Helios Towers Regulatory News (HTWS)

Helios Towers plc announces results for the year and quarter ended 31 December 2021

Full year results in line with expectations

Significant portfolio expansion; building enlarged platform for growth

Organic tenancy guidance increased to reflect portfolio expansion

London, 17 March 2022: Helios Towers plc ("Helios Towers", "the Group" or "the Company"), the independent telecommunications infrastructure company, today announces results for the year to 31 December 2021 ("FY 2021").

1 Alternative Performance Measures are described in our defined terms and conventions.

2 Calculated as per the Senior Notes definition of net debt divided by annualised Adjusted EBITDA.

Kash Pandya, Chief Executive Officer, said:

"I am delighted with the team's performance over the past year. We delivered record site and tenancy additions, as a result of one of our best ever years of organic tenancy growth complemented by two acquisitions closed in the year. We also continued to reduce our cost of capital and combined with the announced acquisitions targeted to close in 2022, we have positioned the Company well for high-quality growth and returns going forward."

Tom Greenwood, CEO-Designate, added:

"2021 was a transformational year. Through organic portfolio expansion, multiple acquisitions and continued investment in our teams and platform, we enter 2022 in a truly exciting position. Alongside the significant expansion, we also delivered record power uptime for our customers. We are proud to see that our culture of continuous improvement and business excellence is being driven across the company by our talented teams to create sustainable value for all our stakeholders."

Financial highlights

· FY 2021 revenue increased by 8% year-on-year to US$449.1m (FY 2020: US$414.0m), driven by the acquisition of tower portfolios in Senegal and Madagascar in Q2 and Q4 2021, respectively, and continued organic tenancy growth across the Group.

o Q4 2021 revenue increased by 7% quarter-on-quarter to US$122.3m (Q3 2021: US$114.4m).

· FY 2021 Adjusted EBITDA increased by 6% year-on-year to US$240.6m (FY 2020: US$226.6m), driven by the acquisitions closed in 2021 and continued organic tenancy growth across our markets, partially offset by increased SG&A investment to support our expansionary strategy. FY 2021 Adjusted EBITDA margin of 54% decreased 1ppt year-on-year (FY 2020: 55%).

o Q4 2021 Adjusted EBITDA increased by 8% quarter-on-quarter to US$65.6m (Q3 2021: US$60.8m), with Q4 2021 Adjusted EBITDA margin at 54% (Q3 2021: 53%).

· FY 2021 operating profit increased by 5% year-on-year to US$59.0m (FY 2020: US$56.3m) driven by Adjusted EBITDA growth.

· FY 2021 portfolio free cash flow decreased by 3% year-on-year to US$168.3m (FY 2020: US$174.4m), driven by an increase in corporate income tax, non-discretionary capex and lease payments.

o Q4 2021 portfolio free cash flow increased by 10% quarter-on-quarter to US$49.6 million (Q3 2021: US$44.9m), driven by Adjusted EBITDA growth and lower non-discretionary capex.

· FY 2021 cash generated from operations decreased by 7% year-on-year to US$195.9m (FY 2020: US$209.6m), due to working capital movements offset by the increase in Adjusted EBITDA.

· Net leverage of 3.6x increased by +0.7x year-on-year (FY 2020: 2.9x) and +0.2x quarter-on-quarter (Q3 2021: 3.4x), remaining at the low-end of the Group's medium-term target range of 3.5x-4.5x.

· Contracted revenues increased by 39% year-on-year to US$3.9bn (FY 2020: US$2.8bn), with an average remaining life of 7.6 years (FY 2020: 6.8 years). With 99% of this contracted revenue from blue-chip MNOs, with embedded CPI and power price escalators, it underpins the growth and resilience of our business.

Operational highlights

· Sites increased by a record 2,204 year-on-year to 9,560 sites (FY 2020: 7,356 sites), reflecting 507 organic site additions and the acquisition of 1,697 sites during the year.

o Sites increased by 795 quarter-on-quarter (Q3 2021: 8,765), reflecting 305 organic site additions and 490 acquired sites in Madagascar.

· Tenancies increased by a record 3,120 year-on-year to 18,776 tenants (FY 2020: 15,656 tenants), reflecting 1,262 organic tenancy additions and 1,858 acquired tenancies through the year.

o Tenancies increased by 1,003 quarter-on-quarter (Q3 2021: 17,773), reflecting 409 organic tenancy additions and 594 acquired tenancies.

· Tenancy ratio decreased 0.17x year-on-year to 1.96x (FY 2020: 2.13x), reflecting the acquisition of two new portfolios with low initial tenancy ratios.

o In-line with Helios Towers' business model, the Company expects to lease-up these portfolios, driving margin expansion and returns.

o In the five markets where the Company was operational in 2020, tenancy ratio increased by 0.02x to 2.15x (FY 2020: 2.13x).

Environmental, Social and Governance (ESG)

· Helios Towers' Sustainable Business Strategy enables the company to deliver a positive impact for all stakeholders, in line with its purpose of driving the growth of mobile communications in Africa and the Middle East. The Company's second Sustainable Business Report will be published on 21 March 2022.

· On 25 November 2021, the Group published its carbon reduction roadmap and long-term ambition to become a net zero carbon emissions business by 2040.

o Against a 2020 baseline, the Company targets a reduction in its carbon intensity per tenant by 46% by 20301.

o Through 'Project 100' the Company will invest a total of US$100 million between 2022 and 2030 in cleaner, greener solutions to power its sites in markets where access to electricity is limited, unreliable and in some areas non-existent.

o In 2021, Helios Towers delivered a reduction in scope 1 and 2 carbon emissions per tenant of 7% in the five markets where Helios Towers was operational in 2020.

Strategic Updates

· The Group continues to progress with the closings of the announced acquisitions in Oman and Malawi and potential acquisition of Airtel Africa's tower assets in Gabon and is providing the following updates:

o Malawi: As previously announced, subject to completing remaining customary closing conditions including obtaining required regulatory approval, the acquisition of Airtel Africa's passive infrastructure company is expected to close in H1 2022.

o Oman: Subject to completing the remaining customary closing conditions including obtaining regulatory approval, the Group anticipates the acquisition of Oman Telecommunications Company ("Omantel") to close in Q2 2022.

o Gabon: As previously announced, Helios Towers and Airtel Africa have extended the memorandum of understanding arrangement. Subject to obtaining a passive infrastructure licence, the acquisition of tower assets in Gabon is expected to close in H2 2022.

· Upon closing the pending deals the Group will have achieved its five-year strategy, laid out at IPO, well ahead of plan.

· Following Tom Greenwood's announced appointment as CEO, effective from the Company's AGM in April 2022, the Company will provide an update on its strategic outlook at a Capital Markets Day planned for 5 May 2022.

2022 outlook and guidance

· As a result of the portfolio and new market expansion in 2021, the Group is now targeting organic tenancy additions of 1,200 - 1,700 in 2022 (prior: 1,000 - 1,500), reflecting continued momentum within Helios Towers' established markets and organic growth targeted in the Group's new markets, Madagascar and Senegal.

o 60% of the organic tenancy additions are expected to be new sites (FY 2021: 40%), reflecting demand for expanded network coverage from MNOs in the year ahead.

o In-line with prior periods, the Group anticipates the majority of its tenancy rollout to occur in the second half of the year. The Group is targeting 25% of new tenancies in the first half of 2022, with 75% in the second half.

o Subject to closing announced acquisitions in Oman and Malawi, the Group targets medium-term annual tenancy additions of 1,600 - 2,100.

· The Group anticipates lease rate per tenant to increase in the range of 3-5% in 2022 (2021: $26.4k per tenant), driven by CPI and power price escalator movements embedded into customer contracts.

· The Group is targeting an Adjusted EBITDA margin of 51-53% in 2022 compared to 54% in 2021. The year-on-year decrease largely reflects the initial impact of acquisitions with lower tenancy ratios primed for growth and incremental Group SG&A required for the expansion of our operations from five to ten markets, in addition to the potential impact of the short-term volatility of global inflation and energy prices on its cost base.

· Excluding acquisitions, the Group is targeting 2022 capex of US$160m - US$200m, of which, US$27m - US$32m is non-discretionary capex.

o The Group expects to deploy approximately $650m on acquisitions in 2022, reflecting the acquisitions in Oman and Malawi and deferred acquisition payments in Senegal and Madagascar.

1 Reflects Scope 1 and 2 emissions against a 2020 baseline and covers the five markets where the Company was operational in 2020. 

For further information go to:

www.heliostowers.com

Investor Relations

Chris Baker-Sams - Head of Strategic Finance and Investor Relations

+44 (0)752 310 1475

Media relations

Edward Bridges / Stephanie Ellis

FTI Consulting LLP

+44 (0)20 3727 1000

Helios Towers' management will host a conference call for analysts and institutional investors at 09.30 BST on Thursday, 17 March 2022. For the best user experience, please access the conference via the webcast. You can pre-register and access the event using the link below:

Registration Link - Helios Towers FY 2021 Results Conference Call

Event Name: FY2021

Password: HELIOS

If you intend to participate in Q&A during the call or are unable to use the webcast, please dial in using the details below: 

About Helios Towers

· Helios Towers is a leading independent telecommunications infrastructure company, having established one of the most extensive tower portfolios across Africa. It builds, owns and operates telecom passive infrastructure, providing services to mobile network operators.

· Helios Towers owns and operates telecommunication tower sites in Tanzania, Democratic Republic of Congo, Congo Brazzaville, Ghana, South Africa, Senegal and Madagascar. Following recent acquisition agreements and subject to regulatory approval, Helios Towers expects to establish a presence in three new markets across Africa and the Middle-East. Including these acquisitions and committed BTS, the Group's total site count is expected to increase from over 9,500 towers to over 14,000.

· Helios Towers pioneered the model in Africa of buying towers that were held by single operators and providing services utilising the tower infrastructure to the seller and other operators. This allows wireless operators to outsource non-core tower-related activities, enabling them to focus their capital and managerial resources on providing higher quality services more cost-effectively.

Alternative Performance Measures

The Group has presented a number of Alternative Performance Measures ("APMs"), which are used in addition to IFRS statutory performance measures. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Loss before tax, gross profit, non-current and current loans and long-term and short-term lease liabilities are the equivalent statutory measures (see 'Certain defined terms and conventions'). For more information on the Group's Alternative Performance Measures, see page 68 of the Group's Annual report for the year ended 31 December 2021, published on the Group's website. Reconciliations of APMs to the equivalent statutory measure are included in the Group's half-year and Annual financial reports.

Chair's statement, Sir Samuel Jonah KBE, OSG

"A truly transformational year for the Company"

2021 marked our second full year as a public company, and a year in which we continued to drive sustainable value for our stakeholders.

It was a period of considerable over-achievement against the growth targets we announced during our IPO in October 2019.

Indeed, alongside closing acquisitions in Madagascar and Senegal in 2021, our M&A pipeline produced a further three acquisitions we are targeting to close. When they are complete, and when we factor in the committed BTS towers that come with them, we will have doubled the size of the Company since IPO.

Of course, such extensive and rapid growth needs careful management. In particular, the demands, albeit welcome, of expansion must never come at the cost of customer service and business excellence in our existing markets.

It was, therefore, equally significant that in 2021 we improved our power uptime to all-time-highs and achieved one of our best ever years of organic tenancy additions, supporting the expansion and densification of reliable mobile communications across our markets. MNOs trust us to power their voice and data traffic whether in city centre locations or in remote regions where grid electricity may be limited, unreliable or non-existent.

Delivering connectivity in a sustainable manner

Our tower-sharing model is innately sustainable, but we strive to do more for our stakeholders. I am pleased to see the team deliver on our ambitious growth targets and further advance our Sustainable Business Strategy through further empowering our local teams and also setting ambitious but achievable carbon reduction targets for the first time.

Our Carbon Reduction Roadmap has been prepared to deliver a transparent plan of how we will reduce our carbon intensity, while we continue to expand critical mobile coverage in our markets, and bring with it, life changing services to individuals and communities.

From my home in Ghana I get to see our work in action. For example, farmers are now able to share pictures and details of their crops and find new markets for them. And it's always a privilege to see remote schools connecting to the world's knowledge and experiences for the first time.

Governance

We were delighted to welcome Manjit Dhillon to the Board on 1 January 2021, following his announced appointment as Chief Financial Officer in December 2020.

Otherwise, our composition remained unaltered. This continuity has served us well and we have a strong and diverse mix of genders and ethnicities, together with an appropriate balance of Non-Executive Directors, including the contribution of Sally Ashford as a representative of our colleagues.

As importantly, we have individuals with deep skills in the fields of towerco operation, mobile communications, HR and workforce engagement, and finance and business leadership.

Section 172(1)

We believe our strategy and actions reflect the requirements and our compliance of Section 172(1) with the information outlined in the Strategic Report within the Group Annual Report which will be published on our website. This includes our commitment to our workforce, customers, suppliers, investors, communities and the environment, operating both sustainably and with integrity.

Our new CEO

In August 2021 we announced that Kash Pandya had elected to retire from his post as Chief Executive Officer ('CEO'), after a successful tenure spanning six years. He will step down in an orderly transition at the Annual General Meeting ('AGM') in April 2022.

Kash has led Helios Towers through a successful listing on the London Stock Exchange, as well as multiple financing transactions and the Company's expansion from four markets to ten including announced acquisition agreements. His strong leadership, and focus on customers' needs and the well-being of colleagues, will leave an indelible mark. His guidance and experience will also be staying with us; he has accepted the Board's request to continue to serve as a Non-Executive Deputy Chair.

We are also excited to appoint Tom Greenwood to succeed Kash as CEO. Tom was one of the Company's very first employees, rising to CFO in 2015 and leading the Group's journey to our IPO in 2019.

Tom was an exemplary candidate for the CEO role. As Chief Operating Officer ('COO') since 2020 he has overseen a period of significant growth, including the recent acquisition announcements. He was the natural choice to take up the reins, and we feel this is succession planning at its best.

Outlook 2022

We expect 2022 will be another significant year for the business, and one in which we continue to drive sustainable value for our stakeholders. Tom will formally assume the CEO position from our 2022 AGM, and will be detailing our new five-year strategy in due course.

Through our targeted entry into three new countries, and continued expansion within our existing markets, we have an exciting year ahead and will continue to deliver on our mission to drive the growth of mobile communications across Africa and the Middle East.

Sir Samuel Jonah KBE, OSG Chair

Chief Executive Officer's statement, Kash Pandya

"Delivering for our stakeholders"

In my final year as CEO, I am delighted with the team's performance. We delivered record achievements on multiple fronts and positioned the business for sustained success going forward.

A broader and stronger platform

Through multiple acquisition announcements in the year, alongside the closing of Free Senegal's tower portfolio first announced in 2020, we eclipsed our previously stated 2025 ambition of operating 12,000+ towers across 8+ markets, well ahead of plan. Combined, these acquisitions will effectively double our tower portfolio since IPO and extend our operations to ten markets.

The result of this highly productive year in M&A is that the Company emerges even stronger, broader, and with higher revenue visibility through improved hard currency earnings and increased contracted revenues.

As importantly, we complemented this inorganic success with one of our best ever years of organic tenancy additions. This reflects the exciting structural growth opportunity in each of our markets and our unrelenting focus on customer service excellence.

New business, from Africa to the Middle East

In 2021, we were delighted to continue delivering on commitments laid out during our IPO in 2019.

Following the acquisition of Free Senegal's tower portfolio announced in 2020, we signed four separate agreements with Airtel Africa in March 2021. These included two acquisition agreements for the purchase of Airtel Africa's tower companies in Madagascar and Malawi, collectively representing over 1,200 sites.

We closed the acquisition in Madagascar, with its 490 sites, in early November, and continue to progress with the acquisition closing in Malawi. We also signed two exclusive memorandum of understanding arrangements for the potential acquisition of Airtel Africa's tower portfolios in Chad and Gabon.

Although the agreement with Chad was allowed to expire in February 2022, we continue to pursue the proposed acquisition in Gabon.

Separately, in May 2021, we announced a further deal that takes us into the Middle East. We agreed to acquire the tower portfolio of Oman Telecommunications Company ('Omantel'), gaining close to 3,000 sites. We view the Middle East region as a natural extension of our geographic focus, sharing many of the same attractive fundamentals as Africa.

We are extremely pleased to have commenced operations in Senegal and Madagascar in 2021, successfully integrating both portfolios, and building a strong team in each market. We are equally excited to start operations in our three other announced markets and, through these acquisitions, establish Helios Towers as the most geographically diverse towerco in Africa and the Middle East.

Breaking organic records

Since our listing in 2019, we have consistently delivered on our organic tenancy guidance. This achievement reflects the huge structural growth opportunity in our markets, as well as our continued focus on customer service excellence.

In complex environments, we aim to remove the challenges for our customers. We do this by delivering reliable power to our towers and enabling our customers to quickly expand their network coverage, either through new BTS or colocations.

We were delighted in 2021 to deliver one of our strongest ever years of organic tenancy additions. We also achieved a record 99.99% power uptime across our tower assets; in fact, we delivered less than one minute's downtime per tower per week, in four months of the year. When I first joined the Company as CEO in 2015, this metric stood at 22 minutes, and so it is extremely rewarding to see this progress, driven by our dedicated and talented local teams and partners.

2021 performance overview

Helios Towers delivered robust financial performance in the year, driven by the acquisitions in Senegal and Madagascar, alongside organic tenancy growth. Revenues increased by 8% to US$449 million and Adjusted EBITDA expanded 6% to US$241 million. Our operating profit also continued to expand, growing 5% year-on-year from US$56 million in 2020 to US$59 million in 2021.

We invested over US$390 million during the year, including delivering 1,262 organic tenancies and the acquisitions in Senegal and Madagascar. Combined with a strong commercial pipeline and announced acquisitions targeted to close in 2022, these investments position us well for strong growth and high-quality earnings in 2022 and beyond.

Our commitment to reducing carbon

As a young company created just over a decade ago, acting sustainably is not a culture change or add-on for us. It has been part of our purpose from day one.

Indeed, our business model is innately sustainable: by bringing together MNOs to share our towers, we reduce the need for duplicate infrastructure, including generators, and significantly reduce both cost and the overall environmental impact and emissions.

However, we always want to do more. Last year we set out our Sustainable Business Strategy, and in November 2021 we added to our sustainability disclosure and targets by defining a Carbon Reduction Roadmap. For the first time, we have set out our commitment to minimise our carbon emissions, and disclose our performance relative to these targets. While our principal business lies in driving the growth of mobile communications across Africa and the Middle East, we will do so while setting ourselves ambitious goals to reduce our carbon intensity, in markets where grid power is either unavailable or inconsistent.

We provide more detail within our Sustainable Business Report.

Primed for further success

As we enter 2022, I am pleased to report that the entrepreneurial spirit that has driven our success is very much alive and well. Twelve years on from our original formation, we now combine this with maturity, solidity and lived-experience. I believe this is a potent combination of characteristics and positions us well for future growth.

On the back of a busy year in M&A, we have positioned the Company for an exciting year ahead and the team looks forward to driving mobile communications in each of our new and established markets.

On a personal note, and with the Company structurally set for future growth, I see this as an opportune time to step down as CEO at the AGM in April 2022 and to take up a new non-executive role as the Company's Deputy Chair. I joined back in 2015, little imagining we were destined for the adventure of an IPO and taking our place as a FTSE 250 company. I am also delighted to have such an able and talented successor in Tom Greenwood, who has served as both CFO and COO.

The Company has always focused on talent development and providing opportunity for individuals to reach their full potential. I have very much enjoyed seeing talent mature into highly inspirational senior leaders and am delighted that I will continue to see the business go from strength to strength. I thank all my colleagues, partners and stakeholders for their hard work and constant support.

Kash Pandya, CEO

Chief Financial Officer's statement, Manjit Dhillon CFO

"2021: A platform built for compounding growth and returns"

2021 was a standout year for Helios Towers. Alongside record performance from an organic tenancy growth and operational perspective, we strengthened our Company through further customer and geographic diversification, improved earnings visibility and reduced cost of capital.

It was a year in which we effectively doubled our tower count, both through our announced acquisitions and by the welcome addition of Senegal in May 2021.

These portfolios expand our asset base and, importantly, offer considerable opportunities for lease-up and compounding cash flow returns. In addition to the strong organic growth opportunity from each of these acquisitions, they also improve our diversification, hard currency mix and earnings visibility. We serve a broader set of investment grade or near-investment grade customers across a broader number of attractive, high-growth markets.

Pro forma for the announced acquisitions we increased our contracted revenues to US$5.3 billion (2021 Actual: US$3.9 billion) and improved our hard currency Adjusted EBITDA to 72% (2021 Actual: 65%), which alongside our contractual CPI and power price escalators provides a robust and resilient income stream for the Company.

Transformational growth

The new market acquisitions also open up considerable growth opportunities to Helios Towers. The portfolios we have purchased from the MNOs come with lower tenancy ratios on day-1 as they were principally built and operated for a sole MNO. So while the tenancy ratio and EBITDA margins will be lower than the Group margins, they offer a fantastic opportunity to lease-up the portfolio and serve the needs of all the MNOs in these markets. Following closing of the signed transactions we will nearly double in size and therefore we will see a period of transition, with a number of our Group metrics becoming diluted in the short-term; however, we will see these rebound as we continue to build new sites, lease up the portfolio and operate the assets more efficiently.

The capital markets

During the year we were active in the capital markets and attracted significant support, diversifying our funding instruments, tapping new pockets of investor demand, lowering our cost of capital and positioning us well for the significant investments being made across both 2021 and 2022.

This included our first raising of convertible bonds in March 2021, which we also subsequently tapped, in total raising US$300 million. Additionally, we raised a small amount of primary equity in the year of approximately US$110 million, which further strengthened our balance sheet in advance of closing the announced acquisitions. Finally, we also raised a €120 million local facility in Senegal to support the acquisition and the committed pipeline of 400 BTS in that market.

The net result of this activity, and alongside our financing actions in 2020, is that we have significantly reduced the cost of our financing. Just two years ago, our cost of debt was approximately 9%. Now, on a blended basis, taking into account all of our activity, that rate is lower than 6%, and we look forward to continuing to drive that down further.

Whilst our activity in the capital markets has positioned us well for the closings of the announced acquisitions, it has resulted in an increase in financing costs on an absolute basis which reduced statutory profitability in the short term.

Group performance: continued growth and significant investment

We closed the year with revenue and Adjusted EBITDA growth of 8% and 6% respectively, and delivered a record operating profit of US$59 million, increasing 5% year-on-year, all of which was driven by continued tenancy growth. Our Adjusted EBITDA margin was largely unchanged from 2020, decreasing 1ppt from 55% to 54% year-on-year, which reflects the increase in SG&A to support the period of significant portfolio expansion.

The Group's loss before tax was US$(119) million, increasing from a loss of US$(21) million in 2020. This was principally related to movements in our derivative financial instruments that reflects the embedded call option in our bond, and also higher finance costs. The higher finance costs reflect capital raised to support our two acquisitions closed during 2021 (portfolios in Senegal and Madagascar), as well as strengthening our balance sheet in advance of closing other announced acquisitions, which are targeted to close through 2022.

We anticipate that we will see continued statutory Group losses as we integrate the acquired assets. However, as we drive colocation lease-up and operational improvements, we expect to see improved profitability in the near term. We are seeing this dynamic in our established markets, with our business transitioning from being loss to profit making.

Cash flow generation from our existing asset base, or portfolio free cash flow ('PFCF'), slightly decreased year-on-year, down 3% to US$168 million. The decrease principally related to higher tax and ground lease payments, offsetting the Adjusted EBITDA growth delivered in the year. Cash conversion decreased from 77% in 2020 to 70% in 2021. As we continue to close the announced acquisitions, we anticipate our cash conversion to remain flat or decrease slightly from this level, but increase over the medium term as we lease-up our tower assets.

We invested US$395 million capex in the year, of which US$373 million was discretionary capex, supporting our entry into two new attractive markets (purchasing 1,697 sites across Senegal and Madagascar) and delivering one of our highest ever years of organic tenancy additions (1,262). The majority of these organic additions came in the second half of the year, so we enter 2022 in a very strong position that is further complemented by three announced acquisition deals that are targeted to close in 2022.

Quality of revenues and earnings

Our business has a high quality earnings profile, which reflects a combination of diverse blue-chip customers, robust contract structure with long tenors, and best in class operational execution.

Customer mix: we serve Africa's largest MNOs, which account for approximately 98% of our 2021 revenues. Importantly, this is spread across a number of blue-chip MNOs, with no single customer accounting for more than 26% of our 2021 revenues. We also price sustainably, with our lease rates approximately 30% lower than the MNOs' total cost of ownership.

Long-term contracts: our contracts typically have initial terms of 10-15 years, with automatic renewals thereafter. As at 31 December 2021, we had an average of 7.6 initial term years remaining across the Group. This represents US$3.9 billion of future revenue already contracted; a strong underlying base (of high quality customers) on which we can grow. Pro forma for announced acquisitions, our contracted revenue increases to US$ 5.3 billion, with an average remaining life of 8.6 years.

Hard currency earnings and escalations: one of the key strengths of our business is hard currency earnings. This is largely due to the fact we operate in hard currency markets: DRC, Senegal and Congo Brazzaville are either dollarised or pegged to the Euro. Across the Group, 65% of our Adjusted EBITDA is in hard currency, and this is further complemented by contractual escalators for power and CPI which provide further earnings protection.

Liquidity and net debt

During 2021 we strengthened our liquidity position, finishing the year with US$529 million of cash and cash equivalents, an increase of US$100 million from US$429 million in 2020. This was partly a result of the equity placing, convertible bond issuance and subsequent tap. Our net leverage was 3.6x at the end of 2021, an increase of 0.7x compared to our 2020 position, reflecting significant capital investment through the year. Importantly, we retain strong funding capacity with leverage still at the low end of our medium term target range of 3.5x - 4.5x. Following closing all of the announced acquisitions, we anticipate net leverage to be slightly above our medium term range, with a clear path back within our range in the near term.

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 2021. 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

With our significant investment and strong tenancy additions in 2021, in addition to signed acquisitions targeted to close this year, we expect 2022 to be another exciting year for the business, and one in which we will continue to drive sustainable value creation.

We have made significant investments to build an enlarged platform, from which we can drive strong growth and compounding returns. Our robust business model and high quality earning base underpins our growth. It comprises a combination of long-term contracts with a diverse set of blue-chip MNOs across a diverse set of attractive high growth geographies, many of which are hard currency.

We were pleased to deliver our Carbon Reduction Roadmap in November 2021, and lay out ambitious, but achievable targets for the business in 2022 and beyond. As part of that, we introduced Project 100, pledging to invest US$100 million between 2022-30. In line with this, we have identified a number of value accretive and carbon reducing initiatives, which we look forward to rolling out through the year and discussing in due course.

We have created a fantastic and compelling platform for growth and we remain laser-focused on delivering exceptional customer service, business excellence and sustainable value creation 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 purpose 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. Other adjusting items are material items that are considered one-off by management by virtue of their size and/or incidence. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue.

Purpose

The Group believes that Adjusted EBITDA and Adjusted EBITDA margin facilitate comparisons of operating performance from period to period and company to company by eliminating potential differences caused by variations in capital structures (affecting interest and finance charges), tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age and booked depreciation on assets. The Group excludes certain items from Adjusted EBITDA, such as loss on disposal of property, plant and equipment and other adjusting items because it believes they facilitate better understanding of the Group's underlying trading performance.

(1) Project costs in 2020 relate to the preparation for debt refinancing which cannot be capitalised.

(2) Deal costs comprise costs related to potential acquisitions and the exploration of investment opportunities, which cannot be capitalised. These comprise employee costs, professional fees, travel costs and set up costs incurred prior to operating activities commencing.

(3) Share-based payments and long-term incentive plan charges and associated costs.

Adjusted gross profit and adjusted gross margin

Definition

Adjusted gross profit means gross profit, adding back site and warehouse depreciation, divided by revenue. Adjusted gross margin means Adjusted gross profit 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.

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.

(1) Project costs in 2020 relate to the preparation for debt refinancing which cannot be capitalised.

(2) Deal costs comprise costs related to potential acquisitions and the exploration of investment opportunities, which cannot be capitalised. These comprise employee costs, professional fees, travel costs and set up costs incurred prior to operating activities commencing.

(3) Payment of lease liabilities includes interest and principal repayments of lease liabilities.

Gross debt, net debt and net leverage

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 cash and cash equivalents. Net leverage is calculated as net debt divided by annualised Adjusted EBITDA (1).

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's medium term net leverage target is to be broadly in the range of 3.5x - 4.5x.

(1) Annualised Adjusted EBITDA calculated as per the Senior Notes definition as the most recent fiscal quarter multiplied by four, adjusted to reflect the annualised contribution from acquisitions that have closed in the most recent fiscal quarter. This is not a forecast of future results.

Return on invested capital

Definition

Return on invested capital ('ROIC') is defined as defined as annualised portfolio free cash flow divided by invested capital. Invested capital is defined as gross property, plant and equipment and gross intangible assets, less accumulated maintenance and corporate capital expenditure, adjusted for IFRS 3 accounting adjustments and deferred consideration for future sites.

Purpose

This measure is used to evaluate asset efficiency and the effectiveness of the Group's capital allocation.

(1) Annualised portfolio free cash flow is calculated as portfolio free cash flow for the respective period, adjusted to annualise the impact of acquisitions closed during the respective period.

Detailed financial review

Consolidated Income Statement

For the year ended 31 December

Segmental key performance indicators

For the year ended 31 December

(1) Group Adjusted EBITDA for the year includes corporate costs of US$28.7 million (2020: US$23.1 million).

Total tenancies as at 31 December

Revenue

Revenue increased by 8% to US$449.1 million in the year ended 31 December 2021 from US$414.0 million in the year ended 31 December 2020. The increase in revenue was largely driven by the 20% increase in tenancies from 15,656 as of 31 December 2020 to 18,776 as of 31 December 2021, including the addition of 1,303 tenancies and 594 tenancies in Senegal and Madagascar respectively during the year.

Cost of sales

The table below shows an analysis of the cost of sales on a country-by-country basis for the year ended 31 December 2021 and 2020.

Year-on-year, cost of sales increased to US$295.3 million in the year ended 31 December 2021 from US$266.1 million in the year ended 31 December 2020, due primarily to the acquisition of Free Senegal's passive infrastructure assets, with non-power cost increases also partially driven by an update to the licence fee in DRC to 3% of local revenues, effective 1 January 2021. As a result, the Adjusted gross margin reduced by 1% to 67%.

Administrative expenses

Administrative expenses increased by 13% to US$94.3 million in the year ended 31 December 2021 from US$83.5 million in the year ended 31 December 2020. The increase in administrative expenses is primarily due to adjusting items of US$21.3 million in the year ended 31 December 2021, compared to US$14.2 million in the year ended 31 December 2020.

Adjusted EBITDA

Adjusted EBITDA was US$240.6 million in the year ended 31 December 2021 compared to US$226.6 million in the year ended 31 December 2020. The increase in Adjusted EBITDA between periods is primarily attributable to the changes in revenue, cost of sales and administrative expenses, as discussed above. Please refer to the Alternative Performance Measures section for more details and Note 4 of the Group Financial Statements for a reconciliation of aggregate Adjusted EBITDA to loss before tax.

Loss on disposal of property, plant and equipment

Loss on disposal of property, plant and equipment was US$0.5 million in the year ended 31 December 2021, compared to a loss of US$8.1 million during the year ended 31 December 2020. This decrease in loss on disposal was primarily a result of a reduction in site consolidations in the current year.

Other gains and losses

Other gains and losses recognised in the year ended 31 December 2021 was a loss of US$28.0 million, compared to a gain of US$40.1 million in the year ended 31 December 2020. This is related to the fair value movement of the embedded derivative valuation of the put and call options embedded within the terms of the Senior Notes. See Note 20 of the Group Financial Statements

Finance costs

Finance costs of US$151.1 million for the year ended 31 December 2021, mainly comprises of interest for the bond. The swing from a gain in foreign exchange differences in 2020, to a loss in the year ended 31 December 2021, is driven primarily by the fluctuations year-on-year of the Central African Franc and Ghana Cedi devaluing against the US Dollar.

Tax expense

Tax expense was US$36.8 million in the year ended 31 December 2021 as compared to US$15.8 million in the year ended 31 December 2020. The total tax charge includes charges in respect of Change of Control Taxes in a number of jurisdictions. While in cash terms these are fully funded by a capital contribution from the pre-IPO shareholders, which has been drawn down from funds held in escrow, these give rise to tax charges in the current period.

Though entities in Congo Brazzaville and Senegal are loss making for tax purposes minimum income taxes have been levied based on revenue, as stipulated by law in these jurisdictions. DRC, Ghana, Madagascar, Tanzania and two entities in South Africa are profitable for tax purposes and subject to income tax thereon.

Contracted revenue

The following table provides our total undiscounted contracted revenue by country as of 31 December 2021 for each year from 2022 to 2026, with local currency amounts converted at the applicable average rate for US Dollars for the year ended 31 December 2021 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.

The following table provides our total undiscounted contracted revenue by key customers as of 31 December 2021 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 2021 held constant. As at 31 December 2021, total contracted revenue was US$3.9 billion, of which 99.0% is from Multinational MNOs, with an average remaining life of 7.6 years. Our contracted revenue calculation for each year presented assumes the same basis as above.

Management cash flow

(1) Payment of lease liabilities includes interest and principal repayments of lease liabilities.

(2) Refer to reconciliation of cash generated from operating activities to portfolio free cash flow in the Alternative Performance Measures section.

(3) Cash conversion % is calculated as portfolio free cash flow divided by Adjusted EBITDA.

(4) 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.

(5) Discretionary capital additions includes acquisition, growth and upgrade capital additions.

(6) Working capital means the current assets less the current liabilities for the Group. Net change in working capital corresponds to movements in working capital, excluding cash paid for exceptional and one-off items and including movements in capital expenditure related working capital.

(7) Cash paid for exceptional and one-off items and proceeds on disposal of assets includes project costs, deal costs, deposits in relation to acquisitions, proceeds on disposal of assets and non-recurring taxes. Non-recurring taxes were US$38 million and US$29 million in 2020 and 2021, respectively, and were fully-funded by Helios Towers' pre-IPO shareholders.

(8) Net cash flow from financing activities includes gross proceeds from issue of equity share capital, share issue costs, loan drawdowns, loan issue costs, repayment of loan and capital contributions in the Consolidated Statement of Cash Flows.

Cash conversion has decreased from 77% for the year ended 31 December 2020 to 70% for the year ended 31 December 2021. 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 increased profitability in DRC, Ghana and Tanzania, partially offset with an increase in Adjusted EBITDA. Net change in working capital improved by US$10.6 million year-on-year due to a decrease in receivables days, from 53 days, for the year ended 31 December 2020, to 46 days in the year ended 31 December 202 1and an increase in trade and other payables. See Note 15 of the Group Financial Statements.

The Group's Consolidated Statement of Cash Flows is set out within the Group Financial Statements.

Capital expenditure

The following table shows our capital expenditure additions by category during the year ended 31 December:

Acquisition capex in the year ended 31 December 2021 relates primarily to the acquisitions in Senegal and Madagascar, excluding the fair value of assets and liabilities acquired and goodwill recognised under IFRS 3. See Note 30 of the Group Financial Statements.

Trade and other receivables

Trade and other receivables increased from US$137.6 million at 31 December 2020 to US$186.6 million at 31 December 2021, primarily due to a US$24.1 million receivable paid into an escrow accounts in relation to the potential Oman transaction with Omantel and an increase in contract and sundry receivables, as a result of the acquisitions in Senegal and Madagascar.

Trade and other payables

Trade and other payables increased from US$174.7 million at 31 December 2020 to US$249.0 million at 31 December 2021, driven by a US$59.4 million increase in deferred consideration, relating to the Senegal and Madagascar acquisitions, and a US$29.6 million increase in accruals due to acquisitions in the year and capital projects around year end.

Cash and cash equivalents

Cash and cash equivalents increased by US$100.2 million year on year, primarily due to the issue of US$300.0 million of convertible bonds and US$109.3 million of equity, partially offset by US$214.1 million in consideration paid to acquire Senegal and Madagascar and US$170.5 million payments to acquire plant, property and equipment.

Cash flows from operations, investing and financing activities

Cash generated from operations reduced by 7% to US$195.9 million due to working capital movements offset by the increase in Adjusted EBITDA. Net cash used in investing activities was US$407.6 million for the year ended 31 December 2021, up from US$123.5 million in the prior year. The increase was primarily as a result of cash paid for acquisition in the year and the organic growth in sites during the year. Net cash generated from financing activities during the year was US$474.0 million, which primarily related to the issue of US$300 million of convertible bonds and US$109.3 million of equity.

Loans and borrowings

As of 31 December 2021 and 31 December 2020 the HT Group's outstanding loans and borrowings, excluding lease liabilities, were US$1,295.5 million (net of issue costs) and US$989.4 million respectively, and net leverage of 3.6x and 2.9x respectively. Indebtedness and leverage as at 31 December 2021 reflect the US$975 million Senior Notes refinance which was completed during the year ended 31 December 2020, US$300 million of convertible bonds of which US$250 million was issued in March 2021 with a coupon of 2.875% due in 2027, and US$50 million of the same Notes tapped in June 2021.

Further details of the refinance are provided in Note 20 of the Group Financial Statements.

Principal risks

Summarised below are the key risks identified (not in order of significance) which could have a material impact on the Group.

NOTE: Principal risks identified, may combine and amalgamate elements of individual risks included in the detailed Group risk register.

Key

▲ Risk increasing

▼ Risk decreasing

► No change

Financial Statements

Consolidated Income Statement

For the year ended 31 December

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

The accompanying Notes form an integral part of these Financial Statements.

Consolidated Statement of Financial Position

As at 31 December

The accompanying Notes form an integral part of these Financial Statements.

These Financial Statements were approved and authorised for issue by the Board on 16 March 2022 and signed on its behalf by:

Consolidated Statement of Changes in Equity

For the year ended 31 December

In March 2021 the Group issued US$250 million of convertible bonds with a coupon of 2.875%, due in 2027. In June 2021 the Group tapped the bond for an aggregate principal amount of US$50 million. On initial recognition of the convertible bond and the convertible bond tap, a liability and equity reserve component were recognised being US$242.4 million and US$52.7 million respectively including transaction costs.

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.

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.

The accompanying Notes form an integral part of these Financial Statements.

Consolidated Statement of Cash Flows

For the year ended 31 December

The accompanying Notes form an integral part of these Financial Statements.

Notes to the Financial Statements

For the year ended 31 December 2021

1. Statement of compliance and presentation of financial statements

Helios Towers plc (the 'Company'), together with its subsidiaries (collectively, 'Helios', or the 'Group'), is an independent tower company, with operations across seven 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 United Kingdom ('IFRSs'), taking into account IFRS Interpretations Committee (IFRS IC) interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The Financial Statements have been prepared on the historical cost basis, except for the revaluation of certain financial instruments that are measured at fair value at the end of each reporting period. The Financial Statements are presented in United States Dollars ('US$') and rounded to the nearest hundred thousand (US$0.1 million) except when otherwise indicated. Comparatives are updated where appropriate.

The financial information included within this Preliminary Announcement does not constitute the Company's statutory Financial Statements for the years ended 31 December 2021 or 31 December 2020 within the meaning of s435 of the Companies Act 2006, but is derived from those Financial Statements. Statutory Financial Statements for the year ended 31 December 2020 have been delivered to the Registrar of Companies and those for the year ended 31 December 2021 will be delivered to the Registrar of Companies during April 2022. The auditor has reported on those Financial Statements; their reports were unqualified, did not draw attention to any matters by way of emphasis and did not contain statements under s498(2) or (3) of the Companies Act 2006. While the financial information included in this Preliminary Announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") adopted pursuant to IFRSs as issued by the United Kingdom, this announcement does not itself contain sufficient information to comply with IFRSs. The Company expects to publish full Financial Statements that comply with IFRSs during March 2022.

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, climate change considerations 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. 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 Statements. 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- Designate, 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.

(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. Other 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.

(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. Other 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.

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. Other 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:

(1) Project costs in 2020 relate to the preparation for debt refinancing which cannot be capitalised.

(2) Deal costs comprise costs related to potential acquisitions and the exploration of investment opportunities, which cannot be capitalised. These comprise employee costs, professional fees, travel costs and set up costs incurred prior to operating activities commencing.

(3) Share-based payments and long-term incentive plan charges and associated costs.

5a. Operating profit

Operating profit is stated after charging the following:

5b. Audit remuneration

6. Staff costs

Staff costs consist of the following components:

The average monthly number of employees during the year was made up as follows:

Some departments previously classified as sales and marketing have been reallocated to operations within the current year.

7. Key management personnel compensation

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

9. Finance costs

The year-on-year increase in foreign exchange differences for the year ended 31 December 2021 is driven primarily by the fluctuations year-on-year of the Central African Franc and Ghana Cedi.

10. Tax expense, tax paid and deferred tax

The range of statutory income tax rates applicable to the Group's operating subsidiaries is between 20% and 30%.

A change of control (as defined by the relevant local tax authority) has been triggered in a number of the Group's subsidiaries. An amount has been set aside by the pre-IPO shareholders and held in escrow to cover cash outflows in respect of these taxes which the Group believes is sufficient to cover its current estimates. In Ghana the tax charge has been computed resulting from an enterprise valuation process with external advisors and the amount is based on the Directors' best estimate of the outcome. The nature of a valuation process is inherently judgemental and is subject to the confirmation by the local tax authority. As a result the tax charge recorded may change once the process is finalised, which is expected during 2022, but the Directors do not expect this to be material.

As stipulated by local applicable law, minimum income taxes were chargeable on operating entities in Congo Brazzaville and Senegal which have reported tax losses for the year ended 31 December 2021. Minimum income taxes rules do not apply to the loss-making entities in the South African business.

A tax charge is reported in the consolidated financial statements despite a consolidated loss for accounting purposes, as a result of losses recorded in certain holding companies in Mauritius and UK. Such losses are not able to be group relieved against taxable profits in the operating company jurisdictions.

During the year, Helios Towers Ltd, HTA Holdings Ltd, HT Congo Brazzaville Holdco Ltd and HT Holdings Tanzania Ltd each obtained a Global Business License, in addition to HTA Group Ltd having obtained the License in a prior period and a Tax Residence Certificate in Mauritius. From 1 July 2021, the profits of these entities are subject to income tax, subject to ongoing conditions of the Global Business License.

Based on recent experience of closing tax audit cases, the provisions held by the Group have accurately quantified the final amounts determined. The Directors considered the current provisions held by the Group to be appropriate.

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 balances are calculated by applying the relevant statutory corporate income tax rates at the balance sheet date.

The following are the deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period:

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Unrecognised deferred tax

At the reporting date, the Group had unused tax losses of $226.4m (2020: $200.6m) available for offset against future periods. No deferred tax asset is recognised on US$222.3m of tax losses at the balance sheet date, as the relevant businesses are not expected to generate sufficient taxable profits in the short term to justify recognising the associated deferred tax assets. DRC US$121.2m (tax effect US$36.4m), South Africa US$13.9m (tax effect US$3.9m), Congo Brazzaville US$20.0m (tax effect US$5.6m), Mauritius US$ 61.1m (tax effect US$9.2m).

No deferred tax liability is recognised on temporary differences relating to the unremitted earnings of overseas subsidiaries as the Group is able to control the timings of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future.

Uncertain tax positions

Measurement of the Group's tax liability involves estimation of the tax liabilities arising from transactions in tax jurisdictions for which the ultimate tax determination is uncertain. Where there are uncertain tax positions, the Directors assess whether it is probable that the position adopted in tax filings will be accepted by the relevant tax authority, with the results of this assessment determining the accounting that follows. The Group uses tax experts in all jurisdiction when assessing uncertain tax positions and seeks the advice of external professional advisors where appropriate. The Group's tax provision for these matters are recognised within current tax liabilities. The provision reflects a number of estimates where the amount of tax payable is either currently under audit by the tax authorities or relates to a period which has yet to be audited. These areas include the tax effects of change of control events, which are calculated based on valuations of the company's operations in the relevant jurisdictions, and interpretation of taxation law relating to statutory tax filings by the Helios Towers Group.

The nature of the items, for which a provision is held, is such that the final outcome could vary from the amounts recognised once a final tax determination is made. To the extent the estimated final outcome differs from the tax that has been provided, adjustments will be made to income tax and deferred tax balances held in the period the determination is made. Whilst the value of open tax audit cases for payroll, VAT and corporate income taxes across the group is material in aggregate, based on recent experiences of closing tax audit cases, the resulting adjustments are generally not material and tax accruals and provisions held by the Group have accurately quantified the final amounts determined. Therefore, the Directors consider the current provisions held by the Group to be appropriate and do not anticipate a significant risk of a material change to the amounts accrued and provided at 31 December 2021 within the next financial year.

11. Intangible assets