REG - Helios Towers PLC - Half-year Report
18/08/2022 07:00
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RNS Number : 3946W Helios Towers PLC 18 August 2022
HELIOS TOWERS plc
Unaudited results for the 6 months ended 30 June 2022
Strong organic tenancy additions
+19% year-on-year Adjusted EBITDA growth
+36% year-on-year portfolio free cash flow growth
2022 guidance reiterated
London, 18 August 2022: Helios Towers plc ("Helios Towers","the Group" or "the
Company"), the independent telecommunications infrastructure company, today
announces results for the 6 months to 30 June 2022.
H1 2022 H1 2021 Change Q2 2022 Q1 2022 Change
Sites 10,694 8,603 +24% 10,694 10,511 +2%
Tenancies 20,549 17,090 +20% 20,549 20,233 +2%
Tenancy ratio 1.92x 1.99x -0.07x 1.92x 1.92x -
Revenue (US$m) 265.4 212.4 +25% 137.9 127.5 +8%
Adjusted EBITDA (US$m)1 136.1 114.2 +19% 69.4 66.7 +4%
Adjusted EBITDA margin1 51% 54% -3ppt 50% 52% -2ppt
Operating profit (US$m) 39.8 26.9 +48% 25.4 14.4 +76%
Portfolio free cash flow (US$m)(1) 100.4 73.8 +36% 51.0 49.4 +3%
Cash generated from operations (US$m) 91.0 45.7 +99% 38.5 52.7 -27%
Net debt (US$m)(1) 1,082.4 786.0 +38% 1,082.4 1,012.7 +7%
Net leverage(1,2) 3.9x 3.2x +0.7x 3.9x 3.7x +0.2x
(1) Alternative Performance Measures are described in our defined terms
and conventions.
(2) Calculated as per the Senior Notes definition of net debt divided by
annualised Adjusted EBITDA. Annualised Adjusted EBITDA calculated as the most
recent fiscal quarter multiplied by 4, adjusted to include the annualised
impact of acquisitions in the period.
Tom Greenwood, Chief Executive Officer, said:
"We have delivered strong organic tenancy growth in the first half of the
year, which combined with the successful integration of acquired assets in
Senegal, Madagascar and Malawi has resulted in impressive year-on-year
financial performance. Despite broader global macroeconomic uncertainty, our
uniquely positioned platform, highly visible base of quality earnings and
unparalleled structural growth continues to drive sustainable value creation
for all of our stakeholders."
Financial highlights
· H1 2022 revenue increased by 25% year-on-year to US$265.4m (H1
2021: US$212.4m) driven by acquisitions in Senegal, Madagascar and Malawi and
strong organic tenancy growth across the Group, in addition to CPI and power
price escalations. Excluding acquisitions, revenue increased 12% year-on-year.
o Q2 2022 revenue increased by 8% quarter-on-quarter to US$137.9m (Q1 2022:
US$127.5m).
· H1 2022 Adjusted EBITDA increased by 19% year-on-year to
US$136.1m (H1 2021: US$114.2m), driven by revenue growth, with H1 2022
Adjusted EBITDA margin decreasing 3ppt year-on-year to 51% (H1 2021: 54%),
reflecting the previously communicated SG&A investment to support the
Group's ongoing expansion into ten markets and higher fuel costs in DRC in Q2
2022.
o Q2 2022 Adjusted EBITDA increased by 4% quarter-on-quarter to US$69.4m (Q1
2022: US$66.7m), with Q2 2022 Adjusted EBITDA margin at 50% (Q1 2022: 52%).
· Operating profit increased 48% year-on-year to US$39.8m (H1 2021:
US$26.9m) driven by strong revenue growth, partially offset by a modest
increase in administrative expenses as part of the Group's ongoing expansion.
o Loss before tax increased to US$122.2m (H1 2021 US$43.6m), driven by a
US$83.8m year-on-year increase in non-cash expenses related to both the fair
value movements of the embedded derivatives in the Group's bond and foreign
exchange movements on Euro and US dollar denominated intercompany borrowings.
· Portfolio free cash flow increased by 36% year-on-year to US$100.4m
(H1 2021: US$73.8m), driven by Adjusted EBITDA growth and timing of
non-discretionary capital expenditure.
· Cash generated from operations increased 99% to US$91.0m driven by
higher Adjusted EBITDA and movements in working capital.
· Net leverage increased by +0.7x year-on-year to 3.9x (H1 2021: 3.2x),
primarily due to acquisitions in Madagascar and Malawi, and quarter-on-quarter
by 0.2x (Q1 2022: 3.7x), remaining comfortably within the Group's medium-term
target range of 3.5x - 4.5x.
o Strong balance sheet with 96% of drawn debt at a fixed rate, no near-term
maturities and fully-funded for announced transactions.
· Business underpinned by long-term contracted revenues of US$4.2bn
(H1 2021: US$3.5bn), of which 99% is from large multinational MNOs, with an
average remaining life of 7.2 years (H1 2021: 7.4 years).
o Pro forma for announced transactions in Oman and Gabon, the Group has
contracted revenues of US$5.3 billion.
o CPI and power price escalators embedded into customer contracts provides
an effective hedge against inflation and fuel price movements over a full-year
cycle.
Operational highlights
· Sites increased by 2,091 year-on-year to 10,694 sites (H1 2021:
8,603 sites), reflecting 1,213 acquired sites in Malawi and Madagascar and 878
organic site additions.
o Sites increased organically by 183 quarter-on-quarter (Q1 2022: 10,511).
· Tenancies increased by 3,459 year-on-year to 20,549 tenants (H1
2021: 17,090 tenants), reflecting 1,692 acquired tenancies in Malawi and
Madagascar and 1,767 organic tenancy additions.
o Tenancies increased organically by 316 quarter-on-quarter (Q1 2022:
20,233).
· Tenancy ratio decreased 0.07x year-on-year to 1.92x (H1 2021:
1.99x), reflecting the dilutive impact of acquired assets in Madagascar
(1.20x) and Malawi (1.58x).
Environmental, Social and Governance (ESG)
· Helios Towers has been awarded a 'AAA' ESG score from MSCI, the
highest score from the investment research firm, in addition to being included
in the FTSE4Good Index, a series designed to measure the performance of
companies demonstrating strong ESG practices. This further highlights Helios
Towers' commitment to sustainable business and its purpose of driving the
growth of mobile communications in Africa and the Middle East.
Strategic Updates
· The Group continues to progress with the closings of passive
infrastructure assets in Oman and the potential acquisition of Airtel Africa's
tower assets in Gabon, with the expected timings and updates outlined below:
o Oman: Subject to completing the remaining customary closing conditions
including obtaining regulatory approval, the Group anticipates the acquisition
of Oman Telecommunications Company ("Omantel") to close in H2 2022.
§ On 7 June 2022, Helios Towers announced it had entered into an agreement
pursuant to which Rakiza Telecommunications Infrastructure LLC ("Rakiza") will
purchase a 30% minority stake in the purchase of Omantel Telecommunications
Company (S.A.O.G)'s ("Omantel") passive infrastructure assets in Oman, with
Helios Towers purchasing the remaining 70%.
§ Partnership combines Helios Towers' proven operational expertise with a
local partner that has extensive local market knowledge.
o Gabon: As previously announced, Helios Towers and Airtel Africa have
extended the memorandum of understanding arrangement. Subject to obtaining a
passive infrastructure licence, the acquisition of tower assets in Gabon is
expected to close in H2 2022.
2022 Outlook and guidance
· Following strong operational and financial performance in H1 2022,
the Group has reiterated its FY 2022 guidance of:
o 1,200 - 1,700 organic tenancy additions, of which 60% are expected to be
new sites.
o Lease rate per tenant to increase in the range of 3% - 5% from FY 2021
(2021: US$26.4k per tenant).
o Adjusted EBITDA margin of 51% - 53% (FY 2021: 53.6%), with the YoY
decrease driven by the impact of new acquisitions and corporate SG&A
investment required for the expansion of the Group's operations to ten
markets.
· The acquisition of Airtel Africa's passive infrastructure company in
Malawi, closed at the end of March, is anticipated to deliver Adjusted EBITDA
of approximately US$6m for its nine months of operation in FY 2022.
· The Group continues to target capex of US$810m - US$850m in FY 2022.
o As previously guided, excluding acquisitions the Group anticipates US$160m
- US$200m of capex, of which, US$27m - US$32m is non-discretionary capex.
o The Group anticipates acquisition capex of approximately US$650m in 2022,
reflecting the acquisitions in Oman and Malawi, and deferred acquisition
payments in Senegal and Madagascar.
For further information go to:
www.heliostowers.com (http://www.heliostowers.com)
Investor Relations
Chris Baker-Sams - Head of Strategic Finance and Investor Relations
+44 (0)752 310 1475
Media relations
Edward Bridges / Stephanie Ellis
FTI Consulting LLP
+44 (0)20 3727 1000
Helios Towers' management will host a conference call for analysts and
institutional investors at 09.30 BST on Thursday, 18 August 2022. For the best
user experience, please access the conference via the webcast. You can
pre-register and access the event using the link below:
Registration Link - Helios Towers H1 2022 Results Conference Call
(https://www.investis-live.com/heliostowers/62a86769e862e51200407d45/lkjh)
Event Name: H12022
Password: HELIOS
If you intend to participate in Q&A during the call or are unable to use
the webcast, please dial in using the details below:
Europe & International +44 203 936 2999
South Africa (local) 087 550 8441
USA (local) +1 646 664 1960
Passcode: 233445
About Helios Towers
· Helios Towers is a leading independent telecommunications
infrastructure company, having established one of the most extensive tower
portfolios across Africa. It builds, owns and operates telecom passive
infrastructure, providing services to mobile network operators.
· Helios Towers owns and operates telecommunication tower sites in
Tanzania, Democratic Republic of Congo, Congo Brazzaville, Ghana, South
Africa, Senegal, Madagascar and Malawi. Following recent acquisition
agreements Helios Towers expects to establish a presence in two new markets
across the Middle-East and Africa. Including these acquisitions and committed
BTS, the Group's total site count is expected to increase from over 10,500
towers to over 14,000.
· Helios Towers pioneered the model in Africa of buying towers that
were held by single operators and providing services utilising the tower
infrastructure to the seller and other operators. This allows wireless
operators to outsource non-core tower-related activities, enabling them to
focus their capital and managerial resources on providing higher quality
services more cost-effectively.
Alternative Performance Measures
The Group has presented a number of Alternative Performance Measures ("APMs"),
which are used in addition to IFRS statutory performance measures. The Group
believes that these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional helpful
information on the performance of the business. These APMs are consistent with
how the business performance is planned and reported within the internal
management reporting to the Board. Loss before tax, gross profit, non-current
and current loans and long-term and short-term lease liabilities are the
equivalent statutory measures (see 'Certain defined terms and conventions').
For more information on the Group's Alternative Performance Measures, see the
Group's Annual report for the year ended 31 December 2021, published on the
Group's website. Reconciliations of APMs to the equivalent statutory measure
are included in the Group's half-year and Annual financial reports.
Financial and Operating Review
Condensed consolidated statement of profit or loss
For the 6 months ended 30 June
6 months ended 30 June (unaudited)
2022 2021
US$m US$m
Revenue 265.4 212.4
Cost of sales (173.6) (138.4)
Gross profit 91.8 74.0
Administrative expenses (52.6) (43.9)
Profit /(loss) on disposal of property, plant and equipment 0.6 (3.2)
Operating profit 39.8 26.9
Interest receivable 0.4 0.2
Other gains and (losses) (57.7) (6.2)
Finance costs (104.7) (64.5)
Loss before tax (122.2) (43.6)
Tax expense (2.9) (7.5)
Loss after tax (125.1) (51.1)
Segmental Key Performance Indicators
For the 6 months ended 30 June
Group Tanzania DRC Congo Brazzaville Ghana South Africa
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue for the period $265.4 $212.4 $95.8 $84.1 $97.9 $85.5 $14.2 $13.9 $20.3 $21.4 $4.2 $2.8
Adjusted gross margin1 64% 67% 69% 69% 60% 65% 65% 64% 68% 69% 72% 73%
Sites at beginning of the period 9,560 7,356 4,005 3,821 2,062 1,895 459 426 1,040 978 272 236
Sites at period end 10,694 8,603 4,133 3,817 2,153 1,915 479 431 1,093 986 347 247
Tenancies at beginning of the period 18,776 15,656 9,012 8,625 4,701 4,096 661 617 2,041 1,914 464 404
Tenancies at period end 20,549 17,090 9,212 8,649 4,841 4,185 669 629 2,173 1,952 576 411
Tenancy ratio at period end 1.92x 1.99x 2.23x 2.27x 2.25x 2.19x 1.40x 1.46x 1.99x 1.98x 1.66x 1.66x
Adjusted EBITDA for the period2 $136.1 $114.2 $63.2 $55.6 $52.4 $49.7 $6.7 $6.5 $12.0 $12.7 $1.8 $1.2
Adjusted EBITDA Margin(2) for the period 51% 54% 66% 66% 54% 58% 47% 47% 59% 59% 43% 43%
Senegal Madagascar Malawi(3)
2022 2021 2022 2021 2022 2021
US$m US$m US$m US$m US$m US$m
Revenue for the period $18.6 $4.7 $7.5 - $6.9 -
Adjusted gross margin1 69% 60% 55% - 45% -
Sites at beginning of the period 1,232 - 490 - - -
Sites at period end 1,278 1,207 488 - 723 -
Tenancies at beginning of the period 1,303 - 594 - - -
Tenancies at period end 1,348 1,264 586 - 1,144 -
Tenancy ratio at period end 1.05x 1.05x 1.20x - 1.58x -
Adjusted EBITDA for the period2 $10.8 $2.3 $2.9 - $2.4 -
Adjusted EBITDA Margin(2) for the period 58% 49% 39% - 35% -
(1) Adjusted gross margin means gross profit, adding back site
depreciation, divided by revenue.
(2) Group Adjusted EBITDA for the period is stated including
corporate costs of US$16.1m (2021: US$13.8m).
(3 ) Results for the period since acquisition on 24(th)
March 2022.
Total tenancies as at 30 June
Group Tanzania DRC Congo Brazzaville Ghana South Africa
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Standard colocation tenants 8,743 7,574 4,454 4,287 2,563 2,170 167 175 753 726 221 159
Amendment colocation tenants 1,112 913 625 545 125 100 23 23 327 240 8 5
Total colocation tenants 9,855 8,487 5,079 4,832 2,688 2,270 190 198 1,080 966 229 164
Total sites 10,694 8,603 4,133 3,817 2,153 1,915 479 431 1,093 986 347 247
Total tenancies 20,549 17,090 9,212 8,649 4,841 4,185 669 629 2,173 1,952 576 411
Senegal Madagascar Malawi
2022 2021 2022 2021 2022 2021
Standard colocation tenants 70 57 94 - 421 -
Amendment colocation tenants - - 4 - - -
Total colocation tenants 70 57 98 - 421 -
Total sites 1,278 1,207 488 - 723 -
Total tenancies 1,348 1,264 586 - 1,144 -
Revenue
Revenue increased by 25% to US$265.4m in the period ended 30 June 2022 (H1
2021: US$212.4m). The increase was largely driven by the growth in total
tenancies from 17,090 as of 30 June 2021 to 20,549 as of 30 June 2022,
including the addition of 1,692 tenancies relating to the acquisitions in
Madagascar and Malawi, which closed in November 2021 and March 2022,
respectively. The acquisition in Senegal, which closed in May 2021, alongside
the acquisitions in Madagascar and Malawi contributed a US$28.3m year-on-year
increase in revenues alongside US$24.7m from organic growth across other
markets.
For the period ended 30 June 2022, 98% of revenues were from multinational
MNOs and 63% were denominated in hard currency, being either USD or XAF/XOF
(both of which are pegged to the Euro) or USD.
Contracted revenue
The following table provides our total undiscounted contracted revenue by
country as of 30 June 2022 for each of the periods from 2022 to 2026, with
local currency amounts converted at the applicable average rate for US Dollars
for the period ended 30 June 2022 held constant. Our contracted revenue
calculation for each year presented assumes: (i) no escalation in fee rates,
(ii) no increases in sites or tenancies other than our committed tenancies,
(iii) our customers do not utilise any cancellation allowances set forth in
their MLAs, (iv) our customers do not terminate MLAs early for any reason and
(v) no automatic renewal.
Year ended 31 December
6 months to 2023 2024 2025 2026
31 December 2022
US$m US$m US$m US$m US$m
Tanzania 98.0 193.8 193.8 193.8 130.5
DRC 99.0 198.9 198.5 171.7 145.8
Congo Brazzaville 14.0 28.0 28.0 18.8 12.1
Ghana 19.1 33.5 31.6 32.0 31.8
South Africa 3.9 7.6 8.1 8.0 7.8
Senegal 19.0 39.1 40.8 42.5 47.0
Madagascar 7.7 12.2 12.8 15.7 15.7
Malawi 11.5 23.0 23.0 25.0 25.0
272.2 536.1 536.6 507.5 415.7
The following table provides our total undiscounted contracted revenue by key
customers as of 30 June 2022 over the life of the contracts with local
currency amounts converted at the applicable average rate for US Dollars for
the period ended 30 June 2022 held constant. Our calculation uses the same
assumptions as above. The average remaining life of customer contracts is 7.2
years.
(US$m) Total Committed Revenues Percentage of Total Committed Revenues
Large multinational MNOs 4,117.8 98.8%
Other 49.9 1.2%
4,167.7 100.0
Cost of sales and adjusted gross margin
6 months ended 30 June
% of % of
Revenue Revenue
(US$m) 2022 2022 2021 2021
Power 56.1 21.1% 39.3 18.5%
Non-power 38.2 14.4% 31.1 14.6%
Cost of sales excluding site depreciation 94.3 35.5% 70.4 33.1%
Site depreciation 79.3 29.9% 68.0 32.1%
Total cost of sales 173.6 65.4% 138.4 65.2%
Year-on-year cost of sales increased by US$35.2m from US$138.4m in the period
ended 30 June 2021 to US$173.6m in the period ended 30 June 2022. This
increase is due to the full year impact of Senegal (US$10.5m), the
acquisitions in Madagascar and Malawi (US$8.4m), increases in tenancies and
inflationary power price increases primarily in our markets in DRC and Ghana.
The Group has both annual CPI and quarterly or annual power price escalators
embedded into its customers contracts, which provides effective protection
from inflation and power price movements on the Group's cost of sales.
The table below shows an analysis of the cost of sales on a country-by-country
basis for the 6-month period ended 30 June 2022 and 2021.
Tanzania DRC Congo Brazzaville Ghana South Africa
(US$m) 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Power 15.3 12.8 25.4 18.7 1.5 1.8 4.6 4.2 1.0 0.6
Non-power 14.4 13.4 13.8 11.1 3.4 3.2 1.8 2.6 0.2 0.2
Site depreciation 29.5 26.0 28.4 27.6 4.3 5.5 3.6 4.3 2.3 1.3
Total cost of sales 59.2 52.2 67.6 57.4 9.2 10.5 10.0 11.1 3.5 2.1
Senegal Madagascar Malawi
(US$m) 2022 2021 2022 2021 2022 2021
Power 3.3 1.2 2.3 - 2.7 -
Non-power 2.5 0.6 1.0 - 1.1 -
Site depreciation 9.9 3.3 1.1 - 0.2 -
Total cost of sales 15.7 5.1 4.4 - 4.0 -
Adjusted gross margin for the period reduced by 2.4% due to an increase in
power costs and the inclusion of lower margin acquisitions, Madagascar and
Malawi.
6 months ended 30 June
% of Revenue % of Revenue
(US$m) 2022 2022 2021 2021
Revenue 265.4 100.0% 212.4 100.0%
Cost of sales excluding site depreciation (94.3) 35.5% (70.4) 33.1%
Adjusted gross margin 171.1 64.5% 142.0 66.9%
Site depreciation (79.3) 29.9% (68.0) 32.1%
Adjusted gross profit 91.8 34.6% 74.0 34.8%
Administrative expenses
Administrative expenses increased by US$8.7m year-on-year, to US$52.6m from
US$43.9m in the prior year. The increase in cost base largely reflects the
impact of new acquisitions and increased corporate SG&A investments
previously communicated to support the Group's ongoing expansion to ten
markets. Year-on-year the administrative cost levels as a percentage of
revenue have reduced to 19.8% (H1 2022: 20.7%).
6 months ended 30 June
% of Revenue % of Revenue
(US$m) 2022 2022 2021 2021
Sales, general and administrative costs (SG&A) 35.0 13.2% 27.8 13.1%
Depreciation and amortisation 9.5 3.6% 6.6 3.1%
Adjusting items 8.1 3.0% 9.5 4.5%
52.6 19.8% 43.9 20.7%
Operating profit
Operating profit increased 48% year-on-year to US$39.8m (H1 2021: US$26.9m)
driven by strong revenue growth, partially offset by a modest increase in
administrative expenses due to the Group expansion to ten markets.
Other gains and losses
The fair value loss of US$57.7m in H1 2022 was driven by a fair value movement
in the embedded derivative within the terms of the Group's Senior Notes, due
to quoted bond prices moving from above par at 31 December 2021 to below par
at 30 June 2022. Further details are explained in note 9 to the condensed
consolidated financial statements.
6 months ended
30 June 2022 30 June 2021
US$m US$m
Fair value loss on derivative financial instruments (57.7) (6.2)
(57.7) (6.2)
Finance costs
Finance costs have increased 62% year-on-year to US$104.7m for the period
ended 30 June 2022. The increase is primarily driven by the non-cash foreign
exchange impact of revaluing intercompany borrowings, denominated in US$ and
Euros, in markets where the operating companies have seen a devaluation in
their local currencies period on period.
6 months ended 30 June
2022 2021
US$m US$m
Foreign exchange differences 36.7 4.4
Interest cost 56.4 51.2
Interest cost on lease liabilities 11.6 8.9
104.7 64.5
Tax expense
Tax expense was US$2.9m in the period ended 30 June 2022 as compared to
US$7.5m in the period ended 30 June 2021. The overall reduction in tax expense
during the 6 months ended 30 June 2022 compared to the 6 months ended 30 June
2021 is primarily driven by prior year adjustments relating to actual results
being lower than initial estimates of corporate income tax in Ghana and
Senegal, and the recognition of deferred tax assets on timing differences
between accounting and tax values of assets, which are offset against
recognised deferred tax liabilities. Entities in Congo Brazzaville and Senegal
are loss making, however minimum income tax is levied as stipulated by law in
these jurisdictions. Malawi is loss making for tax purposes and no minimum
income tax applies. DRC, Ghana, Tanzania and one entity in South Africa are
profit making and subject to income tax on taxable profits.
Loss after tax
The loss after tax for the half year was US$125.1m compared to US$51.1m in the
comparative half year. The increase is due to the non-cash impact of the
adverse movement in the fair value of the embedded derivatives within the
Group's Senior Notes and foreign exchange losses on retranslating intercompany
borrowings, in total amounting to US$94.4m which was partially offset by
growth in operating profit.
Management cash flow
(US$m) 6 months ended 30 June
2022 2021
Adjusted EBITDA 136.1 114.2
Less:
Maintenance and corporate capital additions (9.3) (14.3)
Payments of lease liabilities1 (20.0) (15.2)
Tax paid (6.4) (10.9)
Portfolio free cash flow 100.4 73.8
Cash conversion %2 74% 65%
Net payment of interest3 (45.7) (44.7)
Levered portfolio free cash flow 54.7 29.1
Discretionary capital additions4 (122.4) (222.9)
Adjusted free cash flow (67.7) (193.8)
Net change in working capital5 (52.8) (13.1)
Cash paid for adjusting and EBITDA adjusting items6 (5.5) (29.3)
Proceeds on disposal of assets 0.2 0.3
Free cash flow (125.8) (235.9)
Net cash flow from financing activities7 (11.3) 447.6
Net cash (outflow)/ inflow (137.1) 211.7
Opening cash balance 528.9 428.7
Foreign exchange movement (3.1) (0.2)
Closing cash balance 388.7 640.2
1 Payment of lease liabilities includes interest and principal
repayments of lease liabilities.
2 Cash conversion % is calculated as portfolio free cash flow divided
by Adjusted EBITDA.
3 Net payment of interest corresponds to the net of 'Interest paid'
(including withholding tax) and 'Interest received' in the Consolidated
Statement of cash flow, excluding interest payments on lease liabilities.
4 Discretionary capital additions includes acquisition, growth and
upgrade capital additions and excludes IFRS 3 accounting adjustments.
5 Net change in working capital corresponds to movements in working
capital, excluding cash paid for adjusting and EBITDA adjusting items and
including movements in capital expenditure related working capital.
6 Cash paid for exceptional and one-off items includes project costs,
deal costs, deposits in relation to acquisitions, and non-recurring taxes.
7 Net cash flow from financing activities includes gross proceeds from
issue of equity share capital, share issue costs, borrowing drawdowns, loan
issue costs and repayment of loans in the condensed consolidated statement of
cash flows.
Cash flows from operations
Cash generated from operations has increased by US$45.3m to US$91.0m (H1 2021:
US$45.7m), driven by higher Adjusted EBITDA and movements in working capital.
The Group has presented a Condensed consolidated statement of cash flows for
the six months ended 30 June 2022 later in the release.
Capital expenditure
The following table shows capital expenditure additions by category during the
6 months ended 30 June:
2022 2021
US$m % of US$m % of
Total Capex Total Capex
Acquisition 42.7 32.4% 177.3 74.7%
Growth 68.1 51.8% 39.1 16.5%
Upgrade 11.6 8.8% 6.5 2.8%
Maintenance 8.6 6.5% 13.5 5.7%
Corporate 0.7 0.5% 0.8 0.3%
131.7 100.0% 237.2 100.0%
Acquisition capex in the six months ended 30 June 2022 relates primarily to
Malawi and South Africa excluding the fair value of assets and liabilities
acquired and goodwill recognised under IFRS 3.
Trade and other receivables
Trade and other receivables increased by US$61.5m to US$248.1m at 30 June 2022
(H1 2021: US$186.6m). The increase was primarily driven by new acquisitions
and organic growth in the business. Trade receivables increased by US$27.2m,
due to timing of cash receipts from customers at 30 June 2022. Other
receivables increased by US$35.1m, driven by an increase in contract assets of
US$12.0m and accrued revenue of US$14.9m.
Trade and other payables
Trade and other payables have increased by US$41.3m. This was primarily driven
by an increase in trade payables of US$22.3m, due to capex spend in Q2,
deferred income of US$11.9m and other payables and accruals of US$12.0m.
Loans and borrowings
As of 30 June 2022 and 31 December 2021 the Group's outstanding loans net of
issue costs and excluding lease liabilities, were US$1,289.8m and US$1,295.5m
with net leverage at 3.9x and 3.6x respectively. The Group did not raise or
refinance any debt during the first six months of 2022.
Alternative Performance Measures
The Group has presented a number of Alternative Performance Measures ("APMs"),
which are used in addition to IFRS statutory performance measures. The Group
believes that these APMs, which are not considered to be a substitute for or
superior to IFRS measures, provide stakeholders with additional helpful
information on the performance of the business. These APMs are consistent with
how the business performance is planned and reported within the internal
management reporting to the Board. Some of these measures are also used for
the purposes of setting remuneration targets.
Adjusted EBITDA and Adjusted EBITDA margin
Definition - Management defines Adjusted EBITDA as loss before tax for the
year, adjusted for finance costs, other gains and losses, interest receivable,
loss on disposal of property, plant and equipment, amortisation of intangible
assets, depreciation and impairment of property, plant and equipment,
depreciation of right-of-use assets, deal costs for aborted acquisitions, deal
costs not capitalised, share-based payments and long-term incentive plan
charges, and other adjusting items. Other adjusting items are material items
that are considered one-off by management by virtue of their size and/or
incidence. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by
revenue.
Purpose - The Group believes that Adjusted EBITDA and Adjusted EBITDA margin
facilitate comparisons of operating performance from period to period and
company to company by eliminating potential differences caused by variations
in capital structures (affecting interest and finance charges), tax positions
(such as the impact of changes in effective tax rates or net operating losses)
and the age and booked depreciation on assets. The Group excludes certain
items from Adjusted EBITDA, such as loss on disposal of property, plant and
equipment and other adjusting items because it believes they facilitate better
understanding of the Group's underlying trading performance.
Adjusted EBITDA is reconciled to loss before tax as follows:
6 months ended 30 June
2022 2021
US$m US$m
Adjusted EBITDA 136.1 114.2
Adjustments applied in arriving at Adjusted EBITDA:
Adjusting items:
Deal costs1 (6.9) (8.8)
Share-based payments and long-term incentive plans2 (1.2) (0.7)
Gain/(loss) on disposals of assets 0.6 (3.2)
Other gains and (losses) (57.7) (6.2)
Depreciation of property, plant and equipment (75.8) (66.3)
Depreciation of right-of-use assets (9.3) (7.1)
Amortisation of intangibles (3.7) (1.2)
Interest receivable 0.4 0.2
Finance costs (104.7) (64.5)
Loss before tax (122.2) (43.6)
(1) Deal costs comprise costs related to potential acquisitions and
the exploration of investment opportunities, which cannot be capitalised.
These comprise employee costs, professional fees, travel costs and set up
costs incurred prior to operating activities commencing.
(2) Share-based payments and long-term incentive plan charges and
associated costs.
6 months ended 30 June
2022 2021
US$m US$m
Adjusted EBITDA 136.1 114.2
Revenue 265.4 212.4
Adjusted EBITDA margin 51% 54%
Adjusted gross profit and adjusted gross margin
Definition - Adjusted gross profit is defined as gross profit, adding back
site depreciation. Adjusted gross margin is defined as adjusted gross profit
divided by revenue.
Purpose - These measures are used to evaluate the underlying level of gross
profitability of the operations of the business, excluding depreciation, which
is the major non-cash measure reflected in cost of sales. The Group believes
that Adjusted gross profit facilitates comparisons of operating performance
from period to period and company to company by eliminating potential
differences caused by the age and booked depreciation on assets. It is also a
proxy for the gross cash generation of its operations.
6 months ended 30 June
2022 2021
US$m US$m
Gross profit 91.8 74.0
Add back: site depreciation 79.3 68.0
Adjusted gross profit 171.1 142.0
Revenue 265.4 212.4
Adjusted gross margin 64% 67%
Portfolio free cash flow
Definition - Portfolio free cash flow is defined as Adjusted EBITDA less
maintenance and corporate capital expenditure, payments of lease liabilities
(including interest and principal repayments of lease liabilities) and tax
paid.
Purpose - This measure is used to evaluate the cash flow generated by the
business operations after expenditure incurred on maintaining capital assets,
including lease liabilities, and taxes. It is a measure of the cash generation
of the tower estate.
6 months ended 30 June
2022 2021
US$m US$m
Adjusted EBITDA 136.1 114.2
Less: Maintenance and corporate capital additions (9.3) (14.3)
Less: Payments of lease liabilities1 (20.0) (15.2)
Less: Tax paid (6.4) (10.9)
Portfolio free cash flow 100.4 73.8
Cash conversion %(2) 74% 65%
(1) Payment of lease liabilities includes interest and
principal repayments of lease liabilities.
(2) Cash conversion % is calculated as portfolio free cash
flow divided by Adjusted EBITDA.
Gross debt, net debt, net leverage and cash & cash equivalents
Definition - Gross debt is calculated as non-current loans, current loans, and
long-term and short-term lease liabilities. Net debt is calculated as gross
debt less cash and cash equivalents. Net leverage is calculated as net debt
divided by annualised Adjusted EBITDA.
Purpose -Net debt is a measure of the Group's net indebtedness that provides
an indicator of overall balance sheet strength. It is also a single measure
that can be used to assess both the Group's cash position and its
indebtedness. The use of the term 'net debt' does not necessarily mean that
the cash included in the net debt calculation is available to settle the
liabilities included in this measure. Net leverage is used to show how many
years it would take for a company to pay back its debt if net debt and
Adjusted EBITDA are held constant. The Group aims to maintain net leverage
broadly in the range of 3.5x-4.5x.
30 June 31 December
2022 2021
US$m US$m
External debt(1) 1,289.8 1,295.5
Lease liabilities 181.3 181.9
Gross debt 1,471.1 1,477.4
Cash and cash equivalents 388.7 528.9
Net debt 1,082.4 948.5
Annualised Adjusted EBITDA(2) 277.6 264.0
Net leverage(3) 3.9x 3.6x
(1 ) External debt is presented in line with the balance sheet at
amortised cost. External debt is the total loans owed to commercial banks and
institutional investors.
(2 ) Annualised Adjusted EBITDA calculated as per the Senior Notes
definition as the most recent fiscal quarter multiplied by 4, adjusted to
reflect the annualised contribution from acquisitions that have closed
in the most recent fiscal quarter. This is not a forecast of future results.
(3 ) Net leverage is calculated as net debt divided by annualised
Adjusted EBITDA.
Return on invested capital
Definition - Return on invested capital ('ROIC') is defined as defined as
annualised portfolio free cash flow divided by invested capital. Invested
capital is defined as gross property, plant and equipment and gross intangible
assets, less accumulated maintenance and corporate capital expenditure,
adjusted for IFRS 3 accounting adjustments and deferred consideration for
future sites.
Purpose - This measure is used to evaluate asset efficiency and the
effectiveness of the Group's capital allocation.
30 June 31 December
2022 2021
US$m US$m
Property, plant and equipment 750.1 718.7
Accumulated depreciation 892.0 833.3
Accumulated maintenance and corporate capital expenditure (212.0) (202.7)
Intangible assets 233.3 227.3
Accumulated amortisation 28.0 24.5
Accounting adjustments and deferred consideration for future sites (110.7) (93.2)
Total invested capital 1,580.7 1,507.9
Annualised portfolio free cash flow ((1)) 201.6 177.3
Return on invested capital 12.8% 11.8%
(1) Annualised portfolio free cash flow is defined as portfolio
free cash flow for the previous twelve months from the period end date,
adjusted to annualise for the impact of acquisitions closed over the
respective period.
Risk management
The risk management and governance process has not changed since the 2021
Annual report was published and is set out on pages 60 to 65 of the 2021
Annual report (available on the Group's website at www.heliostowers.com) and
summarised as follows.
The creation and maintenance of the Group risk register involves the whole
business with operating company and functional head input being consolidated
by Group Compliance into a register for discussion and agreement at Executive
level prior to submission to the Audit Committee and the Board. The risk
register is updated twice a year after these discussions and a review of the
external environment for any emerging risks.
All risks are classified into six broad risk types: Strategic, Reputational,
Compliance (including legal), Finance, Operational and People. All risks are
assessed according to the probability and consequence of being realised and a
determination made to accept, avoid, or control and mitigate, in which case
mitigating controls are clearly defined. A risk owner for all risks is
identified.
During bi-annual discussions with Executive Management and functional heads of
department, potential emerging risks are also discussed. These may result from
internal developments, changes in organisational structure/personnel,
potential new products or markets being considered or changes in the external
environment such as regulatory changes, socio-economic, political or health
and safety matters.
Emerging risks related to sustainability, climate change, evolving legal
requirements concerning modern slavery and human rights abuses have been
identified as part of the risk management process and continue to be
monitored.
Principal risks and uncertainties
There has been no change in the nature, probability or potential impact of
previously identified risks as set out on pages 61 to 65 of the 2021 Annual
report (available on the Group's website at www.heliostowers.com
(http://www.heliostowers.com) ). The risks are summarised as follows:
- Major quality failure or breach of contract
- Non-compliance with various laws and regulations
- Economic and political instability
- Significant exchange rate movements
- Non-compliance with licence requirements
- Loss of key personnel
- Technology risk
- Failure to remain competitive
- Failure to integrate new lines of business in new markets
- Tax disputes
- Operational resilience
- COVID-19
- Information technology failure and cyber attack risk
- Climate change
Control environment
The effectiveness of the Group's system of internal control is regularly
reviewed by the Board with specific consideration given to material financial,
operational and sustainable risks and controls, with appropriate steps taken
to address any issues identified.
Going concern
The Directors also considered it appropriate to prepare the condensed
consolidated financial statements on a going concern basis, as explained in
Note 1.
Condensed consolidated financial statements
Independent review report to Helios Towers plc
Conclusion
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2022 which comprises the condensed consolidated statement of profit or
loss and other comprehensive income, condensed consolidated statement of
financial position, condensed consolidated statement of changes in equity,
condensed consolidated statement of cash flows and related notes 1 to 23.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2022 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
As disclosed in note 2, the annual financial statements of the group will be
prepared in accordance with United Kingdom adopted international accounting
standards. The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with United
Kingdom adopted International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE (UK), however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the group a conclusion on the condensed set of financial
statement in the half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity" issued by the
Financial Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our review work, for this report, or for the conclusions
we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
18 August 2022
Condensed consolidated statement of profit or loss and other comprehensive
income (unaudited)
For the 6 months ended 30 June 2022
6 months ended 30 June
Note 2022 2021
US$m US$m
Revenue 265.4 212.4
Cost of sales (173.6) (138.4)
Gross profit 91.8 74.0
Administrative expenses (52.6) (43.9)
Profit / (loss) on disposal of property, plant and equipment 0.6 (3.2)
Operating profit 39.8 26.9
Interest receivable 0.4 0.2
Other gains and (losses) 16 (57.7) (6.2)
Finance costs 5 (104.7) (64.5)
Loss before tax 4 (122.2) (43.6)
Tax expense 6 (2.9) (7.5)
Loss for the period (125.1) (51.1)
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations (1.0) 3.6
(126.1) (47.5)
Loss attributable to:
Owners of the Company (124.2) (51.1)
Non-controlling interests (0.9) -
Loss for the period (125.1) (51.1)
Total comprehensive loss attributable to:
Owners of the Company (125.2) (47.5)
Non-controlling interests (0.9) -
Total comprehensive loss for the period (126.1) (47.5)
Earnings per share
Basic and diluted loss per share (cents) 21 (11.9) (5.1)
Condensed consolidated statement of financial position (unaudited)
As at 30 June 2022
Notes 30 June 2022 31 December 2021
US$m US$m
Non-current assets
Intangible assets 7 233.3 227.3
Property, plant and equipment 8a 750.1 718.7
Right-of-use assets 8b 164.8 161.1
Derivative financial assets 9 0.2 57.7
1,148.4 1,164.8
Current assets
Inventories 13.5 10.5
Trade and other receivables 10 248.1 186.6
Prepayments 55.5 43.3
Cash and cash equivalents 11 388.7 528.9
705.8 769.3
Total assets 1,854.2 1,934.1
Equity
Share capital 12 13.5 13.5
Share premium 105.6 105.6
Other reserves (87.0) (87.0)
Convertible bond reserves 52.7 52.7
Share based payment reserve 20.4 19.6
Treasury shares (1.0) (1.1)
Translation reserve (89.6) (88.6)
Retained earnings 35.5 153.3
Equity attributable to owners 50.1 168.0
Non-controlling interest (2.3) -
Total equity 47.8 168.0
Current liabilities
Trade and other payables 14 290.3 249.0
Short-term lease liabilities 15 25.5 33.0
Loans 13 7.7 2.8
323.5 284.8
Non-current liabilities
Loans 13 1,282.1 1,292.7
Long-term lease liabilities 15 155.8 148.9
Minority interest liability buyout 6.8 -
Deferred tax liabilities 38.2 39.7
1,482.9 1,481.3
Total liabilities 1,806.4 1,766.1
Total equity and liabilities 1,854.2 1,934.1
Condensed consolidated statement of changes in equity (unaudited)
For the 6 months ended 30 June 2022
Share capital Share premium Other reserves Treasury shares Share based payments reserve Convertible bond reserves US$m Translation reserves Accumulated (losses)/profits Available to the owners of the Company Non-controlling interest Total equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
Balance at 1 January 2021 12.8 - (87.0) (2.3) 18.4 - (91.9) 280.3 130.3 - 130.3
Loss for the period - - - - - - - (51.1) (51.1) - (51.1)
Other comprehensive expense - - - - - - 3.6 - 3.6 - 3.6
Total comprehensive (loss)/income for the period - - - - - - 3.6 (51.1) (47.5) - (47.5)
Transactions with owners; 0.7 105.6 - - - - - - 106.3 - 106.3
Issue of share capital
Convertible bond reserves - - - - - 52.7 - - 52.7 - 52.7
Share based payments - - - - 0.7 - - - 0.7 - 0.7
Exercise of share options - - - 0.6 (0.6) - - - - - -
Balance at 30 June 2021 13.5 105.6 (87.0) (1.7) 18.5 52.7 (88.3) 229.2 242.5 - 242.5
Balance at 1 January 2021 12.8 - (87.0) (2.3) 18.4 - (91.9) 280.3 130.3 - 130.3
Loss for the period - - - - - - - (156.2) (156.2) - (156.2)
Other comprehensive expense - - - - - - 3.3 - 3.3 - 3.3
Total comprehensive (loss)/income for the period - - - - - - 3.3 (156.2) (152.9) - (152.9)
Transactions with owners; 0.7 105.6 - - - - - - 106.3 - 106.3
Issue of share capital
Convertible bond reserves - - - - - 52.7 - - 52.7 - 52.7
Share based payments - - - - 2.4 - - - 2.4 - 2.4
Transfer of treasury shares - - - 1.2 (1.2) - - - - - -
Exercise of share options - - - - - - - 29.2 29.2 - 29.2
Balance at 31 December 2021 13.5 105.6 (87.0) (1.1) 19.6 52.7 (88.6) 153.3 168.0 - 168.0
Balance at 1 January 2022 13.5 105.6 (87.0) (1.1) 19.6 52.7 (88.6) 153.3 168.0 - 168.0
Loss for the period - - - - - - - (124.2) (124.2) (0.9) (125.1)
Other comprehensive expense - - - - - - (1.0) - (1.0) - (1.0)
Total comprehensive (loss)/income for the period - - - - - - (1.0) (124.2) (125.2) (0.9) (126.1)
Transactions with owners; - - - 0.1 0.8 - - - 0.9 - 0.9
Share based payments
Shares issued to minority interest - - - - - - - 6.4 6.4 5.4 11.8
Buyout obligation to non-controlling interest - - - - - - - - - (6.8) (6.8)
Balance at 30 June 2022 13.5 105.6 (87.0) (1.0) 20.4 52.7 (89.6) 35.5 50.1 (2.3) 47.8
Condensed consolidated statement of cash flows (unaudited)
For the 6 months ended 30 June 2022
6 months ended 30 June
Note 2022 2021
US$m US$m
Cash flows generated from operating activities
Loss for the period before taxation 4 (122.2) (43.6)
Adjustments for:
Other gains and losses 16 57.7 6.2
Finance costs 5 104.7 64.5
Interest receivable (0.4) (0.2)
Share-based payments and long-term incentive plans 1.2 0.7
Depreciation and amortisation 88.8 74.6
(Gain)/loss on disposal of property, plant and equipment (0.6) 3.2
Movement in working capital:
(Increase)/decrease in inventories (3.0) (0.6)
(Increase)/decrease in trade and other receivables (76.4) (39.5)
Increase in prepayments (4.4) (7.7)
Increase/(decrease) in trade and other payables 45.6 (11.9)
Cash generated from operations 91.0 45.7
Interest paid (55.8) (46.2)
Tax paid 6 (6.4) (10.9)
Net cash generated / (used) in operating activities 28.8 (11.4)
Cash flows from investing activities
Payments to acquire property, plant and equipment (108.2) (49.2)
Payments to acquire intangible assets - (1.9)
Proceeds on disposal on assets 0.2 0.3
Business acquisition 20 (44.2) (167.4)
Interest received 0.4 0.2
Net cash used in investing activities (151.8) (218.0)
Cash flows from financing activities
Gross proceeds from issue of equity share capital - 109.3
Share issue costs - (1.0)
Borrowing drawdowns 3.6 351.8
Transactions with Non-Controlling interests 11.8 -
Loan issue costs (2.7) (12.5)
Repayment of loan (12.2) -
Repayment of lease liabilities (14.7) (6.5)
Net cash generated from financing activities (14.2) 441.1
Foreign exchange on translation movement (3.0) (0.2)
Net increase/(decrease) in cash and cash equivalents (137.2) 211.7
Cash and cash equivalents at the beginning of period 528.9 428.7
Cash and cash equivalents at end of period 388.7 640.2
Notes to the condensed consolidated financial statements (unaudited)
For the 6 months ended 30 June 2022
1. General Information
Helios Towers plc is an independent tower company, with operations across
eight countries. Helios Towers plc is a public limited company incorporated
and domiciled in the UK.
Going concern
The Directors believe that the Group is well placed to manage its business
risks successfully, despite the current uncertain economic outlook in the
wider economy. The Group's forecasts and projections, taking account of
possible changes in trading performance, show that the Group should remain
adequately liquid and should operate within the covenant levels of its current
debt facilities. The Directors consider it appropriate to adopt the going
concern basis of preparation for the condensed consolidated financial
statements.
As part of their regular assessment of the Group's working capital and
financing position, the Directors have prepared a detailed trading and cash
flow forecast for a period which covers at least 12 months after the date of
approval of the interim financial statements. In assessing the forecast, the
Directors have considered:
• trading risks presented by the current economic conditions in the
operating markets;
• the impact of macroeconomic factors, particularly interest rates
and foreign exchange rates;
• the status of the Group's financial arrangements;
• progress made in developing and implementing cost reduction
programmes and operational improvements; and
• mitigating actions available should business activities fall
behind current expectations, including the deferral of discretionary overheads
and restricting cash outflows.
The Directors have acknowledged the latest guidance on going concern as issued
by the Financial Reporting Council. Management have considered the latest
forecasts available to them and additional sensitivity analysis has been
prepared to consider any reduction in anticipated levels of Adjusted EBITDA
and operating profit arising from various scenarios.
The Directors continue to consider it appropriate to adopt the going concern
basis of accounting in preparing the interim financial information. Forecast
liquidity has been assessed under a number of stressed scenarios and a reverse
stress test was performed to support this assertion.
2. Accounting Policies
Basis of preparation
The interim financial statements of Helios Towers plc and its subsidiaries are
prepared using accounting policies consistent with International Financial
Reporting Standards ("IFRS") as adopted by the United Kingdom, taking into
account IFRS Interpretations Committee (IFRS IC) interpretations.
Accounting policies are consistent with those adopted in the last statutory
financial statements of Helios Towers plc and the audit opinion was
unmodified. The information as of 31 December 2021 has been extracted from the
audited financial statements of Helios Towers plc for the year ended 31
December 2021. These condensed financial statements do not constitute
statutory financial statements under the Companies Act 2006. The interim
financial information for the six months ended 30 June 2022 has been reviewed
by the auditor, but not audited. The information for the year ended 31
December 2021 shown in this report does not constitute statutory accounts for
that year as defined in section 434 of the Companies Act 2006. A copy of the
statutory accounts for that year has been delivered to the Registrar of
Companies. The auditor has reported on those accounts. Their report was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain a statement under section 498 (2) or (3) of the Companies Act
2006.
The interim financial information for the six months ended 30 June 2022, which
has been approved by the Board of Directors, has been prepared on the basis of
the accounting policies set out in the Group's 2021 Annual Report on pages 143
to 151. The Group's 2021 Annual Report can be found on the Group's website
www.heliostowers.com. These Condensed Interim Financial Statements should be
read in conjunction with the 2021 information. The Condensed Interim Financial
Statements have been prepared in accordance with UK-endorsed International
Financial Reporting Standards ("IFRS"). These Condensed Interim Financial
Statements do not comprise statutory accounts within the meaning of section
435 of the Companies Act 2006 and should be read in conjunction with the
Annual Report 2021. These Condensed Interim Financial Statements have been
prepared in accordance with IAS 34: "Interim Financial Reporting" contained in
UK-adopted IFRS. There is no significant seasonality impact in the business.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
3. Segmental reporting
The following segmental information is presented in a consistent format with
management information considered by the CEO of each operating segment, and
the CEO and CFO of the Group, who are considered to be the chief operating
decision makers ('CODMs'). Operating segments are determined based on
geographical location. All operating segments have the same business of
operating and maintaining telecoms towers and renting space on such towers.
Accounting policies are applied consistently for all operating segments. The
segment operating result used by CODMs is Adjusted EBITDA, which is defined in
Note 4.
6 months ended 30 June 2022 Tanzania DRC Congo Brazzaville Ghana South Africa Senegal Madagascar Malawi Total operating companies
US$m US$m US$m US$m US$m US$m US$m US$m US$m
Revenue 95.8 97.9 14.2 20.3 4.2 18.6 7.5 6.9 265.4
Adjusted gross margin1 69% 60% 65% 68% 72% 69% 55% 45% 64%
Adjusted EBITDA(2) 63.2 52.4 6.7 12.0 1.8 10.8 2.9 2.4 152.2
Adjusted EBITDA margin(3) 66% 54% 47% 59% 43% 58% 39% 35% 57%
Financing costs:
Interest costs (including leases) (19.8) (25.6) (3.6) (4.2) (3.0) (8.3) (2.3) (0.1) (66.9)
Foreign exchange differences (1.3) 0.3 (7.7) (14.2) (0.8) (3.8) (0.2) (4.0) (31.7)
Total financing costs (21.1) (25.3) (11.3) (18.4) (3.8) (12.1) (2.5) (4.1) (98.6)
( )
6 months ended 30 June 2022 Total operating companies Corporate Group Total
US$m US$m US$m
Revenue 265.4 - 265.4
Adjusted gross margin1 64% - 64%
Adjusted EBITDA(2) 152.2 (16.1) 136.1
Adjusted EBITDA margin(3) 57% - 51%
Financing costs:
Interest costs (including leases) (66.9) (1.1) (68.0)
Foreign exchange differences (31.7) (5.0) (36.7)
Total financing costs (98.6) (6.1) (104.7)
( )
( )
6 months ended 30 June 2021 Tanzania DRC Congo Ghana South Africa Senegal Total operating companies Corporate Group Total
US$m US$m Brazzaville US$m US$m US$m US$m US$m US$m
US$m
Revenue 84.1 85.5 13.9 21.4 2.8 4.7 212.4 - 212.4
Adjusted Gross margin1 69% 65% 64% 69% 73% 60% 67% - 67%
Adjusted EBITDA(2) 55.6 49.7 6.5 12.7 1.2 2.3 128.0 (13.8) 114.2
Adjusted EBITDA margin(3) 66% 58% 47% 59% 43% 49% 60% - 54%
Financing costs:
Interest costs (including leases) (17.6) (24.7) (6.0) (4.3) (2.6) (1.4) (56.6) (3.5) (60.1)
Foreign exchange differences (0.4) 0.2 (2.7) - - (0.1) (3.0) (1.4) (4.4)
Total financing costs (18.0) (24.5) (8.7) (4.3) (2.6) (1.5) (59.6) (4.9) (64.5)
(1) Adjusted gross margin means gross profit, adding back site depreciation,
divided by revenue.
(2) Adjusted EBITDA is loss before tax for the period, adjusted for, finance
costs, other gains and losses, interest receivable, loss on disposal of
property, plant and equipment, amortisation of intangible assets, depreciation
and impairment of property, plant and equipment, depreciation of right-of-use
assets, recharged depreciation, deal costs for aborted acquisitions, deal
costs not capitalised, share-based payments and long-term incentive plan
charges, and other adjusting items.
(3) Adjusted EBITDA margin is Adjusted EBITDA divided by revenue.
4. Reconciliation of aggregate segment Adjusted EBITDA to loss before tax
The key segment operating result used by chief operating decision makers
(CODMs) is Adjusted EBITDA which is also an Alternative Performance Measure of
the Group as a whole, as described above on page 10.
6 months ended 30 June
2022 2021
US$m US$m
Adjusted EBITDA 136.1 114.2
Adjustments applied in arriving at Adjusted EBITDA:
Adjusting items:
Deal costs1 (6.9) (8.8)
Share-based payments and long-term incentive plans2 (1.2) (0.7)
Gain/(loss) on disposals of assets 0.6 (3.2)
Other gains and (losses) (57.7) (6.2)
Depreciation of property, plant and equipment (75.8) (66.3)
Depreciation of right-of-use assets (9.3) (7.1)
Amortisation of intangibles (3.7) (1.2)
Interest receivable 0.4 0.2
Finance costs (104.7) (64.5)
Loss before tax (122.2) (43.6)
(1 ) Deal costs comprise costs related to potential acquisitions
and the exploration of investment opportunities, which cannot be capitalised.
These comprise employee costs, professional fees, travel costs and set
up costs incurred prior to operating activities commencing.
(2) Share-based payments and long-term incentive plan charges and
associated costs.
5. Finance costs
6 months ended 30 June
2022 2021
US$m US$m
Interest cost 56.4 51.2
Interest cost on lease liabilities 11.6 8.9
Foreign exchange differences 36.7 4.4
104.7 64.5
The increase in finance costs is primarily driven by the non-cash foreign
exchange impact of revaluing intercompany borrowings, denominated in US$ and
Euros, where the operating companies have seen devaluations in their local
currencies during the first six months of 2022.
6. Tax expense
Entities in Congo Brazzaville and Senegal are loss making, however minimum
income tax and asset-based taxes are levied as stipulated by law in these
jurisdictions. Malawi is loss making for tax purposes and no minimum income
tax applies. DRC, Ghana, Madagascar, Tanzania and one entity in South Africa
are profit making and subject to income tax on taxable profits.
The tax expense for the period is calculated by reference to the forecast full
year tax rate and applied to profits for the period, adjusted for actual tax
on adjusting items. The effective tax rate, calculated by reference to the
statutory tax rates which are applicable to the Group's operating subsidiaries
is approximately 30% for the profitable jurisdictions. A tax charge is
reported in the consolidated financial statements despite a consolidated loss
for accounting purposes, as a result of losses recorded in Mauritius and UK
which are not able to be group relieved against taxable profits in the
operating company jurisdictions.
Based on recent experience of closing tax audit cases, the provisions held by
the Group have accurately quantified the final amounts determined. The
Directors considered the current provisions held by the Group to be
appropriate.
6 months ended 30 June
Tax expense 2022 2021
US$m US$m
Total current tax 6.0 8.0
Deferred tax (3.1) (0.5)
2.9 7.5
6 months ended 30 June
Tax paid 2022 2021
US$m US$m
Income tax 6.4 10.9
6.4 10.9
7. Intangible assets
Goodwill Customer Contracts Customer Relationships Colocation rights US$m Non-compete agreement Computer software and licences Total
US$m US$m US$m US$m US$m US$m
Cost
At 1 January 2022 17.8 3.0 199.8 8.8 1.1 21.3 251.8
Additions on acquisition of subsidiary undertakings (note 20) 10.3 - 20.7 - - - 31.0
Disposals - - - - - - -
Foreign exchange (3.8) - (16.7) - - (1.0) (21.5)
At 30 June 2022 24.3 3.0 203.8 8.8 1.1 20.3 261.3
Amortisation
At 1 January 2022 - (0.6) (2.5) (1.6) (0.5) (19.3) (24.5)
Charge for period - (0.1) (3.1) (0.3) (0.1) (0.1) (3.7)
Disposals - - - - - - -
Foreign exchange - - (0.3) (0.1) - 0.6 0.2
At 30 June 2022 - (0.7) (5.9) (2.0) (0.6) (18.8) (28.0)
Net book value
At 30 June 2022 24.3 2.3 197.9 6.8 0.5 1.5 233.3
At 31 December 2021 17.8 2.4 197.3 7.2 0.6 2.0 227.3
Impairment
Goodwill acquired in a business combination is allocated, at acquisition, to
the cash generating units (CGUs) that are expected to benefit from that
business combination. The Group tests goodwill annually for impairment or more
frequently if there are indications that goodwill might be impaired. The
Group's CGUs are aligned to its operating segments. No impairment indicators
were identified during the period.
The recoverable amount of each cash generating unit has been determined based
on a value in use calculation using cash flow projections for the next ten
years from financial budgets approved by senior management, as this period
matches the typical customer contract period for tower management.
8a. Property, plant and equipment
IT equipment Fixtures and fittings Motor vehicles Site assets Land Leasehold improvements Total
US$m US$m US$m US$m US$m US$m US$m
Cost
At 1 January 2022 27.5 1.6 4.7 1,508.1 6.6 3.5 1,552.0
Additions during the period 2.4 - - 88.3 - - 90.7
Additions on acquisition of subsidiary undertakings (note 20) - - - 37.6 - - 37.6
Disposals during the period - - - (0.6) - - (0.6)
Transfers - - - - - - -
Foreign exchange (0.5) 0.1 (0.3) (36.3) (0.4) (0.2) (37.6)
At 30 June 2022 29.4 1.7 4.4 1,597.1 6.2 3.3 1,642.1
Depreciation
At 1 January 2022 (20.1) (1.4) (3.5) (805.0) (0.1) (3.2) (833.3)
Charge for period (2.4) (0.2) (0.2) (72.9) - (0.1) (75.8)
Disposals during the period - - - 0.1 - - 0.1
Foreign exchange 0.5 0.1 0.2 16.0 (0.1) 0.3 17.0
At 30 June 2022 (22.0) (1.5) (3.5) (861.8) (0.2) (3.0) (892.0)
Net book value
At 30 June 2022 7.4 0.2 0.9 735.3 6.0 0.3 750.1
At 31 December 2021 7.4 0.2 1.2 703.1 6.5 0.3 718.7
8b. Right-of-use assets
Buildings Land Motor vehicles Total
US$m US$m US$m US$m
Cost
At 1 January 2022 12.1 224.7 0.3 237.1
Additions during the period 1.4 14.1 0.3 15.8
Additions on acquisition of subsidiary undertakings (note 20) 0.2 2.6 - 2.8
Disposals during the period (0.6) (5.8) - (6.4)
Foreign exchange (0.4) (4.7) - (5.1)
At 30 June 2022 12.7 230.9 0.6 244.2
Depreciation
At 1 January 2022 (7.1) (68.8) (0.1) (76.0)
Charge for period (1.3) (7.7) (0.3) (9.3)
Disposals during the period 0.5 4.3 - 4.8
Foreign exchange 0.3 0.8 - 1.1
At 30 June 2022 (7.6) (71.4) (0.4) (79.4)
Net book value
At 30 June 2022 5.1 159.5 0.2 164.8
At 31 December 2021 5.0 155.9 0.2 161.1
9. Derivative financial instruments
The amounts recognised in the statement of financial position are as follows:
30 June 31 December
2022 2021
US$m US$m
Balance brought forward 57.7 88.8
Derivative financial instrument - US$975m 7.000% Senior Notes 2025 (57.6) (28.0)
Currency forward contracts 0.1 (3.1)
Balance carried forward 0.2 57.7
The derivatives represent the fair value of the put and call options embedded
within the terms of the Senior Notes. The call options give the Group the
right to redeem the Senior Notes instruments at a date prior to the maturity
date (18 December 2025), in certain circumstances and at a premium over the
initial notional amount.
The put option provides the holders with the right (and the Group with an
obligation) to settle the Senior Notes before their redemption date in the
event of a change in control resulting in a rating downgrade (as defined in
the terms of the Senior Notes, which also includes a major asset sale), and at
a premium over the initial notional amount. The options are fair valued using
an option pricing model that is commonly used by market participants to value
such options and makes the maximum use of market inputs, relying as little as
possible on the entity's specific inputs and making reference to the fair
value of similar instruments in the market. The options are considered a Level
3 financial instrument in the fair value hierarchy of IFRS 13, owing to the
presence of unobservable inputs. Where Level 1 (market observable) inputs are
not available, the Helios Group engages a third party qualified valuer to
perform the valuation. Management works closely with the qualified external
valuer to establish the appropriate valuation techniques and inputs to the
model. The Senior Notes are quoted and it has an embedded derivative. The fair
value of the embedded derivative is the difference between the quoted price of
the Senior Notes and the fair value of the host contract (the Senior Notes
excluding the embedded derivative). The fair value of the Senior Notes as at
the Valuation Date has been sourced from an independent third-party data
vendor. The fair value of the host contract is calculated by discounting the
Senior Notes' future cash flows (coupons and principal payment) at USD 3-month
LIBOR plus Helios Towers' credit spread. For the valuation date of 30 June
2022, a relative 5% increase in credit spread would result in an approximate
US$nil decrease in the valuation of the embedded derivatives.
As at the reporting date, the call option had a fair value of US$0.1m (31
December 2021: US$57.7m on the US$975m 7.000% Senior Notes 2025), while the
put option had a fair value of US$nil million (31 December 2021: US$nil
million).
10. Trade and other receivables
30 June 31 December
2022 2021
US$m US$m
Trade receivables 110.3 83.1
Loss allowance (5.9) (6.0)
104.4 77.1
Other receivables 131.6 96.5
VAT & Withholding tax receivable 12.1 13.0
248.1 186.6
The Group measures the loss allowance for trade receivables and trade
receivables from related parties at an amount equal to lifetime expected
credit losses ('ECL'). The expected credit losses on trade receivables are
estimated using a provision matrix by reference to past default experience of
the debtor and an analysis of the debtor's current financial position,
adjusted for factors that are specific to the debtors, general economic
conditions of the industry in which the debtors operate and an assessment of
both the current as well as the forecast direction of conditions at the
reporting date. Loss allowance expense is included within cost of sales in the
Consolidated Income Statement.
There has been no change in the estimation techniques or significant
assumptions made during the current reporting period. Interest can be charged
on past due debtors. The normal credit period of services is 30 days.
Other receivables mainly comprise of contract assets of US$59.2m (2021:
US$47.2m) and sundry receivables. $16.8m (2021: US$15.1m) of new contract
assets were recognised in the period and US$4.8m (2021: US$2.1m) of contract
assets at 31 December 2021 were recovered from customers. Sundry receivables
primarily include US$24.1m (2021: US$24.1m) in relation to the potential Oman
transaction, which was paid into an escrow as per the agreement with Omantel
and US$22.3m (2021: US$7.4m) of accrued income.
Debtor days
The Group calculates debtor days as set out in the table below. It considers
its most relevant customer receivables exposure on a given reporting date to
be the amount of receivables due in relation to the revenue that has been
reported up to that date. It therefore defines its net receivables as the
total trade receivables and accrued revenue, less loss allowance and deferred
income that has not yet been settled.
30 June 31 December
2022 2021
US$m US$m
Trade receivables1 110.3 83.1
Accrued Revenue2 22.3 7.4
Less: Loss allowance (5.9) (6.0)
Less: Deferred income3 (48.0) (27.4)
Net Receivables 78.7 57.1
Revenue 265.4 449.1
Debtor days 54 46
(1)Trade receivables, including related parties.
(2) Reported within other receivables.
(3) Deferred income, as per Note 14, has been adjusted for US$9.8m (2021:
US$18.4m) in respect of amounts settled by customers at the balance sheet
date.
In determining the recoverability of a trade receivable, the Group considers
any change in the credit quality of the trade receivable from the date credit
was initially granted up to the reporting date. The Directors consider that
the carrying amount of trade and other receivables is approximately equal to
their fair value.
At 30 June 2022, US$12.2m (2021: US$11.0m) of services had been provided to
customers which had yet to meet the Group's probability criterion for revenue
recognition under the Group's accounting policies. Revenue for these services
will be recognised in the future as and when all recognition criteria are met.
11. Cash and cash equivalents
30 June 31 December
2022 2021
US$m US$m
Bank balances 388.7 528.9
388.7 528.9
12. Share capital
30 June 2022 31 December 2021
Number of shares US$m Number of shares US$m
Authorised, issued and fully paid
Ordinary share capital class A of £0.01 1,048,000,000 13.5 1,048,000,000 13.5
1,048,000,000 13.5 1,048,000,000 13.5
13. Loans
30 June 31 December
2022 2021
US$m US$m
Loans 1,289.8 1,295.5
Total borrowings 1,289.8 1,295.5
Current 7.7 2.8
Non-current 1,282.1 1,292.7
1,289.8 1,295.5
Loans are classified as financial liabilities and measured at amortised cost.
14. Trade and other payables
30 June 31 December
2022 2021
US$m US$m
Trade payables 35.8 13.5
Deferred income 57.7 45.8
Deferred consideration 64.0 63.5
Other payables and accruals 116.7 104.7
VAT, Withholding and other tax payable 16.1 21.5
290.3 249.0
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 31 days (2021: 25 days). Payable days are calculated as trade
payables and payables to related parties, divided by cost of sales plus
administration expenses less staff costs and depreciation and amortisation. No
interest is charged on trade payables. The Group has financial risk management
policies in place to ensure that all payables are paid within the pre-agreed
credit terms.
The Directors consider the carrying amount of trade payables approximates to
their fair value due to their short-term nature.
15. Lease liabilities
30 June 31 December
2022 2021
US$m US$m
Short-term lease liabilities
Land 23.3 30.0
Buildings 2.0 2.8
Motor vehicles 0.2 0.2
25.5 33.0
Long-term lease liabilities
Land 153.1 146.7
Buildings 2.6 2.1
Motor vehicles 0.1 0.1
155.8 148.9
The below undiscounted cash flows do not include escalations based on CPI or
other indexes which change over time. Renewal options are considered on a case
by case basis with judgements around the lease term being based on
management's contractual rights and their current intentions.
The profile of the outstanding undiscounted contractual payments fall due as
follows:
Within 2-5 years 6-10 years 10+ years Total
1 year US$m US$m US$m US$m
US$m
30 June 2022 33.8 116.0 112.6 293.2 555.6
31 December 2021 33.0 110.2 111.4 278.9 533.5
16. Other gains and (losses)
6 months ended
30 June 2022 30 June 2021
US$m US$m
Fair value loss on derivative financial instruments (57.7) (6.2)
(57.7) (6.2)
The fair value loss of US$57.7m in H1 2022 was driven by a fair value movement
in the embedded derivative within the terms of the Group's Senior Notes, due
to quoted bond prices moving from above par at 31 December 2021 to below par
at 30 June 2022.
17. Uncompleted performance obligations
The table below represents undiscounted uncompleted performance obligations at
the end of the reporting period. This is total revenue which is contractually
due to the Group, subject to the performance of the obligation of the Group
related to these revenues.
30 June 31 December
2022 2021
US$m US$m
Total contracted revenue 4,167.7 3,916.6
Contracted revenue
The following table provides our total undiscounted contracted revenue by
country as of 30 June 2022 for each of the periods from 2022 to 2026, with
local currency amounts converted at the applicable average rate for US Dollars
for the period ended 30 June 2022 held constant. Our contracted revenue
calculation for each year presented assumes: (i) no escalation in fee rates,
(ii) no increases in sites or tenancies other than our committed tenancies,
(iii) our customers do not utilise any cancellation allowances set forth in
their MLAs, (iv) our customers do not terminate MLAs early for any reason and
(v) no automatic renewal. The average remaining life of customer contracts is
7.2 years.
Year ended 31 December
6 months to 2023 2024 2025 2026
31 December 2022
US$m US$m US$m US$m US$m
Tanzania 98.0 193.8 193.8 193.8 130.5
DRC 99.0 198.9 198.5 171.7 145.8
Congo Brazzaville 14.0 28.0 28.0 18.8 12.1
Ghana 19.1 33.5 31.6 32.0 31.8
South Africa 3.9 7.6 8.1 8.0 7.8
Senegal 19.0 39.1 40.8 42.5 47.0
Madagascar 7.7 12.2 12.8 15.7 15.7
Malawi 11.5 23.0 23.0 25.0 25.0
272.2 536.1 536.6 507.5 415.7
18. Related party transactions
During the period and comparative period there were no discloseable related
party transactions.
19. Contingencies
The Group exercises judgement to determine whether to recognise provisions and
make disclosures for contingent liabilities.
In the year ended 31 December 2021, the Tanzania Revenue Authority issued an
initial assessment on a number of taxes including corporate income tax,
withholding tax and stamp duty for the financial years ending 2015 to 2018
inclusive. Of the initial claim, US$81m relates to corporate income tax,
US$7.5m for withholding tax and US$0.4m stamp duty. The initial assessments
are in early stages of review with local tax experts and as such the impact,
if any, is unknown at this time. A separate assessment was made for VAT and
payroll taxes which have been agreed with the tax authority and fully settled
at the balance sheet date.
The Directors are working with their advisers and are in discussion with the
tax authorities to bring the matter to conclusion based on the facts. At this
time, the Directors have identified no present obligations in relation to this
tax audit that would lead to material probable future cash outflows and
therefore no provision has been made for these amounts. The balances above
represent the Group's assessment of the maximum possible exposure for the
years assessed.
Other individually immaterial tax, and regulatory proceedings, claims and
unresolved disputes are pending against Helios Towers in a number of
jurisdictions. The timing of resolution and potential outcome (including any
future financial obligations) of these are uncertain, but not considered
probable and therefore no provision has been recognised in relation to these
matters.
20. Acquisitions
On 24 March 2022, the Group completed the acquisition of Malawi Towers Ltd of
the previously announced transaction with Airtel Africa. The group has
acquired 100% of the share capital of Malawi Towers Limited which includes the
passive infrastructure on 723 sites, colocation contracts and certain supplier
contracts. The Group has treated this as a single business combination
transaction and accounted for it in accordance with IFRS 3 - Business
Combinations ('IFRS 3') using the acquisition method. The total consideration
in respect of the transaction was US$57.7m. Goodwill arising on this business
combination has been allocated to the Malawi CGU. This acquisition is in line
with the Group's strategy. On the same date, a 20% stake in the business was
sold as part of the same agreement. See section ii) for the transactions with
minority shareholders on the acquisition date. Non-controlling interest is
recognised under the proportionate share of net assets method as permitted
under IFRS 3.
i) Acquisition of 100% of the share
capital of Malawi Towers Ltd
The breakdown of the acquisition price and goodwill generated by the
acquisition is as follows:
Acquisition price and goodwill 24 March 2022
US$m
Consideration paid in cash 44.8
Deferred consideration 12.9
Total acquisition price (100%) 57.7
Net assets acquired (100%) (47.4)
Resulting goodwill 10.3
The business combination had the following effect on the Group's assets and
liabilities:
Identifiable assets acquired 24 March 2022
US$m
Assets
Fair value of property, plant and equipment 37.6
Fair value of intangible assets 20.7
Right of use assets 2.8
Other assets 2.6
Cash 0.6
Total assets 64.3
Liabilities
Other liabilities (6.6)
Lease liabilities (2.1)
Deferred taxation (8.2)
Total liabilities (16.9)
Total net identifiable assets acquired 47.4
The identified goodwill reflects the lease-up potential of the asset base.
Deferred consideration is payable subject to timing of future closings of
sites and to the committed build-to-suit rollout up to March 2025. This has
been discounted to reflect the present value of future payments. The Group has
assessed the fair value of net assets acquired at US$47.4m, based on
appropriate valuation methodology. The valuation techniques used for measuring
fair value of material assets acquired were as follows:
Assets acquired Valuation technique
Property, plant & equipment Depreciated replacement cost adjusted for physical deterioration as well as
functional and economic obsolescence.
Intangible assets (Customer relationships) Multi-period excess earnings method which considered the present value of net
cash flows expected to be generated by the customer relationships.
The Group incurred acquisition related costs of US$2.0m in 2022 and US$3.1m in
previous financial years. These costs have been included in deal costs in the
Group's consolidated income statement when incurred. For the period from 24
March to 30 June 2022 this acquisition contributed revenue of US$6.9m and
EBITDA of US$2.4m.
The business combination had the following effect on the Group's statement of
cash flows:
Total cash outflow US$m
Consideration paid in cash 44.8
Less: cash acquired (0.6)
Total cash outflow 44.2
ii) Contribution from minority
shareholders
On 24 March 2022 in tandem with but immediately subsequent to the acquisition,
the minority shareholder contributed US$5.3m for a 20% stake in the business.
On the same date the minority shareholder also contributed a loan of US$3.5m
to the entity.
21. Loss per share
Basic loss per share has been calculated by dividing the total loss for the
period by the weighted average number of shares in issue during the period
after adjusting for shares held in employee benefit trusts.
To calculate diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all dilutive
potential shares. Share options granted to employees where the exercise price
is less than the average market price of the Company's ordinary shares during
the year are considered to be dilutive potential shares. Where share options
are exercisable based on performance criteria and those performance criteria
have been met during the period, these options are included in the calculation
of dilutive potential shares. The Directors believe that Adjusted EBITDA per
share is representative of the operations of the business, refer to Note 4.
Earnings per share is based on:
2022 2021
US$m US$m
Loss after tax for the period attributable to owners of the Company (124.2) (51.1)
Adjusted EBITDA (Note 4) 136.1 114.2
6 months ended 30 June
2022 2021
Number Number
Weighted average number of ordinary shares used to calculate basic earnings 1,046,948,396 1,001,462,251
per share
Weighted average number of dilutive potential shares 112,629,231 57,786,113
Weighted average number of ordinary shares used to calculate diluted earnings 1,159,577,627 1,059,248,364
per share
Loss per share
6 months ended 30 June
2022 2021
cents cents
Basic (11.9) (5.1)
Diluted (11.9) (5.1)
Adjusted EBITDA per share
6 months ended 30 June
2022 2021
Cents cents
Basic 13.0 11.4
Diluted 11.7 10.8
The calculation of basic and diluted earnings per share is based on the net
loss attributable to equity holders of the Company entity for the period
US$124.2m (2021: US$51.1m). Basic and diluted earnings per share amounts are
calculated by dividing the net loss attributable to equity shareholders of the
Company entity by the weighted average number of shares outstanding during the
year. Dilutive potential shares are anti-dilutive due to the loss after tax
attributable to ordinary shareholders reported.
The calculation of Adjusted EBITDA per share and diluted EBITDA per share are
based on the Adjusted EBITDA earnings for the period of US$136.1m (2021:
US$114.2m). Refer to Note 4 for a reconciliation of Adjusted EBITDA to net
loss before tax.
22. Subsequent events
There were no reportable subsequent events after the balance sheet date.
23. Directors' responsibility statement
The Directors confirm that, to the best of their knowledge this condensed set
of financial statements has been prepared in accordance with IAS 34 gives a
true and fair view of the assets, liabilities, financial position and profit
or loss of the issuer, or the undertakings included in the consolidation as a
whole as required by DTR 4.2.4R and that this Interim Report includes a fair
review of the information required by content of the Interim Management
section in the Disclosure Guidance and Transparency Rules 4.2.7R and
Disclosure Guidance and Transparency Rules 4.2.8R.
The interim financial statements for the period ended 30 June 2022 have been
authorised for issue on 18 August 2022.
Tom Greenwood Manjit Dhillon
Chief Executive Officer Chief Financial Officer
Certain defined terms and conventions
We have prepared the trading update using a number of conventions, which you
should consider when reading information contained herein as follows:
All references to "we", "us", "our", "HT Group", our "Group" and the "Group"
are references to Helios Towers plc and its subsidiaries taken as a whole.
We have prepared the interim report using a number of conventions, which you
should consider when reading information contained herein as follows:
All references to 'we', 'us', 'our', 'HT Group', 'Helios Towers' our 'Group'
and the 'Group' are references to Helios Towers, plc and its subsidiaries,
taken as a whole.
'2G' means the second-generation cellular telecommunications network
commercially launched on the GSM and CDMA standards.
'3G' means the third-generation cellular telecommunications networks that
allow simultaneous use of voice and data services, and provide high-speed data
access using a range of technologies.
'4G' means the fourth-generation cellular telecommunications networks that
allow simultaneous use of voice and data services, and provide high-speed data
access using a range of technologies (these speeds exceed those available for
3G).
'5G' means the fifth generation cellular telecommunications networks. 5G does
not currently have a publicly agreed upon standard; however, it provides
high-speed data access using a range of technologies that exceed those
available for 4G.
'Adjusted EBITDA' is defined by management as loss before tax for the year,
adjusted for finance costs, other gains and losses, interest receivable, loss
on disposal of property, plant and equipment, amortisation of intangible
assets, depreciation and impairments of property, plant and equipment,
depreciation of right-of-use assets, deal costs for aborted acquisitions, deal
costs not capitalised, share-based payments and long-term incentive plan
charges, and other adjusting items. Adjusting items are material items that
are considered one-off by management by virtue of their size and/or incidence.
'Adjusted EBITDA margin' means Adjusted EBITDA divided by revenue.
'Adjusted free cash flow' means portfolio free cash flow less net payment of
interest and discretionary capital additions.
'Adjusted gross margin' means Adjusted Gross Profit, divided by revenue.
'Adjusted gross profit' means gross profit adding back site and warehouse
depreciation.
'Airtel' means Airtel Africa.
'ALU' means average lease-up, the number of colocation tenancies added to our
portfolio in a defined period of time divided by the average number of total
sites for the same period of time, excluding colocations acquired as part of
site acquisitions reported as of a certain date.
'amendment colocation tenant' means tenants that add or modify equipment,
taking up additional space, wind load capacity and/or power consumption under
an existing lease agreement. The Group calculates amendment colocations on a
weighted basis as compared to the market average rate for a standard tenancy
in the month the amendment is added.
'amendment revenue' means revenue from amendments to existing site contracts
when tenants add or modify equipment, taking up additional vertical space,
wind load capacity and/or power consumption under an existing site contract.
'anchor tenant' means the primary customer occupying each site.
'Analysys Mason' means Analysys Mason Limited.
'Announced markets/Announced new markets': Announced markets reflects signed
acquisition agreements with Omantel for tower portfolios in Oman, in addition
to a memorandum of understanding arrangement for the potential acquisition of
Airtel Africa's tower portfolio in Gabon. All are subject to completion.
'Annualised Adjusted EBITDA' means Adjusted EBITDA for the last three months
of the respective period, multiplied by four, adjusted to reflect the
annualised contribution from acquisitions that have closed in the last three
months of the respective period.
'Annualised portfolio free cash flow' means portfolio free cash flow for the
respective period, adjusted to annualise for the impact of acquisitions closed
during the period.
'average remaining life' means the average of the periods through the
expiration of the term under certain agreements.
'APMs' Alternative Performance Measures are measures of financial performance,
financial position or cash flows that are not defined or specified under IFRS
but used by the Directors internally to assess the performance of the Group.
'Axian' means Axian Group.
'build-to-suit/BTS' means sites constructed by our Group on order by a MNO.
'CAGR' means compound annual growth rate.
'Carbon Reduction Roadmap' refers to Carbon Reduction Roadmap 2021 presented
by Helios Towers, Plc on 25th November 2021.
'CODM' means Chief Operating Decision Maker.
'colocation' means the sharing of site space by multiple customers or
technologies on the same site, equal to the sum of standard colocation tenants
and amendment colocation tenants.
'colocation tenant' means each additional tenant on a site in addition to the
primary anchor tenant and is classified as either a standard or amendment
colocation tenant.
'committed colocation' means contractual commitments relating to prospective
colocation tenancies with customers.
'Company' means Helios Towers, Ltd prior to 17 October 2019, and Helios Towers
plc on or after 17 October 2019.
'Congo Brazzaville' otherwise also known as the Republic of Congo.
'contracted revenue' means total undiscounted revenue as at that date with
local currency amounts converted at the applicable average rate for US dollars
held constant. Our contracted revenue calculation for each year presented
assumes: (i) no escalation in fee rates, (ii) no increases in sites or
tenancies other than our committed tenancies (which include committed
colocations and/or committed anchor tenancies), (iii) our customers do not
utilise any cancellation allowances set forth in their MLAs (iv) our customers
do not terminate MLAs early for any reason and (v) no automatic renewal.
'corporate capital expenditure' primarily relates to furniture, fixtures and
equipment.
'DRC' means Democratic Republic of Congo.
'edge data centre' means secure temperature-controlled technical facilities
which are smaller than a standard core network data centre and positioned on
the edge of a telecommunications network. They are used by operators to
regenerate fibre signal, deliver cloud computing resources or cache streaming
content for local users.
'Free Cash Flow' means Adjusted free cash flow less net change in working
capital, cash paid for adjusting and EBITDA adjusting items, cash paid in
relation to non-recurring taxes and proceeds on disposal of assets.
'Free Senegal' means Saga Africa Holdings Limited SA (which operates under the
'Free' trademark).
'Free Senegal MTSA' means the MTSA with Free Senegal for the provision of
hosting and energy services on the acquired sites and build-to-suit sites.
'Free Senegal site acquisition' means the acquisition of 1,207 sites in
Senegal from Free Senegal and the entry into the Free Senegal MTSA.
'Gabon' means Gabonese Republic.
'Ghana' means the Republic of Ghana.
'gross debt' means non-current loans and current loans and long-term and
short-term lease liabilities.
'gross leverage' means gross debt divided by annualised Adjusted EBITDA.
'gross margin' means gross profit, adding site and warehouse depreciation,
divided by revenue.
'growth capex' or 'growth capital expenditure' relates to (i) construction of
build-to-suit sites (ii) installation of colocation tenants and (ii) and
investments in power management solutions.
'GSM' means Global System for Mobile Communication, a standard for digital
mobile communications.
'Group' means Helios Towers, Ltd ('HTL') and its subsidiaries prior to 17
October 2019, and Helios Towers plc and its subsidiaries on or after 17
October 2019.
'Helios Towers Congo Brazzaville' or 'HT Congo Brazzaville' means Helios
Towers Congo Brazzaville SASU.
'Helios Towers DRC' or 'HT DRC' means HT DRC Infraco SARL.
'Helios Towers Ghana' or 'HT Ghana' means HTG Managed Services Limited.
'Helios Towers plc' means the ultimate Company of the Group.
'Helios Towers South Africa' or 'HTSA' means Helios Towers South Africa
Holdings (Pty) Ltd and its subsidiaries.
'Helios Towers Tanzania' or 'HT Tanzania' means HTT Infraco Limited.
'HSE' means Health, Safety and Environment.
'IBS' means in-building cellular enhancement.
'ISA' means individual site agreement.
'ISP' means Internet Service Provider.
'IFRS' means International Financial Reporting Standards as adopted by the
European Union.
'independent tower company' means a tower company that is not affiliated with
a telecommunications operator.
'lease-up' means the addition of colocation tenancies to our sites.
'Levered portfolio free cash flow' means portfolio free cash flow less net
payment of interest.
'liquidated damages' means provisions that generally require the Group to make
a payment to the customer, most often by means of set-off against service fees
payable by the customer, if the Group fails to uphold a specified level of
uptime.
'Madagascar' means Republic of Madagascar.
'Malawi' means Republic of Malawi.
'maintenance capital expenditure' means capital expenditures for periodic
refurbishments and replacement of parts and equipment to keep existing sites
in service.
'maintained sites' means sites that are maintained by the Group on behalf of a
telecommunications operator but which are not marketed by the Group to other
telecommunications operators for colocation (and in respect of which the
Company has no right to market).
'managed sites' means sites that the Group currently manages but does not own
due to either: (i) certain conditions for transfer under the relevant
acquisition documentation, ground lease and/or law not yet being satisfied; or
(ii) the site being subject to an agreement with the relevant MNO under which
the MNO retains ownership and outsources management and marketing to the
Company.
'Mauritius' means the Republic of Mauritius.
'Middle East' region includes thirteen countries namely Hashemite Kingdom of
Jordan, Kingdom of Bahrain, Kingdom of Saudi Arabia, Republic of Iraq,
Republic of Lebanon, State of Kuwait, Sultanate of Oman, State of Palestine,
State of Qatar, Syrian Arab Republic, The Republic of Yemen, The Islamic
Republic of Iran and The United Arab Emirates.
'Millicom' means Millicom International Cellular SA.
'MLA' means master lease agreement.
'MNO' means mobile network operator.
'mobile penetration' means the amount of unique mobile phone subscriptions as
a percentage of the total market for active mobile phones.
'MTN' means MTN Group Ltd.
'MTSAs' means master tower services agreements.
'net debt' means gross debt less adjusted cash and cash equivalents.
'net leverage' means net debt divided by last quarter annualised Adjusted
EBITDA.
'net receivables' means total trade receivables (including related parties)
and accrued revenue, less deferred income.
'NOC' means network operating centre.
'Oman' means Sultanate of Oman.
'online site' means a site which is operating and generating revenue.
'Orange' means Orange S.A.
'our established markets' refers to Tanzania, DRC, Congo Brazzaville, Ghana
and South Africa.
'our markets' or 'markets in which we operate' refers to Tanzania, DRC, Congo
Brazzaville, Ghana, South Africa, Senegal, Madagascar and Malawi.
'owned sites' means freehold or leasehold sites where we own the
telecommunications passive infrastructure and any equipment relating to power
provision and security. We are responsible for maintaining and securing the
site as well as obtaining the relevant permits and, if applicable, ground
leases relating to the sites.
'performance against SLA' means with respect to a given customer, the uptime
achieved for a given period divided by the maximum required contractual
downtime in such customer's SLA, as applicable.
'Portfolio free cash flow' defined as Adjusted EBITDA less maintenance and
corporate capital additions, payments of lease liabilities (including interest
and principal repayments of lease liabilities) and tax paid.
'PoS' means points of service, which is an MNO's antennae equipment
configuration located on a site to provide signal coverage to subscribers. At
Helios Towers, a standard PoS is equivalent to one tenant on a tower.
'Principal Shareholders' means Millicom Holding B.V., Quantum Strategic
Partners, Ltd., Lath Holdings Ltd., ACM Africa Holdings, LP, RIT Capital
Partners plc, IFC African, Latin American and Caribbean Fund, LP and
International Finance Corporation.
'Senegal' means the Republic of Senegal.
'Shares' means the shares in the capital of the Company.
'Shareholders Agreement' means the agreement entered into between the
Principal Shareholders and the Company on 15 October 2019, which grants
certain governance rights to the Principal Shareholders and sets out a
mechanism for future sales of shares in the capital of the Company.
'SHEQ' means Safety, Health, Environment and Quality.
'site acquisition' means a combination of MLAs or MTSAs, which provide the
commercial terms governing the provision of site space, and individual ISA,
which act as an appendix to the relevant MLA or MTSA, and include
site-specific terms for each site.
'site agreement' means the MLA and ISA executed by us with our customers,
which act as an appendix to the relevant MLA and includes certain
site-specific information (for example, location and any grandfathered
equipment).
'SLA' means service-level agreement.
'small cells' means low-powered cellular radio access nodes that operate in
licensed and unlicensed spectrum that have a range of ten metres to a few
kilometres.
'South Africa' means the Republic of South Africa.
'standard colocation' means tower space under a standard tenancy site contract
rate and configuration with defined limits in terms of the vertical space
occupied, the wind load and power consumption.
'standard colocation tenant' means a customer occupying tower space under a
standard tenancy lease rate and configuration with defined limits in terms of
the vertical space occupied, the wind load and power consumption.
'strategic suppliers' means suppliers that deliver products or provide us
with services deemed critical to executing our strategy such as site
maintenance and batteries.
'Sub-Saharan Africa' or 'SSA' means African countries that are fully or
partially located south of the Sahara.
'Tanzania' means the United Republic of Tanzania.
'telecommunications operator' means a company licensed by the government to
provide voice and data communications services.
'tenancy' means a space leased for installation of a base transmission site
and associated antennae.
'tenancy ratio' means the total number of tenancies divided by the total
number of our sites as of a given date and represents the average number of
tenants per site within a portfolio.
'tenant' means an MNO that leases vertical space on the tower and portions of
the land underneath on which it installs its equipment.
'Tigo' refers to one or more subsidiaries of Millicom that operate under the
commercial brand 'Tigo'.
'total colocations' means standard colocations plus amendment colocations as
of a given date.
'total online sites' or 'total sites' means total towers, IBS sites, edge data
centres or sites with customer equipment installed on third-party
infrastructure that are owned and/or managed by the Company with each reported
site having at least one active customer tenancy as of a given date.
'total tenancies' means total anchor, standard and amendment colocation
tenants as of a given date.
'tower contract' means the MLA and ISA executed by us with our customers,
which act as a schedule to the relevant MLA and includes certain site-specific
information (for example, location and equipment).
'tower sites' means ground-based towers and rooftop towers and installations
constructed and owned by us on property (including a rooftop) that is
generally owned or leased by us.
'UK Corporate Governance Code' means the UK Corporate Governance Code
published by the Financial Reporting Council and dated July 2018, as amended
from time to time.
'upgrade capex' or 'upgrade capital expenditure' comprises structural,
refurbishment and consolidation activities carried out on selected acquired
sites.
'Viettel' means Viettel Tanzania Limited.
'Vodacom' means Vodacom Group Limited.
'Vodacom Tanzania' means Vodacom Tanzania plc.
'Zantel' means Zantel Telecom plc.
Disclaimer:
This release does not constitute an offering of securities or otherwise an
invitation or inducement to any person to underwrite, subscribe for or
otherwise acquire or dispose of securities in Helios Towers plc (the
'Company') or any other member of the Helios Towers group (the 'Group'), nor
should it be construed as legal, tax, financial, investment or accounting
advice. This release contains forward-looking statements which are subject to
known and unknown risks and uncertainties because they relate to future
events, many of which are beyond the Group's control. These forward-looking
statements include, without limitation, statements in relation to the
Company's financial outlook and future performance. No assurance can be given
that future results will be achieved; actual events or results may differ
materially as a result of risks and uncertainties facing the Group.
You are cautioned not to rely on the forward-looking statements made in this
release, which speak only as of the date of this announcement. The Company
undertakes no obligation to update or revise any forward-looking statement to
reflect any change in its expectations or any change in events, conditions or
circumstances. Nothing in this release is or should be relied upon as a
warranty, promise or representation, express or implied, as to the future
performance of the Company or the Group or their businesses.
This release also contains non-GAAP financial information which the Directors
believe is valuable in understanding the performance of the Group. However,
non-GAAP information is not uniformly defined by all companies and therefore
it may not be comparable with similarly titled measures disclosed by other
companies, including those in the Group's industry. Although these measures
are important in the assessment and management of the Group's business, they
should not be viewed in isolation or as replacements for, but rather as
complementary to, the comparable GAAP measures.
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