IHS Holding Limited Reports Second Quarter 2022 Financial Results
IHS Towers reported Q2 2022 revenue of $467.7 million, up 16.4% year-over-year, with adjusted EBITDA of $239.1 million and a margin of 51.1%. Despite revenue growth, the company faced a net loss of $177.5 million, impacted by high diesel costs and increased finance expenses. Cash from operations was $216.8 million, while recurring levered free cash flow dropped 49.7% to $87.5 million. The company completed the acquisition of 5,691 towers in South Africa, enhancing its portfolio to 39,052 towers across 11 countries. Guidance for 2022 revenue was raised by $10 million.
- Revenue increased 16.4% to $467.7 million.
- Adjusted EBITDA margin was 51.1%.
- Completed acquisition of 5,691 towers in South Africa.
- Raised 2022 revenue guidance by $10 million.
- Net loss of $177.5 million compared to a profit last year.
- Adjusted EBITDA decreased 13.1% year-over-year.
- Recurring levered free cash flow fell by 49.7%.
- Increased finance costs due to foreign exchange losses.
CONSOLIDATED HIGHLIGHTS – SECOND QUARTER 2022
-
Revenue increased
16.4% (or9.9% organically) to$467.7 million -
Adjusted EBITDA was
$239.1 million 51.1% -
Loss for the period was
$177.5 million -
Cash from operations was
$216.8 million -
Recurring Levered Free Cash Flow (“RLFCF”) was
$87.5 million -
Capital expenditures were
$146.8 million -
Completed the acquisition of
Mobile Telephone Networks Proprietary Limited (“MTN South Africa Acquisition”) comprising 5,691 towers inSouth Africa onMay 31, 2022 -
Raise 2022 revenue guidance by
$10.0 million
Including the 5,691 towers we acquired in
Separately, we upstreamed
Shifting to our stock liquidity, as you will recall, in
Lastly, regarding Project Green, our team, and I personally, have been busy over the last few months analyzing the various opportunities across many of the countries we operate in to reduce our consumption of diesel and reduce our greenhouse gas emissions by either connecting more sites to the grid, which just a few short years ago was not an option in many locations, or adding more battery and solar solutions. We expect to start investing in Project Green in the second half of this year and when we announce Project Green we expect to raise our 2022 capex guidance. When announced, we intend to highlight the attractiveness of the proposed investment together with longer term greenhouse gas emissions reduction targets. To give you a sense of the financial opportunity, in the second quarter of 2022 we spent
RESULTS FOR THE SECOND QUARTER 2022
The table below sets forth select unaudited financial results for the quarters ended
|
|
Three months ended |
||||
|
|
|
|
|
|
Y on Y |
|
|
2022 |
|
2021 |
|
Growth |
|
|
$’000 |
|
$’000 |
|
% |
|
|
|
|
|
|
|
Revenue |
|
467,683 |
|
401,919 |
|
16.4 |
Adjusted EBITDA(1) |
|
239,113 |
|
275,006 |
|
(13.1) |
(Loss)/profit for the period |
|
(177,497) |
|
105,659 |
|
n/a |
Cash from operations |
|
216,800 |
|
190,632 |
|
13.7 |
RLFCF(1) |
|
87,537 |
|
173,905 |
|
(49.7) |
(1) Adjusted EBITDA and RLFCF are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” for additional information, definitions and a reconciliation to the most comparable IFRS measures.
Results for the three months ended
During the second quarter of 2022, revenue was
Adjusted EBITDA was
Loss for the period was
Cash from operations and RLFCF for the second quarter of 2022 was
Segment results
Revenue and Segment Adjusted EBITDA:
Revenue and Segment Adjusted EBITDA, our key profitability measures used to assess the performance of our reportable segments, for each of our reportable segments were as follows:
|
|
Revenue |
|
Adjusted EBITDA |
|
||||||||
|
|
Three months ended |
|
|
|
Three months ended |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
Change |
|
2022 |
|
2021 |
|
Change |
|
|
|
$'000 |
|
$'000 |
|
% |
|
$'000 |
|
$'000 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
321,125 |
|
296,610 |
|
8.3 |
|
183,698 |
|
240,267 |
|
(23.6) |
|
Sub-Saharan Africa |
|
94,902 |
|
83,940 |
|
13.1 |
|
52,927 |
|
46,048 |
|
14.9 |
|
Latam |
|
42,780 |
|
14,227 |
|
200.7 |
|
30,904 |
|
10,406 |
|
197.1 |
|
MENA |
|
8,876 |
|
7,142 |
|
24.3 |
|
4,170 |
|
3,095 |
|
34.7 |
|
Other |
|
— |
|
— |
|
— |
|
(32,586) |
|
(24,810) |
|
(31.3) |
|
Total |
|
467,683 |
|
401,919 |
|
16.4 |
|
239,113 |
|
275,006 |
|
(13.1) |
|
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
Latam
Revenue for our Latam segment increased by
Segment Adjusted EBITDA for our Latam segment was
MENA
Revenue for our MENA segment increased by
Segment Adjusted EBITDA for our MENA segment was
INVESTING ACTIVITIES
During the second quarter of 2022, capital expenditures were
On
FINANCING ACTIVITIES AND LIQUIDITY
Below is a summary of facilities we have entered in to or amended during second quarter of 2022. Approximate
The IHS Côte d’Ivoire S.A. Facility was amended and restated on
On
On
In March, 2022,
On
The Group ended the second 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) 427 Nigerian Naira; (b)5.16 Brazilian Real (c)0.93 Euros (d)16.54 South African Rand -
Build-to-suit of circa 1,750 sites of which ~950 sites in
Nigeria and ~400 sites in Latam. Note that we have reduced our Build-to-suit expectations inNigeria from previously ~1,250 andBrazil from previously ~700 due to timing and general market conditions.
Metric |
|
|
|
|
|
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
IHS Towers will host a conference call on
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
IHS Towers management is expected to participate in the upcoming conferences outlined below:
-
Goldman Sachs EMEA Credit and Leverage Finance Conference (London, UK ) –September 6, 2022 -
Goldman Sachs 31st
Communacopia Conference (San Francisco ) –September 15, 2022 -
JP Morgan Emerging Markets Credit Conference (London, UK ) –September 20, 2022
About IHS Towers
IHS Towers is one of the largest independent owners, operators and developers of shared communications infrastructure in the world by tower count and is the largest independent multinational towerco solely focused on the emerging markets. The Company has more than 39,000 towers across its 11 markets:
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/A 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 AND SIX MONTHS ENDED
|
|
Three months period |
|
Six months period |
||||||||
|
|
ended |
|
ended |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
$’000 |
|
$’000 |
|
$’000 |
|
$’000 |
||||
|
|
|
|
|
|
|
|
|
||||
Revenue |
|
467,683 |
|
|
401,919 |
|
|
913,815 |
|
|
763,569 |
|
Cost of sales |
|
(270,655 |
) |
|
(210,847 |
) |
|
(521,244 |
) |
|
(400,040 |
) |
Administrative expenses |
|
(102,852 |
) |
|
(85,206 |
) |
|
(193,414 |
) |
|
(153,247 |
) |
Net (loss allowance)/reversal of loss allowance on trade receivables |
|
(668 |
) |
|
36,632 |
|
|
1,800 |
|
|
36,620 |
|
Other income |
|
2,967 |
|
|
3,268 |
|
|
4,137 |
|
|
7,056 |
|
Operating profit |
|
96,475 |
|
|
145,766 |
|
|
205,094 |
|
|
253,958 |
|
Finance income |
|
3,895 |
|
|
67,780 |
|
|
45,667 |
|
|
17,282 |
|
Finance costs |
|
(260,897 |
) |
|
(82,589 |
) |
|
(379,914 |
) |
|
(154,621 |
) |
(Loss)/profit before income tax |
|
(160,527 |
) |
|
130,957 |
|
|
(129,153 |
) |
|
116,619 |
|
Income tax expense |
|
(16,970 |
) |
|
(25,298 |
) |
|
(33,225 |
) |
|
(40,013 |
) |
(Loss)/profit for the period |
|
(177,497 |
) |
|
105,659 |
|
|
(162,378 |
) |
|
76,606 |
|
(Loss)/profit attributable to: |
|
|
|
|
|
|
|
|
||||
Owners of the Company |
|
(175,680 |
) |
|
106,027 |
|
|
(159,162 |
) |
|
77,323 |
|
Non‑controlling interests |
|
(1,817 |
) |
|
(368 |
) |
|
(3,216 |
) |
|
(717 |
) |
(Loss)/profit for the period |
|
(177,497 |
) |
|
105,659 |
|
|
(162,378 |
) |
|
76,606 |
|
(Loss)/income per share—basic $ |
|
(0.53 |
) |
|
0.36 |
|
|
(0.48 |
) |
|
0.26 |
|
(Loss)/income per share—diluted $ |
|
(0.53 |
) |
|
0.33 |
|
|
(0.48 |
) |
|
0.24 |
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
||||
Items that may be reclassified to profit or loss |
|
|
|
|
|
|
|
|
||||
Exchange differences on translation of foreign operations |
|
(122,475 |
) |
|
41,611 |
|
|
9,319 |
|
|
16,056 |
|
Other comprehensive (loss)/income for the period, net of taxes |
|
(122,475 |
) |
|
41,611 |
|
|
9,319 |
|
|
16,056 |
|
Total comprehensive (loss)/income for the period |
|
(299,972 |
) |
|
147,270 |
|
|
(153,059 |
) |
|
92,662 |
|
|
|
|
|
|
|
|
|
|
||||
Total comprehensive (loss)/income attributable to: |
|
|
|
|
|
|
|
|
||||
Owners of the Company |
|
(274,106 |
) |
|
147,594 |
|
|
(160,311 |
) |
|
93,209 |
|
Non‑controlling interests |
|
(25,866 |
) |
|
(324 |
) |
|
7,252 |
|
|
(547 |
) |
Total comprehensive (loss)/income for the period |
|
(299,972 |
) |
|
147,270 |
|
|
(153,059 |
) |
|
92,662 |
|
|
|
|
|
|
|
|
|
|
||||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
AT
|
|
|
, |
|
||
|
|
2022 |
|
|
2021* |
|
|
|
$’000 |
|
$’000 |
||
ASSETS |
|
|
|
|
||
Non‑current assets |
|
|
|
|
||
Property, plant and equipment |
|
2,019,029 |
|
|
1,714,261 |
|
Right of use assets |
|
713,721 |
|
|
520,651 |
|
|
|
954,096 |
|
|
787,665 |
|
Other intangible assets |
|
1,207,845 |
|
|
830,439 |
|
Fair value through other comprehensive income financial assets |
|
11 |
|
|
11 |
|
Deferred income tax assets |
|
8,826 |
|
|
11,064 |
|
Derivative financial instrument assets |
|
2,770 |
|
|
165,100 |
|
Trade and other receivables |
|
155,752 |
|
|
75,054 |
|
|
|
5,062,050 |
|
|
4,104,245 |
|
Current assets |
|
|
|
|
||
Inventories |
|
61,639 |
|
|
42,021 |
|
Income tax receivable |
|
666 |
|
|
128 |
|
Trade and other receivables |
|
712,719 |
|
|
469,130 |
|
Cash and cash equivalents |
|
567,298 |
|
|
916,488 |
|
|
|
1,342,322 |
|
|
1,427,767 |
|
|
|
|
|
|
||
Total assets |
|
6,404,372 |
|
|
5,532,012 |
|
LIABILITIES |
|
|
|
|
||
Current liabilities |
|
|
|
|
||
Trade and other payables |
|
617,571 |
|
|
499,432 |
|
Provisions for other liabilities and charges |
|
502 |
|
|
343 |
|
Derivative financial instrument liabilities |
|
5,328 |
|
|
3,771 |
|
Income tax payable |
|
57,348 |
|
|
68,834 |
|
Borrowings |
|
595,282 |
|
|
207,619 |
|
Lease liabilities |
|
81,824 |
|
|
50,560 |
|
|
|
1,357,855 |
|
|
830,559 |
|
Non‑current liabilities |
|
|
|
|
||
Trade and other payables |
|
334 |
|
|
312 |
|
Borrowings |
|
2,655,672 |
|
|
2,401,471 |
|
Lease liabilities |
|
409,047 |
|
|
325,541 |
|
Provisions for other liabilities and charges |
|
122,994 |
|
|
71,598 |
|
Deferred income tax liabilities |
|
268,129 |
|
|
163,920 |
|
|
|
3,456,176 |
|
|
2,962,842 |
|
|
|
|
|
|
||
Total liabilities |
|
4,814,031 |
|
|
3,793,401 |
|
EQUITY |
|
|
|
|
||
Stated capital |
|
5,309,954 |
|
|
5,223,484 |
|
Accumulated losses |
|
(3,017,807 |
) |
|
(2,860,205 |
) |
Other reserves |
|
(927,301 |
) |
|
(842,911 |
) |
Equity attributable to owners of the Company |
|
1,364,846 |
|
|
1,520,368 |
|
Non‑controlling interest |
|
225,495 |
|
|
218,243 |
|
Total equity |
|
1,590,341 |
|
|
1,738,611 |
|
Total liabilities and equity |
|
6,404,372 |
|
|
5,532,012 |
|
*re-presented to reflect updates to the accounting for the acquisition of Fiberco Soluções de
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE SIX 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 |
|
NCI arising on business combination |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
611 |
|
|
611 |
|
Share‑based payment expense |
|
— |
|
— |
|
|
4,577 |
|
|
4,577 |
|
|
— |
|
|
4,577 |
|
Total transactions with owners of the company |
|
— |
|
— |
|
|
4,577 |
|
|
4,577 |
|
|
611 |
|
|
5,188 |
|
Profit/(loss) for the period |
|
— |
|
77,323 |
|
|
— |
|
|
77,323 |
|
|
(717 |
) |
|
76,606 |
|
Other comprehensive income |
|
— |
|
— |
|
|
15,886 |
|
|
15,886 |
|
|
170 |
|
|
16,056 |
|
Total comprehensive income/(loss) |
|
— |
|
77,323 |
|
|
15,886 |
|
|
93,209 |
|
|
(547 |
) |
|
92,662 |
|
Balance at |
|
4,530,870 |
|
(2,758,067 |
) |
|
(465,042 |
) |
|
1,307,761 |
|
|
14,280 |
|
|
1,322,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at |
|
5,223,484 |
|
(2,860,205 |
) |
|
(842,911 |
) |
|
1,520,368 |
|
|
218,243 |
|
|
1,738,611 |
|
Share‑based payment expense |
|
— |
|
— |
|
|
6,064 |
|
|
6,064 |
|
|
— |
|
|
6,064 |
|
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 |
|
|
(83,241 |
) |
|
4,789 |
|
|
— |
|
|
4,789 |
|
Loss for the period |
|
— |
|
(159,162 |
) |
|
— |
|
|
(159,162 |
) |
|
(3,216 |
) |
|
(162,378 |
) |
Other comprehensive income/(loss) |
|
— |
|
— |
|
|
(1,149 |
) |
|
(1,149 |
) |
|
10,468 |
|
|
9,319 |
|
Total comprehensive (loss)/income |
|
— |
|
(159,162 |
) |
|
(1,149 |
) |
|
(160,311 |
) |
|
7,252 |
|
|
(153,059 |
) |
Balance at |
|
5,309,954 |
|
(3,017,807 |
) |
|
(927,301 |
) |
|
1,364,846 |
|
|
225,495 |
|
|
1,590,341 |
|
*re-presented to reflect updates to the accounting for the acquisition of Fiberco Soluções de
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS AND SIX MONTHS ENDED
|
|
Three months ended |
|
Six months ended |
||||||||
|
|
|
|
|
|
|
|
|
||||
2022 |
2021 |
2022 |
2021 |
|||||||||
|
|
$’000 |
|
$’000 |
|
$’000 |
|
$’000 |
||||
|
|
|
|
|
|
|
|
|
||||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
||||
Cash from operations |
|
216,800 |
|
|
190,632 |
|
|
383,407 |
|
|
392,218 |
|
Income taxes paid |
|
(23,903 |
|
(15,049 |
) |
|
(40,002 |
) |
|
(19,386 |
) |
|
Payment for rent |
|
(1,587 |
) |
|
(1,343 |
) |
|
(4,130 |
) |
|
(3,188 |
) |
Refund/(payment) for tower and tower equipment decommissioning |
|
4 |
|
|
(240 |
) |
|
142 |
|
|
(249 |
) |
Net cash generated from operating activities |
|
191,314 |
|
|
174,000 |
|
|
339,417 |
|
|
369,395 |
|
|
|
|
|
|
|
|
|
|
||||
Cash flow from investing activities |
|
|
|
|
|
|
|
|
||||
Purchase of property, plant and equipment—capital work in progress |
|
(84,665 |
) |
|
(49,975 |
) |
|
(126,215 |
) |
|
(77,245 |
) |
Purchase of property, plant and equipment—others |
|
(12,315 |
) |
|
(4,674 |
) |
|
(36,641 |
) |
|
(8,176 |
) |
Payment in advance for property, plant and equipment |
|
(37,074 |
) |
|
(21,093 |
) |
|
(87,913 |
) |
|
(84,292 |
) |
Purchase of software and licenses |
|
(12,716 |
) |
|
(307 |
) |
|
(13,004 |
) |
|
(557 |
) |
Consideration paid on business combinations, net of cash acquired |
|
(409,545 |
) |
|
(101,654 |
) |
|
(726,924 |
) |
|
(178,873 |
) |
Proceeds from disposal of property, plant and equipment |
|
761 |
|
|
2,708 |
|
|
854 |
|
|
3,375 |
|
Insurance claims received |
|
464 |
|
|
5,269 |
|
|
1,614 |
|
|
11,782 |
|
Interest income received |
|
3,888 |
|
|
1,369 |
|
|
7,016 |
|
|
2,352 |
|
Deposit of short term deposits |
|
(166,465 |
) |
|
— |
|
|
(288,065 |
) |
|
— |
|
Refund of short term deposits |
|
100,121 |
|
|
— |
|
|
151,582 |
|
|
— |
|
Net cash used in investing activities |
|
(617,546 |
) |
|
(168,357 |
) |
|
(1,117,696 |
) |
|
(331,634 |
) |
|
|
|
|
|
|
|
|
|
||||
Cash flows from financing activities |
|
|
|
|
|
|
|
|
||||
Bank loans received |
|
661,114 |
|
|
78,734 |
|
|
715,793 |
|
|
78,734 |
|
Bank loans repaid |
|
(33,360 |
) |
|
(48,585 |
) |
|
(70,027 |
) |
|
(60,538 |
) |
Fees on loans and derivative instruments |
|
(6,417 |
) |
|
(3,643 |
) |
|
(9,277 |
) |
|
(8,095 |
) |
Interest paid |
|
(50,571 |
) |
|
(8,388 |
) |
|
(104,669 |
) |
|
(73,348 |
) |
Payment for the principal of lease liabilities |
|
(14,402 |
) |
|
(13,694 |
) |
|
(29,751 |
) |
|
(27,270 |
) |
Interest paid for lease liabilities |
|
(9,525 |
) |
|
(9,773 |
) |
|
(16,220 |
) |
|
(14,717 |
) |
Initial margin received on non‑deliverable forwards |
|
633 |
|
|
57 |
|
|
6,477 |
|
|
30,665 |
|
Initial margin deposited on non‑deliverable forwards |
|
— |
|
|
— |
|
|
— |
|
|
(11,903 |
) |
(Losses)/gains received on non‑deliverable forwards |
|
(284 |
) |
|
13,343 |
|
|
(3,025 |
) |
|
40,204 |
|
Net generated from/(cash used) in financing activities |
|
547,188 |
|
|
8,051 |
|
|
489,301 |
|
|
(46,268 |
) |
|
|
|
|
|
|
|
|
|
||||
Net increase/(decrease) in cash and cash equivalents |
|
120,956 |
|
|
13,694 |
|
|
(288,978 |
) |
|
(8,507 |
) |
Cash and cash equivalents at beginning of period |
|
508,609 |
|
|
545,396 |
|
|
916,488 |
|
|
585,416 |
|
Effect of movements in exchange rates on cash |
|
(62,267 |
) |
|
(17,446 |
) |
|
(60,212 |
) |
|
(35,265 |
) |
Cash and cash equivalents at end of period |
|
567,298 |
|
|
541,644 |
|
|
567,298 |
|
|
541,644 |
|
Use of Non-IFRS financial measures
Certain parts of this press release contain non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin and Recurring Levered Free Cash Flow (“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 and six months ended
|
|
Three months ended |
|
Six months ended |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
||||
|
|
|
|
|
|
|
|
|
||||
(Loss)/income |
|
(177,497 |
) |
|
105,659 |
|
|
(162,378 |
) |
|
76,606 |
|
Adjustments: |
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
16,970 |
|
|
25,298 |
|
|
33,225 |
|
|
40,013 |
|
Finance costs(a) |
|
260,897 |
|
|
82,589 |
|
|
379,914 |
|
|
154,621 |
|
Finance income(a) |
|
(3,895 |
) |
|
(67,780 |
) |
|
(45,667 |
) |
|
(17,282 |
) |
Depreciation and amortization |
|
114,840 |
|
|
94,740 |
|
|
222,680 |
|
|
183,925 |
|
Impairment of withholding tax receivables(b) |
|
12,932 |
|
|
17,593 |
|
|
27,717 |
|
|
32,684 |
|
Business combination transaction costs |
|
5,679 |
|
|
4,713 |
|
|
14,039 |
|
|
5,948 |
|
Net (reversal of impairment)/impairment of property, plant and equipment and prepaid land (c) |
|
(3,514 |
) |
|
2,093 |
|
|
(1,331 |
) |
|
2,813 |
|
Net loss/(gain) on disposal of property, plant and equipment |
|
13,617 |
|
|
(1,574 |
) |
|
13,784 |
|
|
(1,538 |
) |
Share-based payment expense(d) |
|
2,051 |
|
|
3,491 |
|
|
5,625 |
|
|
4,682 |
|
Insurance claims(e) |
|
(466 |
) |
|
(1,614 |
) |
|
(1,616 |
) |
|
(5,402 |
) |
Listing costs |
|
— |
|
|
2,914 |
|
|
— |
|
|
4,035 |
|
Other costs(f) |
|
— |
|
|
8,153 |
|
|
514 |
|
|
10,193 |
|
Other income(g) |
|
(2,501 |
) |
|
(1,269 |
) |
|
(2,521 |
) |
|
(1,269 |
) |
Adjusted EBITDA |
|
239,113 |
|
|
275,006 |
|
|
483,985 |
|
|
490,029 |
|
- 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.
-
Withholding tax primarily represents amounts withheld by customers in
Nigeria and paid to the local tax authority. The amounts withheld may be recoverable through an offset against future corporate income tax liabilities in the relevant operating company. Revenue withholding tax receivables are reviewed for recoverability at each reporting period end and impaired if not forecast to be recoverable. - Represents non-cash charges related to the impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites.
- 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.
- Represents insurance claims included as non-operating income.
-
Other costs for the six months ended
June 30, 2022 included professional costs related to SOX implementation. Other costs for the three and six months endedJune 30, 2021 related to non-recurring professional costs related to financing and aborted transaction costs. -
Other income for the three and six months ended
June 30, 2022 relates to a tax indemnity receipt from a seller relating to a prior acquisition. Other income for the three and six months endedJune 30, 2021 relates to the remeasurement of the liability for contingent consideration on the Skysites Acquisition for a portion thereof not paid to the sellers, as the conditions were not met post acquisition.
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 and six months ended
|
|
Three months ended |
|
Six months ended |
||||||||
|
|
|
|
|
|
|
|
|
||||
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
||||
|
|
|
|
|
|
|
|
|
||||
Cash from operations |
|
216,800 |
|
|
190,632 |
|
|
383,407 |
|
|
392,218 |
|
Net movement in working capital |
|
22,158 |
|
|
35,539 |
|
|
91,109 |
|
|
46,454 |
|
Net (loss allowance)/reversal of loss allowance on trade receivables |
|
(668 |
) |
|
36,632 |
|
|
1,800 |
|
|
36,620 |
|
Impairment/(reversal of impairment) of inventory |
|
— |
|
|
176 |
|
|
(138 |
) |
|
176 |
|
Income taxes paid |
|
(23,903 |
) |
|
(15,049 |
) |
|
(40,002 |
) |
|
(19,386 |
) |
Withholding tax(a) |
|
(27,837 |
) |
|
(29,992 |
) |
|
(55,981 |
) |
|
(57,842 |
) |
Lease and rent payments made |
|
(25,514 |
) |
|
(24,810 |
) |
|
(50,101 |
) |
|
(45,175 |
) |
Net interest paid(b) |
|
(46,683 |
) |
|
(7,019 |
) |
|
(97,653 |
) |
|
(70,996 |
) |
Business combination transaction costs |
|
5,679 |
|
|
4,713 |
|
|
14,039 |
|
|
5,948 |
|
Listing costs |
|
— |
|
|
2,914 |
|
|
— |
|
|
4,035 |
|
Other costs(c) |
|
— |
|
|
8,153 |
|
|
514 |
|
|
10,193 |
|
Other income(d) |
|
(2,501 |
) |
|
(1,269 |
) |
|
(2,521 |
) |
|
(1,269 |
) |
Maintenance capital expenditure(e) |
|
(29,195 |
) |
|
(26,408 |
) |
|
(68,787 |
) |
|
(55,736 |
) |
Corporate capital expenditures(f) |
|
(799 |
) |
|
(307 |
) |
|
(1,087 |
) |
|
(557 |
) |
RLFCF |
|
87,537 |
|
|
173,905 |
|
|
174,599 |
|
|
244,683 |
|
|
|
|
|
|
|
|
|
|
||||
Non-controlling interest |
|
(750 |
) |
|
(520 |
) |
|
(3,769 |
) |
|
(934 |
) |
RLFCF excluding non-controlling interest |
|
86,787 |
|
|
173,385 |
|
|
170,830 |
|
|
243,749 |
|
-
Withholding tax primarily includes amounts withheld by customers and amounts paid on bond interest in
Nigeria which is paid to the local tax authority. The amounts withheld by customers may be recoverable through an offset against future corporate income tax liabilities in the relevant operating company. - Represents the aggregate value of interest paid and interest income received.
-
Other costs for the six months ended
June 30, 2022 included professional costs related to SOX implementation. Other costs for the three and six months endedJune 30, 2021 related to non-recurring professional costs related to financing and aborted transaction costs. -
Other income for the three and six months ended
June 30, 2022 relates to a tax indemnity receipt from a seller relating to a prior acquisition. Other income for the three and six months endedJune 30, 2021 relates to the remeasurement of the liability for contingent consideration on the Skysites Acquisition for a portion thereof not paid to the sellers, as the conditions were not met post acquisition. - 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.
- 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/20220816005436/en/
FGS Global
Giles.Bethule@fgsglobal.com /Akash.Lodh@fgsglobal.com
+44 207 251 38 01
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