Helios Towers plc
(the "Company")
2020 Annual Report and Accounts and 2021 Notice of Annual General Meeting
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 been posted and/or otherwise made available to shareholders:
· 2020 Annual Report and Accounts
· 2020 Sustainable Business Report
· 2021 Notice of Annual General Meeting
· Form of Proxy for the 2021 Annual General Meeting
The above mentioned documents (except for the Form of Proxy) are available on the Company's website at www.heliostowers.com and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
22 March 2021
LEI: 213800DGC7GS4XCHCU30
Identification Code: GB00BJVQC708
| Enquiries: |
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| For investor enquiries | |
| For media enquiries | Edward Bridges, Stephanie Ellis |
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| FTI Consulting LLP |
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| +44 (0)20 3727 1000 |
Appendix
In compliance with DTR 6.3.5R, the information contained in this appendix is extracted from the 2020 Annual Report and Accounts and should be read in conjunction with the Company's 2020 Full Year Results Announcement for the year ended 31 December 2020 issued on 10 March 2021. 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 2020 Annual Report and Accounts in full. Page numbers and cross references in the extracted information refer to page numbers and cross references in the 2020 Annual Report and Accounts.
1. Business principal risks
Summarised below are the key risks identified (not in order of significance) which could have a material impact on the Group.
| Risk status | Risk description | Impacts | Risk mitigation |
| No change | 1. Operational resilience
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. | Strategic Reputational Operational | · 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 identified in advance to mitigate any potential disruption to the strategic supply chain; · Ongoing review and involvement of the human resources department at an early stage in organisation design and development activities. |
| No change | 2. Major quality failure or breach of contract
The Group's reputation and profitability could be damaged if it 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.
| Reputational Financial | · Continued skills development and training programmes for the project and operational delivery team; · Detailed and defined project scoping and life cycle management through project delivery and transfer to ongoing operations; · Contract and dispute management processes in place; · Continuous monitoring and management of customer relationships; · Use of long-term contracting with minimal termination rights. |
| No change | 3. Non-compliance with various laws and regulations such as:
i) Health, safety and environmental laws
ii)Anti-bribery and corruption provisions
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, in respect of 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. | Compliance Financial Reputational | · Constant monitoring of potential changes to laws and regulatory requirements; · In-person and virtual training on health, safety and environmental matters provided to employees and relevant third-party contractors; · ISO 37001 (Anti-Bribery Management System) certification retained; · Ongoing refresh of compliance and related policies implemented in 2018, including specific details covering Anti-Bribery and Corruption, Facilitation of Tax Evasion, Anti-Money-Laundering; · Compliance monitoring activities and periodic reporting requirements introduced; · Ongoing engagement with external lawyers, 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 introduced and communicated; · Third-party monitoring through supplier audits and performance reviews. |
| No change | 4. Economic and political instability
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 geography where the Group has operations. | Operational Financial | · Ongoing market analysis and business intelligence gathering activities; · Market share growth strategy in place; · Long-term contracts with blue chip MNOs; · Close monitoring of any potential risks that may affect operations; · Business continuity and contingency plans in place to respond to any emergency situations. |
| No change | 5. Significant exchange rate movements
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 that these movements have on Group third-party customers and strategic suppliers.
| Financial | · USD and EUR pegged contracts; · 'Natural' hedge of local currencies (revenue vs. opex); · Monthly review of exchange rate differences. |
| No change | 6. Non-compliance with permit requirements
The Group may not always operate with the necessary required approvals and permits for some of its tower sites, particularly in the case of tower portfolios acquired from a third-party. Vagueness, uncertainty and changes in interpretation of regulatory requirements are frequent and often arise 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. | Operational | · Inventory of required licences and permits maintained for each operating company; · Compliance registers maintained with any potential non-conformities identified by relevant government authorities with a timetable for rectification; · Periodic engagement with external lawyers and advisors, and participation in industry groups; · Active and ongoing engagement with relevant regulatory authorities to proactively identify, assess and manage actual and potential regulation changes. |
| No change | 7. Loss of key personnel
The Group's successful operational activities and growth are 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. | People | · Talent identification and succession planning are in place for key roles; · Competitively benchmarked performance-related remuneration plans; · Staff performance and development/support plans. |
| No change | 8. Technology risk
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 tenancies, service needs and revenue streams.
Examples may include spectrally efficient technologies, which could potentially relieve certain network capacity problems, or complementary voice over internet protocol access technologies that could absorb a portion of subscriber traffic from the traditional tower-based networks. | Strategic | · Strategic long-term planning; · Business intelligence; · Exploring alternative technologies such as solar power; · Continuously improving our product offering to adapt to new wireless technologies; · Applying for new licenses to provide active infrastructure services in certain markets. |
| No change | 9. Failure to remain competitive
Competition in, or consolidation of, the telecommunications tower industry may create pricing pressures that materially and adversely affect the Group. | Financial | · Key performance indicator ('KPI') monitoring and benchmarking against competitors; · Total cost of ownership analysis for MNOs; · Fair pricing structure; · Business intelligence and review of competitors' activities; · Strong tendering team to ensure high win/retention rate; · Continuous capex investment to ensure that the Group has sufficient capacity. |
| No change | 10. Failure to integrate new lines of business in new markets
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 corporate culture. | Strategic Financial Operational | · 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 plan; · Ongoing measurement of performance vs. plan and Group strategic objectives; · Implementation of a regional CEO and support function to governance and oversight structure. |
| No change | 11. Tax disputes
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. | Compliance Financial Operational Reputational | · Frequent interaction and transparent communication with relevant governmental authorities and representatives; · Engagement of external legal and tax consultants 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; · Recruitment of Group Tax Manager, and ongoing recruitment of in-house tax expertise at both Group and Opco levels. |
| New | 12. Covid-19
In addition to the normal health and safety risks to 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 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. | Financial Operational | · Health and safety protocols established and implemented; · Business continuity plans implemented with ongoing monitoring; · Financial modelling, scenario building and stress testing; · Continuous monitoring of the external environment; · Increased fuel and capex purchases; · Review of contractual terms and conditions; · Review and adaptation of our control environment for remote working. |
| New | 13. Information technology failure and cyber-attack risk
We are increasingly dependent on the performance and effectiveness of our IT systems. Failure of our key systems, exposure to the increasing threat 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. | Financial Operational Reputational | · 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 Information Technology Infrastructure Library ('ITIL®') best practice - identification, containment, eradication, recovery and lessons learned; · New supplier risk management assessments and due diligence carried out. |
2. Related party transactions
During the year, the Group companies entered into the following commercial transactions with related parties:
| | 2020 | | 2019 | ||
| | 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 subsidiaries(1) | 72.2 | - | | 70.4 | - |
| Ecost Building Management Pty | - | - | | - | 1.4 |
| Vulatel (Pty) Ltd | - | - | | 0.2 | 0.3 |
| Nepic Pty | - | 0.2 | | 0.3 | - |
| Total | 72.2 | 0.2 | | 70.9 | 1.7 |
| | 2020 | | 2019 | ||
| | 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 subsidiaries(1) | 37.1 | - | | 22.9 | - |
| Vulatel (Pty) Ltd(2) | - | - | | 0.2 | - |
| Nepic Pty(2) | - | - | | 0.3 | 0.1 |
| SA Towers Proprietary Limited(2) | - | - | | - | 1.5 |
| Total | 37.1 | - | | 23.4 | 1.6 |
(1) Millicom Holding B.V is a shareholder of Helios Towers plc.
(2) No longer classified as related parties as of November 2020. See Note 13 for further details.
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
The Directors are responsible for preparing the Annual Report and Financial Statements, and the Group's Financial Statements, in accordance with applicable United Kingdom law and those applicable accounting standards.
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').
The Directors are required to prepare Financial Statements for each financial year which present a true and fair view of the financial position of the Company and of the Group, and of the financial performance and cash flows of the Group. In preparing those Financial Statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8 ('Accounting policies, changes in accounting estimates and errors') and FRS 102 then apply them consistently;
• 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 IFRS for Group and FRS 102 for Company is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company and of the Group's financial position and financial performance;
• state that the Company has complied with FRS 102 and the Group has complied with IFRS, subject to any material departures disclosed and explained in the Financial Statements; and
• prepare the accounts on a going concern basis unless, having assessed the ability of the Company and the Group to continue as a going concern, management either intends to liquidate the entity or to cease trading, or have no realistic alternative but to do so.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group, and which enable them to ensure that the Financial Statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable UK law and regulations, the Directors are responsible for the preparation of a Directors' report, Directors' remuneration report and corporate Governance Report that comply with that law and regulations. In addition, the Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report and Financial Statements except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.
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 of the Directors in respect of the Annual Report and Financial Statements Each of the Directors whose names are listed on pages 72-74 confirm that to the best of their knowledge:
a) the Group Financial Statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and the Company Financial Statements prepared under FRS 102, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group and Company and the undertakings included in the consolidation taken as a whole; and
b) the management report (encompassed within the Overview, Strategic Report, and Governance sections) includes a fair review of the development and performance of the business, and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
The Strategic Report and the Statement of Directors' Responsibilities were approved by the Board and signed on its behalf by the Chief Executive Officer.
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