United Group BO Q1 2017 financial results presentation 30 May 2017 - - PowerPoint PPT Presentation

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United Group BO Q1 2017 financial results presentation 30 May 2017 - - PowerPoint PPT Presentation

United Group BO Q1 2017 financial results presentation 30 May 2017 Disclosure regarding forward-looking statements and the presentation of certain financial information This presentation contains forward-looking statements, which include all


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Q1 2017 financial results presentation

30 May 2017

United Group BO

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This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “may”, “anticipates”, “estimates”, “would”, “will”, “could”, “should” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual performance or achievements to be materially different from future performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future strategies and the environment in which we will operate in the future. These forward-looking statements speak

  • nly as at the date of this presentation. We expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking

statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any

  • f such statements are based.

This presentation contains summary unaudited condensed financial information for Adria Midco B.V. and its subsidiaries for the three months ended March 31, 2017. The statement of financial position for Adria Midco B.V. and its subsidiaries as at 31 March 2017 and as at 31 March 2016, as well as the condensed consolidated interim statements of profit or loss and cash flows for Adria Midco B.V. and its subsidiaries for the three months periods then ended have been reviewed by our independent auditors in accordance with the International Standard on Review Engagements 2410 and have been prepared in accordance with IFRS. Certain financial measures and ratios related thereto in this presentation, including EBITDA, Adjusted EBITDA, Adjusted EBITDA minus capital expenditure, RGUs and ARPU (collectively, the ‘‘Non-IFRS Measures’’) are not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented here because we believe that they and similar measures are widely used in our industry as a means of evaluating a company’s

  • perating performance and financing structure. Our management believes this information, along with comparable IFRS measures, is useful to investors

because it provides a basis for measuring the operating performance in the periods presented. These measures are used in the internal management of our business, along with the most directly comparable IFRS financial measures, in evaluating the operating performance. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to net income (loss), operating income or any other performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies.

Disclosure regarding forward-looking statements and the presentation of certain financial information

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Introduction to United Group

  • South-East Europe’s leading provider of pay-TV and broadband

services, with a strong presence in mobile telephony following the Tušmobil acquisition

  • 3.21 million cable and satellite TV, broadband, fixed-line and mobile

RGUs across the six countries of former Yugoslavia

  • Operating in a market characterized by growing pay-TV and

broadband that is currently underpenetrated relative to other CEE and Western European markets

  • Broad reach via cable and direct-to-home platforms across the

region, and ethnically targeted

  • ver-the-top

content platforms internationally

  • Reputation for providing the most attractive content in our respective

markets, available across all devices and formats

  • Group strategy leverages established proven strengths

extensive network,

differentiated content offerings, and

loyal customer base to further strengthen market leadership in the region and to target the region’s expat community with best in class local content delivered through the internet

  • Owned by funds affiliated with KKR, EBRD and the management

2020 Senior Notes

Issuer United Group B.V. Listed GEM, Irish Stock Exchange Governing Law State of New York Outstanding notes €775 million Coupon 7.875% Maturity 15 November 2020 Coupon dates 15 November & 15 May

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Q1 2017: operational highlights

  • Healthy

year-on-year RGU growth across all services – Driven predominantly by increased multi-play subscribers and the acquisition of M-Kabl in Montenegro

  • Homes passed up by 6% to 1,582k YoY due to

– Expansion of and investment in our network – Acquisition in Montenegro

  • Blended cable ARPU up by 6% to €20.0 YoY as a

result of – Successful execution of our strategy aimed at selling more services to our cable subscribers – Increased revenue from cable network-based services – Migration from lower-priced to higher-priced service packages – Price increases in Serbia, Slovenia and Bosnia and Herzegovina

922 475 110 566 364 343 112 973 498 119 637 453 414 117

Cable pay- TV DTH pay- TV OTT Broadband internet Fixed -line telephony Mobile services Other services

RGUs by service (k)

Q1 2016 Q1 2017 +5% +5% +7% +13% +24% +4% +21% 1,499 1,582 Q1 2016 Q1 2017

Homes passed (k)

+6% 19.0 20.0

Q1 2016 Q1 2017

Blended cable ARPU (€)

+6%

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Q1 2017: financial highlights

  • Revenues up 11% YoY to €121.4million as a result of
  • Organic growth and acquisitions
  • Growing number of RGUs
  • Price increases
  • Adjusted EBITDA up 15% YoY to €53.3 million
  • EBITDA growth ahead of revenue growth due to our focus on

profitable growth

  • Like-for-like margin improvements in both cable and mobile

businesses

  • Net leverage* down to 3.96x from 4.27x
  • Both, Gross and Net leverage down compared to FY 2016 level;

leverage decrease due to Adjusted EBITDA growth

  • Gross leverage includes funds drawn for Ikom acquisition, which

was closed on April 20th 2017

* Annualized Last Two Quarter Adjusted Pro Forma EBITDA is calculated as two times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA 109.3 121.4 Q1 2016 Q1 2017

Revenues (€ m)

+11% 46.5 53.3

Q1 2016 Q1 2017

Adjusted EBITDA (€ m)

15%

4.34x 4.28x 4.27x 3.96x FY 2016 Q1 2017

Leverage

Gross leverage Net leverage

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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SBB Serbia

  • Increase of 7% caused by organic

network expansion Telemach Slovenia

  • Organic increase against Q1 2016,

with 3.5k additional homes passed Telemach BH

  • Increase
  • f

4% due to

  • rganic

network expansion Telemach MNE

  • Increase
  • f

11% caused by acquisition of M-Kabl and network expansion

Homes passed across key markets Key developments

Network expansion

846 909 305 308 303 315 45 50 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE

Homes passed (k)

7% +1% +4% +11%

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RGUs vs. Unique cable subscribers Key developments

Increasing subscribers and RGUs

  • Increasing

cable subscribers as a result of organic network growth and acquisitions

  • Faster growth in RGUs per unique

cable subscriber driving

  • verall

performance

SBB Serbia & Telemach BH

  • Start
  • f

cross-selling

  • f

multi-play

  • ffers to 1-Play subscribers in both

entities

  • RGU per subscriber growth in Serbia

and in Bosnia, both to 2.0x

Telemach Slovenia

  • Cross-selling of 3-Play offers to 1-Play

subscribers

Mobile offering to accelerate take up of multi-play packages

  • Upgrading

existing customers to premium products Our 973k unique cable subscribers order on average between 1.6x and 2.6x different services 922 973 Q1 2016 Q1 2017

Unique cable subs (k)

+5% 2,893 3,210 Q1 2016 Q1 2017

RGUs (k)

+11%

RGUs vs. Unique cable subscribers Q1 2016 Q1 2017 SBB Serbia 1.9x 2.0x Telemach Slovenia 2.6x 2.6x Telemach BH 1.9x 2.0x Telemach MNE

  • 1.6x
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RGUs by service Key developments

Increasing RGUs

Healthy YoY RGU growth across all services

Cable pay TV growth due to organic growth and M-Kabl acquisition

DTH pay-TV RGUs increased by 5% compared to Q1 2016 due to additional subscribers and lower churn rate

OTT RGUs increased by 7% driven by

  • rganic growth

Fixed line telephony RGUs up 24% YoY due to continued growth of this service at SBB and Telemach Bosnia

Mobile services up 21% due to additional organic growth at Telemach Slovenia with around 34% share of gross adds in the market

Other service RGUs increased by 4% mostly due to organic growth of B2B subscribers

922 475 110 566 364 343 112 973 498 119 637 453 414 117

Cable pay-TV DTH pay-TV OTT Broadband internet Fixed -line telephony Mobile services Other services

RGUs by service (k)

Q1 2016 Q1 2017 +5% +5% +7% +13% +24% +4% +21%

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Group

  • Blended cable ARPU up 6% to €20.0 in Q1

2017 as a result of positive trends across all

  • f our markets

SBB Serbia

  • Key drivers included migration to multi-play

packages and a price increase of analogue TV service as of January 1, 2017 Telemach Slovenia

  • Growth in multi-play subscribers
  • Pay-TV and internet revenues positively

affected by price increases in March 2016 Telemach BH

  • Growth in subscribers for multi-play offering
  • Increase in revenue from cable services
  • Price increase of analogue TV service as of

August 1, 2016

  • Catch up of ARPU for subscribers of

companies acquired in 2015 Telemach MNE

  • Introduction of cable subscriber base due to

acquisition of M-Kabl in August 2016, blended cable ARPU of €15.5

Blended cable ARPU Key developments

ARPU development

in € Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Cable pay-TV 8.9 9.3 17.0 17.2 7.5 8.8 - 9.9 Broadband internet 9.9 9.5 15.7 16.0 8.4 9.2 - 9.8 Fixed-line telephony 5.2 4.7 4.0 3.6 9.7 8.8 - 4.8 Blended cable ARPU 15.9 16.9 31.8 32.2 15.3 17.9 - 15.5 Telemach MNE SBB Serbia Telemach Slovenia Telemach BH

15.9 16.9 31.8 32.2 15.3 17.9 0.0 15.5 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 Q1 2016 Q1 2017 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE

Blended cable ARPU per segment (€)

+7% +1% +17%

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Highlights Financial review Mergers & Acquisitions

Agenda

Introduction Operational review Appendices

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Revenue development Q1 2017 Key drivers

Revenue development by segment

Group

  • Q1 2017 revenues up 11% YoY to €121.4 million driven

by growing RGUs, overall increase in ARPU, organic growth and acquisitions SBB Serbia

  • Reported revenues up by 11% YoY to €50.6million
  • Price increase and growth of unique cable subscribers

and RGUs Telemach Slovenia

  • Revenue down by 1% to €46.1 million
  • Q1 2017 revenues reduced for the effect of 2015

mobile handsets sales which were fully recognized in 2016

  • Increase in the number
  • f mobile and multi-play

subscribers Telemach BH

  • Revenue up by 17% to €14.9 million
  • Growth of internet and fixed-line telephony segments

Telemach MNE

  • Revenue up by 36% to €3.6 million as a result of
  • rganic

growth at Telemach Montenegro and the acquisition of M-Kabl

United Media

  • Growth of 76% due to higher sales of distribution rights

and price increase for own channels

Other Businesses

  • Revenue growth of 49% YoY as a result of organic

growth in Solford

109.3 121.4 Q1 2016 Q1 2017

Revenues (€ m)

+11%

45.5 46.4 12.7 2.7 15.5 3.8 50.6 46.1 14.9 3.6 27.4 5.6 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses w/o IC

Revenue by segment (€ m)

Q1 2016 Q1 2017 +17% +76% +11%

  • 1%

+49% +36%

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Key drivers

Adjusted EBITDA development

Group

  • Adjusted EBITDA up by 15% YoY to €53.3 million as

a result of: – Increased revenues, cost discipline and integration of acquired companies – Acquisition of M-Kabl in Montenegro

SBB Serbia

  • Increase of 19% YoY driven by price increase in

January, subscriber and RGU growth

Telemach Slovenia

  • Decrease of 4% compared to Q1 2016 due to higher

Intercompany programming costs

  • Due to internal restructuring, United Media invoiced

additional €959k of IC programming costs in Q1 2017 compared to Q1 2016. Without that effect, EBITDA would be 2% higher

Telemach BH

  • EBITDA

growth

  • f

34% YoY driven by higher revenue, price increase of analogue service in August and lower operating expenses

Telemach MNE

  • Increase of 58% YoY driven by subscriber and RGU

growth and acquisition of M-Kabl

United Media

  • Higher revenue a key driver of EBITDA growth

Other Businesses

  • EBITDA decline due to negative impact of Holding

companies

Adjusted EBITDA development Q1 2017

46.5 53.3

Q1 2016 Q1 2017

Adjusted EBITDA (€ m)

15% 18.4 15.6 4.3 0.6 6.1 1.4 22.0 15.0 5.7 0.9 8.5 1.2

SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses w/o IC

Adjusted EBITDA by segment (€ m)

Q1 2016 Q1 2017 +34% +38% +19%

  • 4%
  • 17%

+58%

16.0 +2%

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Capital expenditures

Capex development Key drivers

Group

  • Capex growth driven by network expansion and

digitalization process in Novi Sad

  • Capex not expected to exceed depreciation

levels on a long-term basis SBB Serbia

  • Growth in Q1 2017 capex due to one off

investment in end user equipment related to the digitalization project, which will result in a switch

  • ff of analogue signal

Telemach Slovenia

  • Higher capex due to end user equipment for new

subscribers to DTH service in Slovenia as a result of switch off of free signal for the two most popular television programs in Slovenia, Additional subscribers will positively impact revenues going forward

  • Additional spending on mobile 4G network

Telemach BH

  • Lower capex in Q1 2017 due to lower investment

in network and DTH end user equipment Telemach MNE

  • Lower capex in Q1 2017 due to lower investment

in DTH business United Media

  • Content investments 15% lower vs. Q1 2016 due

to timing of programming rights purchases

9.8 7.9 4.6 1.0 4.0 0.2 16.3 10.2 3.7 0.5 3.4 0.2 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses

Capex by segment (€ m)

Q1 2016 Q1 2017

  • 20%
  • 15%

+66% +29%

  • 4%
  • 46%

27.4 34.3 Q1 2016 Q1 2017

Group CAPEX (EUR m)

+25%

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Adjusted EBITDA-CAPEX and leverage development

Key drivers

  • Stable adjusted EBITDA-Capex due

to proportional EBITDA and Capex growth

  • One off effect of Capex in Serbia

(digitalization) and in Slovenia (FTE switch off of the two most popular programs in Slovenia)

  • Both Gross and Net leverage down

compared to FY 2016 level

  • Leverage decrease due to Adjusted

EBITDA growth

Annualized Last Two Quarter Adjusted Pro Forma EBITDA is calculated as two times the amount of Consolidated Adjusted Pro Forma L2Q EBITDA

Leverage Adjusted EBITDA-CAPEX

19.1 19.1

Q1 2016 Q1 2017

Adjusted EBITDA - Capex (€m)

+0%

4.34x 4.28x 4.27x 3.96x FY 2016 Q1 2017

Leverage

Gross leverage Net leverage

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Highlights Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Mergers & Acquisitions

  • In July 2016, the Group acquired M-Kabl, a cable operator in Montenegro with close to 23 thousand unique

cable subscribers and 34 thousand RGUs, for €12.7 million.

  • In March 2016, we signed an SPA for the acquisition of Maxtel, a Dark fiber B2B operator in Slovenia, for a

total consideration of €4 million. This transaction was closed in November 2016.

  • On 29 August 2016, we signed an SPA for the acquisition of Ikom, a cable operator in Serbia with 93

thousand unique cable subscribers, for a total consideration of €45 million. This transaction was closed on 20 April 2017.

  • On 28 December 2016, the Group concluded an agreement to acquire 51% of IDJ Digital Holding Limited,

Malta, for €551thousand. This transaction was closed on 21 April 2017.

  • On 1 January 2017, Total TV d.o.o. merged into Telemach d.o.o., Slovenia.
  • On 1 February 2017, Eunet d.o.o. merged into SBB d.o.o., Serbia.
  • On 9 February 2017, the Group concluded an agreement to acquire 100% of Fight Channel d.o.o., Croatia,

for €2.5 million. The transaction was completed on 6 April 2017.

  • In line with its stated strategy, the Group is looking for acquisitions that are value accretive and offer

substantial synergies with the Group’s existing operations.

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Highlights Financial review Appendices

Agenda

Introduction Operational review Mergers & Acquisitions

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Revenue development Q1 2017 Management report Key drivers

Revenue development by segment (management data)

We have incuded the management data comparison for revenues as the Q1 2016 presentation was based on management and not on reviewed data Group

  • Q1 2017 revenues up 17% YoY to €121.8 million driven

by growing RGUs, overall increase in ARPU, organic growth and acquisitions SBB Serbia

  • Reported revenues up by 9% to €45.3million YoY
  • Price increase and growth of unique cable subscribers

and RGUs Telemach Slovenia

  • Revenue up by 13% to €47.0 million
  • Increase in the number of multi-play subscribers

Telemach BH

  • Revenue up by 18% to €14.9 million
  • Growth of internet and fixed-line telephony segments

Telemach MNE

  • Revenue up by 39% to €3.4 million as a result of
  • rganic

growth at Telemach Montenegro and the acquisition of M-Kabl

United Media

  • Growth of 80% due to higher sales of distribution rights

and price increase for own channels and higher Intra group invoicing

Other Businesses

  • Revenue growth of 8% YoY as a result of organic

growth in Solford

103.8 121.8 Q1 2016 Q1 2017

Revenues (€ m)

+17%

41.4 41.5 12.7 2.4 15.2 3.6 45.3 47.0 14.9 3.4 27.2 3.9 SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses w/o IC

Revenue by segment (€ m)

Q1 2016 Q1 2017 +18% +80% +9% +13% +8% +39%

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Key drivers

Adjusted EBITDA development (management data)

We have incuded the management data comparison for Adjusted EBITDA as the Q1 2016 presentation was based on management and not on reviewed data

Group

  • Adjusted EBITDA up by 15% to €53.3 million

SBB Serbia

  • Increase of 19% YoY driven by price increase in

January, subscriber and RGU growth

Telemach Slovenia

  • Increase of 4% compared to Q1 2016
  • Increase in Q1 2017 would be €1.0 million higher

without additional IC programming costs from United media which were caused by price increase of own production channels

Telemach BH

  • Adjusted EBITDA growth of 36% YoY driven by

higher revenue, price increase of analogue service in August and lower operating expenses

Telemach MNE

  • Increase of 58% YoY driven by subscriber and RGU

growth and acquisition of M-Kabl

United Media

  • Higher revenue key driver of Adjusted EBITDA growth

Other Businesses

  • Adjusted EBITDA decline due to negative impact of

Holding companies

Adjusted EBITDA development Q1 2017 Management report

45.5 53.3 Q1 2016 Q1 2017

Adjusted EBITDA (EUR m)

+15%

18.4 14.5 4.2 0.6 6.1 1.6 22.0 15.0 5.7 0.9 8.5 1.2

SBB Serbia Telemach Slovenia Telemach BH Telemach MNE United Media Group Other Businesses w/o IC

Adjusted EBITDA by segment (€ m)

Q1 2016 Q1 2017 +36% +38% +19% +4%

  • 26%

+58%

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Income statement

in €000 Q1 2016 Q1 2017 Revenue 109,308 121,376 Other income 557 767 Content cost (15,493) (18,645) Satellite capacity cost (2,055) (1,576) Interconnection link cost (8,217) (9,329) Materials cost (9,619) (8,136) Staff costs (11,664) (12,399) Other operating expenses (19,207) (22,203) IFRS EBITDA 43,610 49,855 Depreciation (17,626) (20,572) Amortisation of intangible assets (11,460) (13,457) Results from operating activities 14,524 15,826 Finance income 383 433 Finance costs (23,673) (18,768) Net finance costs (23,290) (18,335) Profit/(loss) before tax (8,766) (2,509) Income tax (expenses)/benefit (1,702) (898) Minority share Profit/(Loss) for the period (10,468) (3,407) (Loss)/profit attributable to: Owners of the Company (11,136) (4,280) Non-controlling interests 668 873 (Loss)/profit for the period (10,468) (3,407)

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Statement of financial position

in €000 Q1 2016 Q1 2017 Assets Property, plant and equipment 326,339 357,747 Goodwill 649,094 653,009 Intangible assets 248,688 241,448 Investment property 472 422 Loans to related parties 32,007 Other financial assets 2,003 5,541 Non current prepayments 4,209 30 Deferred costs 49 1,329 Deferred tax assets 7,850 10,168 Non-current assets 1,238,704 1,301,701 Programming rights held for sale Inventories 7,594 5,396 Trade and other receivables 76,984 87,889 Short term loan receivables 7,001 5,542 Receivables from government Prepayments 17,352 20,652 Income tax receivable 1,906 3,626 Cash and cash equivalents 18,694 65,925 Other current assets Current assets 129,531 189,030 Total assets 1,368,235 1,490,731

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Statement of financial position - continued

Equity Issued and fully paid share capital 125 125 Share premium 570,592 568,592 Other capital reserves Translation and other reserves (15,601) (24,882) Accumulated losses (116,432) (122,699) Equity attributable to owners of the Company 438,684 421,136 Non-controlling interests 13,963 10,516 Total equity 452,647 431,652 Liabilities Loans and borrowings 85,825 84,058 Other financial liabilities 620,277 775,067 Amortization of bond related fees Long term liabilities 3,557 94 Long term provisions 1,477 8,292 Deferred revenue 7,022 6,191 Finance lease liabilities 12,536 4,404 Deferred tax liabilities 31,610 27,144 Employee benefits 566 592 Non-current liabilities 762,870 905,842 Trade and other payables 106,440 106,031 Interest payable 19,672 23,575 Current tax liabilities 2,605 739 Loans and borrowings 1,835 5,369 Deferred revenue 8,819 8,807 Finance lease liabilities 13,347 8,716 Current liabilities 152,718 153,237 Total liabilities 915,588 1,059,079 Total equity and liabilities 1,368,235 1,490,731

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Consolidated statement of cash flows

Capex data including capitalized inventory

in €000 Q1 2016 Q1 2017 Cash flows from operating activities Profit/(Loss) for the year (10,468) (3,407) Adjustments for: Depreciation 17,626 20,572 Amortisation 11,460 13,457 Impairment of trade and other receivables 810 1,040 Impairment of PPE and Intangibles 410 185 Tax (income)/expense 1,702 898 Minority interest Employee benefits 32 (7) Net finance cost 23,290 18,335 Operating cash flows before WC changes 44,862 51,073 Changes in working capital: Trade and other receivables (649) (6,770) Deferred revenue 1,653 279 Deferred cost 718 93 Inventories (1,364) (354) Prepayments 4,130 396 Trade and other payables (15,442) 4,673 Cash generated from operations 33,908 49,390 Interest paid (707) (493) Income tax paid (188) (1,476) Net cash from operating activities 33,013 47,421 Cash flows from investing activities Purchase of property, plant and equipment (22,158) (24,856) Purchase of intangible assets (7,473) (8,380) Change in short term loan receivables (861) (69) Change in other non-current financial asset (5,000) Net cash used in investing activities (30,492) (38,305) Cash flows from financing activities Proceeds from bond issue Proceeds from borrowings 21,000 62,500 Repayment of borrowings (15,717) Aquisition of NCI (389) Proceeds from finance lease 5,838 Repayment of finance lease (5,791) (3,523) Distribution of share premium (20,000) Net cash used in financing activities 1,047 42,871 Net increase in cash and cash equivalents 3,568 51,987 Cash and cash equivalents at 1 January 15,126 13,941 Cash at ESCROW account Effects of movements in exchange rates on cash held (3) Cash and cash equivalents at end of period 18,694 65,925