TIDMHTWS
RNS Number : 8488R
Helios Towers PLC
10 March 2021
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) 596/2014, as it forms
part of retained EU law
Helios Towers plc announces results for the year ended 31
December 2020
Full year results in line with expectations
Business underpinned by long-term contracted revenues with
blue-chip mobile network operators
London, 10 March 2021: Helios Towers plc ('the Company' and
together with its subsidiaries 'Helios Towers' or 'the Group'), the
independent telecommunications infrastructure company, today
announces results for the year to 31 December 2020.
FY 2020 FY 2019 Change Q4 2020 Q3 2020 Change
-------------------------- ------- ------- ------- ------- ------- ----------
Sites 7,356 6,974 +5% 7,356 7,222 +2%
Tenancies 15,656 14,591 +7% 15,656 15,082 +4%
Tenancy ratio 2.13x 2.09x +0.04x 2.13x 2.09x +0.04x
Revenue (US$m) 414.0 387.8 +7% 106.1 103.6 +2%
Adjusted EBITDA (US$m)(1) 226.6 205.2 +10% 60.1 57.4 +5%
Adjusted EBITDA margin(1) 55% 53% +2ppt 57% 55% +2ppt
Operating profit / (loss)
(US$m) 56.3 (4.5) +60.8 10.9 16.1 (5.2)
Portfolio free cash flow
(US$m)(1) 174.4 168.9 +3% 41.1 44.2 (7)%
Net debt (US$m)(1) 692.4 626.5 +11% 692.4 662.2 +5%
Net leverage(1,2) 2.9x 2.9x - 2.9x 2.9x -
1. Alternative Performance Measures are described in our defined terms and conventions.
2. Calculated as net debt divided by last quarter annualised Adjusted EBITDA for the period.
Financial highlights
-- Full year Group revenue increased by 7% year-on-year to
US$414.0m (2019: US$387.8m), driven by the continued growth in the
number of sites and tenancies across the Group.
o Q4 2020 Group revenue increased by 2% quarter-on-quarter to
US$106.1m (Q3 2020: US$103.6m).
-- Full year Adjusted EBITDA increased by 10% year-on-year to
US$226.6m (2019: US$205.2m), driven by tenancy growth and continued
improvements in operational efficiency, with Adjusted EBITDA margin
expanding to 55% (2019: 53%), up 2ppts.
o Q4 2020 Adjusted EBITDA increased by 5% quarter-on-quarter to
US$60.1m (Q3 2020: US$57.4m).
-- Full year operating profit increased by US$60.8m year-on-year to US$56.3m (2019: US$-4.5m).
o Q4 2020 operating profit decreased by US$5.2m
quarter-on-quarter to US$10.9m (Q3 2020: US$16.1m), driven by a
loss on disposal of PPE related to our site consolidation
program.
-- Portfolio free cash flow increased by 3% year-on-year to US$174.4m (2019: US$168.9m).
o Q4 2020 portfolio free cash flow decreased by -7%
quarter-on-quarter to US$41.1m (Q3 2020: US$44.2m) reflecting
timing of capex and corporate income tax payments.
-- Net leverage of 2.9x remained flat year-on-year and
quarter-on-quarter (2019 and Q3 2020: 2.9x), below the Group's
target range of 3.5x-4.5x.
-- Business underpinned by long term contracted revenues of
US$2.8bn, of which 82% is from Africa's Big-Five MNOs, with an
average remaining life of 6.8 years.
Operational highlights
-- Helios Towers continues to monitor the impact of COVID-19 on
its operations. The telecommunications sector has been classified
as an 'essential service' in our markets, allowing us to operate at
our normal high levels of service. To date, there has been minimal
impact on the Group's delivery of service and operational
execution.
-- Operational performance continues at very high levels, with
power uptime of 99.99% recorded in Q4 2020 for a third consecutive
quarter.
-- Tenancies increased by 1,065 tenants year-on-year to 15,656
tenants (2019: 14,591 tenants). Q4 2020 tenancies increased by 574
quarter-on-quarter (Q3 2020: 15,082).
-- Sites increased by 382 sites year-on-year to 7,356 sites
(2019: 6,974 sites). Increase of 134 sites quarter-on-quarter (Q3
2020: 7,222).
-- Tenancy ratio of 2.13x increased by 0.04x quarter-on-quarter
and year-on-year (2019 and Q3 2020: 2.09x).
Strategic updates
-- As previously reported, on 12 August 2020 Helios Towers
signed an agreement with Free Senegal, the second largest mobile
operator in Senegal, to acquire its 1,220 tower portfolio, as well
as 400 build-to-suit sites ('BTS') committed over the next 5 years.
The acquisition is anticipated to close in H1 2021.
-- The Senegal transaction enables the Group to enter a new
market, representing the first key milestone against our 2025
strategic ambitions to increase our operational presence to 8+
markets. The acquired sites represent c.25% of the Group's total
targeted site expansion to reach our 2025 strategic target of
12,000+ sites, with further progress expected through the 400
committed BTS.
-- The Group continually monitors growth opportunities which are
in line with its strategy, and is actively investigating an
aggregated M&A pipeline of over 10,000 towers. The Group is
currently in advanced discussions regarding the acquisition of
approximately 5,000 towers in new geographies across the Africa and
Middle East region. Of these, the Group is in advanced negotiations
with respect to approximately 2,000 towers across multiple African
markets and is in the advanced stages of a competitive process with
respect to the remainder. There is no guarantee that these or any
other acquisitions currently under contemplation will ultimately be
agreed or completed, and until acquisitions are agreed their terms
remain confidential. Any transactions agreed by Helios Towers would
be expected to be consistent with the Group's acquisition criteria,
to be value accretive and to have a financing structure aligned to
the Group's target leverage range of 3.5x-4.5x.
Environmental, Social & Governance (ESG)
-- The Group will publish its first Sustainable Business Report
on 15 March 2021 alongside its 2020 Annual Report. The report
provides a detailed review of the Group's progress against its
strategic objectives and ambitions.
-- On 19 November 2020 Helios Towers unveiled its integrated
Sustainable Business Strategy, including its long term targets and
contribution to the UN Sustainable Development Goals. The
presentation can be found at:
www.heliostowers.com/investors/results-reports-and-presentations/
-- Helios Towers' Sustainable Business Strategy is designed to
help the Group maximise the positive impact it is having for all
its stakeholders, and deliver on its purpose of driving the growth
of communications in Africa.
Guidance and outlook
-- Helios Towers is targeting 1,000 - 1,500 organic tenancies
per annum in the medium term in its existing markets, in-line with
the Company's guidance first provided during its IPO in October
2019.
-- Targeting US$110m - US$140m of capex for its existing markets
in 2021, of which US$20m - US$25m is non-discretionary capex.
-- Acquisition of Free Senegal's passive infrastructure assets
is anticipated to close in H1 2021, representing 1,220 sites for an
upfront cash consideration of EUR160m (US$194m). Annualised
revenues and Adjusted EBITDA for the acquired assets are
anticipated to be US$38m and US$19m, respectively. Further growth
is expected through colocation lease-up and 400 committed BTS over
the next five years, for which EUR40m (US$48m) deferred
consideration and EUR30m (US$36m) growth capex are expected to be
paid, and colocation lease-up.
Kash Pandya, Chief Executive Officer, said:
"We are delighted with the team's achievements in our first full
year as a publicly listed company and against the backdrop of the
global COVID-19 pandemic. We delivered results in-line with
guidance set out at the beginning of the year, achieved record
customer service levels, announced entry into our sixth market and
increased available funding while significantly reducing our cost
of debt. We also launched our sustainable business strategy, which
reflects our ambition to contribute to the social and economic
development across Africa through mobile connectivity, while
minimising environmental impact.
Through all of these achievements, we have set the foundations
for an exciting 2021 and look forward to delivering another year of
sustainable growth and operational excellence for all
stakeholders."
For further information go to:
www.heliostowers.com
Investor Relations
Chris Baker-Sams - Corporate Finance Manager
+44 (0)752 310 1475
Media relations
Edward Bridges / Stephanie Ellis
FTI Consulting LLP
+44 (0)20 3727 1000
For the purposes of MAR, the person responsible for making this
announcement is Paul Barrett, General Counsel and Company
Secretary.
Helios Towers' management will host a conference call for
analysts and institutional investors at 09.30 GMT on Thursday, 11
March 2021. Dial in details for the conference call are:
Europe & International +44 20 3936 2999
South Africa (local) 087 550 8441
USA (local) 1 646 664 1960
Passcode: 175364
About Helios Towers
-- Helios Towers is a leading independent telecommunications
infrastructure company in Africa, having established one of the
continent's most extensive tower portfolios with over 7,300 towers
across five countries. It builds, owns and operates telecom passive
infrastructure, providing services to mobile network operators.
-- Helios Towers owns and operates telecommunication tower sites
across Africa in Tanzania, Democratic Republic of Congo ('DRC'),
Congo Brazzaville, Ghana, South Africa and are due to establish a
presence in Senegal in H1 2021.
-- 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.
Forward looking statements
This announcement 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 Group'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 these forward-looking statements,
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
presentation 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.
Use of non-GAAP financial information
This announcement also contains non-GAAP financial information,
described in this announcement as 'Alternative Performance Measures
(APMs) 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.
Chair's statement, Sir Samuel Jonah, KBE, OSG
"We develop local talent to become the future leaders of our
business"
I write this from my home country of Ghana, which also happens
to be where Helios Towers launched its first operations. That was
in 2010, and during the decade that followed I watched this African
success story unfold while on the Board of a mobile network
operator, Vodafone.
Today, I have the pleasure of reviewing the Company's progress
from within, having completed my first full year as Chair of Helios
Towers plc.
This has been our first full year as a public company, in which
we have expanded our tower network in existing markets, scaled new
heights of operational excellence and executed on our growth
strategy through meaningful M&A activity. In August we
announced the signing of a transaction to enter our sixth market,
Senegal, taking a significant step towards our 2025 target of
operating in eight or more markets. Internally, we also enhanced
our governance structure and published our Sustainable Business
Strategy, which will drive our inclusive and sustainable growth
into the future.
I have been impressed with our response to Covid-19; despite
this backdrop, we have achieved significant records in operational
performance. It has been a humbling experience to watch the
pandemic's effects on communities and businesses, and it makes me
particularly proud of the vital role we play as an independent
tower company. Mobile communication is a vital resource in keeping
people connected: this is especially the case this year, and
especially in Africa, where fixed line telephony is minimal.
Importantly, our infrastructure-sharing model enables mobile
operators to expand their networks more rapidly and cost
effectively than they could achieve themselves. The positive
impacts are immediate: at a stroke, a village school can now bring
in the world's knowledge online; farmers can secure market prices
for their crops; and households can access financial services for
the first time, a benefit strongly linked to improved welfare.
Above all, and in a very challenging year, more and more people
have been able to come together, keep informed and engaged through
digital media, and stay connected to families, friends and
colleagues through voice and video calling. We're helping to make
that happen.
Meeting our opcos
We too have relied heavily on video conferencing through 2020.
Fortunately, early in the year I also had the pleasure of visiting
our teams in four of our five markets. It was a reminder that there
is no substitute for personal interaction, to listen, learn and
better understand the nuances of each market. In every case I have
been impressed by the clear purpose of the leadership and the
commitment of our people.
We continue to serve our communities with what I believe is a
key point of difference from our competitors: 100% of our opcos'
leaders and workforce are African-born and are, by definition,
totally attuned to our culture, traditions and people.
I have also been struck by the positive reception to our
Sustainable Business Strategy, launched in November. Whilst
sustainability has always been at the core of our business model,
we have now refined our long-term strategy to amplify our positive
environmental and social contributions to all our stakeholders and
the communities in which we operate.
Governance: a broader Board
Following our listing on the London Stock Exchange in 2019, this
year we continued to strengthen the Board's composition by
welcoming Sally Ashford and Carole Wamuyu Wainaina to the team.
Manjit Dhillon also joins the Board, effective from 1 January 2021,
following his appointment as CFO, announced in December 2020.
The current Board gives us a stronger and more diverse mix of
genders and ethnicities. This, together with an appropriate balance
of Non-Executive Directors, and the appointment of Sally as a
representative of our employees, makes us fully compliant with the
UK Corporate Governance Code guidelines for Board composition and
representation. As importantly, we now have individuals around our
table with deep skills gained in the fields of towerco operation,
mobile communications, HR and workforce engagement, and finance and
business leadership.
I'm delighted that we have attracted a Board of such
calibre.
Section 172
We believe that our strategy and actions reflect the
requirements and spirit of Section 172 with the information we
offer you in our Annual Report which we will publish on our
website. These include our commitment to our workforce, customers,
suppliers, shareholders, communities and the environment and to
operating both sustainably and with integrity.
Outlook
We continue to monitor vigilantly the ongoing Covid-19 situation
across all our markets, and keep in place appropriate working from
home protocols and enhanced health and safety measures for all our
employees and partners.
We have entered 2021 further maintaining our high levels of
operational performance across the Group, and expanding our
business inorganically. In H1 2021, we start with Senegal. It is a
country I know well: it has a thriving economy and a diverse and
growing population. We arrive at a time when we can play a key role
in the country's development, connecting more people and reducing
the environmental burden caused by single operator
infrastructure.
I believe we can look forward to continuing to expand mobile
telephony on the African continent. Africa's growing population,
low mobile penetration, increasing urbanisation, and a data-hungry,
younger generation continue to drive demand for connectivity and
mobile across the continent. We stand ready to play our part.
Sir Samuel Jonah, KBE, OSG | Chair
Chief Executive Officer's statement, Kash Pandya
"We successfully executed on our operational and financial
targets, and delivered growth for our business and for our
stakeholders."
In a testing year for the world, I am proud that we continued to
enable communications for communities, reliability for customers,
and growth for our stakeholders.
We take away many strong successes from 2020: the resilience of
our business model, the agility of our people, and the affirmation
that our business purpose - to drive the growth of communications
in Africa - has never been so important.
When Covid-19 first emerged early in the year, our immediate
priority was to safeguard our people and all the partners we work
with. What swiftly became clear is that, in times of crisis,
dependable mobile communications are critical to distribute
information and keep communities and families together.
Not only did our local teams adjust superbly to new safety
protocols, they managed this whilst delivering excellent levels of
customer service. Indeed, we finished the year recording our third
consecutive quarter of over 99.99% power uptime, a record level for
the Group. In 2020, our average downtime per tower was 1m 32s, a
10% improvement on 2019 levels, and a 93% improvement on 2015
performance, when we first established our business excellence
programme. This programme continues to drive efficiencies, and
supports higher sustainability standards by reducing
emissions-per-site.
On top of operational excellence, we also achieved new financial
records. We delivered Adjusted EBITDA growth of 10% in 2020 and
expanded Adjusted EBITDA margins to a record 55%, reaching our
medium-term guidance range for the first time. We are pleased to
have delivered results in line with the guidance we set out during
our IPO in October 2019, against the backdrop of Covid-19. This
highlights the strength of our business model and the operational
excellence embedded throughout the Company.
Two further highlights gave us great satisfaction. Firstly,
after the success of our IPO, we returned to the capital markets in
2020, effectively reopening the African bond markets after the
global lockdown. In June, we were the first African company to
raise debt capital since the onset of Covid-19 in early 2020, and
were delighted to receive strong support, raising close to US$1
billion. This support was further demonstrated by our US$225
million bond tap in September. Importantly, we are now well
capitalised to capture many of the growth opportunities within our
robust M&A pipeline.
Secondly, in 2020 we signed a key acquisition for 1,220 towers
from the MNO Free Senegal. This takes us into our sixth market, and
represents a significant milestone towards our 2025 strategic
growth targets of 12,000 or more towers in eight or more markets.
We anticipate this transaction will close in H1 2021.
2020 performance overview
Helios Towers had another strong year of financial performance
in 2020, with revenue growth of 7% to US$414 million and Adjusted
EBITDA growth of 10% to US$227 million. We also achieved record
operating profit of US$56 million, which reflects meaningful growth
from an operating loss of US$5 million in 2019.
The African opportunity
With each passing year, Africa's growth and development
reinforces our conviction that there is material room for us to
grow and support the expansion of this continent.
In this endeavour we are welcomed by communities and customers,
who understand the social and economic value of new infrastructure.
MNOs also see the clear commercial logic of releasing capital and
reducing maintenance obligations by sharing our towers, rather than
owning their own.
We are experts in managing their equipment, powering it reliably
in even the most remote locations, and delivering efficiencies that
cannot readily be achieved independently. Removing duplicate
infrastructure through enabling colocation of equipment also
delivers major environmental benefits: one tower on the landscape,
and with that, less equipment to power and maintain.
There is still substantial growth potential for telephony in
Africa. Penetration of mobile is growing rapidly, and Sub-Saharan
Africa will have more than 150 million new subscribers by 20251.
Meanwhile, many of the more remote areas of Africa are still not
connected to network infrastructure, meaning that there are
millions of potential new mobile users, and square miles, still to
be served.
There is also a significant inorganic growth opportunity.
Currently, only 29% of towers are owned by independent operators
across Africa, compared to 70% globally. As mobile matures and
grows, we see this transfer in tower ownership continuing in Africa
also, and Helios Towers is well-positioned, with its track record
of acquisition integration and leading power performance
levels.
1 GSMA: The Mobile Economy 2020
Our new sustainable strategy
Our core business of tower sharing is inherently sustainable: we
minimise wasteful duplication and reduce environmental burden,
whilst creating high-quality local employment. At the same time we
play a significant role in advancing African mobile telecoms
services, improving lives and livelihoods and driving economic
growth. Our business is operated by a dynamic and diverse team who
prioritise the environmental and social good that we deliver
through our core operations.
In 2020, we refined our existing business strategy into an
integrated Sustainable Business Strategy, which includes specific
ESG KPIs and targets. These will drive long-term sustainable growth
and support our commitment to the United Nations' SDGs.
The result is our Sustainable Business Strategy, centred on
three pillars that guide everything we do: Business excellence and
efficiency, Network access and sustainable development, and
Empowered people and partnerships.
Alongside our Annual Report, we will also publish our first
Sustainable Business Report, providing more detail on our approach
and our material issues.
Expansion into Senegal and beyond
As we focus on a sustainable growth trajectory, our business
development team has never been busier. We are currently actively
investigating opportunities representing an aggregated pipeline of
over 10,000 towers. Our medium-term target is to expand our
operations to over eight markets, operating over 12,000 towers, by
2025. Given the multiple opportunities under consideration, we may
achieve this sooner than originally targeted.
An important step towards that goal was the acquisition
agreement with the MNO Free Senegal. This acquisition secures our
entry into our sixth market, Senegal, with a portfolio of 1,220
towers on day-one and 400 committed BTS over the next five
years.
Alongside a requirement to meet our disciplined return
thresholds, we have a criteria checklist for expansion into any new
market. This includes: high population and subscriber growth; a
preferred minimum of three existing MNOs, each with competitive
market share; and stable or pegged currencies. This acquisition
satisfies all our criteria. We look forward to entering this
market, driving colocation lease-up on the assets and delivering
leading power uptime for our customers.
2020: Strong organic growth and sustained structural demand
We saw strong performance within our five existing markets in
2020:
-- Tanzania recorded revenue growth of 3% and Adjusted EBITDA
growth of 9%, driven by strong tenancy additions and operating
savings initiatives, including expanding grid connections. The
government is focused on improving rural telecommunications
infrastructure and greater grid availability, from which Helios
Towers stands to benefit.
-- DRC recorded strong revenue growth of 10% and Adjusted EBITDA
growth of 17%. Like the country itself (which is Africa's second
largest, and the size of Western Europe), scope for growth here is
vast. Independent forecasts project PoS growth at an 11% CAGR
between 2020-2026.
-- Ghana recorded 7% revenue growth and 16% Adjusted EBITDA
growth. Our most competitive market continues to deliver
uninterrupted growth, with Adjusted EBITDA growing fivefold since
2015, reflecting a 39% CAGR.
-- Congo Brazzaville recorded 3% revenue growth and a 7% decline
in Adjusted EBITDA, driven by the introduction of a licence fee at
3% revenues in 2020. Site growth was a record 11% in 2020, and we
expect to see Adjusted EBITDA growth through 2021 as we add
colocations on these assets.
-- South Africa experienced some of the most extensive Covid-19
lockdowns in Africa, yet we were still able to add 118 sites and
196 tenancies, effectively doubling both sites and tenancies. We
are extremely pleased that the tenancy ratio has reached 1.71x in
under two years of operation, highlighting the attractiveness of
our asset base.
2021 Outlook
Following our resilient performance through 2020, we have a
strong foundation and exciting growth opportunities in the year to
come.
We will continue to drive organic growth, meeting the needs of
our MNO customers as they further densify their networks, invest in
3G and 4G, and roll out their coverage in more rural areas. We will
also build on our successful inorganic expansion, focusing on
driving growth and operational excellence in our newest market,
Senegal. We are closely monitoring the ongoing Covid-19 situation,
and will continue to adapt our working practices as necessary to
ensure the safety of all our employees and partners.
We will focus on the pursuit of sustainable growth, and monitor
our own environmental and social impact. This will include setting
a formal emissions reduction target and developing community
needs-based partnerships.
We will embed our corporate culture in Senegal, just as we did
very successfully in South Africa throughout 2019 and 2020. We will
look to expand our Lean Six Sigma programme, bringing people
together from different opcos to train in the methodology and
execution that has driven our efficiency gains in recent years.
We will also act on the learnings of our first-ever Employee
Engagement Survey. With a remarkable 93% participation rate, we
recorded exceptionally high scores relating to our people's
satisfaction with their roles and our purpose. Equally, there are
improvements to focus on, which we have made a priority to address
this year.
To all of our people, our MNO customers, our maintenance and
security partners, I say a warm thank you for your excellent
performance and support amidst the year's external challenges. We
look forward to partnering with you for the upcoming year and
beyond.
Kash Pandya | CEO
(1) GSMA, Mobile Economy 2020, Sub-Saharan Africa.
Chief Financial Officer's statement, Manjit Dhillon
"Alongside strong financial and operational performance, we took
action to improve our balance sheet, significantly reducing our
cost of capital while gaining the financial firepower to deliver on
our growth targets."
We maintained our track record of Adjusted EBITDA growth and
continued revenue expansion, and are well positioned to capitalise
on future opportunities.
I am pleased to report that 2020 was another successful year of
delivering against our financial and operating targets, as laid out
during our IPO in October 2019.
We closed the year with revenue growth and Adjusted EBITDA
growth of 7% and 10% respectively, and delivered a record operating
profit of US$56 million, a year-on-year improvement of US$61
million. Importantly, we delivered on our guidance laid out at the
beginning of the year, adding over 1,000 tenancies, and achieving a
record 55% Adjusted EBITDA margin, hitting our medium-term target
range of 55%-60% for the first time in our history.
We are proud to have met the full-year guidance we gave to the
market pre-Covid-19, without knowledge of the global shutdown that
lay before us. This demonstrates the inherent strength and
stability of our sector and business model, and our ability to
adapt to circumstances outside of our control. In each of our five
markets, our operations were deemed to be essential services,
allowing us to continue enabling connectivity for individuals,
communities and economies.
It was also exciting to see how our integrated Sustainable
Business Strategy has combined social responsibility with
operational and fiscal efficiency. Our business model has always
been rooted in sustainability, but we are committed to do more. Our
2020 performance, driven by our business excellence programme,
resulted in not only financial improvements but also considerable
reductions in per-site fuel consumption and emissions. Our
financial and sustainability goals are closely aligned and we will
continue to integrate and embed sustainability into all of our
financial and commercial activities.
Capital markets' support
Alongside strong financial and operational performance, we took
action to improve our balance sheet, significantly reducing our
cost of capital while gaining the financial firepower to deliver on
our growth targets.
Despite the impact of the Covid-19 pandemic on global markets,
in June 2020 we completed the successful refinancing of our maiden
bond issuance with a US$750 million bond with a 7.000% coupon,
reduced from 9.125%. In addition, we raised a new US$70 million
revolving credit facility and a new US$200 million term loan. The
term loan is currently undrawn and will be utilised for future
expansion opportunities. This transaction effectively reopened the
African debt capital markets following the global lockdown.
In September, we followed this with a US$225 million bond tap
which priced attractively at 106.25, reflecting a yield to maturity
of 5.6% and taking our total bond issuance in 2020 to US$975
million. We are proud of the speed of execution of these
transactions, securing outsized commitments from capital markets
without the traditional global itinerary of roadshows.
The net result of our activity is a meaningful reduction in our
cost of capital and a significant increase in our financial
capacity, which positions us well to execute efficiently on
acquisitions that will help realise our growth ambitions.
Delivering on our strategic targets
Our 2025 target, as originally set out ahead of our IPO, is to
operate 12,000 or more towers in eight or more markets. We took our
first significant step towards this goal by signing an agreement to
purchase 1,220 existing sites from Free Senegal, the country's No.
2 mobile operator. The upfront consideration for this transaction
will be EUR160 million, and we anticipate a further EUR70 million
related to deferred consideration and capex requirements for an
additional 400 committed BTS sites.
The Senegal deal exemplifies all of the key criteria we look for
in acquisitions. These include: a stable and growing economy with a
rising population; multiple MNOs with strong colocation lease-up
opportunities; and protection against FX volatility, in this case
through a currency pegged to the Euro by the French Central Bank.
On a run-rate basis, the integration of Senegal would increase the
Group's hard currency Adjusted EBITDA to 68%.
Pro forma for closing the Senegal transaction, we anticipate net
leverage to be 3.5x, in the lower end of our target range of
3.5x-4.5x. This provides us with strong capacity for further
acquisitions and to deliver on our growth ambitions, while
maintaining prudent levels of leverage.
Group performance
In 2020, revenues grew by 7% from US$388 million to US$414
million and Adjusted EBITDA increased by 10% to US$227 million.
Robust customer demand resulted in a 7% increase in tenancies and
our tenancy ratio grew from 2.09x to 2.13x.
A combination of tenancy growth and operational improvements
supported expansion of our Adjusted EBITDA to 55%, within our
medium-term target range of 55-60%. In 2020 we also achieved a
record operating profit of US$56 million: this compares to an
operating loss of US$(5) million in 2019, which was largely
attributable to IPO-related costs.
Adjusted operating profit increased by US$21 million, from US$58
million in 2019 to US$79 million in 2020, which reflects strong
underlying growth on an adjusted and unadjusted basis.
We continued to improve cash flow generation from our existing
asset base, with portfolio free cash flow ('PFCF') increasing 3%
from US$169 million to US$174 million. This was driven by strong
Adjusted EBITDA growth of 10% partially offset by higher taxes and
higher maintenance capex due to additional precautionary purchases
early in 2020 to mitigate the potential supply chain risk related
to Covid-19. However, this still enabled us to again fund our
financing costs and discretionary capex from PFCF, resulting in
Adjusted free cash flow of US$1.5 million in 2020, which excludes
exceptional items principally related to our capital raising
activities and working capital outflow in the year.
Quality of revenues and earnings
Our business has a robust earnings profile, supported by high
quality customers, strong contract structure with long durations,
and our best-in-class operational execution.
-- Customer mix: we continue to serve Africa's largest MNOs,
which account for the vast majority of our revenue. In 2020, 99% of
revenues came from blue-chip international MNOs, with Africa's
Big-Five (Airtel, MTN, Orange, Tigo and Vodacom/fone) generating
87% of revenues.
-- Long-term contracts: our contracts typically have initial
terms of 10-15 years, with automatic renewals thereafter. As at 31
December 2020, we have an average of 6.8 years initial term
remaining across the Group. This represents US$2.8 billion of
future revenue already contracted, a strong underlying earning base
for future growth.
-- Hard currency/dollarisation and escalations: a significant
percentage of our customer contracts are in hard currency (mainly
US dollars), which leads to 65% of our 2020 Adjusted EBITDA being
in hard currency. We also have CPI and power price escalators
across all our customer contracts, which means that even our local
currency Adjusted EBITDA automatically increases periodically and
provides stability and robustness to our Group earnings.
-- Operational performance: in 2020 we delivered record power
uptime, against the backdrop of the Covid-19 pandemic. We provided
our customers with an average of 99.98% power uptime, achieved
across our markets with an average of 15 hours grid power per day.
This level of performance ensures that we are the tower company of
choice for our customers.
Tax expense
The Group tax expense for 2020 was US$16 million, as compared to
US$62 million in 2019. The prior year included US$55 million
related to Change of Control Taxes, fully funded by a capital
contribution from the pre-IPO shareholders. The increase in tax
expense excluding Change of Control Taxes is due to earnings growth
in Ghana and Tanzania. Tanzania became profitable for the first
time in 2020, meaning both Ghana and Tanzania are now subject to
income tax.
Liquidity and net debt
During 2020 we strengthened our liquidity position, finishing
the year with US$429 million of cash and cash equivalents. This was
partly a result of the bond refinancing and subsequent bond tap,
completed in June and September respectively.
Net leverage of 2.9x at the end of 2020, was in line with our
closing position in 2019. This is currently below our target range
of 3.5x-4.5x.
For 2021, we expect all organic growth capex to be funded
through cash flow. Accounting for the Senegal acquisition, which we
expect to close in H1 2021, net leverage would remain at the low
end of our target range of 3.5x-4.5x, providing additional capacity
for our inorganic growth strategy.
Finally, we were pleased to maintain our credit ratings of B2
corporate family rating ('CFR') by Moody's Investors Service and B
corporate credit rating by S&P, which reaffirms the stability
of our corporate credit profile.
Dividend
Given the scale of the opportunities in our current pipeline,
and our ambitions to invest in our existing businesses and expand
into new markets, the Directors recommended that no dividends be
paid for the year ended 31 December 2020. However, given our
expectations for the future growth of the business and improving
free cash flow, there may be scope to pay a dividend in the medium
term. This decision would be considered depending on investment
opportunities at that time.
Outlook
2021 is shaping up to deliver another exciting year of growth
for Helios Towers. We look forward to closing the Senegal
acquisition, embedding our business practices, and expanding our
operations there, as well as continuing to progress our inorganic
growth strategy in new and existing markets. Importantly, we see
continued demand in our established markets, with numerous
opportunities for our sustainable organic growth, underpinned by
robust long-term contracts. We remain focused on delivering high
quality services to our customers and the communities in our
markets, whilst creating sustainable value for all our
stakeholders.
Manjit Dhillon | CFO
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 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. 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.
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
are not indicative of its underlying trading performance.
2020 2019
Reconciliation between APM and IFRS US$m US$m
------------------------------------------------------- ------ ------
Loss before tax (20.9) (74.8)
Adjustments applied to give Adjusted EBITDA
Adjusting items:
Project costs(1) 4.4 18.6
Deal costs(2) 8.8 1.7
Share-based payments and long-term incentive plans(3) 1.0 31.2
Loss on disposal of property, plant and equipment 8.1 11.0
Other gains (40.1) (33.9)
Depreciation of property, plant and equipment 128.4 129.5
Amortisation of intangibles 5.6 9.2
Depreciation of right-of-use assets 14.0 8.5
Interest receivable (0.8) (0.7)
Finance costs 118.1 104.9
------------------------------------------------------- ------ ------
Adjusted EBITDA 226.6 205.2
------------------------------------------------------- ------ ------
Adjusted EBITDA margin 55% 53%
------------------------------------------------------- ------ ------
(1) Project costs in 2020 relate to the preparation for a debt
refinancing, and in 2019 relate to listing of equity on the London
Stock Exchange in October 2019.
(2) Deal costs comprise costs for potential and aborted
acquisitions, which mainly comprise professional fees and travel
costs incurred while investigating potential site acquisitions that
are expensed when the potential site acquisition does not proceed,
and deal costs not capitalised, which relate to the exploration of
investment opportunities.
(3) Share-based payments and long-term incentive plan charges
and associated costs.
Adjusted gross margin
Definition
Adjusted gross margin means gross profit, adding back site and
warehouse depreciation, divided by revenue.
Purpose
This measure is used to evaluate the underlying level of gross
profitability of the operations of the business, excluding
depreciation, which is the major non-cash measure otherwise
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.
2020 2019
Reconciliation between IFRS and APM US$m US$m
------------------------------------------ ----- -----
Gross profit 147.9 125.9
------------------------------------------ ----- -----
Add back: Site and warehouse depreciation 132.6 128.7
------------------------------------------ ----- -----
Adjusted gross profit 280.5 254.6
------------------------------------------ ----- -----
Revenue 414.0 387.8
------------------------------------------ ----- -----
Adjusted gross margin 68% 66%
------------------------------------------ ----- -----
Adjusted operating profit/(loss)
Definition
Adjusted operating profit/(loss) means reported operating
profit/(loss) adjusted for loss on disposal of property, plant and
equipment, deal costs, share-based payments and long-term incentive
plan charges, and other adjusting items. Adjusting items are
material items that are considered one-off by management by virtue
of their size and/or incidence.
Purpose
This measure is used to evaluate the underlying level of
operating profitability of the Group. By including adjustments
mentioned in the definition the Group believes that adjusted
operating profit/(loss) facilitates a more meaningful comparison of
Group operating performance trends from period to period.
2020 2019
Reconciliation between IFRS and APM US$m US$m
------------------------------------------------------ ----- -----
Operating profit/(loss) 56.3 (4.5)
Adjusting items:
Project costs(1) 4.4 18.6
Deal costs(2) 8.8 1.7
Share-based payments and long-term incentive plans(3) 1.0 31.2
Loss on disposal of property, plant and equipment 8.1 11.0
------------------------------------------------------ ----- -----
Adjusted operating profit 78.6 58.0
------------------------------------------------------ ----- -----
Portfolio free cash flow and adjusted free cash flow
Definition
Portfolio free cash flow is defined as Adjusted EBITDA less
maintenance and corporate capital additions, payments of lease
liabilities (including interest and principal repayments of lease
liabilities) and tax paid.
Adjusted free cash flow is defined as portfolio free cash flow
less net payment of interest and discretionary capital
additions.
Purpose
This measure is used to value the cash flow generated by the
business operations after expenditure incurred on maintaining
capital assets, including lease liabilities, and taxes. It is a
measure of the cash generation of the tower estate.
2020 2019
Reconciliation between IFRS and APM US$m US$m
------------------------------------------------------ ------ ------
Cash generated from operating activities 209.6 125.3
Adjustments applied:
Movement in working capital 3.8 28.4
Adjusting items:
Project costs(1) 4.4 18.6
Deal costs(2) 8.8 1.7
Share-based payments and long-term incentive plans(3) - 31.2
------------------------------------------------------ ------ ------
Adjusted EBITDA 226.6 205.2
Less: Maintenance and corporate capital additions (16.6) (12.1)
Less: Payments of lease liabilities(4) (25.5) (20.9)
Less: Tax paid (10.1) (3.3)
------------------------------------------------------ ------ ------
Portfolio free cash flow 174.4 168.9
------------------------------------------------------ ------ ------
(1) Project costs in 2020 relate to the preparation for a debt
refinancing, and in 2019 relate to listing of equity on the London
Stock Exchange in October 2019.
(2) Deal costs comprise costs for potential or aborted
acquisitions, which mainly comprise professional fees and travel
costs incurred while investigating potential site acquisitions that
are expensed when the potential site acquisition does not proceed,
and deal costs not capitalised, which relate to the exploration of
investment opportunities.
(3) Share-based payments and long-term incentive plan charges
and associated costs.
(4) Payment of lease liabilities includes interest and principal
repayments of lease liabilities.
Gross debt, net debt, net leverage and adjusted cash and cash
equivalents
Definition
Gross debt is calculated as non-current loans and current loans
and long-term and short-term lease liabilities. Net debt is
calculated as gross debt less adjusted cash and cash equivalents.
Adjusted cash and cash equivalents comprises cash and cash
equivalents excluding US$nil (2019 US$37.7 million) of restricted
cash for the potential payment of Change of Control Taxes related
to our initial public offering in 2019 funded by a capital
contribution from our pre-IPO shareholders immediately prior to the
initial public offering. Net leverage is calculated as net debt
divided by last quarter annualised Adjusted EBITDA.
Purpose
Net debt is a measure of the Group's net indebtedness that
provides an indicator of overall balance sheet strength. It is also
a single measure that can be used to assess both the Group's cash
position and its indebtedness. The use of the term 'net debt' does
not necessarily mean that the cash included in the net debt
calculation is available to settle the liabilities included in this
measure. Net leverage is used to show how many years it would take
for a company to pay back its debt if net debt and Adjusted EBITDA
are held constant. The Group aims to maintain net leverage broadly
in the range of 3.5x-4.5x.
2020 2019
Reconciliation between IFRS and APM US$m US$m
------------------------------------ ------- ------
External debt 989.4 684.3
------------------------------------ ------- ------
Lease liabilities 131.7 125.6
------------------------------------ ------- ------
Gross debt 1,121.1 809.9
------------------------------------ ------- ------
Cash and cash equivalents 428.7 221.1
------------------------------------ ------- ------
Less: restricted cash - (37.7)
------------------------------------ ------- ------
Adjusted cash and cash equivalents 428.7 183.4
------------------------------------ ------- ------
Net debt 692.4 626.5
------------------------------------ ------- ------
LQA Adjusted EBITDA 240.4 214.8
------------------------------------ ------- ------
Net leverage 2.9x 2.9x
------------------------------------ ------- ------
Return on invested capital
Definition
Return on invested capital is defined as portfolio free cash
flow divided by invested capital. Invested capital is defined as
gross property, plant and equipment and gross intangibles, less
accumulated maintenance and corporate capital expenditure.
Purpose
This measure is used to evaluate asset efficiency and the
effectiveness of the Group's capital allocation.
2020 2019
Reconciliation between IFRS and APM US$m US$m
---------------------------------------------------------- ------- -------
Property, plant and equipment 594.7 631.9
Accumulated depreciation 713.0 597.2
Accumulated maintenance and corporate capital expenditure (180.6) (163.9)
Intangible assets 23.2 28.4
Accumulated amortisation 56.4 80.7
---------------------------------------------------------- ------- -------
Total invested capital 1,206.7 1,174.3
---------------------------------------------------------- ------- -------
Portfolio free cash flow 174.4 168.9
---------------------------------------------------------- ------- -------
Return on invested capital 14% 14%
---------------------------------------------------------- ------- -------
Detailed financial review
Consolidated income statement
For the year ended 31 December
Year ended 31 December
-------------------------------------------------- ------------------------
(US$m) 2020 2019
-------------------------------------------------- ----------- -----------
Revenue 414.0 387.8
Cost of sales (266.1) (261.9)
-------------------------------------------------- ----------- -----------
Gross profit 147.9 125.9
-------------------------------------------------- ----------- -----------
Administrative expenses (83.5) (119.4)
Loss on disposal of property, plant and equipment (8.1) (11.0)
-------------------------------------------------- ----------- -----------
Operating profit/(loss) 56.3 (4.5)
-------------------------------------------------- ----------- -----------
Interest receivable 0.8 0.7
Other gains 40.1 33.9
Finance costs (118.1) (104.9)
-------------------------------------------------- ----------- -----------
Loss before tax (20.9) (74.8)
-------------------------------------------------- ----------- -----------
Tax expense (15.8) (61.8)
-------------------------------------------------- ----------- -----------
Loss after tax (36.7) (136.6)
-------------------------------------------------- ----------- -----------
Key performance indicators
For the year ended 31 December
Group Tanzania DRC Congo Brazzaville Ghana South Africa
---------- -------------- -------------- -------------- ------------------ ------------ --------------
$ values
are
presented
as US$m 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
---------- ------ ------ ------ ------ ------ ------ -------- -------- ----- ----- ------ ------
Revenue
for the
year $414.0 $387.8 $167.1 $162.2 $174.0 $158.0 $26.6 $25.9 $42.9 $40.1 $3.4 $1.6
Adjusted
gross
margin(1) 68% 66% 67% 66% 67% 64% 66% 70% 72% 69% 77% 78%
Sites at
beginning
of the
year 6,974 6,745 3,661 3,701 1,850 1,773 384 380 961 891 118 -
Sites at
year end 7,356 6,974 3,821 3,661 1,895 1,850 426 384 978 961 236 118
Tenancies
at
beginning
of the
year 14,591 13,549 8,099 7,848 3,828 3,492 568 529 1,888 1,680 208 -
Tenancies
at year
end 15,656 14,591 8,625 8,099 4,096 3,828 617 568 1,914 1,888 404 208
Tenancy
ratio at
year end 2.13x 2.09x 2.26x 2.21x 2.16x 2.07x 1.45x 1.48x 1.96x 1.96x 1.71x 1.76x
Adjusted
EBITDA
for
the
year(2) $226.6 $205.2 $105.0 $96.4 $103.5 $88.3 $12.7 $13.6 $27.4 $23.6 $1.1 $0.2
---------- ------ ------ ------ ------ ------ ------ -------- -------- ----- ----- ------ ------
Adjusted
EBITDA
margin
for the
year 55% 53% 63% 59% 59% 56% 48% 53% 64% 59% 32% 13%
---------- ------ ------ ------ ------ ------ ------ -------- -------- ----- ----- ------ ------
(1) Adjusted gross margin means gross profit, adding back site
and warehouse depreciation, divided by revenue.
(2) Group Adjusted EBITDA for the year includes corporate costs
of US$23.1 million (2019: US$16.9 million).
Total tenancies as at 31 December
Group Tanzania DRC Congo Brazzaville Ghana South Africa
------------- -------------- ------------ ------------ ------------------- ------------ --------------
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Standard
colocations 7,421 6,856 4,268 3,978 2,097 1,905 173 170 718 715 165 88
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Amendment
colocations 879 761 536 460 104 73 18 14 218 212 3 2
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Total
colocations 8,300 7,617 4,804 4,438 2,201 1,978 191 184 936 927 168 90
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Total sites 7,356 6,974 3,821 3,661 1,895 1,850 426 384 978 961 236 118
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Total
tenancies 15,656 14,591 8,625 8,099 4,096 3,828 617 568 1,914 1,888 404 208
------------- ------ ------ ----- ----- ----- ----- --------- -------- ----- ----- ------ ------
Tenancies
The number of tenancies increased by 7% to 15,656 on 31 December
2020 from 14,591 on 31 December 2019. This increase was driven by
tenancy growth across all markets.
Revenue
Revenue increased by 7% to US$414.0 million in the year ended 31
December 2020 from US$387.8 million in the year ended 31 December
2019. The increase in revenue was largely driven by the 7% increase
in tenancies from 14,591 as of 31 December 2019 to 15,656 as of 31
December 2020.
Cost of sales
Year ended 31 December
-------------------------------- ----------------------------------------
% of Revenue % of Revenue
------------ ------------
(US$m) 2020 2020 2019 2019
-------------------------------- ----- ------------ ----- ------------
Power 79.9 19.3% 82.6 21.3%
Non-power 53.6 12.9% 50.6 13.0%
Site and warehouse depreciation 132.6 32.0% 128.7 33.2%
-------------------------------- ----- ------------ ----- ------------
Total cost of sales 266.1 64.3% 261.9 67.5%
-------------------------------- ----- ------------ ----- ------------
The table below shows an analysis of the cost of sales on a
country-by-country basis for the year ended 31 December 2020 and
2019.
Tanzania DRC Congo Brazzaville Ghana South Africa
------------------- -------------- -------------- ------------------- -------------- --------------
Year ended Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December 31 December
-------------- -------------- ------------------- -------------- --------------
(US$m) 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
------------------- ------ ------ ------ ------ --------- -------- ------ ------ ------ ------
Power 27.8 29.4 40.5 41.6 3.1 2.9 7.9 8.5 0.6 0.2
Non-power 26.6 26.1 16.8 15.7 6.1 4.9 3.9 3.8 0.2 0.1
Site and warehouse
depreciation 55.5 54.1 56.9 55.1 10.1 10.9 8.5 8.1 1.6 0.5
------------------- ------ ------ ------ ------ --------- -------- ------ ------ ------ ------
Total cost of
sales 109.9 109.6 114.2 112.4 19.3 18.7 20.3 20.4 2.4 0.8
------------------- ------ ------ ------ ------ --------- -------- ------ ------ ------ ------
Year-on-year, cost of sales increased to US$266.1 million in the
year ended 31 December 2020 from US$261.9 million in the year ended
31 December 2019, due primarily to an increase in non-power and
site and warehouse depreciation costs, partially offset by a
decrease in power costs. The most notable falls in power costs were
seen in Tanzania and DRC driven by reduced cost of fuel and
increased grid connections. Non-power, and site and warehouse
depreciation costs increased across the Group in line with the
increase in sites and related costs.
Administrative expenses
Administrative expenses decreased by 30% to US$83.5 million in
the year ended 31 December 2020 from US$119.4 million in the year
ended 31 December 2019. The decrease in administrative expenses is
primarily due to adjusting items of US$14.2 million in the year
ended 31 December 2020, compared to US$51.5 million in the year
ended 31 December 2019. The majority of the 2019 costs were in
relation to the listing on the London Stock Exchange ('LSE') and
associated share-based payments costs, largely attributed to the
unwinding of the Group's legacy private company Management
Incentive Plans.
Year ended 31 December
------------------------------ ---------------------------------------
% of Revenue % of Revenue
------------ ------------
(US$m) 2020 2020 2019 2019
------------------------------ ---- ------------ ----- ------------
Other administrative costs 53.9 13.0% 49.4 12.7%
Depreciation and amortisation 15.4 3.7% 18.5 4.8%
Adjusting items 14.2 3.4% 51.5 13.3%
------------------------------ ---- ------------ ----- ------------
Total administrative expense 83.5 20.2% 119.4 30.8%
------------------------------ ---- ------------ ----- ------------
Adjusted EBITDA
Adjusted EBITDA was US$226.6 million in the year ended 31
December 2020 compared to US$205.2 million in the year ended 31
December 2019. The increase in Adjusted EBITDA between periods is
primarily attributable to the changes in revenue, cost of sales and
administrative expenses, as discussed above.
Loss on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment was US$8.1
million in the year ended 31 December 2020, compared to a loss of
US$11.0 million during the year ended 31 December 2019. This
decrease in loss on disposal was primarily a result of fewer site
consolidation programs in DRC and Tanzania in 2020, which reduces
site count but improves tenancy ratio and EBITDA margin.
Other gains
Other gains recognised in the year ended 31 December 2020 was a
gain of US$40.1 million, compared to a gain of US$33.9 million in
the year ended 31 December 2019. This is primarily in relation to
the US$33.8 million fair value movement of the embedded derivative
valuation of the US$975 million 7.000% bond (2019: US$33.9 million
on the US$600 million 9.125% bond), and a $6.2 million movement in
the fair value of contingent consideration in 2020 (2019:
US$nil).
Finance costs
Finance costs of US$118.1 million for the year ended 31 December
2020, mainly comprise interest for the bond. During the year, the
US$600 million bond was redeemed with early redemption charges (see
Note 1 below). The swing from a loss in foreign exchange
differences in 2019, to a gain in the year ended 31 December 2020,
is driven primarily by the fluctuations year-on-year of the Central
African Franc and Ghanaian Cedi.
Year ended 31 December
----------------------------------- ------------------------
(US$m) 2020 2019
----------------------------------- ----------- -----------
Foreign exchange differences (3.6) 12.0
Interest cost 80.5 77.0
Early redemption expenses(1) 23.9 -
Interest cost on lease liabilities 17.3 15.9
----------------------------------- ----------- -----------
Total finance costs 118.1 104.9
----------------------------------- ----------- -----------
(1) Includes call premium and release of transaction costs of
US$13.7 million and US$10.2 million respectively, related to the
early redemption of the US$600 million Senior Notes.
Tax expense
Our tax expense was US$15.8 million in the year ended 31
December 2020 as compared to US$61.8 million in the year ended 31
December 2019. The prior year includes US$55.0 million related to
Change of Control Taxes which was fully funded by a capital
contribution from the pre-IPO shareholders. Though entities in
Congo B and DRC have continued to be loss making, minimum income
taxes have been levied based on revenue, as stipulated by law in
these jurisdictions. Ghana and Tanzania are profit making and
subject to income tax.
Contracted revenue
The following table provides our total undiscounted contracted
revenue by country as of 31 December 2020 for each year from 2021
to 2025, with local currency amounts converted at the applicable
average rate for US Dollars for the year ended 31 December 2020
held constant. Our contracted revenue calculation for each year
presented assumes:
-- no escalation in fee rates;
-- no increases in sites or tenancies other than our committed tenancies;
-- our customers do not utilise any cancellation allowances set forth in their MLAs;
-- our customers do not terminate MLAs early for any reason; and
-- no automatic renewal.
Year ended 31 December
------------------ ---------------------------------
(US$m) 2021 2022 2023 2024 2025
------------------ ----- ----- ----- ----- -----
Tanzania 170.8 168.8 163.7 145.6 125.7
DRC 166.7 169.1 171.5 171.0 144.7
Congo Brazzaville 27.1 26.3 25.4 24.7 9.4
Ghana 33.6 31.9 31.0 30.4 30.1
South Africa 4.7 5.1 5.3 5.4 5.3
------------------ ----- ----- ----- ----- -----
Total 402.9 401.2 396.9 377.1 315.2
------------------ ----- ----- ----- ----- -----
The following table provides our total undiscounted contracted
revenue by key customers as of 31 December 2020 over the life of
the contracts with local currency amounts converted at the
applicable average rate for US dollars for the year ended 31
December 2020 held constant. As at 31 December 2020, total
contracted revenue was US$2.8 billion, of which 82% is from
Africa's Big-Five MNOs(1), with an average remaining life of 6.8
years. Our contracted revenue calculation for each year presented
assumes the same basis as above.
% of total
Total committed committed
(US$m) revenues revenues
-------------------------- --------------- ----------
Africa's Big-Five MNOs(1) 2,325.4 82%
Other 517.4 18%
-------------------------- --------------- ----------
Total 2,842.8 100%
-------------------------- --------------- ----------
(1) Includes Vodacom/fone, Airtel, Tigo, Orange and MTN.
Management cash flow
Year ended 31 December
------------------------------------------------------ ------------------------
(US$m) 2020 2019
------------------------------------------------------ ----------- -----------
Adjusted EBITDA 226.6 205.2
Less:
Maintenance and corporate capital additions (16.6) (12.1)
Payments of lease liabilities(1) (25.5) (20.9)
Tax paid(2) (10.1) (3.3)
------------------------------------------------------ ----------- -----------
Portfolio free cash flow(3) 174.4 168.9
Cash conversion %(4) 77% 82%
Net payment of interest(5) (92.6) (67.7)
------------------------------------------------------ ----------- -----------
Levered portfolio free cash flow 81.8 101.2
Discretionary capital additions(6) (80.3) (102.1)
------------------------------------------------------ ----------- -----------
Adjusted free cash flow 1.5 (0.9)
Net change in working capital(7) (22.2) (45.2)
Cash paid for adjusting and EBITDA adjusting items(8) (13.3) (26.0)
Cash paid in relation to Change of Control Taxes (37.7) (10.0)
Proceeds on disposal of assets 1.0 0.4
------------------------------------------------------ ----------- -----------
Free cash flow (70.7) (81.7)
Transactions with non-controlling interests (1.6) -
Net cash flow from financing activities(9) 279.8 214.3
------------------------------------------------------ ----------- -----------
Net cash flow 207.5 132.6
------------------------------------------------------ ----------- -----------
Opening cash balance(10) 221.1 89.0
Foreign exchange movement 0.1 (0.5)
------------------------------------------------------ ----------- -----------
Closing cash balance 428.7 221.1
------------------------------------------------------ ----------- -----------
(1) Payment of lease liabilities includes interest and principal
repayments of lease liabilities.
(2) Tax paid excludes Change of Control Taxes which are classified separately below.
(3) Refer to reconciliation of cash generated from operating
activities to portfolio free cash flow in the alternative
performance measures.
(4) Cash conversion % is calculated as portfolio free cash flow divided by Adjusted EBITDA.
(5) 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.
(6) Discretionary capital additions includes acquisition, growth and upgrade capital additions.
(7) 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.
(8) Cash paid for adjusting and EBITDA adjusting items
corresponds to cash paid in respect of items per note 4 of the
Consolidated Financial Statements - project costs in relation to
the IPO and fees for the preparation of the debt refinancing.
(9) Net cash flow from financing activities includes borrowing
drawdowns, loan issue costs and repayment of loan in the
Consolidated Statement of Cash Flows.
(10) Opening cash balance for the year ended 31 December 2020
included US$37.7 million restricted cash which had been funded at
the time of IPO by Helios Tower's pre-IPO shareholders. This was
paid to the relevant tax authority in Q1 2020.
Cash conversion has decreased from 82% for the year ended 31
December 2019 to 77% for the year ended 31 December 2020. This is
driven by an increase in maintenance and corporate capital
additions, higher payments of lease liabilities year-on-year, and
an increase in tax paid due to Tanzania and Ghana operations
becoming profitable, partially offset with an increase in Adjusted
EBITDA. Working capital improved by US$23.0 million year-on-year
due to a decrease in receivables days, for the year ended 31
December 2019, to 53 days in the year ended 31 December 2020. See
Note 15 of the Group Financial Statements.
Capital expenditures
The following table shows our capital expenditure additions by
category during the year ended 31 December:
2020 2019
------------ ---------------- -----------------
% of total % of total
US$m capex US$m capex
------------ ---- ---------- ----- ----------
Acquisition 15.9 16.4% 25.8 22.6%
Growth 48.9 50.5% 57.2 50.2%
Upgrade 15.5 16.0% 19.1 16.7%
Maintenance 15.4 15.9% 11.2 9.7%
Corporate 1.2 1.2% 0.9 0.8%
------------ ---- ---------- ----- ----------
Total 96.9 100.0% 114.2 100.0%
------------ ---- ---------- ----- ----------
Acquisition capex in the year ended 31 December 2020 mainly
relates to the acquisition of 65 sites from Eagle Towers in South
Africa.
Indebtedness
As of 31 December 2020 and 31 December 2019 the HT Group's
outstanding loans and borrowings, excluding lease liabilities, were
US$989.4 million (net of issue costs) and US$684.3 million
respectively. The increase in indebtedness year-on-year is
primarily due to new Bond issuances during the year ended 31
December 2020. On 18 June 2020 HTA Group, Ltd. issued US$750
million of 7.000% Senior Notes due 2025. The proceeds were used to
redeem the US$600 million notes held previously and extinguish
US$75 million of term loan debt. In addition, on 9 September 2020
HTA Group, Ltd. issued a further US$225 million aggregate principal
of its 7.000% Senior Notes due 2025. For more details, see Note 20
of the Group Financial Statements.
Principal risks and uncertainties
Business principal risks
Summarised below are the key risks identified (not in order of
significance) which could have a material impact on the Group.
Risk
status Risk description Impacts Risk mitigation
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 1. Operational resilience Strategic
The ability of the Group Reputational * Ongoing enhancements to data security and protection
to continue operations is Operational measures with third-party expert support;
heavily reliant on third
parties, the proper
functioning * Additional investment in IT resource and
of its technology platforms infrastructure to increase automation and workflow of
and the capacity of its business as usual activities;
available
human resources. Failure
in any of these three areas * Third-party due diligence, ongoing monitoring and
could severely affect its regular supplier performance reviews;
operational capabilities
and ability to deliver on
its strategic objectives. * Alternative sources of supply are identified in
advance to mitigate any potential disruption to the
strategic supply chain;
* Ongoing review and involvement of the human resources
department at an early stage in organisation design
and development activities.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 2. Major quality failure Reputational
or breach of contract Financial * Continued skills development and training programmes
The Group's reputation and for the project and operational delivery team;
profitability could be
damaged
if it fails to meet its * Detailed and defined project scoping and life cycle
customers' management through project delivery and transfer to
operational specifications, ongoing operations;
quality standards or
delivery
schedules. * Contract and dispute management processes in place;
A substantial portion of
Group revenues is generated
from a limited number of * Continuous monitoring and management of customer
large customers. The loss relationships;
of any of these customers
would materially affect the
Group's finances and growth * Use of long-term contracting with minimal termination
prospects. rights.
Many of the Group's customer
tower contracts contain
liquidated
damage provisions, which
may require the Group to
make unanticipated and
potentially
significant payments to its
customers.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 3. Non-compliance with Compliance
various Financial * Constant monitoring of potential changes to laws and
laws and regulations such Reputational regulatory requirements;
as:
i) Health, safety and
environmental * In-person and virtual training on health, safety and
laws environmental matters provided to employees and
ii)Anti-bribery and relevant third-party contractors;
corruption
provisions
Non-compliance with * ISO 37001 (Anti-Bribery Management System)
applicable certification retained;
laws and regulations may
lead to substantial fines
and penalties, reputational * Ongoing refresh of compliance and related policies
damage and adverse effects implemented in 2018, including specific details
on future growth prospects. covering Anti-Bribery and Corruption, Facilitation of
Sudden and frequent changes Tax Evasion, Anti-Money-Laundering;
in laws and regulations,
in respect of their
interpretation * Compliance monitoring activities and periodic
or application and reporting requirements introduced;
enforcement,
both locally and
internationally, * Ongoing engagement with external lawyers, consultants,
may require the Group to and regulatory authorities, as necessary, to identify
modify its existing business and assess changes in the regulatory environment;
practices, incur increased
costs and subject it to
potential * Third-Party Code of Conduct communicated and annual
additional liabilities. certifications required of all high and medium risk
third parties introduced and communicated;
* Third-party monitoring through supplier audits and
performance reviews.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 4. Economic and political Operational
instability Financial * Ongoing market analysis and business intelligence
A slowdown in the growth gathering activities;
of, or a reduction in demand
for, wireless communication
services could adversely * Market share growth strategy in place;
affect the demand for
communication
sites and tower space, and * Long-term contracts with blue chip MNOs;
could have a material
adverse
effect on the Group's * Close monitoring of any potential risks that may
financial affect operations;
condition and results of
operations.
There are significant risks * Business continuity and contingency plans in place to
related to political respond to any emergency situations.
instability,
security, ethnic, religious
and regional tensions in
each geography where the
Group has operations.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 5. Significant exchange rate Financial
movements * USD and EUR pegged contracts;
Fluctuations in, or
devaluations
of, local market currencies * 'Natural' hedge of local currencies (revenue vs.
where the Group operates opex);
could have a significant
and negative financial
impact * Monthly review of exchange rate differences.
on the Group's business,
financial condition and
results.
Such impacts may also result
from any adverse effects
that these movements have
on Group third-party
customers
and strategic suppliers.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 6. Non-compliance with Operational
permit * Inventory of required licences and permits maintained
requirements for each operating company;
The Group may not always
operate with the necessary
required approvals and * Compliance registers maintained with any potential
permits non-conformities identified by relevant government
for some of its tower sites, authorities with a timetable for rectification;
particularly in the case
of tower portfolios acquired
from a third-party. * Periodic engagement with external lawyers and
Vagueness, advisors, and participation in industry groups;
uncertainty and changes in
interpretation of regulatory
requirements are frequent * Active and ongoing engagement with relevant
and often arise without regulatory authorities to proactively identify,
warning. assess and manage actual and potential regulation
As a result, the Group may changes.
be subject to potential
reprimands,
warnings, fines and
penalties
for non-compliance with the
relevant permitting and
approval
requirements.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 7. Loss of key personnel People
The Group's successful * Talent identification and succession planning are in
operational place for key roles;
activities and growth are
closely linked to the
knowledge * Competitively benchmarked performance-related
and experience of key remuneration plans;
members
of senior management and
highly skilled technical * Staff performance and development/support plans.
employees. The loss of any
such personnel, or the
failure
to attract, recruit and
retain
equally high-calibre
professionals,
could adversely affect the
Group's operations,
financial
condition and strategic
growth
prospects.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 8. Technology risk Strategic
Advances in technology that * Strategic long-term planning;
enhance the efficiency of
wireless networks, and
potential * Business intelligence;
active sharing of wireless
spectrum, may significantly
reduce or negate the need * Exploring alternative technologies such as solar
for tower-based power;
infrastructure
or services. This could
reduce * Continuously improving our product offering to adapt
the need for to new wireless technologies;
telecommunications
operators to add more
tower-based * Applying for new licences to provide active
antenna equipment at certain infrastructure services in certain markets.
tower sites, leading to a
potential decline in
tenancies,
service needs and revenue
streams.
Examples may include
spectrally
efficient technologies,
which
could potentially relieve
certain network capacity
problems, or complementary
voice over internet protocol
access technologies that
could absorb a portion of
subscriber traffic from the
traditional tower-based
networks.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 9. Failure to remain Financial
competitive * Key performance indicator ('KPI') monitoring and
Competition in, or benchmarking against competitors;
consolidation
of, the telecommunications
tower industry may create * Total cost of ownership analysis for MNOs;
pricing pressures that
materially
and adversely affect the * Fair pricing structure;
Group.
* Business intelligence and review of competitors'
activities;
* Strong tendering team to ensure high win/retention
rate;
* Continuous capex investment to ensure that the Group
has sufficient capacity.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 10. Failure to integrate Strategic
new lines of business in Financial * Pre-acquisition due diligence conducted with the
new markets Operational assistance of external advisors with specific
Multiple risks exist with geographic and industry expertise;
entry into new markets and
new lines of business.
Failure * Ongoing monitoring activities
to successfully manage and post-acquisition/agreement;
integrate operations,
resources
and technology could have * Detailed management, operations and technology
material adverse integration plan;
implications
for the Group's overall
growth * Ongoing measurement of performance vs. plan and Group
strategy, and negatively strategic objectives;
impact its financial
position
and corporate culture. * Implementation of a regional CEO and support function
to governance and oversight structure.
--------- ---------------------------- ------------- --------------------------------------------------------------
No change 11. Tax disputes Compliance
Our operations are based Financial * Frequent interaction and transparent communication
in certain countries with Operational with relevant governmental authorities and
complex, frequently changing Reputational representatives;
and bureaucratic and
administratively
burdensome tax regimes. This * Engagement of external legal and tax consultants to
may lead to significant advise on legislative/tax code changes and assessed
disputes liabilities or audits;
around interpretation and
application of tax rules
and may expose us to * Engagement with trade associations and industry
significant bodies and other international companies and
additional taxation organisations facing similar issues;
liabilities.
* Defending against unwarranted claims;
* Recruitment of Group Tax Manager, and ongoing
recruitment of in-house tax expertise at both Group
and Opco levels.
--------- ---------------------------- ------------- --------------------------------------------------------------
New 12. Covid-19 Financial
In addition to the normal Operational * Health and safety protocols established and
health and safety risks to implemented;
our employees and
contractors,
the ongoing impact of the * Business continuity plans implemented with ongoing
Covid-19 pandemic could monitoring;
materially
and adversely affect the
financial and operational * Financial modelling, scenario building and stress
performance of the Group testing;
across all its activities.
The effects of the pandemic
may also disrupt the * Continuous monitoring of the external environment;
achievement
of the Group's strategic
plans and growth objectives * Increased fuel and capex purchases;
and place additional strain
on its technology
infrastructure. * Review of contractual terms and conditions;
There is also an increased
risk of litigation due to
the potential effects of * Review and adaptation of our control environment for
the pandemic on fulfilment remote working.
of contractual obligations.
--------- ---------------------------- ------------- --------------------------------------------------------------
New 13. Information technology Financial
failure and cyber attack Operational * Ongoing implementation and enhancement of security
risk Reputational and remote access processes, policies and procedures;
We are increasingly
dependent
on the performance and * Regular security testing regime established,
effectiveness validated by independent third parties;
of our IT systems. Failure
of our key systems, exposure
to the increasing threat * Annual staff training and awareness programme in
of cybercrime attacks and place;
threats, loss or theft of
sensitive information,
whether * Security controls based on industry best practice
accidentally or frameworks such as NCSC, and validated through
intentionally, internal audit assessments;
expose the Group to
operational,
strategic, reputational and * Specialist security third parties engaged to assess
financial risks. These risks cyber risks and mitigation plans;
are increasing due to
greater
interconnectivity, reliance * Incident management and response processes aligned to
on technology solutions to Information Technology Infrastructure Library
drive business performance, ('ITIL(R)') best practice - identification,
use of third parties in containment, eradication, recovery and lessons
operational learned;
activities and continued
adoption of remote working
practices. * New supplier risk management assessments and due
Cyber attacks are becoming diligence carried out.
more sophisticated and
frequent
and may compromise sensitive
information of the Group,
its employees, customers
or other third parties.
Failure
to prevent unauthorised
access
or to update processes and
IT security measures may
expose the Group to
potential
fraud, inability to conduct
its business, damage to
customers
as well as regulatory
investigations
and associated fines and
penalties.
Financial Statements
Consolidated Income Statement
For the year ended 31 December
2020 2019
Note US$m US$m
-------------------------------------------------- ---- ------- -------
Revenue 3 414.0 387.8
Cost of sales (266.1) (261.9)
-------------------------------------------------- ---- ------- -------
Gross profit 147.9 125.9
-------------------------------------------------- ---- ------- -------
Administrative expenses (83.5) (119.4)
Loss on disposal of property, plant and equipment (8.1) (11.0)
-------------------------------------------------- ---- ------- -------
Operating profit/(loss) 5a 56.3 (4.5)
-------------------------------------------------- ---- ------- -------
Interest receivable 8 0.8 0.7
Other gains 24 40.1 33.9
Finance costs 9 (118.1) (104.9)
-------------------------------------------------- ---- ------- -------
Loss before tax (20.9) (74.8)
-------------------------------------------------- ---- ------- -------
Tax expense 10 (15.8) (61.8)
-------------------------------------------------- ---- ------- -------
Loss after tax for the year (36.7) (136.6)
-------------------------------------------------- ---- ------- -------
Loss attributable to:
Owners of the Company (36.7) (136.0)
Non-controlling interest 13 - (0.6)
-------------------------------------------------- ---- ------- -------
Loss for the year (36.7) (136.6)
-------------------------------------------------- ---- ------- -------
Loss per share:
Basic and diluted loss per share (cents) 29 (4) (15)
-------------------------------------------------- ---- ------- -------
All activities relate to continuing operations.
The accompanying notes form an integral part of these Financial
Statements.
Consolidated Statement of other comprehensive income
For the year ended 31 December
2020 2019
US$m US$m
---------------------------------------------------------- ------ -------
Loss after tax for the year (36.7) (136.6)
Other comprehensive (loss)/gain:
Items that may be reclassified subsequently to profit
and loss:
Exchange differences on translation of foreign operations (9.2) (1.0)
Income tax relating to these items - -
---------------------------------------------------------- ------ -------
Total comprehensive loss for the year, net of tax (45.9) (137.6)
---------------------------------------------------------- ------ -------
Total comprehensive loss attributable to:
Owners of the Company (45.9) (137.0)
Non-controlling interest - (0.6)
---------------------------------------------------------- ------ -------
Total comprehensive loss for the year (45.9) (137.6)
---------------------------------------------------------- ------ -------
The accompanying notes form an integral part of these Financial
Statements.
Consolidated Statement of financial position
As at 31 December
2020 2019
Assets Note US$m US$m
------------------------------ ---- ------- -------
Non-current assets
Intangible assets 11 23.2 28.4
Property, plant and equipment 12a 594.7 631.9
Right-of-use assets 12b 109.2 108.2
Derivative financial assets 26 88.8 41.0
------------------------------ ---- ------- -------
815.9 809.5
------------------------------ ---- ------- -------
Current assets
Inventories 14 9.0 9.3
Trade and other receivables 15 137.6 166.5
Prepayments 16 39.3 14.1
Cash and cash equivalents 17 428.7 221.1
------------------------------ ---- ------- -------
614.6 411.0
------------------------------ ---- ------- -------
Total assets 1,430.5 1,220.5
------------------------------ ---- ------- -------
Equity and liabilities
Equity
Share capital 18 12.8 12.8
Other reserves (87.0) (87.0)
Share-based payments reserves 18.4 19.6
Treasury shares 18 (2.3) (4.4)
Translation reserve (91.9) (82.7)
Retained earnings 280.3 317.6
------------------------------ ---- ------- -------
Equity attributable to owners 130.3 175.9
Non-controlling interest 13 - (0.6)
------------------------------ ---- ------- -------
Total equity 130.3 175.3
------------------------------ ---- ------- -------
Current liabilities
Trade and other payables 19 174.7 222.7
Short-term lease liabilities 21 23.5 21.4
Contingent consideration 30 - 3.6
Loans 20 2.6 19.2
------------------------------ ---- ------- -------
200.8 266.9
------------------------------ ---- ------- -------
Non-current liabilities
Deferred tax liabilities 4.4 3.1
Contingent consideration 30 - 5.9
Long-term lease liabilities 21 108.2 104.2
Loans 20 986.8 665.1
------------------------------ ---- ------- -------
1,099.4 778.3
------------------------------ ---- ------- -------
Total liabilities 1,300.2 1,045.2
------------------------------ ---- ------- -------
Total equity and liabilities 1,430.5 1,220.5
------------------------------ ---- ------- -------
The accompanying notes form an integral part of these Financial
Statements.
These Financial Statements were approved and authorised for
issue by the Board on 10 March 2021 and signed on its behalf
by:
Kash Pandya
Manjit Dhillon
Consolidated Statement of changes in equity
For the year ended 31 December 2020
Attributable
Share- to the Non-
based owners controlling
Share Share Other Treasury payments Translation Retained of the interest Total
capital premium reserves shares reserves reserve earnings Company (NCI) equity
Note US$m US$m US$m US$m US$m US$m US$m US$m US$m US$m
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Balance at 1
January
2019 909.2 187.0 (12.8) - - (81.7) (880.0) 121.7 - 121.7
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Transition to
IFRS 9
Loss for the
year - - - - - - (136.0) (136.0) (0.6) (136.6)
Other
comprehensive
loss - - - - - (1.0) - (1.0) - (1.0)
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Total
comprehensive
loss for the
year - - - - - (1.0) (136.0) (137.0) (0.6) (137.6)
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Transactions
with
owners;
Reorganisation 263.9 (187.0) (74.2) (2.7) 7.9 - - 7.9 - 7.9
New issue of
shares 109.2 16.4 - - - - - 125.6 - 125.6
Share issue
costs - (7.3) - - - - - (7.3) - (7.3)
Purchase of own
shares - - - (1.7) - - - (1.7) - (1.7)
Share-based
payments - - - - 11.7 - - 11.7 - 11.7
Capital
contribution
from
shareholders - - - - - - 55.0 55.0 - 55.0
Capital
reduction (1,269.5) (9.1) - - - - 1,278.6 - - -
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Balance at 31
December 2019 12.8 - (87.0) (4.4) 19.6 (82.7) 317.6 175.9 (0.6) 175.3
Loss for the
year - - - - - - (36.7) (36.7) - (36.7)
Other
comprehensive
loss - - - - - (9.2) - (9.2) - (9.2)
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Total
comprehensive
loss for the
year - - - - - (9.2) (36.7) (45.9) - (45.9)
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Transactions
with
owners;
Share-based
payments 25 - - - - 0.9 - - 0.9 - 0.9
Transfer of
treasury
shares - - - 2.1 (2.1) - - - - -
Non-controlling
interest - - - - - - (0.6) (0.6) 0.6 -
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Balance at 31
December 2020 12.8 - (87.0) (2.3) 18.4 (91.9) 280.3 130.3 - 130.3
---------------- ---- --------- ------- -------- -------- -------- ----------- -------- ------------ ----------- -------
Included in other reserves is the merger accounting reserve
which arose on Group reorganisation in 2019 and is the difference
between the carrying value of the net assets acquired and the
nominal value of the share capital.
Share-based payments reserves relate to share options awarded.
See Note 25.
Translation reserve relates to the translation of the Financial
Statements of overseas subsidiaries into the presentational
currency of the Consolidated Financial Statements.
Consolidated Statement of cash flows
For the year ended 31 December 2020
2020 2019
Note US$m US$m
--------------------------------------------------- ------ ------- -------
Cash flows from operating activities
Loss before tax (20.9) (74.8)
Adjustments for:
Other gains 24 (40.1) (33.9)
Finance costs 9 118.1 104.9
Interest receivable 8 (0.8) (0.7)
Depreciation and amortisation on property, plant
and equipment 11, 12 148.0 147.2
Share-based payments and long-term incentive
plans 25 1.0 -
Loss on disposal of property, plant and equipment 4 8.1 11.0
Movement in working capital:
Decrease in inventories 0.6 1.0
Decrease/(increase) in trade and other receivables 21.1 (56.0)
Increase in prepayments (0.8) (1.0)
(Decrease)/increase in trade and other payables (24.7) 27.6
--------------------------------------------------- ------ ------- -------
Cash generated from operations 209.6 125.3
Interest paid (102.3) (74.4)
Tax paid 10 (47.8) (13.3)
--------------------------------------------------- ------ ------- -------
Net cash generated from operating activities 59.5 37.6
--------------------------------------------------- ------ ------- -------
Cash flows from investing activities
Payments to acquire property, plant and equipment (123.4) (95.2)
Payments to acquire intangible assets (0.3) (9.2)
Acquisition of subsidiary 30 - (10.6)
Proceeds on disposal on assets 1.0 0.4
Transactions with non-controlling interests (1.6) -
Interest received 0.8 0.7
--------------------------------------------------- ------ ------- -------
Net cash used in investing activities (123.5) (113.9)
--------------------------------------------------- ------ ------- -------
Cash flows from financing activities
Gross proceeds from issue of equity share capital - 125.6
Share issue costs - (7.3)
Repurchase of fully vested options - (1.7)
Borrowing drawdowns 995.6 50.0
Loan issue costs (26.0) -
Repayment of loan (689.8) -
Repayment of lease liabilities (8.3) (5.4)
Capital contributions - escrow funds - 47.7
--------------------------------------------------- ------ ------- -------
Net cash generated from financing activities 271.5 208.9
--------------------------------------------------- ------ ------- -------
Net increase in cash and cash equivalents 207.5 132.6
--------------------------------------------------- ------ ------- -------
Foreign exchange on translation movement 0.1 (0.5)
Cash and cash equivalents at 1 January 221.1 89.0
--------------------------------------------------- ------ ------- -------
Cash and cash equivalents at 31 December 428.7 221.1
--------------------------------------------------- ------ ------- -------
Notes to the Financial Statements
For the year ended 31 December 2020
1. Statement of compliance and presentation of financial
statements
Helios Towers plc, together with its subsidiaries (collectively,
'Helios', 'the Group' or 'the Company'), is an independent tower
company, with operations across five countries. Helios Towers plc
is a public limited company incorporated and domiciled in the UK,
and registered under the laws of England & Wales under company
number 12134855 with its registered address at 10th Floor, 5
Merchant Square West, London, W2 1AS, United Kingdom. In October
2019, the ordinary shares of Helios Towers plc were admitted to the
premium listing segment of the Official List of the UK Financial
Conduct Authority and trade on the London Stock Exchange Plc's main
market for listed securities.
The Company and entities controlled by the Company are disclosed
in Note 13. The principal accounting policies adopted by the Group
are set out in Note 2. These policies have been consistently
applied to all periods presented.
2(a). Accounting policies
Basis of preparation
The Group's Financial Statements are prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union ('IFRSs'), taking into account IFRS Interpretations
Committee (IFRS IC) interpretations and those parts of the
Companies Act 2006 applicable to companies reporting under
IFRS.
Going concern
The Directors believe that the Group is well placed to manage
its business risks successfully, despite the current uncertain
economic outlook in the wider economy. The Group's forecasts and
projections, taking account of possible changes in trading
performance, show that the Group should remain adequately liquid
and should operate within the covenant levels of its current debt
facilities. The Directors consider it appropriate to adopt the
going concern basis of preparation for the consolidated Financial
Statements.
As part of their regular assessment of the Group's working
capital and financing position, the Directors have prepared a
detailed trading and cash flow forecast for a period which covers
at least 12 months after the date of approval of the consolidated
Financial Statements. In assessing the forecast, the Directors have
considered:
-- trading risks presented by the current economic conditions in
the operating markets;
-- the impact of macroeconomic factors, particularly interest
rates and foreign exchange rates;
-- the status of the Group's financial arrangements;
-- progress made in developing and implementing cost reduction
programmes and operational improvements; and
-- mitigating actions available should business activities fall
behind current expectations, including the deferral of
discretionary overheads and restricting cash outflows.
In particular, the Directors have considered the impact of
Covid-19 on the Group's operations. The Directors have acknowledged
the latest guidance on going concern as issued by the Financial
Reporting Council in June 2020 and December 2020 and the thematic
review published in July 2020. Management have considered the
latest forecasts available to them and additional sensitivity
analysis has been prepared to consider any reduction in anticipated
levels of Adjusted EBITDA and operating profit arising from various
scenarios.
The Directors continue to consider it appropriate to adopt the
going concern basis of accounting in preparing the consolidated
financial information. Forecast liquidity has been assessed under a
number of stressed scenarios and a reverse stress test was
performed to support this assertion.
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, COO 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.
Total
Congo South operating Group
Tanzania DRC Brazzaville Ghana Africa companies Corporate total
31 December 2020 US$m US$m US$m US$m US$m US$m US$m US$m
---------------------------- -------- ------ ------------ ----- ------- ---------- --------- -------
Revenue 167.1 174.0 26.6 42.9 3.4 414.0 - 414.0
Adjusted gross margin(1) 67% 67% 66% 72% 77% 68% - 68%
Adjusted EBITDA(2) 105.0 103.5 12.7 27.4 1.1 249.7 (23.1) 226.6
Adjusted EBITDA
margin(3) 63% 59% 48% 64% 32% 60% - 55%
Financing costs:
Interest costs (36.2) (49.6) (9.5) (7.3) (2.9) (105.5) 7.7 (97.8)
Early redemption
charges(4) - - - - - - (23.9) (23.9)
Foreign exchange
differences (1.8) 0.5 6.8 (2.2) - 3.3 0.3 3.6
---------------------------- -------- ------ ------------ ----- ------- ---------- --------- -------
Total finance costs (38.0) (49.1) (2.7) (9.5) (2.9) (102.2) (15.9) (118.1)
---------------------------- -------- ------ ------------ ----- ------- ---------- --------- -------
Other segmental
information:
Non-current assets 280.6 295.8 39.5 48.5 50.3 714.7 101.2 815.9
Property, plant
and equipment capital
additions 33.8 27.8 7.7 9.2 17.1 95.6 1.3 96.9
Property, plant
and equipment depreciation
and amortisation (51.1) (57.7) (11.0) (7.9) (2.1) (129.8) (4.2) (134.0)
---------------------------- -------- ------ ------------ ----- ------- ---------- --------- -------
(1) Adjusted gross margin means gross profit, adding back site
and warehouse depreciation, divided by revenue.
(2) Adjusted EBITDA is 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. Adjusting items are material items that are considered
one-off by management by virtue of their size and/or incidence.
(3) Adjusted EBITDA margin is Adjusted EBITDA divided by
revenue.
(4) Corporate includes call premium and release of transaction
costs of US$13.7 million and US$10.2 million respectively, in
relation to the early redemption of the US$600 million Senior
Notes. See note 20 for further detail.
Total
Congo South operating Group
Tanzania DRC Brazzaville Ghana Africa companies Corporate total
31 December 2019 US$m US$m US$m US$m US$m US$m US$m US$m
---------------------------- -------- ------ ------------ ------ ------- ---------- --------- -------
Revenue 162.2 158.0 25.9 40.1 1.6 387.8 - 387.8
Adjusted gross margin(1) 66% 64% 70% 69% 78% 66% - 66%
Adjusted EBITDA(2) 96.4 88.3 13.6 23.6 0.2 222.1 (16.9) 205.2
Adjusted EBITDA
margin(3) 59% 56% 53% 59% 13% 57% - 53%
Financing costs:
Interest costs (44.5) (48.7) (9.0) (6.7) (2.1) (111.0) 18.1 (92.9)
Foreign exchange
differences (3.7) 0.2 (1.5) (6.8) - (11.8) (0.2) (12.0)
---------------------------- -------- ------ ------------ ------ ------- ---------- --------- -------
Total finance costs (48.2) (48.5) (10.5) (13.5) (2.1) (122.8) 17.9 (104.9)
---------------------------- -------- ------ ------------ ------ ------- ---------- --------- -------
Other segmental
information:
Non-current assets 304.7 335.2 40.7 45.7 31.2 757.5 52.0 809.5
Property, plant
and equipment capital
additions (4) 43.7 37.0 6.4 11.7 15.1 113.9 0.3 114.2
Property, plant
and equipment depreciation
and amortisation (52.9) (61.3) (11.8) (8.8) (1.0) (135.8) (2.9) (138.7)
---------------------------- -------- ------ ------------ ------ ------- ---------- --------- -------
(1) Adjusted gross margin means gross profit, adding back site
and warehouse depreciation, divided by revenue.
(2) Adjusted EBITDA is 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. Adjusting items are material items that are considered
one-off by management by virtue of their size and/or incidence.
(3) Adjusted EBITDA margin is Adjusted EBITDA divided by
revenue.
(4) Property, plant and equipment capital additions in the year
ended 31 December 2019 in South Africa, exclude the fair value of
intangible assets acquired and goodwill recognised under IFRS 3
(see Note 30).
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.
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. Adjusting items are material items that are
considered one-off by management by virtue of their size and/or
incidence.
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
are not indicative of its underlying trading performance.
Adjusted EBITDA is reconciled to loss before tax as follows:
2020 2019
US$m US$m
------------------------------------------------------- ------- -------
Adjusted EBITDA 226.6 205.2
Adjustments applied to give Adjusted EBITDA
Adjusting items:
Project costs(1) (4.4) (18.6)
Deal costs(2) (8.8) (1.7)
Share-based payments and long-term incentive plans(3) (1.0) (31.2)
Loss on disposal of property, plant and equipment (8.1) (11.0)
Other gains (Note 24) 40.1 33.9
Depreciation of property, plant and equipment (128.4) (129.5)
Amortisation of intangibles (5.6) (9.2)
Depreciation of right-of-use assets (14.0) (8.5)
Interest receivable 0.8 0.7
Finance costs (118.1) (104.9)
------------------------------------------------------- ------- -------
Loss before tax (20.9) (74.8)
------------------------------------------------------- ------- -------
(1) Project costs in 2020 relate to the preparation for a debt
refinancing, and in 2019 relate to listing of equity on the London
Stock Exchange in October 2019.
(2) Deal costs comprise costs for potential and aborted
acquisitions, which mainly comprise professional fees and travel
costs incurred while investigating potential site acquisitions that
are expensed when the potential site acquisition does not proceed,
and deal costs not capitalised, which relate to the exploration of
investment opportunities.
(3) Share-based payments and long-term incentive plan charges
and associated costs.
5a. Operating profit/(loss)
Operating profit/(loss) is stated after charging the
following:
2020 2019
US$m US$m
-------------------------------------------------- ----- -----
Cost of inventory expensed 51.8 56.8
Auditor remuneration (see Note 5b) 2.8 5.8
Loss on disposal of property, plant and equipment 8.1 11.0
Depreciation and amortisation 148.0 147.2
Staff costs (Note 6) 27.5 22.6
-------------------------------------------------- ----- -----
5b. Audit remuneration
2020 2019
US$m US$m
------------------------------------------------- ----- -----
Statutory audit of the Company's annual accounts 0.4 0.3
Statutory audit of the Group's subsidiaries 1.5 1.7
------------------------------------------------- ----- -----
Audit fees: 1.9 2.0
------------------------------------------------- ----- -----
Quarterly review engagements 0.4 0.3
Other assurance services 0.5 1.0
------------------------------------------------- ----- -----
Audit related assurance services 0.9 1.3
------------------------------------------------- ----- -----
Project costs - 2.4
Other services - 0.1
------------------------------------------------- ----- -----
Total other non-audit services: - 2.5
------------------------------------------------- ----- -----
Total non-audit fees 0.9 3.8
------------------------------------------------- ----- -----
Total fees 2.8 5.8
------------------------------------------------- ----- -----
2019 project costs relate to the IPO which was completed in
October 2019.
6. Staff costs
Staff costs consist of the following components:
2020 2019
US$m US$m
----------------------------------------------- ----- -----
Wages and salaries 25.6 21.3
Social security costs - employer contributions 1.4 1.0
Pension costs 0.5 0.3
----------------------------------------------- ----- -----
27.5 22.6
----------------------------------------------- ----- -----
The average monthly number of employees during the year was made
up as follows:
2020 2019
--------------------- ---- ----
Operations 137 133
Legal and regulatory 29 29
Administration 37 32
Finance 86 84
Sales and marketing 67 64
--------------------- ---- ----
356 342
--------------------- ---- ----
7. Key management personnel compensation
2020 2019
US$m US$m
--------------------- ----- -----
Salary and fees 2.0 1.5
Pension and benefits 0.2 0.2
Bonus 1.3 1.4
--------------------- ----- -----
3.5 3.1
--------------------- ----- -----
The above remuneration information relates to Directors in
Helios Towers plc. Further details can be found in the Directors'
Remuneration Report of the Annual Report.
8. Interest receivable
2020 2019
US$m US$m
------------------------- ----- -----
Bank interest receivable 0.8 0.7
------------------------- ----- -----
9. Finance costs
2020 2019
US$m US$m
------------------------------------ ----- -----
Foreign exchange differences (3.6) 12.0
Interest costs 80.5 77.0
Early redemption expenses(1) 23.9 -
Interest costs on lease liabilities 17.3 15.9
------------------------------------ ----- -----
118.1 104.9
------------------------------------ ----- -----
(1) Early redemption expenses includes call premium and release
of transaction costs of US$13.7 million and US$10.2 million
respectively, related to the early redemption of the US$600 million
Senior Notes.
The year-on-year decrease in foreign exchange differences for
the year ended 31 December 2020 is driven primarily by the
fluctuations year-on-year of the Central African Franc and Ghanaian
Cedi.
10. Tax expense, tax paid and deferred tax
2020 2019
US$m US$m
(a) Tax expense:
Current tax
In respect of current year 12.2 61.3
Adjustment in respect of prior years 3.2 0.7
---------------------------------------------------------- ------ ------
Total current tax 15.4 62.0
Deferred tax
Originating temporary differences on acquisition of
subsidiary undertakings (0.6) (0.2)
Originating temporary differences on capital assets 1.0 -
---------------------------------------------------------- ------ ------
Total deferred tax 0.4 (0.2)
---------------------------------------------------------- ------ ------
Total tax expense 15.8 61.8
---------------------------------------------------------- ------ ------
(b) Tax reconciliation:
Loss before tax (20.9) (74.8)
---------------------------------------------------------- ------ ------
Tax computed at the local statutory tax rate (4.2) (22.0)
Tax effect of expenditure not deductible for tax purposes 25.0 51.1
Tax effect of income not taxable in determining taxable
profit (1.8) -
Deferred income tax movement not recognised (9.3) (26.0)
Prior year over/(under) provision 3.2 0.7
Change of Control Taxes - 55.0
Minimum income taxes 2.3 3.0
Other 0.6 -
---------------------------------------------------------- ------ ------
Total tax expense 15.8 61.8
---------------------------------------------------------- ------ ------
The range of statutory income tax rates applicable to the
Group's operating subsidiaries is between 15% and 30%.
A change of control (as defined by the relevant local tax
authority) of certain of the Group's subsidiaries may trigger
Change of Control Taxes liabilities for the Group. An amount has
been set aside by the pre-IPO shareholders to cover these taxes
which the Group believes is sufficient to cover its current
estimates of these taxes.
As stipulated by local applicable law, minimum income taxes
apply and were paid by operating entities in Congo Brazzaville and
DRC which have reported tax losses for the year ended 31 December
2020. Minimum income taxes rules do not apply to the Ghana, South
Africa or Tanzania businesses.
2020 2019
Tax paid US$m US$m
---------------------------------------------------- ------ ------
Income tax (10.1) (3.3)
Change of Control Taxes funded by escrow restricted
cash (37.7) (10.0)
---------------------------------------------------- ------ ------
Total tax paid (47.8) (13.3)
---------------------------------------------------- ------ ------
For more information relating to Change of Control Taxes see
Note 17.
Deferred tax
As deferred tax assets and liabilities are measured at the rates
that are expected to apply in the periods of the reversal, the
deferred tax balance at the balance sheet date has been calculated
at the rate at which the relevant balance is expected to be
recovered or settled. Management has performed an assessment, for
all material deferred income tax assets and liabilities, to
determine the period over which the deferred income tax assets and
liabilities are forecast to be realised. The deferred tax liability
is calculated by applying the statutory corporate income tax rate
of 28% in South Africa and 30% in Congo Brazzaville on the
respective intangible assets recognised at the balance sheet
date.
Unrecognised deferred tax assets
No deferred tax asset is recognised on US$200.5 million of tax
losses at the balance sheet date, as the relevant businesses are
not expected to generate sufficient short-term taxable profits to
justify recognising the associated deferred tax assets.
Tax losses for which no deferred tax assets were recognised are
as follows: US$190.5 million are subject to expiry under local
statutory tax rules within periods of 3 to 5 years and US$10.0
million are not expected to expire. As at the balance sheet date,
the geographical split of the deferred tax assets in relation to
losses is DRC US$144.6 million (tax effect US$43.4 million), South
Africa US$7.8 million (tax effect US$2.2 million), Congo
Brazzaville US$13.1 million (tax effect US$3.9 million), Mauritius
US$32.7 million (tax effect US$4.9 million) and UK US$2.3 million
(tax effect US$0.4 million).
11. Intangible assets
Right Computer
Customer Customer Colocation of first Non-compete software
Goodwill contracts relationships rights refusal agreement and licence Total
US$m US$m US$m US$m US$m US$m US$m US$m
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
Cost
At 1 January 2019 - - - - 35.0 30.0 17.7 82.7
Additions during
the year - - - 8.8 - - 0.4 9.2
On acquisition of
subsidiary
undertakings
(Note 30) 4.1 3.4 6.9 - - 1.1 - 15.5
Disposals during
the year - - - - - - - -
Effects of foreign
currency exchange
differences 0.1 0.1 0.2 - - - 1.3 1.7
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
At 31 December 2019 4.2 3.5 7.1 8.8 35.0 31.1 19.4 109.1
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
Additions during
the year - - - - - - 0.3 0.3
Disposals - - - - - (30.0) - (30.0)
Effects of foreign
currency exchange
differences 0.7 (0.2) (0.3) - - - - 0.2
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
At 31 December 2020 4.9 3.3 6.8 8.8 35.0 1.1 19.7 79.6
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
Amortisation
At 1 January 2019 - - - - (27.5) (30.0) (12.8) (70.3)
Charge for year - (0.2) (0.3) (0.3) (5.2) - (3.2) (9.2)
Effects of foreign
currency exchange
differences - - - - - - (1.2) (1.2)
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
At 31 December 2019 - (0.2) (0.3) (0.3) (32.7) (30.0) (17.2) (80.7)
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
Charge for year - (0.2) (0.5) (0.6) (2.4) (0.3) (1.6) (5.6)
Disposals - - - - - 30.0 - 30.0
Effects of foreign
currency exchange
differences - - - - 0.1 - (0.2) (0.1)
At 31 December 2020 - (0.4) (0.8) (0.9) (35.0) (0.3) (19.0) (56.4)
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
Net book value
At 31 December 2020 4.9 2.9 6.0 7.9 - 0.8 0.7 23.2
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
At 31 December 2019 4.2 3.3 6.8 8.5 2.3 1.1 2.2 28.4
---------------------- -------- ---------- -------------- ---------- --------- ----------- ------------ ------
In 2016, alongside the purchase of 967 towers from Airtel Group,
a right of first refusal ('ROFR') agreement was signed with Airtel
Group in the DRC giving the Group the right of first refusal over
build-to-suit towers that Airtel Group wish to commission. A
payment of US$20 million was made for this right and was amortised
on a straight line-basis over its exercisable period which ended on
1 May 2020. As part of the same transaction, the Group entered into
a non-compete agreement with Airtel Group under which the Group and
the Company was granted the right that Airtel would not compete
with the Group in DRC and/or Congo Brazzaville. The amortisation
period for the non-compete agreement was four years, which ended in
2020.
On 30 April 2019, the Group acquired 89.5% of the voting equity
shares of Helios Towers South Africa Holdings (Pty) Ltd and
simultaneously entered into agreements with SA Towers Proprietary
Limited and Sky Coverage Proprietary Limited, to purchase certain
employee contracts and business assets comprising towers, tower
sites and related assets as well as to transfer certain tenant
leases. The Group has treated this as a single business combination
transaction and accounted for it in accordance with IFRS 3 -
Business Combinations ('IFRS 3') using the acquisition method. As a
result of this transaction, intangible assets have been recognised
on acquisition of subsidiary undertakings for customer contracts,
customer relationships and goodwill.
In July 2019, HTT Infraco Limited entered into a marketing
agreement with Viettel, whereby it acquired the rights to colocate
on approximately 1,000 sites. These additional sites meant that new
colocation opportunities were made available to other Group
customers.
The remaining amortisation period is;
-- customer contracts and customer relationships 13 years;
-- colocation rights 13 years;
-- non-compete agreement three years; and
-- computer software and licence two to three years.
Impairment
The Group tests goodwill, irrespective of any indicators, at
least annually for impairment. All other intangible assets are
tested for impairment where there is an impairment indicator. The
Group's cash-generating-units (CGUs) are aligned to its operating
segments. All of the carrying value of the goodwill is included in
the South Africa operating segment. If any such indication exists,
then the CGUs recoverable amount is estimated. For goodwill, the
recoverable amount of the related CGU is also estimated each year.
The recoverable amount is determined based on a value-in-use
calculation using cash flow projections for the next six years from
financial budgets approved by the Board of Directors. Management
uses contractual customer agreements at the time, independently
assessed new tenancies based on the expected growth in South Africa
and operating expense assumptions based on past experience in its
cash flow projections.
Key assumptions used in value-in-use calculations
-- number of towers under management at the end of each year
together with the lease upgrade or number of tenants per tower.
These are based on estimates of the number of tower opportunities
in the relevant markets and the expected growth in these
markets;
-- discount rate; and
-- operating cost and capital expenditure requirements.
A long-term nominal growth rate of 7.2% has been applied to
extrapolate the cash flow projections into perpetuity, based on
management's estimate of the long-term annual growth rates in
Adjusted EBITDA. From the financial model a net present value was
derived, using a pre-tax discount rate of 9.5% and compared to the
goodwill carrying value. The discount rate was based on local
weighted average cost of capital assuming debt leveraging of 38.0%
and risk free rate of 3.5%.
Amortisation of Intangibles are included within Administrative
expenses in the Consolidated Income Statement.
12a. Property, plant and equipment
Fixtures Motor Leasehold
IT equipment and fittings vehicles Site assets Land improvements Total
US$m US$m US$m US$m US$m US$m US$m
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
Cost
At 1 January 2019 12.2 1.0 4.4 1,139.4 8.9 1.3 1,167.2
Additions 5.3 0.1 0.4 88.5 - 0.1 94.4
On acquisition of subsidiary
undertakings (Note 30) - - - 7.6 - - 7.6
Disposals - - (0.1) (26.9) - - (27.0)
Effects of foreign currency
exchange differences 1.0 0.3 (0.2) (15.9) - 1.7 (13.1)
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2019 18.5 1.4 4.5 1,192.7 8.9 3.1 1,229.1
Additions 4.0 0.1 0.6 91.9 - - 96.6
Reclassifications - - - 2.3 (2.3) - -
Disposals - - (0.5) (20.2) - - (20.7)
Effects of foreign currency
exchange differences 0.3 - - 2.1 0.2 0.1 2.7
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2020 22.8 1.5 4.6 1,268.8 6.8 3.2 1,307.7
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
Depreciation
At 1 January 2019 (5.7) (0.9) (2.9) (480.5) - (0.6) (490.6)
Charge for the year (4.1) (0.1) (0.6) (124.2) - (0.5) (129.5)
Disposals - - - 15.6 - - 15.6
Effects of foreign currency
exchange differences (0.8) (0.3) 0.3 9.5 - (1.4) 7.3
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2019 (10.6) (1.3) (3.2) (579.6) - (2.5) (597.2)
Charge for the year (4.6) (0.1) (0.5) (122.8) (0.1) (0.3) (128.4)
Disposals - - 0.4 13.9 - - 14.3
Effects of foreign currency
exchange differences (0.2) - - (1.4) - (0.1) (1.7)
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2020 (15.4) (1.4) (3.3) (689.9) (0.1) (2.9) (713.0)
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
Net book value
At 31 December 2020 7.4 0.1 1.3 578.9 6.7 0.3 594.7
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2019 7.9 0.1 1.3 613.1 8.9 0.6 631.9
----------------------------- ------------ ------------- --------- ----------- ----- ------------- -------
At 31 December 2020, the Group had US$59.0 million (2019:
US$62.7 million) of expenditure recognised in the carrying amount
of items of site assets that were in the course of construction. On
completion of the construction, they will remain within the site
assets balance, and depreciation will commence when the assets are
available for use.
12b. Right-of-use assets
2020 2019
US$m US$m
-------------------------------------------------- ----- -----
Right-of-use assets by class of underlying assets
Land 105.4 104.0
Buildings 3.7 4.2
Motor vehicles 0.1 -
-------------------------------------------------- ----- -----
109.2 108.2
-------------------------------------------------- ----- -----
Depreciation charge for right of use assets
Land 12.7 7.2
Buildings 1.3 1.3
-------------------------------------------------- ----- -----
14.0 8.5
-------------------------------------------------- ----- -----
Refer to Note 21 for details of lease liabilities.
13. Investments
The subsidiary companies of Helios Towers plc are as
follows:
Effective Effective
shareholding shareholding
2020 2019
---------------- ----------------
Country of incorporation Direct Indirect Direct Indirect
Name of subsidiary % % % %
------------------------------------------ ------------------------- ------ -------- ------ --------
Helios Chad Holdco Limited Mauritius - 100% - 100%
Helios Towers Africa LLP United Kingdom - 100% - 100%
Helios Towers Congo Brazzaville SASU Republic of Congo - 100% - 100%
Democratic Republic
Helios Towers DRC S.A.R.L. of Congo - 100% - 100%
Helios Towers FZ-LLC United Arab Emirates - 100% - 100%
Helios Towers Ghana Limited Ghana - 100% - 100%
Helios Towers, Ltd Mauritius 100% - 100% -
Helios Towers Madagascar Holdings Limited United Kingdom - 100% n/a n/a
Helios Towers Malawi Holdings Limited United Kingdom - 100% n/a n/a
Helios Towers Partners (UK) Limited United Kingdom - 100% - 100%
Helios Towers Senegal SAU Senegal - 100% n/a n/a
Helios Towers South Africa Holdings
(Pty) Ltd South Africa - 100% - 66%
Helios Towers South Africa (Pty) Ltd South Africa - 100% - 66%
Helios Towers South Africa Services
(Pty) Ltd South Africa - 100% - 62.5%
Helios Towers Tanzania Limited Tanzania - 100% - 100%
Helios Towers UK Holdings Limited United Kingdom 100% - n/a n/a
HS Holdings Limited Tanzania - 1% - 1%
HT Congo Brazzaville Holdco Limited Mauritius - 100% - 100%
Democratic Republic
HT DRC Infraco S.A.R.L. of Congo - 100% - 100%
HT Holdings Tanzania Ltd Mauritius - 100% - 100%
HTA Group, Ltd Mauritius - 100% - 100%
HTA Holdings Ltd Mauritius - 100% - 100%
HTA (UK) Partner Ltd United Kingdom - 100% - 100%
HTG Managed Services Limited Ghana - 100% - 100%
HTSA Towers (Pty) Ltd South Africa - 100% - 59.1%
HTT Infraco Limited Tanzania - 100% - 100%
McRory Investment B.V. The Netherlands - 100% - 100%
McTam International 1 B.V. The Netherlands - 100% - 100%
Towers NL Coöperatief U.A. The Netherlands - 100% - 100%
------------------------------------------ ------------------------- ------ -------- ------ --------
All subsidiaries were incorporated in prior years, other than
Helios Towers UK Holdings Limited, Helios Towers Madagascar
Holdings Limited, Helios Towers Malawi Holdings Limited and Helios
Towers Senegal SAU, which were incorporated in 2020. Helios Towers
plc or its subsidiaries have subscribed to the majority of the
shares as shown above. The consideration paid for these shares on
incorporation was minimal.
Helios Towers Ghana Limited, Helios Towers South Africa Holdings
(Pty) Ltd, HTA Holdings Ltd, Helios Towers DRC S.A.R.L., Helios
Towers Tanzania Limited, HT Congo Brazzaville Holdco Limited,
Helios Chad Holdco Limited, Towers NL Coöperatief U.A., McRory
Investment B.V., McTam International 1 B.V., HT Holdings Tanzania
Ltd, Helios Towers UK Holdings Limited and HTA (UK) Partner Ltd are
intermediate holding companies.
The principal activities of HTG Managed Services Limited, HT DRC
Infraco S.A.R.L., HTT Infraco Limited, and Helios Towers Congo
Brazzaville SASU and the remaining South African entities are the
building and maintenance of telecommunications towers to provide
space on those towers to wireless telecommunication service
providers in Africa. Helios Towers Senegal SAU was incorporated in
2020.
All investments relate to ordinary shares.
During the year the Group acquired the remaining 34% and 10.5%
of two subsidiaries, Helios Towers South Africa Holdings (Pty) Ltd
and HTSA Towers (Pty) Ltd, which it did not previously own for a
cash consideration of ZAR25.0 million and ZAR1.9 million.
2020 2019
US$m US$m
------------------------- ----- -----
Non-controlling interest - (0.6)
------------------------- ----- -----
14. Inventories
2020 2019
US$m US$m
------------ ----- -----
Inventories 9.0 9.3
------------ ----- -----
Inventories are primarily made up of fuel stocks of US$5.9
million (2019: US$6.6 million) and raw materials of US$3.1 million
(2019: US$2.7 million). The impact of inventories recognised as an
expense during the year in respect of continuing operations was
US$51.8 million (2019: US$56.8 million).
15. Trade and other receivables
2020 2019
US$m US$m
-------------------------------------- ----- -----
Trade receivables 50.9 105.7
Loss allowance (5.8) (6.4)
-------------------------------------- ----- -----
45.1 99.3
Trade receivable from related parties 37.1 23.4
-------------------------------------- ----- -----
82.2 122.7
Other receivables 49.1 37.1
VAT & withholding tax receivable 6.3 6.7
-------------------------------------- ----- -----
137.6 166.5
-------------------------------------- ----- -----
2020 2019
Loss allowance US$m US$m
------------------------- ----- -----
Balance brought forward (6.4) (6.5)
Provision for impairment - -
Unused amounts reversed 0.6 0.1
------------------------- ----- -----
(5.8) (6.4)
------------------------- ----- -----
The Group measures the loss allowance for trade receivables and
trade receivables from related parties at an amount equal to
lifetime expected credit losses ('ECL'). The expected credit losses
on trade receivables are estimated using a provision matrix by
reference to past default experience of the debtor and an analysis
of the debtor's current financial position, adjusted for factors
that are specific to the debtors, general economic conditions of
the industry in which the debtors operate and an assessment of both
the current as well as the forecast direction of conditions at the
reporting date. Loss allowance expense is included within cost of
sales in the Consolidated Income Statement.
There has been no change in the estimation techniques or
significant assumptions made during the current reporting period.
Interest can be charged on past due debtors. The normal credit
period of services is 30 days.
Other receivables mainly comprise of accrued income, sundry
receivables and Escrow receivables.
Of the trade receivables balance at 31 December 2020, 84% (31
December 2019: 73%) is due from five of the Group's largest
customers. The Group does not hold any collateral or other credit
enhancements over these balances nor does it have a legal right of
offset against any amounts owed by the Group to the
counterparty.
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.
2020 2019
US$m US$m
------------------------- ------ ------
Trade receivables(1) 88.0 129.1
Accrued revenue(2) 11.0 2.2
Less: Loss allowance (5.8) (6.4)
Less: Deferred income(3) (32.6) (64.4)
------------------------- ------ ------
Net receivables 60.6 60.5
------------------------- ------ ------
Revenue 414.0 387.8
------------------------- ------ ------
Debtor days 53 57
------------------------- ------ ------
(1) Trade receivables, including related parties.
(2) Reported within other receivables.
(3) Deferred income, as per Note 19, has been adjusted for
US$18.4 million (2019: US$nil) in respect of amounts settled by
customers at the balance sheet date.
In determining the recoverability of a trade receivable, the
Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the
reporting date. The Directors consider that the carrying amount of
trade and other receivables is approximately equal to their fair
value.
Terms and conditions attached to receivable balances due by
related parties and are disclosed in Note 23.
16. Prepayments
2020 2019
US$m US$m
------------ ----- -----
Prepayments 39.3 14.1
------------ ----- -----
Prepayments primarily comprise advance payments to suppliers.
Included in prepayments are prepaid transaction costs of US$3.6
million in relation to the US$200 million term facility and US$0.9
million in relation to the US$70 million revolving credit
facility.
17. Cash and cash equivalents
2020 2019
US$m US$m
-------------------- ----- -----
Bank balances 179.7 216.8
Short-term deposits 249.0 4.3
-------------------- ----- -----
428.7 221.1
-------------------- ----- -----
The bank balances as at 31 December 2020 include restricted cash
of US$nil million (31 December 2019: US$37.7 million) relating to
Change of Control Taxes. See Note 10 for further details.
Cash and cash equivalents comprise cash at bank and in hand and
short-term deposits. Short-term deposits are defined as deposits
with an initial maturity of three months or less. Bank overdrafts
that are repayable on demand form an integral part of the Group's
cash management are included as a component of cash and cash
equivalents for the purposes of the statement of cash flows.
18. Share capital
2020 2019
---------------- ----------------
Number Number
of shares of shares
(million) US$m (million) US$m
-------------------------------- ---------- ---- ---------- ----
Authorised, issued and fully
paid
Ordinary shares of GBP0.01 each 1,000 12.8 1,000 12.8
-------------------------------- ---------- ---- ---------- ----
1,000 12.8 1,000 12.8
-------------------------------- ---------- ---- ---------- ----
The share capital of the Group is represented by the share
capital of the Company, Helios Towers plc.
The Treasury shares represent the cost of shares in Helios
Towers plc purchased in the market and held by the Helios Towers
plc Employee Benefit Trust to satisfy options under the Group Share
options plan. Treasury shares held by the Group as at 31 December
2020 are 1,820,105 (31 December 2019: 3,046,273).
19. Trade and other payables
2020 2019
US$m US$m
---------------------------------------------- ----- -----
Trade payables 12.7 17.9
Amounts payable to related parties - 0.1
Deferred income 51.0 64.4
Deferred consideration 4.1 8.0
Accruals 75.1 63.6
VAT, withholding tax, and other taxes payable 31.8 68.7
---------------------------------------------- ----- -----
174.7 222.7
---------------------------------------------- ----- -----
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 27 days (2019: 31 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. Amounts payable to related
parties are unsecured, interest free and repayable on demand.
Deferred income primarily relates to site equipment revenue
which is billed in advance.
The Group recognised revenue of US$61.5 million (2019: US$48.1
million) from contract liabilities held on the balance sheet at the
start of the financial year. Contract liabilities are presented as
deferred income in the table above.
Deferred consideration relates to consideration that is payable
in the future for the purchase of certain tower assets in DRC and
Congo Brazzaville following the Airtel deal, if certain conditions
are met, to enable transfer of ownership of the assets to Helios
Towers.
Accruals consist of general operational accruals, accrued
capital items, and goods received but not yet invoiced.
Trade and other payables are classified as financial liabilities
and measured at amortised cost. These are initially recognised at
fair value and subsequently at amortised cost. These are expected
to be settled within a year.
The Directors consider the carrying amount of trade payables
approximates to their fair value due to their short-term
nature.
20. Loans
2020 2019
US$m US$m
------------------------------------------- ----- -----
Loans(1) 976.9 -
US$600 million 9.125% Senior Notes 2022 - 607.3
US$100 million term loan facility 2022 - 75.5
ZAR 535 million term loan facility A and B 12.5 -
Shareholder loans:
SA Towers Proprietary Limited - 1.5
------------------------------------------- ----- -----
Total borrowings 989.4 684.3
------------------------------------------- ----- -----
Current 2.6 19.2
Non-current 986.8 665.1
------------------------------------------- ----- -----
989.4 684.3
------------------------------------------- ----- -----
(1) Included in loans is the US$975 million 7.000% Senior Notes
due 2025.
On 18 June 2020 HTA Group, Ltd., a wholly owned subsidiary of
Helios Towers plc, issued US$750 million of 7.000% Senior Notes due
2025, guaranteed on a senior basis by Helios Towers plc and certain
of its direct and indirect subsidiaries. The Notes were issued at
an issue price of 99.439% of the principal amount.
The proceeds of the Notes were used (i) to redeem US$600 million
of HTA Group's outstanding Senior Notes due 2022 (plus accrued
interest), (ii) to repay all amounts outstanding under its US$125
million term facility (of which US$75 million was outstanding),
(iii) to pay certain fees and expenses in relation to the Offering
and (iv) with excess funds available for general corporate
purposes.
In addition, on 9 September 2020 HTA Group, Ltd issued a further
US$225 million aggregate principal amount of its 7.000% Senior
Notes due 2025. The Additional Notes will be treated as a single
class together with the Original Notes for all purposes under the
indenture. After giving effect to the issuance of these Additional
Notes, the outstanding aggregate principal amount of Notes will be
US$975 million.
HTA Group also entered into a five-year US$200 million term
facility with borrowing availability in US dollars for the general
corporate purposes (including acquisitions) of the Company and
certain of its subsidiaries. This new term facility replaced the
existing US$125 million term facility, which was cancelled upon
completion of the Offering on 19 June 2020. Transactions fees
related to this are reported in Prepayments (see Note 16).
Additionally, HTA Group entered into a revolving credit facility
(with a 4.5-year tenor) with borrowing availability in US dollars
for the purpose of financing or refinancing the general corporate
and working capital needs of the Company and certain of its
subsidiaries. Commitments under the new revolving credit facility
amount to US$70 million and replaced the previous US$60 million
revolving credit facility, which was also cancelled on 19 June
2020. Transactions fees related to this are reported in Prepayments
(see Note 16).
On 18 December 2019, HTSA Towers (Pty) Ltd, entered into secured
term loan with total commitment of ZAR 535 million and comprises
two facilities: Facility A, with a term of 78 months, and Facility
B, with a term of 84 months. The annual interest rate is JIBAR plus
4% per year on loans under Facility A and JIBAR plus 4.5% per year
on loans under Facility B. As of 31 December 2020, ZAR 184 million
(Facility A: ZAR 92 million, and Facility B: ZAR 92 million) of the
South African facilities were drawn. This is a secured loan with
tower sites owned by HTSA Towers pledged as security.
The current portion of borrowings relates to accrued interest on
the bonds and term loan interest payable within one year of the
balance sheet date.
Loans are classified as financial liabilities and measured at
amortised cost.
21. Lease liabilities
2020 2019
US$m US$m
----------------------------- ----- -----
Short-term lease liabilities
Land 22.4 19.6
Buildings 1.1 1.8
----------------------------- ----- -----
23.5 21.4
----------------------------- ----- -----
2020 2019
US$m US$m
---------------------------- ----- -----
Long-term lease liabilities
Land 105.0 101.4
Buildings 3.1 2.8
Motor vehicles 0.1 -
---------------------------- ----- -----
108.2 104.2
---------------------------- ----- -----
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 total cash paid on leases in the year was US$25.5 million
(2019: US$20.9 million).
The profile of the outstanding undiscounted contractual payments
fall due as follows:
Within 1 2-5 years 5+ years Total
year US$m US$m US$m US$m
----------------- ---------- --------- -------- -----
31 December 2020 23.5 83.9 347.2 454.6
----------------- ---------- --------- -------- -----
31 December 2019 21.5 76.1 459.8 557.4
----------------- ---------- --------- -------- -----
22. Uncompleted performance obligations
The table below represents uncompleted performance obligations
at the end of the reporting period. This is total revenue which is
contractually due to the Group, subject to the performance of the
obligation of the Group related to these revenues. Management
refers to this as contracted revenue.
2020 2019
US$m US$m
------------------------- ------- -------
Total contracted revenue 2,842.8 2,871.7
------------------------- ------- -------
Contracted revenue
The following table provides our total undiscounted contracted
revenue by country as of 31 December 2020 for each year from 2021
to 2025, with local currency amounts converted at the applicable
average rate for US dollars for the year ended 31 December 2020
held constant. Our contracted revenue calculation for each year
presented assumes:
-- no escalation in fee rates;
-- no increases in sites or tenancies other than our committed tenancies;
-- our customers do not utilise any cancellation allowances set forth in their MLAs;
-- our customers do not terminate MLAs early for any reason; and
-- no automatic renewal.
Year ended 31 December
---------------------------------
(US$m) 2021 2022 2023 2024 2025
------------------ ----- ----- ----- ----- -----
Tanzania 170.8 168.8 163.7 145.6 125.7
DRC 166.7 169.1 171.5 171.0 144.7
Congo Brazzaville 27.1 26.3 25.4 24.7 9.4
Ghana 33.6 31.9 31.0 30.4 30.1
South Africa 4.7 5.1 5.3 5.4 5.3
------------------ ----- ----- ----- ----- -----
Total 402.9 401.2 396.9 377.1 315.2
------------------ ----- ----- ----- ----- -----
23. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this Note.
During the year, the Group companies entered into the following
commercial transactions with related parties:
2020 2019
----------------------- -----------------------
Purchase Purchase
Income from of goods Income from of goods
towers US$m US$m towers US$m US$m
------------------------------------------ ------------ --------- ------------ ---------
Millicom Holding B.V. and subsidiaries(1) 72.2 - 70.4 -
Ecost Building Management Pty - - - 1.4
Vulatel (Pty) Ltd - - 0.2 0.3
Nepic Pty - 0.2 0.3 -
------------------------------------------ ------------ --------- ------------ ---------
Total 72.2 0.2 70.9 1.7
------------------------------------------ ------------ --------- ------------ ---------
2020 2019
------------------ ------------------
Amount Amount Amount Amount
owed by owed to owed by owed to
US$m US$m US$m US$m
------------------------------------------ -------- -------- -------- --------
Millicom Holding B.V. and subsidiaries(1) 37.1 - 22.9 -
Vulatel (Pty) Ltd(2) - - 0.2 -
Nepic Pty(2) - - 0.3 0.1
SA Towers Proprietary Limited(2) - - - 1.5
------------------------------------------ -------- -------- -------- --------
Total 37.1 - 23.4 1.6
------------------------------------------ -------- -------- -------- --------
(1) Millicom Holding B.V is a shareholder of Helios Towers
plc.
(2) No longer classified as related parties as of November 2020.
See Note 13 for further details.
The amounts outstanding are unsecured and will be settled in
cash. No guarantees have been given or received. Based on the ECL
model, no provisions have been made for loss allowances in respect
of the amounts owed by related parties.
Amounts receivable from the related parties related to other
Group companies are short term and carry interest varying from 0%
to 15% per annum charged on the outstanding trade and other
receivable balances (Note 15).
24. Other gains
2020 2019
US$m US$m
---------------------------------------------------- ----- -----
Fair value gain on derivative financial instruments 33.8 33.9
Fair value movement on forward contracts 0.1 -
Fair value movement in contingent consideration 6.2 -
---------------------------------------------------- ----- -----
40.1 33.9
---------------------------------------------------- ----- -----
The contingent consideration related to the acquisition of the
South African subsidiary undertakings in April 2019. As at balance
sheet date this was US$nil (2019: US$9.5 million). A fair value
gain of US$6.2 million has been recognised. The contingent
consideration was for a two-year period ending April 2021, however
during the year the Group acquired the remaining 34% and 10.5% of
two subsidiaries; Helios Towers South Africa Holdings (Pty) Ltd and
HTSA Towers (Pty) Ltd. As a result of this transaction the Group
has no further obligation to settle any contingent consideration
(refer to Note 13).
25. Share-based payments
Pre-IPO LTIP
Ahead of the IPO certain Directors, former Directors, Senior
Managers and employees of the Group were granted nil-cost options
in respect of shares up to an aggregate value of US$10 million
based on an offer price of 115 pence and a US Dollar to pounds
Sterling conversion rate of US$1:GBP0.7948 (the 'HT LTIP').
The Company issued 6,557,668 shares to the trustee of the Trust
(or as it directs) immediately prior to IPO in order to satisfy
future settlement of awards under the HT LTIP and nil-cost options
under the HT MIPs. The Trust is consolidated into the Group.
These options become exercisable in tranches over a three-year
period post-IPO. The award participants were entitled to exercise
some of the share options on IPO.
In the event an option holder becomes a 'bad leaver', any of
their options which have not yet become exercisable will lapse.
Between the first anniversary and the third anniversary of
admission to the London Stock Exchange, tranches of each
participant's remaining entitlements (whether shares and/or options
over shares) will cease to be subject to forfeiture in accordance
with a defined schedule.
Number of options 2020 2019
-------------------------- --------- -----------
As at 1 January 2,085,596 -
Granted during the year - 6,557,668
Exercised during the year (315,732) (4,421,831)
Forfeited during the year - (50,241)
-------------------------- --------- -----------
At 31 December 1,769,864 2,085,596
-------------------------- --------- -----------
Of which:
-------------------------- --------- -----------
Vested and exercisable (728,970) (3,790)
-------------------------- --------- -----------
Unvested 1,040,894 2,081,806
-------------------------- --------- -----------
Fair value of options/share awards granted pre-IPO
The fair value at grant date is independently determined using a
probability-weighted expected returns methodology, which is an
appropriate future-orientated approach when considering the fair
value of options/shares that have no intrinsic value at the time of
issue. In this case the expected future returns were estimated by
reference to the expected proceeds attributable to the underlying
shares at IPO, as provided by management, including adjustments for
expected net debt, transaction costs and priority returns to other
shareholders. This is then discounted into present value terms
adopting an appropriate discount rate. The capital asset pricing
methodology was used when considering an appropriate discount rate
to apply to the pay-out expected to accrue to the share awards on
realisation.
Key assumptions:
-- Expected exit dates 0 to 4 years;
-- Probability weightings up to 25%;
-- Expected range of exit multiples up to 10.0x;
-- Expected forecast Adjusted EBITDA across two scenarios
(management case and downside case) and respective probability
weightings;
-- Estimated proceeds per share; and
-- Hurdle per share up to US$1.25.
The Group has in place one adopted discretionary share plan
called the Helios Towers plc Employee Incentive Plan 2019 (the
'EIP'), details of which are set out in this Note.
Employee Incentive Plan
Following successful admission to the London Stock Exchange, the
Company has adopted a discretionary share plan called the Helios
Towers plc Employee Incentive Plan 2019 (the 'EIP'). The Employee
Incentive Plan is designed to provide long-term incentives for
senior managers and above (including Executive Directors) to
deliver long-term shareholder returns. Participation in the plan is
at the Remuneration Committee's discretion, and no individual has a
contractual right to participate in the plan or to receive any
guaranteed benefits. Shares received under the scheme by Executive
Directors will be subject to a two-year post-vesting holding
period. In all other respects the shares rank equally with other
fully paid ordinary shares on issue.
In November 2019, the Group offered 4,271,821 nil cost share
awards to selected Executive Directors and other senior executives.
The equity settled awards comprise three equal and separate
tranches which vest depending upon the achievement of the following
performance targets over a three-year period:
-- Relative TSR tranche;
-- Adjusted EBITDA tranche; and
-- ROIC tranche.
Set out below are summaries of options granted under the
EIP.
2020 2019
Number of Number of
options Options
-------------------------------------- ---------- ----------
As at 1 January 4,271,821 -
Granted during the year 243,195 4,271,821
Exercised during the year - -
Forfeited during the year (287,279) -
-------------------------------------- ---------- ----------
As at 31 December 4,227,737 4,271,821
Vested and exercisable at 31 December - -
-------------------------------------- ---------- ----------
The IFRS 2 charge recognised in the Consolidated Income
Statement for the 2020 financial year in respect to the EIP was
US$1.0 million (2019: US$0.08 million). All share options
outstanding as at 31 December 2020 have a remaining contractual
life of 8.9 years.
The fair value at grant date is independently determined using
the Monte Carlo model. Key assumptions used in valuing the
share-based payment charge are as follows:
Relative Adjusted ROIC
TSR tranche EBITDA tranche tranche
---------------------------------------- ------------ --------------- -----------
Grant date 19 Nov 2019 19 Nov 2019 19 Nov 2019
Share price at grant date GBP1.22 GBP1.22 GBP1.22
Fair value as a percentage of the grant
price 58.7% 100% 100%
Term to vest (years) 3.1 3.1 3.1
Expected life from grant date (years) 3.1 3.1 3.1
Volatility 30.5% n/a n/a
Risk-free rate of interest 0.5% n/a n/a
Dividend yield n/a n/a n/a
Average FTSE 250 volatility 30.5% n/a n/a
Average FTSE 250 correlation 14% n/a n/a
Fair value per share GBP0.72 GBP1.22 GBP1.22
---------------------------------------- ------------ --------------- -----------
26. Financial instruments
Financial instruments held by the Group at fair value had the
following effect on profit and loss:
31 December 31 December
2020 2019
US$m US$m
-------------------------------------------------------- ----------- -----------
Balance brought forward 41.0 7.1
Change in fair value of derivative financial instrument
- US$600m 9.125% Senior Notes 2022 (41.0) 33.9
Derivative financial instrument - US$975m 7.000% Senior
Notes 2025 85.7 -
Currency forward contracts 3.1 -
-------------------------------------------------------- ----------- -----------
Balance carried forward 88.8 41.0
-------------------------------------------------------- ----------- -----------
Fair value measurements
Some of the Group's financial assets and financial liabilities
are measured at fair value at the end of each reporting period. For
all other assets and liabilities the carrying value is
approximately equal to the fair value. The information set out
below provides data about how the fair values of these financial
assets and financial liabilities are determined (in particular, the
valuation technique(s) and inputs used).
For those financial instruments measured at fair value, the
Group has categorised them into a three-level fair value hierarchy
based on the priority of the inputs to the valuation technique in
accordance with IFRS 13. The hierarchy gives the highest priority
to quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable
inputs (Level 3). If the inputs used to measure fair value fall
within different levels of the hierarchy, the category level is
based on the lowest priority level input that is significant to the
fair value measurement of the instrument in its entirety. There are
no financial instruments which have been categorised as Level 1.
There were no transfers between the levels in the year.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The capital structure of the Group consists of
debt, which includes borrowings disclosed in Notes 20 and 21, cash
and cash equivalents and equity attributable to equity holders of
the Company, comprising issued capital, reserves and retained
earnings as disclosed in the Statement of changes in equity.
Gearing ratio
The Group keeps its capital structure under review. The gearing
ratio at the year-end is as follows:
2020 2019
US$m US$m
----------------------------------------------------- ------- -------
Debt (net of issue costs) 1,121.1 809.9
Cash and cash equivalents (excluding restricted cash
- see Note 17) (428.7) (183.4)
----------------------------------------------------- ------- -------
Net debt 692.4 626.5
Equity attributable to the owners 130.3 175.9
----------------------------------------------------- ------- -------
531% 356%
----------------------------------------------------- ------- -------
Debt is defined as long-term and short-term loans and lease
liabilities, as detailed in Notes 20 and 21 respectively.
Equity includes all capital and reserves of the Group
attributable to equity holders of the Company.
Externally imposed capital requirements
The Group is not subject to externally imposed capital
requirements.
Categories of financial instruments
2020 2019
US$m US$m
------------------------------------ ------- -----
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents 428.7 221.1
Trade and other receivables 131.3 159.8
------------------------------------ ------- -----
560.0 380.9
Fair value through profit or loss:
Derivative financial assets 88.8 41.0
------------------------------------ ------- -----
648.8 421.9
------------------------------------ ------- -----
Financial liabilities
Amortised cost:
Trade and other payables 91.9 89.6
Contingent consideration - 9.5
Lease liabilities 131.7 125.6
Loans 989.4 684.3
------------------------------------ ------- -----
1,213.0 909.0
------------------------------------ ------- -----
As at 31 December 2020 and 31 December 2019, the Group had no
cash pledged as collateral for financial liabilities.
The Directors estimate the amortised cost of borrowings and cash
and cash equivalents is approximate to fair value.
Financial risk management objectives and policies
The Group's finance function provides services to the business,
coordinates access to domestic and international financial markets,
and monitors and manages the financial risks relating to the
operations of the Group through internal risk reports which analyse
exposures by degree and magnitude of risks. These risks include
market risk (including currency risk, fair value interest rate risk
and price risk), credit risk, liquidity risk and cash flow interest
rate risk.
The Group's overall financial risk management programme focuses
on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
The Group's senior management oversees the management of these
risks. The finance function is supported by the Group's senior
management, which advises on financial risks and the appropriate
financial risk governance framework for the Group. Key financial
risks and exposures are monitored through a monthly report to the
Board of Directors, together with an annual Board review of
corporate treasury matters. The Group has exposure to Sterling
('GBP') fluctuations, however this is not considered material.
Financial risk
The principal financial risks to which the Group is exposed
through its activities are risks of changes in foreign currency
exchange rates and interest rates.
Foreign currency risk management
The Group undertakes transactions denominated in foreign
currencies; consequently exposures to exchange rate fluctuations
arise. The Group's main currency exposures were to the New Ghanaian
Cedi ('GHS'), Tanzanian Shilling ('TZS'), Central African Franc
('XAF') and South African Rand ('ZAR') through its main operating
subsidiaries.
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
Liabilities Assets
------------- ------------
2020 2019 2020 2019
US$m US$m US$m US$m
---------------------- ------ ----- ----- -----
New Ghanaian Cedi 11.6 9.5 35.8 17.8
Tanzanian Shilling 35.0 83.5 78.7 137.4
South African Rand 16.8 12.2 8.8 6.3
Central African Franc 6.0 4.3 19.7 16.0
---------------------- ------ ----- ----- -----
69.4 109.5 143.0 177.5
---------------------- ------ ----- ----- -----
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to a 10%
increase in US Dollar against GHS, XAF, TZS and ZAR. 10% is the
sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents management's
assessment of the reasonable potential change in foreign exchange
rates. The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their translation
at the year-end for a 10% change in foreign currency rates. A
positive number below indicates an increase in profit and other
equity where US dollar weakens 10% against the GHS, XAF, TZS or
ZAR. For a 10% strengthening of US Dollar against the GHS, XAF, TZS
and ZAR, there would be an equal and opposite effect on the profit
and other equity, on the basis that all other variables remain
constant.
Central African New Ghanaian Tanzanian Shillings South African
Franc impact Cedi impact impact Rand
----------------- -------------- --------------------- ---------------
2020 2019 2020 2019 2020 2019 2020 2019
US$m US$m US$m US$m US$m US$m US$m US$m
-------------------- -------- ------- ------ ------ ---------- --------- ------- ------
Impact on profit or
loss (1.4) (1.2) (2.4) (0.8) (4.4) (5.4) 0.8 0.6
-------------------- -------- ------- ------ ------ ---------- --------- ------- ------
This is mainly attributable to the exposure outstanding on GHS,
XAF, TZS and ZAR receivables and payables in the Group at the
reporting date. In management's opinion, the sensitivity analysis
is unrepresentative of the inherent foreign exchange risk for the
Group or the Company as the year-end exposure does not reflect the
exposure during the year. The Company is not significantly exposed
to foreign currency fluctuations as most of its financial assets
and financial liabilities are denominated in its functional
currency.
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. Default does not occur later than when a financial asset is
90 days past due (unless the Group has reasonable and supportable
information to demonstrate that a more lagging default criterion is
more appropriate.) Write-off happens at least a year after a
financial asset has become credit impaired and when management does
not have any reasonable expectations to recover the asset.
The Group has adopted a policy of only dealing with creditworthy
counterparties and obtaining sufficient collateral where
appropriate, as a means of mitigating the risk of financial loss
from defaults. The Group uses publicly available financial
information and other information provided by the counterparty
(where appropriate) to deliver a credit rating for its major
customers. As of 31 December 2020, the Group has a concentration
risk with regards to four of its largest customers. The Group's
exposure and the credit ratings of its counterparties and related
parties are continuously monitored and the aggregate value of
credit risk within the business is spread amongst a number of
approved counterparties. Credit exposure is controlled by
counterparty limits that are reviewed and approved by management.
The carrying amount of the financial assets recorded in the
Financial Statements, which is net of impairment losses, represents
the Group's exposure to credit risk.
The Group uses the IFRS 9 ECL model to measure loss allowances
at an amount equal to their lifetime expected credit loss.
In order to minimise credit risk, the Group has categorised
exposures according to their degree of risk of default. The use of
a provision matrix is based on a range of qualitative and
quantitative factors that are deemed to be indicative of risk of
default, and range from 1 (lowest risk of irrecoverability) to 5
(greatest risk of irrecoverability). Loss allowances for trade
receivables from related parties held by the Company are deemed
immaterial.
The below table shows the Group's trade and other receivables
balance and associated loss allowances in each Group credit rating
category.
31 December 2020 31 December 2019
------------------------------------------ -------------------------------------------
Gross Loss Gross
Risk of exposure allowance Net exposure exposure Loss allowance Net exposure
Group Rating impairment US$m US$m US$m US$m US$m US$m
------------ ------------- ------------- ------------- ------------ ------------- -------------- ------------
1 Remote risk 62.3 (0.3) 62.0 94.9 (0.1) 94.8
2 Low risk 10.6 (0.4) 10.2 22.1 (0.8) 21.3
3 Medium risk - - - - - -
4 High risk 13.2 (3.2) 10.0 9.6 (3.0) 6.6
5 Impaired 1.9 (1.9) - 2.5 (2.5) -
------------ ------------- ------------- ------------- ------------ ------------- -------------- ------------
Total 88.0 (5.8) 82.2 129.1 (6.4) 122.7
------------ ------------- ------------- ------------- ------------ ------------- -------------- ------------
Liquidity risk management
The Group has long-term debt financing through Senior Loan Notes
of US$975 million due for repayment in December 2025. The Group has
a revolving credit facility of US$70 million for funding general
corporate and working capital needs. As at 31 December 2020 the
facility was undrawn and is available until December 2024. The
Group has remained compliant during the year to 31 December 2020
with all the covenants contained in the Senior Credit facility. In
June 2020 HTA Group Ltd, a wholly owned subsidiary of the Group,
signed a US$200 million term loan agreement. As at 31 December 2020
none of the available term loan balance was drawn.
Ultimate responsibility for liquidity risk management rests with
the Board. The Group manages liquidity risk by maintaining adequate
reserves and banking facilities and continuously monitoring
forecast and actual cash flows including consideration of
appropriate sensitivities.
Non-derivative financial liabilities
The following tables detail the Group's remaining contractual
maturity for its non-derivative financial liabilities. The tables
have been drawn up based on the undiscounted cash flows of
financial liabilities based on the earliest date on which the Group
can be required to pay. The table below includes principal cash
flows.
Within 1 1-2 years 2-5 years 5+ years Total
year US$m US$m US$m US$m US$m
-------------------------------- ---------- --------- --------- -------- -------
31 December 2020
Non-interest bearing 91.9 - - - 91.9
Fixed interest rate instruments 26.1 23.0 1,047.7 347.2 1,444.0
-------------------------------- ---------- --------- --------- -------- -------
118.0 23.0 1,047.7 347.2 1,535.9
-------------------------------- ---------- --------- --------- -------- -------
31 December 2019
Non-interest bearing 89.6 - - - 89.6
Fixed interest rate instruments 40.7 19.8 721.3 459.8 1,241.6
-------------------------------- ---------- --------- --------- -------- -------
130.3 19.8 721.3 459.8 1,331.2
-------------------------------- ---------- --------- --------- -------- -------
Non-derivative financial assets
The following table details the Group's expected maturity for
other non-derivative financial assets. The tables below have been
drawn up based on the undiscounted contractual maturities of the
financial assets except where the Group anticipates that the cash
flow will occur in a different period.
Within 1 1-2 years 2-5 years 5+ years Total
year US$m US$m US$m US$m US$m
-------------------------------- ---------- --------- --------- -------- -----
31 December 2020
Non-interest bearing 560.0 - - - 560.0
Fixed interest rate instruments - - - - -
-------------------------------- ---------- --------- --------- -------- -----
560.0 - - - 560.0
-------------------------------- ---------- --------- --------- -------- -----
31 December 2019
Non-interest bearing 380.9 - - - 380.9
Fixed interest rate instruments - - - - -
-------------------------------- ---------- --------- --------- -------- -----
380.9 - - - 380.9
-------------------------------- ---------- --------- --------- -------- -----
Derivative financial instruments assets
The following table details the Group's liquidity analysis for
its derivative financial instruments based on contractual
maturities. The table has been drawn up based on the undiscounted
net cash inflows and outflows on derivative instruments that settle
on a net basis, and the undiscounted gross inflows and outflows on
those derivatives that require gross settlement. When the amount
payable or receivable is not fixed, the amount disclosed has been
determined by reference to the projected interest rates as
illustrated by the yield curves existing at the reporting date.
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
31 December 2020, a relative 1% increase in credit spread would
result in an approximate US$1.4 million decrease in the valuation
of the embedded derivatives.
As at the reporting date, the call option had a fair value of
US$85.7 million (31 December 2019: US$41.0 million on the US$600
million 9.125% Senior Notes 2022), while the put option had a fair
value of US$0 million (31 December 2019: US$0 million). The
increase in the fair value of the call option is attributable the
tightening of the Group's credit spread, which is in line with the
market movement due to the impact of Covid-19 on financial
markets.
The key assumptions in determining the fair value are: the
quoted price of the bond as at 31 December 2020; the credit spread;
and the yield curve. The probabilities relating to change of
control and major asset sale represent a reasonable expectation of
those events occurring that would be held by a market
participant.
Within 1 1-2 years 2-5 years 5+ years Total
year US$m US$m US$m US$m US$m
--------------------- ---------- --------- --------- -------- ------
31 December 2020
Net settled:
Embedded derivatives - - (85.7) - (85.7)
--------------------- ---------- --------- --------- -------- ------
- - (85.7) - (85.7)
--------------------- ---------- --------- --------- -------- ------
31 December 2019
Net settled:
Embedded derivatives - - (41.0) - (41.0)
--------------------- ---------- --------- --------- -------- ------
- - (41.0) - (41.0)
--------------------- ---------- --------- --------- -------- ------
Interest rate risk management
The Group is exposed to interest rate risk because entities in
the Group borrow funds at both fixed and floating interest rates.
The risk is managed by the Group by maintaining an appropriate mix
between fixed and floating rate borrowings. Hedging activities are
evaluated regularly to align with interest rate views and defined
risk appetite, ensuring the most cost-effective hedging strategies
are applied.
The Group's exposure to interest rates on financial assets and
financial liabilities are detailed in Notes 20 and 21
respectively.
27. Contingent liabilities
In the year ended 31 December 2020, the Congo Brazzaville tax
authority issued an assessment on a number of taxes including VAT
and corporate income tax for the years 2016 and 2017 of
approximately US$3.0 million, of which a provision amounting to
US$0.2 million has been provided for in the Congo Brazzaville
accounts, as a future tax outflow is expected and the remaining
US$2.8 million is subject to an ongoing appeal process.
The Directors are working with their advisers and are in
discussion with the tax authorities to bring the matter to
conclusion based on the facts. The Directors believe that the
potential future cash outflows in relation to certain elements of
the tax audit are not considered probable and cannot be measured
reliably.
Other tax, and regulatory proceedings, claims and unresolved
disputes are pending against Helios Towers in respect of which the
timing of resolution and potential outcome (including any future
financial obligations) are uncertain and no provisions have been
recognised in relation to these matters.
Legal claims
Other legal and regulatory proceedings, claims and unresolved
disputes are pending against Helios Towers in respect of which the
timing of resolution and potential outcome (including any future
financial obligations) are uncertain and no provisions have been
recognised in relation to these matters.
28. Net debt
2020 2019
US$m US$m
-------------------------- ------- -------
External debt (989.4) (684.3)
Lease liabilities (131.7) (125.6)
Cash and cash equivalents 428.7 221.1
Restricted cash - (37.7)
-------------------------- ------- -------
Net debt (692.4) (626.5)
-------------------------- ------- -------
At At
1 January 31 December
2020 Cash flows Other(1) 2020
2020 US$m US$m US$m US$m
---------------------------- ---------- ---------- -------- ------------
Cash and cash equivalents 183.4 245.2 0.1 428.7
---------------------------- ---------- ---------- -------- ------------
External debt (684.3) (279.8) (25.3) (989.4)
Lease liabilities (125.6) 8.3 (14.4) (131.7)
---------------------------- ---------- ---------- -------- ------------
Total financing liabilities (809.9) (271.5) (39.7) (1,121.1)
---------------------------- ---------- ---------- -------- ------------
Net debt (626.5) (26.3) (39.6) (692.4)
---------------------------- ---------- ---------- -------- ------------
At At
1 January 31 December
2019 Cash flows Other (1) 2019
2019 US$m US$m US$m US$m
---------------------------- ---------- ---------- --------- ------------
Cash and cash equivalents 89.0 94.9 (0.5) 183.4
---------------------------- ---------- ---------- --------- ------------
External debt (628.1) (50.0) (6.2) (684.3)
Lease liabilities (118.4) 5.4 (12.6) (125.6)
---------------------------- ---------- ---------- --------- ------------
Total financing liabilities (746.5) (44.6) (18.8) (809.9)
---------------------------- ---------- ---------- --------- ------------
Net debt (657.5) 50.3 (19.3) (626.5)
---------------------------- ---------- ---------- --------- ------------
(1) Other includes foreign exchange and interest movements.
Refer to Note 20 for further details on the year on year
movements in short-term loans and long-term loans.
29. Earnings per share
Basic earnings per share has been calculated by dividing the
total loss for the year by the weighted average number of shares in
issue during the year after adjusting for shares held in Employee
Benefit Trusts.
To calculate diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume conversion
of all dilutive potential shares. Share options granted to
employees where the exercise price is less than the average market
price of the Company's ordinary shares during the year are
considered to be dilutive potential shares. Where share options are
exercisable based on performance criteria and those performance
criteria have been met during the year, these options are included
in the calculation of dilutive potential shares.
The Directors believe that Adjusted EBITDA per share is
representative of the operations of the business (refer to Note
4).
Earnings per share is based on:
2020 2019
US$m US$m
----------------------------------------------------- ------------- -----------
Loss after tax for the year attributable to owners
of the Company (36.7) (136.0)
Adjusted EBITDA (Note 4) 226.6 205.2
----------------------------------------------------- ------------- -----------
2020 2019
Number Number
----------------------------------------------------- ------------- -----------
Weighted average number of ordinary shares used to
calculate basic earnings per share 997,517,010 926,493,633
Weighted average number of dilutive potential shares 6,527,541 998,232
----------------------------------------------------- ------------- -----------
Weighted average number of ordinary shares used to
calculate diluted earnings per share 1,004,044,551 927,491,865
----------------------------------------------------- ------------- -----------
2020 2019
Loss per share cents cents
----------------------------------------------------- ------------- -----------
Basic (4) (15)
Diluted (4) (15)
----------------------------------------------------- ------------- -----------
2020 2019
Adjusted EBITDA per share cents cents
----------------------------------------------------- ------------- -----------
Basic 23 22
Diluted 23 22
----------------------------------------------------- ------------- -----------
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 year of US$36.7 million (2019: US$136.0 million).
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.
The calculation of Adjusted EBITDA per share and diluted EBITDA
per share are based on the Adjusted EBITDA earnings for the year of
US$226.6 million (2019: US$205.2 million). Refer to Note 4 for a
reconciliation of Adjusted EBITDA to net loss before tax.
30. Acquisition of subsidiary undertakings 2019
On 30 April 2019, the Group acquired 89.5% of the voting equity
shares of Helios Towers South Africa Holdings (Pty) Ltd and
simultaneously entered into agreements with SA Towers Proprietary
Limited and Sky Coverage Proprietary Limited, to purchase certain
employee contracts and business assets comprising towers, tower
sites and related assets as well as to transfer certain tenant
leases. The Group has treated this as a single business combination
transaction and accounted for it in accordance with IFRS 3 -
Business Combinations ('IFRS 3') using the acquisition method. The
total consideration in respect of this transaction was US$20.0
million. Goodwill arising on this business combination has been
allocated to the South Africa CGU. This acquisition is in line with
the Group's strategy.
This business combination had the following effect on the
Group's assets and liabilities:
30 April
2019
US$m
-------------------------------------------- --------
Identifiable assets acquired:
Assets
Fair value of property, plant and equipment 7.6
Fair value of intangible assets 11.5
Other assets 0.2
Total assets 19.3
Liabilities
Assumed liabilities (0.1)
Deferred income (0.1)
Deferred taxation (3.2)
-------------------------------------------- --------
Total net identifiable assets 15.9
Goodwill on acquisition 4.1
-------------------------------------------- --------
Total consideration 20.0
-------------------------------------------- --------
Consideration paid in cash 10.6
Consideration paid in shares 0.1
Contingent consideration 9.3
-------------------------------------------- --------
Total consideration 20.0
-------------------------------------------- --------
The goodwill is mainly attributable to the workforce and the
future lease-up potential of the sites acquired and is expected to
be deductible for tax purposes.
Acquisition related contingent consideration
The contingent consideration balance is dependent on the timing
of sites under construction being fully completed in accordance
with technical specifications. The potential undiscounted amount of
all future payments that the Group could be required to make under
the contingent consideration arrangement is between US$nil and
US$12.0 million undiscounted. The fair value of the contingent
consideration arrangement of US$9.3 million was estimated at 30
April 2019 based on management knowledge of market outlook and
future pipeline. There was no change in the fair value of the
contingent consideration for the year ended 31 December 2019. The
contingent consideration liability is categorised as Level 3 in the
fair value hierarchy of IFRS 13. The calculation of the fair value
of the contingent consideration balance is most sensitive to
changes in the following assumptions:
-- number of sites coming on-air between 310 and 500;
-- timing of sites coming on-air for a period of two years; and
-- discount rate ranging from 15% to 20%.
As at 31 December 2020 the contingent consideration was US$nil
(2019: US$9.5 million). Please refer to Notes 13 and 24 for further
details.
The Group incurred acquisition-related costs of US$0.7 million
related to the above business combination in 2019. These costs have
been included in deal costs in the Group's consolidated income
statement. For the period from 30 April 2019 to 31 December 2019
this acquisition contributed revenue of US$1.7 million and a loss
of US$1.9 million.
The Group has assessed the fair value of the assets acquired at
US$19.3 million, in terms of IFRS 3, based on appropriate valuation
methodology. The valuation techniques used for measuring the fair
value of material assets acquired were as follows:
Assets acquired Valuation technique
-------------------------------------- ----------------------------------------------
Property, plant and equipment Depreciated replacement cost adjusted
for physical deterioration as well as
functional and economic obsolescence
-------------------------------------- ----------------------------------------------
Intangible assets (customer contracts) Multi-period excess earnings method which
considers the
present value of net cash flows expected
to be generated by the customer relationships
-------------------------------------- ----------------------------------------------
31. Subsequent events
There are no reportable events after the balance sheet date.
Glossary
We have prepared the interim report using a number of
conventions, which you should consider when reading information
contained herein as follows:
All references to 'we', 'us', 'our', 'HT Group', 'Helios Towers'
our 'Group' and the 'Group' are references to Helios Towers, plc
and its subsidiaries, taken as a whole.
'2G' means the second-generation cellular telecommunications
network commercially launched on the GSM and CDMA standards.
'3G' means the third-generation cellular telecommunications
networks that allow simultaneous use of voice and data services,
and provide high-speed data access using a range of
technologies.
'4G' or '4G LTE' 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 cash and cash equivalents' means cash and cash
equivalents excluding restricted cash.
'Adjusted EBITDA' is defined by management as loss before tax
for the year, adjusted for finance costs, other gains and losses,
interest receivable, loss on disposal of property, plant and
equipment, amortisation of intangible assets, depreciation and
impairments of property, plant and equipment, depreciation of
right-of-use assets, deal costs for aborted acquisitions, deal
costs not capitalised, share-based payments and long-term incentive
plan charges, and other adjusting items. Adjusting items are
material items that are considered one-off by management by virtue
of their size and/or incidence.
'Adjusted EBITDA margin' means Adjusted EBITDA divided by
revenue.
'Adjusted free cash flow' means portfolio free cash flow less
net payment of interest and discretionary capital additions.
'Adjusted gross margin' means Adjusted Gross Profit, divided by
revenue.
'Adjusted gross profit' means gross profit adding back site and
warehouse depreciation.
'Adjusted operating profit/(loss)' means operating profit/(loss)
adjusted for loss on disposal of property, plant and equipment,
deal costs, share-based payments and long-term incentive plan
charges, and adjusting items. Adjusting items are material items
that are considered one-off in nature by management by virtue of
their size and/or incidence.
'Africa's Big-Five MNOs' means Airtel, MTN, Orange, Tigo and
Vodacom/Vodafone.
'Airtel' means Airtel Africa.
'ALU' means average lease-up, the number of colocation tenancies
added to our portfolio in a defined period of time divided by the
average number of total sites for the same period of time,
excluding colocations acquired as part of site acquisitions
reported as of a certain date.
'amendment colocation tenant' means tenants that add or modify
equipment, taking up additional space, wind load capacity and/or
power consumption under an existing lease agreement. The Group
calculates amendment colocations on a weighted basis as compared to
the market average rate for a standard tenancy in the month the
amendment is added.
'amendment revenue' means revenue from amendments to existing
site contracts when tenants add or modify equipment, taking up
additional vertical space, wind load capacity and/or power
consumption under an existing site contract.
'anchor tenant' means the primary customer occupying each
site.
'ARPU' means average revenue per user.
'average remaining life' means the average of the periods
through to 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.
'build-to-suit/BTS' means sites constructed by our Group on
order by a MNO.
'CAGR' means compound annual growth rate.
'CODM' means Chief Operating Decision Maker.
'colocation' means the sharing of site space by multiple
customers or technologies on the same site, equal to the sum of
standard colocation tenants and amendment colocation tenants.
'colocation tenant' means each additional tenant on a site in
addition to the primary anchor tenant and is classified as either a
standard or amendment colocation tenant.
'committed colocation' means contractual commitments relating to
prospective colocation tenancies with customers.
'Company' means Helios Towers, Ltd prior to 17 October 2019, and
Helios Towers plc on or after 17 October 2019.
'Congo Brazzaville' otherwise also known as the Republic of
Congo.
contracted revenue' means total undiscounted revenue as at that
date with local currency amounts converted at the applicable
average rate for US dollars held constant. Our contracted revenue
calculation for each year presented assumes: (i) no escalation in
fee rates, (ii) no increases in sites or tenancies other than our
committed tenancies (which include committed colocations and/or
committed anchor tenancies), (iii) our customers do not utilise any
cancellation allowances set forth in their MLAs (iv) our customers
do not terminate MLAs early for any reason and (v) no automatic
renewal.
'corporate capital expenditure' primarily relates to furniture,
fixtures and equipment.
'DRC' means Democratic Republic of Congo.
'Eagle Towers site acquisition' means the acquisition of 65
sites in South Africa from Eagle Towers SA (RF) (Pty) Ltd.
'edge data centre' means secure temperature-controlled technical
facilities which are smaller than a standard core network data
centre and positioned on the edge of a telecommunications network.
They are used by operators to regenerate fibre signal, deliver
cloud computing resources or cache streaming content for local
users.
'Free Cash Flow' means Adjusted Free Cash Flow less cash flows
from changes in working capital adjusting items, deal costs, the
Vodacom Tanzania plc share repurchases and the proceeds from the
disposal of assets.
'Free Senegal' means Saga Africa Holdings Limited SA (which
operates under the 'Free' trademark).
'Free Senegal MTSA' means the MTSA with Free Senegal for the
provision of hosting and energy services on the acquired sites and
build-to-suit sites.
'Free Senegal site acquisition' means the acquisition of 1,220
sites in Senegal from Free Senegal and the entry into the Free
Senegal MTSA.
'G7 countries' means each of the United States, Canada, France,
Germany, Italy, Japan and the United Kingdom.
'Ghana' means the Republic of Ghana.
'gross debt' means non-current loans and current loans and
long-term and short-term lease liabilities.
'gross leverage' means gross debt divided by last quarter
annualised Adjusted EBITDA.
'gross margin' means gross profit, adding site and warehouse
depreciation, divided by revenue.
'growth capex' or 'growth capital expenditure' relates to (i)
construction of build-to-suit sites (ii) installation of colocation
tenants and (ii) and investments in power management solutions.
'GSM' means Global System for Mobile Communication, a standard
for digital mobile communications.
'Group' means Helios Towers, Ltd ('HTL') and its subsidiaries
prior to 17 October 2019, and Helios Towers plc and its
subsidiaries on or after 17 October 2019.
'Hardiman' means Hardiman Telecommunications Ltd.
'Helios Towers Congo Brazzaville' or 'HT Congo Brazzaville'
means Helios Towers Congo Brazzaville SASU.
'Helios Towers DRC' or 'HT DRC' means HT DRC Infraco SARL.
'Helios Towers Ghana' or 'HT Ghana' means HTG Managed Services
Limited.
'Helios Towers plc' means the ultimate Company of the Group.
'Helios Towers South Africa' or 'HTSA' means Helios Towers South
Africa Holdings (Pty) Ltd and its subsidiaries.
'Helios Towers Tanzania' or 'HT Tanzania' means HTT Infraco
Limited.
'HSE' means Health, Safety and Environment.
'IBS' means in-building cellular enhancement.
'ISA' means individual site agreement.
'ISP' means Internet Service Provider.
'IFRS' means International Financial Reporting Standards as
adopted by the European Union.
'independent tower company' means a tower company that is not
affiliated with a telecommunications operator.
'last quarter annualised Adjusted EBITDA' or 'LQA Adjusted
EBITDA' means Adjusted EBITDA for the last three months of the
respective period, multiplied by four.
'LCY' means Local Currency.
'lease-up' means the addition of colocation tenancies to our
sites.
'Levered portfolio free cash flow' means Portfolio free cash
flow less net payment of interest.
'liquidated damages' means provisions that generally require the
Group to make a payment to the customer, most often by means of
set-off against service fees payable by the customer, if the Group
fails to uphold a specified level of uptime.
'LTE' means Long-Term Evolution, designed to increase the
capacity and speed of mobile telephone networks according to the
standard developed by the 3GPP consortium, frequently referred to
as 4G or 4th generation. Some of the key assumptions of the system
are: (i) data transmission at speeds faster than 3G; (ii) ready for
new serviced types; (iii) architecture simplified in comparison to
3G; and (iv) provisions for open interfaces.
'LTIFR' means the number of incidents requiring days away from
work due to occupational injuries per 1 million man hours
worked.
'maintenance capital expenditure' means capital expenditures for
periodic refurbishments and replacement of parts and equipment to
keep existing sites in service.
'maintained sites' means sites that are maintained by the Group
on behalf of a telecommunications operator but which are not
marketed by the Group to other telecommunications operators for
colocation (and in respect of which the Company has no right to
market).
'managed sites' means sites that the Group currently manages but
does not own due to either: (i) certain conditions for transfer
under the relevant acquisition documentation, ground lease and/or
law not yet being satisfied; or (ii) the site being subject to an
agreement with the relevant MNO under which the MNO retains
ownership and outsources management and marketing to the
Company.
'Mauritius' means the Republic of Mauritius.
'Millicom' means Millicom International Cellular SA.
'MLA' means master lease agreement.
'MNO' means mobile network operator.
'mobile penetration' means the amount of active mobile phone
subscriptions as a percentage of the total market for active mobile
phones.
'MTN' means MTN Group Ltd.
'MTSAs' means master tower services agreements.
'net debt' means gross debt less adjusted cash and cash
equivalents.
'net leverage' means net debt divided by last quarter annualised
Adjusted EBITDA.
'net receivables' means total trade receivables (including
related parties) and accrued revenue, less deferred income.
'network PoS' means the different technology placed on a site by
a single MNO, for example, installing of 3G equipment on a site
where the MNO may already have 2G equipment.
'NOC' means network operating centre.
'online site' means a site which is operating and generating
revenue.
'Orange' means Orange S.A.
'our established markets' refers to Tanzania, DRC, Congo
Brazzaville, Ghana and South Africa.
'our markets' or 'markets in which we operate' refers to
Tanzania, DRC, Congo Brazzaville, Ghana and South Africa.
'owned sites' means freehold or leasehold sites where we own the
telecommunications passive infrastructure and any equipment
relating to power provision and security. We are responsible for
maintaining and securing the site as well as obtaining the relevant
permits and, if applicable, ground leases relating to the
sites.
'performance against SLA' means with respect to a given
customer, the uptime achieved for a given period divided by the
maximum required contractual downtime in such customer's SLA, as
applicable.
'Portfolio free cash flow' defined as Adjusted EBITDA less
maintenance and corporate capital additions, payments of lease
liabilities (including interest and principal repayments of lease
liabilities) and tax paid.
'PoS' means points of service, which is an MNO's antennae
equipment configuration located on a site to provide signal
coverage to subscribers. At Helios Towers, a standard PoS is
equivalent to one tenant on a tower.
'Principal Shareholders' means Millicom Holding B.V., Quantum
Strategic Partners, Ltd., Lath Holdings Ltd., ACM Africa Holdings,
LP, RIT Capital Partners plc, IFC African, Latin American and
Caribbean Fund, LP and International Finance Corporation.
'pro forma last quarter annualised Adjusted EBITDA' means the
last quarter annualised Adjusted EBITDA for the last three months
of the respective period, as further adjusted to reflect the
estimated contribution to Adjusted EBITDA for the Free Senegal Site
Acquisition.
'SA Towers' means SA Towers (Pty) Ltd.
'Senegal' means the Republic of Senegal.
'Shares' means the shares in the capital of the Company.
'Shareholders Agreement' means the agreement entered into
between the Principal Shareholders and the Company on 15 October
2019, which grants certain governance rights to the Principal
Shareholders and sets out a mechanism for future sales of shares in
the capital of the Company.
'SHEQ' means Safety, Health, Environment and Quality.
'site acquisition' means a combination of MLAs or MTSAs, which
provide the commercial terms governing the provision of site space,
and individual ISA, which act as an appendix to the relevant MLA or
MTSA, and include site-specific terms for each site.
'site agreement' means the MLA and ISA executed by us with our
customers, which act as an appendix to the relevant MLA and
includes certain site-specific information (for example, location
and any grandfathered equipment).
'SLA' means service-level agreement.
'small cells' means low-powered cellular radio access nodes that
operate in licensed and unlicensed spectrum that have a range of
ten metres to a few kilometres.
'South Africa' means the Republic of South Africa.
'standard colocation' means tower space under a standard tenancy
site contract rate and configuration with defined limits in terms
of the vertical space occupied, the wind load and power
consumption.
'standard colocation tenant' means a customer occupying tower
space under a standard tenancy lease rate and configuration with
defined limits in terms of the vertical space occupied, the wind
load and power consumption.
'strategic suppliers' means suppliers that deliver products or
provide us with services deemed critical to executing our strategy
such as site maintenance and batteries.
'Sub-Saharan Africa' or 'SSA' means African countries that are
fully or partially located south of the Sahara.
'Tanzania' means the United Republic of Tanzania.
'telecommunications operator' means a company licensed by the
government to provide voice and data communications services.
'tenancy' means a space leased for installation of a base
transmission site and associated antennae.
'tenancy ratio' means the total number of tenancies divided by
the total number of our sites as of a given date and represents the
average number of tenants per site within a portfolio.
'tenant' means an MNO that leases vertical space on the tower
and portions of the land underneath on which it installs its
equipment.
'Tigo' refers to one or more subsidiaries of Millicom that
operate under the commercial brand 'Tigo'.
'total colocations' means standard colocations plus amendment
colocations as of a given date.
'total online sites' or 'total sites' means total towers, IBS
sites, edge data centres or sites with customer equipment installed
on third-party infrastructure that are owned and/or managed by the
Company with each reported site having at least one active customer
tenancy as of a given date.
'total tenancies' means total anchor, standard and amendment
colocation tenants as of a given date.
'tower contract' means the MLA and ISA executed by us with our
customers, which act as a schedule to the relevant MLA and includes
certain site-specific information (for example, location and
equipment).
'tower sites' means ground-based towers and rooftop towers and
installations constructed and owned by us on property (including a
rooftop) that is generally owned or leased by us.
'UK Corporate Governance Code' means the UK Corporate Governance
Code published by the Financial Reporting Council and dated July
2018, as amended from time to time.
'upgrade capex' or 'upgrade capital expenditure' comprises
structural, refurbishment and consolidation activities carried out
on selected acquired sites.
'Viettel' means Viettel Tanzania Limited.
'Vodacom' means Vodacom Group Limited.
'Vodacom Tanzania' means Vodacom Tanzania plc.
'Vulatel' means Vulatel (Pty) Ltd.
'Zantel' means Zantel Telecom plc.
Disclaimer:
This release does not constitute an offering of securities or
otherwise constitute 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 document 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 these forward -looking
statements, 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 document 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.
Auditor's report on Reports and Accounts 2020
The financial information set out above does not constitute the
Company's full statutory accounts for the year ended 31 December
2020 for the purposes of section 435 of the Companies Act 2006, but
it is derived from those accounts. The auditors have reported on
those accounts; their report was unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain statements under s498(2) or (3)
Companies Act 2006.
Responsibility statement of the Directors in respect of the
Report and Accounts 2020
The Directors confirm that to the best of their knowledge:
-- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face and;
-- the annual report and financial statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's performance,
business model and strategy.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
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(END) Dow Jones Newswires
March 10, 2021 11:38 ET (16:38 GMT)
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