TIDMHTWS
RNS Number : 1369I
Helios Towers PLC
03 August 2023
HELIOS TOWERS plc
Unaudited results for the 6 months ended 30 June 2023
Record organic tenancy additions year-to-date
Half-year revenue and Adjusted EBITDA ahead of expectations
2023 guidance tightened upwards
London, 3 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 2023.
H1 2023 H1 2022 Change Q2 2023 Q1 2023 Change
-------------------------------- ------- ------- ------ ------- ------- ------
Sites 13,870 10,694 +30% 13,870 13,684 +1%
Tenancies 25,883 20,549 +26% 25,883 25,120 +3%
Tenancy ratio 1.87x 1.92x -0.05x 1.87x 1.84x +0.03x
Revenue (US$m) 350.2 265.4 +32% 179.4 170.8 +5%
Adjusted EBITDA (US$m) 1 173.8 136.1 +28% 89.1 84.7 +5%
Adjusted EBITDA margin 1 50% 51% -1ppt 50% 50% -
Operating profit (US$m) 69.3 39.8 +74% 36.3 33.0 +10%
Portfolio free cash flow (US$m)
1 124.5 100.4 +24% 66.8 57.7 +16%
Cash generated from operations
(US$m) 147.6 91.0 +62% 111.4 36.2 +208%
Net debt (US$m) 1 1,714.9 1,082.4 +58% 1,714.9 1,734.2 -1%
Net leverage 1 4.8x 3.9x 0.9x 4.8x 5.1x -0.3x
(1) Alternative Performance Measures are described in our defined terms and conventions.
Tom Greenwood, Chief Executive Officer, said:
"I am delighted with the Company's performance in the first half
of the year, which included delivering record organic tenancies and
continuing improvements in customer delivery. The team also
continues to make solid progress on our 2023 goals of acquisition
integration, tenancy ratio expansion, accelerating Adjusted EBITDA
growth and reducing net leverage. Accordingly, we have tightened
our full-year 2023 guidance to the top end of our previously
announced range and we remain committed to delivering sustainable
value for all our stakeholders."
Financial highlights
Structural growth and robust business model driving record
financial performance across a number of key metrics
-- H1 2023 revenue increased by 32% year-on-year to US$350.2m
(H1 2022: US$265.4m) driven by strong organic tenancy growth across
the Group, acquisitions in Malawi and Oman and contractual
escalators.
o Organic revenue increased 18% year-on-year, of which 9% was
due to tenancy growth and 9% due to power and CPI escalators, net
of foreign exchange movements.
o Q2 2023 revenue increased by 5% quarter-on-quarter to US179.4m
(Q1 2023: US$170.8m).
-- H1 2023 Adjusted EBITDA increased by 28% year-on-year to
US$173.8m (H1 2022: US$136.1m), mainly driven by tenancy
growth.
o Excluding acquisitions, Adjusted EBITDA increased by 13%
year-on-year.
o Q2 2023 Adjusted EBITDA increased by 5% quarter-on-quarter to
US$89.1m (Q1 2023: US$84.7m).
-- H1 2023 Adjusted EBITDA margin decreased 1ppt year-on-year to
50% (H1 2022: 51%), reflecting an increase in both power-linked
revenues and power operating expenses, due to higher fuel
prices.
o Excluding the impact of higher fuel prices, Adjusted EBITDA
margin increased 2ppt year-on-year.
-- Operating profit increased 74% year-on-year to a record
US$69.3m (H1 2022: US$39.8m) largely driven by Adjusted EBITDA
growth.
o H1 2023 finance costs increased by 5% year-on-year to
US$110.3m, driven by an increase in interest costs that largely
reflects debt drawn in Oman and at Group level in December 2022,
partially offset by non-cash foreign exchange movements.
o Loss before tax decreased to US$39.4m (H1 2022 US$122.2m),
driven by an increase in operating profit and a decrease in other
gains and losses and foreign exchange losses.
-- Portfolio free cash flow increased by 24% year-on-year to a
record US$124.5m (H1 2022: US$100.4m), driven by Adjusted EBITDA
growth partially offset by timing of non-discretionary capital
expenditure.
-- Cash generated from operations increased by 62% to a record
US$147.6m (H1 2022: US$91.0m), driven by higher Adjusted EBITDA and
movements in working capital.
-- Net leverage decreased by 0.3x quarter-on-quarter to 4.8x (Q1
2023: 5.1x), primarily driven by growth in Adjusted EBITDA.
o The Group continues to target being in or around the high-end
of its 3.5-4.5x target range by Q4 2023.
-- Business underpinned by long-term contracted revenues of
US$4.9bn (H1 2022: US$4.2bn), of which 99% is from large
multinational MNOs, with an average remaining life of 7.1 years (H1
2022: 7.2 years).
Operational highlights
Consistent and strong tenancy growth reflecting leadership
positions in structurally high-growth markets
-- Sites increased by 3,176 year-on-year to 13,870 (H1 2022:
10,694), reflecting organic site growth of 657 sites and the
acquisition of 2,519 sites in Oman.
o Sites increased organically by 186 quarter-on-quarter.
o Sites increased organically by 317 year-to-date.
-- Tenancies increased by 5,334 year-on-year to 25,883 (H1 2022:
20,549), reflecting a record addition of 2,317 organic tenancies
and 3,017 acquired tenancies in Oman.
o Tenancies increased organically by 763 quarter-on-quarter.
o Tenancies increased organically by 1,391 year-to-date.
-- Quarter-on-quarter tenancy ratio increased to 1.87x (Q1 2023:
1.84x), reflecting solid progress across several markets: DRC,
Ghana, Oman and Malawi.
Environmental, Social and Governance (ESG)
Increased rating from Sustainalytics and highest possible ESG
score from MSCI reaffirmed; solid progress against KPIs
-- Continued progress against the Group's 2026 Sustainable
Business Strategy targets in H1 2023:
o 143m population coverage footprint (FY 22: 141m)
o 99.98% power uptime (FY 22: 99.97%)
o 29% female staff (FY 22: 28%)
o 48% staff trained in Lean Six Sigma (FY 22: 42%)
o 96% local staff in our operating companies (FY 22: 96%)
-- Helios Towers' ESG score of 'AAA' from MSCI, the highest
score from the investment research firm, was reaffirmed in July
2023.
-- In July 2023, Sustainalytics improved Helios Towers' ESG risk
rating from Medium risk (22.6) to Low risk (16.8).
-- The Group is currently updating its carbon emissions
reduction target to reflect its expansion into four high-growth
markets across 2021 and 2022, and expects to publish this updated
target by Q1 2024.
2023 Outlook and guidance
-- The Group has tightened upwards its guidance on all metrics,
reflecting strong performance in H1 2023 and robust commercial
pipeline:
o Tenancy additions of 1,900 - 2,100 (prior: 1,600 - 2,100), of
which 40% are anticipated to be new sites.
o Adjusted EBITDA of US$355m - US$365m (prior: US$350m -
US$365m).
o Portfolio free cash flow of US$235m - US$245m (prior: US$230m
- US$245m).
o Capital expenditure of US$180m - US$210m (prior: US$170m -
US$210m).
-- Of which, US$40m is anticipated to be non-discretionary
capital expenditure.
For further information go to:
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, 3
August 2023. 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 2023 Results Conference
Call
Event Name: H12023
Password: HELIOS
If you are unable to use the webcast for the event, or if you
intend to participate in Q&A during the call, please dial in
using the details below:
Europe & International +44 204 587 0498
South Africa (local) 087 550 8441
USA (local) + 1 646 664 1960
Passcode: 059607
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 over 13,800 telecommunication
tower sites in nine countries across Africa and the Middle
East.
-- 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 2022, published on the
Group's website. Reconciliations of APMs to the equivalent
statutory measure are also included in this half-year financial
report.
Upcoming Conferences and Events
Helios Towers management is expected to participate in the
upcoming conferences outlined below:
-- JP Morgan Telecoms Towers Call Series Fireside Chat (virtual) - 3 August 2023
-- BofA European Telecoms Field Trip Fireside Chat (virtual) - 19 September 2023
-- JP Morgan Emerging Markets Credit Conference (London) - 21 September 2023
-- RBC Capital Markets Global Communications Infrastructure
Conference (Chicago) - 27 to 28 September 2023
Financial and Operating Review
Condensed consolidated statement of profit or loss
For the six months ended 30 June
6 months ended
30 June
----------------
2023 2022
US$m US$m
---------------------------------------------------- ------- -------
Revenue 350.2 265.4
Cost of sales (218.5) (173.6)
----------------------------------------------------- ------- -------
Gross profit 131.7 91.8
----------------------------------------------------- ------- -------
Administrative expenses (62.9) (52.6)
Profit on disposal of property, plant and equipment 0.5 0.6
----------------------------------------------------- ------- -------
Operating profit 69.3 39.8
----------------------------------------------------- ------- -------
Interest receivable 0.7 0.4
Other gains and (losses) 0.9 (57.7)
Finance costs (110.3) (104.7)
----------------------------------------------------- ------- -------
Loss before tax (39.4) (122.2)
----------------------------------------------------- ------- -------
Tax expense (5.0) (2.9)
----------------------------------------------------- ------- -------
Loss for the period (44.4) (125.1)
----------------------------------------------------- ------- -------
Other comprehensive income/(expense):
Items that may be reclassified subsequently to
profit and loss:
Exchange differences on translation of foreign
operations 5.2 (1.0)
----------------------------------------------------- ------- -------
(39.2) (126.1)
---------------------------------------------------- ------- -------
Loss attributable to:
Owners of the Company (41.0) (124.2)
Non-controlling interests (3.4) (0.9)
----------------------------------------------------- ------- -------
Loss for the period (44.4) (125.1)
----------------------------------------------------- ------- -------
Total comprehensive loss attributable to:
Owners of the Company (36.4) (125.2)
Non-controlling interests (2.8) (0.9)
----------------------------------------------------- ------- -------
Total comprehensive loss for the period (39.2) (126.1)
----------------------------------------------------- ------- -------
Financial and operating metrics
Key metrics
For the six months ended 30 June
Middle East East & West Central &
Group & North Africa(3) Africa(4) Southern Africa(5)
-------------- -------------------- -------------- ---------------------
2023 2022 2023 2022 2023 2022 2023 2022
US$m US$m US$m US$m US$m US$m US$m US$m
------------------------ ------ ------ --------- --------- ------ ------ ---------- ---------
Sites at period end 13,870 10,694 2,519 - 6,349 6,134 5,002 4,560
Tenancies at period end 25,883 20,549 3,192 - 12,334 11,704 10,357 8,845
Tenancy ratio at period
end 1.87x 1.92x 1.27x - 1.94x 1.91x 2.07x 1.94x
-
Revenue for the period $350.2 $265.4 $27.0 - $156.1 $121.3 $167.1 $144.1
Adjusted gross margin
(1) 62% 64% 77% - 67% 68% 55% 62%
Adjusted EBITDA for the
period (2) $173.8 $136.1 $18.0 - $95.7 $76.4 $77.2 $75.8
Adjusted EBITDA Margin
for the period 50% 51% 67% - 61% 63% 46% 53%
------------------------ ------ ------ --------- --------- ------ ------ ---------- ---------
(1) Adjusted gross margin means gross profit, adding back site depreciation, divided by revenue.
(2) Group Adjusted EBITDA for the period includes corporate
costs of US17.1 million (2022: US$16.1m).
(3) Middle East & North Africa segment reflects the
Company's operations in Oman (for further information on segmental
split refer to note 3).
(4) East & West Africa segment reflects the Company's
operations in Tanzania, Senegal and Malawi.
(5) Central & Southern Africa segment reflects the Company's
operations in DRC, Congo Brazzaville, South Africa, Ghana and
Madagascar.
Total tenancies as at 30 June
Middle East East & West Central &
Group & North Africa(3) Africa(4) Southern Africa(5)
-------------- -------------------- -------------- ---------------------
2023 2022 2023 2022 2023 2022 2023 2022
US$m US$m US$m US$m US$m US$m US$m US$m
----------------------------- ------ ------ --------- --------- ------ ------ ----------- --------
Standard colocation tenants 10,401 8,743 623 - 5,182 4,945 4,596 3,798
Amendment colocation tenants 1,612 1,112 50 - 803 625 759 487
----------------------------- ------ ------ --------- --------- ------ ------ ----------- --------
Total colocation tenants 12,013 9,855 673 - 5,985 5,570 5,355 4,285
Total sites 13,870 10,694 2,519 - 6,349 6,134 5,002 4,560
----------------------------- ------ ------ --------- --------- ------ ------ ----------- --------
Total tenancies 25,883 20,549 3,192 - 12,334 11,704 10,357 8,845
Tenancy ratio 1.87x 1.92x 1.27x - 1.94x 1.91x 2.07x 1.94x
----------------------------- ------ ------ --------- --------- ------ ------ ----------- --------
Revenue
Revenue increased by 32% to US$350.2m in the period ended 30
June 2023 (H1 2022: US$265.4m). The increase was largely driven by
the growth in total tenancies from 20,549 as of 30 June 2022 to
25,883 as of 30 June 2023, including the addition of 3,017
tenancies relating to the acquisition in Oman, which closed in
December 2022. The acquisition in Oman, alongside an acquisition in
Malawi which closed in March 2022, contributed a US$38.7m
year-on-year increase in revenues alongside US$46.1m from organic
growth across other markets.
For the period ended 30 June 2023, 98% of revenues were from
multinational MNOs and 63% were denominated in hard currency, being
either USD, XAF/XOF (both of which are pegged to the Euro) or OMR
(which is pegged to the US Dollar).
Contracted revenue
The following table provides our total undiscounted contracted
revenue by country as of 30 June 2023 for each of the periods from
2023 to 2027, with local currency amounts converted at the
applicable average rate for US Dollars for the period ended 30 June
2023 held constant. Our contracted revenue calculation for each
year presented assumes: (i) no escalation in fee rates, (ii) no
increases in sites or tenancies other than our committed tenancies,
(iii) our customers do not utilise any cancellation allowances set
forth in their MSAs, (iv) our customers do not terminate MSAs early
for any reason and (v) no automatic renewal.
Year ended 31 December
----------------------------
6 months
to
31 December
2023 2024 2025 2026 2027
US$m US$m US$m US$m US$m
--------------------------- ------------ ------ ------ ----- -----
Middle East & North Africa 26.3 47.4 48.4 49.4 50.4
East & West Africa 145.2 262.2 249.0 198.2 183.3
Central & Southern Africa 167.7 341.1 306.4 275.2 242.5
339.2 650.7 603.8 522.8 476.2
--------------------------- ------------ ------ ------ ----- -----
The following table provides our total undiscounted contracted
revenue as of 30 June 2023 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 2023 held constant. Our
calculation uses the same assumptions as above. The average
remaining life of customer contracts is 7.1 years (H1 2022: 7.2
years).
Percentage
Total of Total
Committed Committed
(US$m) Revenues Revenues
------------------------- ---------- ----------
Large multinational MNOs 4,830.6 98.6%
Other 71.0 1.4%
------------------------- ---------- ----------
4,901.6 100.0%
------------------------- ---------- ----------
Cost of sales and adjusted gross profit
6 months ended 30 June
--------------------------------
% of % of
Revenue Revenue
-------- --------
(US$m) 2023 2023 2022 2022
------------------------------------------ ----- -------- ----- --------
Power 89.2 25.5% 56.1 21.1%
Non-power 43.9 12.5% 38.2 14.4%
------------------------------------------ ----- -------- ----- --------
Cost of sales excluding site depreciation 133.1 38.0% 94.3 35.5%
------------------------------------------ ----- -------- ----- --------
Site depreciation 85.4 24.4% 79.3 29.9%
------------------------------------------ ----- -------- ----- --------
Total cost of sales 218.5 62.4% 173.6 65.4%
------------------------------------------ ----- -------- ----- --------
Year-on-year cost of sales increased by US$44.9m from US$173.6m
in the period ended 30 June 2022 to US$218.5m in the period ended
30 June 2023. This increase is due to the impact of acquisitions in
Malawi and Oman (US$23.9m), increases in tenancies and inflationary
power price increases primarily in DRC. The Group has both annual
CPI and quarterly or annual power price escalators embedded into
its customers' contracts, which provides effective protection from
inflation and power price movements on the Group's cost of
sales.
The table below shows an analysis of the cost of sales on a
region-by-region basis for the six month period ended 30 June 2023
and 2022.
Southern
Middle East East & West & Central
Group & North Africa Africa Africa
------------ ----------------- ------------- ------------
(US$m) 2023 2022 2023 2022 2023 2022 2023 2022
-------------------- ----- ----- -------- ------- ------ ----- ------ ----
Power 89.2 56.1 3.3 - 32.2 21.3 53.7 34.8
Non-power 43.9 38.2 2.9 - 19.2 18 21.8 20.2
Site depreciation 85.4 79.3 7.7 - 39.0 39.6 38.7 39.7
-------------------- ----- ----- -------- ------- ------ ----- ------ ----
Total cost of sales 218.5 173.6 13.9 - 90.4 78.9 114.2 94.7
-------------------- ----- ----- -------- ------- ------ ----- ------ ----
Adjusted gross profit for the period increased by 27% due to
organic tenancy growth and the acquisition of Oman, partially
offset by an increase in power costs.
6 months ended 30 June
-----------------------------------
% of % of
Revenue Revenue
-------- --------
(US$m) 2023 2023 2022 2022
------------------------------------------ ------- -------- ------ --------
Revenue 350.2 100.0% 265.4 100.0%
Cost of sales excluding site depreciation (133.1) 38.0% (94.3) 35.5%
------------------------------------------ ------- -------- ------ --------
Adjusted gross profit 217.1 62.0% 171.1 64.5%
------------------------------------------ ------- -------- ------ --------
Site depreciation (85.4) 24.4% (79.3) 29.9%
------------------------------------------ ------- -------- ------ --------
Gross profit 131.7 37.6% 91.8 34.6%
------------------------------------------ ------- -------- ------ --------
Administrative expenses
Administrative expenses increased by US$10.3m year-on-year, to
US$62.9m from US$52.6m in the prior year. The increase in cost base
largely reflects the impact of new acquisitions and inflationary
increases. Year-on-year the administrative cost level as a
percentage of revenue has decreased to 18.0% (H1 2022: 19.8%).
6 months ended 30 June
------------------------------
% of % of
Revenue Revenue
-------- --------
(US$m) 2023 2023 2022 2022
----------------------------------------------- ---- -------- ---- --------
Sales, general and administrative costs (SG&A) 43.3 12.4% 35.0 13.2%
Depreciation and amortisation 15.7 4.5% 9.5 3.6%
Adjusting items 3.9 1.1% 8.1 3.0%
----------------------------------------------- ---- -------- ---- --------
62.9 18.0% 52.6 19.8%
----------------------------------------------- ---- -------- ---- --------
Operating profit
Operating profit increased 74% year-on-year to US$69.3m (H1
2022: US$39.8m) driven by strong organic revenue growth across the
Group, as well as the acquisitions of tower portfolios in Malawi
and Oman in 2022, partially offset by an increase in cost of sales
and administrative expenditure.
Other gains and losses
The fair value gain of US$0.9m in H1 2023 (H1 2022: loss of
US$57.7m) was driven by a fair value movement in the derivative
instruments. Further details are explained in note 6 to the
condensed consolidated financial statements.
6 months ended
30 June
----------------
2023 2022
US$m US$m
----------------------------------------------------------- ------- -------
Fair value gain/(loss) on derivative financial instruments 0.9 (57.7)
0.9 (57.7)
----------------------------------------------------------- ------- -------
Finance costs
Finance costs have increased 5% year-on-year to US$110.3m for
the period ended 30 June 2023 (30 June 2022: US$104.7m). The
increase is primarily an increase in interest costs due to debt
drawn down in Oman and at Group level in December 2022, partially
offset by non-cash foreign exchange movements.
Tax expense
Tax expense was US$5.0m in the period ended 30 June 2023 (30
June 2022: US$2.9m). Though entities in Congo Brazzaville and
Senegal continue to be loss-making for tax purposes, minimum income
taxes and/or asset based taxes were levied, as stipulated by law in
these jurisdictions. Malawi, Oman and South Africa are loss making
for tax purposes and no minimum income tax applies. DRC, Ghana,
Madagascar, Tanzania and two entities in South Africa are
profitable for tax purposes and subject to income tax on taxable
profits thereon.
Loss after tax
The loss after tax for the half year was US$44.4m compared to
US$125.1m in the comparative half year. The decrease in loss before
tax is due to an increase in operating profit and a gain on the
fair value of derivative instruments (as opposed to a loss in prior
year), partially offset by an increase in cost of sales,
administrative expenditure and finance costs.
Management cash flow
6 months ended
30 June
---------------------------------------------------- ----------------
(US$m) 2023 2022
---------------------------------------------------- ------- -------
Adjusted EBITDA 173.8 136.1
Less:
Maintenance and corporate capital additions (18.4) (9.3)
Payments of lease liabilities1 (24.7) (20.0)
Tax paid (6.2) (6.4)
---------------------------------------------------- ------- -------
Portfolio free cash flow 124.5 100.4
Cash conversion %2 72% 74%
Net payment of interest3 (60.3) (45.7)
---------------------------------------------------- ------- -------
Levered portfolio free cash flow 64.2 54.7
Discretionary capital additions4 (74.5) (122.4)
---------------------------------------------------- ------- -------
Adjusted free cash flow (10.3) (67.7)
Net change in working capital5 (21.4) (52.8)
Cash paid for adjusting and EBITDA adjusting items6 (5.5) (5.5)
Proceeds on disposal of assets - 0.2
Free cash flow (37.2) (125.8)
Net cash flow from financing activities7 45.7 (11.3)
---------------------------------------------------- ------- -------
Net cash (outflow)/ inflow 8.5 (137.1)
---------------------------------------------------- ------- -------
Opening cash balance 119.6 528.9
Foreign exchange movement (0.4) (3.1)
---------------------------------------------------- ------- -------
Closing cash balance 127.7 388.7
---------------------------------------------------- ------- -------
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 and deal costs.
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 increased by US$56.6m to
US$147.6m (H1 2022: US$91.0m), driven by higher Adjusted EBITDA and
movements in working capital. The Group has presented a Condensed
consolidated statement of cash flows for the six months ended 30
June 2023 later in the release.
Capital expenditure
The following table shows capital expenditure additions by
category during the 6 months ended 30 June:
2023 2022
------------ -------------
% of % of
Total Total
US$m Capex US$m Capex
------------ ---- ------ ----- ------
Acquisition 8.8 9.5% 42.7 32.4%
Growth 51.6 55.6% 68.1 51.8%
Upgrade 14.1 15.2% 11.6 8.8%
Maintenance 17.5 18.9% 8.6 6.5%
Corporate 0.9 0.8% 0.7 0.5%
------------ ---- ------ ----- ------
92.9 100.0% 131.7 100.0%
------------ ---- ------ ----- ------
Acquisition capex has declined significantly year on year,
reflecting the acquisition of Airtel Africa's passive
infrastructure company in Malawi which closed in H1 2022.
Trade and other receivables
Trade and other receivables increased by US$83.0m from US$246.8m
as at 31 December 2022 to US$329.8m as at 30 June 2023. This
increase was predominately driven by an increase in trade
receivables of US$92.7m, due to timing of invoices being issued to
customers.
Trade and other payables
Trade and other payables have increased by US$69.6m from
US$244.7m as at 31 December 2022 to US$314.3m as at June 2023. This
was primarily driven by an increase in deferred income of US$71.8m
due to timing of invoices being issued to customers.
Loans and borrowings
As of 30 June 2023 and 31 December 2022 the Group's outstanding
loans net of issue costs and excluding lease liabilities, were
US$1,619.1 and US$1,571.6m respectively with net leverage
decreasing to 4.8x in June 2023 from 5.1x in December 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
----------------
2023 2022
US$m US$m
------------------------------------------------------------- ------- -------
Adjusted EBITDA 173.8 136.1
Adjustments applied in arriving at Adjusted EBITDA:
Adjusting items:
Deal costs1 (2.2) (6.9)
Share-based payments and long-term incentive plans2 (1.0) (1.2)
Other/Restructuring (0.8) -
Gain/(loss) on disposals of assets 0.5 0.6
Other gains and (losses) 0.9 (57.7)
Depreciation of property, plant and equipment (76.1) (75.8)
Depreciation of right-of-use assets (12.7) (9.3)
Amortisation of intangibles (12.2) (3.7)
Interest receivable 0.7 0.4
Finance costs (110.3) (104.7)
Loss before tax (39.4) (122.2)
------------------------------------------------------------- ------- -------
1 Deal costs comprise costs related to potential acquisitions and the exploration of investment opportunities, which cannot be capitalised. These comprise employee costs, professional fees, travel costs and set up costs incurred prior to operating activities commencing.
2 Share-based payments and long-term incentive plan charges and associated costs.
6 months ended
30 June
----------------
2023 2022
US$m US$m
----------------------- ------- -------
Adjusted EBITDA 173.8 136.1
----------------------- ------- -------
Revenue 350.2 265.4
Adjusted EBITDA margin 50% 51%
----------------------- ------- -------
Adjusted gross profit and adjusted gross margin
Definition - Adjusted gross profit is defined as gross profit,
adding back site depreciation. Adjusted gross margin is defined as
adjusted gross profit divided by revenue.
Purpose - These measures are used to evaluate the underlying
level of gross profitability of the operations of the business,
excluding depreciation, which is the major non-cash measure
reflected in cost of sales. The Group believes that Adjusted gross
profit facilitates comparisons of operating performance from period
to period and company to company by eliminating potential
differences caused by the age and booked depreciation on assets. It
is also a proxy for the gross cash generation of its
operations.
6 months ended
30 June
----------------
2023 2022
US$m US$m
---------------------------- ------- -------
Gross profit 131.7 91.8
Add back: site depreciation 85.4 79.3
---------------------------- ------- -------
Adjusted gross profit 217.1 171.1
---------------------------- ------- -------
Revenue 350.2 265.4
Adjusted gross margin 62% 64%
---------------------------- ------- -------
Portfolio free cash flow
Definition - Portfolio free cash flow is defined as Adjusted
EBITDA less maintenance and corporate capital expenditure, payments
of lease liabilities (including interest and principal repayments
of lease liabilities) and tax paid.
Purpose - This measure is used to evaluate the cash flow
generated by the business operations after expenditure incurred on
maintaining capital assets, including lease liabilities, and taxes.
It is a measure of the cash generation of the tower estate.
6 months ended
30 June
----------------
2023 2022
US$m US$m
-------------------------------------------------- ------- -------
Adjusted EBITDA 173.8 136.1
-------------------------------------------------- ------- -------
Less: Maintenance and corporate capital additions (18.4) (9.3)
Less: Payments of lease liabilities1 (24.7) (20.0)
Less: Tax paid (6.2) (6.4)
-------------------------------------------------- ------- -------
Portfolio free cash flow 124.5 100.4
-------------------------------------------------- ------- -------
Cash conversion % (2) 72% 74%
-------------------------------------------------- ------- -------
1 Payment of lease liabilities includes interest and principal
repayments of lease liabilities.
2 Cash conversion % is calculated as portfolio free cash flow divided by Adjusted EBITDA.
Gross debt, net debt, net leverage and cash & cash
equivalents
Definition - Gross debt is calculated as non-current loans,
current loans, and long-term and short-term lease liabilities. Net
debt is calculated as gross debt less cash and cash equivalents.
Net leverage is calculated as net debt divided by annualised
Adjusted EBITDA.
Purpose - Net debt is a measure of the Group's net indebtedness
that provides an indicator of overall balance sheet strength. It is
also a single measure that can be used to assess both the Group's
cash position and its indebtedness. The use of the term 'net debt'
does not necessarily mean that the cash included in the net debt
calculation is available to settle the liabilities included in this
measure. Net leverage is used to show how many years it would take
for a company to pay back its debt if net debt and Adjusted EBITDA
are held constant. The Group aims to maintain net leverage broadly
in the range of 3.5x-4.5x.
30 June 31 December
2023 2022
US$m US$m
----------------------------- ------- -----------
External debt (1) 1,619.1 1,571.6
Lease liabilities 223.5 226.0
----------------------------- ------- -----------
Gross debt 1,842.6 1,797.6
Cash and cash equivalents 127.7 119.6
Net debt 1,714.9 1,678.0
----------------------------- ------- -----------
Annualised Adjusted EBITDA 2 356.3 328.8
----------------------------- ------- -----------
Net leverage (3) 4.8x 5.1x
----------------------------- ------- -----------
(1) External debt is presented in line with the balance sheet at
amortised cost. External debt is the total loans owed to commercial
banks and institutional investors.
(2) Annualised Adjusted EBITDA calculated as per the Senior
Notes definition as the most recent fiscal quarter multiplied by 4,
adjusted to reflect the annualised contribution from acquisitions
that have closed in the most recent fiscal quarter. This is not a
forecast of future results.
(3) Net leverage is calculated as net debt divided by annualised
Adjusted EBITDA.
Return on invested capital
Definition - Return on invested capital ('ROIC') is defined as
defined as annualised portfolio free cash flow divided by invested
capital. Invested capital is defined as gross property, plant and
equipment and gross intangible assets, less accumulated maintenance
and corporate capital expenditure, adjusted for IFRS 3 accounting
adjustments and deferred consideration for future sites.
Purpose - This measure is used to evaluate asset efficiency and
the effectiveness of the Group's capital allocation.
30 June 31 December
2023 2022
US$m US$m
---------------------------------------------------------- ------- -----------
Property, plant and equipment 931.4 931.4
Accumulated depreciation 997.9 934.0
Accumulated maintenance and corporate capital expenditure (243.2) (224.8)
Intangible assets 573.5 583.5
Accumulated amortisation 62.7 50.4
Accounting adjustments and deferred consideration for
future sites (97.6) (102.5)
---------------------------------------------------------- ------- -----------
Total invested capital 2,224.7 2,172.0
---------------------------------------------------------- ------- -----------
Annualised portfolio free cash flow (1) 234.3 223.8
---------------------------------------------------------- ------- -----------
Return on invested capital 10.5% 10.3%
---------------------------------------------------------- ------- -----------
1 Annualised portfolio free cash flow is calculated as portfolio
free cash flow for the last twelve months, adjusted to annualise
the impact of acquisitions closed during the respective period.
Risk management
The risk management and governance process has not changed since
the 2022 Annual report was published and is set out on pages 58 to
63 of the 2022 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 59 to 63
of the 2022 Annual report (available on the Group's website at
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
- Pandemic risk
- Cyber security 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.
INDEPENT 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 2023 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 17.
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 2023
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 (ISRE (UK) 2410). 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 are 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 ISRE (UK) 2410; 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 company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion 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
ISRE (UK) 2410. 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
2 August 2023
Condensed consolidated statement of profit or loss and other
comprehensive income (unaudited)
For the 6 months ended 30 June 2023
6 months ended
30 June
----------------
2023 2022
Note US$m US$m
----------------------------------------------------------- ---- ------- -------
Revenue 350.2 265.4
Cost of sales (218.5) (173.6)
----------------------------------------------------------- ---- ------- -------
Gross profit 131.7 91.8
----------------------------------------------------------- ---- ------- -------
Administrative expenses (62.9) (52.6)
Profit on disposal of property, plant and equipment 0.5 0.6
----------------------------------------------------------- ---- ------- -------
Operating profit 69.3 39.8
----------------------------------------------------------- ---- ------- -------
Interest receivable 0.7 0.4
Other gains and (losses) 11 0.9 (57.7)
Finance costs (110.3) (104.7)
----------------------------------------------------------- ---- ------- -------
Loss before tax 4 (39.4) (122.2)
----------------------------------------------------------- ---- ------- -------
Tax expense 5 (5.0) (2.9)
----------------------------------------------------------- ---- ------- -------
Loss for the period (44.4) (125.1)
----------------------------------------------------------- ---- ------- -------
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation of foreign operations 5.2 (1.0)
----------------------------------------------------------- ---- ------- -------
(39.2) (126.1)
----------------------------------------------------------- ---- ------- -------
Loss attributable to:
Owners of the Company (41.0) (124.2)
Non-controlling interests (3.4) (0.9)
----------------------------------------------------------- ---- ------- -------
Loss for the period (44.4) (125.1)
----------------------------------------------------------- ---- ------- -------
Total comprehensive loss attributable to:
Owners of the Company (36.4) (125.2)
Non-controlling interests (2.8) (0.9)
----------------------------------------------------------- ---- ------- -------
Total comprehensive loss for the period (39.2) (126.1)
----------------------------------------------------------- ---- ------- -------
Earnings per share
Basic and diluted loss per share (cents) 15 (3.9) (11.9)
----------------------------------------- ----- ------
Condensed consolidated statement of financial position
(unaudited)
As at 30 June 2023
30 June 31 December
2023 2022
Notes US$m US$m
----------------------------------- ----- ------- -----------
Non-current assets
Intangible assets 573.5 583.5
Property, plant and equipment 931.4 931.4
Right-of-use assets 201.5 200.0
Derivative financial assets 3.7 2.8
----------------------------------- ----- ------- -----------
1,710.1 1,717.7
----------------------------------- ----- ------- -----------
Current assets
Inventories 10.6 14.6
Trade and other receivables 7 329.8 246.8
Prepayments 42.0 45.7
Cash and cash equivalents 127.7 119.6
----------------------------------- ----- ------- -----------
510.1 426.7
----------------------------------- ----- ------- -----------
Total assets 2,220.2 2,144.4
----------------------------------- ----- ------- -----------
Equity
Share capital 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 23.5 23.2
Treasury shares (1.2) (1.1)
Translation reserve (88.9) (93.5)
Retained earnings (46.1) (5.1)
----------------------------------- ----- ------- -----------
Equity attributable to owners (27.9) 8.3
----------------------------------- ----- ------- -----------
Non-controlling interest 38.2 41.0
----------------------------------- ----- ------- -----------
Total equity 10.3 49.3
Current liabilities
Trade and other payables 9 314.3 244.7
Short-term lease liabilities 10 32.8 34.1
Loans 8 20.0 19.9
------- -----------
367.1 298.7
----------------------------------- ----- ------- -----------
Non-current liabilities
Loans 8 1,599.1 1,551.7
Long-term lease liabilities 10 190.7 191.9
Deferred tax liabilities 50.5 50.1
Minority interest buyout liability 2.5 2.7
----------------------------------- ----- ------- -----------
1,842.8 1,796.4
----------------------------------- ----- ------- -----------
Total liabilities 2,209.9 2,095.1
----------------------------------- ----- ------- -----------
Total equity and liabilities 2,220.2 2,144.4
----------------------------------- ----- ------- -----------
Condensed consolidated statement of changes in equity
(unaudited)
For the 6 months ended 30 June 2023
Available
Share to the
based Convertible owners
Share Share Other Treasury payments bond Translation Accumulated of the Non-controlling Total
capital premium reserves shares reserve reserves reserves (losses)/profits Company interest equity
US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
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;
Share based
payments - - - 0.1 0.8 - - - 0.9 - 0.9
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
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
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 - - - - - - - (171.5) (171.5) 0.1 (171.4)
Other
comprehensive
expense - - - - - - (4.9) - (4.9) (0.6) (5.5)
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Total
comprehensive
(loss)/income
for the period - - - - - - (4.9) (171.5) (176.4) (0.5) (176.9)
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Transactions
with owners;
Issue of share
capital - - - - - - - 13.1 13.1 - 13.1
Non-controlling
interests - - - - - - - - - 48.1 48.1
Share based
payments - - - - 3.6 - - - 3.6 - 3.6
Buyout
Obligation
Liability - - - - - - - - (6.6) (6.6)
Balance at
31 December
2022 13.5 105.6 (87.0) (1.1) 23.2 52.7 (93.5) (5.1) 8.3 41.0 49.3
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Balance at
1 January 2023 13.5 105.6 (87.0) (1.1) 23.2 52.7 (93.5) (5.1) 8.3 41.0 49.3
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Loss for the
period - - - - - - - (41.0) (41.0) (3.4) (44.4)
Other
comprehensive
expense - - - - - - 4.6 - 4.6 0.6 5.2
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Total
comprehensive
(loss)/income
for the period - - - - - - 4.6 (41.0) (36.4) (2.8) (39.2)
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Transactions
with owners;
Share based
payments - - - (0.1) 0.3 - - - 0.2 - 0.2
Balance at
30 June 2023 13.5 105.6 (87.0) (1.2) 23.5 52.7 (88.9) (46.1) (27.9) 38.2 10.3
---------------- ------- ------- -------- -------- -------- ----------- ----------- ---------------- --------- --------------- -------
Condensed consolidated statement of cash flows (unaudited)
For the 6 months ended 30 June 2023
6 months ended
30 June
----------------
2023 2022
Note US$m US$m
------------------------------------------------------ ---- ------- -------
Cash flows generated from operating activities
Loss for the period before taxation 4 (39.4) (122.2)
Adjustments for:
Other (gains) and losses 6 (0.9) 57.7
Finance costs 110.3 104.7
Interest receivable (0.7) (0.4)
Share-based payments and long-term incentive plans 1.0 1.2
Depreciation and amortisation 101.0 88.8
Gain on disposal of property, plant and equipment (0.5) (0.6)
Operating cash flows before movement in working
capital 170.8 129.2
Movement in working capital:
(Increase) in inventories (0.2) (3.0)
(Increase) in trade and other receivables (82.4) (76.4)
(Increase) in prepayments (4.3) (4.4)
Increase in trade and other payables 63.7 45.6
------------------------------------------------------ ---- ------- -------
Cash generated from operations 147.6 91.0
Interest paid (72.3) (55.8)
Tax paid 5 (6.2) (6.4)
------------------------------------------------------ ---- ------- -------
Net cash generated / (used) in operating activities 69.1 28.8
------------------------------------------------------ ---- ------- -------
Cash flows from investing activities
Payments to acquire property, plant and equipment (88.6) (108.2)
Payments to acquire intangible assets (2.1) -
Acquisition of subsidiaries (net of cash acquired) - (44.2)
Proceeds on disposal of property, plant and equipment - 0.2
Interest received 0.7 0.4
------------------------------------------------------ ---- ------- -------
Net cash used in investing activities (90.0) (151.8)
------------------------------------------------------ ---- ------- -------
Cash flows from financing activities
Transactions with Non-Controlling interests - 11.8
Loan drawdowns 76.2 3.6
Loan issue costs (0.5) (2.7)
Repayment of loan (30.0) (12.2)
Repayment of lease liabilities (17.3) (14.7)
Net cash used in financing activities (28.4) (14.2)
------------------------------------------------------ ---- ------- -------
Net increase/(decrease) in cash and cash equivalents 7.5 (137.2)
Foreign exchange on translation movement 0.6 (3.0)
Cash and cash equivalents at the beginning of
period 119.6 528.9
------------------------------------------------------ ---- ------- -------
Cash and cash equivalents at end of period 127.7 388.7
------------------------------------------------------ ---- ------- -------
Notes to the condensed consolidated financial statements
(unaudited)
For the 6 months ended 30 June 2023
1. General Information
Helios Towers plc is an independent tower company, with
operations across nine 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.
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 Consolidated
Financial Statements, together with sensitivities and a 'reasonable
worst case' stress scenario. In assessing the forecasts, the
Directors have considered:
-- trading and operating risks presented by the conditions in the operating markets;
-- the impact of macroeconomic factors, particularly inflation,
interest rates and foreign exchange rates;
-- climate change risks and initiatives, including the Group's Project 100 initiative;
-- the availability of the Group's funding arrangements,
including loan covenants and nonreliance on facilities with
covenant restrictions in more extreme downside scenarios;
-- the status of the Group's financial arrangements;
-- progress made in developing and implementing cost reduction
programmes, climate change considerations and initiatives and
operational improvements; and - mitigating actions available should
business activities fall behind current expectations, including the
deferral of discretionary overheads and other expenditures.
In particular for the current period, the Directors have
considered the impact of rising energy prices and the broader
inflationary environment on the Group's operations. Based on the
foregoing considerations, the Directors continue to consider it
appropriate to adopt the going concern basis of accounting in
preparing the Consolidated Financial Statements.
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
2022 has been extracted from the audited financial statements of
Helios Towers plc for the year ended 31 December 2022. 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 2023 has
been reviewed by the auditor, but not audited. The information for
the year ended 31 December 2022 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 2023, 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 2022 Annual Report on pages 156 to 165. The Group's
2022 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 2022 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 2022. 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.
Middle
East &
Group East & West Central & Southern North
Total Corporate Africa Africa Africa
----------------------------- ------- --------- ---------------- -------------------- -------
6 months ended 30 Tanzania Other DRC Other Oman
June 2023 US$m US$m US$m US$m US$m US$m US$m
----------------------------- ------- --------- -------- ------ --------- --------- -------
Revenue 350.2 - 116.6 39.5 122.2 44.9 27.0
Adjusted gross margin1 62% - 71% 55% 52% 61% 77%
Adjusted EBITDA2 173.8 (17.1) 78.2 17.5 57.3 19.9 18.0
Adjusted EBITDA margin3 50% - 67% 44% 47% 44% 67%
Financing costs:
Interest costs (including
leases) (82.3) 3.6 (19.0) (13.4) (26.7) (9.6) (17.2)
Foreign exchange differences (28.0) 4.6 (4.1) (6.7) 0.4 (22.0) (0.2)
------------------------------- ------- --------- -------- ------ --------- --------- -------
Total financing costs (110.3) 8.2 (23.1) (20.1) (26.3) (31.6) (17.4)
------------------------------- ------- --------- -------- ------ --------- --------- -------
Other segmental information
----------------------------- ------- --------- -------- ------ --------- --------- -------
Non-current assets 1,710.1 2.6 306.7 320.2 353.8 211.7 515.1
------------------------------- ------- --------- -------- ------ --------- --------- -------
Property, plant and
equipment additions 84.1 1.5 19.2 11.3 28.1 20.3 3.7
------------------------------- ------- --------- -------- ------ --------- --------- -------
Property, plant and
equipment depreciation
and amortisation 88.3 3.6 25.3 12.5 25.6 10.5 10.8
------------------------------- ------- --------- -------- ------ --------- --------- -------
Middle
East
East & West Central & Southern & North
Group Total Corporate Africa Africa Africa
----------------------------- ----------- --------- ---------------- -------------------- --------
6 months ended 30
June 2022 (Represented) Tanzania Other DRC Other Oman
4 US$m US$m US$m US$m US$m US$m US$m
----------------------------- ----------- --------- -------- ------ --------- --------- --------
Revenue 265.4 - 95.8 25.5 97.9 46.2 -
Adjusted gross margin1 64% - 69% 63% 60% 65% -
Adjusted EBITDA2 136.1 (16.1) 63.2 13.2 52.4 23.4 -
Adjusted EBITDA margin3 51% - 66% 52% 54% 51% -
Financing costs:
Interest costs (including
leases) (68.0) (1.1) (19.8) (8.4) (25.6) (13.1) -
Foreign exchange differences (36.7) (5.0) (1.3) (7.8) 0.3 (22.9) -
------------------------------ ----------- --------- -------- ------ --------- --------- --------
Total financing costs (104.7) (6.1) (21.1) (16.2) (25.3) (36.0) -
------------------------------ ----------- --------- -------- ------ --------- --------- --------
Middle
East
East & West Central & Southern & North
Group Total Corporate Africa Africa Africa
----------------------------- ----------- --------- ---------------- -------------------- --------
As at 31 December
2022 (Represented) Tanzania Other DRC Other Oman
4 US$m US$m US$m US$m US$m US$m US$m
----------------------------- ----------- --------- -------- ------ --------- --------- --------
Other segmental information
----------------------------- ----------- --------- -------- ------ --------- --------- --------
Non-current assets 1,717.7 4.2 312.9 316.9 343.6 215.5 524.6
------------------------------ ----------- --------- -------- ------ --------- --------- --------
Property, plant and
equipment additions 389.4 2.4 53.8 66.6 76.7 40.6 149.3
------------------------------ ----------- --------- -------- ------ --------- --------- --------
Property, plant and
equipment depreciation
and amortisation 157.2 6.4 52.9 21.6 53.3 21.3 1.7
------------------------------ ----------- --------- -------- ------ --------- --------- --------
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, nance 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 Due to substantial growth within the business (with the
expansion from five opcos to nine) the business has opted to group
operating companies into geographical regions for segmental
reporting purposes. This aggregation is consistent with internal
reporting and allows users to evaluate the business and
environments we operate in.
In H1 2023 60% of the Group's revenue was generated from three
customers (28%, 22% and 10% respectively), two of whom (28% and 10%
of revenue) operated in both East & West Africa and Central
& Southern Africa, with the remaining customer operating in all
three segments.
In H1 2022 76% of the Group's revenue was generated from four
customers (27%, 24%, 14% and 11% respectively), all of whom
operated in both East & West Africa and Central & Southern
Africa.
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
----------------
2023 2022
US$m US$m
------------------------------------------------------------- ------- -------
Adjusted EBITDA 173.8 136.1
Adjustments applied in arriving at Adjusted EBITDA:
Adjusting items:
Deal costs1 (2.2) (6.9)
Share-based payments and long-term incentive plans2 (1.0) (1.2)
Other restructuring (0.8) -
Gain on disposals of assets 0.5 0.6
Other gains and (losses) 0.9 (57.7)
Depreciation of property, plant and equipment (76.1) (75.8)
Depreciation of right-of-use assets (12.7) (9.3)
Amortisation of intangibles (12.2) (3.7)
Interest receivable 0.7 0.4
Finance costs (110.3) (104.7)
Loss before tax (39.4) (122.2)
------------------------------------------------------------- ------- -------
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 hare-based payments and long-term incentive plan charges and associated costs.
5. Tax expense
Though entities in Congo Brazzaville and Senegal continue to be
loss-making for tax purposes, minimum income taxes and/or asset
based taxes were levied, as stipulated by law in these
jurisdictions. Malawi, Oman and South Africa are loss making for
tax purposes and no minimum income tax applies. DRC, Ghana,
Madagascar, Tanzania and two entities in South Africa are
profitable for tax purposes and subject to income tax on taxable
profits thereon.
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 range of statutory
income tax rates applicable to the Group's operating subsidiaries
is between 15% and 30%. 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
----------------
2023 2022
Tax expense US$m US$m
------------------ ------- -------
Total current tax 8.5 6.0
Deferred tax (3.5) (3.1)
------------------ ------- -------
5.0 2.9
------------------ ------- -------
6 months ended
30 June
----------------
2023 2022
Tax paid US$m US$m
----------- ------- -------
Income tax 6.2 6.4
----------- ------- -------
6.2 6.4
----------- ------- -------
6. Derivative financial instruments
The amounts recognised in the statement of financial position
are as follows:
30 June 31 December
2023 2022
US$m US$m
-------------------------------------------------------- ------- -----------
Balance brought forward 2.8 57.7
Derivative financial instrument - US$975m 7.000% Senior
Notes 2025 0.6 (55.2)
Currency forward contracts 0.3 0.3
-------------------------------------------------------- ------- -----------
Balance carried forward 3.7 2.8
-------------------------------------------------------- ------- -----------
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 2023, 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$3.1m (31 December 2022: US$2.5m on the US$975m 7.000% Senior
Notes 2025), while the put option had a fair value of US$nil
million (31 December 2022: US$nil million).
7. Trade and other receivables
30 June 31 December
2023 2022
US$m US$m
--------------------------------- ------- -----------
Trade receivables 173.2 80.5
Loss allowance (5.7) (5.8)
--------------------------------- ------- -----------
167.5 74.7
Contract Assets 91.5 91.6
Deferred Tax Assets 22.4 18.7
Sundry receivables 40.9 38.6
VAT & Withholding tax receivable 7.5 23.2
--------------------------------- ------- -----------
329.8 246.8
--------------------------------- ------- -----------
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.
The increase in trade receivables during the period of $92.7m is
primarily due to invoicing customers in advance, which is also
reflected in the higher deferred income balance at 30 June 2023
(see note 9).
Debtor days
The Group calculates debtor days as set out in the table below.
It considers its most relevant customer receivables exposure on a
given reporting date to be the amount of receivables due in
relation to the revenue that has been reported up to that date. It
therefore defines its net receivables as the total trade
receivables and accrued revenue, less loss allowance and deferred
income that has not yet been settled.
30 June 31 December
2023 2022
US$m US$m
----------------------- ------- -----------
Trade receivables1 173.2 80.5
Accrued Revenue2 9.3 22.9
Less: Loss allowance (5.7) (5.8)
Less: Deferred income3 (81.6) (9.8)
----------------------- ------- -----------
Net Receivables 95.2 87.8
----------------------- ------- -----------
Revenue 350.2 560.7
----------------------- ------- -----------
Debtor days 49 57
----------------------- ------- -----------
1 Trade receivables, including related parties.
2 Reported within contract assets.
3 Deferred income has been adjusted for nil (2022: nil) in
respect of amounts settled by customers at the balance sheet
date.
The decrease in debtor days at 30 June 2023 is primarily due to
significant collections during the period as well as a part-year of
revenue from acquisitions in the prior period.
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 2023, US$21.3m (2022: US$16.6m) of services had been
provided to customers which had yet to meet the Group's probability
criterion for revenue recognition under the Group's accounting
policies. Revenue for these services will be recognised in the
future as and when all recognition criteria are met.
8. Loans
30 June 31 December
2023 2022
US$m US$m
Loans & bonds 1,606.5 1,564.3
Bank overdraft 12.6 7.3
----------------- ------- -----------
Total borrowings 1,619.1 1,571.6
----------------- ------- -----------
Current 20.0 19.9
Non-current 1,599.1 1,551.7
----------------- ------- -----------
1,619.1 1,571.6
----------------- ------- -----------
Loans are classified as financial liabilities and measured at
amortised cost.
9. Trade and other payables
30 June 31 December
2023 2022
US$m US$m
--------------------------------------- ------- -----------
Trade payables 31.1 32.0
Deferred income 81.6 9.8
Deferred consideration 47.7 52.2
Accruals 130.2 132.2
VAT, Withholding and other tax payable 23.7 18.5
--------------------------------------- ------- -----------
314.3 244.7
--------------------------------------- ------- -----------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 23 days (2022: 22 days).
Payable days are calculated as trade payables and payables to
related parties, divided by cost of sales plus administration
expenses less staff costs and depreciation and amortisation. No
interest is charged on trade payables. The Group has financial risk
management policies in place to ensure that all payables are paid
within the pre-agreed credit terms.
Deferred income has increased due to timing of invoices being
issued to customers and also reflects the higher trade receivables
balance at 30 June 2023
(see note 7).
The Directors consider the carrying amount of trade payables
approximates to their fair value due to their short-term
nature.
10. Lease liabilities
30 June 31 December
2023 2022
US$m US$m
----------------------------- ------- -----------
Short-term lease liabilities
Land 29.7 31.8
Buildings 2.8 2.2
Motor vehicles 0.3 0.1
----------------------------- ------- -----------
32.8 34.1
----------------------------- ------- -----------
Long-term lease liabilities
Land 188.3 188.4
Buildings 2.3 3.4
Motor vehicles 0.1 0.1
----------------------------- ------- -----------
190.7 191.9
----------------------------- ------- -----------
The below undiscounted cash flows do not include escalations
based on CPI or other indexes which change over time. Renewal
options are considered on a case by case basis with judgements
around the lease term being based on management's contractual
rights and their current intentions.
The profile of the outstanding undiscounted contractual payments
fall due as follows:
Within 6-10
1 year 2-5 years years 10+ years Total
US$m US$m US$m US$m US$m
----------------- ------- --------- ------ --------- -----
30 June 2023 42.9 135.5 126.7 339.7 644.8
----------------- ------- --------- ------ --------- -----
31 December 2022 43.0 137.7 122.7 326.0 629.4
----------------- ------- --------- ------ --------- -----
11. Other gains and (losses)
6 months ended
----------------
30 June 30 June
2023 2022
US$m US$m
----------------------------------------------------------- ------- -------
Fair value gain/(loss) on derivative financial instruments 0.9 (57.7)
0.9 (57.7)
----------------------------------------------------------- ------- -------
The fair value gain of US$0.9 in H1 2023 was driven by a fair
value movement in the embedded derivative within the terms of the
Group's Senior Notes of US$0.6m (H1 2022: (US$57.6m)) and a US$0.3m
fair value movement in FX forward contracts (H1 2022:
(US$0.1m)).
12. Uncompleted performance obligations
The table below represents undiscounted uncompleted performance
obligations at the end of the reporting period. This is total
revenue which is contractually due to the Group, subject to the
performance of the obligation of the Group related to these
revenues.
30 June 31 December
2023 2022
US$m US$m
------------------------- ------- -----------
Total contracted revenue 4,901.6 4,705.0
------------------------- ------- -----------
Contracted revenue
The following table provides our total undiscounted contracted
revenue by country as of 30 June 2023 for each of the periods from
2023 to 2027, with local currency amounts converted at the
applicable average rate for US Dollars for the period ended 30 June
2023 held constant.
Our contracted revenue calculation for each year presented
assumes: (i) no escalation in fee rates, (ii) no increases in sites
or tenancies other than our committed tenancies, (iii) our
customers do not utilise any cancellation allowances set forth in
their MLAs; (iv) our customers do not terminate MLAs prior their
current term; and (v) no automatic renewal. The average remaining
life of customer contracts is 7.1 years (H1 2022: 7.2 years).
Year ended 31 December
----------------------------
6 months
to
31 December
2023 2024 2025 2026 2027
US$m US$m US$m US$m US$m
--------------------------- ------------ ------ ------ ----- -----
Middle East & North Africa 26.3 47.4 48.4 49.4 50.4
East & West Africa 145.2 262.2 249.0 198.2 183.3
Central & Southern Africa 167.7 341.1 306.4 275.2 242.5
339.2 650.7 603.8 522.8 476.2
--------------------------- ------------ ------ ------ ----- -----
13. Related party transactions
During the period and comparative period there were no
disclosable related party transactions.
14. Contingent Liabilities
The Group exercises judgement to determine whether to recognise
provisions and make disclosures for contingent liabilities.
In the period ended June 2023, the Tanzania Revenue Authority
issued an assessment for corporate income tax for the financial
years ending tax years 2017 to 2021 inclusive totalling $9.7
million.
In the year ending December 2022, the DRC tax authority issued
an assessment on a number of taxes amounting to US$51.9 million for
the financial years 2018 and 2019.
In year ending December 2022, the DRC tax authority issued an
assessment amounting to US$37.5 million for the financial years
2013 to 2016 inclusive for environmental taxes.
In the period ended June 2023, the Congo Brazzaville tax
authority issued an assessment for a number of taxes amounting to
US$37.8 million for the years 2021 and 2022.
Responses have been submitted to the relevant tax authority in
relation to the assessments and remain under review with local tax
experts and as such the impact, if any, is unknown at this
time.
The Directors are working with their advisers and are in
discussion with the tax authorities to bring the matters to
conclusion based on the facts. At this time, the Directors have
identified no present obligations in relation to these tax audits
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.
15. 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:
2023 2022
US$m US$m
----------------------------------------------------- ------ -------
Loss after tax for the period attributable to owners
of the Company (41.0) (124.2)
Adjusted EBITDA (Note 4) 173.8 136.1
----------------------------------------------------- ------ -------
6 months ended
30 June
----------------------------
2023 2022
Number Number
------------------------------------------------------------- ------------- -------------
Weighted average number of ordinary shares used to calculate
basic earnings per share 1,048,121,517 1,046,948,396
Weighted average number of dilutive potential shares 116,179,382 112,629,231
Weighted average number of ordinary shares used to calculate
diluted earnings per share 1,164,300,899 1,159,577,627
------------------------------------------------------------- ------------- -------------
Loss per share
6 months ended
30 June
----------------
2023 2022
cents cents
-------- ------- -------
Basic (3.9) (11.9)
Diluted (3.9) (11.9)
-------- ------- -------
Adjusted EBITDA per share
6 months ended
30 June
----------------
2023 2022
Cents cents
-------- ------- -------
Basic 16.6 13.0
Diluted 14.9 11.7
-------- ------- -------
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$41.0m (H1 2022: US$124.2). 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$173.8m (2022: US$136.1m). Refer to Note 4 for a
reconciliation of Adjusted EBITDA to net loss before tax.
16. Subsequent events
There were no reportable subsequent events after the balance
sheet date.
17. Directors' responsibility statement
The Directors confirm that, to the best of their knowledge this
condensed set of financial statements which 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
2023 have been authorised for issue on 2 August 2023.
Tom Greenwood Manjit Dhillon
Chief Executive Officer Chief Financial Officer
Certain defined terms and conventions
We have prepared the annual 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 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.
'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.
'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 diesel emissions per tenant' have been calculated from
diesel consumption figures for our five established markets,
comparing diesel consumption on towers with one, two, three or four
tenants.
'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.
'Average diesel emissions reductions' have been calculated from
diesel consumption figures for our five established markets,
comparing diesel consumption on towers with one, two, three and
four tenants.
'Average grid hours' or 'average grid availability' reflects the
estimated site weighted average of grid availability per day across
the Group portfolio in the reporting year.
'B-BBEE' refers to 'Broad-Based Black Economic Empowerment' a
South African Government policy promoting the participation of
ethnically diverse South Africans in the local economy.
'BEIS' means Department for Business, Energy and Industrial
Strategy.
'build-to-suit/BTS' means sites constructed by our Group on
order by a MNO.
'CAGR' means compound annual growth rate.
'Carbon emissions per tenant' is the metric used for our
intensity target. The carbon emissions include Scope 1 and 2
emissions for the markets included in the target and the average
number of tenants is calculated using monthly data.
'Chad' means Republic of Chad.
The 'Code' means the UK Corporate Governance Code 2018.
'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.
'CPI' means Consumer Price Index.
'Downtime per tower per week' refers to the average amount of
time our sites are not powered across each week.
'DEI' means Diversity, Equity and Inclusion.
'Deloitte' means Deloitte LLP.
'DRC' means Democratic Republic of Congo.
'EBT' means Employee Benefit Trust.
'ESG' means Environmental, Social and Governance.
'Executive Committee' means the Group CEO, the Group CFO, the
regional CEO's, the Director of Business Development and Regulatory
Affairs, the Director of Delivery and Business Excellence, the
Director of Operations and Engineering, the Director of Human
Resources, the Director of Property and SHEQ and the General
Counsel and Company Secretary.
'Executive Leadership Team' means the Executive Committee, the
regional directors, the country managing directors and the
functional specialists.
'Executive Management' means Executive Committee.
'Fatality frequency rate' refers to occupational fatalities per
million hours worked (five-year roll).
'FCA' means 'Financial Conduct Authority'.
'FRC' means the Financial Reporting Council.
'FRS 102' means the Financial Reporting Standard Applicable in
the UK and Republic of Ireland.
'FTSE WLR' means FTSE Women Leaders Review.
'FTSE' refers to 'Financial Times Stock Exchange'.
'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.
'Gabon' means Gabonese Republic.
'Ghana' means the Republic of Ghana.
'GHG' means greenhouse gases.
'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.
'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.
'GSMA' is the industry organisation that represents the
interests of mobile network operators worldwide.
'Hard currency Adjusted EBITDA' refers to Adjusted EBITDA that
is denominated in US Dollars, US$ pegged, US Dollar linked or Euro
pegged.
'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 Oman' or 'HT Oman' means Oman Tech Infrastructure
SAOC.
'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.
'IAL' means Independent Audit Limited.
'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.
'Indicative site ROIC' is for illustrative purposes only, and
based on Group average build-to-suit tower economics as of December
2022. Site ROIC calculated as site portfolio free cash flow divided
by indicative capital expenditure. Site portfolio free cash flow
reflects indicative Adjusted gross profit per site less ground
lease expense and non-discretionary capex.
'Indicative site Adjusted gross profit and profit/(loss) before
tax' is for illustrative purposes only, and based on Group average
build-to-suit tower economics as of December 2021. Site
profit/(loss) before tax calculated as indicative Adjusted gross
profit per site less indicative selling, general and administrative
('SG&A'), depreciation and financing costs.
'IPO' means Initial Public Offering.
'IS accreditations ' refers to the International Organisation
for Standardisation and its published standards: ISO 9001 (Quality
Management), ISO 14001 (Environmental Management), ISO 45001
(Occupational Health and Safety) and ISO 37001 (Anti-Bribery
Management).
'Lath' means Lath Holdings, Ltd.
'Lean Six Sigma' is a renowned approach that helps businesses
increase productivity, reduce inefficiencies and improve the
quality of output.
'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.
'Lost Time Injury Frequency Rate' means the number of lost time
injuries per 1m person-hours worked (12-month roll)
'LSE' means London Stock Exchange.
'LTIP' means Long Term Incentive Plan.
'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.
'Mauritius' means the Republic of Mauritius.
'MSCI' means Morgan Stanley Capital International.
'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.
'Near miss' is an event not causing harm but with the potential
to cause injury or ill health.
'NED' means Non- Executive Director.
'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.
'Newlight' means Newlight Partners LP.
'Oman' means Sultanate of Oman.
'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, Malawi and Oman.
'Percentage of employees trained in Lean Six Sigma' is the
percentage of permanent employees who have completed the Orange or
Black Belt training programme.
'Population coverage' refers to the Company estimated potential
population that falls within the network coverage footprint of each
of our towers, calculated using WorldPop source data.
'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.
'Power uptime' reflects the average percentage our sites are
powered across each month, and is a key component of our service
offering to customers. Figures presented reflects towers that are
under service level agreements with customers.
'Principal Shareholders' refers to Quantum Strategic Partners
Ltd, Helios Investment Partners and Albright Capital
Management.
'Project 100' refers to our commitment to invest US$100 million
between 2022 and 2030 on carbon reduction and carbon
innovation.
'Quantum' means Quantum Strategic Partners, Ltd.
'Road Traffic Accident Frequency Rate' means the number of work
related road traffic accidents per 1m km driven (12-month
roll).
'ROIC' means return on invested capital and is defined as
annualised portfolio free cash flow divided by invested
capital.
'Rural area' while there is no global standardised definition of
rural, we have defined rural as milieu with population density per
square kilometre of up to 1,000 inhabitants. These include
greenfield sites, small villages and towns with a series of small
settlement structures.
'Rural coverage' is the population living within the footprint
of a site located in a rural area.
'Rural sites' means sites which align to the above definition of
'Rural area'.
'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.
'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.
'TCFD' means Task Force on Climate- Related Financial
Disclosures.
'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.
'the Code' means the UK Corporate Governance Code published by
the FRC and dated July 2018, as amended from time to time.
'the Regulations' means the Large and Medium-sized Companies and
Groups (Accounts and Reports) regulations 2008 (as amended).
'the Trustee' means the trustee(s) of the EBT.
'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 tenancies' means total anchor, standard and amendment
colocation tenants as of a given date.
'tower contract' means the MLA and individual site agreements
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).
'towerco' means tower company, a corporation involved primarily
in the business of building, acquiring and operating
telecommunications towers that can accommodate and power the needs
of multiple tenants.
'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.
'TSR' means total shareholder return.
'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.
'UK GAAP' means the United Kingdom Generally Accepted Accounting
Practice.
'upgrade capex' or 'upgrade capital expenditure' comprises
structural, refurbishment and consolidation activities carried out
on selected acquired sites.
'US-style contracts' means the structure and tenor of contracts
are broadly comparable to large US-based companies.
'Viettel' means Viettel Tanzania Limited.
'Vodacom' means Vodacom Group Limited.
'Vodacom Tanzania' means Vodacom Tanzania 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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END
IR SSWESEEDSESA
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August 03, 2023 02:00 ET (06:00 GMT)
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