Helios Towers Regulatory News (HTWS)

HELIOS TOWERS plc

Helios Towers plc announces results for the year and quarter ended 31 December 2023

Tenancies, Adjusted EBITDA and ROIC ahead of expectations

+29% revenue and +31% Adjusted EBITDA year-on-year growth

+10-14% Adjusted EBITDA growth, free cash flow inflection and

London, 14 March 2024: Helios Towers plc ("Helios Towers", "the Group" or "the Company"), the independent telecommunications infrastructure company, today announces results for the year to 31 December 2023 ("FY 2023").

Tom Greenwood, Chief Executive Officer, said:

"I am extremely pleased with the operational and financial performance of the business. In our first year with all recent acquisitions integrated, we exceeded expectations in customer delivery and across our KPIs. This included record organic tenancy growth that supported return on invested capital (ROIC) expansion.

Looking forward, we have conviction in a faster pace of tenancy ratio expansion than our prior medium-term guidance. As such, we have adjusted our strategic target of '22,000 towers by 2026', which included meaningful inorganic site growth, to '2.2x tenancy ratio by 2026', prioritising organic growth and returns expansion. Consequently, we expect FY 2024 to be our inflection year for free cash flow, and continue to grow thereafter.

We have built a compelling and unique platform in some of the world's fastest growing mobile markets and through our focus on customer service excellence, are well placed to capture the structural growth and deliver sustainable value for our stakeholders."

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.

Financial highlights

· FY 2023 revenue increased by 29% year-on-year to US$721.0m (FY 2022: US$560.7m), driven by record organic tenancy growth, complemented by acquisitions in Malawi and Oman

o  Q4 2023 revenue increased by 2% quarter-on-quarter to US$187.3m (Q3 2023: US$183.5m)

· FY 2023 Adjusted EBITDA increased by 31% year-on-year to US$369.9m (FY 2022: US$282.8m), driven by tenancy growth

o  Excluding acquisitions, Adjusted EBITDA increased by 17% year-on-year, representing the Company's fastest organic growth since IPO

o  Q4 2023 Adjusted EBITDA increased by 6% quarter-on-quarter to US$100.7m (Q3 2023: US$95.4m)

· FY 2023 Adjusted EBITDA margin increased 1ppt year-on-year to 51% (FY 2022: 50%) reflecting tenancy ratio expansion, partially offset by higher fuel prices

o  Excluding the impact of higher fuel prices, which increase power-linked revenue and operating expenses comparably, Adjusted EBITDA margin expanded 3ppt year-on-year

o  Q4 2023 Adjusted EBITDA margin increased 2ppt quarter-on-quarter to 54% (Q3 2023: 52%)

· FY 2023 operating profit increased by 82% year-on-year to US$146.1m (FY 2022: US$80.3m), driven by Adjusted EBITDA growth

o  Loss before tax improved to US$112.2m (FY 2022: US$162.5m), primarily driven by a US$65.8m year-on-year increase in operating profit and US$53.6m favourable movement in non-cash fair value movements on embedded derivatives, partially offset by US$60.3m higher finance costs

o  Higher finance costs reflect the non-cash impact of foreign exchange movements on the Group's intercompany borrowings and the full year impact of increased debt, largely related to the Oman acquisition which closed in December 2022

· FY 2023 portfolio free cash flow increased by 33% year-on-year to US$268.2m (FY 2022: US$201.4m), driven by Adjusted EBITDA growth and proportionately lower increases in payments of lease liabilities and taxes paid

o  FY 2023 portfolio free cash flow exceeded updated guidance of US$260m - US$265m, due to the timing of non-discretionary capex

· FY 2023 cash generated from operations increased by 65% year-on-year to US$318.5m (FY 2022: US$193.2m), driven by higher Adjusted EBITDA and improved working capital due to customer collections

· Net leverage of 4.4x decreased by 0.7x year-on-year (FY 2022: 5.1x) and by 0.1x quarter-on-quarter (Q3 2023: 4.5x)

· Business underpinned by future contracted revenues of US$5.4bn (FY 2022: US$4.7bn), of which 99% is from multinational MNOs, with an average remaining life of 7.8 years (FY 2022: 7.6 years)

Operational highlights

· Sites increased by 544 year-on-year to 14,097 sites (FY 2022: 13,553 sites) and by 73 quarter-on-quarter

· Tenancies increased by 2,433 year-on-year to 26,925 tenants (FY 2022: 24,492 tenants) and by 301 quarter-on-quarter

· Tenancy ratio increased by 0.10x year-on-year to 1.91x (FY 2022: 1.81x), reflecting expansion across all markets

o  Acquisitions in Oman and Malawi, completed in 2022, saw strong tenancy ratio expansion of 0.13x to 1.33x and 0.09x to 1.70x, respectively

Strategy update

· The Group's capital allocation policy is focused on growing portfolio free cash flow while consistently delivering ROIC above its cost of capital. Its current priorities are accretive organic investments and further deleveraging

· Combined with a faster pace of forecast tenancy ratio expansion compared to prior guidance, the Group has updated its strategic target of '22,000 towers by 2026', which included approximately 5,000 inorganic sites, to '2.2x tenancy ratio by 2026'. This is expected to support accelerated ROIC expansion over the medium-term

FY 2024 outlook and guidance1

· Organic tenancy additions of 1,600 - 2,100

· Adjusted EBITDA of US$405m - US$420m

· Portfolio free cash flow of US$275m - US$290m

· Capital expenditure of US$150m - US$190m

o  Of which c.US$45m is anticipated to be non-discretionary capital expenditure

· Net leverage below 4.0x

· Neutral free cash flow2

1 Guidance assumes the Group continues to apply the same accounting policies.

2 Excluding potential second acquisition closing in Oman, previously announced on 8 December 2022.

Environmental, Social and Governance (ESG)

· The Group has made continued progress against many of its Sustainable Business Strategy targets in FY 2023:

o  144m population coverage footprint (FY 2022: 141m)

o  5,817 rural sites (FY 2022: 5,593)

o  99.98% power uptime (FY 2022: 99.96%)

o  0% reduction in carbon emissions per tenant (FY 2022: -2%)3

o  28% female employees (FY 2022: 28%)

o  53% employees trained in Lean Six Sigma (FY 2022: 42%)

o  96% local employees in our operating companies (FY 2022: 96%)

· The Company has been recognised by external rating agencies for its Sustainable Business Strategy and commitment to transparency

o  ESG score of 'AAA' from MSCI, the highest score from the investment research firm, was reaffirmed

o  B score from CDP was reaffirmed

o  Inclusion in the FTSE4Good Index for a second consecutive year

o  ESG risk rating from Sustainalytics improved from Medium risk (22.6) to Low risk (16.8)

o  80% score for WDI disclosure exceeded sector and UK company average

· In 2024, the Group expects to publish an updated carbon emissions reduction target to reflect its recent expansion into four new markets

3 Reflects change in scope 1 and 2 carbon emissions per tenant compared to 2020 baseline. Includes only the five markets that were operational in our 2020 baseline year.

For further information go to:

www.heliostowers.com

Investor Relations

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

+44 (0)782 511 2288

Media relations

Edward Bridges / Rob Mindell

FTI Consulting LLP

+44 (0)20 3727 1000

Helios Towers' management will host a conference call for analysts and institutional investors at 09.30 GMT on Thursday, 14 March 2024. 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 2023 Results Conference Call

Event Name: FY2023

Password: HELIOS

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

Upcoming Conferences and Events

Helios Towers management is expected to participate in the upcoming conferences outlined below:

· JP Morgan Telecoms Towers Call Series (Virtual) - 18 Mar 2024

· Berenberg UK Corporate Conference (Watford) - 19 Mar 2024

· Jefferies Pan-European Mid-Cap Conference (London) - 20 Mar 2024

· Annual General Meeting (London) - 25 Apr 2024

About Helios Towers

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

· Helios Towers owns and operates over 14,000 telecommunication tower sites in nine countries across Africa and the Middle East

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

Alternative Performance Measures

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

Chair's statement

Uniquely positioned in the world's most exciting mobile markets

"Our talented people and partners have once again ensured that Helios Towers has delivered excellent performance in 2023, exceeding both operational and financial expectations laid out at the beginning of the year. Our focus on Customer Service Excellence and People and Business Excellence has been matched by our unwavering commitment to responsible governance."

Sir Samuel Jonah KBE, OSG

Chair

I am delighted to welcome you to our 2023 Annual Report, which demonstrates the strong progress we have made on our platform during the year. Through successful acquisition integration and continued progress on our 2026 strategy, underpinned by a robust governance framework, the business is well-positioned to create sustainable value for our stakeholders.

This is my fifth letter as Chair of Helios Towers and as I reflect on our latest accomplishments detailed throughout this report, I am reminded of how the business has transformed over these years and effectively mitigated global challenges, delivering on our purpose of driving the growth of mobile communications across Africa and the Middle East.

Through the challenges of Covid-19 and subsequent macroeconomic volatility, the Company consistently demonstrates its qualities: the resilience to inflation and foreign currency movements in its revenues, its operational expertise to deliver best-in-class customer service, and the embedded organic growth and lease-up opportunities across its markets.

Following the platform expansion across 2020 to 2022, in which the business doubled its portfolio and diversified through entry into four new markets, the Company entered 2023 with the opportunity to demonstrate the quality of its enlarged portfolio, against the backdrop of macroeconomic volatility.

With operational and financial performance exceeding guidance laid out at the beginning of the year, resulting in the fastest rate of organic growth and ROIC expansion since our Initial Public Offering (IPO), the quality of our enlarged platform, leadership and local teams is evident.

Our 2026 Sustainable Business Strategy

Our 2026 Sustainable Business Strategy is focused on creating value for all stakeholders and is reflected through targets within each of our three pillars: Customer Service Excellence, People and Business Excellence, and Sustainable Value Creation.

In the context of higher interest rates globally, we have updated our capital allocations principles to focus on organic growth and deleveraging, and as such target a slower pace of inorganic platform expansion. Combined with conviction in a faster pace of tenancy ratio expansion than prior guidance, the Board and management have adapted our prior target of '22 by 26' to '2.2x by 26'. The prior target being linked to portfolio scale and operating 22,000 towers by 2026, to now focus on portfolio utilisation and to deliver a 2.2x tenancy ratio by 2026.

We expect to achieve this through our uniquely positioned platform, proactive sales approach and our focus on Customer Service Excellence. This adaptation does not rule out acquisitions, which remain a key tool for us, but reflects our disciplined approach to capital allocation and focus on organic growth, lease-up and ROIC enhancement.

Our strategy is underpinned by our commitment to strong governance and ethics. The Board is satisfied that our strategy and actions reflect the requirements of, and our compliance with, Section 172(1), and there is more information relating to this throughout this Strategic Report. This includes our commitment to our workforce, customers, partners, suppliers, investors, communities and the environment, and our key impact areas of digital inclusion, climate action, local and talented teams and responsible governance.

Digital inclusion and climate action

Enabling digital inclusion in the communities we serve is one of the key reasons why we do what we do. Every new site, colocation or operational improvement we make furthers this ambition.

In 2023, our growth of +544 sites meant an additional 3.7 million people enjoyed the coverage provided by our towers. We also continued to improve power uptime at our sites, delivering 99.98% even though in many of our markets grid connectivity can be unreliable or inconsistent.

With significant population growth predicted and low mobile penetration in many of our regions today, we expect to see continued strong demand for tower infrastructure over the coming years.

While we seek to grow, we also understand the importance of minimising our carbon footprint. Alongside lower emissions, reducing our reliance on fuel supports improved financial performance. Between 2022-2030 we plan to invest US$100 million in low carbon solutions across the Group, including grid connections, hybrid and solar solutions. We look forward to further advancing our carbon reduction roadmap in 2024, including refreshing our carbon targets to include our four recent acquisitions.

Local, diverse, talented teams

The Board values our inclusive culture, believing it to be central to employee engagement and a crucial enabler for the long-term success of the Company. We were delighted once again to attract a 100% response rate to our Pulse Engagement Survey, which serves as a check-in between our biennial engagement survey.

We have been working to address the key feedback from our 2022 survey to further enrich our colleagues' experience of working with Helios Towers. Furthermore, we have implemented several initiatives including new wellbeing programmes, enhancing employee development and improving performance management across the Company.

Responsible governance

We fully appreciate the need for a strong governance framework to ensure we meet the high standards we set ourselves to work responsibly and comply with regulations.

At Board level, in relation to the Financial Conduct Authority's (FCA) Listing Rules target, FTSE Women Leaders Review recommendations and the Parker Review, we continue to exceed on ethnicity and have held 40% female representation on the Board, along with 24% in management positions. Following changes to Board roles announced in May 2023, we now also comply with the FTSE Women Leaders Review recommendation and FCA's Listing Rules target to have a female director in at least one of the senior board positions.

Our governance structures and policies help us to deliver on our strategy, manage our performance and ultimately support the value we create for all our stakeholders.

Outlook

Our performance in 2023 demonstrated the quality of our platform, uniquely positioned in some of the world's fastest growing mobile markets, as well as the dedicated, local teams and strong leadership throughout the Company. Looking forward, I am confident we will continue to drive the growth of mobile communications in our regions and deliver sustainable value for many years to come for all stakeholders.

Sir Samuel Jonah KBE, OSG

Chair

Group CEO's statement

Strong and consistent delivery on our expanded platform

"In my second year as CEO, and the first for the business in our enlarged nine-market platform, I am delighted with the team's performance on multiple fronts. Through the effective execution of our Sustainable Business Strategy, which prioritises delivering Customer Service Excellence through empowering our people, we took our customer service levels to new highs, successfully integrated our new acquisitions, delivered record organic tenancy growth and continued to drive sustainable value through robust colocation lease-up and ROIC enhancement."

Tom Greenwood

Group CEO

I am thrilled to report on strong Group performance in 2023, a year in which we again have demonstrated the qualities of our enlarged platform and our resilience against a volatile macroeconomic backdrop. This performance is underpinned by our talented local teams who continue to deliver best-in-class service for our customers.

Following a period of transformational expansion across 2020 to 2022, investing over US$1 billion to double the size of our platform to almost 14,000 towers and expand into four new markets, we entered 2023 ready to demonstrate our ability to successfully integrate assets while at the same time further elevating our best-in-class customer service, driving lease-up and materially improving ROIC.

I am delighted that we exceeded many of our ambitious expectations laid out at the beginning of the year, delivering record organic tenancy additions and strong lease-up, accelerating Adj. EBITDA and portfolio free cash flow growth and reducing net leverage back to within our target range. It was the fastest rate of organic growth and ROIC expansion delivered since IPO.

At the same time, we continued to demonstrate our resilience to macroeconomic volatility. Despite average inflation of 6% and foreign currency volatility in some of our markets, notably Ghana and Malawi, our financial performance measured by Adj. EBITDA continued to track in line with tenancy growth. It is our robust business model that supports this resilience, reflected by US$5.4 billion of future contracted revenues with investment grade or near investment grade customers, that is largely denominated in hard currencies with further protections through consumer price index (CPI) and power escalators.

It is from these strong foundations we drive value for all our stakeholders, captured in ambitious targets under our three pillars of Customer Service Excellence, People and Business Excellence, and Sustainable Value Creation.

Customer Service Excellence

Our philosophy for customers is simple: we are committed to delivering Customer Service Excellence in everything we do, whether that's in our core offerings of power delivery, roll out and site services, or by proactively anticipating and responding to our customers' needs.

One of our main KPIs is power availability, and in 2023 we achieved power uptime of 99.98% (2022: 99.96%). We continued to deliver at world-class levels, even in markets with limited grid availability and road infrastructure. All of our new markets have seen material improvements in power uptime since we started operations. For example, since entering Oman in December 2022 we reduced downtime per tower by 89% from nearly six minutes to 38 seconds. Similarly in Senegal, we reduced downtime per tower from six minutes in May 2021 to a record four seconds in December 2023. We remain focused on our Group goal of just 30 seconds of downtime per tower per week by 2026.

Another core customer service offering is the speed at which we can safely roll out new sites and get MNOs on air. We have internal targets focused on continuous improvement, covering multiple functions from supply chain management to operations and finance. In 2023, we took our performance to new levels, installing many colocations for our customers within 24 hours from order.

This focus on Customer Service Excellence has supported record organic tenancy growth in 2023. Coupled with our sustainable pricing strategy and continuous improvement ethos, it ensures we are positioned to support our customers and deliver excellence for the long-term, through the initial 10-15-year contract term and well beyond.

People and Business Excellence

Our second pillar focuses on integrating top talent and safe, efficient business practices to achieve Customer Service Excellence and in turn our overall success. While we are an asset-heavy business, our most important asset is always our people. We dedicate resources to nurture and enable our people and partners, equipping them with tools and training for data-driven decision-making, and personal development with people's health and safety of paramount importance in everything we do.

As a Lean Six Sigma (LSS) Black Belt, I'm committed to supporting colleagues through our Orange and Black Belt initiatives. As part of our LSS programme, colleagues are challenged to execute projects enhancing business efficiency and performance. During this year, I was delighted to be the mentor for Lujaina Al Amri, a female project engineer in Oman. This opportunity allowed me to directly contribute to discussing her project and business challenges, while nurturing our emerging talent and advocating for increased female representation in a historically male-dominated field.

LSS is at the core of our people development, and one of our strategic targets is to have 70% of our workforce trained to Orange or Black Belt by 2026.

We are making good progress, with 53% of our team trained by the end of the year. We've also invested in another cohort of next generation leaders, with 25 of our rising stars going to Cranfield University for leadership training, following 50 colleagues who completed the programme last year.

When it comes to enhancing our culture and leadership approach, the big themes this year have been empowerment, ownership and accountability. We viewed these as particularly important following our expansion across 2020 to 2022, which doubled the size of the business and meant our previous management operating model had to change to effectively manage the new scale. We held several off-site management meetings to promote our ethos of empowering colleagues across the business to make the right decisions quickly. We also held strategy days across each of our OpCos, enabling every employee to understand and contribute to the strategic development of the Company.

Our OpCo teams, which have 96% local staff across the Group, strongly mirror the communities we serve, fostering a rich business culture. We believe that the most effective business performance is achieved through empowering local leadership and teams to deliver. Female representation has remained at 28% in the year, with 24% at the senior management level and 40% at the Board level.

In 2023, we started a Board mentor programme connecting female Board members with our top 25 female leaders across the organisation, creating an environment for coaching and support for career enhancement. In 2024, we're initiating a female-male 'reciprocal mentoring' programme, which focuses on two-way mentorship between colleagues throughout the organisation.

Sustainable Value Creation

The third pillar in our strategy, Sustainable Value Creation, takes the successful output of our other two pillars and combines it with our disciplined approach to capital allocation. It is focused on value creation for all our stakeholders.

In 2023, we achieved record organic tenancy additions of +2,433, far exceeding our previous record of +1,601 tenancies in 2022. It was particularly pleasing to see our new market Oman deliver +358 tenancies in the first year of ownership, exceeding our initial expectations, as well as achieving over +1,000 organic tenancy additions in DRC for the very first time.

Notably, the majority of the tenancy additions came through lease-up on our existing towers, with our tenancy ratio expanding +0.10x year-on-year to 1.91x. This reflects our ability to identify uniquely positioned towers in each of our markets and our pro-active customer partnership approach. This approach supports our ongoing readiness to safely deliver new rollout in market-leading timescales.

As lease-up of our sites continues apace, and as we expand our portfolio, it's with real pride that we see the societal and environmental benefits that our tower-sharing model creates. Today, we estimate that our sites now cover 144 million people, compared to 141 million one year ago.

We also continued to invest in low carbon solutions, investing US$12 million in 2023 on grid connections, solar and hybrid solutions in addition to trialling wind technology for the first time.

Year-on-year carbon emissions per tenant were flat, with the benefit of colocation lease-up and power investments offset by higher grid emission factors in Tanzania and Senegal, as well as record tenancy growth in DRC, a fuel intensive market.

Through our strong tenancy growth and operational investments, we achieved +31% Adj. EBITDA and +82% operating profit growth in 2023. This also supported ROIC increasing meaningfully, expanding from 10.3% to 12.0%. Loss before tax improved by US$50.3 million to a loss of US$112.2 million, reflecting improved operating profit.

2.2x by 26

In the context of higher interest rates, we have updated our capital allocation priorities and over the near-term we are focused on organic growth and deleveraging. We anticipate inorganic activity and platform growth to be at a slower pace than previously guided. As such, we have tweaked our internal target from 22,000 towers by 2026 to 2.2x tenancy ratio by 2026. This reflects our updated capital allocation priorities and conviction in faster lease-up than previously guided.

This does not rule out attractive acquisitions, but it does illustrate our continued disciplined approach to capital allocation and to ensure our strategy is adaptable to external factors to drive the best value for our stakeholders.

Embedding health and safety in our DNA

I am proud of all the ways we support our people, but at Helios Towers we know the single most important thing we can do for our colleagues is to protect their health and safety. In the last two to three years, we have worked hard at every level of the organisation to embed this fully into our culture. From working at height to tower construction to working with power set-ups, safety risks are always present for our people and partners, so we do everything we can to avoid accidents.

We are also very transparent in our health and safety disclosures, declaring the number of incidents not just in our own workforce, but also among the 11,500 partners in our contractor network. Transparency is key to achieving our safety culture, and I'm very pleased to see that our near miss reporting rate has increased by 50% year-on-year. This improvement demonstrates open transparent communication through the business and increases our data pool, which allows us to learn, adapt and improve to ensure we are better able to keep our colleagues and partners safe when at work.

Furthermore, this year we have been leading the way in the wider telecoms community, for example by organising health and safety forums for the tower industry in Africa, in partnership with Nokia. We are breaking new ground in getting the whole industry together to ensure safety is our shared number one priority.

I am pleased that our commitment to health and safety, and sustainability more generally, also continues to deliver solid value to a range of stakeholders. Our sustainability credentials were confirmed this year by a AAA sustainability rating with MSCI, one of the leading providers of critical decision support tools and services for the global investment community.

Outlook

Following a strong 2023, in which we demonstrated the strength of our platform through accelerating organic growth and increasing returns, we expect to deliver more of the same over the coming years. Our revised strategic goal of '2.2x by 26', reflects our capital allocation priorities and conviction of faster lease-up than previously guided.

I expect our uniquely positioned platform with leading market share in some of the world's fastest growing markets, our dedicated focus on delivering Customer Service Excellence, alongside our talented local teams, will continue to drive sustainable value for all our stakeholders for many years to come.

Tom Greenwood

Group CEO

Group CFO's statement

Record organic tenancy growth, ROIC enhancement and proactively managing our balance sheet

"In 2023, we accelerated our organic growth, increased ROIC and strengthened our funding position, against the backdrop of a rising interest rate environment and continued global volatility. This performance reflects the strength and diversification of our enlarged platform, following two years of transformational expansion."

Manjit Dhillon

Group CFO

2023 was our most successful year for organic growth and ROIC expansion since IPO. With a record +2,433 organic tenancy additions delivered across our enlarged platform, we exceeded expectations for Adjusted EBITDA, operating profit and cash flow generation, while also reducing our net leverage back within our target range, ahead of schedule.

We also strengthened our funding position, partially reducing our 2025 Senior Notes through new loan facilities, which extended our average maturity by one year with only a minimal increase in our cost of debt, despite materially higher rates globally.

Our playbook in action

Our playbook is fairly simple - identify attractive high growth mobile markets with power and tower infrastructure gaps. Then identify compelling entry opportunities, either organically or more commonly inorganically through portfolio acquisitions, which create leading market positions, provide strong organic growth and lease-up opportunities and are underpinned by a robust base of revenues, often in hard currencies and supplemented by contractual escalators.

This has been demonstrated through the four new market acquisitions which have been integrated in the last couple of years. We are pleased with the performance of the new acquisitions, all of which have hit the ground running.

While our efficiency metrics were diluted in these acquisitive years (notably tenancy ratio, Adjusted EBITDA margin and ROIC), this not only reflected the relative infancy of these assets but also the opportunity. In 2023, we started to demonstrate the quality of these acquisitions, alongside the long-term embedded growth within all our markets.

Our record organic tenancy growth supported our tenancy ratio expanding by +0.1x, reflecting expansion in both our new markets, which are tracking in line with our expectations, as well as continued growth within our established platform, in particular DRC that added over 1,000 tenancies through the year.

Consequently, Group ROIC expanded at its fastest rate since IPO from 10.3% to 12.0% with portfolio free cash flow expanding +33% and substantially reduced capital intensity for the business, reflecting our disciplined approach to capital allocation which always targets investments with a meaningful surplus to our weighted average cost of capital (WACC).

Robust business model

Our strong performance is underpinned by our robust business model that continues to demonstrate its resilience through macroeconomic volatility. While we saw a 11% increase in fuel prices, 6% in CPI and 4% foreign currency movements against the dollar, our Adjusted EBITDA expanded 31%, in line with our average tenancy growth.

Our revenues are largely protected from inflation and foreign currency movements, through four of our markets being innately hard-currency, in addition to contractual CPI and power price escalations. In our quarterly earnings releases over the past few years, we continue to demonstrate this dynamic.

In addition to these escalations, our defence against macroeconomic volatility is established through a protective blend of sustainable pricing strategy, market diversity and a diverse portfolio of blue-chip customers.

Customer mix: Our customers comprise major MNOs across Africa and the Middle East, contributing around 98% of our revenues in 2023. This revenue stream is diversified across several blue-chip MNOs, with none representing more than 27% of our revenue for the year. Additionally, we maintain sustainable pricing, offering lease rates approximately 30% lower than the MNOs' overall cost of ownership.

Long-term contracts: Traditionally, our agreements span initial periods of 10-15 years, followed by automatic renewals. As at 31 December 2023, the Group had an average of 7.8 years remaining in the initial term across our contracts. This equates to US$5.4 billion in future revenue already secured, marking a 15% increase year-on-year, through organic growth and contract renewals.

Hard currency earnings: Another layer of safeguarding comes from our operation within hard currency markets. Countries like DRC, Senegal, Oman, and Congo Brazzaville are either dollarised or hard currency pegged. Within the Group, 71% of our Adjusted EBITDA comes from hard currency sources, strengthened by contractual escalations linked to power and CPI.

Through the year, we showcased how these attributes shield our Adjusted EBITDA and position us favourably to seize growth opportunities in a robust and resilient manner.

Our performance in 2023

We delivered record organic tenancy additions of +2,433, far exceeding our guidance of +1,600-2,100 provided at the beginning of the year, with the overachievement largely driven by lease-up. Consequently, we saw strong revenue and Adjusted EBITDA growth of 29% and 31% respectively. Our operating profit reached a record of US$146.1 million, marking an increase of 82% year-on-year.

Our Adjusted EBITDA margin increased by 1ppt from 50.4% in 2022 to 51.3% in 2023. Our Adjusted EBITDA margin was partially impacted by higher fuel prices in 2023, as both fuel-linked revenues and operating expenses increased comparably due to pricing and therefore decreased margin. Adjusting for this dynamic, our Adjusted EBITDA margin increased by 3ppt year-on-year, reflecting the strong lease-up delivered through the year.

The Group's loss before tax was US$112.2 million, an improvement of US$50.3 million year-on-year. The impact of foreign currency movements was US$86.1 million, largely reflecting the non-cash impact of intercompany loan movements. Nevertheless, with our focus on tenancy growth and operational efficiencies, we anticipate enhanced profitability in the near term. This transformation is evident in our five established markets, where our business is evolving towards profitability.

Cash flow

Cash flow generated from our existing asset base, or portfolio free cash flow, increased by 33% to US$268.2 million. The increase was driven by Adjusted EBITDA growth and improved cash conversion, principally related to proportionately lower increases in payments of lease liabilities and taxes paid. Cash generated from operations increased by 65% to a record US$318.5 million (2022: US$193.2 million) driven by higher Adjusted EBITDA, lower deal costs and movements in working capital.

With portfolio free cash flow growth and a large decrease in capital expenditure in the year, our free cash flow improved materially from negative US$720.6 million to negative US$81.1 million and we continue to move towards reaching neutral free cash flow in 2024 and positive free cash flow thereafter.

Balance sheet

In September, we raised up to US$720 million loan and credit facilities as part of a liability management exercise, to opportunistically partially tender our 2025 Senior Notes and repay our existing term loan. In total US$405 million was utilised, resulting in our average maturities extending by one year with a minimal increase in our cost of debt, despite the rising interest rate environment.

We believe this reflects the consistency of our performance delivery over the past few years, as well as the improved scale and diversification achieved through our platform expansion. Our expansion over the last few years has resulted in us having US$38.5 million of net liabilities at year-end, primarily driven by the depreciation on acquired assets and financing costs associated with those acquisitions, as well as the non-cash impact of foreign currency movements on our foreign currency asset base. As we lease-up those assets over the next few years, we expect the liability position to reverse. Our net current assets at year end remain strong at US$84.2 million.

At year-end our balance sheet debt remained in a solid position, with a four-year average remaining life and over 80% of it being fixed. However, we continue to be opportunistic in regard to our debt liability management and are currently reviewing options around refinancing in 2024.

We closed the year with net leverage of 4.4x, within our medium-term target range of 3.5-4.5x and ahead of expectations. Given the projected earnings growth ahead, we target to be below 4.0x by the end of 2024.

Capital allocation

We have a disciplined approach to capital allocation, in which every investment needs to achieve a sufficient spread above our cost of capital among other factors. While we have a strong platform, the higher interest rate environment in which we operate today requires us to adjust return requirements for each investment.

In this context, our primary focus for capital allocation looking forward revolves around maximising returns through highly selective organic investments and strengthening our balance sheet. Consistent with prior years our primary focus is on organic investments including colocations, operating expense initiatives and highly selective BTS. Following this, our capital allocation priorities shift from acquisitions in the short term to supporting a reduction in our net leverage to below 4.0x by year-end 2024.

With free cash flow anticipated to move into positive territory over the near term, we are now close to a juncture where the capital we generate allows us the capacity to make distributions to our investors, both debt and equity holders, while still having ample resources to invest in our growth.

Outlook

Our outlook and strategy is simple - consistently look for and invest in capital efficient opportunities to increase our return on invested capital and ensure we continue to exceed our cost of capital. We have an exciting year ahead where we will continue to prioritise our capital allocation on high returning organic growth while delivering exceptional customer experience.

In 2024 and beyond, our focus remains steadfast on these objectives, aiming to leverage the positive aspects of our high-growth markets combined with our robust business model for the benefit of all stakeholders.

This fundamental approach forms the core of our strategy. We've laid down the foundations that promise a strong growth trajectory irrespective of global market shifts.

Manjit Dhillon

Group 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 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 a better understanding of the Group's underlying trading performance.

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 Includes 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

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.

Purpose

Portfolio free cash flow 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 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 Payment of lease liabilities comprises 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 EBITDA1.

Purpose

Gross debt is a prominent metric used by investors and rating agencies.

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 the Group's cash position relative to 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.

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 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 and IAS 29 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.

2 Restatement on finalisation of acquisition accounting; see Note 31.

Detailed financial review

Consolidated Income Statement

For the year ended 31 December

Segmental key performance indicators

For the year ended 31 December

Following the Group's recent expansion into new countries and related internal management and reporting reorganisation, the Group's segments are now presented on a regional rather than a country basis, with comparative information re-presented accordingly.

1 Group Adjusted EBITDA for the year includes corporate costs of US$36.0 million (2022: US$31.5 million).

2 MENA (Middle East & North Africa) segment reflects the Company's operations in Oman.

3 East & West Africa segment reflects the Company's operations in Tanzania, Senegal and Malawi.

4 Central & Southern Africa segment reflects the Company's operations in DRC, Congo Brazzaville, South Africa, Ghana and Madagascar.

Total tenancies as at 31 December

? Alternative Performance Measures are defined on pages 64-66 of the Annual Report.

Revenue

Revenue increased by 28.6% to US$721.0 million in the year ended 31 December 2023 from US$560.7 million in the year ended 31 December 2022. The increase in revenue was driven by organic tenancy growth, especially in DRC, contractual CPI and power escalators and acquisitions in Malawi and Oman in 2022.

Cost of sales

The table below shows an analysis of the cost of sales on a region-by-region basis for the year ended 31 December 2023 and 2022.

Cost of sales increased to US$450.4 million in the year ended 31 December 2023 from US$365.9 million in the year ended 31 December 2022, due primarily to a full year of operations in Malawi and Oman (US$42.7 million) and organic site growth.

Administrative expenses

Administrative expenses increased by 11.8% to US$127.6 million in the year ended 31 December 2023 from US$114.1 million in the year ended 31 December 2022. Year-on-year administrative expenses as a percentage of revenue has decreased by 2.6%. The increase in administrative expenses is primarily due to the impact of acquisitions that increased amortisation and other administrative costs.

Adjusted EBITDA

Adjusted EBITDA was US$369.9 million in the year ended 31 December 2023 compared to US$282.8 million in the year ended 31 December 2022. 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.

Other gains and losses

Other gains and losses recognised in the year ended 31 December 2023 was a loss of US$6.1 million, compared to a loss of US$51.4 million in the year ended 31 December 2022. This is mainly related to the impacts of hyperinflation accounting in 2023 in Ghana and the non-cash US$2.1 million (2022: US$51.5 million) fair value movement of the embedded derivative valuation of the put and call options embedded within the terms of the Senior Notes. See Note 26 of the Group Financial Statements.

Finance costs

Finance costs of US$253.5 million for the year ended 31 December 2023 included interest costs of US$150.2 million which reflects interest on the Group's debt instruments, fees on available Group and local term loans and revolving credit facilities (RCF), withholding taxes and amortisation. The increase in interest costs from US$115.4 million in 2022 to US$150.2 million in 2023 is primarily due to a full year of interest costs for the Oman term loan. The increase in non-cash foreign exchange differences from US$52.3 million in 2022 to US$86.1 million in 2023 primarily reflects fluctuations of the Malawian Kwacha, Ghanaian Cedi and Tanzanian Shilling which declined against the US Dollar during the year.

Tax expense

Tax expense was US$0.4 million credit in the year ended 31 December 2023 as compared to US$8.9 million expense in the year ended 31 December 2022. The decrease in overall tax charge is predominantly driven by the recognition of previously unrecognised deferred tax assets in profitable territories.

Though entities in Congo Brazzaville and Senegal have continued to be loss-making for tax purposes, minimum income taxes or/and asset based taxes were levied, 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 corporate income tax thereon.

Contracted revenue

The following table provides our total undiscounted contracted revenue by country as of 31 December 2023 for each year from 2024 to 2028, with local currency amounts converted at the applicable average rate for US Dollars for the year ended 31 December 2023 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 prior their current term; and

· no automatic renewal.

The following table provides our total undiscounted contracted revenue by key customers as of 31 December 2023 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 2023 held constant. As at 31 December 2023, total contracted revenue was US$5.4 billion (2022: US$4.7 million), of which 99% is from multinational MNOs, with an average remaining life of 7.8 years (2022: 7.6 years).

Management cash flow

1 Payment of lease liabilities comprises 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 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 working capital related to capital expenditure.

6 Levered portfolio free cash flows have been represented based on the updated structure of the management cash flow. It is defined as portfolio free cash flow less net payment of interest and net change in working capital.

7 Discretionary capital additions includes acquisition, growth and upgrade capital additions.

8 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.

9 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 increased slightly from 71% for the year ended 31 December 2022 to 73% for the year ended 31 December 2023. This is driven by Adjusted EBITDA growing faster than corporate taxes paid and payment of lease liabilities.

Net change in working capital decreased by US$39.4 million year-on-year due to timing of cash payments to suppliers and improved collections from customers.

The Group's Consolidated Statement of Cash Flows is set out on page 135 of the Annual Report.

Cash flows from operations, investing and financing activities

Cash generated from operations increased by 64.9% to US$318.5 million (2022: US$193.2 million) driven by higher Adjusted EBITDA, lower deal costs and movements in working capital. Net cash used in investing activities was US$195.8 million for the year ended 31 December 2023, down from US$381.5 million in the prior year. The decrease was primarily due to lower organic and inorganic site growth in 2023. Net cash generated from financing activities during the year was US$43.2 million, which primarily related to loan drawdowns net of loan repayments.

Cash and cash equivalents

Cash and cash equivalents decreased by US$13.0 million year-on-year to US$106.6 million at 31 December 2023 (2022: US$119.6 million) as described above.

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 2023 relates primarily to deferred consideration in Senegal.

Trade and other receivables

Trade and other receivables increased from US$228.1 million at 31 December 2022 to US$297.2 million at 31 December 2023, primarily due to increases from new markets entered, organic growth, customer billing profile and contract assets. Debtor days decreased from 57 days in 2022 to 47 days in 2023 (see Note 15).

Trade and other payables

Trade and other payables increased from US$239.4 million at 31 December 2022 to US$301.7 million at 31 December 2023. The increase is primarily driven by an increase in deferred income, as a result of the timing of customer billings, and an increase in accruals due to the timing of capital expenditure and other purchases around year-end.

Loans and borrowings

As of 31 December 2023 and 31 December 2022, the Group's outstanding loans and borrowings, excluding lease liabilities, were US$1,650.3 million (net of issue costs) and US$1,571.6 million respectively, and net leverage was 4.4x and 5.1x respectively. The year-on-year change in indebtedness largely reflects a US$325 million partial tender of the Group's Senior Notes due 2025 and US$65 million repayment of the Group's previous term loan using proceeds from new banking facilities completed during the year. Further details of loans and borrowings are provided in Note 20 of the Group Financial Statements.

Principal risks and uncertainties

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

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

1 Restatement on finalisation of acquisition accounting.

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

These Financial Statements were approved and authorised for issue by the Board on 13 March 2024 and signed on its behalf by:

Tom Greenwood Manjit Dhillon

Consolidated Statement of Changes in Equity

For the year ended 31 December

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 and the cash flow hedge reserve.

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 Consolidated Financial Statements

For the year ended 31 December 2023

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 nine 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 on page 172 of the Annual Report. 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 and for the application of IAS 29 'Financial Reporting in Hyperinflationary Economies' for the Group's entities reporting in Ghanaian Cedi. 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 principal accounting policies adopted are set out below.

The financial information included within this Preliminary Announcement does not constitute the Company's statutory Financial Statements for the years ended 31 December 2023 or 31 December 2022 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 2022 have been delivered to the Registrar of Companies and those for the year ended 31 December 2023 will be delivered to the Registrar of Companies during April 2024. 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 or April 2024. Page number references in this document refer to the Group's 2023 Annual Report.

Basis of consolidation

The Consolidated Financial Statements incorporate the Financial Statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:

- has the power over the investee;

- is exposed, or has rights, to variable return from its involvement with the investee; and

- has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the accounting policies used in line with the Group's accounting policies.

All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that have present ownership interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests' proportionate share of the fair value of the acquiree's identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

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 debt facilities (Note 20).

As part of their regular assessment of the Group's working capital and financing position, the Directors have prepared a detailed trading and cash flow forecast for a period which covers at least 12 months after the date of approval of the Consolidated Financial Statements, together with sensitivities and a 'reasonable worst case' stress scenario. In assessing the forecasts, the Directors have considered:

- trading and operating risks presented by the conditions in the operating markets;

- the impact of macroeconomic factors, particularly inflation, interest rates and foreign exchange rates;

- climate change risks and initiatives, including the Group's Project 100 initiative;

- the availability of the Group's funding arrangements, including loan covenants and non-reliance on facilities with covenant restrictions in more extreme downside scenarios;

- the status of the Group's financial arrangements;

- progress made in developing and implementing cost reduction programmes, climate change considerations and initiatives and operational improvements; and

- mitigating actions available should business activities fall behind current expectations, including the deferral of discretionary overheads and other expenditures.

In particular for the current year, the Directors have considered the impact of energy prices and the broader inflationary environment in some of the Group's operations. Our expansion over the last few years has resulted in us having US$38.5m of net liabilities at year end, primarily driven by the depreciation on acquired assets and financing costs associated with those acquisitions. As we lease-up those assets over the next few years, we expect the liability position to reverse. Our net current assets at year end remain strong at US$84.2m.

Based on the foregoing considerations, the Directors continue to consider it appropriate to adopt the going concern basis of accounting in preparing the Consolidated Financial Statements.

New accounting policies in 2023

In the current financial year, the Group has adopted the following new and revised Standards, Amendments and Interpretations. Their adoption has not had a material impact on the amounts reported in these Financial Statements:

- IFRS 17: Insurance contracts, Amendments to IAS 8: Definition of Accounting Estimates, Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction and Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies.

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination in accordance with IFRS 3 Business Combinations (IFRS 3) is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the Group in exchange for control of the acquiree. The identifiable assets, liabilities and contingent liabilities (identifiable net assets) are recognised at their fair value at the date of acquisition. Acquisition-related costs are expensed as incurred and included in administrative expenses.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

- uncertain tax positions and deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

- liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-Based Payments at the acquisition date (see below); and

- assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquired (if any) over the net of the fair values of acquired assets and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss. Goodwill is capitalised as an intangible asset with any subsequent impairment in carrying value being charged to the consolidated statement of profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (a period of no more than 12 months), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the contingent consideration is measured at its acquisition date fair value and included as part of the consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. The carrying value of contingent consideration is the present value of those cash flows (when the effect of the time value of money is material).

Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. Subsequently, changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments are recognised in the income statement, when contingent consideration amounts are remeasured to fair value at subsequent reporting dates.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the cash-generating units (CGU) that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata based on the carrying amount of each asset in the unit. Any impairment loss is recognised directly in profit or loss. An impairment loss recognised for goodwill is not able to be reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Revenue recognition

The Group recognises revenue from the rendering of tower services provided by utilisation of the Group's tower infrastructure pursuant to written contracts with its customers. The Group applies the five-step model in IFRS 15 Revenue from Contracts with Customers (IFRS 15). Prescriptive guidance in IFRS 15 is followed to deal with specific scenarios and details of the impact of IFRS 15 on the Group's Consolidated Financial Statements are described below. Revenue is not recognised if uncertainties over a customer's intention and ability to pay means that collection is not probable.

On inception of the contract a 'performance obligation' is identified based on each of the distinct goods or services promised to the customer. The consideration specified in the contract with the customer is allocated to a performance obligation identified based on their relative standalone selling prices. In line with IFRS 15, the Group has one material performance obligation, which is providing a series of distinct tower space and site services. This performance obligation includes fees for the provision of tower infrastructure, power escalations and tower service contracts. This is the only material performance obligation for the Group at the balance sheet date.

Revenue from these services is recognised as the performance obligation is satisfied over time using the time elapsed output method for each customer to measure the Group's progress under the contract. Customers are usually billed in advance creating deferred income which is then recognised as the performance obligation is met over a straight-line basis. Amounts billed in arrears are recognised as contract assets until billed.

Revenue is measured at the fair value of the consideration received or expected to be received and represents amounts receivable for services provided in the normal course of business, less VAT and other sales-related taxes. Where refunds are issued to customers, they are deducted from revenue in the relevant service period.

The entire estimated loss for a contract is recognised immediately when there is evidence that the contract is unprofitable. If these estimates indicate that any contract will be less profitable than previously forecasted, contract assets may have to be written down to the extent they are no longer considered to be fully recoverable. We perform ongoing profitability reviews of our contracts in order to determine whether the latest estimates are appropriate.

Key factors reviewed include:

- transaction volumes or other inputs affecting future revenues which can vary depending on customer requirements, plans, market position and other factors such as general economic conditions;

- the status of commercial relations with customers and the implications for future revenue and cost projections; and

- our estimates of future staff and third-party costs and the degree to which cost savings and efficiencies are deliverable.

The direct and incremental costs of acquiring a contract including, for example, certain commissions payable to staff or agents for acquiring customers on behalf of the Group, are recognised as contract acquisition cost assets in the statement of financial position when the related payment obligation is recorded. Costs are recognised as an expense in line with the recognition of the related revenue that is expected to be earned by the Group; typically, this is over the customer contract period as new commissions are payable on contract renewal.

Foreign currency translation

The individual Financial Statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the Consolidated Financial Statements, the results and financial position of each Group company are expressed in United States Dollars (US$), which is the functional currency of the Company, and the presentation currency for the Consolidated Financial Statements.

In preparing the Financial Statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting Consolidated Financial Statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the reporting date, with the exception of the Group's Ghanaian Cedi operations, which are subject to hyperinflation accounting.

Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity (attributed to non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest become a financial asset), all of the exchange differences accumulated in a separate component of equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss.

Hyperinflation Accounting

Ghana met the requirements to be designated as a hyperinflationary economy under IAS 29 'Financial Reporting in Hyperinflationary Economies' in the quarter ended 31 December 2023. The Group has therefore applied hyperinflationary accounting, as specified in IAS 29, to its Ghanaian operations whose functional currency is the Ghanaian Cedi.

In accordance with IAS 21 'The Effects of Changes in Foreign Exchange Rates', comparative amounts have not been restated.

Ghanaian Cedi denominated results and non-monetary asset and liability balances for the current financial year ended 31 December 2023 have been revalued to their present value equivalent local currency amount as at 31 December 2023, based on an inflation index, before translation to USD at the reporting date exchange rate of USD$1:GHS11.89.

For the Group's operations in Ghana:

- The gain or loss on net monetary assets resulting from IAS 29 application is recognised in the consolidated income statement within other gains & losses.

- The Group also presents the gain or loss on cash and cash equivalents as monetary items together with the effect of inflation on operating, investing and financing cash flows as one number in the consolidated statement of cash flows.

- The Group has presented the IAS 29 opening balance adjustment to net assets within currency reserves in equity. Subsequent IAS 29 equity restatement effects and the impact of currency movements are presented within other comprehensive income because such amounts are judged to meet the definition of 'exchange differences'.

The inflation index in Ghana selected to reflect the change in purchasing power was the consumer price index (CPI) issued by the Ghana Statistical Service, which has risen by 23.2% to 200.5 (2022: 162.8) during the current financial year.

The main impacts of the aforementioned adjustments on the consolidated financial statements are shown below.

Financial assets

Financial assets within the scope of IFRS 9 are classified as financial assets at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

At the current reporting period the Group did not elect to classify any financial instruments as fair value through OCI.

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Group's consolidated statement of financial position) when:

- the rights to receive cash flows from the asset have expired; or

- the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party.

Financial liabilities

Financial liabilities within the scope of IFRS 9 are classified, at initial recognition, as financial liabilities at fair value through profit or loss. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans and borrowings.

The subsequent measurement of financial liabilities depends on their classification, as described below:

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied.

(b) Financial liabilities at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

Embedded derivatives

A derivative may be embedded in a non-derivative 'host contract' such as put and call options over loans. Such combinations are known as hybrid instruments. If a hybrid contract contains a host that is a financial asset within the scope of IFRS 9, then the relevant classification and measurement requirements are applied to the entire contract at the date of initial recognition. Should the host contract not be a financial asset within the scope of IFRS 9, the embedded derivative is separated from the host contract, if it is not closely related to the host contract, and accounted for as a standalone derivative. Where the embedded derivative is separated, the host contract is accounted for in accordance with its relevant accounting policy, unless the entire instrument is designated at FVTPL in accordance with IFRS 9.

Hedge Accounting

The Group's activities expose it to the financial risks of changes in interest rates which it manages using derivative financial instruments. The use of financial derivatives is governed by the Group's policies approved by the Board of Directors, which provide written principles on the use of financial derivatives consistent with the Group's risk management strategy. The Group does not use derivative financial instruments for speculative purposes.

The Group designates certain derivatives as hedges of highly probable interest rate risks of firm commitments (cash flow hedges). Derivative financial instruments are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changes in values of all derivatives of a financing nature are included within financing costs in the income statement unless designated in an effective cash flow hedge relationship when the effective portion of changes in value are deferred to other comprehensive income. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised or no longer qualifies for hedge accounting. When hedge accounting is discontinued, any gain or loss recognised in other comprehensive income at that time remains in equity and is recognised in the income statement when the hedged transaction is ultimately recognised in the income statement.

For cash flow hedges, when the hedged item is recognised in the income statement, amounts previously recognised in other comprehensive income and accumulated in equity for the hedging instrument are reclassified to the income statement. However, when the hedged transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are transferred from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. If a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in the income statement.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Leases

The Group applies IFRS 16 Leases. The Group holds leases primarily on land, buildings and motor vehicles used in the ordinary course of business. Based on the accounting policy applied the Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for all leases conveying the right to control the use of an identified asset for a period of time. The commencement date is the date on which a lessor makes an underlying asset available for use by a lessee.

The right-of-use assets are initially measured at cost, which comprises:

- the amount of the initial measurement of the lease liability;

- any lease payments made at or before the commencement date, less any lease incentives received; and

- any initial direct costs incurred by the lessee.

After the commencement date the right-of-use assets are measured at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any remeasurement of the lease liability.

The Group depreciates the right-of-use asset from the commencement date to the end of the lease term. The lease liability is initially measured at the present value of the lease payments that are not paid at that date. These include:

- fixed payments, less any lease incentives receivable.

The lease payments are discounted using the incremental borrowing rate at the commencement of the lease contract or modification. Generally, it is not possible to determine the interest rate implicit in the land and building leases. The incremental borrowing rate is estimated taking account of the economic environment of the lease, the currency of the lease and the lease term. The lease term determined by the Group comprises:

- non-cancellable period of lease contracts;

- periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option; and - periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.

After the commencement date the Group measures the lease liability by:

- increasing the carrying amount to reflect interest on the lease liability;

- reducing the carrying amount to reflect lease payments made; and

- remeasuring the carrying amount to reflect any reassessment or lease modifications.

Property, plant and equipment

Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation and impairment losses, if any.

Assets in the course of construction for production, supply or administrative purposes, are carried at cost, less any recognised impairment loss. Cost includes material and labour and professional fees in accordance with the Group's accounting policy, and only those costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management are capitalised. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready for their intended use. Borrowing costs are not capitalised as assets are generally constructed in substantially less than one year.

Freehold land is not depreciated.

Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:

Directly attributable costs of acquiring tower assets are capitalised together with the towers acquired and depreciated over a period of up to 15 years in line with the assets estimated useful lives.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is recognised in profit and loss.

Intangible assets

Contract-acquired-related intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. They are amortised on a straight-line basis over the life of the contract.

Intangible assets acquired in a business combination and recognised separately from goodwill are recognised initially at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Amortisation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method, on the following bases:

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. Amortisation of intangibles is included within Administrative expenses in the Consolidated Income Statement.

Impairment of tangible and intangible assets

At each reporting date, the Directors review the carrying amounts of its tangible and intangible assets (other than goodwill, which is tested at least annually as described above) to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows (cash-generating units - 'CGUs'). Where the asset does not generate cash flows that are independent from other assets, the Directors estimate the recoverable amount of the CGU to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss. Any impairment is allocated pro-rata across all assets in a CGU unless there is an indication that a class of asset should be impaired in the first instance or a fair market value exists for one or more assets. Once an asset has been written down to its fair value less costs of disposal then any remaining impairment is allocated equally among all other assets.

Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (CGU) in prior years. Reversals are allocated pro-rata across all assets in the CGU unless there is an indication that a class of asset should be reversed in the first instance or a fair market value exists for one or more assets. A reversal of an impairment loss is recognised in the income statement immediately. An impairment loss recognised for goodwill is never reversed in subsequent periods.

Related parties

For the purpose of these Financial Statements, parties are considered to be related to the Group if they have the ability, directly or indirectly to control the Group or exercise significant influence over the Group in making financial or operating decisions, or vice versa, or where the Group is subject to common control or common significant influence. Related parties may be individuals or other entities.

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

Share-based payments

The Group's management awards employee share options, from time to time, on a discretionary basis which are subject to vesting conditions. The economic cost of awarding the share options to its employees is recognised as an employee benefit expense in the income statement equivalent to the fair value of the benefit awarded over the vesting period. For further details refer to Note 25.

Inventory

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. Short-term deposits are defined as deposits with an initial maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purposes of the Statement of Cash Flows.

Interest expense

Interest expense is recognised as interest accrues, using the effective interest method, to the net carrying amount of the financial liability.

The effective interest method is a method of calculating the amortised cost of a financial asset/financial liability and of allocating interest income/interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/ payments through the expected life of the financial assets/financial liabilities, or, where appropriate, a shorter period.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised either for taxable temporary differences arising on investments in subsidiaries or on carrying value of taxable assets, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the profit or loss, except when it relates to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off 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.

Uncertain tax positions

Where required under applicable standards, provision is made for matters where Management assess that it is probable that a relevant taxation authority will not accept the position as filed in the tax returns, it is probable an outflow of economic benefits will be required to settle the obligation and the amount can be reliably estimated. The Group typically uses a weighted average of outcomes assessed as possible to determine the level of provision required, unless a single best estimate of the outcome is considered to be more appropriate. Assessments are made at the level of an individual tax uncertainty, unless uncertainties are considered to be related, in which case they are grouped together. Provisions, which are not discounted given the short period over which they are expected to be utilised, are included within current tax liabilities, together with any liability for penalties, which to date have not been significant. Any liability relating to interest on tax liabilities is included within finance costs.

Share capital

Ordinary shares are classified as equity.

Treasury shares

Treasury shares represents the shares of Helios Towers plc that are held by the Employee Benefit Trust (EBT). Treasury shares are recorded at cost and deducted from equity.

New accounting pronouncements

The following Standards, Amendments and Interpretations have been issued by the IASB and are effective for annual reporting periods beginning on or after 1 January 2024:

- Amendments to IAS 1 'Classification of liabilities and Non-current liabilities with Covenants'

- Amendments to IFRS 16 'Lease Liability in a Sale and Leaseback'

- Amendments to IAS 7 and IFRS 7 'Supplier Finance Arrangements'

The Group's financial reporting will be presented in accordance with the above new standards from 1 January 2024. The Directors do not expect that the adoption of the above Standards, Amendments and Interpretations will have a material impact on the Financial Statements of the Group in future periods.

In the application of the Group's accounting policies, which are described above, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the Directors, have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the Financial Statements.

Revenue recognition

Revenue is recognised as service revenue in accordance with IFRS 15: Revenue from contracts with customers. In arriving at this assessment, the Directors concluded that there is not an embedded lease, given customer contracts provide for an amount of space on a tower rather than a specific location on a tower. Our contracts permit us, subject to certain conditions, to relocate customer equipment on our towers in order to accommodate other tenants. Customer consent is usually required to move equipment, however, this should not be unreasonably withheld. The Directors believe these substitution rights are substantive, given the practical ability to move equipment and the economics of doing so. In applying the requirements of IFRS 15, management makes an evaluation as to whether it is probable that the Group will collect the consideration that it is entitled to under the contract. The amount of revenue that the Group is contractually entitled to but has not recognised is disclosed in Note 22.

Contingent liabilities

The Group exercises judgement to determine whether to recognise provisions and the exposures to contingent liabilities related to pending litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation, as well as other contingent liabilities (see Note 27). Judgement is necessary to assess the likelihood that a pending claim will succeed, or a liability will arise.

Recognition of deferred tax assets

The Group has material unrecognised deferred tax assets across a number of jurisdictions (see Note 10) which have not been recognised to date due to current period tax losses, insufficient certainty as to future taxable profits and in the context of ongoing assessments from local tax authorities in certain jurisdictions (see Note 27). Successful resolution of such assessments from tax authorities and greater certainty over future taxable profitability may lead to partial recognition of currently unrecognised deferred tax assets with the next 12 months.

2(b). Critical accounting judgements and key sources of estimation uncertainty

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Derivatives valuation

The group manages its interest rate risk using interest rate swap agreements. These are classified as financial instruments and recognised at fair value at the reporting date. The fair value is dependent on the future interest rate forward yield curve at the reporting date. This can have a material impact on the fair value of the interest rate swaps between periods. A 100 basis point movement will result in a change in value of US$19.5 million which will be recognised either in the income statement or in other comprehensive income depending on if hedge accounting has been applied and effective in the period.

The Directors have considered whether certain other estimates included in the financial statements meet the criteria to be key sources of estimation uncertainty, as follows:

Impairment testing

Following the assessment of the recoverable amount of goodwill allocated to the Group's CGUs, to which Goodwill of US$40.7 million is allocated, the Directors consider the recoverable amount of goodwill allocated to the operating companies to be most sensitive to the key assumptions in the number of tenancy opportunities in the relevant markets and the expected growth rates in these markets, future discount rates and operating cost and capital expenditure requirements.

In the current year sensitivities have been applied to the key assumptions and the Directors do not consider there to be a reasonable possible change that would have a material impact to the balance sheet valuation.

Provisions for litigation

Provisions and exposures to contingent liabilities related to pending litigations or other outstanding claims subject to negotiated settlement, mediation, arbitration or government regulation (see Note 27) are subject to estimation uncertainty. Whilst the value of open claims across the Group is material in aggregate, based on recent experiences of closing such cases, the resulting adjustments are generally not material 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 2023 within the next financial year.

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 jurisdictions when assessing uncertain tax positions and seeks the advice of external professional advisors where appropriate. The Group's tax provision for these matters is recognised within current tax liabilities and in the measurement of deferred tax assets as applicable. 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 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 all 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 2023 within the next financial year.

Climate-related matters on the financial statements

The Directors have considered the effects climate-related matters may have on the financial statements. In particular, consideration has been given to the potential impact climate matters may have on the carrying amount of the Group's property plant and equipment and inventories, the impact climate change considerations and initiatives have when assessing forecasts as part of our going concern assessment and impairment reviews, potential financial impact that future regulatory requirements may have on financial instruments the Group may use or the way it assesses the recognition of assets and liabilities.

While no adjustments have been made to the carrying amount of assets and liabilities in the current year, the Group's forecasts reflect the Group's planned spend in respect of carbon-intensity reduction targets. The Directors will continue to assess the impact climate-related matters may have on the financial position and performance of the Group and reflect those in future financial statements.

3. Segmental reporting

The following segmental information is presented in a consistent format with management information considered by the CEO of each operating segment, and the CEO and CFO of the Group, who are considered to be the chief operating decision makers (CODMs). Operating segments are determined based on geographical location. Following the Group's recent expansion into new countries and related internal management and reporting reorganisation, the Group's segments are now presented on a regional rather than a country basis, with comparative information re-presented accordingly. 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 the CODMs is Adjusted EBITDA, which is defined in Note 4.