IHS Holding Limited Reports First Quarter 2022 Financial Results
IHS Towers reported a robust first quarter 2022 with revenue reaching $446.1 million, marking a 23.4% increase year-over-year. Adjusted EBITDA stood at $244.9 million with a 54.9% margin. The firm achieved a net profit of $16.9 million, reversing a loss from the previous year. Key growth drivers included organic revenue growth of 21.5% and successful acquisitions, including São Paulo Cinco Locação de Torres Ltda. IHS Towers also ended the quarter with $3,060.3 million in total debt and $508.6 million in cash, positioning them well for future investments.
- Revenue increased by 23.4% to $446.1 million.
- Adjusted EBITDA rose to $244.9 million with a margin of 54.9%.
- Net profit of $16.9 million compared to a loss of $29.1 million in Q1 2021.
- Completion of the acquisition of SP5, adding 2,115 towers.
- Organic revenue growth of 21.5% driven by new sites and colocations.
- Cash from operations decreased by 17.4% to $166.6 million.
- Increased costs of sales and administrative expenses impacting profitability.
- Higher maintenance capital expenditure and lease payments.
CONSOLIDATED HIGHLIGHTS – FIRST QUARTER 2022
-
Revenue increased
23.4% (or21.5% organically) to$446.1 million -
Adjusted EBITDA was
$244.9 million 54.9% -
Profit for the period was
$16.9 million -
Cash from operations was
$166.6 million -
Recurring Levered Free Cash Flow (“RLFCF”) was
$87.1 million -
Completed the acquisition of São Paulo Cinco Locação de Torres Ltda. (“SP5”), a Grupo Torresur (“GTS”) portfolio company comprising of 2,115 towers on
March 17, 2022
Including the approximately 5,700 towers subject to the imminent completion of our pending deal in
In
Separately, we have begun working on a plan that we internally refer to as “Project Green” to identify areas where we can further reduce our consumption of diesel as this is the right thing to do both from a sustainability and cost savings perspective. We are excited about the work done to date and look forward to sharing the details with you later this year in the fall.
Lastly, you may recall that our Shareholders Agreement with our pre-IPO shareholders is structured in a manner that enables shares held by these locked-up shareholders to be released from lock-up in blocks every 6 months beginning in
RESULTS FOR THE FIRST QUARTER 2022
The table below sets forth select unaudited financial results for the quarters ended
|
|
|
|
|
|
|
||
|
|
Three months ended |
||||||
|
|
|
|
|
|
|
||
|
|
2022 |
|
2021 |
|
Change |
||
|
|
$’000 |
|
$’000 |
|
% |
||
|
|
|
|
|
|
|
||
Revenue |
|
446,132 |
|
361,650 |
|
|
23.4 |
|
Adjusted EBITDA(1) |
|
244,872 |
|
215,023 |
|
|
13.9 |
|
Profit/(loss) for the period |
|
16,916 |
|
(29,053 |
) |
|
n/a |
|
Cash from operations |
|
166,607 |
|
201,586 |
|
|
(17.4 |
) |
RLFCF(1) |
|
87,060 |
|
70,778 |
|
|
23.0 |
|
(1) |
Adjusted EBITDA and RLFCF are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” for additional information and a reconciliation to the most comparable IFRS measures. |
Results/comparison of three months ended
During the first quarter of 2022, revenue was
Adjusted EBITDA was
Profit for the period was
Cash from operations and RLFCF for the first quarter of 2022 were
Segment results
Revenue and Segment Adjusted EBITDA:
Revenue alongside Segment Adjusted EBITDA, our key profitability measure used to assess the performance of our reportable segments, for each of our reportable segments was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
Revenue |
|
Adjusted EBITDA |
|
|||||||||||
|
|
Three months ended |
|
|
|
Three months ended |
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
2022 |
|
2021 |
|
Change |
|
2022 |
|
|
2021 |
|
|
Change |
|
|
|
|
$'000 |
|
$'000 |
|
% |
|
$'000 |
|
$'000 |
|
% |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
320,656 |
|
261,253 |
|
22.7 |
|
203,019 |
|
|
179,923 |
|
|
12.8 |
|
|
Sub-Saharan Africa |
|
85,628 |
|
83,170 |
|
3.0 |
|
46,999 |
|
|
48,619 |
|
|
(3.3 |
) |
|
MENA |
|
8,615 |
|
6,724 |
|
28.1 |
|
3,618 |
|
|
3,057 |
|
|
18.3 |
|
|
Latam |
|
31,233 |
|
10,503 |
|
197.4 |
|
22,113 |
|
|
7,470 |
|
|
196.0 |
|
|
Other |
|
— |
|
— |
|
— |
|
(30,877 |
) |
|
(24,046 |
) |
|
(28.4 |
) |
|
Total |
|
446,132 |
|
361,650 |
|
23.4 |
|
244,872 |
|
|
215,023 |
|
|
13.9 |
|
|
Revenue for our
Segment Adjusted EBITDA for our
Sub-Saharan Africa
Revenue for our Sub-Saharan Africa segment increased by
Segment Adjusted EBITDA for our Sub-Saharan Africa segment was
MENA
Revenue for our MENA segment increased by
Segment Adjusted EBITDA for our MENA segment was
Latam
Revenue for our Latam segment increased by
Segment Adjusted EBITDA for our Latam segment was
INVESTING ACTIVITIES
During the first quarter of 2022, capital expenditures were
On
On
FINANCING ACTIVITIES AND LIQUIDITY
Approximate
The Group ended the first quarter of 2022 with
Full Year 2022 Outlook Guidance
The following full year 2022 guidance is based on a number of assumptions that management believes to be reasonable and reflect the Company’s expectations as of
The Company’s outlook is based on the following assumptions:
-
Organic revenue Y/Y growth of approximately
15% -
Average foreign currency exchange rates to
1.00 U.S. Dollar forJanuary 1, 2022 throughDecember 31, 2022 for key currencies: (a) 432 Nigerian Naira; (b)5.21 Brazilian Real (c)0.90 Euros (d)15.95 South African Rand -
Oil assumed at
$120 USD -
Build-to-suit of circa 2,350 sites of which ~1,250 sites in
Nigeria and ~700 sites inBrazil
|
|
|
Metric |
|
Range |
Revenue |
|
|
Adjusted EBITDA (1) |
|
|
Recurring Levered Free Cash Flow (1) |
|
|
Total Capex |
|
|
(1)
|
Adjusted EBITDA and RLFCF are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” for additional information and a reconciliation to the most comparable IFRS measures. We are unable to provide a reconciliation of Adjusted EBITDA and RLFCF to (loss)/profit and cash from operations, respectively, for the periods presented above without an unreasonable effort, due to the uncertainty regarding, and the potential variability, of these costs and expenses that may be incurred in the future, including, in the case of Adjusted EBITDA, share-based payment expense, finance costs, and insurance claims, and in the case of RLFCF net movement in working capital, other non-operating expenses, and impairment of inventory. |
Conference Call
A simultaneous webcast and replay will be available in the Investor Relations section of the Company’s website, www.ihstowers.com, on the Earnings Materials page.
Upcoming Conferences and Events
-
JP Morgan 50th Annual
Global TMT Conference (Boston, MA ) -May 23-25, 2022 -
RBC Global Communications Infrastructure Conference (Denver, CO ) -May 24-25, 2022 -
WIA Connect (X) (
Denver, CO ) -May 23-26, 2022 -
Cowen 50th Annual
TMT Conference (New York ) -June 1-2, 2022 -
Credit Suisse 24th Annual
Communications Conference (New York ) -June 14-15, 2022
About
Cautionary statement regarding forward-looking Information
This press release contains forward-looking statements. We intend such forward-looking statements to be covered by relevant safe harbor provisions for forward-looking statements (or their equivalent) of any applicable jurisdiction, including those contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates," “believes,” “estimates,” “forecast,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release include, but are not limited to statements regarding our future results of operations and financial position, including our anticipated results for the fiscal year 2022, industry and business trends, business strategy, plans, market growth and our objectives for future operations.
We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to:
- non-performance under or termination, non-renewal or material modification of our customer agreements;
- volatility in terms of timing for settlement of invoices or our inability to collect amounts due under invoices;
- a reduction in the creditworthiness and financial strength of our customers;
- the business, legal and political risks in the countries in which we operate;
- general macroeconomic conditions in the countries in which we operate;
- changes to existing or new tax laws, rates or fees;
-
foreign exchange risks and/or ability to access
U.S. Dollars in our markets; -
regional or global health pandemics, including COVID 19, and geopolitical conflicts and wars, including the current situation between
Russia andUkraine ; -
our inability to successfully execute our business strategy and operating plans, including our ability to increase the number of Colocations and Lease Amendments on our Towers and construct New Sites or develop business related to adjacent telecommunications verticals (including, for example, relating to our anticipated fiber businesses in
Latin America and elsewhere) or deliver on our sustainability or environmental, social and governance (ESG) strategy and initiatives including plans to reduce diesel consumption; - reliance on third-party contractors or suppliers, including failure or underperformance or inability to provide products or services to us (in a timely manner or at all) due to sanctions regulations, due to supply chain issues or other reasons;
- increases in operating expenses, including increased costs for diesel;
- failure to renew or extend our ground leases, or protect our rights to access and operate our Towers or other telecommunications infrastructure assets;
- loss of customers;
- changes to the network deployment plans of mobile operators in the countries in which we operate;
- a reduction in demand for our services;
- the introduction of new technology reducing the need for tower infrastructure and/or adjacent telecommunication verticals;
- an increase in competition in the telecommunications tower infrastructure industry and/or adjacent telecommunication verticals;
- our failure to integrate recent or future acquisitions;
- reliance on our senior management team and/or key employees;
- failure to obtain required approvals and licenses for some of our sites or businesses or comply with applicable regulations;
- environmental liability;
- inadequate insurance coverage, property loss and unforeseen business interruption;
- compliance with or violations (or alleged violations) of laws, regulations and sanctions, including but not limited to those relating to telecommunications regulatory systems, tax, labor, employment (including new minimum wage regulations), unions, health and safety, antitrust and competition, environmental protection, consumer protection, data privacy and protection, import/export, foreign exchange or currency, and of anti-bribery, anti-corruption and/or money laundering laws, sanctions and regulations;
- fluctuations in global prices for diesel or other materials;
- disruptions in our supply of diesel or other materials;
- legal and arbitration proceedings;
- reliance on shareholder support (including to invest in growth opportunities) and related party transaction risks;
- risks related to the markets in which we operate;
- injury, illness or death of employees, contractors or third parties arising from health and safety incidents;
- loss or damage of assets due to security issues or civil commotion;
- loss or damage resulting from attacks on any information technology system or software;
- loss or damage of assets due to extreme weather events whether or not due to climate change;
- failure to meet the requirements of accurate and timely financial reporting and/or meet the standards of internal control over financial reporting that support a clean certification under the Sarbanes Oxley Act;
- risks related to our status as a foreign private issuer; and
-
the important factors discussed in the section titled “Risk Factors” in our Annual Report on Form 20-F for the fiscal year ended
December 31, 2021 .
The forward-looking statements in this press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. You should read this press release and the documents that we reference in this press release with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this press release. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.
|
||||||
CONDENSED CONSOLIDATED STATEMENT OF INCOME/(LOSS) AND OTHER COMPREHENSIVE INCOME (UNAUDITED) |
||||||
FOR THE THREE MONTHS ENDED |
||||||
|
|
|
|
|
||
|
|
Three months period |
||||
|
|
ended |
||||
|
|
|
|
|
||
|
|
2022 |
|
2021 |
||
|
|
$’000 |
|
$’000 |
||
|
|
|
|
|
||
Revenue |
|
446,132 |
|
|
361,650 |
|
Cost of sales |
|
(247,867 |
) |
|
(189,193 |
) |
Administrative expenses |
|
(90,562 |
) |
|
(68,041 |
) |
Reversal of loss allowance/(loss allowance) on trade receivables |
|
2,468 |
|
|
(12 |
) |
Other income |
|
1,170 |
|
|
3,788 |
|
Operating profit |
|
111,341 |
|
|
108,192 |
|
Finance income |
|
114,967 |
|
|
27,844 |
|
Finance costs |
|
(192,212 |
) |
|
(150,374 |
) |
Profit/(loss) before income tax |
|
34,096 |
|
|
(14,338 |
) |
Income tax expense |
|
(17,180 |
) |
|
(14,715 |
) |
Profit/(loss) for the period |
|
16,916 |
|
|
(29,053 |
) |
Profit/(loss) attributable to: |
|
|
|
|
||
Owners of the Company |
|
18,314 |
|
|
(28,704 |
) |
Non‑controlling interests |
|
(1,398 |
) |
|
(349 |
) |
Profit/(loss) for the period |
|
16,916 |
|
|
(29,053 |
) |
Income/(loss) per share—basic $ |
|
0.06 |
|
|
(0.10 |
) |
Income/(loss) per share—diluted $ |
|
0.05 |
|
|
(0.10 |
) |
|
|
|
|
|
||
Other comprehensive income: |
|
|
|
|
||
Items that may be reclassified to profit or loss |
|
|
|
|
||
Exchange differences on translation of foreign operations |
|
129,674 |
|
|
(25,429 |
) |
Other comprehensive income/(loss) for the period, net of taxes |
|
129,674 |
|
|
(25,429 |
) |
Total comprehensive income/(loss) for the period |
|
146,590 |
|
|
(54,482 |
) |
|
|
|
|
|
||
Total comprehensive income/(loss) attributable to: |
|
|
|
|
||
Owners of the Company |
|
148,219 |
|
|
(54,259 |
) |
Non‑controlling interests |
|
(1,629 |
) |
|
(223 |
) |
Total comprehensive income/(loss) for the period |
|
146,590 |
|
|
(54,482 |
) |
|
|
|
|
|
||
|
||||||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) |
||||||
AT |
||||||
|
|
|
|
|
||
|
|
|
|
|
||
|
|
2022 |
|
2021 |
||
|
|
$’000 |
|
$’000 |
||
ASSETS |
|
|
|
|
||
Non‑current assets |
|
|
|
|
||
Property, plant and equipment |
|
1,816,547 |
|
|
1,708,834 |
|
Right of use assets |
|
648,129 |
|
|
520,651 |
|
|
|
1,171,696 |
|
|
869,319 |
|
Other intangible assets |
|
747,164 |
|
|
701,425 |
|
Fair value through other comprehensive income financial assets |
|
11 |
|
|
11 |
|
Deferred income tax assets |
|
8,438 |
|
|
11,064 |
|
Derivative financial instrument assets |
|
56,100 |
|
|
165,100 |
|
Trade and other receivables |
|
134,678 |
|
|
69,479 |
|
|
|
4,582,763 |
|
|
4,045,883 |
|
Current assets |
|
|
|
|
||
Inventories |
|
39,626 |
|
|
42,022 |
|
Income tax receivable |
|
260 |
|
|
128 |
|
Trade and other receivables |
|
630,318 |
|
|
469,130 |
|
Cash and cash equivalents |
|
508,609 |
|
|
916,488 |
|
|
|
1,178,813 |
|
|
1,427,768 |
|
Total assets |
|
5,761,576 |
|
|
5,473,651 |
|
|
|
|
|
|
||
LIABILITIES |
|
|
|
|
||
Current liabilities |
|
|
|
|
||
Trade and other payables |
|
558,609 |
|
|
499,432 |
|
Provisions for other liabilities and charges |
|
448 |
|
|
343 |
|
Derivative financial instrument liabilities |
|
3,597 |
|
|
3,771 |
|
Income tax payable |
|
69,427 |
|
|
68,834 |
|
Borrowings |
|
257,461 |
|
|
207,619 |
|
Lease liabilities |
|
54,806 |
|
|
50,560 |
|
|
|
944,348 |
|
|
830,559 |
|
Non‑current liabilities |
|
|
|
|
||
Trade and other payables |
|
330 |
|
|
312 |
|
Borrowings |
|
2,389,796 |
|
|
2,401,471 |
|
Lease liabilities |
|
358,221 |
|
|
325,541 |
|
Provisions for other liabilities and charges |
|
77,206 |
|
|
71,598 |
|
Deferred income tax liabilities |
|
116,376 |
|
|
118,210 |
|
|
|
2,941,929 |
|
|
2,917,132 |
|
Total liabilities |
|
3,886,277 |
|
|
3,747,691 |
|
|
|
|
|
|
||
EQUITY |
|
|
|
|
||
Stated capital |
|
5,309,954 |
|
|
5,223,484 |
|
Accumulated losses |
|
(2,840,331 |
) |
|
(2,860,205 |
) |
Other reserves |
|
(735,648 |
) |
|
(780,272 |
) |
Equity attributable to owners of the Company |
|
1,733,975 |
|
|
1,583,007 |
|
Non‑controlling interest |
|
141,324 |
|
|
142,953 |
|
Total equity |
|
1,875,299 |
|
|
1,725,960 |
|
Total liabilities and equity |
|
5,761,576 |
|
|
5,473,651 |
|
|
|||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) |
|||||||||||||||||
FOR THE THREE MONTHS ENDED |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Attributable to owners of the Company |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
Non‑ |
|
|
|||||
|
|
Stated |
|
Accumulated |
|
|
Other |
|
|
|
|
|
controlling |
|
|
Total |
|
|
|
capital |
|
losses |
|
|
reserves |
|
|
Total |
|
|
interest |
|
|
equity |
|
|
|
$’000 |
|
$’000 |
|
|
$’000 |
|
|
$’000 |
|
|
$’000 |
|
|
$’000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at |
|
4,530,870 |
|
(2,835,390 |
) |
|
(485,505 |
) |
|
1,209,975 |
|
|
14,216 |
|
|
1,224,191 |
|
Share‑based payment expense |
|
— |
|
— |
|
|
1,191 |
|
|
1,191 |
|
|
— |
|
|
1,191 |
|
Total transactions with owners of the company |
|
— |
|
— |
|
|
1,191 |
|
|
1,191 |
|
|
— |
|
|
1,191 |
|
Loss for the period |
|
— |
|
(28,704 |
) |
|
— |
|
|
(28,704 |
) |
|
(349 |
) |
|
(29,053 |
) |
Other comprehensive (loss)/income |
|
— |
|
— |
|
|
(25,555 |
) |
|
(25,555 |
) |
|
126 |
|
|
(25,429 |
) |
Total comprehensive loss |
|
— |
|
(28,704 |
) |
|
(25,555 |
) |
|
(54,259 |
) |
|
(223 |
) |
|
(54,482 |
) |
Balance at |
|
4,530,870 |
|
(2,864,094 |
) |
|
(509,869 |
) |
|
1,156,907 |
|
|
13,993 |
|
|
1,170,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at |
|
5,223,484 |
|
(2,860,205 |
) |
|
(780,272 |
) |
|
1,583,007 |
|
|
142,953 |
|
|
1,725,960 |
|
Share‑based payment expense |
|
— |
|
— |
|
|
4,024 |
|
|
4,024 |
|
|
— |
|
|
4,024 |
|
Options converted to shares |
|
86,470 |
|
— |
|
|
(86,470 |
) |
|
— |
|
|
— |
|
|
— |
|
Other reclassifications related to share based payment |
|
— |
|
1,560 |
|
|
(2,835 |
) |
|
(1,275 |
) |
|
— |
|
|
(1,275 |
) |
Total transactions with owners of the company |
|
86,470 |
|
1,560 |
|
|
(85,281 |
) |
|
2,749 |
|
|
— |
|
|
2,749 |
|
Profit/(loss) for the period |
|
— |
|
18,314 |
|
|
— |
|
|
18,314 |
|
|
(1,398 |
) |
|
16,916 |
|
Other comprehensive income/(loss) |
|
— |
|
— |
|
|
129,905 |
|
|
129,905 |
|
|
(231 |
) |
|
129,674 |
|
Total comprehensive income/ (loss) |
|
— |
|
18,314 |
|
|
129,905 |
|
|
148,219 |
|
|
(1,629 |
) |
|
146,590 |
|
Balance at |
|
5,309,954 |
|
(2,840,331 |
) |
|
(735,648 |
) |
|
1,733,975 |
|
|
141,324 |
|
|
1,875,299 |
|
|
||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) |
||||||
FOR THE THREE MONTHS ENDED |
||||||
|
|
|
|
|
||
|
|
Three months ended |
||||
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
$’000 |
|
|
$’000 |
|
|
|
|
|
|
||
Cash flows from operating activities |
|
|
|
|
||
Cash from operations |
|
166,607 |
|
|
201,586 |
|
Income taxes paid |
|
(16,099 |
) |
|
(4,337 |
) |
Payment for rent |
|
(2,543 |
) |
|
(1,845 |
) |
Refund/(payment) for tower and tower equipment decommissioning |
|
138 |
|
|
(9 |
) |
Net cash generated from operating activities |
|
148,103 |
|
|
195,395 |
|
|
|
|
|
|
||
Cash flow from investing activities |
|
|
|
|
||
Purchase of property, plant and equipment—capital work in progress |
|
(41,550 |
) |
|
(27,270 |
) |
Purchase of property, plant and equipment—others |
|
(24,326 |
) |
|
(3,502 |
) |
Payment in advance for property, plant and equipment |
|
(50,839 |
) |
|
(63,199 |
) |
Purchase of software and licenses |
|
(288 |
) |
|
(250 |
) |
Consideration paid on business combinations, net of cash acquired |
|
(317,379 |
) |
|
(77,219 |
) |
Proceeds from disposal of property, plant and equipment |
|
93 |
|
|
667 |
|
Insurance claims received |
|
1,150 |
|
|
6,513 |
|
Interest income received |
|
3,128 |
|
|
983 |
|
Refund of short term deposits |
|
51,460 |
|
|
— |
|
Deposit of short term deposits |
|
(121,599 |
) |
|
— |
|
Net cash used in investing activities |
|
(500,150 |
) |
|
(163,277 |
) |
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
||
Bank loans received |
|
54,679 |
|
|
— |
|
Bank loans repaid |
|
(36,667 |
) |
|
(11,953 |
) |
Fees on loans and derivative instruments |
|
(2,860 |
) |
|
(4,452 |
) |
Interest paid |
|
(54,098 |
) |
|
(64,960 |
) |
Payment for the principal of lease liabilities |
|
(15,350 |
) |
|
(13,576 |
) |
Interest paid for lease liabilities |
|
(6,694 |
) |
|
(4,944 |
) |
Initial margin received on non‑deliverable forwards |
|
5,844 |
|
|
30,607 |
|
Initial margin deposited on non‑deliverable forwards |
|
— |
|
|
(11,902 |
) |
(Losses)/gains received on non‑deliverable forwards |
|
(2,741 |
) |
|
26,861 |
|
Net cash used in financing activities |
|
(57,887 |
) |
|
(54,319 |
) |
|
|
|
|
|
||
Net decrease in cash and cash equivalents |
|
(409,934 |
) |
|
(22,201 |
) |
Cash and cash equivalents at beginning of period |
|
916,488 |
|
|
585,416 |
|
Effect of movements in exchange rates on cash |
|
2,055 |
|
|
(17,819 |
) |
Cash and cash equivalents at end of period |
|
508,609 |
|
|
545,396 |
|
Use of Non-IFRS financial measures
Certain parts of this press release contain non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Recurring Levered Free Cash Flow (“RLFCF”) and Consolidated RLFCF. The non-IFRS financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from similarly titled non-IFRS measures used by other companies.
We define Adjusted EBITDA as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share-based payment (credit)/expense, insurance claims, listing costs and certain other items that management believes are not indicative of the core performance of our business. The most directly comparable IFRS measure to Adjusted EBITDA is our profit/(loss) for the period.
Segment Adjusted EBITDA (defined as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share based payment (credit)/expense, insurance claims, costs relating to this offering and certain other items that management believes are not indicative of the core performance of its business)) to assess the performance of the business.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue for the applicable period, expressed as a percentage.
We believe that Adjusted EBITDA is an indicator of the operating performance of our core business. We believe Adjusted EBITDA and Adjusted EBITDA Margin, as defined above, are useful to investors and are used by our management for measuring profitability and allocating resources, because they exclude the impact of certain items which have less bearing on our core operating performance. We believe that utilizing Adjusted EBITDA and Adjusted EBITDA Margin allows for a more meaningful comparison of operating fundamentals between companies within our industry by eliminating the impact of capital structure and taxation differences between the companies.
Adjusted EBITDA measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present an Adjusted EBITDA-related performance measure when reporting their results.
Adjusted EBITDA and Adjusted EBITDA Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA and Adjusted EBITDA Margin as reported by us to Adjusted EBITDA and Adjusted EBITDA Margin as reported by other companies. Adjusted EBITDA and Adjusted EBITDA Margin are unaudited and have not been prepared in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance under IFRS and you should not consider Adjusted EBITDA or Adjusted EBITDA Margin as an alternative to profit/(loss) for the period or other financial measures determined in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:
- they do not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements that would be required for such replacements;
- some of the items we eliminate in calculating Adjusted EBITDA and Adjusted EBITDA Margin reflect cash payments that have less bearing on our core operating performance, but that impact our operating results for the applicable period; and
- the fact that other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, which limits their usefulness as comparative measures.
Accordingly, prospective investors should not place undue reliance on Adjusted EBITDA or Adjusted EBITDA Margin.
We believe that it is important to measure the free cash flows we have generated from operations, after accounting for the cash cost of funding and recurring capital expenditure required to generate those cash flows. In this respect, we monitor RLFCF which we define as cash from operations, before certain items of income or expenditure that management believes are not indicative of the core performance of our business (to the extent that these items of income and expenditure are included within cash flow from operating activities), and after taking into account loss allowances on trade receivables, impairment of inventory, net working capital movements, net interest paid or received, revenue withholding tax, income taxes paid, lease payments made, maintenance capital expenditures, and routine corporate capital expenditures.
We believe RLFCF are useful to investors because they are also used by our management for measuring our operating performance, profitability and allocating resources. While Adjusted EBITDA provides management with a basis for assessing its current operating performance, in order to assess the long-term, sustainable operating performance of our business through an understanding of the funds generated from operations, we also take into account our capital structure and the taxation environment (including withholding tax implications), as well as the impact of non- discretionary maintenance capital expenditures and routine corporate capital expenditures, to derive RLFCF. RLFCF provides management with a metric through which to measure how the underlying cash generation of the business by further adjusting for expenditures that are non-discretionary in nature (such as interest paid and income taxes paid), as well as certain non-cash items that impact profit/(loss) in any particular period.
RLFCF measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present an RLFCF-related performance measure when reporting their results. Such measures are used in the telecommunications infrastructure sector as they are seen to be important in assessing the long-term, sustainable operating performance of a business. We present RLFCF to provide investors with a meaningful measure for comparing our cash generation performance to those of other companies, particularly those in our industry.
RLFCF, however, are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing RLFCF as reported by us to RLFCF or similar measures as reported by other companies. RLFCF are unaudited and have not been prepared in accordance with IFRS.
RLFCF are not intended to replace profit/(loss) for the period or any other measures of performance under IFRS, and you should not consider RLFCF as an alternative to cash from operations for the period or other financial measures as determined in accordance with IFRS. RLFCF have limitations as analytical tools, and you should not consider these in isolation. Some of these limitations are:
- not all cash changes are reflected, for example, changes in working capital are not included and discretionary capital expenditures are not included;
- some of the items that we eliminate in calculating RLFCF reflect cash payments that have less bearing on our core operating performance, but that impact our operating results for the applicable period;
- the fact that certain cash charges, such as lease payments made, can include payments for multiple future years that are not reflective of operating results for the applicable period, which may result in lower lease payments for subsequent periods;
- the fact that other companies in our industry may have different capital structures and applicable tax regimes, which limits its usefulness as a comparative measure; and
- the fact that other companies in our industry may calculate RLFCF differently than we do, which limits their usefulness as comparative measures.
Accordingly, you should not place undue reliance on RLFCF.
Reconciliation from profit/(loss) for the period to Adjusted EBITDA (Unaudited) |
||||||
The following is a reconciliation of Adjusted EBITDA to the most directly comparable IFRS measure, which is profit/(loss) for the three months ended |
||||||
|
|
|
|
|
||
|
|
Three months ended |
||||
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
$'000 |
|
|
$'000 |
|
|
|
|
|
|
||
Profit/(loss) |
|
16,916 |
|
|
(29,053 |
) |
Adjustments: |
|
|
|
|
||
Income tax expense |
|
17,180 |
|
|
14,715 |
|
Finance costs(a) |
|
192,212 |
|
|
150,374 |
|
Finance income(a) |
|
(114,967 |
) |
|
(27,844 |
) |
Depreciation and amortization |
|
105,118 |
|
|
89,185 |
|
Impairment of withholding tax receivables(b) |
|
14,787 |
|
|
15,091 |
|
Business combination transaction costs |
|
8,360 |
|
|
1,235 |
|
Impairment of property, plant and equipment and prepaid land (c) |
|
2,183 |
|
|
720 |
|
Net loss on disposal of property, plant and equipment |
|
167 |
|
|
36 |
|
Share-based payment expense(d) |
|
3,574 |
|
|
1,191 |
|
Insurance claims(e) |
|
(1,150 |
) |
|
(3,788 |
) |
Listing costs |
|
— |
|
|
1,121 |
|
Other costs(f) |
|
512 |
|
|
2,040 |
|
Other non-operating income and expenses |
|
(20 |
) |
|
— |
|
Adjusted EBITDA |
|
244,872 |
|
|
215,023 |
|
(a) |
Finance costs consist of interest expense and loan facility fees on borrowings, the unwinding of the discount on our decommissioning liability and lease liability, realized and unrealized net foreign exchange losses arising from financing arrangements and net realized and unrealized losses from valuations of financial instruments. Finance income consists of interest income from bank deposits, realized and unrealized net foreign exchange gains arising from financing arrangements and net realized and unrealized gains from valuations of financial instruments. |
|
|
|
|
(b) |
Revenue withholding tax primarily represents amounts withheld by customers in |
|
|
|
|
(c) |
Represents non-cash charges related to the impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites. |
|
|
|
|
(d) |
Represents credits and expense related to share-based compensation, which vary from period to period depending on timing of awards and changes to valuation inputs assumptions. |
|
|
|
|
(e) |
Represents insurance claims included as non-operating income. |
|
|
|
|
(f) |
Other costs for the three months ended |
| Reconciliation from cash from operations to RLFCF (Unaudited) | ||||||
The following is a reconciliation of RLFCF to the most directly comparable IFRS measure, which is cash from operations for the three months ended |
||||||
|
|
|
|
|
||
|
|
Three months ended |
||||
|
|
|
|
|
|
|
|
|
2022 |
|
|
2021 |
|
|
|
$'000 |
|
|
$'000 |
|
|
|
|
|
|
||
Cash from operations |
|
166,607 |
|
|
201,586 |
|
Net movement in working capital |
|
68,951 |
|
|
10,915 |
|
Reversal of loss allowance/(loss allowance) on trade receivables |
|
2,468 |
|
|
(12 |
) |
Impairment of inventory |
|
(138 |
) |
|
— |
|
Income taxes paid |
|
(16,099 |
) |
|
(4,337 |
) |
Revenue withholding tax(a) |
|
(28,144 |
) |
|
(27,850 |
) |
Lease and rent payments made |
|
(24,587 |
) |
|
(20,365 |
) |
Net interest paid(b) |
|
(50,970 |
) |
|
(63,977 |
) |
Business combination transaction costs |
|
8,360 |
|
|
1,235 |
|
Listing costs |
|
— |
|
|
1,121 |
|
Other costs(c) |
|
512 |
|
|
2,040 |
|
Other non-operating income and expenses |
|
(20 |
) |
|
— |
|
Maintenance capital expenditure(d) |
|
(39,592 |
) |
|
(29,328 |
) |
Corporate capital expenditures(e) |
|
(288 |
) |
|
(250 |
) |
RLFCF |
|
87,060 |
|
|
70,778 |
|
|
|
|
|
|
||
Non-controlling interest |
|
(3,019 |
) |
|
(414 |
) |
Consolidated RLFCF |
|
84,041 |
|
|
70,364 |
|
(a) |
Revenue withholding tax primarily represents amounts withheld by customers in |
|
(b) |
Represents the aggregate value of interest paid and interest income received. |
|
(c) |
Other costs for the three months ended |
|
(d) |
We incur capital expenditures in relation to the maintenance of our towers and fiber equipment, which is non- discretionary in nature and required in order for us to optimally run our portfolio and to perform in line with our service level agreements with customers. Maintenance capital expenditures includes the periodic repair, refurbishment and replacement of tower, fiber equipment and power equipment at existing sites to keep such assets in service. |
|
(e) |
Corporate capital expenditures, which are non-discretionary in nature, consist primarily of routine spending on information technology infrastructure. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220517005332/en/
Media:
Email: IHS-SVC@sardverb.com
Investor Relations:
InvestorRelations@ihstowers.com
Source:
FAQ
What were IHS Towers' revenue and profit figures for Q1 2022?
How much did IHS Towers' Adjusted EBITDA increase in Q1 2022?
What acquisitions did IHS Towers complete in Q1 2022?
What is IHS Towers' debt and cash position as of Q1 2022?
What was the impact of foreign exchange on IHS Towers' revenue?
