Helios Towers Regulatory News (HTWS)

HELIOS TOWERS plc

Unaudited results for the 6 months ended 30 June 2022

Strong organic tenancy additions

+19% year-on-year Adjusted EBITDA growth

+36% year-on-year portfolio free cash flow growth

2022 guidance reiterated

London, 18 August 2022: Helios Towers plc ("Helios Towers","the Group" or "the Company"), the independent telecommunications infrastructure company, today announces results for the 6 months to 30 June 2022.

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

2 Calculated as per the Senior Notes definition of net debt divided by annualised Adjusted EBITDA. Annualised Adjusted EBITDA calculated as the most recent fiscal quarter multiplied by 4, adjusted to include the annualised impact of acquisitions in the period.

Tom Greenwood, Chief Executive Officer, said:

"We have delivered strong organic tenancy growth in the first half of the year, which combined with the successful integration of acquired assets in Senegal, Madagascar and Malawi has resulted in impressive year-on-year financial performance. Despite broader global macroeconomic uncertainty, our uniquely positioned platform, highly visible base of quality earnings and unparalleled structural growth continues to drive sustainable value creation for all of our stakeholders." 

Financial highlights

· H1 2022 revenue increased by 25% year-on-year to US$265.4m (H1 2021: US$212.4m) driven by acquisitions in Senegal, Madagascar and Malawi and strong organic tenancy growth across the Group, in addition to CPI and power price escalations. Excluding acquisitions, revenue increased 12% year-on-year.

o  Q2 2022 revenue increased by 8% quarter-on-quarter to US$137.9m (Q1 2022: US$127.5m).

· H1 2022 Adjusted EBITDA increased by 19% year-on-year to US$136.1m (H1 2021: US$114.2m), driven by revenue growth, with H1 2022 Adjusted EBITDA margin decreasing 3ppt year-on-year to 51% (H1 2021: 54%), reflecting the previously communicated SG&A investment to support the Group's ongoing expansion into ten markets and higher fuel costs in DRC in Q2 2022.

o  Q2 2022 Adjusted EBITDA increased by 4% quarter-on-quarter to US$69.4m (Q1 2022: US$66.7m), with Q2 2022 Adjusted EBITDA margin at 50% (Q1 2022: 52%).

· Operating profit increased 48% year-on-year to US$39.8m (H1 2021: US$26.9m) driven by strong revenue growth, partially offset by a modest increase in administrative expenses as part of the Group's ongoing expansion.

o  Loss before tax increased to US$122.2m (H1 2021 US$43.6m), driven by a US$83.8m year-on-year increase in non-cash expenses related to both the fair value movements of the embedded derivatives in the Group's bond and foreign exchange movements on Euro and US dollar denominated intercompany borrowings.

· Portfolio free cash flow increased by 36% year-on-year to US$100.4m (H1 2021: US$73.8m), driven by Adjusted EBITDA growth and timing of non-discretionary capital expenditure.

· Cash generated from operations increased 99% to US$91.0m driven by higher Adjusted EBITDA and movements in working capital.

· Net leverage increased by +0.7x year-on-year to 3.9x (H1 2021: 3.2x), primarily due to acquisitions in Madagascar and Malawi, and quarter-on-quarter by 0.2x (Q1 2022: 3.7x), remaining comfortably within the Group's medium-term target range of 3.5x - 4.5x.

o  Strong balance sheet with 96% of drawn debt at a fixed rate, no near-term maturities and fully-funded for announced transactions.

· Business underpinned by long-term contracted revenues of US$4.2bn (H1 2021: US$3.5bn), of which 99% is from large multinational MNOs, with an average remaining life of 7.2 years (H1 2021: 7.4 years).

o  Pro forma for announced transactions in Oman and Gabon, the Group has contracted revenues of US$5.3 billion.

o  CPI and power price escalators embedded into customer contracts provides an effective hedge against inflation and fuel price movements over a full-year cycle.

Operational highlights

· Sites increased by 2,091 year-on-year to 10,694 sites (H1 2021: 8,603 sites), reflecting 1,213 acquired sites in Malawi and Madagascar and 878 organic site additions.

o  Sites increased organically by 183 quarter-on-quarter (Q1 2022: 10,511).

· Tenancies increased by 3,459 year-on-year to 20,549 tenants (H1 2021: 17,090 tenants), reflecting 1,692 acquired tenancies in Malawi and Madagascar and 1,767 organic tenancy additions.

o  Tenancies increased organically by 316 quarter-on-quarter (Q1 2022: 20,233).

· Tenancy ratio decreased 0.07x year-on-year to 1.92x (H1 2021: 1.99x), reflecting the dilutive impact of acquired assets in Madagascar (1.20x) and Malawi (1.58x).

Environmental, Social and Governance (ESG)

· Helios Towers has been awarded a 'AAA' ESG score from MSCI, the highest score from the investment research firm, in addition to being included in the FTSE4Good Index, a series designed to measure the performance of companies demonstrating strong ESG practices. This further highlights Helios Towers' commitment to sustainable business and its purpose of driving the growth of mobile communications in Africa and the Middle East.

Strategic Updates

· The Group continues to progress with the closings of passive infrastructure assets in Oman and the potential acquisition of Airtel Africa's tower assets in Gabon, with the expected timings and updates outlined below:

o  Oman: Subject to completing the remaining customary closing conditions including obtaining regulatory approval, the Group anticipates the acquisition of Oman Telecommunications Company ("Omantel") to close in H2 2022.

§ On 7 June 2022, Helios Towers announced it had entered into an agreement pursuant to which Rakiza Telecommunications Infrastructure LLC ("Rakiza") will purchase a 30% minority stake in the purchase of Omantel Telecommunications Company (S.A.O.G)'s ("Omantel") passive infrastructure assets in Oman, with Helios Towers purchasing the remaining 70%.

§ Partnership combines Helios Towers' proven operational expertise with a local partner that has extensive local market knowledge.

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

2022 Outlook and guidance

· Following strong operational and financial performance in H1 2022, the Group has reiterated its FY 2022 guidance of:

o  1,200 - 1,700 organic tenancy additions, of which 60% are expected to be new sites.

o  Lease rate per tenant to increase in the range of 3% - 5% from FY 2021 (2021: US$26.4k per tenant).

o  Adjusted EBITDA margin of 51% - 53% (FY 2021: 53.6%), with the YoY decrease driven by the impact of new acquisitions and corporate SG&A investment required for the expansion of the Group's operations to ten markets.

· The acquisition of Airtel Africa's passive infrastructure company in Malawi, closed at the end of March, is anticipated to deliver Adjusted EBITDA of approximately US$6m for its nine months of operation in FY 2022.

· The Group continues to target capex of US$810m - US$850m in FY 2022.

o  As previously guided, excluding acquisitions the Group anticipates US$160m - US$200m of capex, of which, US$27m - US$32m is non-discretionary capex.

o  The Group anticipates acquisition capex of approximately US$650m in 2022, reflecting the acquisitions in Oman and Malawi, and deferred acquisition payments in Senegal and Madagascar.

For further information go to:

www.heliostowers.com

Investor Relations

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

+44 (0)752 310 1475

Media relations

Edward Bridges / Stephanie Ellis

FTI Consulting LLP

+44 (0)20 3727 1000

Helios Towers' management will host a conference call for analysts and institutional investors at 09.30 BST on Thursday, 18 August 2022. For the best user experience, please access the conference via the webcast. You can pre-register and access the event using the link below:

Registration Link - Helios Towers H1 2022 Results Conference Call

Event Name: H12022

Password: HELIOS

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

About Helios Towers

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

· Helios Towers owns and operates telecommunication tower sites in Tanzania, Democratic Republic of Congo, Congo Brazzaville, Ghana, South Africa, Senegal, Madagascar and Malawi. Following recent acquisition agreements Helios Towers expects to establish a presence in two new markets across the Middle-East and Africa. Including these acquisitions and committed BTS, the Group's total site count is expected to increase from over 10,500 towers to over 14,000.

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

Alternative Performance Measures

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

Financial and Operating Review

Condensed consolidated statement of profit or loss

For the 6 months ended 30 June

Segmental Key Performance Indicators

For the 6 months ended 30 June

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

2 Group Adjusted EBITDA for the period is stated including corporate costs of US$16.1m (2021: US$13.8m).

3 Results for the period since acquisition on 24th March 2022.

Total tenancies as at 30 June

Revenue

Revenue increased by 25% to US$265.4m in the period ended 30 June 2022 (H1 2021: US$212.4m). The increase was largely driven by the growth in total tenancies from 17,090 as of 30 June 2021 to 20,549 as of 30 June 2022, including the addition of 1,692 tenancies relating to the acquisitions in Madagascar and Malawi, which closed in November 2021 and March 2022, respectively. The acquisition in Senegal, which closed in May 2021, alongside the acquisitions in Madagascar and Malawi contributed a US$28.3m year-on-year increase in revenues alongside US$24.7m from organic growth across other markets.

For the period ended 30 June 2022, 98% of revenues were from multinational MNOs and 63% were denominated in hard currency, being either USD or XAF/XOF (both of which are pegged to the Euro) or USD.

Contracted revenue

The following table provides our total undiscounted contracted revenue by country as of 30 June 2022 for each of the periods from 2022 to 2026, with local currency amounts converted at the applicable average rate for US Dollars for the period ended 30 June 2022 held constant. Our contracted revenue calculation for each year presented assumes: (i) no escalation in fee rates, (ii) no increases in sites or tenancies other than our committed tenancies, (iii) our customers do not utilise any cancellation allowances set forth in their MLAs, (iv) our customers do not terminate MLAs early for any reason and (v) no automatic renewal.

The following table provides our total undiscounted contracted revenue by key customers as of 30 June 2022 over the life of the contracts with local currency amounts converted at the applicable average rate for US Dollars for the period ended 30 June 2022 held constant. Our calculation uses the same assumptions as above. The average remaining life of customer contracts is 7.2 years.

Cost of sales and adjusted gross margin

Year-on-year cost of sales increased by US$35.2m from US$138.4m in the period ended 30 June 2021 to US$173.6m in the period ended 30 June 2022. This increase is due to the full year impact of Senegal (US$10.5m), the acquisitions in Madagascar and Malawi (US$8.4m), increases in tenancies and inflationary power price increases primarily in our markets in DRC and Ghana. The Group has both annual CPI and quarterly or annual power price escalators embedded into its customers contracts, which provides effective protection from inflation and power price movements on the Group's cost of sales.

The table below shows an analysis of the cost of sales on a country-by-country basis for the 6-month period ended 30 June 2022 and 2021.

Adjusted gross margin for the period reduced by 2.4% due to an increase in power costs and the inclusion of lower margin acquisitions, Madagascar and Malawi.

Administrative expenses

Administrative expenses increased by US$8.7m year-on-year, to US$52.6m from US$43.9m in the prior year. The increase in cost base largely reflects the impact of new acquisitions and increased corporate SG&A investments previously communicated to support the Group's ongoing expansion to ten markets. Year-on-year the administrative cost levels as a percentage of revenue have reduced to 19.8% (H1 2022: 20.7%).

Operating profit

Operating profit increased 48% year-on-year to US$39.8m (H1 2021: US$26.9m) driven by strong revenue growth, partially offset by a modest increase in administrative expenses due to the Group expansion to ten markets.

Other gains and losses

The fair value loss of US$57.7m in H1 2022 was driven by a fair value movement in the embedded derivative within the terms of the Group's Senior Notes, due to quoted bond prices moving from above par at 31 December 2021 to below par at 30 June 2022. Further details are explained in note 9 to the condensed consolidated financial statements.

Finance costs

Finance costs have increased 62% year-on-year to US$104.7m for the period ended 30 June 2022. The increase is primarily driven by the non-cash foreign exchange impact of revaluing intercompany borrowings, denominated in US$ and Euros, in markets where the operating companies have seen a devaluation in their local currencies period on period.

Tax expense

Tax expense was US$2.9m in the period ended 30 June 2022 as compared to US$7.5m in the period ended 30 June 2021. The overall reduction in tax expense during the 6 months ended 30 June 2022 compared to the 6 months ended 30 June 2021 is primarily driven by prior year adjustments relating to actual results being lower than initial estimates of corporate income tax in Ghana and Senegal, and the recognition of deferred tax assets on timing differences between accounting and tax values of assets, which are offset against recognised deferred tax liabilities. Entities in Congo Brazzaville and Senegal are loss making, however minimum income tax is levied as stipulated by law in these jurisdictions. Malawi is loss making for tax purposes and no minimum income tax applies. DRC, Ghana, Tanzania and one entity in South Africa are profit making and subject to income tax on taxable profits.

Loss after tax

The loss after tax for the half year was US$125.1m compared to US$51.1m in the comparative half year. The increase is due to the non-cash impact of the adverse movement in the fair value of the embedded derivatives within the Group's Senior Notes and foreign exchange losses on retranslating intercompany borrowings, in total amounting to US$94.4m which was partially offset by growth in operating profit.

Management cash flow

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

2 Cash conversion % is calculated as portfolio free cash flow divided by Adjusted EBITDA.

3 Net payment of interest corresponds to the net of 'Interest paid' (including withholding tax) and 'Interest received' in the Consolidated Statement of cash flow, excluding interest payments on lease liabilities.

4 Discretionary capital additions includes acquisition, growth and upgrade capital additions and excludes IFRS 3 accounting adjustments.

5 Net change in working capital corresponds to movements in working capital, excluding cash paid for adjusting and EBITDA adjusting items and including movements in capital expenditure related working capital.

6 Cash paid for exceptional and one-off items includes project costs, deal costs, deposits in relation to acquisitions, and non-recurring taxes.

7 Net cash flow from financing activities includes gross proceeds from issue of equity share capital, share issue costs, borrowing drawdowns, loan issue costs and repayment of loans in the condensed consolidated statement of cash flows.

Cash flows from operations

Cash generated from operations has increased by US$45.3m to US$91.0m (H1 2021: US$45.7m), driven by higher Adjusted EBITDA and movements in working capital. The Group has presented a Condensed consolidated statement of cash flows for the six months ended 30 June 2022 later in the release.

Capital expenditure

The following table shows capital expenditure additions by category during the 6 months ended 30 June:

Acquisition capex in the six months ended 30 June 2022 relates primarily to Malawi and South Africa excluding the fair value of assets and liabilities acquired and goodwill recognised under IFRS 3.

Trade and other receivables

Trade and other receivables increased by US$61.5m to US$248.1m at 30 June 2022 (H1 2021: US$186.6m). The increase was primarily driven by new acquisitions and organic growth in the business. Trade receivables increased by US$27.2m, due to timing of cash receipts from customers at 30 June 2022. Other receivables increased by US$35.1m, driven by an increase in contract assets of US$12.0m and accrued revenue of US$14.9m.

Trade and other payables

Trade and other payables have increased by US$41.3m. This was primarily driven by an increase in trade payables of US$22.3m, due to capex spend in Q2, deferred income of US$11.9m and other payables and accruals of US$12.0m.

Loans and borrowings

As of 30 June 2022 and 31 December 2021 the Group's outstanding loans net of issue costs and excluding lease liabilities, were US$1,289.8m and US$1,295.5m with net leverage at 3.9x and 3.6x respectively. The Group did not raise or refinance any debt during the first six months of 2022.

Alternative Performance Measures

The Group has presented a number of Alternative Performance Measures ("APMs"), which are used in addition to IFRS statutory performance measures. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Some of these measures are also used for the purposes of setting remuneration targets.

Adjusted EBITDA and Adjusted EBITDA margin

Definition - Management defines Adjusted EBITDA as loss before tax for the year, adjusted for finance costs, other gains and losses, interest receivable, loss on disposal of property, plant and equipment, amortisation of intangible assets, depreciation and impairment of property, plant and equipment, depreciation of right-of-use assets, deal costs for aborted acquisitions, deal costs not capitalised, share-based payments and long-term incentive plan charges, and other adjusting items. Other adjusting items are material items that are considered one-off by management by virtue of their size and/or incidence. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenue.

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

Adjusted EBITDA is reconciled to loss before tax as follows:

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

2 Share-based payments and long-term incentive plan charges and associated costs.

Adjusted gross profit and adjusted gross margin

Definition - Adjusted gross profit is defined as gross profit, adding back site depreciation. Adjusted gross margin is defined as adjusted gross profit divided by revenue.

Purpose - These measures are used to evaluate the underlying level of gross profitability of the operations of the business, excluding depreciation, which is the major non-cash measure reflected in cost of sales. The Group believes that Adjusted gross profit facilitates comparisons of operating performance from period to period and company to company by eliminating potential differences caused by the age and booked depreciation on assets. It is also a proxy for the gross cash generation of its operations.

Portfolio free cash flow

Definition - Portfolio free cash flow is defined as Adjusted EBITDA less maintenance and corporate capital expenditure, payments of lease liabilities (including interest and principal repayments of lease liabilities) and tax paid.

Purpose - This measure is used to evaluate the cash flow generated by the business operations after expenditure incurred on maintaining capital assets, including lease liabilities, and taxes. It is a measure of the cash generation of the tower estate.

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

2 Cash conversion % is calculated as portfolio free cash flow divided by Adjusted EBITDA.

Gross debt, net debt, net leverage and cash & cash equivalents

Definition - Gross debt is calculated as non-current loans, current loans, and long-term and short-term lease liabilities. Net debt is calculated as gross debt less cash and cash equivalents. Net leverage is calculated as net debt divided by annualised Adjusted EBITDA.

Purpose -Net debt is a measure of the Group's net indebtedness that provides an indicator of overall balance sheet strength. It is also a single measure that can be used to assess both the Group's cash position and its indebtedness. The use of the term 'net debt' does not necessarily mean that the cash included in the net debt calculation is available to settle the liabilities included in this measure. Net leverage is used to show how many years it would take for a company to pay back its debt if net debt and Adjusted EBITDA are held constant. The Group aims to maintain net leverage broadly in the range of 3.5x-4.5x.

1 External debt is presented in line with the balance sheet at amortised cost. External debt is the total loans owed to commercial banks and institutional investors. 

2 Annualised Adjusted EBITDA calculated as per the Senior Notes definition as the most recent fiscal quarter multiplied by 4, adjusted to reflect the annualised contribution from acquisitions that have closed in the most recent fiscal quarter. This is not a forecast of future results.

3 Net leverage is calculated as net debt divided by annualised Adjusted EBITDA.

Return on invested capital

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

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

(1) Annualised portfolio free cash flow is defined as portfolio free cash flow for the previous twelve months from the period end date, adjusted to annualise for the impact of acquisitions closed over the respective period.

Risk management

The risk management and governance process has not changed since the 2021 Annual report was published and is set out on pages 60 to 65 of the 2021 Annual report (available on the Group's website at www.heliostowers.com) and summarised as follows.

The creation and maintenance of the Group risk register involves the whole business with operating company and functional head input being consolidated by Group Compliance into a register for discussion and agreement at Executive level prior to submission to the Audit Committee and the Board. The risk register is updated twice a year after these discussions and a review of the external environment for any emerging risks.

All risks are classified into six broad risk types: Strategic, Reputational, Compliance (including legal), Finance, Operational and People. All risks are assessed according to the probability and consequence of being realised and a determination made to accept, avoid, or control and mitigate, in which case mitigating controls are clearly defined. A risk owner for all risks is identified.

During bi-annual discussions with Executive Management and functional heads of department, potential emerging risks are also discussed. These may result from internal developments, changes in organisational structure/personnel, potential new products or markets being considered or changes in the external environment such as regulatory changes, socio-economic, political or health and safety matters.

Emerging risks related to sustainability, climate change, evolving legal requirements concerning modern slavery and human rights abuses have been identified as part of the risk management process and continue to be monitored.

Principal risks and uncertainties

There has been no change in the nature, probability or potential impact of previously identified risks as set out on pages 61 to 65 of the 2021 Annual report (available on the Group's website at www.heliostowers.com). The risks are summarised as follows:

- Major quality failure or breach of contract

- Non-compliance with various laws and regulations

- Economic and political instability

- Significant exchange rate movements

- Non-compliance with licence requirements

- Loss of key personnel

- Technology risk

- Failure to remain competitive

- Failure to integrate new lines of business in new markets

- Tax disputes

- Operational resilience

- COVID-19

- Information technology failure and cyber attack risk

- Climate change

Control environment

The effectiveness of the Group's system of internal control is regularly reviewed by the Board with specific consideration given to material financial, operational and sustainable risks and controls, with appropriate steps taken to address any issues identified.

Going concern

The Directors also considered it appropriate to prepare the condensed consolidated financial statements on a going concern basis, as explained in Note 1.

Condensed consolidated financial statements

Independent review report to Helios Towers plc

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows and related notes 1 to 23.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the group will be prepared in accordance with United Kingdom adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusion Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE (UK), however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly financial report, we are responsible for expressing to the group a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the company in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Deloitte LLP

Statutory Auditor

London, United Kingdom

18 August 2022

Condensed consolidated statement of profit or loss and other comprehensive income (unaudited)

For the 6 months ended 30 June 2022

Earnings per share

Condensed consolidated statement of financial position (unaudited)

As at 30 June 2022

Condensed consolidated statement of changes in equity (unaudited)

For the 6 months ended 30 June 2022

Condensed consolidated statement of cash flows (unaudited)

For the 6 months ended 30 June 2022