2021 Annual Report and Accounts

RNS Number : 5078F

Helios Towers PLC

21 March 2022

Helios Towers plc

(the "Company")

2021 Annual Report and Accounts

In accordance with Listing Rule 9.6.1R, and Disclosure and Transparency Rule ("DTR") 4.1.3R, the Company announces that the following documents have today been made available on the Company's website at www.heliostowers.com:

· 2021 Annual Report and Accounts

· 2021 Sustainable Business Report

The above mentioned documents will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Copies of the above documents, along with the 2022 Notice of Annual General Meeting and Form of Proxy for the 2022 Annual General Meeting, will be posted to shareholders on 28 March 2022.

21 March 2022

LEI: 213800DGC7GS4XCHCU30

Identification Code: GB00BJVQC708

Enquiries:

For investor enquiries	[email protected]
For media enquiries	Edward Bridges, Stephanie Ellis
	FTI Consulting LLP
	+44 (0)20 3727 1000

Appendix

In compliance with DTR 6.3.5R, the information contained in this appendix is extracted from the 2021 Annual Report and Accounts and should be read in conjunction with the Company's 2021 Full Year Results Announcement for the year ended 31 December 2021 issued on 17 March 2022. Both documents are available at www.heliostowers.com/investors/results-reports-and-presentations/ and together constitute the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the 2021 Annual Report and Accounts in full. Page numbers and cross references in the extracted information refer to page numbers and cross references in the 2021 Annual Report and Accounts.

1. Principal risks

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

Risk

Category

Description

Mitigation

Status

Major quality failure or breach of contract

· Reputational

· Financial

The Group's reputation and profitability could be damaged if the Group fails to meet its customers' operational specifications, quality standards or delivery schedules.

A substantial portion of Group revenues is generated from a limited number of large customers. The loss of any of these customers would materially affect the Group's finances and growth prospects.

Many of the Group's customer tower contracts contain liquidated damage provisions, which may require the Group to make unanticipated and potentially significant payments to

its customers.

· Continued skills development and training programmes for the project and operational delivery team;

· Detailed and defined project scoping and lifecycle management through project delivery and transfer to ongoing operations;

· Contract and dispute management processes in place;

· Continuous monitoring and management of customer relationships; and

· Use of long-term contracting with minimal termination rights.

No change

Non-compliance with laws and regulations, such as:

· Safety, health and environmental laws

· Anti-bribery and corruption provisions

· Compliance

· Financial

· Reputational

Non-compliance with applicable laws and regulations may lead to substantial fines and penalties, reputational damage and adverse effects on future growth prospects.

Sudden and frequent changes in laws and regulations, their interpretation or application and enforcement, both locally and internationally, may require the Group to modify its existing business practices, incur increased costs and subject it to potential additional liabilities.

· Constant monitoring of potential changes to laws and regulatory requirements;

· In-person and virtual training on Safety, Health and Environmental matters provided to employees and relevant third-party contractors;

· Ongoing refresh of compliance and related policies implemented in 2018 including specific details covering: anti-bribery and corruption; anti- facilitation of Tax Evasion; anti-money laundering;

· Compliance monitoring activities and periodic reporting requirements introduced;

· Ongoing engagement with external lawyers and consultants and regulatory authorities, as necessary, to identify and assess changes in the regulatory environment;

· Third-Party Code of Conduct communicated and annual certifications required of all high and medium risk third parties;

· Supplier audits and performance reviews;

· ISO Certifications maintained;

· Regionalisation of the Compliance function and recruitment of additional resource; and

· Internal audit function adding additional checks and balances.

No change

Economic and political instability

· Operational

· Financial

A slowdown in the growth of, or a reduction in demand for, wireless communication services could adversely affect the demand for communication sites and tower space and could have a material adverse effect on the Group's financial condition and results of operations.

There are significant risks related to political instability, security, ethnic, religious and regional tensions in each market where

the Group has operations.

· Ongoing market analysis and business intelligence gathering activities;

· Market share growth strategy in place;

· Close monitoring of any potential risks that may affect operations; and

· Business continuity and contingency plans in place to respond to any emergency situations.

No change

Significant exchange rate movements

· Financial

Fluctuations in, or devaluations of, local

market currencies where the Group operates could have a significant and negative financial impact on the Group's business, financial condition and results. Such impacts may also result from any adverse effects such movements have on Group third-party customers and strategic suppliers.

· USD and EUR pegged contracts;

· 'Natural' hedge of local currencies (revenue vs. opex);

· Monthly review of exchange rate differences; and

· Regular upstream of cash with the majority of cash held in hard currency, i.e. USD/GBP at Group.

No change

Non-compliance with permit requirements

· Operational

The Group may not always operate with the necessary required approvals and permits for some of its tower sites, particularly in the case of existing tower portfolios acquired from a third party. Vagueness, uncertainty and changes in interpretation of regulatory requirements are frequent and often without warning. As a result, the Group may be subject to potential reprimands, warnings, fines and penalties for non-compliance with the relevant permitting and approval requirements.

· Inventory of required licences and permits maintained for each operating company;

· Compliance registers maintained with any potential non-conformities identified by the relevant government authority with a timetable for rectification;

· Periodic engagement with external lawyers and advisors and participation in industry groups; and

· Active and ongoing engagement with relevant regulatory authorities to proactively identify, assess and manage actual and potential regulation changes.

No change

Loss of key personnel

· People

The Group's successful operational activities and growth is closely linked to the knowledge and experience of key members of senior management and highly skilled technical employees. The loss of any such personnel, or the failure to attract, recruit and retain equally high calibre professionals could adversely affect the Group's operations, financial condition and strategic growth prospects.

· Talent identification and succession- planning exit for key roles;

· Competitive benchmarked performance- related remuneration plans; and

· Staff performance and development/ support plans.

No change

Technology risk

· Strategic

Advances in technology that enhance the

efficiency of wireless networks and potential

active sharing of wireless spectrum may significantly reduce or negate the need for tower-based infrastructure or services. This could reduce the need for telecommunications operators to add more tower-based antenna equipment at certain tower sites, leading to a potential decline in tenants, service needs and decreasing revenue streams.

Examples of such new technologies may include spectrally efficient technologies which could potentially relieve certain network capacity problems or complementary voice over internet protocol access technologies that could be used to offload a portion of subscriber traffic away from the traditional tower-based networks.

· Strategic long-term planning;

· Business intelligence;

· Exploring alternatives;

· Continuously improving product offering to enable adaptation to new wireless technologies; and

· Applying for new licences to provision active infrastructure services in certain markets.

No change

Failure to remain competitive

· Financial

Competition in, or consolidation of the

telecommunications tower industry may create pricing pressures that materially and adversely affect the Group.

· KPI monitoring and benchmarking against competitors;

· Total cost of ownership ('TCO') analysis for MNOs to run towers;

· Fair and competitive pricing structure;

· Business intelligence and review of competitors' activities;

· Strong tendering team to ensure high win/retention rate; and

· Continuous capex investment to ensure that the Group can facilitate customer needs quickly.

No change

Failure to integrate new lines of business in new markets

· Strategic

· Financial

· Operational

Multiple risks exist with entry into new markets and new lines of business. Failure to successfully manage and integrate operations, resources and technology could have material adverse implications for the Group's overall growth strategy and negatively impact its financial position and organisation culture.

· Pre-acquisition due diligence conducted with the assistance of external advisors with specific geographic and industry expertise;

· Ongoing monitoring activities post- acquisition/agreement;

· Detailed management, operations and technology integration plans;

· Ongoing measurement of performance vs. plan and Group strategic objectives; and

· Implementation of a regional CEO and support function governance and oversight structure.

No change

10.

Tax disputes

· Compliance

· Financial

· Operational

· Reputational

Our operations are based in certain countries with complex, frequently changing and bureaucratic and administratively burdensome tax regimes. This may lead to significant disputes around interpretation and application of tax rules and may expose us to significant additional taxation liabilities.

· Frequent interaction and transparent communication with relevant governmental authorities and representatives;

· Engagement of external legal and tax advisors to advise on legislative/tax code changes and assessed liabilities or audits;

· Engagement with trade associations and industry bodies and other international companies and organisations facing similar issues;

· Defending against unwarranted claims; and

· Strengthening of the Group tax team and continued recruitment of in-house tax expertise at both Group and OpCo levels.

No change

11.

Operational resilience

· Strategic

· Reputational

· Operational

The ability of the Group to continue operations is heavily reliant on third parties, the proper functioning of its technology platforms and the capacity of its available human resources. Failure in any of these three areas could severely affect its operational capabilities and ability to deliver on its strategic objectives.

· Ongoing enhancements to data security and protection measures with third-party expert support;

· Additional investment in IT resource and infrastructure to increase automation and workflow of business as usual activities;

· Third-party due diligence, ongoing monitoring and regular supplier performance reviews;

· Alternative sources of supply are previously identified to deal with potential disruption to the strategic supply chain; and

· Ongoing review and involvement of the Human Resources function at an early stage in organisation design and development activities.

No change

12.

Covid-19

· Operational

· Financial

In addition to the risk to the Health and Safety of our employees and contractors, the ongoing impact of the Covid-19 pandemic could materially and adversely affect the financial and operational performance of the Group across all of its activities. The effects of the pandemic may also disrupt the achievement of the Group's strategic plans and growth objectives and place additional strain on its technology infrastructure. There is also an increased risk of litigation due to the potential effects of the pandemic on fulfilment of contractual obligations.

· Health and Safety protocols established and implemented;

· Business continuity plans implemented with ongoing monitoring;

· Financial modelling, scenario building and stress testing;

· Continuous scanning of the external environment;

· Increased fuel purchases; and

· Review of contractual terms and conditions.

No change

13.

Information management failure and cyber attack risk

· Operational

· Financial

· Reputational

We are increasingly dependent on the performance and effectiveness of our IT systems. Failure of our key systems, exposure to the increasing risk of cybercrime attacks and threats, loss or theft of sensitive information, whether accidentally or intentionally, expose the Group to operational, strategic, reputational and financial risks. These risks are increasing due to greater interconnectivity, reliance on technology solutions to drive business performance, use of third parties in operational activities and continued adoption of remote working practices.

Cyber attacks are becoming more sophisticated and frequent and may compromise sensitive information of the Group, its employees, customers or other third-parties. Failure to prevent unauthorised access or to update processes and IT security measures may expose the Group to potential fraud, inability to conduct its business, damage to customers as well as regulatory investigations and associated fines and penalties.

· Ongoing implementation and enhancement of security and remote access processes, policies and procedures;

· Regular security testing regime established, validated by independent third parties;

· Annual staff training and awareness programme in place;

· Security controls based on industry best practice frameworks, such as NCSC, and validated through internal audit assessments;

· Specialist security third parties engaged to assess cyber risks and mitigation plans;

· Incident management and response processes aligned to ITIL® best practice - identification, containment, eradication, recovery and lessons learned; and

· New supplier risk management assessments and due diligence carried out.

No change

14.

Climate change

· Operational

· Financial

· Reputational

There is continuing and increasing focus by regulators, investors and communities on the impacts of GHG emissions on business and society.

Business risks we may face as a result of climate change relate to physical risks to our assets, operations and personnel (i.e. events arising due to the frequency and severity of extreme weather events or shifts in climate patterns) and transition risks (i.e. economic, technology or regulatory changes related to the move towards a low-carbon economy).

Governments in our operating markets, in addition to increasing qualitative and quantitative disclosure requirements, may take action to address climate change such as the introduction of a carbon tax or mandate net zero requirements which could impact our business through higher costs or reduced flexibility of operations.

· Carbon reduction intensity target to 2030 with an ambition to decarbonise our emissions to net zero by 2040;

· Monitoring changes to carbon legislation and regulations in all our markets;

· Investing in solutions which reduce our carbon footprint and reliance on diesel such as installing hybrid and solar solutions in many of our towers and connecting to grid power where possible;

· Additional capital expenditure in carbon reduction innovation;

· Factoring emissions and climate risk into strategy and growth plans. All operating companies' budgets and forecasts include calculated emissions to evaluate trends vs. our 2030 carbon target;

· Aligning with the TCFD framework; and

· Dedicated sustainability team at Group level.

New risk

2. Related party transactions

Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this Note.

During the year, and in respect of the period for which the related party relationship was in existence, the Group companies entered into the following commercial transactions with related parties:

	2021		2020
	Income from towers US$m	Purchase of goods US$m	Income from towers US$m	Purchase of goods US$m
Millicom Holding B.V. and subsidiaries1	18.0	-	72.2	-
Nepic Pty2	-	-	-	0.2
Total	18.0	-	72.2	0.2

1 Millicom Holding B.V is no longer a related party of Helios Towers plc as of June 2021.

2 No longer classified as related party as of November 2020 as their shares were sold.

	2021		2020
	Amount owed by US$m	Amount owed to US$m	Amount owed by US$m	Amount owed to US$m
Millicom Holding B.V. and subsidiaries1	-	-	37.1	-
Total	-	-	37.1	-

The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. Based on the ECL model, no provisions have been made for loss allowances in respect of the amounts owed by related parties.

Amounts receivable from the related parties related to other Group companies are short term and carry interest varying from 0% to 15% per annum charged on the outstanding trade and other receivable balances (Note 15).

3. Statement of Directors' Responsibilities

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements, and the Group Financial Statements, in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under the law, the Directors are required to prepare the Group Financial Statements in accordance with International Financial Reporting Standards ('IFRSs'). The Directors have elected to prepare the Company Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP'), which is the United Kingdom Accounting Standards and applicable law, including the Financial Reporting Standard Applicable in the UK and Republic of Ireland ('FRS 102'). Under company law, the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit and loss of the Company for that period.

In preparing the parent company Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements; and

· prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

In preparing the Group Financial Statements, International Accounting Standard 1 requires that Directors:

· properly select and apply accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' responsibility statement under the UK Corporate Governance Code

In accordance with Provision 27 of the 2018 UK Corporate Governance Code, the Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides information to enable shareholders to assess the Company's performance, business model and strategy.

Responsibility statement

Each of the Directors whose names are listed on pages 78-80 confirm that to the best of their knowledge:

· the Group Financial Statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and Company and the undertakings included in the consolidation taken as a whole;

· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 16 March 2022 and is signed on its behalf by:

Kash Pandya	Manjit Dhillon
Chief Executive Officer	Chief Financial Officer

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END

ACSPPURAWUPPGQG

TIDM	HTWS
Share Price	196.10p-0.96%
Market Cap	£2.03bn

Date	21 Mar 2022
Time	17:08:25
Category	Results
ID	5078F

TIDM	HTWS
Share Price	196.10p-0.96%
Market Cap	£2.03bn

Date	21 Mar 2022
Time	17:08:25
Category	Results
ID	5078F

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