994).
|
c
|
If an X is not marked in either column, if an X is marked in the “Yes” column and the shareholder does not provide details, or an X is marked in both columns (as the case may be), the
vote shall be disqualified.
|
☐ |
Yes. I approve the declaration below.
|
☐ |
No. I do not approve the declaration above. I hold, together with others, ________ Ordinary Shares of Partner and my holdings require the consent of the
Israeli Minister of Communications as stated above.
|
|
Signature | |
|
Name (Print): ___________
Title: __________________
Date: __________________
|
d
|
In the event that the shareholder is an “Interested Party”, as defined in the License, voting in a different manner with respect to each part
of the shareholder's Ordinary Shares, a separate Deed of Vote should be filed for each quantity of Ordinary Shares in respect of which the shareholder intends to vote differently.
|
e |
Under certain licenses granted, directly or indirectly, to Partner, approval of, or notice to, the Minister of Communications of the State of Israel may be required for holding of 5%
or more of Partner's means of control.
|
To:
|
Partner Communications Company Ltd. (the “Company”)
|
Attn:
|
Hadar Vismunski-Weinberg, Adv., Company Secretary
|
1 |
Name of shareholder.
|
2 |
A shareholder is entitled to give several Deeds of Authorization, each of which refers to a different quantity of Ordinary Shares of the Company held by the shareholder, so long as the shareholder shall not give Deeds of Authorization
with respect to an aggregate number of Ordinary Shares exceeding the total number of shares held by him.
|
3 |
In the event that the proxy does not hold an Israeli Identification number, indicate a passport number, if any, and the name of the country in which the passport was issued.
|
4 |
Kindly provide details regarding the nature of your “Personal Interest” in the resolution, why do you constitute a “Controlling Party” in the Company, you are a “Senior Office Holder” or an “Institutional Investor” (as the case may
be), at the designated space below the table (on page 5). “Personal Interest” is defined in Section 1 of the Israeli Companies Law (1999), as amended (the “Israeli Companies Law”) as a person’s
personal interest in an act or a transaction of a company, including, without limitation, the personal interest of a person's relative and the personal interest of an entity in which the person or the person's relative is an interested
party. Holding shares in the applicable company does not give rise to a “Personal Interest”. “Personal Interest” includes, without limitation, a personal interest of a person voting by proxy which was given by another person, even if the
other person does not have a personal interest, and a person voting on behalf of a person having a personal interest will be deemed as having a personal interest, whether the voting discretion is in the voter’s hands or not. The Israeli
Companies Law refers to the definition of “Control” in Section 1 of the Israeli Securities Law (1968), as amended, defining "Control" as the ability to direct the activity of a company, except for ability stemming only from being a
director or holding another position in that company, and it is presumed that a person is controlling a company if said person "holds" (as defined therein) at least half of (i) the right to vote in the shareholders general meeting; or
(ii) the right to appoint the directors or the general manager of that company. For approval of the resolutions regarding the detailed items, any shareholders holding 25% or more of the voting rights in a company will be deemed a
“Controlling Party”. Two or more persons holding voting rights in a company whereas each of them has a personal interest in approving a certain transaction would be deemed “holding together”. According to section 37 (d) of the Securities
Law, a “Senior Office Holder” is, generally, a general manager, chief executive officer, deputy managing director, deputy director general, all fulfilling such a role in the company even if his title is different, a director, or manager
directly subordinated to the general manager; as well as chairman of the board, an alternate director, an individual appointed under section 236 of the Israeli Companies Law on behalf of the corporation who is a director, controller, an
internal auditor, independent authorized signatory, and anyone fulfilling such a role, even if his job title is different, and a Senior Office Holder of a corporation controlled by the corporation, which has a significant impact on the
corporation and any individual employed by a corporation in another position, holding five percent or more of the nominal value of the issued share capital or voting rights. “Institutional Investor” - shall have the meaning defined in
section 1 of the Supervisory Regulations Control of Financial Services (Provident Funds) (Participation of a Managing Company at a General Meeting), 2009, and a managing company of a Joint Investment Trust Fund as defined in the Joint
Investment Trust Law, 1994.
|
Item No.
|
Subject of the Resolution
|
Votea
|
In respect of appointment of an external director (dahatz) pursuant to sections 239(b) or 245(a1) of
the Israeli Companies Law - are you a “Controlling Party” in the Company, an “Interested Party”, having a “Personal Interest” in the appointment approval, a “Senior Office Holder” or an “Institutional Investor”b?
|
In respect of a transaction’s approval pursuant to sections 255 and 272 to 275 (the majority required for which is not
an ordinary majority) - do you have a “Personal Interest” in the resolution, are you a
“Controlling Party” in the Company, a “Senior Office Holder” or an “Institutional Investor”b?
|
||||
For
|
Against
|
Abstain
|
Yesc
|
No
|
Yesc
|
No
|
||
1)
|
Approval of the re-appointment of Kesselman & Kesselman, independent certified public accountants in Israel and a
member of PricewaterhouseCoopers International Limited group, as the Company's auditor for the period ending at the close of the next annual general meeting.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
2)
|
Discussion of the auditor’s remuneration for the year ended December 31, 2019, as determined by the Audit Committee and by the Board of
Directors, and the report of the Board of Directors with respect to the remuneration paid to the auditor and its affiliates for the year ended December 31, 2019.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
||
3)
|
Discussion of the Company’s audited financial statements for the year ended December 31, 2019 and the report of the Board of Directors for
such period.
This item is not subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
||
4)
|
Approval of the re-election of Mr. Richard Hunter, Mr. Yehuda Saban, Mr. Yossi Shachak, Mr. Arie (Arik) Steinberg and Mr. Ori Yaron to serve
as directors of the Company until the close of the next annual general meeting, unless their office become vacant earlier in accordance with the provisions of the Israeli Companies Law and the Company's Articles of Association.
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
5)
|
Approval of the appointment of Mr. Shlomo Zohar as a new independent director (bilty taluy).
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
Irrelevant
|
|||
6)
|
Approval of the appointment of Ms. Roly Klinger as a new external director (Dahatz);
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
|||||
7)
|
Approval of the appointment of Ms. Michal Marom-Brikman as a new external director (Dahatz)
effective January 1, 2021
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
|||||
8)
|
Approval of an amendment to the Company's Compensation Policy
This item is subject to the Regulations Procedure.
|
Irrelevant
|
Irrelevant
|
a
|
If an X is not marked in either column, the vote shall be considered as an abstention on the relevant item. If an X is marked in more than
one column, the vote shall be disqualified.
|
b
|
Kindly provide details regarding the nature of the “Personal Interest” in the resolution, why do you constitute a
“Controlling Party” in the Company, if you are a “Senior Office Holder” or an “Institutional Investor” (as the case may be) at the designated space below the table. Detailing of “Personal Interest” in appointment approval not
resulting from linkage to the “Controlling Party” is not required. “Personal Interest” is defined in Section 1 of the Israeli Companies Law (1999), as amended (the “Israeli Companies Law”) as a person’s personal interest in an act or a transaction of a company, including, without limitation, the personal interest of a person's relative and the personal interest of an entity in
which the person or the person's relative is an interested party. Holding shares in the applicable company does not give rise to a “Personal Interest”. “Personal Interest” includes, without limitation, a personal interest of a
person voting by proxy which was given by another person, even if the other person does not have a personal interest, and a person voting on behalf of a person having a personal interest will be deemed as having a personal interest,
whether the voting discretion is in the voter’s hands or not. The Israeli Companies Law refers for the definition of “Control” to Section 1 of the Israeli Securities Law (1968) (the “Securities Law”),
defining “Control” as the ability to direct the activity of a company, except for ability stemming only from being a director or holding another position in that company, and it is presumed
that a person or entity is controlling a company if said person or entity “holds” (as defined therein) at least half of (i) the right to vote in the shareholders general meeting; or (ii) the right to appoint directors or the general
manager of that company. For approval of the resolutions regarding the detailed items, any shareholders holding 25% or more of the voting rights in a company will be deemed a “Controlling Party”. Two or more persons holding voting
rights in a company whereas each of them has a personal interest in approving a certain transaction would be deemed “holding together”. According to section 37 (d) of the Securities Law, a “Senior
Office Holder” is, generally, a general manager, chief executive officer, deputy managing director, deputy director general, all fulfilling such a role in the company even if his title is different, a director, or manager
directly subordinated to the general manager; as well as chairman of the board, an alternate director, an individual appointed under section 236 of the Israeli Companies Law on behalf of the corporation who is a director,
controller, an internal auditor, independent authorized signatory, and anyone fulfilling such a role, even if his job title is different, and a Senior Office Holder of a corporation controlled by the corporation, which has a
significant impact on the corporation and any individual employed by a corporation in another position, holding five percent or more of the nominal value of the issued share capital or voting rights. “Institutional Investor” - shall have the meaning defined in section 1 of the Supervisory Regulations Control of Financial Services (Provident Funds) (Participation of a Managing Company at a General Meeting) (2009),
and a managing company of a Joint Investment Trust Fund as defined in the Joint Investment Trust Law (1994).
|
c
|
If an X is not marked in either column, if an X is marked in the “Yes” column and the shareholder does not provide details, or an X is marked in both columns (as the case may be), the
vote shall be disqualified.
|
☐ |
Yes. I approve the declaration below.
|
☐ |
No. I do not approve the declaration above. I hold, together with others, ________ Ordinary Shares of Partner and my holdings REQUIRE the consent of the
Israeli Minister of Communications as stated above.
|
Date: _____________ | __________________________ |
|
|
Signature |
|
|
|
|
|
Name (print):_______________
Title: _____________________
|
|
5 |
In the event that the shareholder is an “Interested Party,” as defined in the License, voting in a different manner with respect to each part of the shareholder's Ordinary Shares, a separate Deed of Authorization should be filed for
each quantity of Ordinary Shares in respect of which the shareholder intends to vote differently.
|
6 |
A translation of sections 21-24 of the License is attached as Annex “E” to the Proxy Statement distributed with this Deed of Authorization.
|
7 |
Under certain licenses granted, directly or indirectly, to Partner, approval of, or notice to, the Minister of Communications of the State of Israel may be required for holding of 5% or more of Partner's means of control.
|
|
Partner Communications Company Ltd.
|
|
|
|
|
|
|
By:
|
/s/ Tamir Amar
|
|
|
|
|
Name: Tamir Amar
|
|
|
|
Title: Chief Financial Officer
|
|