se
Consolidated Annual Report and
Financial Statements
FOR THE YEAR ENDED DECEMBER 31, 2021
Atlantica Sustainable Infrastructure plc Consolidated Annual Report
and Financial Statements
Contents
Strategic Report
Directors’ Report
Directors’ Remuneration Report
Directors’ Responsibilities Statement
Definitions
Independent Auditor’s Report To The Members Of Atlantica Sustainable Infrastructure Plc
Consolidated Financial Statement
Company Financial Statements
Page
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231
Strategic Report
This Strategic Report has been prepared to provide shareholders with information that will aid
them in assessing Atlantica’s strategies and the potential of such strategies to succeed.
The Strategic Report contains certain forward-looking statements that are made by the directors
in good faith and based on the information available to them up to the time of their approval of
this report. These statements should be treated with caution due to the uncertainties, including
both economic and business risk factors, inherent in such forward-looking information.
The directors have prepared this Strategic Report in compliance with Section 414C of the
Companies Act 2006.
The Strategic Report discusses the following areas:
- Nature of the business.
- Business model, strategy and objectives.
Fair review of the business.
-
- Principal risks and uncertainties.
-
- Section 172 statement.
- Going concern basis.
Environment, Social and Governance.
Nature of the Business
Atlantica Sustainable Infrastructure plc (hereinafter “we”, “our”, the “Company” or “Atlantica”), a
Company registered in England and Wales and incorporated in the United Kingdom, is a
sustainable infrastructure company with a majority of our business in renewable energy assets. In
2021, our renewable sector represented approximately 77% of our revenue with solar energy
representing approximately 69%. We complement our renewable assets portfolio with storage,
efficient natural gas and heat and transmission infrastructure assets, as enablers of the transition
towards a clean energy mix. We are also present in water infrastructure assets, a relevant sector for
sustainable development. Our purpose is to support the transition towards a more sustainable
world by investing in and managing sustainable infrastructure, while creating long-term value for
our investors and the rest of our stakeholders.
As of December 31, 2021, we own or have an interest in a portfolio of diversified assets in terms of
business sector and geographic footprint. Our portfolio consists of 38 assets with 2,044 MW of
aggregate renewable energy installed generation capacity, (of which approximately 71% is solar),
343 MW of efficient natural gas-fired power generation capacity, 55 MWt of district heating
capacity, 1,166 miles of electric transmission lines and 17.5 M ft3 per day of water desalination.
We currently own and manage operating facilities in North America (United States, Canada and
Mexico), South America (Peru, Chile, Colombia and Uruguay) and EMEA (Spain, Italy, Algeria and
South Africa). Our assets generally have contracted or regulated revenue. As of December 31, 2021,
our assets had a weighted average remaining contract life of approximately 15 years.
3
The address of our registered office is Great West House, GW1, 17th floor, Great West Road,
Brentford, TW8 9DF, United Kingdom.
Events During the Period
Investments
•
•
•
•
•
•
•
•
In April 2020, we made an investment in the creation of a renewable energy platform in Chile,
together with financial partners, in which we now own approximately a 35% stake and have a
strategic investor role. In January 2021, we closed our second investment through this platform
with the acquisition of Chile PV 2, a 40 MW PV plant. Total equity investment in this new asset
was approximately $5.0 million. The platform intends to make further investments in renewable
energy in Chile and sign PPAs with creditworthy off-takers.
In January 2021, we closed the acquisition of a 42.5% equity interest in Rioglass, a supplier of
spare parts and services in the solar industry, increasing our equity interest to 57.5%. In
addition, on July 22, 2021 we exercised the option to acquire the remaining 42.5% equity
interest in Rioglass. The total investment made in 2021 to acquire the additional 85% equity
interest, resulting in a 100% ownership, was approximately $17.1 million.
In April 2021, we closed the acquisition of Coso, a 135 MW renewable asset in California. Coso
is the third largest geothermal plant in the United States and provides base load renewable
energy to the California Independent System Operator (California ISO). It has PPAs signed with
an 18-year average contract life. The total equity investment was $130 million, which was paid
in April 2021. In addition, on July 15, 2021, we repaid $40 million of project debt.
In May 2021, we closed the acquisition of Calgary District Heating, a district heating asset in
Canada, for a total equity investment of $22.7 million. The asset has availability-based revenue
with inflation indexation and 20 years of weighted average contract life at the time of the
investment. Contracted capacity and volume payments represent approximately 80% of the
total revenue.
In June 2021, we closed the acquisition of a 49% interest in Vento II, a 596 MW wind portfolio
in the U.S. for a total equity investment of $198.3 million. EDP Renewables owns the remaining
51%. The assets have PPAs with investment grade off-takers with five-year average remaining
contract life at the time of the investment.
In August 2021, we closed the acquisition of Italy PV 1 and Italy PV 2, two solar PV plants in
Italy with a combined capacity of 3.7 MW for a total equity investment of $9 million. These
assets have regulated revenues under a feed in tariff until 2030 and 2031, respectively.
In November 2021, we closed the acquisition of La Sierpe, a 20 MW solar asset in Colombia for
a total equity investment of $23.5 million. The asset was acquired under our Liberty GES ROFO
Agreement. We also acquired two additional solar projects in Colombia with a combined
capacity of approximately 30 MW which are currently in construction, la Tolua and Tierra Linda.
In December 2021, we closed the acquisition of Italy PV 3, a 2.5 MW solar portfolio in Italy for
a total equity investment of $4.0 million. The four assets in the portfolio have regulated
revenues under a feed in tariff until 2032.
4
•
In October 2018, we reached an agreement to acquire PTS, a natural gas transportation
platform located in Mexico. We initially acquired a 5% stake in the project and reached an
agreement to increase our equity interest. Given that the project financing did not close, in June
2021, we reached an agreement with our partner to sell our 5% ownership in the project at
cost. There are no other costs or liabilities related to this investment.
Corporate Financing Activities during the year
• On January 7, 2021 Algonquin purchased 4,020,860 ordinary shares in a private placement in
order to maintain its equity interest in the Company, as a consequence of the prior underwritten
public offering of 5,069,200 ordinary shares in December 2020. Gross proceeds of the private
placement were approximately $300 million, which were used to finance growth opportunities
and for general corporate purposes after deducting underwriting discounts and commissions
and offering expenses.
• On May 18, 2021, we issued the Green Senior Notes amounting to an aggregate principal
amount of $400 million due in 2028. The Green Senior Notes bear interest at a rate of 4.125%
per year, payable on June 15 and December 15 of each year, commencing December 15, 2021,
and will mature on June 15, 2028. The proceeds were used to fully prepay the Note Issuance
Facility 2019 and to finance investments and acquisitions.
• On August 3, 2021, we established an “at-the-market program” and entered into the
Distribution Agreement with J.P. Morgan Securities LLC, as sales agent, under which we may
offer and sell from time to time up to $150 million of our ordinary shares, including in “at-the-
market” offerings under our universal shelf registration statement on Form F-3 and a
prospectus supplement that we filed on August 3, 2021. During the third and fourth quarters,
we have issued 1.6 million shares under the program at an average market price of $38.43 per
share pursuant to the Distribution Agreement, representing net proceeds of $61.4 million.
5
Asset Portfolio and Operations
The following table provides an overview of our current assets as of December 31, 2021:
Assets
Type
Ownership
Location
Currency
(9)
Capacity
(Gross)
Counterparty
Credit Ratings(10)
COD*
Contract
Years
Remaining(16)
Solana
Renewable (Solar)
100% Arizona (USA) USD 280 MW BBB+/A3/ BBB+ 2013
Mojave
Renewable (Solar)
100%
Coso
Renewable
(Geothermal)
100%
California
(USA)
California
(USA)
USD 280 MW
BB-/--/BB
2014
USD 135 MW
Investment grade
(14)
1987/
1989
Elkhorn Valley
Renewable (Wind)
49% Oregon (USA) USD 101 MW
BBB/A3/--
2007
Prairie Star
Renewable (Wind)
49%
Minnesota
(USA)
USD 101 MW
--/A3/A-
2007
Twin Groves II
Renewable (Wind)
49%
Illinois (USA) USD 198 MW BBB-/Baa2/--
2008
Lone Star II
Renewable (Wind)
49%
Texas (USA) USD 196 MW
Not rated
2008
22
18
17
6
6
4
1
Chile PV 1
Renewable (Solar)
35%(8)
Chile
USD
55 MW
N/A
2016
N/A
Chile PV 2
Renewable (Solar)
35%(8)
Chile
USD
40 MW
Not rated
2017
La Sierpe
Renewable (Solar)
100%
Colombia
COP
20 MW
Not rated
2021
Palmatir
Cadonal
Renewable (Wind)
100%
Uruguay
USD
50 MW BBB/Baa2/BBB-(12) 2014
Renewable (Wind)
100%
Uruguay
USD
50 MW BBB/Baa2/BBB-(12) 2014
Melowind
Renewable (Wind)
100%
Uruguay
USD
50 MW BBB/Baa2/BBB- 2015
Mini-Hydro
Renewable
(Hydraulic)
100%
Peru
USD
4 MW BBB+/ Baa1/BBB 2012
9
14
12
13
14
11
Solaben 2 & 3
Renewable (Solar)
70%(1)
Spain
Euro 2x50 MW
A/Baa1/A-
2012
16/16
Solacor 1 & 2
Renewable (Solar)
87%(2)
Spain
Euro 2x50 MW
A/Baa1/A-
2012
15/15
PS10/PS20
Renewable (Solar)
100%
Spain
Euro
31 MW
A/Baa1/A-
2007&
2009
10/12
Helioenergy 1 & 2 Renewable (Solar)
100%
Spain
Euro 2x50 MW
A/Baa1/A-
2011
15/15
Helios 1 & 2
Renewable (Solar)
100%
Spain
Euro 2x50 MW
A/Baa1/A-
2012
15/16
Solnova 1, 3 & 4 Renewable (Solar)
100%
Spain
Euro 3x50 MW
A/Baa1/A-
2010
13/13/14
Solaben 1 & 6
Renewable (Solar)
100%
Spain
Euro 2x50 MW
A/Baa1/A-
2013
17/17
Seville PV
Renewable (Solar)
80%(6)
Spain
Euro
1 MW
A/Baa1/A-
2006
14
Italy PV 1
Renewable (Solar)
100%
Italy PV 2
Renewable (Solar)
100%
Italy PV 3
Renewable (Solar)
100%
Kaxu
Renewable (Solar)
51%(3)
Italy
Italy
Italy
South
Africa
Euro
1.6 MW BBB/Baa3/BBB 2010
Euro
2.1 MW BBB/Baa3/BBB 2011
Euro
2.5 MW BBB/Baa3/BBB 2012
Rand 100 MW
2015
9
9
10
13
BB-/Ba2/
BB-(11)
~41% A+ or
higher(15)
2010
19
Calgary
Efficient natural
gas
100%
Canada
CAD 55 MWt
6
Assets
Type
Ownership
Location
Currency
(9)
Capacity
(Gross)
Counterparty
Credit Ratings(10)
COD*
Contract
Years
Remaining(16)
ACT
Monterrey
ATN (13)
ATS
ATN 2
Efficient natural
gas
Efficient natural
gas
100%
Mexico
USD 300 MW
BBB/ Ba3/
BB-
2013
30%
Mexico
USD 142 MW
Not rated
2018
Transmission line
100%
Transmission line
100%
Transmission line
100%
Peru
Peru
Peru
USD 379 miles BBB+/ Baa1/BBB 2011
USD 569 miles BBB+/ Baa1/BBB 2014
USD 81 miles
Not rated
2015
11
17
19
22
11
Quadra 1 & 2
Transmission line
100%
Chile
USD
49 miles/
32 miles
100%
Chile
USD
6 miles
Not rated
2014
13/13
BBB/-/
A-
2007
16
Transmission
line
Transmission
line
Palmucho
Chile TL3
Skikda
Honaine
Tenes
100%
Chile
USD 50 miles
A/A1/A-
1993 Regulated
Water
34.2%(4)
Algeria
USD
Water
25.5%(5)
Algeria
USD
Water
51%(7)
Algeria
USD
3.5 M
ft3/day
7 M ft3/
day
7 M ft3/
day
Not rated
2009
Not rated
2012
Not rated
2015
12
16
18
Notes:
(1) Itochu Corporation, holds 30% of the shares in both Solaben 2 and Solaben 3.
(2)
(3)
JGC, holds 13% of the shares in each of Solacor 1 and Solacor 2.
Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu Community Trust
(20%).
Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. (“Sacyr”) owns the remaining 16.8%.
Algerian Energy Company, SPA owns 49% of Honaine and Sacyr owns the remaining 25.5%.
Instituto para la Diversificacion y Ahorro de la Energia holds 20% of the shares in Seville PV.
Algerian Energy Company, SPA owns 49% of Tenes.
65% of the shares in Chile PV 1 and Chile PV 2 are held by financial partners at our renewable energy platform in Chile.
Certain contracts denominated in U.S. dollars are payable in local currency.
(4)
(5)
(6)
(7)
(8)
(9)
(10) Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service Inc.,
or Moody’s, and Fitch Ratings Ltd, or Fitch.
(11) Refers to the credit rating of the Republic of South Africa. The offtaker is Eskom, which is a state-owned utility company in
South Africa.
(12) Refers to the credit rating of Uruguay, as UTE (Administracion Nacional de Usinas y Transmisoras Electricas) is unrated.
(13)
(14) Refers to the credit rating of two Community Choice Aggregators: Silicon Valley Clean Energy and Monterrey Bar Community
Including the acquisition of ATN Expansion 1 & 2.
Power, both with A Rating from S&P and Southern California Public Power Authority. The third off-taker is not rated.
(15) Refers to the credit rating of a diversified mix of 22 high credit quality clients (~41% A+ rating or higher, the rest is unrated).
(16) As of December 31, 2021.
(*)
Commercial Operation Date.
7
Business Model, Strategy and Objectives
Our strategy focuses on climate change solutions in the power and water sectors. We intend to
provide clean electricity, transmission capacity and desalinated water in a safe, reliable and
environmentally responsible way. We believe our value creation capability is significantly enhanced
by investing in sustainable sectors and managing our assets in a sustainable manner to the benefit
of our shareholders and other stakeholders.
We intend to take advantage of, and leverage our growth strategy on, favorable trends in clean
power generation, energy scarcity and the global focus on the reduction of carbon emissions. We
believe that we are well positioned to benefit from the expected transition towards a more
sustainable power generation mix in our markets. In addition, we believe that water is going to be
the next frontier in a transition towards a more sustainable world.
We seek to grow our cash available for distribution and our dividends to shareholders through
organic growth and by investing in new assets, while ensuring the ongoing stability and
sustainability of our business. We intend to grow our business maintaining renewable energy as
our main segment and with a primary focus on North America and Europe.
We believe we can achieve organic growth through the optimization of the existing portfolio,
escalation factors at many of our assets, as well as the repowering and hybridization with other
technologies of some of the renewable energy facilities and the expansion of our existing
transmission lines.
Additionally, we expect to acquire assets from third parties leveraging the local presence and
network we have in geographies and sectors in which we operate. We will also continue to invest
in the development and construction of new assets, in some cases on our own and in other cases
with partners. We have entered into and intend to continue to enter into agreements or
partnerships with developers and asset owners.
Our plan for executing this strategy includes the following key components:
Focus on stable assets in the power and water sectors, including renewable energy, storage,
efficient natural gas and heat, transmission, as well as water assets, generally contracted or
regulated.
We intend to focus on owning and operating stable, sustainable infrastructure assets with long
useful lives, generally contracted, for which we believe we have extensive experience and proven
systems and management processes, as well as the critical mass to benefit from operating
efficiencies and scale. We intend to maintain a diversified portfolio with a large majority of our
Adjusted EBITDA generated from low-carbon footprint assets, as we believe these sectors will see
significant growth in our targeted geographies.
Maintain diversification across three core geographic areas
Our focus on three core geographies, North America, South America and Europe, helps to ensure
exposure to markets in which we believe renewable energy, storage and transmission will continue
to grow significantly. We believe that our diversification by business sector and geography provides
us with access to different sources of growth.
8
Grow our business through the optimization of the existing portfolio and through the investments
in the expansion of our current assets.
We intend to grow our business through organic growth that we expect to deliver through the
optimization of the existing portfolio, price escalation factors in many of our assets as well as
through investments in the expansion and repowering of our current assets and hybridization of
existing assets with other complimentary technologies including storage, particularly in our
transmission lines and renewable energy assets.
Grow our business by investing in new assets in the business sectors where we are present
We will seek to grow our business by investing in new assets, generally contracted or regulated.
We expect to acquire assets from third parties leveraging the local presence and network we have
in the geographies and sectors in which we operate. We have also entered into and intend to enter
into agreements or partnerships with developers or asset owners to develop or acquire assets. We
also invest in assets under development or construction either directly or with partners via
investment vehicles. We believe that our know-how and operating expertise in our key markets
together with a critical mass of assets in several geographic areas as well as our access to capital
provided by being a listed company will assist us in achieving our growth plans.
Foster a low-risk approach
We intend to maintain a portfolio of contracted assets with a low-risk profile for a significant part
of our revenue. A large majority of our revenue is contracted or regulated. We seek to invest
generally in assets with proven technologies in which we generally have significant experience,
located in countries where we believe conditions to be stable and safe. We may complement our
portfolio with investments or co-investments in assets with shorter contracts or with partially
contracted revenue or in assets with revenue in currencies other than U.S. dollar or euro. We also
invest in assets under development or construction either directly or with partners via investment
vehicles.
Additionally, our policies and management systems include thorough risk analysis and risk
management processes applied on an ongoing basis from the date of asset acquisition. Our policy
is to insure all of our assets whenever economically feasible, retaining in some cases part of the risk
in house.
Maintain a prudent financial policy and financial flexibility
Non-recourse project debt is an important principle for us. We intend to continue financing our
assets with project debt progressively amortized using the cash flows from each asset and where
lenders do not have recourse to the holding company assets. The majority of our consolidated debt
is project debt.
In addition, we hedge a significant portion of our interest rate risk exposure. We estimate that as
of December 31, 2021, approximately 92% of our total interest risk exposure was fixed or hedged,
generally for the long-term. We also limit our foreign exchange exposure. We intend to ensure that
at least 80% of our cash available for distribution is always in U.S. dollars and euros. Furthermore,
we hedge net distributions in euros for the upcoming 24 months on a rolling basis.
We also intend to maintain a solid financial position through a combination of cash on hand and
undrawn credit facilities. In order to maintain financial flexibility, we use diversified sources of
9
financing in our project and corporate debt including banks, capital markets and private investor
financing. In recent years we have been active in green financing initiatives, improving our access
to new debt investors
Our Competitive Strengths
We believe that we are well-positioned to execute our business strategies thanks to the following
competitive strengths:
Stable and predictable long-term cash flows
We believe that our portfolio of sustainable infrastructure has a stable cash flow profile. The off-
take agreements or regulation in place at our assets have a weighted average remaining term of
approximately 15 years as of December 31, 2021, providing long-term cash flow visibility. In 2021,
approximately 58% of our revenue was non-dependent on natural resource (i.e. not subject to the
volatility that natural resource may have, especially solar and wind resource). This includes our
transmission lines, our efficient natural gas plant, our water assets and approximately 77% of the
revenue received from our solar assets in Spain. In these assets, our revenue is not subject to (or
has low dependence on) solar, wind or geothermal resources, which translates in a more stable
cash-flow generation. Going forward, our new investments will probably be dependent on the
natural resource. Additionally, our facilities have minimal or no fuel risk.
Our diversification by geography and business sector also strengthens the stability of our cash flow
generation. We expect our well-diversified asset portfolio, in terms of business sector and
geography to maintain cash flow stability.
Furthermore, due to the fact that we are a U.K. registered company, we should benefit from a more
favorable treatment than if we were a corporation based in the U.S. when receiving dividends from
our subsidiaries that hold our international assets because they should generally be exempt from
U.K. taxation due to the U.K.’s distribution exemption. Based on our current portfolio of assets,
which includes renewable assets that benefit from an accelerated tax depreciation schedule, and
tax regulations benefits permitted in the jurisdictions in which we operate, under current
regulations we do not expect to pay significant income tax in the upcoming years in most of our
geographies due to existing net operating losses, or NOLs. Furthermore, based on our existing
portfolio of assets, we believe that there is limited repatriation risk in the jurisdictions in which we
operate.
Positioned in business sectors with high growth prospects
The renewable energy industry has grown significantly in recent years and it is expected to continue
to grow in the coming decades. According to Bloomberg New Energy Finance 2021, renewable
energy is expected to account for the majority of new investments in the power sector in most
markets. In Bloomberg’s green scenario, approximately 1,400 GW of renewables will be added
every year for the next three decades. Solar PV sees the largest deployment with 16.5 TW installed
by 2050. Required investment in energy supply and infrastructure amounts to between $92 trillion
and $173 trillion over the next three decades. To achieve this, annual investment will need to more
than double from around $1.7 trillion, to somewhere between $3.1 trillion and $5.8 trillion per year.
The significant increase expected in the renewable energy space over the coming decades also
requires significant new investments in electric transmission and distribution lines for power supply,
10
as well as storage and natural gas generation for dispatchability, with each becoming key elements
to support additional wind and solar energy generation. We believe that we are well positioned in
sectors with solid growth expectations.
We also believe that our diversified exposure to international markets will allow us to pursue
improved growth opportunities and achieve higher returns than we would have if we had a narrow
geographic or technological focus. If certain geographies and business sectors become more
competitive for asset acquisitions in the future, we believe we can continue to execute on our
growth strategy by having the flexibility to invest in other regions or in other business sectors.
Well positioned in ESG
In 2021, 73% of our Adjusted EBITDA was derived from renewable energy and 64% of our Adjusted
EBITDA corresponded to solar energy production. Adjusted EBITDA from low carbon footprint
assets represented 88%, including renewable energy, transmission infrastructure, as well as water
assets. We have set a target to maintain over 80% of our Adjusted EBITDA generated from low-
carbon footprint assets.
In addition, we have set a target to reduce our scope 1 and scope 2 GHG emissions per unit of
energy generated by 70% by 2035, with 2020 as base year. This target has been validated by the
Science Based Targets initiative in 2021.
In terms of governance, we maintain a simple structure with one class of shares. The majority of
our Directors are independent, and all the board committees are formed exclusively by
independent directors. In 2021, the Board updated and /or issued, as applicable, several key ESG-
related documents following our long-term strategy. 25% of our directors are women.
We have been rated by various ESG rating agencies, which we believe can provide relevant
information for investors.
A Fair Review of the Business
Factors that Affect Comparability of our Results of Operations
▪ Acquisitions and Non-recurrent Projects
The results of operations of Chile PV 1 and Tenes have been fully consolidated since April and
May 2020, respectively. Tenes was recorded under the equity-method from January 2019 to
May 2020, at which point we then gained control over the asset and started to fully consolidate
it. The results of operations of Chile PV 2, Coso, Calgary District Heating, Italy PV 1 and Italy PV
2, La Sierpe and Italy PV 3 have been fully consolidated since January, April, May and August,
November and December 2021, respectively. Vento II has been recorded under the equity
method since June, 2021.
In addition, the results of operations of Rioglass have been fully consolidated since January
2021. In 2021, most of Rioglass operating results relate to a specific solar project which ended
in October 2021, and which represented $85.3 million in revenue and $1.0 million in Adjusted
EBITDA, included in our EMEA and Renewable energy segments for 2021 and which are non-
recurrent.
11
▪
Impairment
Considering the delays in the improvements and replacements that we are carrying out in the
storage system in Solana and their impact on production in 2021, as well as an increase in the
discount rate, we identified an impairment triggering event in accordance with IAS 36
(Impairment of Assets). As a result, an impairment test has been performed which resulted in
the recording of an impairment loss of $43.1 million for the year ended December 31, 2021 in
the line “Depreciation, amortization, and impairment charges”.
In addition, IFRS 9 requires impairment provisions to be based on expected credit losses on
financial assets rather than on actual credit losses. For the year ended December 31, 2021 we
recorded a reversal of the expected credit loss impairment provision at ACT for $24.9 million
following an improvement of a major client’s credit risk metrics which is reflected in the line
item “Depreciation, amortization, and impairment charges”. In 2020 we had recorded a $26.6
million impairment provision in ACT.
▪ Change in the useful life of the solar plants in Spain
In September 2020, following a thorough analysis of recent developments in the Energy and
Climate Policy Framework adopted by Spain in 2020, we decided to reduce the useful life of the
solar plants in Spain from 35 years to 25 years after COD, effective from September 1, 2020.
This change in the estimated useful life was accounted for as a change in accounting estimates
in accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors. This
caused $46.0 million increase if we compare the results of the two years since the change was
applied for twelve months in 2021 and only four months in 2020.
▪ Electricity market prices
In addition to regulated revenue, our solar assets in Spain receive revenue from the sale of
electricity at market prices. Electricity prices have increased significantly since mid-2021 and
revenues from the sale of electricity at power prices represented $132.9 million in 2021
compared to 42.9 million in 2020, causing higher short-term cash collections. Regulated
revenues are revised every three years to reflect, among other things, the difference between
expected and actual market prices if the difference is higher than a pre-defined threshold.
Current higher market prices in Spain will therefore cause lower regulated revenue to be
received progressively over the remaining regulatory life of our solar assets. As a result, we
recorded a negative provision for $77.1 million with no cash impact on the current period that
has lowered revenue and Adjusted EBITDA in this geography, compared to a positive provision
reversal for $22.3 million in 2020.
Factors Affecting Results of Operations
▪ Exchange rates
Our functional currency is the U.S. dollar, as most of our revenue and expenses are
denominated or linked to U.S. dollars. All our companies located in North America, with the
exception of Calgary, with revenue in Canadian dollars, and most of our companies in South
America have their revenue and financing contracts signed in, or indexed totally or partially to
U.S. dollars. Our solar power plants in Europe have their revenue and expenses denominated
in euros, Kaxu, our solar plant in South Africa, has its revenue and expenses denominated in
South African rand and La Sierpe our solar plant in Colombia has its revenue and expenses
12
denominated in Colombian pesos. Project financing is typically denominated in the same
currency as that of the contracted revenue agreement. This policy seeks to ensure that the
main revenue and expenses streams in foreign companies are denominated in the same
currency, limiting our risk of foreign exchange differences in our financial results.
Our strategy is to hedge cash distributions from our assets in Europe. We hedge the exchange
rate for the distributions in euros after deducting euro-denominated interest payments and
euro-denominated general and administrative expenses. Through currency options, we have
hedged 100% of our euro-denominated net exposure for the next 12 months and 75% of our
euro-denominated net exposure for the following 12 months. We expect to continue with this
hedging strategy on a rolling basis.
Although we hedge cash-flows in euros, fluctuations in the value of the euro in relation to the
U.S. dollar may affect our operating results. For example, revenue in euro-denominated
companies could decrease when translated to U.S. dollars at the average foreign exchange
rate solely due to a decrease in the average foreign exchange rate, in spite of revenue in the
original currency being stable. Fluctuations in the value of South African rand and Colombian
peso with respect to the U.S. dollar may also affect our operating results. Apart from the impact
of these translation differences, the exposure of our income statement to fluctuations of
foreign currencies is limited, as the financing of projects is typically denominated in the same
currency as that of the contracted revenue agreement.
▪ Interest rates
We incur significant indebtedness at the corporate and asset level. The interest rate risk arises
mainly from indebtedness at variable interest rates. To mitigate interest rate risk, we primarily
use long-term interest rate swaps and interest rate options which, in exchange for a fee, offer
protection against a rise in interest rates. As of December 31, 2021, approximately 92% of our
project debt and close to 100% of our corporate debt either has fixed interest rates or has
been hedged with swaps or caps. Nevertheless, our results of operations can be affected by
changes in interest rates with respect to the unhedged portion of our indebtedness that bears
interest at floating rates, which typically bear a spread over EURIBOR, LIBOR or over the
alternative rates replacing these.
▪ Electricity market prices
In addition to regulated revenue, our solar assets in Spain receive revenue from the sale of
electricity at market prices. Regulated revenues are revised every three years to reflect the
difference between expected and actual market prices if the difference is higher than a pre-
defined threshold. Given that since mid-2021 electricity prices in Spain have been, and may
continue to be, significantly higher than expected, it will cause lower regulated revenue starting
in 2023 over the remaining regulatory life of our solar assets. Also, the regulator or the
administration may change or may create new mechanisms to adjust the price of electricity,
which could have a material adverse effect on our business, financial condition, results of
operations and cash flows.
13
Key Performance Indicators
We closely monitor the following key drivers of our business sectors’ performance to plan for our
needs, and to adjust our expectations, financial budgets and forecasts appropriately.
• MW in operation in the case of Renewable energy and Efficient natural gas and heat assets,
miles in operation in the case of Electric Transmission lines and Mft3 in operation in the case of
Water assets are indicators which provide information about the installed capacity or size of
our portfolio of assets.
• Production measured in GWh in our Renewable energy and Efficient natural gas and heat assets
provides information about the performance of these assets.
• Availability in the case of our Efficient natural gas and heat assets, Transmission lines and Water
assets also provides information on the performance of the assets. In these business segments
revenues are based on availability, which is the time during which the asset was available to our
client totally or partially divided by contracted availability or budgeted availability, as
applicable.
Renewable Energy
MW in operation1
GWh produced2
Efficient Natural Gas & Heat
MW in operation3
GWh produced4
Availability (%)4
Transmission lines
Miles in operation
Availability (%)
Water
Mft3 in operation1
Availability (%)
As of December 31,
2020
2021
2,044
4,655
398
2,292
100.6%
1,166
100.0%
17.5
97.9%
1,551
3,244
343
2,574
102.1%
1,166
100.0%
17.5
100.1%
1 Represents total installed capacity in assets owned or consolidated at the end of the year, regardless of our percentage
of ownership in each of the assets except for Vento II for which we have included our 49% interest.
2 Includes 49% of Vento II wind portfolio production since its acquisition. Includes curtailment in wind assets for which
we receive compensation.
3 Includes 43 MW corresponding to our 30% share in Monterrey and 55 MWt corresponding to Calgary District Heating.
4 GWh produced includes 30% of the production from Monterrey.
During 2021, our renewable assets continued to generate solid operating results and production
increased by 43.5%. The increase was mainly driven by the contribution from the recently acquired
renewable assets Coso, Chile PV1, Chile PV 2, Vento II, Italy PV 1, Italy PV 2, Italy PV 3 and La Sierpe
bringing approximately 1,339 GWh of additional electricity generation. The increase was also due
to higher production at Kaxu compared to the prior year when an unscheduled outage that affected
part of the first half of 2020, largely covered by insurance. Production also increased in our assets
in Spain where solar radiation was better than in the previous year.
In our solar assets in the U.S. production decreased by 3.5% year over year mainly due to lower
solar resource in Arizona, especially in the third quarter, and lower availability in the storage system,
14
as we are carrying out the improvements and replacements that were scheduled. These works have
impacted production in 2021 and are expected to impact production in 2022 as we have been
experiencing delays due to COVID-19 restrictions and delays from subcontractors.
In our wind assets in Uruguay production decreased by 10.4% in 2021, mainly due to lower wind
resource in the period. Wind resource was also lower than expected in our wind assets in the United
States.
Efficient natural gas and heat production was lower in 2021 compared to 2020 due to lower
production at ACT, mainly due to lower demand from our off-taker. This did not affect our revenue
as the contract is based on availability and continues to achieve high availability levels.
In Water, the decrease in availability was mainly due to lower availability in Tenes in the fourth
quarter of 2021, resulting principally from the high number of suspended particles in the water
caused by heavy rains in the region in the fourth quarter. Availability in this plant in the first quarter
of 2021 was also lower largely due to the installation of some new safety-related equipment. Our
transmission lines, where revenue is also based on availability, continue to achieve high availability
levels.
Results of Operations
The table below details our results of operations for the years ended December 31, 2021, and 2020
$ in millions
Revenue
Other operating income
Employee benefit expenses
Depreciation, amortization and impairment charges
Other operating expenses
Operating profit
Financial income
Financial expense
Net exchange differences
Other financial income/(expense), net
Financial expense, net
Share of profit/(loss) of associates carried under the equity
method
Profit before income tax
Income tax
Profit/(loss) for the year
Profit attributable to non-controlling interests
Profit/(loss) for the year attributable to the parent
company
Revenue
2021
2020
1,211.7
74.6
(78.7)
(439.4)
(414.3)
353.9
2.7
(361.2)
1.9
15.7
(340.9)
12.3
25.3
(36.2)
(10.9)
(19.2)
(30.1)
1,013.3
99.5
(54.4)
(408.6)
(276.7)
373.1
7.1
(378.4)
(1.4)
40.9
(331.8)
0.5
41.8
(24.9)
16.9
(4.9)
12.0
Revenue increased by 19.6% to $1,211.7 million for the year 2021, compared to $1,013.3 million for
the year 2020. On a constant currency basis, revenue in 2021 was $1,187.7 million, representing an
increase of 17.2% compared to the year 2020. On a constant currency basis and excluding the
aforementioned Rioglass non-recurrent solar project, revenue for the year 2021 was $1,102.3
million, representing an increase of 8.8% compared to the previous year.
15
This increase (on a constant currency basis and excluding the Rioglass non-recurrent solar project)
was mainly due to the contribution of the recently acquired and consolidated assets which
represent a total of $92.3 million of additional revenue in 2021. Revenue was also higher at Kaxu.
Damage and business interruption were covered by our insurance; however, insurance proceeds
were recorded in “Other operating income”. In addition, revenue increased at ACT mainly due to
higher revenue in the portion of the tariff related to operation and maintenance services, driven by
higher operation and maintenance costs for the year 2021 compared to the previous year. At ACT,
operation and maintenance costs are higher in the quarters preceding any major maintenance,
which is scheduled for the beginning of 2022.
These effects were partially offset by a 4.8% decrease in revenue from our solar assets in Spain on
a constant currency basis, in spite of higher production in the period. The decrease results mainly
from a negative provision that reduces revenue but has no cash impact on the current period, as
further explained in the discussion of the EMEA region. Revenue also decreased in our solar assets
in North America, mainly due to lower solar radiation in the year ended December 31, 2021
compared to the previous year and lower availability of the storage system in Solana, as previously
described.
Other Operating Income
The following table details our other operating income for the years ended December 31, 2021 and
2020:
Other operating income
Grants
Insurance proceeds and other
Total
Year ended December 31,
2021
2020
$ in millions
60.7
13.9
74.6
59.0
40.5
99.5
Other operating income decreased by 25.0% to $74.6 million for the year ended December 31,
2021, compared to $99.5 million for the year ended December 31, 2020.
“Insurance proceeds and other” for the year 2020 included $18.4 million in insurance income in
Kaxu in compensation for the unscheduled outage, as well as $5.7 million in insurance income
received at Solana and Mojave in compensation for events from prior years, which are the main
reasons for the decrease.
“Grants” represent the financial support provided by the U.S. Department of the Treasury to Solana
and Mojave and consist of an ITC Cash Grant and an implicit grant related to the below market
interest rates of the project loans with the Federal Financing Bank. Grants were stable for the year
2021 compared to the previous year.
Employee Benefit Expenses
Employee benefit expenses increased by 44.4% to $78.7 million for the year ended December 31,
2021, compared to $54.5 million for the year ended December 31, 2020. The increase was mainly
due to the consolidation of Coso and Rioglass.
16
Depreciation, Amortization and Impairment Charges
Depreciation, amortization and impairment charges increased by 7.5% to $439.4 million for the
year ended December 31, 2021, compared to $408.6 million for the year ended December 31, 2020.
The increase was mainly due to an increase in depreciation and amortization at our solar assets in
Spain. In September 2020 we reduced the useful life of our solar assets in Spain from 35 to 25 years
after COD, which increased our depreciation and amortization charges for the year ended
December 31, 2021 by $46.0 million compared to the previous year. In addition, the increase is also
due to the $43.1 million impairment loss recorded in Solana in September 2021, after a triggering
event was identified mainly due to delays in the improvements and replacements in the storage
system and their impact on production in 2021, as well as to the increase in the discount rate.
Depreciation, amortization and impairment charges also increased due to the consolidation of
recent acquisitions and because in 2020 this caption included a reversal of an impairment charge
in our wind assets in Uruguay for $18.7 million in Cadonal and Palmatir, with no corresponding
amount in 2021.
These effects were partially offset by a reversal of the expected credit loss impairment provision at
ACT. IFRS 9 requires impairment provisions to be based on the expected credit loss of the financial
assets in addition to actual credit losses. ACT recorded a reversal of the expected credit loss
impairment provision of $24.9 million for the year ended December 31, 2021, while in the year
ended December 31, 2020 there was an increase of $26.6 million in the expected credit loss
impairment provision. In addition, for the year ended December 31, 2020, depreciation,
amortization and impairment charges included an equipment write-off of $48 million related to
the Solana storage system with no corresponding amount in the current period.
Other Operating Expenses
The following table details our other operating expenses for the years ended December 31, 2021
and 2020:
Other operating expenses
Raw materials
Leases and fees
Operation and maintenance
Independent professional
services
Supplies
Insurance
Levies and duties
Other expenses
Total
Year ended December 31,
2021
2020
$ in millions
70.7
9.3
154.0
% of revenue
5.8%
0.8%
12.7%
$ in millions
7.8
2.6
110.9
% of revenue
0.8%
0.3%
10.9%
39.2
40.8
45.4
29.9
25.0
414.3
3.2%
3.4%
3.8%
2.5%
2.1%
34.2%
40.2
27.9
37.6
39.8
9.9
276.7
4.0%
2.8%
3.7%
3.9%
1.0%
27.3%
Other operating expenses increased by 49.7% to $414.3 million for the year ended December 31,
2021, compared to $276.7 million for the year ended December 31, 2020, mainly due to higher raw
material costs corresponding to the aforementioned Rioglass non-recurrent solar project.
Other operating expenses also increased due to higher operation and maintenance costs mainly
caused by the contribution of the recently consolidated assets for $17.9 million and higher costs at
17
ACT, since operation and maintenance costs are higher in this asset in the quarters preceding a
major overhaul, which is scheduled to be performed at the beginning of 2022.
In addition, the cost of supplies increased mainly because part of our supply costs are related to
the electricity market prices, which have increased in 2021 compared to the previous year.
Operating Profit
As a result of the above-mentioned factors, operating profit decreased by 5.1% to $353.9 million
for the year ended December 31, 2021, compared with $373.1 million for the year ended December
31, 2020.
Financial Income and Financial Expense
Financial income and financial expense
Financial income
Financial expense
Net exchange differences
Other financial income, net
Financial expense, net
Financial Income
Year ended December 31,
2021
2020
$ in millions
2.7
(361.2)
1.9
15.7
(340.9)
7.1
(378.4)
(1.4)
40.9
(331.8)
Financial income decreased to $2.7 million for the year ended December 31, 2021, compared to
$7.1 million for the year ended December 31, 2020, primarily due to a $3.8 million of non-monetary
financial income resulting from the refinancing of the Cadonal project debt in 2020.
Financial Expense
The following table details our financial expense for the years ended December 31, 2021 and 2020:
Financial expense
Interest on loans and notes
Interest rates losses derivatives: cash flow hedges
Total
Year ended December 31,
2020
2021
$ in millions
(302.5)
(58.7)
(361.2)
(316.2)
(62.1)
(378.4)
Financial expense decreased by 4.5% to $361.3 million for the year ended December 31, 2021,
compared to $378.4 million for the year ended December 31, 2020.
The decrease of “Interest on loans and notes” was mainly due to a decrease in interest on loans
indexed to LIBOR and EURIBOR, since the reference rates were lower in the year ended December
31, 2021 compared to the previous year. The decrease was also due to the acquisition of Liberty
Interactive’s equity interest in Solana in August 2020, which caused a decrease of $15.0 million. In
addition, the year ended December 31, 2020 included costs and expenses related to the
prepayment of the Note Issuance Facility 2017. This decrease was partially offset by the
contribution of recently consolidated assets and by interest accruing on the Green Senior Notes
and the Green Exchangeable, which have contributed a full year in 2021, for a total amount of $18.0
million.
18
Interest rate losses on derivatives designated as cash flow hedges correspond primarily to transfers
from equity to financial expense when the hedged item impacts profit and loss. The decrease was
mainly due to lower losses from the Helios 1&2 swap, which was canceled after the Helios 1&2
project debt was refinanced in 2020 with a new fixed rate financing. This decrease was partially
offset by higher losses in swaps hedging loans indexed to LIBOR, as a result of lower reference
rates than in the previous year.
Other Financial Income/(Expense), Net
Other financial income/(expenses)
Other financial income
Other financial losses
Total
Year ended December 31,
2020
2021
$ in millions
32.3
(16.6)
15.7
162.3
(121.4)
40.9
Other financial income/(expense) net, decreased to a net income of $15.7 million for the year ended
December 31, 2021 compared to a net income of $40.9 million for the year ended December 31,
2020.
In the year 2020, Other financial income includes a non-cash gain of $145 million from the
acquisition of Liberty Interactive’s equity interest in Solana, which is the primary reason for the
decrease. Liberty Interactive was the tax equity investor in Solana and although the investment of
Liberty Interactive was in shares, under IFRS it was recorded as liability. In August 2020, we acquired
Liberty Interactive’s equity interest in Solana and recorded a gain corresponding to the difference
between book value of Liberty Interactive’s equity interest in Solana and the total price expected
to be paid to Liberty Interactive. For the year ended December 31, 2021, Other financial income
includes $9.2 million income corresponding to the change in the fair value of the conversion option
of the Green Exchangeable Notes since December 2020 and $7.6 million of income corresponding
to the change in fair value of Kaxu derivatives, for which hedge accounting is not applied. Residual
items are primarily interest on deposits and loans, including non-monetary changes to the
amortized costs of such loans.
The decrease in other financial expenses is primarily due to a one-time non-cash loss of $73.0
million caused by the refinancing of Helios 1&2 in 2020. Other financial expense includes expenses
for guarantees and letters of credit, wire transfers, other bank fees and other minor financial
expenses.
Share of Profit of Associates Carried Under the Equity Method
Share of profit of associates carried under the equity method increased to $12.3 million in the year
ended December 31, 2021 compared to $0.5 million in the year ended December 31, 2020. The
increase was primarily due to the contribution of the recently acquired Vento II and a higher profit
in Honaine.
19
Profit/(loss) Before Income Tax
As a result of the previously mentioned factors, we reported a profit before income tax of $25.3
million for the year ended December 31, 2021, compared to a profit before income tax of $41.8
million for the year ended December 31, 2020.
Income Tax
The reconciliation between the theoretical income tax resulting from applying an average statutory
tax rate to profit before income tax and the actual income tax expense recognized in the
consolidated income statements for the years ended December 31, 2021 and 2020, is as follows:
The effective tax rate differs from the nominal tax rate mainly due to permanent differences and
treatment of tax credits in some jurisdictions.
Profit before tax
Average statutory tax rate
Corporate income tax at average statutory tax rate
Income tax of associates, net
Differences in statutory tax rates
Unrecognised NOLS and deferred tax assets
Purchase of Liberty Interactive’s equity interest in Solana
Other Permanent differences
Other non-taxable income/(expense)
Corporate Income Tax
Year ended December 31,
2020
2021
$ in millions
25.3
25%
(6.3)
3.1
(3.4)
(11.2)
-
(4.1)
(14.3)
(36.2)
41.8
25%
(10.4)
0.1
(0.1)
(37.1)
36.4
(8.9)
(4.7)
(24.9)
For the year ended December 31, 2021, the overall effective tax rate was different than the statutory
rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the U.K. entities and
to provisions recorded for potential tax contingencies.
For the year ended December 31, 2020, the overall effective tax rate was different than the average
statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the U.K.
entities, partially offset by the non-taxable gain recorded in the consolidated financial statements
on the purchase of Liberty´s Interactive equity interest in Solana.
Profit Attributable to Non-Controlling Interests
Profit attributable to non-controlling interests was $19.2 million for the year ended December 31,
2021 compared to $4.9 million for the year ended December 31, 2020. Profit attributable to non-
controlling interests corresponds to the portion attributable to our partners in the assets that we
consolidate (Kaxu, Skikda, Solaben 2 & 3, Solacor 1 & 2, Seville PV, Chile PV 1, Chile PV 2 and
Tenes). The increase is due to higher profits at Kaxu and Skikda, as well as to the consolidation of
Tenes since the second quarter of 2020.
20
Profit / (Loss) Attributable to the Parent Company
As a result of the previously mentioned factors, loss attributable to the parent company was $30.1
million for the year ended December 31, 2021, compared to a profit of $12.0 million for the year
ended December 31, 2020.
Our Segment Reporting
We organize our business into the following three geographies where the contracted assets and
concessions are located: North America, South America and EMEA. In addition, we have identified
four business sectors based on type of activity: renewable energy, efficient natural gas and heat,
transmission and water. We report our results in accordance with both criteria. Our Efficient natural
gas and heat segment was renamed to include Calgary District Heating which has been
consolidated since its acquisition in May 2021.
In our segment discussion, we use Adjusted EBITDA, which is an Alternative Performance Measure.
Our management believes Adjusted EBITDA is useful to investors and other users of our financial
statements in evaluating our operating performance, as it provides them with an additional tool to
compare business performance across companies and across periods. This measure is widely used
by investors to measure a company’s operating performance, without regard to items such as
interest expense, taxes, depreciation and amortization, which can vary substantially from company
to company depending upon accounting methods and book value of assets, capital structure and
the method by which assets were acquired. This measure is widely used by other companies in our
industry. Our management uses Adjusted EBITDA as a measure of operating performance to assist
in comparing performance from period to period and we aim to use it on a consistent basis moving
forward and to readily view operating trends, as a measure for planning and forecasting overall
expectations and for evaluating actual results against such expectations, as well as in
communications with our Board of Directors, shareholders, creditors, analysts and investors
concerning our financial performance.
Year ended December 31,
2021
2020
Revenue by geography
North America
South America
EMEA
Total revenue
$ in millions
395.8
155.0
660.9
1,211.7
% of revenue
$ in millions
% of revenue
32.7%
12.9%
54.5%
100.0%
330.9
151.5
530.9
1,013.3
32.6%
15.0%
52.4%
100%
Adjusted EBITDA by geography
North America
South America
EMEA
Adjusted EBITDA(1)
Note:
Year ended December 31,
2021
2020
$ in millions
311.8
119.6
393.0
824.4
% of revenue
78.8%
77.2%
59.5%
68.0%
$ in millions
279.4
120.0
396.7
796.1
% of revenue
84.4%
79.2%
74.7%
78.6%
(1) Adjusted EBITDA is calculated as profit/(loss) for the year attributable to the parent company, after adding back loss/(profit)
attributable to non-controlling interest, income tax expense, financial expense (net), depreciation, amortization and impairment
charges of entities included in the Annual Consolidated Financial Statements and Depreciation and amortization, financial expense
and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Adjusted EBITDA previously excluded share
of profit/(loss) of associates carried under the equity method and did not include depreciation and amortization, financial expense
21
and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Prior periods have been presented
accordingly. Adjusted EBITDA is not a measure of performance under IFRS as issued by the IASB and you should not consider
Adjusted EBITDA as an alternative to operating income or profits or as a measure of our operating performance, cash flows from
operating, investing and financing activities or as a measure of our ability to meet our cash needs or any other measures of
performance under generally accepted accounting principles. We believe that Adjusted EBITDA is a useful indicator of our ability to
incur and service our indebtedness and can assist securities analysts, investors and other parties to evaluate us. Adjusted EBITDA
and similar measures are used by different companies for different purposes and are often calculated in ways that reflect the
circumstances of those companies. Adjusted EBITDA may not be indicative of our historical operating results, nor is it meant to be
predictive of potential future results. See Financial Measures (see note 4 to the Consolidated Financial Statements).
Volume by geography
North America (GWh)(1)
North America availability(1)
South America (GWh)(2)
South America availability
EMEA (GWh)
EMEA availability
Volume produced/availability
Year ended December 31,
2021
2020
4,818
100.6%
722
100.0%
1,407
97.9%
3,908
102.1%
667
100.0%
1,243
100.1%
Note:
(1) GWh produced includes 30% of the production from Monterrey and our 49% of Vento II wind portfolio production
since its acquisition
Includes curtailment production in wind assets for which we receive compensation
(2)
North America
Revenue increased by 19.6% to $395.8 million for the year ended December 31, 2021, compared
to $330.9 million for the year ended December 31, 2020. The increase was mainly due to the
contribution from the recently acquired assets, Coso and Calgary. The increase was also caused by
higher revenue at ACT mainly due to the higher revenue in the portion of the tariff related to
operation and maintenance services, driven by higher operation and maintenance costs for year
ended December 31, 2021. This increase was partially offset by a 2.4% decrease in revenue at our
solar assets in North America, mainly due to lower radiation in Arizona and lower availability of the
Solana storage system, as previously described.
Adjusted EBITDA increased by 11.6% to $311.8 million for the year ended December 31, 2021,
compared to $279.4 million for the year ended December 31, 2020. Adjusted EBITDA increased due
to the recently acquired assets Coso, Vento II and Calgary. This effect was partially offset by lower
Adjusted EBITDA at our solar assets in North America mainly due to lower revenue and to the
insurance income received in the year 2020 amounting to $5.7 million. Adjusted EBITDA was also
lower at ACT due to higher operation and maintenance expenses in 2021. Adjusted EBITDA margin
decreased to 78.8% for the year ended December 31, 2021, compared to 84.4% for year ended
December 31, 2020, mainly due to the events described above and to the lower margins of the
recently acquired assets.
South America
Revenue increased by 2.3% to $155.0 million for the year ended December 31, 2021, compared to
$151.5 million for the year ended December 31, 2020. Adjusted EBITDA remained stable at $119.6
million for the year ended December 31, 2021, compared to $120.0 million for the year ended
22
December 31, 2020. The increase in revenue was primarily due to the contribution of Chile PV 1
and Chile PV 2. This increase was offset by lower revenue and Adjusted EBITDA from our wind
assets in Uruguay, resulting mainly from lower wind resource. Adjusted EBITDA margin decreased
slightly to 77.2% for the year ended December 31, 2021, compared to 79.2% for the year ended
December 31, 2020 mainly due to lower Adjusted EBITDA margins in the assets recently acquired.
EMEA
Revenue increased by 24.5% to $660.9 million for the year ended December 31, 2021, compared
to $530.9 million for the year ended December 31, 2020. On a constant currency basis, revenue for
the year ended December 31, 2021, was $636.9 million, which represents an increase of 20.0%
compared to 2020. On a constant currency basis and excluding the aforementioned Rioglass non-
recurrent solar project, revenue for the year ended December 31, 2021, was $551.5 million, which
represents an increase of 3.9% compared to 2020. The increase was primarily due to higher revenue
at Kaxu, where an unscheduled outage affected production in part of the first quarter of 2020.
Property damage and business interruption were covered by our insurance; however, insurance
proceeds were recorded in “Other operating income”. Revenue also increased due to the
contribution from Tenes, fully consolidated since the second quarter of 2020. At our solar assets in
Spain, revenue decreased by 4.8% on a constant currency basis in spite of higher production in the
period mainly due to a non-cash negative provision related to higher than historical electricity
prices. Electricity market prices have been higher than expected and the regulation establishes a
compensation mechanism under which regulated revenue is revised every three years to reflect the
difference between expected and actual market prices if the difference is higher than a pre-defined
threshold. Current higher market prices in Spain will therefore cause lower regulated revenue to be
received progressively over the remaining regulatory life of our solar assets. As a result, we
recorded a negative provision with no cash impact in the current period for $77 million that reduced
our revenue in 2021. Due to methodology used in the calculation, revenue from sales of electricity
at market prices, net of the provision, decreased by approximately $10 million, which is the main
reason for the decrease in revenue in our solar assets in Spain.
Adjusted EBITDA decreased by 0.9% to $393.0 million for the year ended December 31, 2021,
compared to $396.7 million for the year ended December 31, 2020. On a constant currency basis,
Adjusted EBITDA for the year ended December 31, 2021, was $375.9 million which represents a
decrease of 5.2% compared to 2020. On a constant currency basis and excluding the
aforementioned Rioglass non-recurrent solar project, Adjusted EBITDA for the year ended
December 31, 2021, was $374.9 million which represents a decrease of 5.5% compared to 2020.
This decrease was mainly caused by lower revenue in our solar assets in Spain as previously
explained and to higher supply costs, since the prices are partially linked to electricity prices, and
was partially offset by the contribution of Tenes and the recently acquired assets in Italy as well as
higher Adjusted EBITDA at Kaxu. Adjusted EBITDA margin decreased to 59.5% for the year ended
December 31, 2021, compared to 74.7% for the year ended December 31, 2020, mainly due to
lower margin at the Rioglass non-recurrent solar project and to the higher than usual Adjusted
EBITDA margin in Kaxu in the year 2020 due to insurance proceeds recorded in “Other Operating
Income”.
23
Revenue by business sector
Renewable
Efficient natural gas & heat
Transmission lines
Water
Total revenue
Adjusted EBITDA by business
sector
Renewable energy
Efficient natural gas and heat
Transmission lines
Water
Adjusted EBITDA(1)
Year ended December 31,
2021
2020
$ in
millions
928.5
123.7
105.6
53.9
1,211.7
% of revenue
76.6%
10.2%
8.7%
4.5%
100.0%
$ in
millions
753.1
111.0
106.1
43.1
1,013.3
% of revenue
74.3%
11.0%
10.5%
4.2%
100.0%
Year ended December 31,
2021
2020
$ in millions
% of
Revenue
$ in
millions
% of
revenue
602.6
100.0
83.6
38.2
824.4
64.9%
80.8%
79.5%
70.9%
68.0%
576.3
101.0
87.3
31.5
796.1
76.5%
91.0%
82.3%
73.1%
78.6%
Note:
(1) Adjusted EBITDA is calculated as profit/(loss) for the year attributable to the parent company, after adding back loss/(profit)
attributable to non-controlling interest, income tax expense, financial expense (net), depreciation, amortization and impairment
charges of entities included in the Annual Consolidated Financial Statements and Depreciation and amortization, financial expense
and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Adjusted EBITDA previously excluded share
of profit/(loss) of associates carried under the equity method and did not include depreciation and amortization, financial expense
and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Prior periods have been presented
accordingly. Adjusted EBITDA is not a measure of performance under IFRS as issued by the IASB and you should not consider
Adjusted EBITDA as an alternative to operating income or profits or as a measure of our operating performance, cash flows from
operating, investing and financing activities or as a measure of our ability to meet our cash needs or any other measures of
performance under generally accepted accounting principles. We believe that Adjusted EBITDA is a useful indicator of our ability
to incur and service our indebtedness and can assist securities analysts, investors and other parties to evaluate us. Adjusted EBITDA
and similar measures are used by different companies for different purposes and are often calculated in ways that reflect the
circumstances of those companies. Adjusted EBITDA may not be indicative of our historical operating results, nor is it meant to be
predictive of potential future results. See Financial Measures (see note 4 to the Consolidated Financial Statements).
Volume produced/availability
Year ended December 31,
Volume by business sector
Renewable energy (GWh)(1)
Efficient natural gas & Heat (GWh) (2)
Efficient natural gas & Heat
availability
Transmission lines availability
Water availability
2021
4,655
2,292
100.6%
100.0%
97.9%
2020
3,244
2,574
102.1%
100.0%
100.1%
Note:
(1)
(2)
Includes curtailment production in wind assets for which we receive compensation. Includes our 49% of Vento II
wind portfolio production since its acquisition.
GWh produced includes 30% of the production from Monterrey.
24
Renewable Energy
Revenue increased by 23.3% to $928.5 million for the year ended December 31, 2021, compared
to $753.1 million for the year ended December 31, 2020. On a constant currency basis, revenue for
the year ended December 31, 2021, was $904.4 million, which represents an increase of 20.1%
compared to 2020. On a constant currency basis and excluding the aforementioned Rioglass non-
recurrent solar project, revenue for the year ended December 31, 2021, was $819.1 million, which
represents an increase of 8.8% compared to 2020. Adjusted EBITDA increased by 4.6% to $602.6
million for the year ended December 31, 2021, compared to $576.3 million for 2020. On a constant
currency basis, Adjusted EBITDA for the year ended December 31, 2021, was $585.5 million, which
represents an increase of 1.6% compared to 2020. On a constant currency basis and excluding the
aforementioned Rioglass non-recurrent solar project, Adjusted EBITDA for the year ended
December 31, 2021, was $584.5 million, a 1.4% increase compared to the previous year. The
increase in revenue and Adjusted EBITDA was primarily due to the contribution from the recently
acquired assets Coso, Vento II, Chile PV1, Chile PV2, Italy PV 1, Italy PV 2 and Italy PV 3. Revenue
and Adjusted EBITDA also increased due to higher revenue at Kaxu as previously explained. The
increase in revenue was partially offset by the decrease in revenue in Spain with no cash impact in
the current period, as previously explained. The increase in Adjusted EBITDA was partially offset by
higher supply costs in Spain since the prices are partially linked to electricity prices. Adjusted
EBITDA margin decreased to 64.9% for the year ended December 31, 2021, from 76.5% for the year
ended December 31, 2020, mainly due to lower margin at the non-recurrent one-off project
previously described, higher than usual Adjusted EBITDA margin at Kaxu in 2020 due to insurance
proceeds recorded in “Other Operating Income” and lower Adjusted EBITDA margins at some of
the recently acquired assets.
Efficient Natural Gas and Heat
Revenue increased by 11.4% to $123.7 million for the year ended December 31, 2021, compared
to $111.0 million for the year ended December 31, 2020, while Adjusted EBITDA decreased by 1.0%
to $100.0 million for the year ended December 31, 2021, compared to $101.0 million for the year
ended December 31, 2020. At ACT, operation and maintenance costs are higher in the quarters
preceding any major maintenance works, the next of which is scheduled at the beginning of 2022.
Revenue increased due to higher operation and maintenance costs, since there is a portion of
revenue related to operation and maintenance services plus a margin. Revenue also increased due
to the contribution from the recently acquired Calgary district heating asset. Adjusted EBITDA
margin decreased due to these higher operation and maintenance costs.
Transmission Lines
Revenue remained stable at $105.6 million for the year ended December 31, 2021, compared to
$106.1 million for the year ended December 31, 2020. Adjusted EBITDA also remained stable at
$83.6 million for the year ended December 31, 2021 compared to $87.3 million for the year ended
December 31, 2020.
Water
Revenue increased by 25.0% to $53.9 million for the year ended December 31, 2021, compared to
$43.1 million for the year ended December 31, 2020. Adjusted EBITDA increased by 21.3% to $38.2
million for the year ended December 31, 2021, compared to $31.5 million for the year ended
25
December 31, 2020. The increases were mainly due to the contribution from Tenes, which we
started to consolidate on May 31, 2020. Adjusted EBITDA margin was stable compared to the
previous year.
Liquidity and Capital Resources
Our principal liquidity and capital requirements consist of the following:
• debt service requirements on our existing and future debt;
• cash dividends to investors; and
• investments in new assets and companies and operations.
As a normal part of our business, depending on market conditions, we will from time to time
consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in
our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events
may cause us to seek additional debt or equity financing in future periods. There can be no
guarantee that financing will be available on acceptable terms or at all. Debt financing, if available,
could impose additional cash payment obligations and additional covenants and operating
restrictions. In addition, any of the items discussed in detail under the “Principal risks and
uncertainties” section of this report.
Liquidity Position
Corporate liquidity
Cash and cash equivalents at Atlantica Sustainable
Infrastructure, plc, excluding subsidiaries
Revolving credit facility availability
Total Corporate liquidity
Liquidity at project companies
Restricted cash
Non-restricted cash
Total cash at project companies
Year ended December 31,
2021
2020
$ in millions
88.3
440.0
528.3
254.3
280.1
534.4
335.2
415.0
750.2
279.8
253.5
533.3
Cash at the project level includes $254.3 million and $279.8 million restricted cash balances as of
December 31, 2021 and 2020, respectively. Restricted cash consists primarily of funds required to
meet the requirements of certain project debt arrangements. In the case of Solana, part of the
restricted cash was being used and is expected to be used for equipment replacement. Restricted
cash also includes Kaxu’s cash balance, given that the project financing of this asset is under a
theoretical event of default.
Non-restricted cash at project companies includes among others, the cash that is required for day-
to-day management of the companies, as well as amounts that are earmarked to be used for debt
service in the future.
As of December 31, 2021, $10 million of letters of credit were outstanding under the Revolving
Credit Facility and we had no borrowings. In March 2021 we increased the notional amount of this
facility from $425 million to $450 million and extended its maturity to December 2023. As a result,
26
as of December 30, 2021 $440 million was available under our Revolving Credit Facility. As of
December 31, 2020, we had no borrowings, $10 million of letters of credit were outstanding and
$415 million was available under our Revolving Credit Facility.
Management believes that the Company's liquidity position, cash flows from operations and
availability under its revolving credit facility will be adequate to meet the Company's financial
commitments and debt obligations; growth, operating and maintenance capital expenditures; and
dividend distributions to shareholders. Management continues to regularly monitor the Company's
ability to finance the needs of its operating, financing and investing activities within the guidelines
of prudent balance sheet management.
Credit Ratings
Credit rating agencies rate us and part of our debt securities. These ratings are used by the debt
markets to evaluate our credit risk. Ratings influence the price paid to issue new debt securities as
they indicate to the market our ability to pay principal, interest and dividends.
In March and April 2021 both Fitch and S&P upgraded Atlantica’s corporate rating to BB+. The
following table summarizes our credit ratings as of December 31, 2021. The ratings outlook is stable
for S&P and Fitch.
Atlantica Sustainable Infrastructure corporate rating
Senior secured debt
Senior unsecured debt
Sources of Liquidity
S&P
BB+
BBB-
BB
Fitch
BB+
BBB-
BB+
We expect our ongoing sources of liquidity to include cash on hand, cash generated from our
operations, project debt arrangements, corporate debt and the issuance of additional equity
securities, as appropriate, and given market conditions. Our financing agreements consist mainly
of the project-level financing for our various assets and our corporate debt financings, including
our Green Exchangeable Notes, the Note Issuance Facility 2020, the 2020 Green Private Placement,
the Green Senior Notes, the Revolving Credit Facility and our commercial paper program.
A) Corporate Debt Agreements
▪ Green Senior Notes
On May 18, 2021, we issued the Green Senior Notes with an aggregate principal amount of
$400 million due in 2028. The Green Senior Notes bear interest at a rate of 4.125% per year,
payable on June 15 and December 15 of each year, commencing December 15, 2021, and will
mature on June 15, 2028.
The Green Senior Notes were issued pursuant to an Indenture, dated May 18, 2021, by and
among Atlantica as issuer, Atlantica Peru S.A., ACT Holding, S.A. de C.V., Atlantica
Infraestructura Sostenible, S.L.U., Atlantica Investments Limited, Atlantica Newco Limited,
Atlantica North America LLC, as guarantors, BNY Mellon Corporate Trustee Services Limited,
as trustee, The Bank of New York Mellon, London Branch, as paying agent, and The Bank of
New York Mellon SA/NV, Dublin Branch, as registrar and transfer agent.
27
Our obligations under the Green Senior Notes rank equal in right of payment with our
outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement,
the Note Issuance Facility 2020 and the Green Exchangeable Notes.
▪ Green Exchangeable Notes
On July 17, 2020, we issued 4.00% Green Exchangeable Notes amounting to an aggregate
principal amount of $100 million due in 2025. On July 29, 2020, we issued an additional $15
million aggregate principal amount in Green Exchangeable Notes. The Green Exchangeable
Notes are the senior unsecured obligations of Atlantica Jersey, a wholly owned subsidiary of
Atlantica, and fully and unconditionally guaranteed by Atlantica on a senior, unsecured basis.
The notes mature on July 15, 2025, unless they are repurchased or redeemed earlier by
Atlantica or exchanged, and bear interest at a rate of 4.00% per annum.
Noteholders may exchange all or any portion of their notes at their option at any time prior to
the close of business on the scheduled trading day immediately preceding April 15, 2025, only
during certain periods and upon satisfaction of certain conditions. Noteholders may exchange
all or any portion of their notes during any calendar quarter if the last reported sale price of
Atlantica’s ordinary shares for at least 20 trading days during a period of 30 consecutive trading
days, ending on the last trading day of the immediately preceding calendar quarter is greater
than 120% of the exchange price on each applicable trading day. On or after April 15, 2025,
until the close of business on the second scheduled trading day immediately preceding the
maturity date thereof, noteholders may exchange any of their notes at any time, at the option
of the noteholder. Upon exchange, the notes may be settled, at our election, into Atlantica
ordinary shares, cash or a combination of both. The initial exchange rate of the notes is 29.1070
ordinary shares per $1,000 of the principal amount of notes (which is equivalent to an initial
exchange price of $34.36 per ordinary share). The exchange rate is subject to adjustment upon
the occurrence of certain events.
Our obligations under the Green Exchangeable Notes rank equal in right of payment with our
outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement,
the Note Issuance Facility 2020 and the Green Senior Notes.
▪ Note Issuance Facility 2020
On July 8, 2020, we entered into the Note Issuance Facility 2020, a senior unsecured euro-
denominated financing with a group of funds managed by Westbourne Capital as purchasers
of the notes issued thereunder for a total amount of approximately $159 million (€140 million).
The notes under the Note Issuance Facility 2020 were issued on August 12, 2020 and are due
on August 12, 2027. Interest accrues at a rate per annum equal to the sum of the 3-month
EURIBOR plus a margin of 5.25% with a floor of 0% for the EURIBOR. We have entered into a
cap at 0% for the EURIBOR with 3.5 years maturity to hedge the variable interest rate risk.
Our obligations under the Note Issuance Facility 2020 rank equal in right of payment with our
outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement,
the Green Exchangeable Notes and the Green Senior Notes. The notes issued under the Note
Issuance Facility 2020 are guaranteed on a senior unsecured basis by our subsidiaries Atlantica
Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica
Investments Limited, Atlantica Newco Limited and Atlantica North America LLC.
28
▪ 2020 Green Private Placement
On March 20, 2020, we entered into a senior secured note purchase agreement with a group
of institutional investors as purchasers providing for the 2020 Green Private Placement. The
transaction closed on April 1, 2020 and we issued notes for a total principal amount of €290
million (approximately $330 million), maturing on June 20, 2026. Interest accrues at a rate per
annum equal to 1.96%. If at any time the rating of these senior secured notes is below
investment grade, the interest rate thereon would increase by 100 basis points until such notes
are again rated investment grade.
Our obligations under the 2020 Green Private Placement rank equal in right of payment with
our outstanding obligations under the Revolving Credit Facility, the Note Issuance Facility 2020
and the Green Senior Notes. Our payment obligations under the 2020 Green Private Placement
are guaranteed on a senior secured basis by our subsidiaries Atlantica Infraestructura
Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited,
Atlantica Newco Limited and Atlantica North America LLC. The 2020 Green Private Placement
is also secured with a pledge over the shares of the subsidiary guarantors, the collateral of
which is shared with the lenders under the Revolving Credit Facility.
▪ Note Issuance Facility 2019
On April 30, 2019, we entered into the Note Issuance Facility 2019, a senior unsecured financing
with a group of funds managed by Westbourne Capital as purchasers of the notes issued
thereunder for a total amount of €268 million, approximately $305 million. In June 2021 we
prepaid the Note Issuance Facility 2019 in full before maturity in accordance with the terms
thereof, with the proceeds of the Green Senior Notes.
▪ Revolving Credit Facility
On May 10, 2018, we entered into a $215 million Revolving Credit Facility with a syndicate of
banks. The Revolving Credit Facility was increased by $85 million to $300 million on January
25, 2019 and was further increased by $125 million (to a total limit of $425 million) on August
2, 2019. On March 1, 2021, this facility was further increased by $25 million (to a total limit of
$450 million) and the maturity date was extended to December 31, 2023. In addition, the
lenders under the Revolving Credit Facility have the option to extend the maturity date of all
or any portion of their commitments and/or loans for additional consecutive 365-day periods,
upon request from us subject to certain conditions. Under the Revolving Credit Facility, we are
also able to request the issuance of letters of credit, which are subject to a sublimit of $100
million that are included in the aggregate commitments available under the Revolving Credit
Facility.
Loans under the Revolving Credit Facility accrue interest at a rate per annum equal to: (A) for
Eurodollar rate loans, LIBOR plus a percentage determined by reference to our leverage ratio,
ranging between 1.60% and 2.25% and (B) for base rate loans, the highest of (i) the rate per
annum equal to the weighted average of the rates on overnight U.S. Federal funds transactions
with members of the U.S. Federal Reserve System arranged by U.S. federal funds brokers on
such day plus 1 /2 of 1.00%, (ii) the prime rate of the administrative agent under the Revolving
Credit Facility and (iii) LIBOR plus 1.00%, in any case, plus a percentage determined by
reference to our leverage ratio, ranging between 0.60% and 1.00%.
29
Our obligations under the Revolving Credit Facility rank equal in right of payment with our
outstanding obligations under the 2020 Green Private Placement, the Note Issuance Facility
2020, the Green Exchangeable Notes and the Green Senior Notes. Our payment obligations
under the Revolving Credit Facility are guaranteed on a senior secured basis by Atlantica
Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica
Investments Limited, Atlantica Newco Limited and Atlantica North America LLC. The Revolving
Credit Facility is also secured with a pledge over the shares of the subsidiary guarantors, the
collateral of which is shared with the holders of the notes issued under the 2020 Green Private
Placement.
▪ Other Credit Lines
In July 2017, we signed a line of credit with a bank for up to €10.0 million (approximately $11.4
million) which was available in euros or U.S. dollars. On June 30, 2021, the maturity was
extended to July 1, 2023. Amounts drawn accrue interest at a rate per annum equal to the sum
of the 3-month EURIBOR or LIBOR, plus a margin of 2%, with a floor of 0% for the EURIBOR or
LIBOR. As of December 31, 2021, $8.2 million were drawn down.
In December 2020, we also entered into a loan with a bank for €5 million ($5.7 million). The
maturity date is December 4, 2025. The loan accrues interest at a rate per annum equal to
2.50%.
▪ Commercial Paper Program
On October 8, 2019, we filed a euro commercial paper program with the Alternative Fixed
Income Market (MARF) in Spain. The program had an original maturity of twelve months and
has been extended twice, for annual periods. The program allows Atlantica to issue short term
notes for up to €50 million, with such notes having a tenor of up to two years. As of December
31, 2021, we had €21.5 million ($24.4 million) issued and outstanding under the Commercial
Paper Program at an average cost of 0.36%.
▪ Covenants, restrictions and events of default
The Note Issuance Facility 2020, the 2020 Green Private Placement, the Green Senior Notes
and the Revolving Credit Facility contain covenants that limit certain of our and the guarantors’
activities. The Note Issuance Facility 2020, the 2020 Green Private Placement and the Green
Exchangeable Notes also contain customary events of default, including a cross-default, with
respect to our indebtedness, indebtedness of the guarantors thereunder and indebtedness of
our material non-recourse subsidiaries (project-subsidiaries) representing more than 25% of
our cash available for distribution distributed in the previous four fiscal quarters, which in
excess of certain thresholds could trigger a default. Additionally, under the 2020 Green Private
Placement, the Revolving Credit Facility and the Note Issuance Facility 2020 we are required
to comply with a leverage ratio of our corporate indebtedness excluding non-recourse project
debt to our cash available for distribution of 5.00:1.00 (which may be increased under certain
conditions to 5.50:1.00 for a limited period in the event we consummate certain acquisitions).
30
At-The-Market Program
On August 3, 2021, we established an “at-the-market program” and entered into the Distribution
Agreement with J.P. Morgan Securities LLC, as sales agent, under which we may offer and sell from
time to time up to $150 million of our ordinary shares, including in “at-the-market” offerings under
our universal shelf registration statement on Form F-3 and a prospectus supplement that we filed
on August 3, 2021. During the third and fourth quarters of 2021, we have issued 1.6 million shares
under the program at an average market price of $38.43 per share pursuant to the Distribution
Agreement, representing gross proceeds of $62 million and net proceeds of $61.4 million.
Use of Liquidity and Capital Requirements
A) Debt service
Principal payments on debt as of December 31, 2021, are due in the following periods according
to their contracted maturities:
$ in millions
Project Debt
Corporate Debt
Total Debt
2022
2023
2024
2025
2026
Subsequent
Years
Total
335.4
27.9
363.3
356.0
10.1
366.1
369.5
1.9
371.4
498.7(1)
106.2
604.9
411.5
327.1
738.6
3,065.1
550.0
3,615.1
5,036.2
1,023.1
6,059.3
Note:
(1)
Includes the outstanding amount of the Green Project Finance from the sub-holding company of Solaben 1 & 6 and Solaben 2 &
3. This facility is 25% progressively amortized over its 5-year term and the remaining 75% is expected to be refinanced before
maturity.
The project debt maturities will be repaid with cash flows generated from the projects in respect
of which that financing was incurred.
B) Contractual obligations
In addition to the principal repayment debt obligations detailed above, we have other contractual
obligations to make future payments.
Purchase commitments
Accrued interest estimate during
the useful life of loans
Total
Up to one
year
Between
one and
three years
Between
three and
five years
Subsequent
years
$ in millions
1,570.8
79.2 191.2
159.3
1,141.1
2,029.4
267.6 497.6
427.2
837.0
Purchase obligations include agreements for the purchase of goods or services that are enforceable
and legally binding on the combined group and that specify all significant terms, including fixed or
minimum quantities to be purchased, fixed, minimum or variable price provisions and the
appropriate timing of the transactions. In the first quarter of 2022, we have reached an agreement
to internalize some of our long-term operation and maintenance contracts and to reduce the
duration of other contracts.
Accrued interest estimate during the useful life of loans represents the estimation for the total
amount of interest to be paid or accumulated over the useful life of the loans, notes and bonds,
taking into consideration the hedging contracts.
31
C) Cash dividends to investors
We intend to distribute a significant portion of our cash available for distribution to shareholders
on an annual basis, less all cash expenses including corporate debt service and corporate general
and administrative expenses and less reserves for the prudent conduct of our business (including,
among other things, dividend shortfall as a result of fluctuations in our cash flows), on an annual
basis. We intend to distribute a quarterly dividend to shareholders. Our Board of Directors may, by
resolution, amend the cash dividend policy at any time. The determination of the amount of the
cash dividends to be paid to shareholders will be made by our Board of Directors and will depend
upon our financial condition, results of operations, cash flow, long-term prospects and any other
matters that our Board of Directors deem relevant.
Our cash available for distribution is likely to fluctuate from quarter to quarter and, in some cases,
significantly as a result of the seasonality of our assets, the terms of our financing arrangements,
maintenance and outage schedules, among other factors. Accordingly, during quarters in which
our projects generate cash available for distribution in excess of the amount necessary for us to
pay our stated quarterly dividend, we may reserve a portion of the excess to fund cash distributions
in future quarters. During quarters in which we do not generate sufficient cash available for
distribution to fund our stated quarterly cash dividend, if our Board of Directors so determines, we
may use retained cash flow from other quarters, and other sources of cash.
Declared
Feb 26, 2021
May 4, 2021
July 30, 2021
Nov 9, 2021
Feb 25, 2022
Record
March 12, 2021
May 31, 2021
Aug 31, 2021
Nov 30, 2021
March 14, 2022
Paid
March 22, 2021
June 15, 2021
Sep 15, 2021
Dec 15, 2021
March 25, 2022
Amount (US$)
0.42
0.43
0.43
0.435
0.44
D) Investments and Acquisitions
The acquisitions detailed in the section “Events during the period, Investments” of this Consolidated
Annual Report have been part of our use of liquidity in 2021 and are expected to be part of our
use of liquidity in 2022. In addition, we have made investments in assets which are currently under
development or construction. We expect to continue making investments in assets in operation or
under construction or development to grow our portfolio.
E) Capital Expenditures
In some cases, maintenance capex is included in the operation and maintenance agreement,
therefore it is included in operating expenses within our Income Statement.
Principal Risks and Uncertainties
The Board is responsible for the effective oversight of the Company’s risk management framework,
and corporate governance processes.
Risk management day-to-day activities are led by the Head of Risk Management who reports to
the Audit Committee. The Audit Committee responsibilities include reviewing the effectiveness of
the Company’s Internal Controls and Risk Management, evaluating Compliance, Whistleblowing
and Anti-Fraud policies, as well as procedures and tools implemented by the Company.
32
Atlantica has developed a risk analysis methodology based on ISO 31000 standard and on common
market practices. The risk analysis comprises the following steps:
- Risk Identification (ex-ante): identify causes that may turn into a risk situation, classifying those
potential causes as natural, human, intentioned, accidental and technological.
- Risk Assessment: evaluate the risk considering its likelihood and potential impact.
- Risk Management Plan: focused on mitigating risk effects. To prevent unexpected events,
Atlantica’s corporate team in collaboration with geographic VPs, analyze unexpected risks in
each of our geographies and define a Prevention and Mitigation Plan for each risk.
The Head of Risk Management coordinates the risk identification, assessment, monitoring and
mitigation effort principally with the geographic VPs. The resulting Risk Heat Map is periodically
reviewed and approved by the senior management team including Atlantica’s VPs, the Chief
Financial Officer and the Chief Executive Officer.
Atlantica’s risk management process follows a multidisciplinary approach to identifying risks in
different areas, assigning probability distributions and estimating potential economic impact in
order to develop action plans to mitigate the main risks facing the Company. The process includes
completing a questionnaire regarding risk indicators and economic impact. An output of the
process includes reporting on each major risk including the risk assessment, mitigation strategies,
deadlines and responsible parties. Risks are re-assessed on a quarterly basis.
The Finance Committee monitors market risks such as, interest rate and foreign exchange risk, and
is also responsible for monitoring and managing liquidity risks.
In addition, the Operations Department is responsible for monitoring and preventing health and
safety, operational and environmental risks.
The Company and its underlying assets are subject to a number of risks including operational,
regulatory, financial and other. The processes and systems implemented have been designed to
mitigate those risks to the extent possible. We include the following table as a summary of some
of those risks and action plans carried out to mitigate them:
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
Risks related to our Business and our
Assets
Our failure to maintain safe work
to
environments may expose us
significant financial losses, as well as
civil and criminal liabilities.
The facilities we operate often put our
employees and others, including those of
our subcontractors, in close proximity
large pieces of mechanized
with
vehicles,
equipment,
manufacturing or industrial processes,
electrical equipment, heat or
liquids
stored under pressure or at high
moving
In 2021 all our key health and safety indicators
met annual targets and remained below sector
average. 2021 GFI was 6.0 and FWLI was 2.3,
in 2020 (see
compared to 5.0 and 1.4
“Occupational Health and Safety”).
- The short-term variable compensation of
our CEO, geographic VPs, Head of
Operations and other members of our
management include Health and Safety
targets.
Although our ratios remain low, the FWLI and
GFI increased with respect to the previous
year, which is mostly due to safety accidents at
one of the assets acquired in 2021. We are
working on
recently
acquired assets in order to implement our
strong safety culture.
integration of
the
- Atlantica has implemented a Health and
Safety program; which is key to mitigate
this risk and has been in place since 2017.
We
regularly audit our assets and
implement new best practices based on
lessons learned in other assets, as well as
from peers, contractors and suppliers
We continue to closely monitor all accidents
incidents and expect to set more
and
33
- We have a Safety App for mobile devices
subcontractors’
employees
and
for
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
regulated
temperatures and highly
materials. On most projects and at most
facilities, we, together in some cases with
the operation and maintenance supplier,
are responsible for safety. Accordingly, we
must implement safe practice and safety
procedures, which are also applicable to
on-site subcontractors.
if
If we or the operation and maintenance
supplier fail to design and implement such
practices and procedures or
the
practices and procedures are ineffective or
if our operation and maintenance service
providers or other suppliers do not follow
them, our employees and others may
become injured. This could result in civil
the
and
Company.
liabilities against
criminal
ambitious targets over time.
workers to use.
issued new
- To integrate recently acquired assets we
have performed specific external and
safety
internal audits,
campaigns and bulletins, performed
safety
and
inspections, procedures
training, and extended health and safety
bonuses to certain employees to improve
supervision.
- See section “Occupational Health and
Safety” for a comprehensive description of
our initiatives.
- Senior management and the corporate
operations department take ownership of
this risk.
work
We are also subject to regulations dealing
with occupational health and safety and
procedures
environmental
throughout our organization. The failure
to comply with such regulations could
subject us to reputational damage and/or
liability. In addition, we may incur liability
based on allegations of illness or disease
resulting from exposure of employees or
other persons to hazardous materials or
equipment that we handle or are present
in our workplaces.
Risks related to our Business and our
Assets
Counterparty credit risk
Not being able to collect our revenues.
terminate
they otherwise
If any of our clients are unable or unwilling
to fulfil their contractual obligations or if
they refuse to accept delivery of power or
if
such
agreements prior to their expiration, or if
re-negotiated under a
prices were
bankruptcy situation or under financial
difficulty of the client, or if they delay
payments,
financial
condition, results of operations and cash
flow may be materially adversely affected.
business,
our
limited
(“S&P”), Caa1
The credit rating of Eskom has weakened in
the last few years and is currently CCC+ from
from
S&P Global Rating
Moody’s Investor Service Inc. (“Moody’s”) and
B from Fitch Ratings Inc. (“Fitch”). Eskom is the
off-taker of our Kaxu solar plant, a state-
liability company, wholly
owned,
owned by the government of the Republic of
South Africa. Eskom’s payment guarantees to
our Kaxu solar plant are underwritten by the
South African Department of Energy, under
the terms of an implementation agreement.
The credit ratings of the Republic of South
Africa have also weakened and as of the date
of this report are BB-/Ba2/BB- by S&P,
Moody’s and Fitch, respectively.
the
to our
In the case of Kaxu, Eskom’s payment
solar plant are
guarantees
underwritten by
South African
Department of Energy. The credit rating of
the Republic of South Africa as of the date
of this report BB-/Ba2/BB- by S&P, Moody’s
and Fitch, respectively. In addition, in 2019
we entered into a political risk insurance
agreement
the Multinational
Investment Guarantee Agency for Kaxu. The
insurance provides protection for breach of
contract up to $78 million in the event the
South African Department of Energy does
not comply with its obligations as guarantor.
This insurance policy does not cover credit
risk.
with
In addition, Pemex’s credit rating has also
weakened and is currently BBB, Ba3 and BB-
from S&P, Moody’s and Fitch, respectively. We
have been experiencing delays
in client
collections since the second half of 2019 which
In the case of Pemex, during 2021 we have
maintained a pro-active approach including
fluent dialogue with our client.
The diversification by geography and
business sector helps to diversify credit risk
34
Assessment of Change in Risk
Year-on-Year
have been significant in certain quarters.
The reduction in the cost of renewable energy
and the intense competition has contributed
to a reduction in electricity prices paid by off-
takers. In light of these market conditions, our
off-takers may try to renegotiate or terminate
our PPAs.
During 2021, our assets have generally
performed fairly in line with expectations.
Production has increased in our renewable
energy assets and our transmission lines,
efficient natural gas and water assets have
maintained high availability levels.
However, in Solana, availability in the storage
system was lower than expected in 2021 due
to the improvements and replacements that
we are carrying out after leaks were identified
in the first quarter of 2020. These works have
impacted production in 2021 and are expected
to impact production in 2022 as we are
experiencing delays due
to COVID-19
restrictions and delays from subcontractors.
Regarding our risk relating to insurance, in
2021 the insurance program was split into two:
U.S. and rest of the world.
Risk / Impact
Risks Related to Our Business and Our
Assets:
Poor performance of assets
Loss of revenues and cash flows at the
project
which
subsequently impacts cash returns to the
Company.
company
level,
In addition, Atlantica relies on third
parties for the supply of services and
equipment,
technologically
complex equipment and software, and
operation and maintenance services.
including
result
if damaged, could
In recent years we have filed several
insurance claims. Our property damage
and business interruption policies have
significant deductibles and exclusions
with respect to some key equipment
which,
in
financial losses and business interruption.
Moreover, insurance market terms and
conditions have been becoming more
and more onerous over the last few years
and insurance companies are requiring
some companies in our sector to retain a
portion of the overall risks instead of
transferring 100% of those risks to the
insurers. As a result, we have retained a
portion of our risks and may need to
increase this percentage in the future. If
equipment failed in one of our assets and
this equipment was part of the insurance
exclusion or was part of the risk that we
have retained, we would need to assume
the repairs and business interruption
costs.
Furthermore, some of our project finance
agreements and PPAs include specific
conditions regarding insurance coverage
that we may need to modify if we are
unable to obtain insurance. If we did not
obtain a waiver from our project finance
lenders accepting these modifications, an
35
Mitigation of Risk
exposure by diluting our exposure to a
single client.
The local teams take ownership in managing
this risk.
- Dedicated supervisory and management
teams in place at our assets.
- Reporting and monitoring systems in
place.
responsible
- Asset Managers are
for
completing checklists designed to identify
operational,
and
engineering, risks, improve efficiency and
reduce costs at asset level.
maintenance
- Our corporate operations team performs
regular operational, maintenance and
risks,
engineering audits
implement and follow-up on mitigation
plans and best practices and share lessons
learned from other assets.
identify
to
to our
- Risk-related training courses are regularly
provided
and
subcontractors to improve their skills,
identify new risk management practices
and report them to management.
employees
- Operation and maintenance can be either
carried out in-house or contracted with
specialists. We
internalized
operation and maintenance services in
some of our assets. We have also tracked
down
and
maintenance opportunities in the market.
alternative
operation
have
- On-going
of
analysis
insurance
alternatives in the market and on-going
dialogue with
companies
present
in our program as well as
alternative insurers.
insurance
- The
teams,
and
the operations
local
department
insurance
the
department take ownership in managing
this risk.
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
event of default could be triggered by our
lenders due to non-compliance with the
terms of the project finance agreement. If
we were to incur a serious uninsured loss
or a loss that significantly exceeded the
coverage
in our
limits established
insurance policies or we were not able to
modify coverage conditions, this could
have a material adverse effect on our
business, financial condition, results of
operations and cash flows. In addition,
our insurance policies are subject to
periodic renewals and the terms of the
renewal
our
counterparties. If we were unable to
renew our insurance coverage, we would
the
not be
requirements of our project
finance
agreements and our PPAs, which could
have a material adverse effect on our
business, financial condition, results of
operations and cash flows.
compliance with
reviewed
are
by
in
Risks Related to Our Business and Our
Assets:
Climate change
Climate change is causing an increasing
number of severe, chronic and extreme
weather events, which are a risk to our
facilities and may
In
addition, climate change may cause
transition risks, related to existing and
emerging regulation related to climate
change. These risks include:
impact
them.
- Acute physical. Severe and extreme
weather events include severe winds
and rains, hail, hurricanes, cyclones,
droughts, as well as the risk of fire and
flooding. In particular:
- Severe floods could damage our
solar
lines,
transmission
generation assets or our water
facilities.
our
- Severe winds could cause damage
the solar fields at our solar assets.
- Storms with intense lightning activity
could damage our plants, especially
our wind farms.
- Severe droughts could result in water
that may affect our
restrictions
No significant change.
Acute physical:
- Our geographic VPs and our corporate
team monitor weather
operations
conditions in-real time at each of the
assets to adopt the required protection
measures. For example,
if winds are
forecasted, our solar fields are placed in a
defence mode. In addition, we also have:
- Insurance policies covering: (i) physical
damage and (ii) l business interruption.
- A crisis management procedure defining
specific action plans for all our assets.
- An
automatic
system using
alert
information from U.S. National Agencies
and from local weather forecast agencies.
- A specific procedure for extreme weather.
Furthermore, Atlantica does not have any
hedge contract in place with an obligation
to deliver electricity with the potential risk
of having to purchase it at market price.
Chronic physical:
- Our corporate operations department
closely monitors the performance of each
of our assets to identify measures that
improve efficiency.
- In addition, Atlantica has historically only
withdrawn approximately 50% of the total
36
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
regulatory limit of water permitted at our
solar assets. Even if the water limits were
to be reduced, we believe to have margin
to withdraw enough water to keep our
plants working properly. Our local asset
management teams systematically track
and monitor water availability as a key
asset KPI.
Regulation:
line with
- Current regulation: Asset managers are
responsible for monitoring asset activities
regulation and
local
in
contractual requirements (environmental,
permits,
Local
compliance managers are responsible for
managing and solving compliance issues
their
in
responsibility, including the supervision of
compliance with current regulation.
their geographies under
servitudes,
etc.).
- Emerging regulation: Various
internal
working groups
and management
regularly review risks arising from new
regulatory developments and potential
impacts.
Reputation:
- We refer to the Environment, Social and
Governance section in this Report.
General:
- Atlantica has developed a risk analysis
methodology based on the ISO 31000 and
on common market practices.
- We use a multidisciplinary approach to
in different areas and
identify risks
develop appropriate mitigation plans.
- Management,
the
corporate operations department take
ownership in managing this risk.
teams and
local
operations and which may force us to
stop generation at some of our
facilities.
- If our transmission assets caused a
fire, we could be found liable if the
fire damaged third parties.
- Severe winter weather, like the storm
in February 2021 in Texas, could
cause supply from wind farms to
decline due
turbine
equipment freezing.
to wind
- Rising temperatures and droughts
could cause wildfires like the ones
that have affected California starting
in 2017.
components
systems,
our
of
Furthermore,
such as
equipment and
structures, mirrors, absorber
tubes,
blades, PV panels or transformers are
susceptible to being damaged by severe
weather, including for example by hail or
lightning.
increase
- Chronic physical. An
in
temperatures can reduce efficiency and
increase operating costs at our plants.
The main
rising
impacts
temperatures include:
of
- Lower
turbine efficiency
efficient natural gas asset.
in our
- Reduced efficiency at our solar
photovoltaic generation assets.
- Lower air density at our wind
facilities.
- Higher consumption of chemicals
used for operational purposes at our
water treatment plants.
Furthermore, a reduction of mean
precipitation may result in a reduction
of availability of water from aquifers
and could also modify the main water
properties at our generation facilities
- Current Regulation. Atlantica is directly
affected by environmental regulation
at all our assets. This includes climate-
related risks driven by laws, regulation,
taxation, disclosure of emissions and
other practices
- Emerging
regulation. Changes
in
37
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
regulation could have a negative
impact on Atlantica's growth or
profitability.
- Reputation. If our reputation worsened,
our cost of capital could increase and
our access to capital may become more
difficult. In addition, some potential
employees, clients, and /or suppliers
could perceive Atlantica as a less
appealing
a
deterioration in our reputation.
company due
to
Downstream. Some of our clients are
large utilities or industrial corporations.
These are also exposed to significant
climate change related risks, including
current and emerging regulation, acute
and chronic physical risks. A negative
climate-related risk impact on our clients,
including their credit quality could lead to
their
their
obligations under our existing contracts.
to comply with
inability
Risks Related
Pandemic
to
the COVID-19
The COVID-19 pandemic could have a
material adverse impact on our business,
financial condition, liquidity, results of
operations, cash flows, cash available for
distribution and ability to make cash
distributions to our shareholders.
COVID-19 can affect our operation and
maintenance
activities. We may
experience delays in certain operation
and maintenance activities, or certain
activities may take longer than usual, or,
in a worst-case scenario, a potential
outbreak at one of our assets may prevent
our employees or our operation and
maintenance suppliers’ from operating
the plant.
- We could also experience commercial
disputes with our clients, suppliers and
partners related to
implications of
COVID-19 in contractual relations.
- Additionally, many governments have
implemented and may continue to
implement stimulus measures to reduce
the negative impact of COVID-19 in the
In 2021, the rapid increase in demand after the
slowdown in 2020 caused tension in the supply
chain, including delays in obtaining some
components and increased prices. Further
disruptions in the supply chain could limit the
availability of certain parts required to operate
our facilities and could adversely impact our
ability (or our operation and maintenance
suppliers’ ability) to operate our plants or to
perform maintenance activities. If we were to
experience a shortage of or inability to acquire
critical spare parts, we could incur significant
delays in returning facilities to full operation.
team. During 2021,
In 2020, we established a COVID-19
Committee which included the CEO, the
geographic VPs, Health and Safety Manager
and other members of Atlantica’s
management
the
Committee continued adapting measures
based on new information released on
COVID-19 in each specific location where
our assets and offices are located and took
all necessary actions to manage the risks
affecting our employees, operations and
stakeholders. In 2021, we:
- Implemented measures
on
developments
in
countries and regions where we are
present.
in COVID-19 data
based
- Defined key KPIs to monitor the pandemic
situation in all the regions and decided
whether to open or close our offices in
each region.
- Tested employees for COVID-19.
positive
and
- Monitored
among
cases
employees
subcontractors,
supervising the isolation of positive cases
and tracing close contacts.
- Monitored new regulations issued by
governments
include
implementing such regulations, where
(measures
38
Risk / Impact
Assessment of Change in Risk
Year-on-Year
cases,
In many
these
economy.
measures may increase government
spending which may translate
into
increased tax pressure on companies in
the countries where we operate.
Mitigation of Risk
appropriate).
- Developed
and
implemented
new
measures to adapt our protocols to the
most recent technical publications about
the virus.
- All the risks referred to can cause delays
in distributions from our assets to the
holding company
- Reinforced safety measures at all of our
assets while we continued to provide
reliable service to our clients.
- Reinforced our physical and cyber-
security measures
in
those
rates are
In addition,
regions where
took
vaccination
measures to incentivize employees and
subcontractors employees to get COVID-19
vaccine.
lower, we
We continue to monitor the situation closely
at all of our assets and offices to take
additional action if required.
The COVID-19 committee takes ownership
in managing this risk.
(including
- Any transaction between us and Liberty
the
GES or Algonquin
acquisition of any ROFO assets or any co-
investment with Liberty GES or Algonquin
or any investment on an Algonquin asset)
is subject to our related party transactions
policy, which requires prior approval of
such transactions by the related party
transactions
is
committee, which
composed of independent directors.
- Algonquin has to comply with our Related
Parties Transaction Committee and Terms
of Reference
to
- Algonquin has the right to appoint
directors
their
proportionally
ownership but in any event no more than
(i)
as
such number of directors
corresponds to 41.5% of our voting
securities; and (ii) 50% of our board less
one.
Furthermore, Algonquin’s voting rights are
limited to 41.5% and the additional shares
(the difference between the actual shares
beneficially owned by Algonquin and shares
representing 41.5% of voting rights) votes
replicating non-Algonquin’s shareholders
vote.
- The Related Party Transaction Committee
Risks Related to Our Relationship with
Algonquin and Abengoa
No significant change
Connection to Algonquin
Algonquin is our largest shareholder and
exercises substantial influence over us.
Currently, Algonquin beneficially owns
43.5% of our ordinary shares and is
entitled to vote on approximately 41.5%
of our ordinary shares. As a result of this
ownership, Algonquin has substantial
influence over our affairs and their
ownership interest and voting power
constitute a significant percentage of the
shares eligible to vote on any matter
requiring
our
shareholders.
approval
the
of
Furthermore, our reputation is closely
related to that of Algonquin. Any damage
to the public image or reputation of
Algonquin could have a material adverse
effect on our business, financial condition,
results of operations and cash flows.
In addition, our ownership structure and
certain service agreements may create
conflicts of interest that may be resolved
in a manner that is not in our best
interests.
Liberty GES and Algonquin are related
39
Mitigation of Risk
takes ownership in managing this risk.
In 2021 we obtained a waiver to remediate
the default situation in Kaxu. On February 2,
2022 we fulfilled the main condition, which
was the internalization of operation and
maintenance services, and we are currently
working on the rest of documents. In any
case, we are in constant communication
with our lenders and we do not expect any
negative action from them.
Regarding the operation and maintenance
activities, on February 2, 2022 we
internalized the operation and maintenance
services in Kaxu. For our assets in Spain,
where Abengoa provides most of the
operation and maintenance services. We
have reached an agreement subject to
conditions precedent,
including waivers
from financial institutions, to terminate the
O&M agreements in six plants in Spain and
to introduce a clause to be able to terminate
the rest of the agreements every three years.
If and when the conditions precedent are
met, we would perform the O&M with third
parties or internal resources.
Senior management and local teams take
ownership in managing this risk.
Risk / Impact
Assessment of Change in Risk
Year-on-Year
parties and may have interests that differ
from our interests, including with respect
to the types of acquisitions made, the
timing and amount of the dividends paid
returns
by us,
generated by our operations, the use of
leverage when making acquisitions and
the appointment of outside advisors and
service providers.
reinvestment of
the
Risks Related to Our Relationship with
Algonquin and Abengoa
Connection to Abengoa
Abengoa, which is currently our largest
supplier and used to be our largest
shareholder, went through a restructuring
process which started in November 2015
and ended in March 2017, obtained
approval for a second restructuring in July
2019. On February 22, 2021, Abengoa,
S.A., the holding company, filed for
insolvency proceedings in Spain. Based on
the public information filed in connection
with these proceedings, such insolvency
include other
proceedings do not
Abengoa
including
companies,
Abenewco1, S.A., the controlling company
of
the
the subsidiaries performing
operation and maintenance services for
us.
The project financing arrangement for
Kaxu contained cross-default provisions
related to Abengoa such that debt
defaults by Abengoa, subject to certain
threshold amounts and/or a restructuring
process, could trigger a default under the
Kaxu project financing arrangement.
A deterioration in the financial position of
certain of Abengoa’s subsidiaries may
result in a material adverse effect on
certain of our operation and maintenance
agreements. Abengoa and its subsidiaries
provide operation and maintenance
services for some of our assets. We cannot
its
guarantee
subcontractors will be able to continue
performing with the same level of service
(or at all) and under the same terms and
conditions, and at the same prices.
Because we have long-term operation
and maintenance agreements with
Abengoa for many of our assets, if
that Abengoa and/or
the
insolvency
finance agreement.
The
individual
filing by
company Abengoa S.A. in February 2021
represents a theoretical event of default under
the Kaxu project
In
September 2021, we obtained a waiver for
such theoretical event of default which was
conditional upon the replacement of the
operation and maintenance supplier of the
plant, which
is currently an Abengoa
subsidiary, before October 31, 2021. On
November 4, 2021, we obtained an extension
of the term for such replacement until January
31, 2022. On February 1, 2022, we completed
the transfer of the employees performing the
operation and maintenance from the above-
mentioned supplier to an Atlantica subsidiary.
The waiver has been extended until April 30,
2022 and is subject to the lenders receiving
certain documentation from us, including
formal evidence of the approval by our off-
taker and the department of energy of South
Africa of the operation and maintenance
internalization and we are currently working
on obtaining such documentation. If we were
not able to deliver such documents by the
deadline, we do not expect the Kaxu project
debt lenders to declare the acceleration of the
debt or take any other action. However, if not
cured or waived, a cross-default or default
scenario may entitle
lenders to demand
repayment, limit distributions from the asset or
enforce on their security interests, which may
have a material adverse effect on our business,
financial condition, results of operations and
cash flows.
Many of our senior executives have previously
worked for Abengoa. Abengoa’s current and
prior restructuring processes, and the events
and circumstances that led to them, are
currently
legal
proceedings and may in the future become the
subject of additional proceedings. To the
extent that allegations are made in any such
subject of various
the
40
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
Abengoa cannot continue performing
current services at the same prices, we
may need to renegotiate contracts and
pay higher prices or change the scope of
the contracts.
proceedings that involve us, our assets, our
dealings with Abengoa or our employees, such
proceedings may have a material adverse
effect on our business, financial condition,
results of operations and cash flows, as well as
on our reputation and employees.
Abengoa has a number of obligations and
indemnities which have resulted or could
result in additional liability obligations to
us or to our assets. Certain of Abengoa’s
indemnities and obligations are no longer
filing by
the
valid after
Abengoa S.A. in February 2021.
insolvency
In addition, although Abengoa has not
been our shareholder since the end of
2018, in some geographies our reputation
continues to be related to that of
Abengoa. Any damage to the public
image or reputation of Abengoa could
have a negative impact on us.
All these situations may have a material
adverse effect on our business, financial
condition, results of operations and cash
flows.
Risks Related to Our Indebtedness
The financing agreements of our
project subsidiaries are primarily loan
agreements which provide that the
repayment of the loans (and interest
thereon) is secured solely by the shares,
physical assets, contracts and the cash
flow of that project company.
Our project finance agreements include
covenants and restrictions which may
limit our ability to distribute cash from
project companies
the holding
company level.
to
In addition, if we fail to satisfy any of our
debt service obligations or breach any
related financial or operating covenants,
the applicable lender could declare the
full amount of the relevant project debt to
be immediately due and payable and
could foreclose on any assets pledged as
collateral.
Risks Related to Our Indebtedness:
Liquidity Risk and Access to capital
Not being able to meet our payment
In addition, certain of Abengoa’s indemnities
and obligations are no longer valid after the
insolvency filing by Abengoa S.A. in February
2021. In addition, considering the current
financial situation of Abengoa, we cannot
guarantee that these indemnities will be
future. A potential
maintained
insolvency of Abenewco1, S.A. may also
terminate
obligations,
the
indemnities and guarantees.
remaining
the
in
The Kaxu project financing arrangement
contains cross-default provisions related to
Abengoa (see previous risk).
- Kaxu cross-default provisions related to
Abengoa (see previous risk).
- Reporting and monitoring of covenants in
each contract.
- Management and specialized compliance
and legal teams constantly tracking any
change.
- The
local
teams
managing this risk.
take ownership
in
- A quarterly report is provided to the Audit
Internal Audit on
from
Committee
covenant compliance.
In the United States, capital markets have been
experiencing
recently.
Concerns over
the COVID-19 pandemic
(including the new highly contagious variants
volatility
higher
- Appropriate cash management to ensure
appropriate levels of cash: Cash on hand
as of December 31, 2021, was $88.3
million at the corporate level plus $440
41
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
obligations as they fall due.
Not being able to meet our covenants and
obligations under our corporate financing
arrangements.
Failing to meet the required or desired
financing for acquisitions and for the
successfully refinancing of Company’s
project and corporate indebtedness.
The global capital and credit markets have
experienced in the past and may continue
to experience, periods of extreme
volatility and disruption. At times, our
access to financing was curtailed by
market conditions and other factors.
Continued disruptions, uncertainty or
volatility in the global capital and credit
markets may limit our access to additional
capital required to refinance our debt on
satisfactory terms or at all, may limit our
ability to replace, in a timely manner,
maturing liabilities, and may limit our
access to new debt and equity capital to
make further acquisitions. Volatility in
debt markets may also limit our ability to
fund or refinance many of our projects
and corporate level debt, even in cases
where such capital has already been
committed.
Risks Related to Our Indebtedness
Interest rate and foreign currency
exchange rate
Increases in interest rates would raise our
finance expenses at project companies or
corporate level.
Revenue and expenses of our solar assets
in Europe, South Africa and Colombia are
denominated in euros, South African
Rands and Colombian pesos respectively.
Depreciation in the value of euro, the
South African rand or the Colombian
pesos against the U.S. dollar may have a
negative impact on our operating results
and our cash available for distribution.
interest
expected
such as Omicron) and its effects on the global
economy, high inflation, volatile oil and gas
prices, high electricity prices particularly in
Europe,
raise,
geopolitical issues, geopolitical tensions, the
availability and cost of credit, increase in
sovereign debt and the instability of the euro
have contributed to increased volatility in
capital markets and worsened expectations for
the economy.
rate
million available under our revolving
credit facility.
- In 2021 we issued the Green Senior Notes
amounting to an aggregate principal
amount of $400 million due in 2028. We
also
“at-the-market
program” under which we may offer and
sell from time to time up to $150 million
of our ordinary shares.
established
an
- A portion of cash flows generated and
distributed by our project companies to
the holding company are retained at the
holding company level.
- Proactive relationship management with
banks.
- Regular discussions with rating agencies
in operating
confidence
to build
performance.
- Our Board of Directors may change our
dividend policy at any point in time if
required, or modify the dividend for
specific quarters
following prevailing
conditions.
- The finance committee take ownership in
managing this risk.
With regard to our assets, revenue, debt and
most of our expenses are generally
denominated in the same currency, creating
a natural hedge.
Our solar power plants in Europe have their
revenue and expenses denominated
in
euros. At the corporate level, we have some
general and administrative expenses and
debt denominated in euros. Our strategy is
to hedge the exchange rate
for the
distributions from our European assets after
interest
deducting
payments and euro-denominated general
and administrative expenses. Through
currency options, we hedge 100% of the net
euro net exposure for the next 12 months
and 75% of the net euro net exposure for
the following 12 months.
euro-denominated
We intend to ensure that at least 80% of our
cash available for distribution is always
denominated in U.S. dollars or euros. We
hedge the euros for the upcoming 24
Some of our indebtedness (including project-
level indebtedness) bears interest at variable
rates, generally linked to market benchmarks
such as EURIBOR, and U.S. LIBOR or the
alternative measures replacing these. The
Federal Reserve has announced over the last
months that it expects to increase interest
rates in the United States several times in 2022.
In 2021 we closed the acquisition of La Sierpe,
a 20 MW solar asset in Colombia. We also
acquired two additional solar projects in
Colombia with a combined capacity of
approximately 30 MW which are currently in
construction, la Tolua and Tierra Linda.
42
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
months on a rolling basis.
Over 90% of our total interest risk exposure
is fixed or hedged.
finance
committee
The
management teams take ownership
managing this risk.
and
local
in
Risks Related to Our Growth Strategy
Access to future investments.
to
local
successfully
Our growth strategy depends on our
ability
identify and
evaluate investment opportunities and
consummate acquisitions on favorable
terms. The number of
investment
opportunities may be limited. We are
competing with other
and
international companies for acquisition
opportunities from third parties, which
increase our cost of making
may
investments or cause us to refrain from
making acquisitions from third parties. If
we are unable to identify and complete
future investments and acquisitions, it will
impede our ability to execute our growth
strategy and limit our ability to increase
the amount of dividends paid to our
shareholders.
In addition, our ability to grow through
acquisitions depends, in part, on Liberty
GES and Algonquin’s ability to offer us
investment opportunities. Liberty GES and
Algonquin may not offer us assets at all or
may not offer us assets that fit within our
portfolio or contribute to our growth
strategy. Liberty GES and Algonquin may
decide to keep assets subject to our ROFO
Agreements in their portfolios and not
offer them to us for acquisition. We may
not reach an agreement on the price of
assets offered by Liberty GES or
Algonquin.
We have diversified our sources of growth
and have a proven track record of closing
acquisitions from those sources:
We believe we can achieve organic growth
through the optimization of the existing
portfolio, escalation factors at many of our
assets, as well as the repowering and
hybridization with other technologies of
some of the renewable energy facilities and
the expansion of our existing transmission
lines.
Additionally, we expect to acquire assets
from third parties leveraging the local
presence and network we have
in
geographies and sectors
in which we
operate. We also invest in the development
and construction of new assets, in some
cases on our own and in other cases with
partners. We have entered into and intend
to enter into agreements or partnerships
with developers and asset owners.
The investment committee takes ownership
in managing this risk.
recent years competition
to acquire
In
renewable assets has increased. Some of our
competitors for investments are much larger
entities, with substantially greater resources.
These players may be able to pay more for
investments and acquisitions due to cost of
capital advantages, potential synergies or
other drivers, and may be able to identify and
purchase a greater number of assets than our
resources permit.
In order to grow our business, we may acquire
assets and businesses which may have a higher
risk profile than the assets we currently own.
We have recently announced investments with
exposure to development and construction
risk. In addition, we may consider acquiring
businesses which are not contracted, including
regulated businesses and assets which are
subject to demand risk. We may also consider
investing in assets which are not contracted or
not fully contracted, or subject to merchant
risk. We have recently invested and may
consider investing in business sectors where
we do not have previous experience and may
not be able to achieve the expected returns.
We may also consider investing with partners
or on our own in new technologies which do
not for the moment have a track record as
proven as our current assets, such as storage,
district heating or geothermal. Furthermore,
we may consider acquiring assets with
revenues not denominated in US dollars or
euros, which would increase our exposure to
local currency and which could generate
higher volatility in the cash flows we generate,
such as the agreement we recently announced
for the acquisition of an asset and investments
in projects under development in Colombia.
Risks Related to the Success of Our
Recent and Future Investments
Our investments may not perform as
and
expected
construction activities are subject to
specific risks
and development
In 2021, we closed the acquisition of several
assets in operation. We refer to the Events
During the Period section for further details on
our 2021 investments.
Also in 2021 we acquired two additional solar
projects in Colombia with a combined capacity
- Refined due diligences process is either
carried out in-house or contracted with
specialists.
- We take a multidisciplinary approach to
identifying risks in different areas.
- We have commenced development and
43
Risk / Impact
violations
(including
Our investments are subject to substantial
risks, including unknown or contingent
liabilities
of
environmental, antitrust, anticorruption,
anti-bribery and anti-money laundering
laws, and tax and labor disputes), the
failure to
identify material problems
during due diligence (for which we may
not be indemnified post-closing), the risk
of over-paying for assets (or not making
acquisitions on an accretive basis) and the
ability to retain customers.
acceptance of
In addition, we have reached agreements
with a number of partners in order to
develop assets in the geographies in
which we operate. Development and
construction activities are subject to
failure rate and different types of risks.
Our ability to develop new assets is
dependent on our ability to secure or
renew our rights to an attractive site on
reasonable terms; accurately measuring
resource availability; the ability to secure
new or renewed approvals, licenses and
local
the
permits;
communities;
secure
the ability
transmission interconnection access or
agreements; the ability to acquire suitable
labor, equipment and
construction
services on acceptable terms; the ability to
attract project financing; and the ability to
secure PPAs or other sales contracts on
reasonable terms. Failure to achieve any
one of these elements may prevent the
development and construction of a
project. If any of the foregoing were to
occur, we may lose all of our investment
in development expenditures and may be
required to write-off project development
assets.
to
the
and
engineering
In addition,
construction and
development of new projects is subject to
environmental,
and
construction risks that could result in
cost-overruns, delays
reduced
performance. A delay in the projected
completion of a project can result in a
total project
material
construction
through higher
capitalized interest charges, additional
labor and other expenses, and a delay in
the commencement of cash flow.
increase
costs
in
Assessment of Change in Risk
Year-on-Year
of approximately 30 MW which are currently in
construction.
In 2021 we increased our investments in
development and construction activities with
partners or on our own. Although these
investments still represent a very small portion
of our portfolio, we expect this source of
growth to increase over time.
Mitigation of Risk
activities with
small
construction
investments. We have sufficient internal
expertise and we generally complement
this invest with partners. We believe that
by building our own pipeline of assets
under development and construction
we should rely less on third party
opportunities, which may be difficult to
achieve at certain moments.
Senior management, including geographic
VPs, and local teams take ownership in
managing this risk.
44
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
Risks Related to the Markets in Which
We Operate:
Brexit
We are exposed to political, social and
macroeconomic risks relating to the
United Kingdom’s exit from the European
Union. The exit of the United Kingdom
and
trade
agreement could have negative impacts
on our business,
financial condition,
results of operations and cash flows.
terms of
final
the
the
- Management and specialized compliance
teams continuously track any potential
changes.
- Support of reputable external tax lawyers
and consultants with proven expertise in
legal and potential tax implications and
mitigating actions.
- The tax department (under the CFO
supervision)
compliance
committee take ownership in managing
this risk.
and
the
- On December 31, 2020, the transition period
ended, and on January 1, 2021, the U.K. left
the EU Single Market and Customs Union, as
well as all EU policies and international
agreements. As a result, the free movement
of persons, goods, services and capital
between the U.K. and the EU ended, with the
EU and the U.K. forming two separate
markets and two distinct regulatory and
legal frameworks. The Trade Agreement
offers U.K. and EU companies preferential
access to each other’s markets, ensuring
imported goods will be free of tariffs and
quotas; however,
relations
between the U.K. and the EU will now be on
existed
more
to
previously and Brexit could
additional political,
legal and economic
instability in the EU or labor shortages due
to changes and restrictions regarding the
free movement of people into the U.K. from
the EU.
economic
restricted
terms
than
lead
- Since some of the proposed changes due to
Brexit have only recently become effective
(i.e., further tightening of border controls on
January 1, 2022), the Company is still
assessing and monitoring the impact that
Brexit will have on its business, and we
continue to evaluate our own risks and
uncertainty related to Brexit to better
navigate the changes in the U.K.-EU market.
Notwithstanding, as of the date hereof, we
have evaluated the impact of Brexit on us,
our subsidiaries, our business, and our future
operations, operating results, and cash flows
and it has not materially changed our
business to date.
- Moreover, we cannot anticipate if the U.K.
and EU will succeed in negotiating all
material terms not otherwise addressed or
the Trade Agreement, or
covered by
subsequent
agreements or
transition
arrangements and/or if previously agreed
upon items will be renegotiated in the
future.
In 2021 we entered two new markets (i.e.,
Colombia and Italy) with attractive growth
prospects for renewables and with similar
characteristics to other Atlantica’s markets in
South America and Europe.
- We closed the acquisition of three solar PV
45
Risks Related to Regulation
International operations including in
emerging markets.
We intend to grow our portfolio mainly in
countries that we consider stable in North
America, South America and Europe. We
expect that investments in countries with a
higher risk profile such as Algeria and South
Africa always represent a small portion of
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
We operate our activities in a range of
international locations, including North
America (Canada, the United States and
Mexico), South America (Peru, Chile,
Uruguay and Colombia), and EMEA
(Spain, Italy, Algeria and South Africa),
and we may expand our operations to
these
certain core countries within
regions. Accordingly, we face several risks
associated with operating and investing in
different countries that may have a
material adverse effect on our business,
financial condition, results of operations
and cash flows. These risks include, but
limited to, adapting to the
are not
such
requirements
regulatory
countries, compliance with changes in
laws and regulations applicable to foreign
corporations, the uncertainty of judicial
processes, and the absence, loss or non-
renewal of favorable treaties, or similar
agreements, with local authorities, or
political, social and economic instability,
all of which can place disproportionate
demands on our management, as well as
significant demands on our operational
and financial personnel and business. As a
result, we can provide no assurance that
our future international operations and
investments will remain profitable.
of
Risks Related to Regulation
Legal, environmental and general
compliance of each asset
We are subject to extensive governmental
regulation
in a number of different
jurisdictions.
laws and
We are subject to extensive regulation of
our business in the countries in which we
operate. Such
regulations
licenses, permits and other
require
approvals to be obtained in connection
with the operations of our activities. This
regulatory framework imposes significant
actual, day-to-day compliance burdens,
costs and risks on us. In addition, we need
to adapt to the regulatory requirements
of the different countries where we
in
plants
aggregate installed capacity of 6 MW.
Italy, with an approximate
- We closed the acquisition of La Sierpe, a 20
MW solar asset in Colombia.
our portfolio.
We have a political risk insurance agreement
in place with the Multinational Investment
Guarantee Agency for Kaxu. The insurance
provides protection for breach of contract
up to $78.0 million in the event the South
African Department of Energy does not
comply with its obligations as guarantor. We
have also increased coverage in our political
risk insurance for our assets in Algeria up to
$38.2 million, including 2 years dividend
coverage. This insurance policy does not
cover credit risk.
Our local presence in each region provides
us with good knowledge and expertise to
operate in these regions.
local
teams and
The
the compliance
committee take ownership in managing this
risk.
a
Constitution
On March 9th, 2021, Mexico´s President
proposed a preferential reform to the Electric
Industry Law. In broad terms, the reform aimed
for CFE to increase its preponderance in the
energy generation sector. Additionally, on
September 30, 2021, Mexico’s President
submitted
amendment
proposal which will be discussed and resolved
by the House of Representatives, the Mexican
Senate and regional local congresses. If passed
as presented, most of the energy reform of
December 2013 would be modified and the
sector would be deeply transformed. Although
we do not expect a direct and immediate
impact on our existing contracts, we cannot
guarantee that the new regulation will not
have any impact on our business, financial
condition, results of operations and cash flows.
The new regulation could also limit our growth
prospects in the region.
In addition, in December 2021 the Mexican
46
for
individual
responsible
- An
local
compliance has been appointed in each
geography where we are present to solve
day to-day issues. These employees report
to the General Counsel. We have local legal
teams in each geography that are usually
assessed by local external lawyers. Our local
internal and external lawyers are in close
contact with the regulation and potential
regulation changes in each geography.
These, together with the asset managers,
proactively track and monitor any potential
regulatory change.
- We have a Quality, Environmental, and
Health and Safety Management System in-
place certified under ISO 9001, 14001 and
45001 standards, which are audited
annually by an external third party.
- The corporate operations department
performs annual internal audits on our
Risk / Impact
operate.
Uncertainty or changes to any such
regulation in any of the countries where
we operate could adversely affect the
return of our current plants and our
results of operations, cash flows, cash
available for distribution and ability to
make
our
cash
shareholders.
distributions
to
In some of our assets, revenues are based
on regulation:
- Revenues in Spain are mainly defined by
regulation. Revenues are based on a
“reasonable rate of return” which was
reviewed following a proposal by the
Spanish regulator CNMC based on the
weighted average cost of capital
(WACC). Parameters were reviewed at
the end of 2019 and were set for a six-
year or twelve-year period starting on
January 1, 2020, depending on each
asset within our portfolio.
- We have a transmission line in Chile
with revenues based on regulation.
In addition, we are subject to significant
environmental regulation, which, among
other things, requires us to obtain and
maintain regulatory licenses, permits and
other approvals and comply with the
requirements of such licenses, permits
and other approvals and perform
environmental impact studies on changes
to projects. In addition, our assets need to
comply with
environmental
strict
regulation on air emissions, water usage
and contaminating spills, among others.
As a company with a focus on ESG and
most of the business in renewable energy,
environmental
also
can
significantly harm our reputation.
incidents
Risks Related to Taxation
Changes to tax regulations could
adversely affect the return of our
current plants and our ability to
refinance projects. We are subject to
changes in tax regulation in all the
jurisdictions where we have assets.
Assessment of Change in Risk
Year-on-Year
Energy Regulatory Commission approved an
amendment to the existing regulation on the
isolated supply, which may affect our
Monterrey asset. We have filed appeals for
protection before specialized courts and we
expect this situation to be solved without
significant
impact. However, we cannot
guarantee that this change in regulation will
not have any negative impact on our business,
financial condition, results of operations and
cash flows
Electricity market prices in Spain have been
higher than expected and the regulation
establishes a compensation mechanism under
which regulated revenue is revised every three
years to reflect the difference between
expected and actual market prices if the
difference
is higher than a pre-defined
threshold. Current higher market prices in
Spain will therefore cause a lower regulated
revenue to be recorded progressively over the
remaining regulatory life of our solar assets.
- In November 2021, 137 countries agreed to
implement the “Two Pillars Solution”, an
OECD/ G20 Inclusive Framework initiative,
which aims to reform the international
taxation
that
multinational companies pay taxes wherever
they operate and generate profits. “Pillar
Two” of this initiative generally provides for
an effective global minimum corporate tax
rate of 15% on profits generated by
policies
ensure
and
47
Mitigation of Risk
to
ensure
compliance with
assets
regulation and our best practices and to
promote continuous improvement.
The compliance committee take ownership
in managing this risk.
- Management and specialized teams with
these
experience monitor
broad
developments.
- Engagement with local authorities on tax
matters.
- Support of
reputable external
tax
consultants with proven expertise in each
jurisdiction.
- The corporate tax department (under the
Risk / Impact
Our future tax liability may be greater
than expected if we do not use sufficient
NOLs to offset our taxable income. We
have NOLs that we can use to offset future
taxable income. Based on our current
portfolio of assets, we expect these NOLs
will be available as a future benefit. In the
event that they are not generated as
expected, or are successfully challenged
by the local tax authorities, or are subject
to future limitations, our ability to realize
these benefits may be limited.
have
generated
Furthermore, we
significant NOLs in the U.S. and our ability
to use them is subject to the rules of
Sections 382 of the IRC. A corporation
that experiences an “ownership change”,
as defined in the rule, will generally be
subject to an annual limitation on the use
of its pre-ownership change U.S. NOLs.
We have experienced ownership changes
in the past. Future sales by our largest
shareholder, future equity issuances and
in general the activity of our direct or
indirect shareholders may further limit our
ability to use net operating loss carry
forwards in the United States, which could
have a potential adverse effect on cash
flows from U.S. assets expected in the
in our
In addition, changes
future.
shareholder base during 2019 may have
triggered an ownership change under
Section 382 of the IRC.
In addition, because we have recorded tax
credits for the U.S. tax loss carry forwards
in the past, a limit to our ability to use U.S.
NOLs could result in writing off tax credits,
which could cause a substantial non-cash
income tax expense
in our financial
statements.
Some countries where we operate could
implement changes to the tax loss and
regulations, the content of which are
largely uncertain currently.
Cybersecurity risk
We are dependent upon information
our
technology
operations. Our information technology
systems are subject to disruption, damage
systems
run
to
Mitigation of Risk
CFO supervision) and local teams take
ownership in managing this risk.
Assessment of Change in Risk
Year-on-Year
multinational companies with consolidated
revenues of at least €750 million, calculated
on a country-by country basis. This
minimum tax would be applied on profits in
any jurisdiction wherever the effective tax
rate, determined on a jurisdictional basis, is
below 15%. Any additional tax
liability
resulting
from the application of this
minimum tax will be payable by the parent
entity of the multinational group to the tax
authority
in such parent’s country of
residence. A framework for the coordinated
implementation of the minimum tax is
expected to be developed over 2022.
Although this initiative is still subject to
further developments in the countries where
Atlantica operates, if implemented, it may
have a negative impact on our financial
condition, results of operations and cash
flows.
in
continue
- Additionally, many governments have
implemented
to
and will
implement stimulus measures to reduce the
negative
the
impact of COVID-19
economy. In many cases, these measures will
increase government spending which may
translate into increased tax pressure on
companies
in the countries where we
operate. Changes in corporate tax rates
and/or other relevant tax laws may have a
material adverse effect on our business,
financial condition, results of operations and
cash flows.
- Potential tax reforms could have a negative
impact on our financial condition, results of
operations and cash flows.
The number of cyber-attacks to companies has
been increasing in the last few years. Many of
these attacks have
focused on critical
infrastructure.
- We have
monitoring
measures
standards including ISO 27000.
implemented prevention,
threat-detection
international
and
following
Given the unpredictability of the timing, nature
and
technology
disruptions, we could be subject to production
information
scope of
48
- Internal and external audits to ensure that
our cybersecurity controls are effective,
targeted
including
simulated
and
Risk / Impact
Assessment of Change in Risk
Year-on-Year
Mitigation of Risk
or failure from a variety of sources,
including, without limitation, computer
viruses, security breaches, cyber-attacks,
ransomware
or
destructive code, phishing attacks, natural
disasters, design defects, denial-of-
service-attacks or information or fraud or
other security breaches.
attacks, malicious
delays,
destruction
operational
information,
the
downtimes,
compromising of confidential or otherwise
protected
or
corruption of data, security breaches, other
manipulation or improper use of our systems
and networks or financial losses from remedial
actions, any of which could have a material
adverse effect on our financial condition,
results of operations or cash flows.
cyberattacks
employees accounts.
to our
servers
and
- Employees training to detect, monitor and
prevent threats.
- The corporate IT team (under the CFO
take
supervision) and
ownership in managing this risk.
teams
local
Financial Risk Management
Interest Rates
We incur significant indebtedness at the corporate and asset level. The interest rate risk arises
mainly from indebtedness at variable interest rates. To mitigate interest rate risk, we primarily use
long-term interest rate swaps and interest rate options which, in exchange for a fee, offer protection
against a rise in interest rates. As of December 31, 2021, approximately 92% of our project debt
and close to 100% of our corporate debt either has fixed interest rates or has been hedged with
swaps or caps. Nevertheless, our results of operations can be affected by changes in interest rates
with respect to the unhedged portion of our indebtedness that bears interest at floating rates,
which typically bear a spread over EURIBOR, LIBOR or over the alternative rates replacing these.
Exchange Rates
Our functional currency is the U.S. dollar, as most of our revenue and expenses are denominated
or linked to U.S. dollars. All our companies located in North America, with the exception of Calgary,
with revenue in Canadian dollars, and most of our companies in South America have their revenue
and financing contracts signed in, or indexed totally or partially to U.S. dollars. Our solar power
plants in Europe have their revenue and expenses denominated in euros, Kaxu, our solar plant in
South Africa, has its revenue and expenses denominated in South African rand and La Sierpe our
solar plant in Colombia has its revenue and expenses denominated in Colombian pesos. Project
financing is typically denominated in the same currency as that of the contracted revenue
agreement. This policy seeks to ensure that the main revenue and expenses streams in foreign
companies are denominated in the same currency, limiting our risk of foreign exchange differences
in our financial results.
Our strategy is to hedge cash distributions from our assets in Europe. We hedge the exchange rate
for the distributions in euros after deducting euro-denominated interest payments and euro-
denominated general and administrative expenses. Through currency options, we have hedged
100% of our euro-denominated net exposure for the next 12 months and 75% of our euro-
denominated net exposure for the following 12 months. We expect to continue with this hedging
strategy on a rolling basis.
Although we hedge cash-flows in euros, fluctuations in the value of the euro in relation to the U.S.
dollar may affect our operating results. For example, revenue in euro-denominated companies
could decrease when translated to U.S. dollars at the average foreign exchange rate solely due to
49
a decrease in the average foreign exchange rate, in spite of revenue in the original currency being
stable. Fluctuations in the value of South African rand and Colombian peso with respect to the U.S.
dollar may also affect our operating results. Apart from the impact of these translation differences,
the exposure of our income statement to fluctuations of foreign currencies is limited, as the
financing of projects is typically denominated in the same currency as that of the contracted
revenue agreements.
In our discussion of operating results, we have included foreign exchange impacts in our revenue
by providing constant currency revenue growth. The constant currency presentation is not a
measure recognized under IFRS and excludes the impact of fluctuations in foreign currency
information provides valuable
exchange rates. We believe providing constant currency
supplemental information regarding our results of operations. We calculate constant currency
amounts by converting our current period local currency revenue using the prior period foreign
currency average exchange rates and comparing these adjusted amounts to our prior period
reported results. This calculation may differ from similarly titled measures used by others and,
accordingly, the constant currency presentation is not meant to substitute recorded amounts
presented in conformity with IFRS as issued by the IASB, nor should such amounts be considered
in isolation.
Electricity market prices
In addition to regulated revenue, our solar assets in Spain receive revenue from the sale of
electricity at market prices. Regulated revenues are revised every three years to reflect the
difference between expected and actual market prices if the difference is higher than a pre-defined
threshold. Given that since mid-2021 electricity prices in Spain have been, and may continue to be,
significantly higher than expected, it will cause a lower regulated revenue starting in 2023 over the
remaining regulatory life of our solar assets. Also, the regulator or the administration may change
or may create new mechanisms to adjust the price of electricity, which could have a material
adverse effect on our business, financial condition, results of operations and cash flows.
Credit Risks
The credit rating of Eskom is currently CCC+ from S&P, Caa1 from Moody’s and B from Fitch. Eskom
is the off-taker of our Kaxu solar plant, a state-owned, limited liability company, wholly owned by
the government of the Republic of South Africa. Eskom’s payment guarantees to our Kaxu solar
plant are underwritten by the South African Department of Energy, under the terms of an
implementation agreement. The credit ratings of the Republic of South Africa as of the date of this
report are BB-/Ba2/BB- by S&P, Moody’s and Fitch, respectively.
In addition, Pemex’s credit rating is currently BBB from S&P, Ba3 from Moody’s and BB- from Fitch.
We have been experiencing delays from our client collections since the second half of 2019 which
have been significant in certain quarters.
In 2019, we also entered into a political risk insurance agreement with the Multinational Investment
Guarantee Agency for Kaxu. The insurance provides protection for breach of contract up to $78.0
million in the event the South African Department of Energy does not comply with its obligations
as guarantor. We also have a political risk insurance in place for our assets in Algeria up to $38.2
million, including two years dividend coverage. These insurance policies do not cover credit risk.
50
Liquidity Risk
The objective of our financing and liquidity policy is to ensure that we maintain sufficient funds to
meet our financial obligations as they fall due.
Project finance borrowing permits us to finance projects through project debt and thereby insulate
the rest of our assets from such credit exposure. We incur project finance debt on a project-by-
project basis.
The repayment profile of each project is established based on the projected cash flow generation
of the business. This ensures that sufficient financing is available to meet deadlines and maturities,
which mitigates the liquidity risk.
51
Environment, Social and Governance (ESG)
Our purpose is to support the transition towards a more sustainable world by investing in and
managing sustainable infrastructure, while creating long-term value for our shareholders,
employees, suppliers, customers, business partners, local communities and debt investors.
Atlantica’s strategy focuses on climate change solutions in the power and water sectors. We intend
to be part of the solution to climate change. Our long-term strategy reflects this. We are committed
to investing mostly in renewable energy assets as enablers of the energy transition.
In 2021, we announced an ambitious greenhouse gas emissions (GHG) reduction objective
approved by the Science Based Targets initiative (SBTi). Atlantica targets to reduce Scope 1 and 2
GHG emissions per kWh of electricity produced by 70% by 2035 from a 2020 base year1. Targets
are considered ‘science-based’ if they are in line with the latest levels recommended by climate
science to meet the goals set out in the Paris Agreement to limit global warming to “well-below
2ºC”.
This objective is particularly ambitious for a company like Atlantica, where approximately 77% of
the business consists of renewable energy production, an activity which already has a very low rate
of emissions per unit of energy produced.
In addition, we have a goal to maintain over 80% of our adjusted EBITDA generated from low-
carbon footprint assets including renewable energy, storage, transmission infrastructure and water
assets.
At Atlantica, we have set targets, issued and updated policies, delivered measurable results and
hold ourselves to high ESG standards. We annually publish a comprehensive ESG Report prepared
in accordance with the Global Reporting Initiative (GRI) and the Sustainability Accounting
Standards Board (SASB) for Electric Utilities standards. We also follow the disclosure
recommendations issued by the Task Force on Climate-related Financial Disclosures (TCFD). We
plan to disclose new detailed TCFD-related data as well as other sustainability information in our
2021 ESG Report, expected to be published during the first semester of 2022.
ESG Credentials
In February 2022, Atlantica was included in the S&P Global Sustainability Yearbook. Atlantica was
recognized with the Bronze Class distinction, awarded to Companies with a score within a 5% to
10% of its industry top-performing company.
Also in February 2022, Sustainalytics updated its rating on Atlantica’s ESG factors. Atlantica was
rated in the top 3rd percentile in its ESG Risk Rating for the utility industry.
In January 2022, Atlantica was recognized once again as one of the World’s 100 Most Sustainable
Corporations, issued annually by Corporate Knights. Atlantica ranked #8 in the Global 100 index
and #2 in Power Generation.
Also in January 2022, Atlantica was included for the 2nd consecutive year in the Bloomberg Gender-
Equality Index (GEI). The GEI includes 418 companies across 11 sectors and 45 countries and
regions. It measures disclosure and gender equality using indicators across five dimensions: female
1 The target boundary includes steam generation
52
leadership and talent pipeline, equal pay and gender pay parity, inclusive culture, anti-sexual
harassment policies, and pro-women brand.
In December 2021, the Carbon Disclosure Project (CDP) issued Atlantica’s 2021 climate change
rating. CDP included us in its “A List”, achieving the highest score on environmental transparency
and action.
In November 2021, Atlantica was selected amongst the inaugural recipients of the Terra Carta Seal,
launched by His Royal Highness the Prince of Wales through the Sustainable Markets Initiative
(SMI). The Terra Carta Seal recognizes companies which are demonstrating their commitment to,
and momentum towards, the creation of genuinely sustainable markets. It is awarded to companies
whose ambitions are aligned with those of the Terra Carta, a recovery plan for Nature, People and
Planet, launched in January 2021.
Atlantica is a signatory to the United Nations Global Compact (UNGC), the world’s largest corporate
sustainability initiative with more than 12,000 signatories in over 160 countries. The UNGC is an
initiative which encourages companies and organizations worldwide to adopt sustainable and
socially-responsible policies. Participation in the UNGC is voluntary and pledge to uphold and
disseminate the principles and report on their progress once they apply them in their management.
As part of its commitment to sustainability, Atlantica has formally adopted the UNGC ten
fundamental principles in the fields of human rights, labour, environment and anticorruption. We
have made the UNGC and its principles an integral part of our strategy, culture and day-to-day
operations.
Atlantica is committed to aligning its actions to 7 of the 17 Sustainable Development Goals: climate
action, affordable and clean energy, clean water and sanitation, decent work and economic growth,
gender equality, life on land, and industry, innovation and infrastructure.
Our ESG Report includes additional disclosure related to UNGC, which is available on our website.
In December 2021, the Board updated and/or issued, as applicable, several key documents
following our long-term strategy:
- Compliance documents, including the Code of Conduct and the Corporate Governance
Guidelines.
53
- Health and Safety Policy.
- Environmental Policy.
- Diversity and Inclusion Policy
- Community Development and Involvement Policy.
- Biodiversity Policy.
- Asset Management Policy.
- Human Rights Policy (new).
These policies are available on our website (www.atlantica.com).
Environmental Awareness
In 2021 we continued to improve our environmental awareness among our stakeholders. We also
improved our social media and intranet content to increase environmental awareness.
In November 2021, we participated in a side event to the 26th Conference of the Parties to the
United Nations Framework Convention on Climate Change (COP26) in Glasgow, UK.
In early 2021, our CEO took part in an online conference hosted by RBC Capital Markets on
leveraging sustainability as a competitive advantage. Our CEO discussed how sustainability factors
are impacting business and global markets, renewable energy investment opportunities and risks,
and the importance of ESG and climate change disclosure.
The European Union Taxonomy
The European Union (EU) Taxonomy defines economic activities that can be considered
environmentally sustainable. It is aimed at investors, companies and financial institutions, covers a
wide range of industries and is expected to create security from greenwashing, help companies to
plan the transition to a decarbonized economic model, and help shift investments where they are
most needed. Reporting is not mandatory for Atlantica, but we have decided to voluntary provide
revenue, Adjusted Ebitda and investment information of our business activities.
2021
Revenue Adjusted
EBITDA
2020
Investment Revenue Adjusted
EBITDA
Investment
85%
83%
77%
92%*
Taxonomy aligned: Renewable (solar,
wind and hydro) and Transmission
lines contributing to climate change
mitigation
Under Analysis
Total (in USD million)
* Includes 2021 investments in Coso, Vento II, Chile PV2, La Sierpe and Italy PV 1, 2 and 3.
** Includes 2020 investments in Solana and Chile PV1.
*** We are analyzing if our some of our 2021 acquisitions / investments are compliant with the EU taxonomy.
Note: On February 2, 2022, the European Commission presented a “Taxonomy Complementary Climate Delegated Act”
to include certain gas power activities as part of the EU's transition towards climate neutrality. The Complementary
Delegated Act is expected to enter into force on January 1, 2023. The table above does not consider our efficient natural
gas assets as taxonomy aligned.
8%***
$1,212
3%***
$480
$1,013
97%**
$796
$824
$302
83%
Environmental Dimension
Atlantica’s Environmental, Quality and Health and Safety Management System is ISO 14001, ISO
9001 and 45001 compliant, respectively. These standards cover the management and acquisition
of contracted assets. An external third party (DNV GL) audits our Environmental, Quality and Health
54
and Safety Management System annually. Our certifications, obtained for the first time in 2015,
were renewed in May 2021 and are valid until May 2024.
The Company’s management system guarantees that we comply with our own policies and with
the regulations in force in each of the markets in which we operate. In particular, we measure and
monitor the environmental impact of our activities and we analyse initiatives to reduce our GHG
and non-GHG emissions, water consumption, and hazardous and non-hazardous waste.
We perform annual internal audits on our assets to ensure compliance with our best practices and
to promote continuous improvement. The Operations department audits all our assets at least
every two years. The purpose of these audits is to review operational, maintenance, engineering,
health and safety and environmental indicators, as well as to comply with reporting requirements.
The internal audit team reviews the internal controls and financial information of all our assets on
an annual basis. Specific internal audits may be carried out on certain assets on an as-needed basis.
Number of Assets Audited and Improvement Actions in 2021 and 2020
Assets audited
Identified improvement actions
2021
13
91
2020
13
179
Note 1: Approximately 85% of 2020 identified improvement actions were implemented during 2020 and 2021. The rest are expected to
be implemented during 2022.
Note 2: Approximately 40% of 2021 identified improvement actions have been implemented. The rest of them are expected to be
implemented during 2022.
Note 3: Due to COVID-19 restrictions some of 2021 and 2020 audits were performed remotely and/or partially compared with the annual
audit plan.
In 2021 we closed the acquisition of Rioglass, a supplier of spare parts and services in the solar
industry. Considering that we are still in the integration process for this subsidiary, we do not have
reliable and comparable information on this subsidiary. As a result, we have decided to exclude
Rioglass data in the greenhouse gas emissions, air quality, water and waste management sections.
Greenhouse Gas Emissions
Atlantica complies with the 2008 U.K. Climate Change Act on GHG reporting, with the Commission
Regulation (EU) No 601/2012, and with the GHG Protocol on GHG quantification. We followed the
operational control approach to calculate our 2021 and 2020 GHG emissions data.
As of December 31, 2021, approximately 86% of our installed power generation capacity relates to
renewable energy assets and 14% refers to ACT and Monterrey, our efficient natural gas plants in
Mexico, compared to 82% and 18% in 2020, respectively.
55
Installed Capacity in Generation Assets, MW
2021
14%
Efficient
Natural
Gas
86%
Renewable
Energy
2020
18%
Efficient
Natural Gas
82%
Renewable
Energy
Note: Our 55 MWt of district heating capacity is not included within the installed capacity of our generating assets.
ACT achieved “efficient cogeneration facility” status according to the Mexican energy regulator.
The Mexican regulator categorises facilities that deliver energy above a defined efficiency threshold
as “efficient plants”. This status allows ACT to benefit from certain favourable conditions regarding
interconnection and transmission.
We expect to complete the 2021 GHG inventory external verification in Q1 2022. In 2020, Atlantica’s
complete greenhouse gas inventory was also externally verified. In Mexico, our Scope 1 and 2
greenhouse emissions were verified by ANCE, a leading certification association across industries
in Mexico. In Spain, our Scope 1 greenhouse emissions were verified by AENOR, a not-for-profit
entity that fosters standardization and certification across industrial and service sectors. The rest of
our greenhouse gas inventory was verified by DNV GL, an independent expert in assurance and
risk management. We expect no significant changes to 2021 GHG emissions presented in this
report.
In 2021 we avoided emissions of approximately 5.7 million tons of equivalent CO2, compared with
a 100% fossil fuel-based generation plant. In 2020, we avoided emissions of approximately 5.4
million tons of equivalent CO2 compared with a 100% fossil-fuel based generation plant.
We base our avoided emissions calculations on the “Greenhouse Gas Equivalencies Calculator” and
the Avoided Emissions and Generation Tool (AVERT) U.S. national weighted average CO2 marginal
emission rate, to convert reductions of kilowatt-hours into avoided units of CO2 emissions. In 2021
and 2020, Atlantica’s GHG emissions ratio was well-below those of fossil fuel-based generation.
56
Atlantica’s GHG Emission Ratio vs. Fossil Fuel-Based Generation GHG Emissions Ratio
2021
2020
h
W
k
/
e
2
O
C
g
1,000
750
500
250
0
709
191
h
W
k
/
e
2
O
C
g
1,000
750
500
250
0
709
188
Atlantica GHG Emissions
(Scopes 1+2)
Electricity-Related
Emissions Factor (AVERT)
Atlantica GHG Emissions
(Scopes 1+2)
Electricity-Related Emissions
Factor (AVERT)
We quantified and reported on the GHG emissions figures following the GHG Protocol:
- Scope 1: Direct emissions of GHG from sources that are owned or controlled by the Company.
- Scope 2: Indirect emissions of GHG from consumption of purchased electricity, heat or steam.
- Scope 3: Indirect emissions of GHG not included in Scope 2 that occur in the Company’s value
chain, including both upstream and downstream emissions, and the emissions of our non-
consolidated affiliates.
Our reported emissions include emissions of methane (CH4), and nitrous oxide (N2O) as CO2
equivalents. We use the GHG inventories conversion factors indicated by the organizations listed
below:
-
Intergovernmental Panel on Climate Change (the “IPCC”).
- United States Environmental Protection Agency (the “EPA”).
- 2021 GHG National Inventory from the Ministry of Ecological Transition in Spain.
We calculated Scope 3 emissions using an economic input-output analysis and key emission factors
from CEDA’s2 5.0 database. We also used the fuel consumption activity data and emission factors
disclosed at WTT DEFRA 20213 to calculate Scope 3 emissions.
Approximately 75% of the total GHG emissions generated in 2021 came from our efficient natural
gas plants in Mexico, compared to 86% in 2020. The difference is mainly due to the consolidation
of Coso, our geothermal asset, which increased GHG emissions generated by our renewable energy
assets.
2 CEDA stands for “Comprehensive Environmental Data Archive”, a set of databases designed to assist on environmental system analysis throughout the
supply chain.
3 WTT DEFRA 2021 stands for “Department of Environment Food and Rural Affairs”, GHG conversion factors from resource extraction, production and
delivery.
57
2021
25% Others
2020
14% Others
75% Efficient Natural Gas
86% Efficient Natural Gas
Others: Renewable energy, water desalination assets, and
transmission lines
Others: Renewable energy, water desalination assets, and
transmission lines
GHG Emissions by Technology
Following U.K. GHG regulation disclosure, GHG emissions generated in the U.K. were less than
0.001% in both 2021 and 2020.
The graph below represents our GHG emissions in 2021 and 2020:
3,000
2,757
2,832
e
2
O
C
f
o
s
n
o
t
0
0
0
'
2,000
1,737
1,795
1,000
0
821
800
199
237
Scope 1
Scope 2
Scope 3
Total
GHG Emissions Breakdown by Scope
2020
2021
Total CO2 equivalent emissions generated by the Company in 2021 reached 2,832 thousand tons,
compared to 2,757 thousand tons in 2020.
Scope 1 emissions include CO2 emissions from Coso, our geothermal asset in California since we
acquired the asset in April 2021. The area where our asset is located releases GHG emissions to the
atmosphere, mostly in the form of CO2 that already exists and is released progressively in a natural
process. With our activity, while we produce electricity, we are accelerating this process of release
of already existing CO2. Following the GHG protocol, we record these emissions as part of our
Scope 1 emissions even though these emissions were not created by Atlantica. This is the main
reason for the increase in Scope 1 emissions, which was partially offset by lower production in 2021
compared to 2020 at ACT, an efficient natural gas plant in Mexico. Its off-taker, requested less
electricity and steam, hence decreased natural gas consumption and emissions. A tolling
agreement exists for this asset, according to which we receive water and natural gas from the client
and in return we provide electricity and steam.
In addition, our scope 2 emissions increased due to the consolidation of Tenes, our desalination
water plant since June 2020. 2021 was the first complete year we consolidated this asset.
58
Finally, our scope 3 emissions decreased as most of them relate to ACT. In 2021 ACT had lower
production compared to 2020, which resulted in lower emissions.
Scope 1 and 2 GHG Emissions Rate per Unit of Energy Generated4
h
W
K
/
e
2
O
C
g
400
350
300
250
200
150
100
50
0
188
191
2020
2021
Scope 1 and 2 GHG emissions rate per unit of energy generated increased from 188 gCO2e/kWh
in 2020 to 191 gCO2e/kWh in 2021. This increase is mainly due to the consolidation of Tenes, the
desalination plant since May 2020 (adding GHG emissions (gCO2e) with no generation contribution
(kWh)). 2021 was the first complete year we consolidated this asset.
If we exclude the effect of our non-generating assets, the GHG emissions rate per unit of energy
generated would have decreased from 175 gCO2e/kWh in 2020 to 173 gCO2e/kWh in 2021. The
increase caused by the consolidation of Coso, our geothermal asset, was offset by lower
production, thus emissions, in ACT.
Air Quality
Regarding non-GHG emissions, Atlantica generates (i) nitrogen oxide (NOx), excluding nitrous
oxide (N2O) which is computed within the GHG emission calculation, (ii) sulfur dioxide (SO2), and
(iii) carbon monoxide (CO). Our efficient natural gas plants in Mexico generate most of these
emissions.
Tons
2021
2020
NOx
SO2
CO
550
0.63
397
Note: We have revised 2020 figures to account for non-GHG emissions at Monterrey, a non-controlling investment. We have determined
that non-GHG emissions at Monterrey are material, hence we have included them based on our percentage of economic interest in the
project.
526
0.64
342
NOx and CO emissions decreased mainly due to lower production at ACT, which resulted in lower
emissions.
Water Management
Atlantica is committed to using water efficiently in our operations. This covers two main types of
water use:
4 The ratio has been calculated considering electric and thermal generation.
59
1. Power generation in the assets that use cycled water in the turbine circuit and in refrigeration
processes.
2. Generation of drinking water for local communities and industries through the desalination of
sea water.
We are also committed to: (i) calculating and monitoring our water usage and promoting rational
and sustainable use of water in compliance with our Environmental Policy, (ii) limiting water
consumption as much as possible and operating our assets using an amount of water well below
legal limits, and (iii) continuing to improve our water management beyond compliance. We aim to
reduce the water consumption of our plants over time.
1. Power Generation
Renewable Energy Assets
Some of our renewable assets use water in its power generation process. These plants use water
for cooling condensers during power generation. We withdraw fresh water primarily from rivers
and aquifers. The Company holds permits to withdraw water from these sources and adheres to
regulations on water quality. The difference between water withdrawn from and returned to its
source is our water consumption which occurs because of evaporation.
We measure the water we withdraw and return using the installed water meters on the plants’
pumping equipment. The reported volumes represent the total readings measured by the water
meters at all our assets without adjusting for our interest in the assets.
The water meters are sealed and are normally subject to audit by the inspector representing the
local water authorities. We comply with the requirements and regulations of the applicable local
regulatory authorities in the areas in which we operate. We regularly report the results of our water
statistics to the local water agencies.
For example, we have implemented an air-dry cooling system, instead of cooling towers, to
refrigerate the condensers in one of our plants. This plant is in an area of water scarcity and this
system reduces the demand for water.
Efficient Natural Gas Plant
The ACT plant is an efficient natural gas cogeneration facility with a rated capacity of approximately
300 MW and between 550 and 800 metric tons per hour of steam. ACT produces electrical energy
and steam.
The water necessary to operate the plant is withdrawn and supplied by our client. The water
received is transformed to high pressure steam through heat recovery steam generators and
delivered back to the client.
The following charts set out water management key performance indicators (KPIs) for power
generation assets for 2021 and 2020:
60
l
a
w
a
r
d
h
t
i
w
r
e
t
a
w
3
m
n
o
i
l
l
i
m
s
e
g
r
a
h
c
s
i
d
r
e
t
a
w
3
m
n
o
i
l
l
i
m
Water Withdrawal and Water Savings
Water Withdrawal Breakdown by Sources of Water
25
20
15
10
5
0
5
4
3
2
1
0
51%
16.0
43%
17.3
2020
2021
Water Savings
60%
50%
40%
30%
20%
10%
l
a
w
a
r
d
h
t
i
w
r
e
t
a
w
3
m
n
o
i
l
l
i
m
14
12
10
8
6
4
2
0
10.4
11.8
5.6
5.5
2020
2021
Ground Water
Surface Water
Public Network
Water Discharges
Water Withdrawal and Discharges per MWh
2.1
2.3
2020
2021
h
W
M
r
e
p
3
m
3
2
1
0
1.56
1.63
0.21
0.22
Withdrawal
Discharges
2020
2021
In 2021, we withdrew 12.4 million cubic meters of water at our renewable energy assets and we
returned 2.3 million cubic meters (18%) back to the source, which represents an increase of the
water used in our operations compared to the previous year. In 2020, we withdrew 10.6 million
cubic meters of water at our renewable energy assets and we returned 2.1 million cubic meters
(20%) back to the source.
Also, in 2021, our client withdrew and supplied 4.9 million cubic meters of surface water to ACT. In
2020, the client withdrew and supplied 5.4 million cubic meters of surface water. In both years,
water received was transformed to high pressure steam through heat recovery steam generators
and delivered back to our client. Water withdrawn was 0.5 million cubic meters lower in 2021
because of lower production per the client request, which resulted in lower water withdrawal.
Independent external laboratories periodically test the quality of the water returned to the
environment. The 12.4 million cubic meters represents 57% of the limits allowed by our water
permits. The difference between the water permit limits and actual water withdrawn represents
water savings.
2. Water Desalination
Some parts of the world are suffering from ongoing drought which, combined with a water supply
that is unfit for human consumption, can foster disease and death. Water scarcity also affects food
production. The desalination of sea water provides a climate-independent source of drinking water.
61
We withdraw sea water for desalination as specified in the agreements for our three desalination
plants.
In 2021, we withdrew 402.4 million cubic meters of sea water, from which we removed salt and
minerals during the desalination process at our water treatment facilities to prepare it for human
consumption. The difference between water withdrawn from and returned to the sea is the
desalinated potable water delivered to the water utility, as specified by our take-or-pay agreements
for the consumption needs of approximately 3 million people. In 2021, we produced 167.6 million
cubic meters of desalinated water and returned 234.8 million cubic meters (58%) back to the sea.
In 2020, we withdrew 330.3 million cubic meters and returned 185.9 million cubic meters (56%)
back to the sea. 2021 was the first full year our water segment included three desalination plants,
hence water withdrawal increased from 330.3 million cubic meters in 2020 to 402.4 million cubic
meters in 2021.
Waste Management
The Company’s assets produce two main types of waste, hazardous and non-hazardous. Our
processes generate hazardous waste through the use of chemical products. Waste that does not
contain substances that are potentially harmful to human health or the environment is defined as
non-hazardous waste. Atlantica is committed to reduce waste and has a comprehensive waste
management system with controls in place.
25,000
20,000
15,000
10,000
5,000
0
e
t
s
a
W
f
o
s
n
o
T
20,532
21,868
2,482
2,649
Non- Hazardous Waste
Hazardous Waste
2020
2021
Note: We have revised 2020 figures to account for waste at Monterrey, a non-controlling investment, based on our
percentage of economic interest in the project.
Atlantica is committed to reducing waste and has a comprehensive waste management system
with controls in place. Our targets go beyond legal compliance. In 2021 we continued to implement
new initiatives that improved our leak detection capabilities. We also provided enhanced employee
waste-related training, updated our leaks procedure with best practices and lessons learned and
identified new recycling and reusing initiatives.
Hazardous Waste
The main reason for the increase of hazardous waste in 2021 corresponds to land removal from a
2019 environmental accident at one of our assets in Spain. Absent this remediation action
corresponding to prior periods, our hazardous waste would have been reduced. The increase is
62
also due to the acquisition of Coso our geothermal asset in April 2021. In Coso, the extracted
geothermal steam contains a small portion of non-condensable gases. These gases are pumped to
an emission abatement system that converts them into hazardous waste, preventing polluting
gases to be emitted to the atmosphere.
In 2021 we reused or recycled 30% of the total hazardous waste generated and disposed of the
remaining 70% in landfills. In 2020, we reused or recycled 55% of the total hazardous waste
generated and disposed of the remaining 45% in landfills. Following legal requirements, the
additional land removal at one of our assets in Spain was deposited in landfills.
Non-hazardous Waste
Non-hazardous waste concerns the wastewater treatment plants and the reuse of wastewater
before discharge. In 2021, the non-hazardous waste increase was mainly driven by poorer
withdrawal water quality at some assets in Spain.
In 2021, we reused or recycled 70% of the total non-hazardous waste generated and disposed of
the remaining 30% in landfills, compared to 61% and 39%, respectively, in 2020.
Energy Consumption
Our renewable energy, efficient natural gas and water assets consume energy from different
sources, including purchased fuel and electricity and, self-generated energy. In 2021, Atlantica
consumed 8,376 GWh of energy compared to 9,287 GWh of energy in 2020.
Energy Consumption
In GWh
Consumption of Fuel
Consumption of Purchased Electricity for own use
Consumption of Self-Generated Renewable Energy
Total Energy Consumption
2021
2020
7,543
537
296
8,376
8,545
448
294
9,287
In 2021 and 2020 approximately 90% of fuel consumption came from ACT, our natural gas
subsidiary in Mexico. In 2021 the asset had lower production resulting in lower fuel consumption.
Following U.K. energy consumption regulation disclosure, energy consumption generated in the
U.K. was less than 0.001% in both 2021 and 2020.
Employees
At Atlantica, fostering a collaborative environment is one of our core values. Respect, teamwork
and empowerment are key principles to building effective teams.
Our values and Code of Conduct set out what we expect of all our people. The honesty, integrity
and sound judgement of our employees, officers and directors are essential to Atlantica's
63
reputation and success. We seek employees who have the right skills and who understand and
embody the values and expected behaviors that guide our business activity.
Atlantica has built standardized processes for evaluating the performance of our employees and
have in-place a career development program, performance assessments and skills training
programs aimed at talent retention and development.
The Company offers packages that include monetary compensation and remuneration in-kind.
In 2021 and 2020, we based our compensation policy on these four pillars:
1. Pre-defined remuneration bands based on market surveys provided by external consultants for
certain positions.
2. Annual performance appraisal for 100% of our employees.
3. Variable compensation based on Company, department and individual targets.
4. Long-term incentive plan for management.
Regarding our training program, we identify training categories to improve distinct sets of skills,
integrate them into Atlantica’s team and culture, and as a measure to retain talented employees:
-
Introduction to Atlantica. All new employees must attend our “Introduction to Atlantica”
course during their induction period. In addition, all the employees receive training about our
compliance and management policies.
- Management skills. We offer soft management-skills courses to improve negotiation, team-
working, team-building, decision-making, leadership and communication, among other skills.
- Technical knowledge courses. Our training plans also include technical knowledge courses
specific to different technical fields.
- Languages. We offer several language courses to our employees to allow them to operate
effectively in an international setting.
- Health and Safety. This is part of our core values. We offer several training courses to both
our employees and operation and maintenance personnel to reinforce it.
As of December 31, 2021 and 2020, Atlantica offered over 150 different training programs to its
employees. The employee agrees on the definitive training program with his or her manager and,
the People and Culture department. In 2021, employees completed on average 80 hours of training
compared to 33 in 2020. COVID-19 pandemic limitations postponed to 2021 scheduled training is
the primary reason for higher training hours in 2021 versus 2020.
64
The table below shows the average number of employees for the years 2021 and 2020 on a
consolidated basis:
Average Number of Employees by Geography
North America
South America
EMEA
Corporate
Total
Average Number of Employees by Category
Management
Middle Management**
Engineers and Graduates
Assistants and Professionals
Asset Operations Employees
Total
Average Number of Employees by Gender
Male
Female
2021
296
61
61
109
527
2021
16
100
158
25
228
527
2021
396
131
2020
237
46
54
104
441
2020
17
94
132
20
178
441
2020
325
116
Total
(*) Middle Management consists of employees who: (i) manage a specific area, (ii) supervise a group of employees, or (iii) are considered
key personnel within the organization.
527
441
In 2021 we closed the acquisition of Rioglass, a supplier of spare parts and services in the solar
industry. Since we are still in the integration process for this subsidiary, we do not have reliable and
comparable information on this subsidiary and as a result we have decided to exclude Rioglass in
the tables above.
The increase in the average number of employees during 2021 compared to 2020 was mostly due
to the investments closed during 2021 and in particular Coso, our geothermal asset in California.
This subsidiary brought 76 new employees, of which approximately 76% were operation and
maintenance employees and approximately 89% were men.
In 2021, 131 out of 527 average employees were women, representing 25% of the Company’s
personnel. In 2020, 116 out of 441 employees were women, or 26% of the total headcount.
The table below summarizes the percentage of women at the Board of Directors, management
level (without including middle management level and without including directors) and over total
number of employees as of December 31, 2021 and 2020:
Women at the Board of Directors
Women at Management Level
Women at Atlantica
2021
25%
25%
25%
2020
25%
24%
26%
By 2021 year-end, our workforce increased to 558 from 456 in 2020. Women represented 25% of
the Company’s personnel by year-end, compared to 26% of the total headcount in 2020. In
addition, there were 99 full-time employees in Rioglass. Including these employees, women
represented approximately 24% of 657 employees.
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Atlantica guarantees respect for salary equality rights. Monitoring pay equality is one of the key
factors to ensuring the creation of an inclusive and respectful culture without differentiation based
on gender, age, race or any other personal factor.
The Company is determined to ensure that there is no gender-based inequality in its activities by
offering equal pay for equal work in all the businesses and countries where it does business. We
expect to disclose our 2021 gender pay gap analysis in our 2021 ESG Report.
We did not receive any communication regarding potentially discriminatory incidents in 2021 nor
2020.
In 2021 our consolidated employee benefit expense was $78.8 million, of which $70.5 million
comprised wages and salaries, $4.6 million social security costs incurred by the Company, and other
expenses. In 2020 our consolidated employee benefit expense was $54.5 million, of which $47.2
million comprised wages and salaries, $3.7 million to social security costs incurred by the Company
and, other expenses. The increase was mostly due to the investments closed during 2021.
The graphs below summarize the age and gender diversity of our people as of December 31, 2021
and 2020:
2021
2020
80%
70%
60%
50%
40%
30%
20%
10%
0%
2%
8%
11%
5%
Women
Above 51
41-50
31-40
Below 30
80%
70%
60%
50%
40%
30%
20%
10%
0%
15%
20%
28%
11%
Men
2%
9%
11%
5%
Women
Above 51
41-50
31-40
Below 30
15%
20%
28%
11%
Men
We have a key management team with extensive experience in developing, financing, managing
and operating contracted sustainable infrastructure assets. Our key management in 2021 and 2020
is made up of the following members:
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Name
David Esteban
Emiliano Garcia
Position
VP EMEA
VP North America
Irene M. Hernandez
General Counsel and Chief of Compliance
Francisco Martinez-Davis
Chief Financial Officer
Antonio Merino
VP South America
Stevens C. Moore
VP Strategy and Corporate Development
Santiago Seage
Chief Executive Officer and Director
Year of Birth
1979
1968
1980
1963
1967
1973
1969
There are no potential conflicts of interest between the private interests or other duties of the key
management members listed above and their duties to Atlantica. There are no familial relationships
among any of our executive officers or directors.
Diversity and Inclusion
At Atlantica, we believe that the diversity of our workforce is an asset that enriches the Company
with fresh ideas, perspectives, and experiences. We acknowledge the contribution of people of
different genders, nationalities, cultures, races, professional backgrounds, abilities, socio-economic
backgrounds, and ages. Our belief is that employees with diverse skills represent an important
resource identifying innovative solutions and improving our business performance, which
ultimately benefits all our stakeholders.
We provide a work environment free of discrimination, intimidation and harassment, where
everyone can participate in the success of the business and where all employees are valued for the
distinctive skills and experiences they bring to the Company.
Currently, 25% of the members of both the Board of Directors and Management are women.
In January 2021, Atlantica was included for the 2nd consecutive year in Bloomberg Gender-Equality
Index (GEI). We believe Bloomberg’s GEI helps bring transparency to gender-related practices and
policies at publicly listed companies by increasing ESG data available to investors. The GEI scoring
method measures gender equality a across five areas: female leadership and talent pipeline, equal
pay and gender pay parity, inclusive culture, anti-sexual harassment policies, and pro-women
brand. In 2021, the GEI includes 418 companies across 11 sectors and 45 countries and regions.
In 2021 and 2020, Atlantica has been part of the Women’s Empowerment Principles, a set of good
business practices that promote equality between men and women across all areas of the
organization.
In 2021 and 2020 we were not notified of any incidents relating to potential situations of
discrimination.
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People Management
We believe that by providing a healthy working environment for our employees, and by enhancing
social and professional development we will retain and attract valuable employees. Employees are
a core component of our present and future success.
Our values and Code of Conduct set out what we expect of all our people. The honesty, integrity
and sound judgement of our employees, officers and directors is essential to Atlantica's reputation
and success. We seek employees who have the right skills and who understand and embody the
values and expected behaviours that guide our business activity.
To improve communication with our people we have implemented several measures:
- Our CEO updates Atlantica’s employees on key priorities in open sessions with Q&A at least
twice a year.
- Our senior management takes part in our “Atlantica’s Management Model” training to discuss
with all employees the Company’s long-term strategy and business model, recent milestones,
growth strategy, as well as values, policies and procedures. We promote an informal and open
environment to foster discussions with employees in groups of less than 20 people. Employees
can express their ideas and concerns without evaluation or retaliation. The feedback is analysed
and shared with Atlantica’s management in monthly management meetings. Where
appropriate, we devise action plans and assign one or several managers responsibility for their
implementation.
- We periodically publish Atlantica-related news via our internal intranet.
In 2021, we had an employee voluntary turnover of 10.4%, which increased from 7.5% in 2020. This
is due to the low unemployment and high rotation in the U.S. If we exclude the effect of our
employees in the U.S., our employee voluntary turnover would have remained at 5.9%. Turnover
has been traditionally higher in the U.S. compared to the rest of our geographies, due to lower
unemployment rates. In 2021, employee turnover has increased in general in the U.S. following the
rapid economy recovery after the COVID-19 pandemic.
Also in 2021, 30 of our employees took parental leave in 2021, of which 19 were men and 11 were
women, and 21 employees enjoyed parental leave in 2020 (14 men and 7 women). In both years,
all employees returned to work.
At Atlantica, we offer a remuneration package that includes monetary and non-monetary
compensation. In 2021 and 2020, we based our compensation policy on these four pillars:
- Pre-defined remuneration bands based on market surveys provided by several external
consultants for certain positions.
- Annual performance appraisal for 100% of our employees.
- Variable compensation based on Company targets, departmental targets and individual targets.
-
Long-term incentive plan for certain employees.
Our People and Culture department receives remuneration data from two separate external
consultants for certain positions by location.
The package offered by Atlantica includes monetary compensation and remuneration in-kind,
depending on the employee’s position, and on local practices in the countries in which we operate.
In addition, we offer flexible compensation in certain locations, which sometime presents tax
68
advantages for employees. Under current local regulations, we offer 401(k) plans in the U.S. We
also finance a high percentage of the health insurance costs of our employees and their immediate
family in most of the countries where we are based. Finally, in certain locations, we have
implemented health initiatives including providing fresh fruit at our offices and subsidizing fitness.
In 2021, we continued implementing COVID-19 related contingency plans to guarantee the safety
of our employees. Since March 2020, we have implemented the use of additional personal
protection equipment (PPE), reinforced access control to our plants, reduced contact between
employees, changed shifts and tested employees. We have also reinforced our physical and cyber-
security measures. We have implemented protocols to decide which offices to keep open and
under what limitations, depending on health indicators in each specific region.
Community Development and Involvement Initiatives
Atlantica’s day-to-day activities affect nearby communities. These are the communities where some
of our employees and other stakeholders live and raise their families, and where part of our future
workforce is educated. It is crucial that we bring value to our communities.
We recognize that some communities where Atlantica is present are suffering and will continue to
suffer the consequences of COVID-19. In 2021 and 2020 we focused most of our efforts on
mitigating the impact of COVID-19. We will continue to look for ways to help our surrounding
communities to minimize the impact of COVID-19.
The Company’s corporate culture includes a commitment to supporting the long-term
development of the communities where we operate. Our Community Development and
Involvement Policy is available on our website (www.atlantica.com).
Occupational Health and Safety
The first of Atlantica’s core values is “Integrity, Compliance and Safety”. Atlantica, its Board and its
management are committed to prioritizing and actively promoting health and safety as a tool to
protect the integrity and health of our employees and those of our subcontractors at our assets or
work centres. We promote a safe operating culture across Atlantica and encourage our
subcontractors to adopt a preventive culture in the operation and maintenance activities as
reflected in our corporate health and safety policy available on our website (www.atlantica.com).
COVID-19 Pandemic
In 2020, we established a COVID-19 Committee which included the CEO, the geographic VPs, the
Health and Safety Manager and other members of Atlantica’s management team. During 2021, the
Committee adapted measures to the new information released on COVID-19 in each specific
location where our assets and offices are located and took all necessary actions to manage the risks
affecting our employees, operations and stakeholders. In 2021, we held 83 COVID-19 Committee
meetings. We have continued to monitor and implement health and safety measures for each asset
and office. During 2021 and 2020, we continued operating the assets and providing a reliable
service to all our clients, with no disruptions to availability or production because of COVID-19.
Some key actions implemented during 2021 COVID-19 pandemic include:
▪ Our COVID-19 Committee:
69
-
Implemented measures based on developments in COVID-19 data in countries and regions
where we are present.
- Defined key KPIs to monitor the pandemic situation in all the regions and decide whether
to open or close our offices in each region.
- Monitored positive cases among employees and subcontractors, supervising the isolation
of positive cases and close contacts.
- Monitored new regulations issued by governments (measures include implementing such
regulations, where appropriate). The Committee approves all necessary measures without
delay.
- Developed and implemented new measures to adapt our protocols to the last technical
publications about the virus.
▪
In those regions where the vaccination rates are lower, we took measures to incentivize
employees and subcontractors employees to get the COVID-19 vaccine. For example, in the
U.S. and in South Africa our initiatives increased the number of vaccinated operation and
maintenance employees by approximately 10% and 25%, respectively.
▪ We implemented new safety initiatives such as improvement of the ventilation and the
measurement of CO2 levels as an indirect indicator of a good/bad ventilation.
Health and Safety Management System
Atlantica conducts annual internal and external audits to test our health and safety management
system. An independent third party carries out the external audit. In 2021, we certified our system
to the new ISO 45001.
In addition, we perform periodic health and safety audits of our operation and maintenance
suppliers to monitor compliance with legal regulations, contractual requirements, and our safety
best practices.
Health and Safety Best Practices
Our health and safety rates include both our employees and subcontractors data.
The Company’s health and safety best practices program is a key management tool. It has been in
place since 2017 and we regularly update it to include the lessons learned from our peers,
contractors and suppliers. During 2021, we continued implementing new best practices as well as
incorporated our best practices to newly acquired assets.
- “Walk and Talk” awards. We present quarterly awards to employees of Atlantica and our
subcontractors for the best safety improvement proposals.
- “Golden Rules” applied to each of our technologies. We defined key safety rules for each of our
technologies, which we communicated to all employees, posted on boards at all our assets and
included in regular operation and maintenance training.
- Safety Day. In 2021 we held our Safety Day online and physically at some of our assets
depending on COVID-19 pandemic restrictions. Over 750 Atlantica’s employees and
subcontractors’ employees took part. We honored 30 Atlantica and subcontractors employees
with awards for their commitment to safety.
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Health and Safety Rates
Our Frequency with Leave Index (FWLI) represents the total number of lost-time accidents recorded
in the last 12 months per million hours worked. We ended 2021 at 2.3 compared to 1.4 in 2020.
Frequency with Leave Index in 2020 and 2021
Employees
Subcontractors
Total
3
2
1
0
2.0
2.4
1.9
3
2
1
0
2.3
1.4
3
2
1
0
2020
2021
2020
2021
2020
2021
Atlantica’s FWLI is below the sector average.
FWLI Below Sector Average in 2020 and 2021
10
8
6
4
2
0
5.5
1.4
3.3
2.3
2020*
Sector Average
Atlantica
2021*
(*) Weighted Index is calculated based on the Public National Index weighted by actual working hours in each geography. Sources: USA:
Bureau of Labor Statistics (2020); Mexico: Secretaria del Trabajo y Prevision Social (2020); EMEA: Spain, South Africa and Algeria: Instituto
Nacional de Estadisticas (2021); Peru and Chile: Superintendencia Seguridad Social Chile (2020); Uruguay: Banco del Seguros del Estado
(2019).
Our General Frequency Index (GFI) represents the total number of recordable accidents with and
without lost time recorded in the last 12 months per million hours worked. We ended 2021 at 6.0,
representing approximately a 20% increase compared to 2020.
General Frequency Index in 2020 and 2021
Employees
5.6
0.9
8
6
4
2
0
8
6
4
2
0
Subcontractors
6.8
6.2
Total
5.0
6.0
8
6
4
2
0
2020
2021
2020
2021
2020
2021
Atlantica’s GFI is below the sector average.
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GFI Below Sector Average in 2020 and 2021
20
15
10
5
0
13.0
5.0
7.5
6.0
2020*
2021*
Sector Average
Atlantica
(*) Weighted Index is calculated based on the Public National Index weighted by actual working hours in each geography. Sources: USA:
Bureau of Labor Statistics (2020); Mexico: Secretaria del Trabajo y Prevision Social (2020); EMEA: Spain, South Africa and Algeria: Instituto
Nacional de Estadisticas (2021); Peru and Chile: Superintendencia Seguridad Social Chile (2020); Uruguay: Banco del Seguros del Estado
(2019).
Although our ratios remain low, the FWLI and GFI increase is mostly due to safety accidents at one
of the assets acquired in 2021. We are still working on the integration of recently acquired assets
in order to implement our strong safety culture in all the subsidiaries. We undertook all necessary
measures to minimize potential safety impacts, performed specific external and internal audits,
issued new safety campaigns and bulletins, improved safety inspections, procedures and training,
and extended health and safety bonus to certain employees to improve supervision.
Due to COVID-19 travel restrictions some of 2021 health and safety, operations and environmental
audits were performed remotely and/or partially compared with the audit plan. We will make every
effort to implement new health and safety measures during 2022 despite COVID-19 potential
restrictions.
The fatality rate (including both our employees and subcontractors) has been zero, and we have
recorded no major injuries since our incorporation.
We also monitor near-misses and unsafe acts and conditions through our Total Recordable
Deviation Index (TRDI). This index represents the number of near-misses and unsafe acts and
conditions recorded in the last 12 months per million hours worked. The goal of this Key
Performance Indicator (KPI) is to encourage the identification and communication of near misses
and unsafe acts and conditions by our employees and our contractors’ employees. Given the fact
that this helps to identify risks and to implement adequate preventive measures, the higher the
rate is, the better.
In 2021 our TRDI improved thanks to the enhanced risk identification processes and
communication initiatives implemented in our assets. Our preventive reporting program, mainly
through Walk and Talk, has progressed alongside our measures to managing and mitigating risks.
We believe in the health and safety processes and procedures we have in-place, hence we expect
the Total Recordable Deviations to remain relatively stable in the future.
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2,000
1,500
1,000
500
0
1,197
1,519
2020
2021
Total Recordable Deviations Index
By 2021 year-end, 65% of our assets had achieved more than 1,000 days without lost time accidents
and 70% over 500 days without lost-time accidents.
In 2022, we will continue to devote time and effort to protect our employees and subcontractors
against COVID-19 and promoting a health and safety culture. We will seek to continue to improve
our health and safety performance by using our existing tools and implementing new ones based
on best practices.
Business Ethics
“Integrity, Compliance and Safety” is our first value and prevails over the rest. We continuously
strive for the highest standards of business conduct, safety, professionalism, honesty, and ethical
conduct even if it means making difficult choices. We are committed to promoting ethical business
practices and complying with all relevant laws and regulations.
The Company has policies, processes, and procedures in-place to prevent, avoid and mitigate
actions improper or contrary to law and to ensure ethical principles are applied in all our activities.
In addition, Atlantica has implemented a Code of Conduct to ensure consistent and effective
commitment to Integrity and Compliance. We refer to the Code of Conduct section for additional
disclosure on our Code. We also promote and strengthen measures to prevent and combat
corruption more effectively and efficiently. Our Anti-Bribery and Corruption Policy applies to all
Atlantica businesses.
The Whistleblowing Channel is an essential part of Atlantica’s commitment to fighting fraud,
irregularities and corruption. It is available on our website to all Company employees and
stakeholders. It serves as a tool to report any complaints and concerns about management, as well
as any breaches of the Code of Conduct or any conduct contrary to ethics, law or Company
standards. The channel is managed by the Audit Committee. Confidentiality and no retaliation are
the essential operating principles of the channel. We may suspend these principles only where the
claimant did not act in good faith.
Atlantica business activities are governed by laws that prohibit bribery supporting global efforts to
fight corruption. Specifically, the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act
2010 make it a criminal offense for companies, as well as their officers, directors, employees, and
agents, (or any other person) to give, request, promise, offer or authorize the payment of anything
of value (such as money, any advantage, benefits in kind, or other benefits) to a foreign official,
foreign political party, officials of foreign political parties, candidates for foreign political office or
officials of public international organizations to obtain or retain business. Similar laws have been
73
or are being adopted by other countries. Private bribery is also illegal under U.S. laws, the U.K.
Bribery Act, and the laws of other jurisdictions.
Neither the Company, nor its directors, employees or representatives on its behalf, can make
political contributions (donations to politicians, political parties or political organizations) or
sponsor events whose exclusive purpose is political propaganda. In 2021 and 2020, neither
Atlantica nor any of its subsidiaries made any financial or political contributions in-kind to political
organisations, political campaigns, lobbyists or lobbying organizations, trade organizations (with
political impact) nor other tax-exempt groups, whether directly or indirectly.
Finally, all our officers and employees working with sensitive information sign a formal commitment
annually acknowledging our insider trading policy. We also provide compliance courses.
Human Rights
We are committed to conducting our business in a manner that respects the rights and dignity of
our employees and those linked to our activities including our supply chain. We respect
internationally recognized human rights, as set out in the International Bill of Human Rights and
the International Labour Organization´s (ILO) Declaration on Fundamental Principles and Rights at
Work. Labor practices at Atlantica and the professional activities of its employees, executives and
directors are governed by the United Nations Universal Declaration of Human Rights and the ILO
on social rights, and the principles of the United Nations Global Compact.
Freedom of association is a human right as defined by international declarations and conventions.
The right of workers to collectively bargain the terms and conditions of work is also an
internationally recognized human right. Collective bargaining refers to all negotiations which take
place between one or more employers or employers' organizations, on the one hand, and one or
more workers' organizations (trade unions), on the other, for determining working conditions and
terms of employment or for regulating relations between employers and workers.
Atlantica is a signatory to the UNGC, whose principles are derived from, among others, the
Universal Declaration of Human Rights and the ILO’s Declaration on Fundamental Principles and
Rights at Work. The environment, social and governance section includes additional disclosure
related to UNGC.
Our Code of Conduct includes a section on Human and Labor Rights. The code requires all
employees, officers and directors to report any illegal behavior or violations of laws, rules or
regulations. All our employees acknowledge our Code of Conduct once per year and they all receive
training on our internal Management Policies, which include our Code of Conduct and human and
labor rights. We do not tolerate discrimination against anyone based on any personal characteristic,
such as ethnic background, culture, religion, age, disability, gender, marital status, sexual
orientation, union membership, political affiliation, health, disability, pregnancy, smoking habits, or
any other characteristic protected by law. We provide equal opportunities to all employees. We
promote equality and work to create an inclusive workforce. We want to foster a comfortable work
environment where employees can raise issues. Any unacceptable behavior must be reported.
Atlantica strictly prohibits forced labour, employees should undertake work voluntarily. Whether as
indentured labour, bonded labour or any other form of involuntary labour, forced labour is not
acceptable. Mental and physical coercion, slavery and human trafficking are prohibited.
74
All employees receive a remuneration package that meets or exceeds the legal minimum standards
or appropriate prevailing industry standards.
We have a Supplier Code of Conduct approved by the Board of Directors. Atlantica has a strong
commitment to operate at the highest standards of corporate conduct. We seek to operate with
third parties who operate under principles similar to those set out in our Code of Conduct,
accordingly, we have included our requirements in our contractual arrangements with suppliers.
We acknowledge that our day-to-day activities affect nearby communities. Our assets occupy
extensive areas of land and we generate waste, but we also facilitate communities’ economic
prosperity through local purchasing and the hiring of local employees. It is important that we are
proactive and provide value to the communities in which we operate by collaborating with locals
to promote their environmental, economic and social progress. We have implemented our human
rights initiative into the processes that govern our business activities in the areas where we are
present.
In December 2021, our Board of Directors issued a new Human Rights Policy. The policy is available
on our website (www.atlantica.com).
Atlantica’s Code of Conduct
Atlantica is committed to maintaining the highest standards of honesty, integrity and ethical
conduct. We are also committed to promoting ethical business practice and complying with all
relevant laws and regulations.
Our Code of Conduct requires the highest standards for honest and ethical conduct, explicitly states
that we do not tolerate bribery or corruption in any of its forms and prohibits political involvement
of any kind on the Company’s behalf. We intend the Code of Conduct to help everyone recognize
ethics and compliance issues before they arise and to deal appropriately with those issues that
occur.
The Code applies to all directors, officers, and employees of Atlantica Sustainable Infrastructure plc
and each of its subsidiaries, including controlled and associated non-controlled companies. We
make every effort to apply this Code at associate non-controlled companies given Atlantica ´s level
of participation. We also seek to work or partner with third parties that adhere to principles that
are similar to those set out in this Code. Our employees acknowledge and agree to the Code of
Conduct annually. In addition, we organize training on our management policies, which includes
our Code of Conduct.
Our Board of Directors reviews and approves the Code of Conduct on an annual basis. It was last
approved and amended in December 2021. All our employees acknowledge and agree to the Code
of Conduct annually.
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The Code of Conduct at a Glance
Personal and Business Integrity
Human and Labor Rights
Corporate Asset and Financial Integrity
-
Conflicts of interest
-
Bribery and corruption
-
Travel, entertainment, and gifts
-
Insider trading
-
Privacy and personal data protection
- Dignity and respect. Equality and diversity
-
- Occupational health and safety
-
Environmental sustainability
-
Accurate accounting and reporting
-
Anti-Money laundering and related offenses
-
Confidentiality and information security
-
Protection of Assets
Labor standards
Ethic Mailboxes
-
Channels of communication
Breach of the Code of Conduct
- Managing suspected misconduct
The Code is publicly available on our website (www.atlantica.com).
Our Code requires the highest standards for honest and ethical conduct and explicitly states that
we do not tolerate bribery and corruption in any of its forms. In 2020 and 2021 we did not identify,
nor did we receive, any notification of non-compliances or breaches in relation to the Code of
Conduct.
Sustainable Suppliers
According to our Code, we seek to work with third parties who operate under principles that are
similar to those set out in the Code of Conduct. We also have a Supplier Code of Conduct that we
expect our suppliers to adhere to, which includes human rights and labor standard principles. We
include our requirements in our contractual arrangements with suppliers. Understanding that some
suppliers may face significant challenges in adhering to every aspect of the Code, from the outset
of our business relationship, we pledge to work with those suppliers to help them comply.
In addition to complying with applicable laws and regulations, we seek to efficiently manage the
environmental and social impact of our operations, implement best practices, reduce our
environmental footprint over time and comply with our social targets and impacts in the local
communities where we operate.
Our main suppliers are large operation and maintenance corporations with robust corporate
policies regarding ethical standards and human rights.
Atlantica has implemented a risk identification process to evaluate and approve the engagement
of suppliers. This process comprises: (1) an internal and external supplier due diligence process
and, (2) an annual internal assessment aimed at monitoring our key suppliers’ activities. The internal
due diligence process determines the eligibility of a potential new supplier based on our internal
policies. In addition, we have engaged the services of an external provider to evaluate our key
suppliers in terms of: (i) environment, (ii) fair labour and human rights, (iii) ethics, and (iv)
sustainable procurement. We conduct the annual supplier evaluation assessment internally to
monitor our key suppliers’ activities.
In 2021 and 2020 we certified suppliers representing over 51% of the Company‘s annual expenses
through an external supplier.
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Additional information on our sustainable supply chain management is disclosed in our annual ESG
Report.
Anti-Slavery and Human Trafficking Statement
In February 2021 our Board of Directors amended and approved our “U.K. Anti-Modern Slavery
and Human Trafficking Statements” under the Modern Slavery Act, 2015. The statement, available
on www.atlantica.com, outlines the steps taken by the Company to address the risk of slavery and
human trafficking occurring within our operations and supply chains.
Given our business, we believe the risk of modern slavery is low. Our main suppliers are large
operation and maintenance corporations with robust corporate policies in place regarding ethical
standards and human rights. We also engage with financial institutions, including banks, legal
advisors, accountants, consultants, and insurers, who we believe operate under principles similar
to those set out in our Code of Conduct. We consider the risk to be low based on the Atlantica risk
identification process adopted to evaluate and approve supplier engagement. This process
comprises an internal and external supplier homologation process and, an annual internal
assessment aimed at monitoring our key suppliers’ activities’. In addition, suppliers are requested
to adhere to our Supplier Code of Conduct. Through this Code, Atlantica encourages conducting
operations, while fully respecting human rights, in line with the Universal Declaration of Human
Rights. We will continue to work to improve our policies and procedures to ensure slavery and
human trafficking do not take place anywhere in our supply chain.
In particular, all new suppliers are subject to internal due diligence and required to confirm that
their organization will comply with our Supplier Code of Conduct (available at www.atlantica.com),
which includes expectations regarding sustainable development in the following areas: business
integrity and ethical standards, human rights and labour standards, environmental sustainability,
and reporting concerns and compliance monitoring. Through our Supplier Code of Conduct,
Atlantica encourages suppliers to conduct their operations fully respecting fundamental human
rights, as affirmed by the Universal Declaration of Human Rights. Atlantica joined the UNGC
initiative in January 2018 and formally adopted the Ten Fundamental Principles in the fields of
human rights, labour, environment and anticorruption. The UNGC and its principles are an integral
part of the strategy of Atlantica and our objective is to also make it part of our suppliers’ strategy.
We have a responsibility to our stakeholders to be ethical and lawful in all our businesses.
We further provide our employees, shareholders and others with the whistleblower channel, a
specific channel of communication with management and the governing bodies that is a means to
report any misconduct, instances of non-compliance with our compliance policy framework, and
unethical or unlawful behaviour, including any suspected or actual form of modern slavery taking
is available at
place within the business or supply chain. The whistleblower channel
www.atlantica.com.
Atlantica has zero tolerance for modern slavery and we confirm that no incidents of modern slavery
were reported or identified during 2021 or 2020.
We also provided training in 2021 and 2020 to members of senior management and to the rest of
employees on our Code of Conduct and corporate policies, which included specific content related
to human and labour rights, to promote the policy throughout our organization.
77
Finally, all our employees must annually read, understand, and commit to following our corporate
governance policies.
Section 172 Statement
The Board is ultimately responsible for the long-term success of the Company. Our Directors are
aware of their responsibility to promote the success of the Company in accordance with Section
172 of the Companies Act 2006 and have acted in accordance with these responsibilities during
the year.
The Board’s Approach to Section 172 and Decision-Making
The Board acknowledges that Atlantica’s purpose is to support the transition towards a more
sustainable world by investing in and managing sustainable infrastructure, while creating long-
term value for its shareholders, employees, suppliers, customers, business partners, local
communities and debt investors. As such, the Board has considered the interests of and the impact
of its decisions on these stakeholders as part of its decision-making process. When making such
decisions, each Director has acted in the way they consider, in good faith, would most likely
promote the success of the company for the benefit of its stakeholders.
The board believes governance of the Company is best achieved by delegation of its authority for
the executive management to the CEO, subject to a set of defined limits and monitoring by the
board. The board routinely monitors the delegation of authority, ensuring that it is regularly
updated, while retaining ultimate responsibility.
Stakeholder Identification and Engagement
At Atlantica, we acknowledge that our stakeholders have a broad range of interests and viewpoints.
We believe that collaboration with them is key to our success. As such, we listen and do our best
to gain stakeholders’ trust, thus leading to a more stable and long-term relationship. Across the
company, we engage with our stakeholders to obtain input that can be helpful as we execute our
strategy.
We have made a two-way engagement channel available for our stakeholders to build trusting
long-term relationships:
Face-to-
face
meetings,
video or
phone
calls1
Key
stakeholders
Shareholders
Employees
Suppliers
Customers
Business
Partners
Local
Communities
Debt
Investors
ESG
Report2
Social
Media1
Materiality
Assessment
Survey2
Press
Releases1
Website
Content1
Whistleblower
Channel3
Annual
General
Meeting
(AGM)2
Earnings
Presentations4
Roadshows4
Intranet1
Employee
Climate
Survey5
Training1
(1) Regular or on an as-needed basis; (2) On an annual basis; (3) Always available; (4) On a quarterly basis; (5) At least every three years and intend to increase
its frequency moving forward.
78
The Board ensures that stakeholder considerations are considered in strategic decision-making by
requiring that strategic proposals include an analysis of key stakeholder impacts, which form part
of the decision-making process.
Our Employees
Our people are fundamental for the long-term success of the Company. Atlantica, its Board and its
management are committed to prioritizing and actively promoting health and safety. In addition,
we provide a work environment free of discrimination, intimidation and harassment where
everyone can participate in the success of the business. We refer to sections Health and Safety,
Business Ethics, Human Rights, and People Management.
We perform an employee climate survey every three years to assess employees’ satisfaction and
intend to increase the frequency of this survey. The goal is to receive feedback as well as to engage
with our employees. The survey is confidential, it is managed by a third-party and results are
aggregated, shared and discussed with supervisors. The last climate survey was performed in
October 2020, participation reached approximately 80% and the general engagement with the
Company was 77%, which is above the average for similar organizations. Atlantica received high
scores in several sections, including our response to COVID-19, overall experience in the Company
and degree of satisfaction with immediate manager/supervisor. This survey also helped us to
identify certain areas with improvement potential. Management prepared action plans for those
areas. The Board receives reports on the survey results together with action plans that management
intend to implement going forward.
We refer to the Employees, Diversity and Inclusion, Business Ethics, Our People and Health and
Safety sections for further employee-related details and initiatives.
Key employee-related metrics followed by the Board include:
Health and Safety
Employee
Percentage of Women
General Frequency Index5
Frequency with Leave Index6
Near Misses Unsafe Acts and Unsafe Conditions
Frequency Rate
Voluntary Turnover by year-end
Average Annual Training (in hours)
At Management Level
Over Total Number of Employees
2021
6.0
2.3
1,519
10.4%
80
25%
25%
2020
5.0
1.4
1,197
7.5%
33
24%
26%
Note: Health and safety industry benchmarks provided in the Health and Safety section.
Our Shareholders and Debt Investors
The support and engagement of our shareholders, potential shareholders, debt investors and
capital markets is key for the future success of our business. Continued access to capital is of vital
importance to the long-term success of our business, especially considering that our strategy
includes distributing a high portion of the cash we generate as dividend and growing that dividend
through acquisitions and investments.
5 General Frequency Index (GFI) represents the total number of recordable accidents with and without leave (lost time injury) recorded in the last twelve
months per 1,000,000 worked hours.
6 Frequency with Leave Index (FWLI) represents the total number of recordable accidents with leave (lost time injury) recorded in the last twelve months
per 1,000,000 worked hours.
79
We strive to effectively communicate our strategic objectives and operating and financial
performance through our engagement activities, including:
- Dialogue with shareholders, prospective shareholders and analysts, led by the Chief Executive
Officer, Chief Financial Officer and Head of Investor Relations. Our Chair and Independent
Directors are also available to meet institutional shareholders.
- Quarterly earnings presentations with Q&A.
Major investor relations engagement activities carried out in 2021 include:
- 139 meetings with existing and potential investors.
- Attendance at 24 investor conferences and roadshows.
Investors can contact our Head of Investor Relations or access all public information on our website
(www.atlantica.com).
The Board periodically receives feedback on the views of our shareholders, including their main
issues and concerns. The Board also reviews reports from sector analysts on the Company.
The Annual General Meeting (“AGM”) is also an important part of effective engagement and
communication with shareholders. All shareholders have the opportunity to ask questions at our
AGM meetings. The Chairs of the Audit, Nominating and Corporate Governance and,
Compensation Committees will be available to answer questions at that meeting.
We also maintain a dialogue with the two proxy advisory agencies covering Atlantica to explain the
main resolutions included in the notice to our AGM and answer any questions they may have.
The Environment and Local Communities
Our Board of Directors believes climate change can lead to significant risks and opportunities for
the Company and its stakeholders. Our strategy is focused on climate change solutions in the
power and water sectors and we therefore see sustainability and climate change as a growth
opportunity for us.
In 2021, Atlantica announced an ambitious greenhouse gas (GHG) objective approved by the
Science Based Targets initiative (SBTi). Atlantica targets to reduce Scope 1 and 2 GHG emissions
per kWh of power generated by 70% by 2035 from a 2020 base year7. Targets are considered
‘science-based’ if they are in line with the latest levels recommended by climate science to meet
the goals set out in the Paris Agreement to limit global warming to “well-below 2ºC”.
In addition, we have a goal to maintain over 80% of our adjusted EBITDA generated from low-
carbon footprint assets such as renewable energy, storage, transmission infrastructure and water
assets.
Our Board takes into consideration these targets while making decisions, including capital
allocation. Our Board also monitors the main impacts that our assets may have in the environment
through water use and waste.
Furthermore, we acknowledge that our day-to-day activities have impacts on nearby communities.
We recognize that the communities where we operate are where some of our employees and other
stakeholders live and raise their families, and where part of our future workforce is educated and
7 The target boundary includes steam generation
80
trained. We foster communities’ economic prosperity through local purchasing and hiring of local
employees. As such, it is key for us to be both proactive and a valued member of our communities.
In 2021 we updated our Community Investment and Development Policy to better reflect our
commitment with local communities.
We also recognize that some communities where we are present continue to suffer the
consequences of COVID-19. As such, in 2021 and 2020 we focused our efforts on mitigating COVID-
19 impacts. We will continue analysing initiatives to help our surrounding communities to minimize
the impact of COVID-19.
The key metrics followed by the Board are:
At least 80% of adjusted EBITDA coming from
low carbon footprint assets
Scope 1
Scope 2
Scope 3
Total
Scope 1 and 2 GHG Emission
Rate per Unit of Energy
Generated
Withdrawal
Discharges
Hazardous waste
Non-hazardous waste
GHG
Emissions
Water
Management
in Power
Generation
Waste
Management
Community Investment and Development
2021
88%
2020
87%
1,795 thousand tons of CO2
237 thousand tons of CO2
800 thousand tons of CO2
2,832 thousand tons of CO2
1,737 thousand tons of CO2
199 thousand tons of CO2
821 thousand tons of CO2
2,757 thousand tons of CO2
191 tons of gCO2/kWh
188 tons of gCO2/kWh
1.63 m3 per MWh
1.56 m3 per MWh
0.22 m3 per MWh
0.21 m3 per MWh
2,649 tons of waste
21,868 tons of waste
Investments focused on
mitigating COVID-19 pandemic
consequences
2,482 tons of waste
20,532 tons of waste
Investments focused on
mitigating COVID-19
pandemic consequences
For further information we refer you to the “Greenhouse Gas Emissions”, “Water Management”,
“Waste Management” and “Community Development and Involvement Initiatives” sections in this
Strategic Report.
Our Suppliers and Business Partners
We have a Supplier Code of Conduct and we expect our suppliers to adhere to it. We include our
requirements in our contractual arrangements with suppliers. The Board reviews our Code of
Conduct and Supplier Code of Conduct on an ongoing basis, at least once per year. In addition, we
have a Modern Slavery and Human Trafficking Statement which sets out the steps taken to prevent
modern slavery in our business and supply chains.
In 2021 we continued the environmental certification of our suppliers through the two-step process
described in the section “Sustainable Suppliers”.
In addition, we have partners in some of our assets. In some cases, such as at Solacor 1 & 2, Solaben
2 & 3, Seville PV, Kaxu, Skikda, Tenes and Chile PV 1 and 2, we have control over the asset. In other
cases, such as Honaine, Monterrey or Vento II, we do not manage the projects’ day-to-day
operations. As an example, our partner in Vento II is EDP Renewables (EDPR), a company with
ethical standards similar to those set out in our Code. In any case, our geographic VPs maintain
regular engagement and dialogue with our partners. To the extent possible, considering Atlantica’s
81
ownership interest, we try to introduce our Code of Conduct and business ethics practices in
affiliates where we do not have control.
Among others, the key metrics followed by the Board are:
Percentage of suppliers verified in terms of total costs
Adherence to Atlantica’s Supplier Code of Conduct
Our Customers
2021
>51%
~100%
2020
>51%
~100%
Our assets have long-term contracts in place or regulated revenues. We have 13 clients including
utilities, corporations, electric systems and government owned electricity and transmission
companies.
Engagement with clients is achieved through dialogue led by geographic VPs, Country Managers
and/or Asset Managers. This generally enables us to identify and react in advance to our customers’
needs. We listen and do our best to gain our customers’ trust, thus leading to a more stable and
long-term relationship.
Strategic Decisions
In 2021, the main decisions relate to our strategy going forward and the investment in new assets.
Investments and Acquisitions
Our Board analyses and approves, if deemed appropriate, investment and acquisition opportunities
proposed by our Investment Committee.
In 2021, Atlantica closed the following investments approved by the Board:
-
-
-
-
In January 2021, we closed our second investment through our local platform with the
acquisition of Chile PV 2, a 40 MW PV plant. This asset started commercial operation in 2017
and its revenue is partially contracted. Total equity investment in this new asset was
approximately $5 million. The platform intends to make further investments in renewable energy
in Chile and sign PPAs with creditworthy off-takers.
In January 2021, we closed the acquisition of a 42.5% equity interest in Rioglass, a supplier of
spare parts and services in the solar industry, increasing our equity interest to 57.5%. In addition,
on July 22, 2021 we exercised the option to acquire the remaining 42.5% equity interest in
Rioglass. The total investment made in 2021 to acquire the additional 85% equity interest,
resulting in a 100% ownership, was approximately $17 million. We have fully consolidated
Rioglass in our EMEA and Renewables segments.
In April 2021, we closed the acquisition of Coso, a 135 MW renewable asset in California. Coso
is the third largest geothermal plant in the United States and provides base load renewable
energy to the California Independent System Operator (California ISO). It has PPAs signed with
a 18-year average contract life. The total equity investment was approximately $130 million,
which was paid in April 2021. In addition, on July 15, 2021, we paid an additional amount of $40
million to reduce project debt.
In May 2021, we closed the acquisition of Calgary District Heating, a district heating asset in
Canada, for a total equity investment of approximately $23 million. The asset has availability-
based revenue with inflation indexation and 20 years of weighted average contract life.
Contracted capacity and volume payments represent approximately 80% of the total revenue.
82
-
-
-
-
In June 2021, we closed the acquisition of a 49% interest in Vento II, a 596 MW wind portfolio
in the U.S. for a total equity investment of $198 million. EDP Renewables owns the remaining
51%.
In August 2021, we closed the acquisition of Italy PV 1 and Italy PV 2, two solar PV plants in Italy
with a combined capacity of 3.7 MW for a total equity investment of $9 million. Italy PV 1 and
Italy PV 2 have regulated revenues under a feed in tariff until 2030 and 2031, respectively.
In November 2021, we closed the acquisition of La Sierpe, a 20 MW solar asset in Colombia for
a total equity investment of approximately $24 million. The asset was acquired under our ROFO
agreement with Algonquin.
In December 2021, we closed the acquisition of Italy PV 3, a 2.5 MW solar portfolio in Italy for a
total equity investment of approximately $4 million. The four assets in the portfolio have
regulated revenues under a feed in tariff until 2032.
When approving these investments, the Board continued to promote a low-carbon energy industry
and a business model based on sustainable development. The Board considered our long-term
growth plan, expected returns for each acquisition, impact on GHG emissions and environmental
targets, synergies with existing assets, risks involved in each asset acquisition (operational, country
and off-taker credit risk, etc.), potential impacts to communities and the environment. The Board
also considered resources available to finance these acquisitions in the context of our broader
growth plan. While deciding on acquisitions and investments, the Board took into consideration
the interest of all our stakeholders.
Corporate Financing
In 2021 the Board approved the Green Senior Notes for $400 million, maturing in 2028. The
proceeds were used to fully prepay the Note Issuance Facility 2019 and finance investments and
acquisitions.
In addition, in August 2021 we established an “at-the-market program” (ATM) under which we may
offer and sell up to $150 million of our ordinary shares. During 2021 we issued and sold 1.6 million
shares, representing net proceeds of $61.4 million.
When approving these financings, the Board took into consideration our strategic growth plan, the
Company’s corporate leverage and how the financing decisions affect all our stakeholders. The
Board also considered the impact of their decisions on shareholders and debt investors and
concluded that the financing transactions would promote the long-term success of the Company.
Dividends
In 2021, the Board decided to pay total dividends of $1.715 per share to our shareholders in
quarterly dividends, a 3.3% increase with respect to the previous year. Details of the dividend policy
are included in Directors’ Report, where we explain our long-term approach to dividends. The Board
decides the dividend on a quarterly basis. The Directors considered the performance of our assets,
cash available for distribution generated in the period, available liquidity under our financing
arrangements and investment plans of the Company. The Directors also considered the net
corporate debt position of the Company.
When analyzing these acquisitions, the Board considered our long-term growth plan, the current
financial structure of the Company, including compliance with obligations under financing
agreements and potential access to different financing sources, among other factors. The Board
83
took into consideration the interest of shareholders and debt investors. The Board deliberated on
and concluded that the level of dividends approved would promote the long-term success of the
Company.
Going Concern Basis
The Group has prepared the consolidated financial statements on a going concern basis. The
Directors have considered a number of factors in concluding in their going concern assessment
covering the period to March 31, 2023. The Directors have a reasonable expectation that the Group
and Company will meet its commitments as they fall due over the going concern period.
Accordingly, the Directors continue to adopt the going concern basis in preparing the Group’s
consolidated financial statements and Company’s standalone financial statements. For further
information, please refer (Note 2.1) of the consolidated financial statements for the going concern
basis.
Approval
This Strategic Report was approved by the Board of Directors on February 25, 2022 and signed on
its behalf by Santiago Seage, Director and Chief Executive Officer.
Director and Chief Executive Officer
Santiago Seage
February 25, 2022
84
Directors’ Report
The directors are pleased to present their Consolidated Annual Report on the affairs of the
Company and its subsidiaries, together with the Consolidated Financial Statements and Auditor’s
Report, for the year ending December 31, 2021.
Strategic Report
The Strategic Report was prepared in accordance with the Companies Act, 2006 which requires the
Company to set out a fair review of our business during the financial year, including a financial
analysis at year-end and the trends and factors likely to affect the future development, performance
and position of the business.
Review of Business and Future Developments
The Strategic Report includes an indication of likely future developments in our business.
Dividends
We intend to distribute a significant portion of our cash available for distribution as dividends, after
considering the cash available for distribution that we expect our assets will be able to generate,
less reserves for the prudent conduct of our business (including reserves for, among other things,
dividend shortfalls as a result of fluctuations in our cash flows), on an annual basis. We intend to
distribute a quarterly dividend to shareholders. Our Board of Directors may, by resolution, amend
the cash dividend policy at any time. We intend to grow our business via organic growth through
the optimization of the existing portfolio and expansion of our current assets and through
investments in and acquisitions of new assets. We believe this will facilitate the growth of our cash
available for distribution and enable us to increase our dividend per share over time. However, the
determination of the amount of cash dividends to be paid to holders of our shares will be made by
our Board of Directors and will depend upon our financial condition, results of operations, cash
flow, long-term prospects and any other matters that our Board of Directors deem relevant.
Our cash available for distribution is likely to fluctuate from quarter to quarter, in some cases
significantly, as a result of the seasonality of our assets, the terms of our financing arrangements
and maintenance and outage schedules, among other factors. Accordingly, during quarters in
which our assets generate cash available for distribution in excess of the amount necessary for us
to pay our stated quarterly dividend, we may reserve a portion of the excess to fund cash
distributions in future quarters. During quarters in which we do not generate sufficient cash
available for distribution to fund our stated quarterly cash dividend, if our Board of Directors so
determines, we may use retained cash flow from other quarters, and other sources of cash, to pay
dividends to our shareholders.
85
Dividends paid in 2021 were:
Declared
Nov 9, 2021
July 30, 2021
May 4, 2021
Feb 26, 2021
Record
Nov 30, 2021
Aug 31, 2021
May 31, 2021
March 12, 2021
Paid
Dec 15, 2021
Sep 15, 2021
June 15, 2021
March 22, 2021
Total
Amount (US$)
0.435
0.43
0.43
0.42
1.715
On February 25, 2022, our Board of Directors approved a dividend of $0.44 per share which is
expected to be paid on March 25, 2022 to shareholders on the record as of March 14, 2022.
Risks Regarding Our Cash Dividend Policy
There is no guarantee that we will pay quarterly cash dividends to our shareholders. We do not
have a legal obligation to pay any dividend. While we currently intend to grow our business and
increase our dividend per share over time, our cash dividend policy is subject to all the risks inherent
in our business and may be changed at any time as a result of certain restrictions and uncertainties,
including the following:
- The amount of our quarterly cash available for distribution could be impacted by restrictions
on cash distributions contained in our project-level financing arrangements, which require that
our project-level subsidiaries comply with certain financial tests and covenants in order to make
such cash distributions. Generally, these restrictions limit the frequency of permitted cash
distributions to semi-annual or annual payments, and prohibit distributions unless specified
debt service coverage ratios, historical and/or projected, are met. When forecasting cash
available for distribution and dividend payments we have aimed to take these restrictions into
consideration, but we cannot guarantee future dividends. In addition, restrictions or delays on
cash distributions could also happen if our project finance arrangements are under an event of
default.
- Additionally, indebtedness we have incurred under the Green Senior Notes, the Note Issuance
Facility 2020, the 2020 Green Private Placement and the Revolving Credit Facility contain,
among other covenants, certain financial incurrence and maintenance covenants, as applicable.
- We and our Board of Directors have the authority to establish cash reserves for the prudent
conduct of our business and for future cash dividends to our shareholders, and the
establishment of or increase in those reserves could result in a reduction in cash dividends from
levels we currently anticipate pursuant to our stated cash dividend policy. These reserves may
account for the fact that our project-level cash flows may vary from year to year based on,
among other things, changes in the operating performance of our assets, operational costs,
capital expenditures required in the assets, collections from our off-takers, compliance with the
terms of project debt including debt repayment schedules and cash reserve accounts
requirements, compliance with the terms of corporate debt, compliance with all the applicable
laws and regulations and working capital requirements. Our Board of Directors may increase
the reserves to account for the seasonality that has historically existed in our assets’ cash flows
and the variances in the pattern and frequency of distributions to us from our assets during the
year.
- We may lack sufficient cash to pay dividends to our shareholders due to cash flow shortfalls
attributable to a number of operational, commercial or other factors, including low availability,
86
low production, unexpected operating interruptions, legal liabilities, costs associated with
governmental regulation, changes in governmental subsidies, delays in collections from our
off-takers, changes in regulation, as well as increases in our operating and/or general and
administrative expenses, principal and interest payments on our and our subsidiaries’
outstanding debt, income tax expenses, failure of Abengoa to comply with its obligations under
the agreements in place, working capital requirements or anticipated cash needs at our project-
level subsidiaries.
- We may pay cash to our shareholders via capital reduction in lieu of dividends in some years.
- Our project companies’ cash distributions to us (in the form of dividends or other forms of cash
distributions such as shareholder loan repayments) and, as a result, our ability to pay or grow
our dividends, are dependent upon the performance of our subsidiaries and their ability to
distribute cash to us. The ability of our project-level subsidiaries to make cash distributions to
us may be restricted by, among other things, the provisions of existing and future indebtedness,
applicable corporation laws and other laws and regulations.
- Our Board of Directors may, by resolution, amend the cash dividend policy at any time. Our
Board of Directors may elect to change the amount of dividends, suspend any dividend or
decide to pay no dividends even if there is ample cash available for distribution.
Our Ability to Grow our Business and Dividend
We intend to grow our business via organic growth through the optimization of the existing
portfolio, repowering, hybridization with other technologies, and expansion of our current assets
and through investments in and acquisitions of new assets, which, we believe will facilitate the
growth of our cash available for distribution and enable us to increase our dividend per share over
time. Our policy is to distribute a significant portion of our cash available for distribution as a
dividend. However, the final determination of the amount of cash dividends to be paid to our
shareholders will be made by our Board of Directors and will depend upon our financial condition,
results of operations, cash flow, long-term prospects and any other matters that our Board of
Directors deems relevant.
We expect we will rely primarily upon external financing sources, including commercial bank
borrowings and issuances of debt and equity securities, to fund any future growth capital
expenditures. To the extent we are unable to finance growth externally, our cash dividend policy
could significantly impair our ability to grow because we do not currently intend to reserve a
substantial amount of cash generated from operations to fund growth opportunities. If external
financing is not available to us on acceptable terms, our Board of Directors may decide to finance
investments with cash from operations, which would reduce or impair our ability to pay dividends
to our shareholders. To the extent we issue additional shares to fund our business, our growth or
for any other reason, the payment of dividends on those additional shares may increase the risk
that we will be unable to maintain or increase our per share dividend level. Additionally, the
incurrence of additional commercial bank borrowings or other debt to finance our growth would
result in increased interest expense, which in turn may impact our cash available for distribution
and, in turn, our ability to pay dividends to our shareholders.
Capital Structure
Details of the share capital, together with details of the movements in the Company's issued share
capital during the year are shown in note 13 to the Consolidated Financial Statements. The
87
Company has one class of ordinary shares which are listed on the NASDAQ Global Select Market
under the symbol “AY.” Our shares carry no right to fixed income and each share provides the
owner the right to one vote at general meetings of the Company.
When Algonquin acquired a 25% stake in our equity, Atlantica signed a Shareholders Agreement
with Algonquin, which set forth that, if and to the extent provided in our articles of association,
Algonquin had the right to appoint to our board the maximum number of directors that
corresponds to Algonquin’s holding of voting rights as per articles of association but in no event
more than (i) such number of directors as corresponds to 41.5% of our voting securities; and (ii)
50% of our board less one, and if the resulting number is not a whole number, it shall be rounded
up to the next whole number. In 2019, Algonquin completed the purchase of 3,384,402 ordinary
shares and increased its equity interest in Atlantica to 44.2%.
On December 11, 2020 Atlantica closed an underwritten public offering of 5,069,200 ordinary
shares (including those sold pursuant to the underwriters’ over-allotment option) at a price of $33
per new share. Algonquin Power & Utilities Corp. purchased 4,020,860 ordinary shares of the
Company in a private placement, which closed on January 7, 2021, which represents the pro-rata
number of shares required to maintain their previous equity ownership in the Company. As a result,
as of January 7, 2021 Algonquin was the beneficial owner of 48,962,925 ordinary shares,
representing 44.2% of the issued and outstanding ordinary shares.
On August 3, 2021, we established an “at-the-market program” and entered into the Distribution
Agreement with J.P. Morgan Securities LLC, as sales agent, under which we may offer and sell from
time to time up to $150 million of our ordinary shares, including in “at-the-market” offerings under
our universal shelf registration statement on Form F-3 and a prospectus supplement that we filed
on August 3, 2021. On the same date we entered into the ATM Plan Letter Agreement with
Algonquin, pursuant to which we will offer Algonquin the right but not the obligation, on a
quarterly basis, to purchase a number of ordinary shares to maintain its percentage interest in
Atlantica. During the third and fourth quarters, we have issued 1.6 million shares under the program
at an average market price of $38.43 per share pursuant to our Distribution Agreement,
representing gross proceeds of $62 million and net proceeds of $61.4 million. Pursuant to the ATM
Plan Letter Agreement, we deliver a notice to Algonquin quarterly in order for them to exercise
their rights thereunder.
As of December 31, 2021, Algonquin owned 48,962,925 ordinary shares, representing a 43.6% of
the issued and outstanding ordinary shares.
In addition, as of December 31, 2021, there was no treasury stock and there have been no
transactions with treasury stock during the period then ended.
With regard to the appointment and replacement of directors, the Company is governed by its
Articles of Association, the SEC listing rules, the U.K. Companies Act 2006 and related legislation.
The Articles of Association may be amended by special resolution of the shareholders.
88
Substantial Shareholdings
Name
5% Beneficial Owners
Algonquin (AY Holdco) B.V.” (1)
Morgan Stanley (2)
Ordinary Shares
Beneficially Owned
Percentage
48,962,925
5,677,200
43.6%
5.1%
Notes:
(1) This information is based solely on the Schedule 13D filed on August 4, 2021 by Algonquin Power & Utilities
Corp., a corporation incorporated under the laws of Canada. The direct beneficial owner of the
shares is Algonquin (AY Holdco) B.V.
(2) This information is based solely on the Schedule 13G filed on February 10, 2022 by Morgan Stanley, corporation
incorporated under the laws of Delaware. The registered address of Morgan Stanley is 1585 Broadway New
York, NY 10036.
To the best of our knowledge and based on public information, the rest of our shareholders are
mainly United States-based institutional investors.
Change of Control
If any investor acquires over 50.0% of our shares or if our ordinary shares cease to be listed on the
NASDAQ or similar stock exchange, we may be required to refinance all or part of our corporate
debt or obtain waivers from the related noteholders or lenders, as applicable, due to the fact that
all of our corporate financing agreements contain customary change of control provisions and
delisting restrictions. If we fail to obtain such waivers and the related noteholders or lenders, as
applicable, elect to accelerate the relevant corporate debt, we may not be able to repay or refinance
such debt (on favourable terms or at all), which may have a material adverse effect on our business,
financial condition, results of operations and cash flows. Additionally, in the event of a change of
control we could see an increase in the yearly state property tax payment in Mojave, which would
be reassessed by the tax authority at the time the change of control potentially occurred. Our best
estimate with current information available and subject to further analysis is that we could have an
incremental annual payment of property tax of approximately $10 million to $12 million, which
could potentially decrease progressively over time as the asset depreciates. Additionally, an
ownership change under section 382 could be triggered and could have a significant negative
impact on our tax positions in the U.S.
Furthermore, in order to protect the Company's know-how and to ensure continuity in terms of
attainment of business objectives, the policy approved by our shareholders at the 2017 Annual
General Meeting, introduced certain termination payments to key executives, including the Chief
Executive Officer in the case of a change of control. This is addressed in the Policy on Payments for
Loss of Office section of this report.
A change of control means that a third party or coordinated parties: (i) acquire directly or indirectly
by any means a number of shares in the Company which (together with the shares that such party
may already hold in the Company) amount to more than 50% of the share capital of the Company
or, (ii) appoint or have the right to appoint at least half of the members of the Board of Directors
of the Company.
In addition, if there is a change in control, all awards under long-term incentives shall vest in full
on the date of the change in control.
89
Directors
Our board is comprised of eight directors.
All the directors meet the U.S. securities or NASDAQ’s qualifications from independence except our
CEO. Atlantica's Board has determined that Mr. Banskota and Mr. Trisic are not independent based
on their employment relationship with Algonquin, which is currently Atlantica’s largest shareholder
with a 43.6% ownership. The Board has also determined that the rest of the non-executive directors,
Mr. Aziz, Ms. Del Favero, Ms. Eprile, Mr. Forsayeth and Mr. Woollcombe are independent.
Name, Primary Occupation
Independent
Other Public
Company Boards
A N&CG
C
RPT
Committee
Memberships(*)
William Aziz
President and Chief Executive Officer of
BlueTree Advisors Inc.
Arun Banskota
President and Chief Executive Officer of
Algonquin
Debora Del Favero
Co-Founder of CMC Capital Limited
Brenda Eprile
Director and Chair of the Audit Committee of
Westport Fuel Systems Inc.
Michael Forsayeth
Former Chief Executive Officer and Director of
Granite Real Estate Investment Trust
Santiago Seage
Chief Executive Officer of the Company
George Trisic
Chief Governance Officer and Corporate
Secretary of Algonquin
Michael Woollcombe
Partner of Voorheis & Co. LLP and Executive
Vice-President of VC & Co. Inc.
Yes
No
Yes
Yes
Yes
No
No
Yes
1
1
-
1
-
-
-
-
✓
✓
★
✓
★
★
✓
✓
✓
★
(*) A = Audit Committee; N&CG = Nominating and Corporate Governance Committee C = Compensation Committee;
RPT = Related Parties Transactions Committee
Chair ✓ Member
★
The Board is committed to promoting the success of the Company. The Board is responsible to
shareholders for its performance and for the strategy and management of the Company, its values,
its governance, and its business.
Directors are obliged, among other duties, to act in the way they consider, in good faith, would be
most likely to promote the success of the Company for the benefit of its members as a whole. All
directors are expected to spend the time and effort necessary to properly discharge their
responsibilities.
The main objectives of the Board may be summarized as follows:
- Providing entrepreneurial leadership;
- Setting strategy;
- Ensuring the human and financial resources are available to achieve objectives;
90
- Reviewing management performance;
- Setting the company’s values and standards; and
- Ensuring that obligations to shareholders and other stakeholders are understood and met.
Under English law, the Board of Directors is responsible for management, administration and
representation of all matters concerning the relevant business, subject to the provisions of relevant
constitutional documents, applicable laws and regulations, and resolutions duly adopted at general
shareholders’ meetings.
In addition, the Board of Directors is entitled to delegate its powers to an executive committee or
other delegated committee or to one or more persons, unless the shareholders, through a meeting,
have specifically delegated certain powers to the Board and have not approved the Board of
Director’s delegation to others.
The Board has established four Board Committees:
- Audit Committee, with responsibilities including monitoring the integrity of the company’s
financial statements, reviewing internal control and risk management system, as well as the
Company’s relationship with external auditors;
- Compensation Committee, mainly responsible for setting the remuneration for directors and
recommending and monitoring remuneration for senior management;
- Nominating and Corporate Governance Committee, responsible for leading the process for
board appointments; and
- Related Party Transactions Committee, responsible for identifying and evaluating existing
relationships between counterparties and transactions with related parties.
The Board has delegated certain responsibilities to these committees. Membership, roles, duties
and authority of these committees are described in their Terms of Reference, available in the
website of the Company (www.atlantica.com). Terms of Reference are reviewed and updated by
the Board on a yearly basis.
The directors, who served throughout 2021, and to the date of this report, were as follows:
91
Name
Role
Term
William Aziz
Director, Independent
Appointed on May 5, 2020.
Arun Banskota
Director
Appointed on April 28, 2020.
Debora Del Favero
Director, Independent
Appointed on May 5, 2020.
Brenda Eprile
Director, Independent
Appointed on May 5, 2020.
Michael Forsayeth
Director, Independent
Appointed on May 5, 2020.
Santiago Seage
Director and Chief
Executive Officer
Appointed on December 17, 2013, resigned March 9,
2018, re-appointed on December 19, 2018 and elected
on June 20, 2019.
George Trisic
Director
Appointed on October 9, 2020.
Michael Woollcombe Director, Independent
and Chair of the Board
Appointed on May 5, 2020.
There are no family relationships among any of our executive officers or directors. There are no
potential conflicts of interest between the private interests or other duties of the members of the
Board of Directors listed above and their duties to Atlantica, except in the case of Mr. Arun Banskota
and Mr. George Trisic who serve as President and Chief Executive Officer, and Chief Governance
Officer respectively, at Algonquin.
Detailed biographical information on Atlantica’s Board of Directors is available on our website. In
2020, Directors’ appointments resulted in a balanced Board structure in terms of diverse
professional and industry backgrounds (i.e., financial, legal and regulatory, governance, diversity
and social responsibility, energy sector, etc.), gender and geographical experience (i.e., experience
in international business environments). The Directors’ appointment enhanced making good use
of complementary views, insights and opinions to assess problems from a broader point of view,
and making it more likely that the Board will take into account the best interests of all stakeholders.
Board member profiles:
92
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Independent (in accordance
with the Board of Directors’
determination8)
CEO/Senior Executive:
CEO or senior executive
experience with a large publicly
traded organization
Governance/ Other
Directorships:
Director of public company
and/or significant governance
role
Stakeholder:
Experience in managing
stakeholders or represents
stakeholder group
Energy Sector:
Senior executive experience in
the energy sector
Mergers & Acquisitions
/Growth Strategy:
Senior executive experience
with mergers, acquisitions
and/or business growth
strategy
Compensation and Human
Resources:
Understanding and experience
with human resources issues
and compensation policies
Financial:
Senior financial executive
experience / Corporate or
project finance/ Capital
allocation
Legal and Regulatory:
Legal and regulatory experience
International:
Experience in international
business environments
Enterprise Risk Management:
Health and Safety, Climate
Change, Environment
Governance, Diversity and
Social Responsibility
97
Membership and Attendance
The table below outlines membership and attendance to our board during 2021.
Director
Membership
From
To
n/a
William Aziz
May 2020
Director, Independent
Role
Attendance /
Eligible to attend (1)
Arun Banskota
April 2020
n/a
Director
Debora Del Favero
May 2020
n/a
Director, Independent
Brenda Eprile
May 2020
n/a
Director, Independent
Michael Forsayeth
May 2020
n/a
Director, Independent
Santiago Seage
Dec' 2018
n/a
Director and Chief
Executive Officer
George Trisic
Oct’ 2020
n/a
Director
Michael Woollcombe
May 2020
n/a
Director, Independent
and Chair of the Board
(1) Does not include matters approved by Director’s Written Resolution.
Senior management attend meetings by invitation of the Board.
2021 Key Activities
11/11
11/11
11/11
11/11
11/11
11/11
11/11
11/11
In 2021, the Board of Directors held 11 meetings and adopted four written resolutions.
Major areas of focus of the Board during 2021 have been as follows:
- Review of health and safety issues;
- Review the action plan to continue improving in ESG (Environmental, Social and Governance);
- Review and approval of the strategy of the Company: growth plan, key priorities and risks;
- Review of assets’ performance and main technical issues;
- Approval and review of the budget of the Company;
- Review and approval of quarterly and annual accounts;
- Approval of significant transactions (acquisitions, partnerships, etc.);
- Review of capital markets updates; and
- Approval of dividends.
Directors’ Indemnities
The Company has made qualifying third-party indemnity provisions for the benefit of its directors
which were made during the year and are in force at the date of this report.
8 Atlantica's Board has determined that Mr. Banskota and Mr. Trisic are not independent based on their employment relationship with
Algonquin, which is currently Atlantica’s largest shareholder with a 43.5% ownership. The Board has also determined that the rest of
the non-executive directors, Mr. Aziz, Ms. Del Favero, Ms. Eprile, Mr. Forsayeth and Mr. Woollcombe are independent.
98
Financial Instruments
Information about the use of financial instruments by the Company is given in note 8 to the
Consolidated Financial Statements. In addition, a detailed analysis of risk, including liquidity,
interest rate, foreign exchange and credit risks is provided in sections “Principal risks and
uncertainties” and “Financial Risk Management” of our Strategic report.
Environmental Reporting
Environmental information such as our (i) GHG emissions and, (ii) quantity of energy consumed
from activities for which the company is responsible for and from the purchase of electricity, heat,
steam or cooling by the company for its own use is disclosed in the Strategic Report.
Employees
Information on Atlantica’s employees and its policies can be found in the Strategic Report.
Anti-Slavery and Human Trafficking Statement
Atlantica has published its anti-slavery and human trafficking statement in accordance with the
Modern Slavery Act, 2015, which can be found on www.atlantica.com. Additional information is
provided in the Strategic Report.
Political Contributions
It is the Company’s policy that neither the Company nor any of its subsidiaries may, under any
circumstances, make donations or contributions to political organisations, political campaigns,
lobbyists or lobbying organizations nor other tax-exempt groups. Thus, no political donations or
contributions were made during 2021 nor 2020.
Research and Development
Our business model relies on using proven third-party technologies at our assets and we therefore
do not plan to invest significant amounts on R&D. Nevertheless, considering that delivering solid
operational performance is key for us, we do work on certain innovative technologies that can help
us to better manage our assets and maximize their value. As a result, we have reinforced our internal
teams responsible for big data and artificial intelligence capabilities in order to improve our real-
time predictive maintenance.
Corporate Governance Statement
Atlantica, as a non-premium listed company, is not required to implement the provisions of the UK
Corporate Governance Code (the “Code”) and has chosen to follow the requirements of the
NASDAQ Listing Rules in terms of corporate governance.
Our Board is responsible collectively for providing leadership within a framework of appropriate
and effective controls that enable us to assess the risk and then manage it promoting the success
of the Company. The Board is also responsible for the effective oversight of the Company’s strategy
and performance, financial reporting, internal control and risk management framework, and
corporate governance processes. It is also ultimately accountable to shareholders for the long-term
performance of the Company and the delivery of sustainable shareholder and stakeholder value.
99
The Board has put in place a clear and robust corporate governance framework in order to facilitate
the oversight role that it provides in these areas. This includes a schedule of matters reserved for
the approval of the Board, such as the approval of acquisitions, the Company strategy and budgets,
major capital expenditure, the Company’s financial statements and its dividend policy. With the aim
of allowing the Board appropriate time to focus on these key matters within the constraints of its
annual program, a number of its other responsibilities have been delegated to four principal
committees. Such responsibilities are set out within the Terms of Reference for each Committee,
which can be found on our website at www.atlantica.com.
Auditors
Each person who is a director at the date of approval of this Consolidated Annual Report confirms
that:
- So far as the director is aware, there is no relevant audit information of which the Company's
auditor is unaware; and
- The director has taken all the steps that he ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the Company's
auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section
418 of the U.K. Companies Act 2006.
Ernst & Young S.L. and Ernst & Young LLP are our auditors providing the audit services to the
Company during 2021. Ernst & Young S.L. and other member firms of EY were appointed as external
auditor of the Group in February 2019 for the period 2019 – 2022.
The company will request at the Annual General Meeting to be held in May 2022 to approve the
re-appointment of Ernst & Young LLP and Ernst & Young S.L. as the Company’s auditors until
December 31, 2023.
Events After the Balance Sheet Date
Details of significant events since the balance sheet date are contained in note 25 to the
Consolidated Financial Statements
On February 25, 2022, our Board of Directors approved a dividend of $0.44 per share which is
expected to be paid on or about March 25, 2022 to shareholders of record on March 14, 2022.
This report was approved by the Board of Directors on February 25, 2022 and signed on its behalf
by Santiago Seage, Director and Chief Executive Officer.
Director and Chief Executive Officer
Santiago Seage
February 25, 2022
100
Audit Committee Report
Chair’s Introduction
I am pleased to introduce this report on the audit committee’s activities during the year. The
committee has continued to assist the board in fulfilling its oversight responsibilities by monitoring
the integrity of the company’s financial reporting and risk management systems, and as
appropriate, challenging management and the external auditors on key issues including accounting
judgements and control issues.
In addition to the normal committee agenda for the year, we have focused on the extent to which
the COVID-19 pandemic has had an impact on the company’s financial performance, its financial
control environment and resilience, and the external auditor’s ability to fulfil their responsibilities
to Atlantica.
Brenda Eprile
Committee Chair
Committee Overview
Role of the Committee
The committee monitors the effectiveness of Atlantica’s financial reporting, systems of internal
control and risk management, as well as the integrity of the Company’s external and internal audit
processes.
Key Responsibilities during 2021
- Monitoring and obtaining assurance that the processes to identify, manage, and mitigate
significant and emerging financial risks are appropriately addressed by senior management and
that the system of internal control is designed and implemented effectively in accordance with
board authorized limits.
- Overseeing the appointment, remuneration, independence and performance of the external
auditor and the integrity of the audit process overall, including the engagement of the external
auditor to provide non-audit services to Atlantica.
- Reviewing the effectiveness of the internal audit function, Atlantica’s internal financial controls
and systems of internal control and risk management.
- Reviewing financial statements and other financial disclosures for clarity and monitoring
compliance with relevant legal and listing requirements, and applicable financial reporting
standards.
- Reviewing the systems in place to enable those who work for Atlantica to raise concerns about
possible improprieties in financial reporting or other issues and for those matters to be
investigated.
Meetings and attendance
There were 4 committee meetings in 2021 and one educational session on taxes with the Chief
Financial Officer and Head of Taxation. All members attended each meeting. Regular attendees at
the meetings from management include the Chief Financial Officer, Head of Accounting and
101
Consolidation Department, Head of Investor Relations, Head of Internal Audit, Corporate Secretary,
and the external auditor.
Director
Brenda Eprile
William Aziz
Michael Forsayeth
Membership
From
May 2020
May 2020
May 2020
To
n/a
n/a
n/a
Role
Attendance /
Eligible to
Attend (1)
Director, Independent and Chair of the Audit
Committee. Financial Expert
Director, Independent. Financial Expert
Director, Independent. Financial Expert
4/4
4/4
4/4
The Directors who serve on the committee have the necessary qualifications and bring a wide range
and depth of financial experience across various industries. The board is satisfied that all three
members meet the requirements to qualify as “audit committee financial experts” under applicable
SEC rules. The collective knowledge, skills, experience and objectivity of the committee members
enables the committee to work effectively and to have robust discussions with management on
significant issues.
2021 Key Activities
Reviewing Financial Disclosure
During the year, the committee reviewed the quarterly and annual financial statements with
management, focusing on the:
• Integrity of the Company’s financial reporting process.
• Clarity of the disclosure.
• Compliance with relevant legal and listing requirements, and applicable financial reporting
standards.
• Application of accounting policies and judgements.
In its review of financial reporting, the committee received regular updates from management and
the external auditor in relation to accounting judgements and estimates, including those related to
asset impairment/recoverability.
In considering Atlantica’s 2021 UK Annual Report and Form 20-F, the committee assessed whether
the reports were fair, balanced and understandable and whether they provided shareholders with
the information necessary to assess Atlantica’s position and performance. In making this
assessment, the committee examined disclosures during the year, discussed the requirements with
senior management, confirmed that representations to the external auditors had been evidenced
and reviewed reports relating to internal control over financial reporting. The committee made a
recommendation to the board, who in turn reviewed these reports, confirmed the assessment and
approved the reports’ publication.
Accounting Judgements and Estimates
The committee was briefed on a quarterly basis on the company’s key accounting judgements and
estimates. The primary areas of judgement and estimation considered by the committee are laid
out below. These areas were discussed with management and the external auditor throughout the
year and during the review of the financial statements. The committee is satisfied that the financial
102
statements appropriately address the key accounting judgements and estimates in the reported
amounts and related disclosures.
Particular attention was paid to the following significant judgements and estimates in the 2021
financial reporting:
1. Recoverability of contracted concessional assets.
2. Credit risk assessment of certain off takers / customers and potential expected losses on
receivables.
3. Significant one-off transactions, including acquisitions, partnerships and other significant
agreements.
4. Recoverability of tax assets.
5. Operations and maintenance risk in specific geographies.
6. Controls for identifying and evaluating potential impairment indicators or triggering events.
7.
Impact of regulatory developments in particular jurisdictions.
Policies
At our third quarter meeting we reviewed and discussed the Disclosure Policy developed by
management. This policy supports Atlantica’s commitment to providing timely, accurate and
balanced disclosure to the public of all material information. The audit committee endorsed the
policy and recommended it for approval to the Board. We also approved an amendment to the
policy for approving non-audit services provided by the external auditor which further restricts
accumulated fees for non-audit services to less than 50% of the audit services fees in any given
year.
Non-Financial Reporting
The principal risks allocated to the audit committee for monitoring in 2021 included those
associated with:
• Counterparty risk.
• Compliance with policies and regulation.
• Financial liquidity.
• Tax risk.
We discussed management’s ongoing approach to these risk areas during our quarterly committee
meetings. We held a separate education session during the year with senior finance management
on the topic of taxes and tax risk.
In addition, during the year, the committee reviewed the 2020 Environmental, Social and
Governance (ESG) report, focusing on the clarity and consistency of the disclosure, prior to board
approval.
103
Committee's Time and Responsabilities
Internal Audit, Internal
Control and Risk
Management
30%
Financial Reporting
35%
External Audit
25%
10%
Non-financial Reporting
The committee performed an annual self-assessment in 2021. We discussed the findings and
areas for improvement. Climate risk was an area identified as increasing in importance.
External Audit
➢ Assessing Audit Risk
The external auditor prepared an audit plan for 2021 which identified key audit risks to be
addressed during the audit including:
Improper revenue recognition.
- Management override of controls related to relevant management estimates.
-
- Effect of Covid-19 on the company’s internal controls and financial reporting processes.
- Credit risk of certain significant power off-takers / customers.
- Recoverability assessment of contractual concessional assets.
- Risks related to material acquisitions / transactions.
- Significant unusual transactions.
- Financial covenants – risk of incorrect classification of current assets and liabilities.
The committee received updates during the year on the audit process, including how the external
auditor challenged management’s assumptions on key issues.
➢ Assessing Audit Fees
The audit committee reviews the fee structure, resourcing and terms of engagement for the
external auditor annually. In addition, we review the non-audit services that the auditor provides
on a quarterly basis.
Fees paid to the auditor for the year were $2.9 million (2020 $2.4 million), of which 22% was for
non-audit and other services (see financial statements – Note 23). The audit committee is satisfied
that this level of fee is appropriate in respect of the audit services provided and that an effective
audit can be conducted for this fee. Non-audit or non-audit related assurance fees were $0.6 million
104
(2020 $0.5 million). Non-audit or non-audit related services consisted of tax compliance in US
subsidiaries and transfer pricing services.
➢ Assessing Audit Effectiveness
Management undertook a survey which compromised questions in the following areas:
- Communication and availability
- Technical knowledge
- Quality of the service
- Deadline achievements
- Added value
- Objectivity
The results of the survey indicated that most geographic regions were satisfied with the
performance of the external auditors. There were some areas for improvement, however none of
them impacted the effectiveness of the audit. The results of the survey were discussed with EY for
consideration in their 2021 audit approach. EY’s proposed action plan to address these areas for
improvement was reviewed with the committee. Progress on addressing these matters was
discussed with management at the quarterly audit committee meetings.
The committee also held in camera meetings with the external auditors during the year and the
committee chair met separately with the external auditor and Head of Internal Audit at least
quarterly.
The effectiveness of the external auditor is evaluated by the committee. The committee assessed
the auditor’s approach to providing audit services and concluded that the audit team was providing
the appropriate quality in relation to the services provided. The audit team has the requisite
expertise, depth of knowledge, appreciation of complex issues, dedication, as well as the
independence and objectivity necessary to fulfil their responsibilities to shareholders. They are able
and willing to appropriately challenge management.
➢ Assessing Auditor Reappointment and Independence
The committee considers the reappointment of the external auditor each year before making a
recommendation to the board. The committee assesses the independence of the external auditor
on an ongoing basis. The external auditor is required to rotate the lead audit partner every five
years and we have discussed succession plans with EY during the year.
➢ Oversight of Non-Audit Services
The audit committee is responsible for Atlantica’s policy on non-audit services and the approval of
non-audit services. Audit objectivity and independence is safeguarded through the prohibition of
certain non-audit services and audit-related services which fall within certain defined categories.
Atlantica’s policy on non-audit services states that the auditor may not perform non-audit services
that are prohibited by the SEC and the Public Company Oversight Board (PCAOB).
The audit committee approves the terms of all audit services as well as permitted audit-related and
non-audit related services.
Approvals for individual engagements of pre-approved permitted services below certain thresholds
are delegated to the Head of Internal Audit. Any proposed service not included in the permitted
services categories must be approved in advance either by the audit committee chair or the audit
105
committee before the engagement commences. The audit committee, Chief Financial Officer and
Head of Internal Audit monitor overall compliance with Atlantica’s policy on audit-related and non-
audit services, including whether the necessary pre-approvals have been obtained. The categories
of permitted and pre-approved services are outlined in Note 23 of the Consolidated Financial
Statements included in this Annual Report. The external auditor in considered for permitted non-
audit services only when its expertise and experience of Atlantica is important.
The committee approved an amendment to the policy on non-audit services in Q3 2021. For non-
audit services, the accumulated annual fees threshold was reduced to less than 50% of the annual
audit services fees.
All services performed by EY have been approved by the committee. All fees received by EY in 2021
have been approved by the committee.
In thousand USD
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total
EY
Others Auditors
Total
1,571
651
633
-
2,855
289
-
-
-
289
1,860
651
633
-
3,144
“Audit Fees” are the aggregate fees billed for professional services in connection with the audit of
our Annual Consolidated Financial Statements, quarterly reviews of our interim financial statements
and statutory audits of our subsidiaries’ financial statements under the rules of England and Wales
and the countries in which our subsidiaries are organized. The increase in audit fees is mainly due
to new companies being under scope and exchange rates variations.
“Audit-Related Fees” include fees charged for services that can only be provided by our auditor,
such as consents and comfort letters of non-recurring transactions, assurance and related services
that are reasonably related to the performance of the audit or review of our financial statements.
Fees paid during 2021 and 2020 related to comfort letters and consents required for capital market
transactions of our major shareholder are also included in this category ($272 thousand and $212
thousand in 2021 and 2020 respectively). These fees were re-invoiced and paid by our major
shareholder.
“Tax Fees” include mainly fees charged for transfer pricing services and tax compliance services in
our US subsidiaries.
“All Other Fees” comprises fees billed in relation to financial advisory and due diligence services
and other services which cannot be comprised under other categories.
Internal Audit
The committee reviewed and approved the 2021 Internal Audit Plan. Throughout the year the
committee received quarterly reports on the findings of internal audit and actions taken to address
those findings, as well as, their reviews of cash distributions from its operating entities and the
Group’s various financial covenants. The committee also received a report from internal audit on
their annual review of the system of internal control. The committee met privately with the Head
of Internal Audit each quarter. The committee continued to monitor and review the effectiveness
of internal audit during the year.
106
Whistleblowing
The committee is responsible for monitoring the management of the Whistleblower Channel.
According to the Code of Conduct, any allegation received through the Whistleblower Channel will
be sent to the Chair of the Audit Committee, the General Counsel and the Head of Internal Audit.
All main procedures performed, conclusions and proposed corrective measures are communicated
to the committee.
The Company’s whistle-blower policy encourages employees of the Company, its subsidiaries and
all external stakeholders to raise concerns about suspected wrongdoing within the Group in
complete confidence.
Atlantica’s Whistleblower Channel is available at the Company’s website www.atlantica.com.
107
Directors’ Remuneration Report
Introduction
This report (the “Directors' Remuneration Report”) relates to the remuneration of the directors of
Atlantica for the year ending December 31, 2021. It sets out the remuneration policy and
remuneration details for the executive and non-executive directors of the Company. It has been
prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008, as amended.
The report is split into three main areas:
- The statement by the Chair of the Compensation Committee;
- The annual report on remuneration; and
- The policy report.
The remuneration report will be submitted to a vote by shareholders at the Annual General Meeting
in May 2022.
The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the
Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report
have been properly prepared in accordance with the Regulations. The statement by the Chair of
the Compensation Committee and the policy report are not subject to audit.
Atlantica has a Nominating and Corporate Governance Committee, responsible for reviewing the
structure, size and composition of the Board and succession planning for directors and senior
executives. It also reviews and advises the Board on the strategy and corporate governance
responsibility objectives of the Company. The Compensation Committee is mainly focused on
setting the remuneration policy for directors and senior management.
Statement by the Chair of the Compensation Committee
I am pleased to present the Directors’ Remuneration Report for 2021. The regular and transparent
dialogue with shareholders, investors and other stakeholders is a vital element in our way of
operating and, through this remuneration report, we aim to increase the awareness of our
shareholders of the principles of our remuneration policy.
The Company´s remuneration policy is set in accordance with applicable law, with the aim of
attracting and retaining highly skilled professional and managerial resources and aligning the
interests of management with the primary objective of value creation for shareholders, for the
Company, its stakeholders and the members of the Company as a whole, in the medium to long
term.
A total of two Compensation Committee meetings were convened in 2021. All Committee members
attended each meeting that they were eligible to attend.
The Compensation Committee focused its activities on the following objectives:
✓ Periodically reviewing the fixed and variable remuneration of the Chief Executive Officer;
✓ Periodically reviewing the remuneration policy and overall levels of remuneration for the Chief
Executive Officer and senior management team, including the long-term incentive plans, in
accordance with the following criteria:
108
- Seeking an alignment between incentives, business performance and creation of value for
shareholders,
- Consistency with the principles of the UK Corporate Governance Code, and
- Retention in the medium to long term of high-quality resources for the achievement of
ambitious targets and to face the challenges that the Company will have to face in the
current and future market context.
✓ Periodically reviewing the remuneration levels of non-executive directors;
✓ Reviewing the Company’s compensation for directors, the CEO and management in
comparison with its direct peers and best practices.
In 2021, most of the objectives defined for the Chief Executive Officer's variable bonus were met
or exceeded and the Compensation Committee decided to approve a bonus corresponding to
105.0% of the target variable compensation, which will be payable in 2022. In 2020, most of the
objectives defined for the Chief Executive Officer's variable bonus were met or exceeded and a
bonus corresponding to 102.7% of the target variable compensation was paid in 2021.
To finalise, I would like to thank our shareholders for their strong vote in favour of approving the
directors’ remuneration report last year, demonstrating their support of Atlantica’s remuneration
arrangements.
I look forward to welcoming you and receiving your support again at the Annual General Meeting
this year.
Annual Report on Remuneration
1. Single Total Figure of Remuneration for Each Director (Audited)
Each independent non-executive director is entitled to receive annual compensation of $150.0
thousand. The Chair of the Board and Chairs of the committees of the board are entitled to receive
additional compensation as detailed in the table below. Non-independent non-executive directors
are entitled to be compensated on the same terms as independent non-executive directors. In 2021
and 2020, non-independent non-executive directors declined compensation.
The following table sets out the fee schedule for 2021 and 2020:
In thousands of U.S. Dollars
2021
2020
Annual Director Retainer
Non-Executive Director
Annual Committee Chair Retainer
Chair of the Board
Chair of the Audit Committee
Chair of the Nominating and Corporate Governance Committee
Chair of the Compensation Committee
150.0
75.0
15.0
10.0
10.0
150.0
75.0
15.0
10.0
10.0
The table below summarizes the directors who received remuneration during 2021, as well as the
prior year for comparison. The Chief Executive Officer’s total annual compensation is also detailed
in this table.
109
In thousands of U.S.
Dollars
Salary and Fees
Annual Bonuses
Long-Term
Incentive Awards2
(Vested)
Total Fixed
Total Variable
Remuneration
Remuneration
Total
Name1
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
William Aziz3
160.0
106.7
Debora Del Favero3
160.0
106.7
Brenda Eprile3
165.0
110.0
Michael Forsayeth3
150.0
100.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160.0
106.7
160.0
106.7
165.0
110.0
150.0
100.0
-
-
-
-
-
-
-
-
160.0
106.7
160.0
106.7
165.0
110.0
150.0
100.0
Santiago Seage4
816.6
756.8
1,056.3 996.4
1,879.8
770.9
816.6
756.8
2,936.1 1,767.3
3,752.7
2,524.1
Michael Woollcombe3
225.0
150.0
Andrea Brentan5
Robert Dove5
Francisco J. Martinez5
Jackson Robinson5
Daniel Villalba5
-
-
-
-
-
56.3
60.0
61.9
60.0
84.4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
225.0
150.0
56.3
60.0
61.9
60.0
84.4
-
-
-
-
-
-
-
-
-
-
-
-
225.0
150.0
56.3
60.0
61.9
60.0
84.4
Total
1,676.6 1,652.8 1,056.3 996.4
1,879.8 770.9
1,676.6 1,652.8 2,936.1 1,767.3 4,612.7 3,420.1
1 All directors served only part of 2020 (see Directors’ Report), except for Santiago Seage.
2 Long-term Incentive Awards includes Long-term Incentive Plan (LTIP) and One-Off Plan vested in the year and calculating amounts
with the share price at vesting date. In 2021, from the $1,879.8 thousand vested, $1,549.1 corresponded to share appreciation. In 2020,
from the $770.9 vested, $464.7 thousand corresponded to share appreciation.
3 Mr. Aziz, Mrs. Del Favero, Mrs. Eprile, Mr. Forsayeth and Mr. Woollcombe joined the Board of Directors on May 5, 2020 as independent
non-executive Directors and were appointed as Chair of the Compensation Committee, Chair of the Nominating and Corporate
Governance Committee, Chair of the Audit Committee, Chair of the Related Parties Transactions Committee and Interim Chair of the
Board, respectively.
4 The CEO’s compensation is approved in euros. It has been converted to U.S. dollars for reporting purposes, at the average exchange
rate of each year, which is 1.18 $/€ in 2021 and 1.14 $/€ in 2020.
In 2021, the CEO’s total pay amounted to €3,148.6 thousand ($3,752.7 thousand). Fixed salary amounted to €690.0 thousand ($816.6
thousand), annual bonus to €892.5 thousand ($1,056.3 thousand) and long-term incentive awards to €1,566.1 thousand ($1,879.8
thousand).
In 2020, the CEO’s total pay amounted to €2,222.2 thousand ($2,524.1 thousand). Fixed salary amounted to €663.0 thousand ($756.8
thousand), annual bonus to €873.0 thousand ($996.4 thousand) and long-term incentive awards to €686.3 thousand ($770.9 thousand).
5 Mr. Villalba, Mr. Dove, Mr. Martinez and Mr. Robinson were directors until May 5, 2020, and were Chair of the Board of Directors, Chair
of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, and Chair of the Compensation Committee,
respectively, until such date. Mr. Brentan was a director until May 5, 2020.
The Remuneration Report is presented in U.S. dollars since remuneration of all directors except the
CEO is defined in U.S. dollars and the functional currency of the Company is also the U.S. dollar.
None of the directors received any pension entitlement and/or taxable benefits in 2021 or 2020.
Each member of our Board of Directors will be indemnified for his or her actions associated with
being a director to the extent permitted by law.
Chief Executive Officer Long Term Incentives awards vested
In June 2021, one-third of the CEO’s one-off plan stock units vested, and shares were transferred
to the CEO in accordance with the terms of the plan using the share price at the date of vesting
(June 20, 2021).
In June 2020, one-third of the CEO’s one-off plan stock units vested and were paid in cash in
accordance with the terms of the plan using the share price at the date of vesting (June 20, 2020).
The value of the shares transferred and cash payments have been included in the Single Total
Figure of Remuneration table above in their vesting period.
110
One-Off Plan
2019
One-Off Plan
Vesting
June 2021
June 2020
One-Third of
Restricted Stock
Units (RSUs)
Price on Vesting
Date (USD)
Remuneration in
Cash (000’s USD)*
RSUs Value at
Vesting Date
(000’s USD)*
14,535
14,535
36.50
27.97
-
430.3
578.8
-
* One-off plan vesting includes one third of RSUs (14,535 RSUs) plus dividend equivalent rights corresponding to the
amount of dividends paid on one share RSU between the One-off plan effective date and the date on which the RSU
vests.
In addition, one-third of the CEO’s share options awarded in 2019 and 2020 under the LTIP vested
in June and January 2021, respectively. These share options were exercised, and shares were
transferred to the CEO in accordance with the terms of the plan.
In 2020, one-third of the CEO’s share options awarded in 2019 under the LTIP vested. They were
exercised in 2021 and the shares were transferred to the CEO in accordance with the terms of the
plan.
The share options have been included in the Single Total Figure of Remuneration table above in
their vesting period.
LTIP
2020
2019
LTIP Vesting
One-Third of
Share Options
Share Price on
Vesting Date
(USD)
LTIP Vesting
Price per
Option (USD)
2021
2021
2020
34,494
40,693
40,693
44.17
36.50
27.97
26.39
19.60
19.60
Share Options
Value at Vesting
Date (000’s USD)*
613.3
687.7
340.6
* The value of the share options on vesting date is calculated using the number of share options multiplied by (the share
price on vesting date minus the LTIP vesting price per option).
In 2021, the majority of the objectives set for the Chief Executive Officer's variable bonus were met
or exceeded and the Compensation Committee decided to approve a bonus corresponding to
105.0% of the target variable compensation, which will be payable in 2022.
CAFD* – Equal or higher than the CAFD budgeted in the 2021 budget
EBITDA – Equal or higher than the EBITDA budgeted in the 2021 budget
Close accretive acquisitions for the Company
Achieve health and safety targets – (Frequency with Leave / Lost Time Index
below 3.5 and General Frequency Index below 10.0) based on reliable targets
and consistent measure metrics
Management of relationships with key shareholders and partners
Percentage
weight
40%
15%
20%
10%
15%
Achievement
99%
99%
120%
116%
100%
(*) Cash Available for Distribution refers to the cash distributions received by the Company from its subsidiaries, minus cash expenses of the Company,
including debt service and general and administrative expenses.
In 2020, most of the objectives defined for the Chief Executive Officer's variable bonus were met
or exceeded and the Compensation Committee decided to approve a bonus corresponding to
102.7% of the target variable compensation, which was paid in 2021.
The Chief Executive Officer’s maximum potential bonus could be 120% of such bonus,
approximately $1,150 thousand (approximately €1,020 thousand).
No element of the Chief Executive Officer’s annual bonus is deferred.
111
Deferred Restricted Shares Units (DRSU) Plan
In 2021 the Board of Directors established a DRSU Plan for non-executive directors to promote a
greater alignment of interests between directors and shareholders, which was approved at the
Annual General Meeting held in May 2021. The plan provides a means for directors to accumulate
a financial interest in the Company and to enhance Atlantica’s ability to attract and retain qualified
individuals with the experience and ability to serve as directors. Pursuant to the DRSU Plan, the
Company shall determine, and the directors shall agree, the percentage of their fees, starting on
May 31, 2021, that shall be irrevocably substituted for the grant of Restricted Stock Units.
The number of DRSUs credited to a participant’s account is determined by dividing the amount of
the annual compensation to be received in DRSUs by the market value of an ordinary share at the
time of the grant. Upon a participant ceasing to be a member of the Board, for any reason whether
voluntary or involuntary, the DRSUs will vest. The Company shall transfer to the director a number
of shares equal to the number of vested DRSUs and a number of shares equal in value to any
dividends which would have been paid or payable, on such number of ordinary shares equal to the
vested DRSUs, from the grant date until the vesting date. The director shall not have any
shareholders’ rights other than the dividend equivalent rights until the DRSUs vest and are settled
by the issuance of shares.
The following table sets out the total compensation received by independent, non-executive
directors via a mix of cash and DRSUs in 2021:
Name
Total Remuneration
(000’s USD)
Total Remuneration in Cash and/or Deferred Restricted Stock Units (DRSU)
Remuneration in Cash
Remuneration in DRSUs
(000’s USD)
DRSUs (000’s USD)
Number of DRSUs (#)2
William Aziz
Debora Del Favero1
Brenda Eprile
Michael Forsayeth1
Michael Woollcombe1
160.0
160.0
165.0
150.0
225.0
160.0
128.5
165.0
100.8
77.5
-
31.5
-
49.2
147.5
-
878
-
1,372
4,117
860.0
Total
6,367
1 Following the Annual General Meeting held in May 2021, the Company determined, and Ms. Del Favero, Mr. Forsayeth, and Mr.
Woollcombe agreed that 30%, 50% and 100% respectively of their annual fee payable to the director by the Company for the period
starting on May 31, 2021 shall be irrevocably substituted for the grant of Restricted Stock Units.
2 The number of DRSUs is determined by dividing the amount of the annual compensation to be received in DRSUs by the market value
of an ordinary share at the time of grant.
631.9
228.1
2. Remuneration of the Chief Executive Officer
The information provided in this part of the report is not subject to audit.
Details for Mr. Seage, who serves in the role of the Chief Executive Officer, are set out in the “Single
Total Figure of Remuneration for each director” section above.
In 2021, he accrued $1,056.3 thousand as a bonus payment in accordance with his service
agreement, payable in 2022. In 2020, Mr. Seage accrued $996.4 thousand in accordance with his
service agreement, which was paid in 2021. The CEO’s bonus is approved in euros and converted
to U.S. dollars for reporting purposes at the average exchange rate of each year. The increase is
due in part to the fluctuation of the Euro-Dollar exchange rate.
112
Scheme interests awarded during 2021
LTIP
2021
Number of
Restricted Stock Units
Number of
Share Options
Face Value*
(000’s USD)
Performance Criteria
25,716
74,843
1,302
RSU: 5% minimum Total Shareholder
Return Performance Stock Unit
Share Options: Time-Based Vesting
(*) Face Value means the maximum number of shares that would vest if performance measures are met using the share price at the
grant date. The face value for the Share Options is calculated using the Option price at the grant date.
In 2021, under the LTIP, 25,716 Restricted Stock Units were awarded to the CEO, which will vest on
the third anniversary of the grant date. In addition, 74,843 stock options were awarded, which vest
one third per year, starting on the first anniversary of the grant date.
If the total shareholder return (“TSR”) performance condition has not been met during the vesting
period, the participant's Restricted Stock Units will lapse on the vesting date. The stock options are
not subject to performance vesting.
A description of each type of interest awarded and the basis on which the award is made is provided
in the Remuneration Policy section below.
Total Shareholder Return and Chief Executive Officer Pay
The chart below shows the Company’s total shareholder return since June 2014, the date of our
Initial Public Offering (“IPO”), until the end of 2021 compared with the TSR of the companies in the
Russell 2000 Index. The chart represents the progression of the return, including investment,
starting from the time of the IPO at a 100%-point. In addition, dividends are assumed to have been
re-invested at the closing price of each dividend payment date.
We believe the Russell 2000 Index is an adequate benchmark as it represents a broad range of
companies of similar size.
TSR is calculated in U.S. dollars.
250%
225%
200%
175%
150%
125%
100%
75%
50%
25%
0%
204%
178%
183%
178%
133%
116%
119%
100%
96%
149%
121%
74%
76%
87%
85%
2014
2015
2016
2017
2018
2019
2020
2021
Atlantica
Russell
113
The table below shows the total remuneration of the Chief Executive Officer, his bonus and his
long-term incentive awards expressed as a percentage of the maximum he is likely to be awarded.
Bonus
Long-Term Incentive Awards(3)
Total Pay(1)
(000’s USD)
Percentage of Target
3,752.7
2,524.1
1,685.4
2,511.1
1,602.0
1,499.4
1,597.6(4)
174.1
105.0%
102.7%
100.7%
101.8%
96.3%
100.0%
-
-
Amount of
Bonus(2)
(000’s USD)
1,056.3
996.4
957.7
992.2
924.2
940.5
-
-
Percentage of
Maximum
Value
(000’s USD)
100.0%
100%
-
22.0%
-
-
-
-
1,879.8
770.9
-
751.1
-
-
-
-
Year
2021
2020
2019
2018
2017
2016
2015
2014
(1) The CEO’s compensation is approved in euros. It has been converted to U.S. dollars for reporting purposes at the average exchange
rate of each year. The total pay received by the CEO in thousands of euros was €3,148.6 in 2021, €2,222.2 in 2020, €1,505.5 in 2019,
€2,170.3 in 2018, €1,418.1 in 2017, €1,329.1 in 2016, €1,440.9 in 2015, and €130.9 in 2014.
(2) Amount of bonus accrued by the Company at year-end and paid the next year. For example: In 2020, the Company accrued $996.4
thousand of the bonus paid to the Chief Executive Officer in 2021.
(3) Long-Term Incentive Awards includes LTIP and One-Off Plan vested in the year
(4) Includes a €1,189.5 thousand (approximately $1,319.6 thousand) termination payment received by Mr. Garoz after leaving the
Company on November 25, 2015.
The Chief Executive Officer did not receive any variable remuneration for service provided to the
Company for the years ended December 31, 2015 and 2014. Santiago Seage occupied that office
between January and May 2015, and again from late November 2015. Meanwhile, Mr. Garoz held
that position between May and November 2015, when Santiago Seage left the Company.
Director’s, Chief Executive Officer’s and Employee’s Pay
The table below sets out the percentage change between 2020 and 2021 in salary, bonus and long-
term incentive awards for independent non-executive directors, executive director, and the average
per capita change for employees of the Company’s group as a whole, excluding the Chief Executive
Officer.
114
2021 (% Change from 2020 to 2021)
2020 (% Change from 2019 to 2020)
Name
Salary
Bonus
Long-Term
Incentive
Awards1
Salary
Bonus
Long-Term
Incentive
Awards1
Independent, non-executive directors
William Aziz2
Debora Del Favero2
Brenda Eprile2
Michael Forsayeth2
Michael Woollcombe2
Andrea Brentan3
Robert Dove3
Francisco J. Martinez3
Jackson Robinson3
Daniel Villalba3
Executive director
Santiago Seage (CEO)
Employees (excluding CEO)4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%5
4%
2%5
8%
144%7
163% 7
-
-
-
-
-
3%
3%
3%
3%
3%
2%6
5%
-
-
-
-
-
-
-
-
-
-
2%6
8%
-
-
-
-
-
-
-
-
-
-
- 8
- 8
Notes:
All directors served only part of 2020 (see Directors’ Report), except for Santiago Seage.
Only directors who received remuneration are included in the table above.
None of the non-executive directors received any bonus, long-term incentive awards, pension entitlement and/or taxable benefits in
2021 or 2020.
1 Long-term Incentive Awards includes Long-term Incentive Plan (LTIP) and One-Off Plan.
2 Mr. Aziz, Mrs. Del Favero, Mrs. Eprile, Mr. Forsayeth and Mr. Woollcombe joined the Board of Directors on May 5, 2020 as independent
non-executive Directors.
3 Mr. Villalba, Mr. Dove, Mr. Martinez and Mr. Robinson were directors until May 5, 2020, and were Chair of the Board of Directors, Chair
of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, and Chair of the Compensation Committee,
respectively, until such date. Their percentage of salary change was calculated on a full-time equivalent basis for 2020, hence based
on their total remuneration received in 2019 compared to their 2020 entitled compensation as shown in the Single Total Figure of
Remuneration section. Mr. Andrea Brentan was a director until May 5, 2020.
4 The salary and bonus percentage change for employees (excluding the CEO) has been calculated considering the same average number
of employees and the same average exchange rate in both 2021 and 2020. This is the most appropriate methodology to reflect how
much the salary and potential bonus changed on a year-to-year basis as it excludes the effect of employee hires and turnover.
5 The Compensation Committee approved a (i) fixed remuneration of €690 thousand ($817 thousand) for the Chief Executive Officer for
2021 compared to €663 thousand ($757 thousand) for 2020, representing a 4% increase in euros on a year-to-year basis, and (ii)
variable remuneration of €893 thousand ($1,056 thousand) for 2021 compared to €873 thousand ($996 thousand) for 2020,
representing a 2% increase in euros on a year-to-year basis.
6 The Compensation Committee approved a (i) fixed remuneration of €663 thousand ($757 thousand) for the Chief Executive Officer for
2020 compared to €650 thousand ($728 thousand) for 2019, representing a 2% increase in euros on a year-to-year basis, and (ii)
variable remuneration of €873 thousand ($996 thousand) for 2020 compared to €856 thousand ($958 thousand) for 2019, representing
a 2% increase in euros on a year-to-year basis.
7 In 2021, the long-term incentive awards increase for the CEO and the rest of the employees is driven by the (i) vesting of one-third of
his share options awarded in 2020 under the LTIP, and (ii) increase of Atlantica’s share price that resulted in higher LTIP and One-off
plan amounts at vesting date.
8 In 2019 no amount vested under long-term incentive awards for the CEO or Management.
115
Relative Importance of Spend on Pay
The following table sets out the change in overall employee costs, directors’ compensation and
dividends.
$ in Million
Spend on Pay for All Employees
Total Remuneration of Directors
Total Remuneration of employees and
directors
Dividends Paid
Amount in 2021
78.8
4.6
83.4
190.4
Amount in 2020
54.5
3.4
57.9
168.8
Difference
24.3
1.2
25.5
21.6
The Company has not made any share repurchases during 2021 or 2020.
The average number of employees in 2021 in Atlantica was 655 employees, compared to 441
employees in 2020. The $24.3 million increase in spend on pay and the increase in the average
number of employees is mostly due to the investments closed during 2021.
The increase in total remuneration of directors is mainly due to the vesting of one-third of the
CEO’s share options awarded in 2020 and the increase of Atlantica’s share price that resulted in
higher LTIP and One-off plan amounts at vesting date.
3. Directors’ Shareholdings (Audited)
The following table includes information with respect to beneficial ownership of our ordinary shares
as of December 31, 2021 and by each of our current directors and executive officers, as well as their
connected persons, in relation to any compensation paid and/or benefits granted by the Company.
Non-independent, non-executive directors are not required to comply with minimum share
ownership requirements as they do not receive remuneration from the Company.
Name(1)
Shares
Restricted
Share Units(2)
Share Units
Value
($000’s)(3)
Deferred
Investment
Minimum Share
William Aziz
2,500
Debora Del Favero
-
Brenda Eprile
5,500
-
878
-
Michael Forsayeth
2,500
1,372
Santiago Seage
55,666
George Trisic
Michael
Woollcombe
1,000
5,000
-
-
4,117
-
-
-
-
89
31
197
138
120,880
6,313
Ownership
Requirement
3 times annual
compensation
3 times annual
compensation
3 times annual
compensation
3 times annual
compensation
6 times fixed
compensation
Compliance
With Policy(4)
On track
On track
On track
On track
-
-
36
326
Non-applicable Non-applicable
3 times annual
compensation
On track
(1) Mr. Banskota, non-independent, non-executive director, has no shares and is not required to comply with minimum share
ownership requirements.
(2) Non-vested Share Units as of December 31, 2021. LTIP share units subject to 5% minimum Total Shareholder Return Performance
Stock Unit. As of December 31, 2021, the CEO has no share units vested and not exercised.
(3) Assuming a share price of $35.76 as of December 31, 2021.
(4) 5-year window from May 2021 to comply with this policy.
116
Between the year end and the date of issuance of this report there have been no changes to
directors’ share ownership.
Under the LTIP and one-off plans, the CEO holds as of December 31, 2021 120,880 share units,
convertible into shares in the future and 184,524 options, none of which have vested. As of
December 31, 2020, he held 109,700 share units, convertible into shares in the future and 225,562
options, out of which 40,693 options had vested, but had not been exercised as of December 31,
2020.
Minimum Share Ownership
The Board of Directors adopted in 2021 minimum share ownership guidelines for directors
receiving remuneration from the Company and for the executives participating in the LTIP to further
align executive and shareholder interests. Directors and executives subject to these guidelines shall
achieve, within a period of five years, a minimum share ownership in the Company. In calculating
the value of shares owned, shares that are issuable pursuant to the LTIP and DRSU Plans, vested
and non-vested, are counted. Directors receiving remuneration and executives participating in the
LTIP shall achieve a minimum share ownership in the Company equal in value to:
- Non-executive directors receiving remuneration from the Company: 3 times their annual
compensation,
- CEO: 6 times his fixed compensation,
- CFO: 3 times his fixed compensation,
- Other executives: 2 times their fixed compensation.
The directors receiving remuneration from the Company and executives have a 2-year window to
amend non-compliances with minimum share ownership requirements derived from a stock price
decrease.
The directors not receiving remuneration from the Company are not required to comply with
minimum share ownership requirements.
Termination Payments (Audited)
No termination payments were made to the Chief Executive Officer or any other director in 2021
nor 2020. The policy for termination payments is detailed under the section “Policy on payments
for loss of office” of this report.
4. Statement of Implementation of Policy in 2021
The targets for bonuses are detailed under the section “Remuneration Policy” of this annual report.
The current policy was approved at our 2021 Annual General Meeting, held in May 2021. The
approved Remuneration Policy is set out below. There have been no changes to this approved
version.
For 2022, the bonus measures for the remuneration of the Chief Executive Officer, will focus on six
areas: financial targets, value creating growth/investments, health and safety, management of
relationships with key shareholders and partners, executive talent development and disclosure best
standards.
This approach is intended to provide a balanced assessment on how the business has performed
over the course of the year against stated objectives. Targets are aligned with the annual plan and
strategic and operational priorities for the year.
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For 2022 the bonus objectives are:
CAFD – Equal or higher than the CAFD budgeted in the 2022 budget
EBITDA – Equal or higher than the EBITDA budgeted in the 2022 budget
Close sustainable value accretive investments
Achieve health and safety targets – (Frequency with Leave / Lost Time Index below 3.9 and
General Frequency Index below 10.1) based on reliable targets and consistent measure metrics
Management of relationships with key shareholders and partners
Continued executive talent development
Disclosure best standards
5. Compensation Committee
Percentage
Weight
35%
15%
15%
10%
10%
10%
5%
The Compensation Committee was created in February 2016, together with the Nominating and
Corporate Governance Committee. These two committees replaced the Appointments and
Remuneration Committee which was in place since the IPO.
The Compensation Committee is responsible for determining the remuneration policies of directors
and the remuneration of the Chief Executive Officer and other senior members of management.
In 2021, the Compensation Committee focused its activities on the following key remuneration
topics:
- Periodically reviewing Long Term Incentive Plans,
- Deciding on the Chief Executive Officer’s remuneration,
- Reviewing Independent non-executive director’s remuneration, and
- Analysing peers and comparable remuneration structures.
Membership and Attendance
As of December 31, 2021, all members of the Compensation Committee are independent, non-
executive directors. The Compensation Committee held two meetings in 2021.
Membership
Director
From
William Aziz
May 2020
Debora Del Favero
May 2020
To
n/a
n/a
Role
Attendance /
Eligible to Attend
Director, Independent and Chair of
the Compensation Committee
Director, Independent
2/2
2/2
No director or senior manager shall be involved in any decision as to their own remuneration. The
Chief Executive Officer and members of senior management, such as the Head of People and
Culture, may attend the meetings by invitation.
The Compensation Committee Chair provides regular updates to the Board of Directors on the key
issues discussed at the Compensation Committee’s meetings.
Role of the Compensation Committee
The Board of Directors approved Terms of Reference for the Compensation Committee which are
available on the website of the Company (www.atlantica.com).
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These Terms of Reference provide the roles and responsibilities of the Compensation Committee,
which are reviewed by the Compensation Committee itself and the Board of Directors on a yearly
basis. In accordance with this document, the Compensation Committee’s responsibilities include,
but are not limited, to the following matters:
1. To analyse, discuss and make recommendations to the Board regarding the setting of the
remuneration policy for all directors and senior management,
2. To analyse and discuss proposals made by the Board regarding the Company’s remuneration
policy,
3. To obtain reliable and updated information about remuneration in other companies of
comparable scale and complexity,
4. To review the Chief Executive Officer’s annual compensation package and performance
objectives,
5. To review the design of long-term incentive plans for approval by the board and shareholders,
and
6. To review and approve the compensation payable to executive directors, and the Chief
Executive Officer for any loss or termination of office or appointment.
2021 Key Activities
In 2021, the Compensation Committee continued its work on revising our remuneration structure
to ensure that the Company has in place an effective remuneration policy which:
- Allows the Company to attract and retain top quality talent; and
- Rewards and compensates sustainable performance to the benefit of both shareholders and
stakeholders.
Remuneration Analysis
The Compensation Committee has re-assessed the remuneration policy implemented by the Board
of Directors and approved in the Annual General Meeting. At least once a year, the Compensation
Committee reviews compensation practices for non-executive directors in similar companies.
The Compensation Committee has been particularly focused on reviewing remuneration for
directors and the Chief Executive Officer, based on the information collected from external
consultants that provided independent advice on remuneration best practices and market practice
on directors´ minimum ownership requirements.
The Compensation Committee is responsible for proposing the remuneration of the Chief Executive
Officer and the overall remuneration of the senior management to the Board of Directors, including
any kind of compensation.
The Compensation Committee has the following duties regarding performance-related bonuses or
variable remuneration:
- Definition of specific targets for the Chief Executive Officer and overall structure for senior
management.
- Evaluation of the accomplishment of those objectives in the case of the Chief Executive Officer.
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Long-Term Incentive Awards
In April 2018, the Board of Directors approved the implementation of a remuneration policy
including LTIP awards. Until May 2021, the long-term incentive plan permitted the granting of share
options and Restricted Stock Units to the executive team of the Company. The shareholders
meeting held in May 2021 approved a change to the remuneration policy according to which LTIP
awards will be granted as Restricted Stock Units only. The LTIP applies to approximately 13
executives and the Chief Executive Officer, who is also a director. The Chief Executive Officer’s
participation in the LTIP was approved by shareholders at the 2019 annual general meeting in June
2019.
Voting at the 2021 Annual General Meeting
The Company takes an active interest in voting outcomes. In the event of a substantial vote against
a resolution in relation to director´s remuneration, the Company would seek to understand the
reasons for any such vote and would set out in the following Annual Report any actions in response
to it.
At the 2021 Annual General Meeting, votes in relation to the Directors’ Remuneration Report and
the Directors’ Remuneration Policy were as follows:
Remuneration Report
Remuneration Policy
Number of
votes
79,763,404
2,758,584
93,076
%
96.7%
3.3%
-
Number of
votes
79,679,548
2,802,551
132,965
%
96.6%
3.4%
-
For
Against
Withheld*
For
Against
Withheld*
* A vote “withheld” is not a vote in law and is not counted in the calculation of the proportion of votes for and against the resolution
Remuneration Policy
The current policy was approved at our 2021 Annual General Meeting, held on May 2021. The
approved Remuneration Policy is set out below. There have been no changes to this approved
version.
Non-Executive Directors:
For non-executive directors, independent and non-independent directors, the Company’s policy is
to compensate via cash or Deferred Restricted Share Units for the time dedicated, subject to a
maximum total annual compensation for non-executive directors in aggregate of two million
dollars. Once a year, the Compensation Committee reviews compensation practices for non-
executive directors in similar companies and the skills and experience required and may propose
an adjustment in the current compensation.
In 2021 the Board of Directors established a DRSU Plan for non-executive directors which was
approved by the shareholders’ meeting. See section 1. Single Total Figure of Remuneration for Each
Director in this Report for a description of the plan.
None of the non-executive directors receive bonuses, long-term incentive awards, pension or other
benefits in respect of their services to the Company.
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Executive Directors:
The policy for executive directors, only applicable to the Chief Executive Officer as the only
executive director, is as follows:
Name of
component
Description of
component
Salary/fees
Benefits
Fixed remuneration
payable monthly.
Opportunity to join
existing plans for
employees but
without any
increase in
remuneration.
Annual Bonus Annual bonus is
paid following the
end of the financial
year for
performance over
the year. There are
no retention or
forfeiture
provisions.
Restricted Stock
Units subject to
certain vesting
periods and
minimum TSR.
Long Term
Incentive
Awards
How does this
component support the
company’s (or Group’s)
short and long-term
objectives?
Helps to recruit and retain
executive directors and forms
the basis of a competitive
remuneration package.
Helps to offer a competitive
remuneration package and
align it with the company’s
objectives.
Framework used to assess
performance
Not applicable.
No retention or clawback.
What is the
maximum that may
be paid in respect
of the component?
Maximum amount
€800 thousand
(approximately $910
thousand), may be
increased by 5% per
year.
Salary levels for peers
are considered.
200% of base salary.
40%-50% of CAFD.
Align executive directors and
shareholders interests.
70% of target annual
salary + bonus.
10%-15% of EBITDA.
40%-50% of other operational
or qualitative objectives.
No retention.
Clawback policy.
Granted Restricted Stock Units
subject to 5% average annual
TSR. If the TSR performance
condition has not been met
during the vesting period, the
participant's Restricted Stock
Units will lapse on the vesting
date.
One-off plan in 2019
for 50% of 2019 salary
+ bonus.
Share units.
Clawback policy.
CAFD, EBITDA and TSR have been selected as key parameters to measure the company’s
performance due to their importance for our shareholders. These measures are considered
standard indicators of financial performance in our sector.
Clawback Policy
In 2021, the Company implemented an incentive compensation recoupment, or clawback policy.
The policy is aimed at allowing the Company to recover performance-based compensation for
three years after short-term variable compensation and/or long-term compensation awards are
granted. The clawback policy is applicable from 2021 to all executives who participate in long term
incentive arrangements.
The clawback policy is applicable in the event of the occurrence of either of the following triggering
events: material financial restatement, including a restatement resulting from employee
misconduct, or in the case of fraud, embezzlement or other serious misconduct that is materially
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detrimental to the Company. The Compensation Committee shall retain discretion regarding
application of the policy. The policy is incremental to other remedies that are available to the
Company.
If a triggering event occurs, unless otherwise determined by the Compensation Committee and/or
if the Company is required to prepare a material restatement of its financial statements as a result
of misconduct, and the Compensation Committee determines that the executive knowingly
engaged in the misconduct or acted knowingly or with gross negligence in failing to prevent the
misconduct, or the Compensation Committee concludes that the participant engaged in fraud,
embezzlement or other similar activity (including acts of omission) that the Compensation
Committee concludes was materially detrimental to the Company, the Company may require the
participant (or the participant’s beneficiary) to reimburse the Company for, or forfeit, all or any
portion of any short or long term variable compensation awards.
Compensation Committee Discretions
The Compensation Committee has discretion, consistent with market practice, in respect of, but
not limited to participants, timing of payments, size of the award subject to policy, performance
measures and when dealing with special situations, such as change of control or restructuring.
The annual bonus is a variable cash bonus, based on the objectives described above. Those
objectives include Cash Available for Distribution (CAFD) and EBITDA, as these are key financial
metrics for our industry sector. Additionally, the annual bonus includes 2-3 objectives that reflect
some of the key projects, initiatives or key objectives.
Annual bonus performance targets include annual CAFD and EBITDA performance thresholds for
payment and also thresholds for the operational/qualitative targets defined by the Compensation
Committee. These could vary on a year-to-year basis, hence assessment performance thresholds
are analysed and updated by the Compensation Committee on an annual basis.
For the management team and key personnel, our policy is to use two external consultants to
estimate market conditions for similar positions in terms of fixed and variable remuneration and,
based on a performance appraisal, set a target remuneration, as a general rule, within that market
practice. Variable payments are based on a number of specific measurable targets in relation to the
measures described herein, which are defined by the Compensation Committee at the beginning
of the year. For the rest of its employees, the Company establishes predefined remuneration ranges
for different positions and reviews each individual remuneration depending on performance
appraisal and within two ranges without employee consultation.
In addition, the Compensation Committee shall retain discretion regarding application of the
clawback policy described in the remuneration policy section.
Long-Term Incentive Awards
The purpose of the LTIP is to attract and retain the best talent for positions of substantial
responsibility in the Company, to encourage ownership in the Company by the executive team
whose long-term service the Company considers essential to its continued progress and, thereby,
encourage recipients to act in the shareholders’ interest and to promote the success of the
Company.
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The long-term incentive plan permits the granting of Restricted Stock Units (“Awards”) to the
executive team of the Company (the “Executives”). The LTIP applies to approximately 13 Executives
and the Chief Executive Officer.
In addition, the management has discretion to grant additional LTIPs to a certain group of
employees and decide the value up to the 50% of the participant´s total annual compensation for
the year closed before the date upon which an Award is granted.
The aggregate number of shares which may be reserved for issuance under the LTIP must not
exceed 2% of the number of the shares outstanding at the time of the Awards are granted but is
expected to be significantly less. In addition, total equity-based awards will be limited to 10% of
the Company's issued share capital over a 10-year rolling period, in order to assure shareholders
that dilution will remain within a reasonable range. In any case, the Compensation Committee may
decide that, instead of issuing or transferring shares, the Executives may be paid in cash.
The value of the Awards will be defined as 50% of the Executives’ total annual compensation for
the year closed before the date upon which an Award is granted and, in the case of the Chief
Executive Officer, would be 70% of the same previous year total annual compensation at the grant
date. The award will be granted in Restricted Stock Units.
Main Terms of the LTIP:
Nature
Exercisability
and Vesting
Period
Executives who are not Directors
Executives who are Directors
Restricted Stock Units
Conditions shall be based on:
- Continuing employment (or other service
relationship) for 33% of the award and
- Continuing employment and achievement of
a minimum 5% average annual TSR for 67%
of the award.
33% of the shares will vest on the third
anniversary of the grant date and 67% of the
shares will vest on the third anniversary of the
grant date but only if the annual TSR has been at
least a 5% yearly average over such 3-year
period. If the TSR has not met such threshold
during the period, the participant's relevant
Restricted Stock Units for the 67% portion will
lapse on the vesting date.
The Company will decide at vesting if cash or
shares are given as payment.
Conditions shall be based on continuing
employment (or other service relationship)
and achievement of a minimum 5% average
annual TSR.
The shares will vest on the third anniversary
of the grant date but only if the annual TSR
has been at least a 5% yearly average over
such 3-year period. If the TSR has not met
such threshold during the period, the
participant's relevant Restricted Stock Units
will lapse on the vesting date.
The Company will decide at vesting if cash or
shares are given as payment.
Ownership and
Dividends
The participant will be entitled to receive, for
each Restricted Stock Unit held, a payment
equivalent to the amount of any dividend or
distribution paid on one share between the grant
date and the date on which the Restricted Stock
Unit vests.
The participant will be entitled to receive, for
each Restricted Stock Unit held, a payment
equivalent to the amount of any dividend or
distribution paid on one share between the
grant date and the date on which the
Restricted Stock Unit vests.
Effect on Termination of Employment
If a participant’s employment terminates by reason of involuntary termination (death, disability,
redundancy, constructive dismissal or retirement dismissal rendered unfair), any portion of his/her
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Award shall thereafter continue to vest and become exercisable according to the terms of the LTIP
but such participant shall no longer be entitled to be granted Awards under the LTIP.
If a participant incurs a termination of employment for cause or voluntary resignation or
withdrawal, share options that have vested at the termination date will be exercisable within the
period of 30 days from such termination date (after which they will lapse) but any unvested Awards
(options or Restricted Stock Units) shall lapse.
Change of Control
If there is a change of control, all Awards shall vest in full on the date of the change in control. The
participants must exercise their share options within a period of 30 days following receipt of a
change of control notice from the Company without which, the options will lapse.
Delisting
If the Company is delisted, all outstanding Awards shall vest in full on the date of delisting and will
be settled in cash. The cash payment for Restricted Stock Units will be the last quoted share price
of the Company and the cash payment for any outstanding share options will be the difference
between the last quoted share price and the exercise price for the applicable option. Such cash
payments will be made after applicable tax deductions within 30 days of the delisting.
One-Off Plan
There is a one-off plan in-place that grants Restricted Stock Units to certain members of the
management and certain members of middle management9, consisting of approximately 25
managers including the Chief Executive Officer. The value of the award was defined as 50% of 2019
target remuneration (including salary and variable bonus). The share units vest over 3 years, one
third each year starting in 2020, provided that the manager is still an employee of the Company.
This was approved by shareholders at the 2019 Annual General Meeting.
Pension
The executive director does not receive any pension contributions.
None of the non-executive directors receive bonuses, long-term incentive awards, pension or other
benefits in respect of their services to the Company.
There are no provisions for the recovery of sums paid or the withholding of any sum, except for
those potentially derived from the application of the clawback provision. The company
implemented the clawback provision in 2021.
Chief Executive Officer Remuneration Policy
The Compensation Committee approved a fixed remuneration of €690 thousand ($785 thousand
converted to U.S. dollars at the December 31, 2021 exchange rate, which is 1.137 $/€) for the Chief
Executive Officer for 2022. In 2021, the CEO’s fixed remuneration also was €690 thousand.
Total remuneration of the only executive director for a minimum, target and maximum
9 Middle Management consists of employees who: (i) manage a specific area, (ii) supervise a group of employees, or (iii) are considered
key personnel within the organization.
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performance in 2022 is presented in the chart below.
In thousands of USD
$2,766
$1,498
$483
$785
Target
$3,443
$1,498
$1,160
$785
Maximum
$785
$785
Minimum
Salary and Benefits
Annual Bonus
LTIP and One-Off Plan
Assumptions made for each scenario are as follows:
Minimum:
Target:
Maximum:
Fixed remuneration only, assuming performance targets are not met for the annual bonus
nor for the RSU and assuming no value for the options vesting in the year.
Fixed remuneration, plus half of target annual bonus and the LTIP and one-off plans vesting
in 2022 at face value, using share price at grant date for units and option value at grant
date for options, not including dividends, and assuming that the minimum annual TSR of
at least a 5% yearly average over the 3-year period is met for the units.
Fixed remuneration, plus maximum annual bonus and LTIP and one-off plans vesting in
2022 at face value, using share price at grant date for units and option value at grant date
for options not including dividends, and assuming that the minimum annual TSR of at least
a 5% yearly average over the 3-year period is met for the units.
In addition, if we assume a 50% appreciation of the share price with respect to the grant date,
maximum remuneration for 2022 including vesting long-term awards would be approximately
$5,058 thousand.
For 2022, the bonus measures for the remuneration of the Chief Executive Officer, will focus on six
areas: financial targets, value creating growth/investments, health and safety, management of
relationships with key shareholders and partners, executive talent development and disclosure best
standards.
This approach is intended to provide a balanced assessment of how the business has performed
over the course of the year against stated objectives. Targets are aligned with the annual plan and
strategic and operational priorities for the year.
The CEO’s 2022 bonus objectives are disclosed under the section Annual Report on Remuneration.
Approach to Recruitment
The remuneration policy reflects the composition of the remuneration package for the
appointment of new executive and non-executive directors. We expect to offer a competitive fixed
remuneration, an annual bonus (for executive directors) not exceeding 200% of the fixed
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remuneration and participation in the LTIP. Whenever needed, the Company can contract an
external advisor to hire key personnel.
Nominee directors do not receive any compensation from the Company.
Policy on Payments for Loss of Office
The Company has an agreement in-place with certain executives with strategic and key
responsibilities in the Company (“Key Managers”), including the Chief Executive Officer, to protect
the Company's know-how and to ensure continuity in terms of attainment of business objectives,
the policy approved by our shareholders at the 2019 Annual General Meeting, introduced certain
termination payments to key executives, including the Chief Executive Officer.
No payments would be made to Key Managers for dismissal for breach of contract, breach of
fiduciary duties or gross misconduct, determined (in the event of a dispute) by a court of competent
jurisdiction to reach a final determination.
The Company agreed with Key Managers, including the CEO, the Company would make payments
for loss of office or employment in addition to the severance payment under the prevailing labour
and legal conditions in their contracts or countries where they are employed if they should leave
(by loss of office or employment) the Company within 2 years of a change in control. The payment
would represent six months of remuneration and will be adjusted to ensure that total payment
including severance payment required under prevailing laws represent at least 12 months of
remuneration (including salary, benefits, long term incentive plans and variable pay), but never
more than 24 months of remuneration, unless required by local law.
A change of control means that a third party or coordinated parties (i) acquire directly or indirectly
by any means a number of shares in the Company which (together with the shares that such party
may already hold in the Company) amount to more than 50% of the share capital of the Company;
or (ii) appoint or have the right to appoint at least half of the members of the Board of Directors
of the Company.
Consideration of Employee Conditions Elsewhere
For the management team and key personnel, our policy is to use two external consultants to
estimate market conditions for roles of a similar level of managerial responsibilities and complexity
in terms of fixed and variable remuneration and, as a general rule, based on a performance
appraisal, set target remuneration within that market practice.
The annual variable remuneration payment is calculated with reference to the achievement of a
number of specific measurable targets defined in the previous year. Each specific target is measured
on a performance scale of 0%-120%.
For the rest of its employees, the Company establishes predefined remuneration ranges for
different positions and reviews each individual remuneration depending on performance appraisal
within two ranges without employee consultation.
The remuneration of all employees, including the members of the management team, may be
adjusted periodically in the framework of the annual salary review process which is carried out for
all employees.
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Overall, we expect that, following the implementation of our policies, remunerations of the
Company’s employees will increase in line with the market with the exception of individuals that
have recently been promoted or whose remuneration is above market conditions.
Statement of Consideration of Shareholder Views
There are no comments in respect of directors’ remuneration expressed to the Company by
shareholders. The next Annual General Meeting is expected to be held in May 2022.
Summary of Policy for Non-Executive Directors
Name of
component
How does the
component support the
company’s objective?
Fees and/or
Deferred
Restricted
Share Units
(DRSU)
Attract and retain high-
performing
independent
non-executive directors.
Align
interests of non-
independent
executive
directors with interests of
shareholders.
Benefits
Reasonable
expenses
Company’s
office or
meetings.
travel
to
the
registered
for
venues
Operation
Maximum
the
annually
Reviewed
Compensation Committee and Board.
by
The chair of the Board and the chair of
each committee receive additional
fees.
Annual total compensation for
independent
non-executive
directors, in any case, the fees
or DRSUs will not exceed two
million dollars.
credited
DRSUs: the Company and the Directors
shall agree the percentage of their fees
that shall be paid in DRSUs. The
number of DRSUs
is
determined using the market value of
an ordinary share at the time of the
grant. Upon a participant ceasing to be
a member of the Board the DRSUs will
vest. The Company shall transfer to the
director a number of shares equal to
the number of vested DRSUs and a
number of shares equal in value to any
dividends which would have been paid
or payable, or such number of ordinary
shares equal to the vested DRSUs, from
the grant date until the vesting date.
Minimum share ownership: within a
period of five years, directors receiving
remuneration
the Company
from
share
should have a minimum
ownership in the Company of 3 times
their annual compensation. In the case
of the CEO, this requirement is 6 times
his fixed compensation.
Customary control procedures.
Real costs of travel with a
maximum of one million
dollars for all directors.
Non-independent, non-executive directors are entitled to the same compensation as independent
non-executive directors.
127
In 2021, the Board of Directors adopted minimum share ownership guidelines for directors
receiving remuneration from the Company (see the Directors’ Shareholdings section). Within a
period of five years, non-executive directors receiving remuneration from the Company should
have a minimum share ownership in the Company of 3 times their annual compensation.
In addition, starting in 2021, the directors may elect to receive compensation via a mix of cash and
DRSUs. The DRSUs shall vest upon the date on which the director ceases to be a member of the
Board due to a voluntary or involuntary separation from service. The director shall not have any
rights of a shareholder unless and until the DRSUs vest and are settled by the issuance of shares
(see further detail in the Current remuneration policy section above).
Service Contracts
Mr. Seage has a service contract with Atlantica that includes a 6-month notice period.
Non-executive directors do not have a service contract and will be submitted for election by
shareholders at the 2022 Annual General Meeting for one year. All directors will be submitted for
re-election by shareholders annually.
Employee Benefit Trusts
The Company has not established employee trusts for share plans.
Statement of Voting at General Meetings
The remuneration report will be submitted to a vote of shareholders at the Annual Shareholders’
Meeting in May 2022.
Approval
This report was approved by the Board of Directors on February 25, 2022 and signed on its behalf
by William Aziz, Director and Chair of the Compensation Committee.
Director and Chair of the Compensation Committee
William Aziz
February 25, 2022
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Directors’ Responsibilities Statement
The directors are responsible for preparing the Consolidated Annual Report and the Consolidated
Financial Statements in accordance with applicable UK law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under
that law the directors are required to prepare the group financial statements in accordance with
International Accounting Standards in conformity with the requirements of the Companies Act
2006 and have elected to prepare the parent company financial statements in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). 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 the group and of the profit or loss of the company
and the group for that period.
In preparing these 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 then apply them consistently;
- Make judgements and accounting estimates that are reasonable and prudent;
- 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 and in
respect of the parent company financial statements, FRS 101 is insufficient to enable users to
understand the impact of particular transactions, other events and conditions on the group and
company financial position and financial performance;
In respect of the group financial statements, state whether International Accounting Standards
in conformity with the requirements of the Companies Act 2006 have been followed, subject to
any material departures disclosed and explained in the financial statements;
In respect of the parent company financial statements, state whether the applicable FRS 101
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 appropriate to presume
that the company and the group will not continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the company’s and the group’s transactions and disclose with reasonable accuracy at
any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
Responsibility Statement
Under applicable law and regulations, the directors are also responsible for preparing a strategic
report, directors’ report and directors’ remuneration report that comply with that law and those
regulations. The directors are responsible for the maintenance and integrity of the corporate and
financial information included on the company’s website.
129
We confirm that to the best of our knowledge:
The Consolidated Financial Statements, prepared in accordance with the International Accounting
Standards in conformity with the requirements of the Companies Act 2006, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the 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 Consolidated 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
performance, business model and strategy.
This responsibility statement was approved by the Board of Directors on February 25, 2022 and is
signed on its behalf by:
By order of the Board
Director and Chief Executive Officer
Chief Financial Officer
Santiago Seage
February 25, 2022
Francisco Martinez-Davis
February 25, 2022
130
Definitions
Unless otherwise specified or the context requires otherwise in this annual report:
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references to “2020 Green Private Placement” refer to the €290 million (approximately $330
million) senior secured notes maturing on June 20, 2026 which were issued under a senior
secured note purchase agreement entered with a group of institutional investors as purchasers
of the notes issued thereunder;
references to “Abengoa” refer to Abengoa, S.A., together with its subsidiaries, or Abenewco1,
S.A. together with its subsidiaries, unless the context otherwise requires;
references to “ACT” refer to the gas-fired cogeneration facility located inside the Nuevo Pemex
Gas Processing Facility near the city of Villahermosa in the State of Tabasco, Mexico;
references to “Algonquin” refer to, as the context requires, either Algonquin Power & Utilities
Corp., a North American diversified generation, transmission and distribution utility, or
Algonquin Power & Utilities Corp. together with its subsidiaries;
references to “Algonquin ROFO Agreement” refer to the agreement we entered into with
Algonquin on March 5, 2018, under which Algonquin granted us a right of first offer to purchase
any of the assets offered for sale located outside of the United States or Canada as amended
from time to time;
references to “Amherst Island Partnership” or AIP refer to the holding company of Windlectric
Inc;
references to “Annual Consolidated Financial Statements” refer to the audited annual
consolidated financial statements as of December 31, 2021 and 2020, including the related
notes thereto, prepared in accordance with IFRS as issued by the IASB (as such terms are
defined herein), included in this annual report;
references to “ASI Operations” refer to ASI Operations LLC;
references to “Atlantica” refer to Atlantica Sustainable Infrastructure plc and, where the context
requires, Atlantica Sustainable Infrastructure plc together with its consolidated subsidiaries;
references to “Atlantica Jersey” refer to Atlantica Sustainable Infrastructure Jersey Limited, a
wholly-owned subsidiary of Atlantica;
references to “ATM Plan Letter Agreement” refer to the agreement by and among the Company
and Algonquin dated August 3, 2021, pursuant to which the Company offers Algonquin the
right but not the obligation, on a quarterly basis, to purchase a number of ordinary shares to
maintain its percentage interest in Atlantica at the average price of the shares sold under the
Distribution Agreement in the previous quarter, as adjusted;
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references to “ATN” refer to ATN S.A., the operational electronic transmission asset in Peru,
which is part of the Guaranteed Transmission System;
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references to “ATS” refer to ABY Transmision Sur S.A.;
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references to “AYES Canada” refer to Atlantica Sustainable Infrastructure Energy Solutions
Canada Inc., a vehicle formed by Atlantica and Algonquin to channel co-investment
opportunities;
references to “Befesa Agua Tenes” refer to Befesa Agua Tenes, S.L.U;
references to “cash available for distribution” or CAFD refer to the cash distributions received
by the Company from its subsidiaries minus cash expenses of the Company, including third
party debt service and general and administrative expenses;
references to “Calgary District Heating” refer to the district heating asset in Canada, which we
agreed to acquire in the fourth quarter of 2020 for a total equity investment of approximately
$20 million, subject to conditions precedent and regulatory approvals;
references to “Chile PV 1” refer to the solar PV plant of 55 MW located in Chile;
references to “Chile PV 2” refer to the solar PV plant of 40 MW located in Chile;
references to “Chile TL 3” refer to the 50-mile transmission line located in Chile;
references to “Chile TL 4” refer to the 63-mile transmission line located in Chile;
references to “CNMC” refer to Comision Nacional de los Mercados y de la Competencia, the
Spanish state-owned regulator;
references to “COD” refer to the commercial operation date of the applicable facility;
references to “Coso” refer to the 135 MW geothermal plant located in California;
references to the “Distribution Agreement” refer to the agreement entered into with J.P.
Morgan Securities LLC, as sales agent, dated August 3, 2021 under which the Company may
offer and sell from time to time up to $150 million of our ordinary shares and pursuant to which
J.P. Morgan Securities LLC may sell our ordinary shares by any method permitted by law
deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the
Securities Act of 1933, as amended;
references to “DOE” refer to the U.S. Department of Energy;
references to “EMEA” refer to Europe, Middle East and Africa;
references to “EPC” refer to engineering, procurement and construction;
references to “EURIBOR” refer to Euro Interbank Offered Rate, a daily reference rate published
by the European Money Markets Institute, based on the average interest rates at which
Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money
market;
references to “EU” refer to the European Union;
references to “Exchange Act” refer to the U.S. Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated by the SEC thereunder;
references to “Federal Financing Bank” refer to a U.S. government corporation by that name;
references to “Fitch” refer to Fitch Ratings Inc.;
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references to Frequency with Leave Index (FWLI) refer to the total number of recordable
accidents with leave (lost time injury) recorded in the last 12 months per million of worked
hours;
references to “FPA” refer to the U.S. Federal Power Act;
references to “General Frequency Index” (GFI) refer to the total number of recordable accidents
with leave (lost time injury) recorded in the last twelve months per million of worked hours;
references to “Green Exchangeable Notes” refer to the $115 million green exchangeable senior
notes due in 2025 issued by Atlantica Jersey on July 17, 2020, and fully and unconditionally
guaranteed on a senior, unsecured basis, by Atlantica;
references to “Green Project Finance” refer to the green project financing agreement entered
into between Logrosan, the sub-holding company of Solaben 1 & 6 and Solaben 2 & 3, as
borrower, and ING Bank, B.V. and Banco Santander S.A., as lenders;
references to “Green Senior Notes” refer to the $400 million green senior notes due in 2028;
references to “gross capacity” refer to the maximum, or rated, power generation capacity, in
MW, of a facility or group of facilities, without adjusting for the facility’s power parasitic
consumption, or by our percentage of ownership interest in such facility as of the date of this
annual report;
references to “GWh” refer to gigawatt hour;
references to “IFRIC 12” refer to International Financial Reporting Interpretations Committee’s
Interpretation 12—Service Concessions Arrangements;
references to “IFRS as issued by the IASB” refer to International Financial Reporting Standards
as issued by the International Accounting Standards Board;
references to “IPO” refer to our initial public offering of ordinary shares in June 2014;
references to “Italy PV” refer to the six solar PV plants located in Italy with combined capacity
of 6.2 MW;
references to “ITC” refer to investment tax credits;
references to “La Sierpe” refer to the 20MW solar PV plant in Colombia to be acquired from
Algonquin by mid-2021, subject to customary conditions;
references to “Liberty GES” refer to Liberty Global Energy Solutions B.V., a subsidiary of
Algonquin formerly known as Abengoa- Algonquin Global Energy Solutions B.V. (AAGES) which
invests in the development and construction of contracted clean energy and water
infrastructure contracted assets;
references to “Liberty Interactive” refer to Liberty Interactive Corporation;
references to “Liberty Interactive Ownership Interest in Solana” refer to Class A membership
interests of ASO Holdings Company LLC (the holding company of Arizona Solar One LLC, owner
of the 250 MW net (280 MW gross) solar electric generation facility located in Maricopa County,
Arizona, known as the Solana plant), previously owned by Liberty Interactive and purchased by
us on August 17, 2020;
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references to “Liberty GES ROFO Agreement” refer to the agreement we entered into with
Liberty GES on March 5, 2018, that provides us a right of first offer to purchase any of the assets
offered for sale thereunder, as amended and restated from time to time;
references to “LIBOR” refer to London Interbank Offered Rate;
references to “Lost time injury rate” refer to the total number of recordable accidents with leave
(lost time injury) recorded in the last 12 months per two hundred thousand worked hours;
references to “Logrosan” refer to Logrosan Solar Inversiones, S.A.;
references to “LTIP” refer to the long-term incentive plans approved by the Board of Directors;
references to “Mft3M ft3” refer to million standard cubic feet;
references to “Monterrey” refer to the 142 MW gas-fired engine facility including 130 MW
installed capacity and 12 MW battery capacity, located in, Monterrey, Mexico;
references to “Multinational Investment Guarantee Agency” refer to Multinational Investment
Guarantee Agency, a financial institution member of the World Bank Group which offers
political insurance and credit enhancement guarantees;
references to “MW” refer to megawatts;
references to “MWh” refer to megawatt hour;
references to “Moody’s” refer to Moody’s Investor Service Inc.;
references to “NOL” refer to net operating loss;
references to “Note Issuance Facility 2017” refer to the senior secured note facility dated
February 10, 2017, of €275 million (approximately $313 million), with Elavon Financial Services
DAC, UK Branch, as facility agent and a group of funds managed by Westbourne Capital as
purchasers of the notes issued thereunder, which was fully repaid in April 2020;
references to “Note Issuance Facility 2019” refer to the senior unsecured note facility dated
April 30, 2019, as amended on May 14, 2019, October 23, 2020 and March 30, 2021 for a total
amount of €268 million, (approximately $310 million), with Lucid Agency Services Limited, as
facility agent and a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder which was fully repaid on June 4, 2021;
references to “Note Issuance Facility 2020” refer to the senior unsecured note facility dated July
8, 2020, as amended on March 30, 2021 of €140 million (approximately $159 million), with Lucid
Agency Services Limited, as facility agent and a group of funds managed by Westbourne Capital
as purchasers of the notes issued thereunder;
references to “O&M” refer to operation and maintenance services provided at our various
facilities;
references to “operation” refer to the status of projects that have reached COD (as defined
above);
references to “Pemex” refer to Petroleos Mexicanos;
references to “PG&E” refer to PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company collectively;
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references to “PPA” refer to the power purchase agreements through which our power
generating assets have contracted to sell energy to various off-takers;
references to “PTS” refer to Pemex Transportation System;
references to “Revolving Credit Facility” refers to the credit and guaranty agreement with a
syndicate of banks entered into on May 10, 2018 as amended on January 24, 2019, August 2,
2019, December 17, 2019 and August 28, 2020 and March 1, 2021 providing for a senior secured
revolving credit facility in an aggregate principal amount of $450 million;
references to “Rioglass” refer to Rioglass Solar Holding, S.A.;
references to “ROFO” refer to a right of first offer;
references to “ROFO Agreements” refer to the Liberty GES ROFO Agreement and Algonquin
ROFO Agreement ;
references to the “Shareholders’ Agreement” refer to the agreement by and among Algonquin
Power & Utilities Corp., Abengoa-Algonquin Global Energy Solutions and Atlantica Sustainable
Infrastructure plc, dated March 5, 2018, as amended;
references to “Solnova 1, 3 & 4” refer to a 150 MW concentrating solar power facility wholly
owned by Atlantica, located in the municipality of Sanlucar la Mayor, Spain;
references to “S&P” refer to S&P Global Rating;
references to “Tenes” refer to the water desalination plant in Algeria, which is 51% owned by
Befesa Agua Tenes;
references to “Total-Record Incident” refer to the total number of recordable accidents with
and without leave (lost time injury) recorded in the last 12 months per two hundred thousand
worked hours;
references to “U.K.” refer to the United Kingdom;
reference to “U.S.” or “United States” refer to the United States of America;
references to “we,” “us,” “our,” “Atlantica” and the “Company” refer to Atlantica Sustainable
Infrastructure plc and its subsidiaries, unless the context otherwise requires.
135
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ATLANTICA SUSTAINABLE
INFRASTRUCTURE PLC
Opinion
In our opinion:
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Atlantica Sustainable Infrastructure plc’s group financial statements and parent company financial
statements (the “financial statements”) give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31 December 2021 and of the group’s loss for the year then
ended;
the group financial statements have been properly prepared in accordance with UK adopted
International Accounting Standards;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of Atlantica Sustainable Infrastructure plc (the ‘parent
company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2021 which comprise:
Group
Parent company
Company Balance Sheet as at 31 December
2021
Company Statement of Changes in Equity for
the year then ended
Related notes 1 to 10 to the financial
statements including a summary of significant
accounting policies
Consolidated Balance Sheet as at 31 December 2021
Consolidated Income Statement for the year then ended
Consolidated Statement of Other Comprehensive Income for
the year then ended
Consolidated Statement of Changes in Equity for the year then
ended
Consolidated Cash Flow Statement for the year then ended
Related notes 1 to 26 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and UK adopted International Accounting Standards. The financial
reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the group and parent company’s ability to continue to adopt the going
concern basis of accounting included:
• We performed a walkthrough of the Group’s financial close process to confirm our
understanding of management’s going concern assessment process. From this walkthrough,
we obtained an understanding of management’s financing structure that splits the Group into
corporate level financing and project level financing. The finance secured by the projects is
non-recourse to the Group. The Group going concern assessment is therefore based on
corporate level cash flows which are dependent on income from operating subsidiaries to
service corporate level finance arrangements and does not include these non-recourse project
level finance arrangements directly but considers the ability for dividends to flow up through
the Group. The corporate forecast incorporates the cash flows from the Parent and all holding
and investment entities within the Group, as well as dividends forecast to be received from the
operating subsidiaries.
• We performed an independent risk assessment on going concern to identify potential risks to
the liquidity of the Group in order to determine whether management’s process had identified
all the appropriate risks.
• We obtained management’s going concern assessment, including the corporate cash flow
forecast, available liquidity and debt maturity profiles for the going concern period which
covers the 13-month period from when these financial statements are authorised for issue to
31 March 2023.
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In obtaining an understanding of the Group’s project finance structure, we instructed
component teams to inspect the terms of the agreements to understand the structure of the
project finance debt. We confirmed that the project debt was non-recourse to the Group.
• We agreed the opening cash position to external bank confirmations and available bank
facilities to external credit facility agreements.
• We agreed the debt maturity profiles, including the upcoming repayment profiles, to the terms
of the signed agreements with the debt providers and we also obtained confirmation from
debtholders on the amounts due.
• We obtained management’s assessment of the budgeted EBITDA for the going concern
period. We confirmed the contracted revenues through our revenue testing. We assessed the
reasonableness of the budgets by analysing the historical performance of the operating assets
and by comparing 2021 actual data to 2021 budgeted data. Through this, we confirmed that
the operating assets were generating sufficient EBITDA to fulfil their financial commitments
and also to upstream dividends. We did not identify any defaults at a project level, except at
Kaxu where the Group has not fulfilled the conditional waiver before the balance sheet date
and classified the project debt relating to Kaxu as short-term, as described in Note 1.
Considering the project debt is non-recourse to the Group, we concluded that there is no
impact to the Group’s ability to continue as a going concern. Furthermore, we have inspected
the terms of other project and corporate debts to understand whether the default in Kaxu
would trigger any cross-default event. We confirmed that it does not trigger any other cross-
default event.
• We recalculated the Group’s performance against financial covenants as at 31 December
2021 to ensure that covenant testing had been performed correctly in accordance with the
Group’s agreements with debtholders. We also recalculated the Group’s forecasted
performance against the covenant ratios in the going concern period in order to assess its
future ability to comply.
• We assessed the corporate cash flow forecast and considered the appropriateness of the key
assumptions, inputs and methods used to calculate it.
• We performed reverse stress testing to determine what would be the corporate cash shortfall
in case no dividends were received from the operating subsidiaries, which is the main source
of operating cash flows at the corporate level throughout the going concern period. This
exercise also included considering mitigating factors which are within the Board of Directors’
control that could be implemented in a very short time to prevent or mitigate any cash shortfall
during the going concern period.
• We read the Group’s going concern disclosures included in the annual report to assess that
the disclosures were appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group and
parent company’s ability to continue as a going concern for a period of 16 months from when the
financial statements are authorised for issue
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report. However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going
concern.
Overview of our audit approach
Audit scope
• We performed an audit of the complete financial information of 5
components and audit procedures on specific balances for a further 23
components. In addition, we selected 7 components where we performed
specified procedures.
• The components where we performed full or specific audit procedures
accounted for 90% of Earnings before interest, taxes, depreciation, and
amortization (EBITDA), 82% of Revenue and 87% of Total assets.
Recoverability assessment of contracted concessional assets
• Overall group materiality of $21m which represents 2.5% of Group
Adjusted EBITDA
Key audit
matters
Materiality
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for each company within the Group. Taken together, this
enables us to form an opinion on the consolidated financial statements. We take into account size, risk
profile, the organisation of the group and effectiveness of group-wide controls, changes in the
business environment and other factors such as recent internal audit results when assessing the level
of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we
had adequate quantitative coverage of significant accounts in the financial statements, of the 91
reporting components of the Group, we selected 35 components covering entities within the UK,
Spain, Mexico, USA, Peru, South Africa, Uruguay and Luxembourg, which represent the principal
business units within the Group.
Of the 35 components selected, we performed an audit of the complete financial information of 5
components (“full scope components”) which were selected based on their size or risk characteristics.
For 23 components (“specific scope components”), we performed audit procedures on specific
accounts within that component that we considered had the potential for the greatest impact on the
significant accounts in the financial statements either because of the size of these accounts or their
risk profile. For the remaining 7 components (“specified procedures components”), we performed
procedures at the component level that were specified by the group engagement team in response to
specific risk factors.
The reporting components where we performed audit procedures accounted for 90% (2020: 86% of
the Group’s EBIT) of the Group’s EBITDA, 82% (2020: 90%) of the Group’s revenue and 87% (2020:
67%) of the Group’s total assets. For the current year, the full scope components contributed 50%
(2020: 31% of the Group’s EBIT) of the Group’s EBITDA, 40% (2020: 37%) of the Group’s revenue
and 43% (2020: 40%) of the Group’s total assets. The specific scope component contributed 40%
(2020: 49% of the Group EBIT) of the Group’s EBITDA, 42% (2020: 50%) of the Group’s revenue and
44% (2020: 46%) of the Group’s total assets. The audit scope of these components may not have
included testing of all significant accounts of the component but will have contributed to the coverage
of significant accounts tested for the Group. We also instructed 7 locations to perform specified
procedures over the US tax restructuring, new project debt facilities and an existing corporate debt
facility.
Of the remaining 56 components that together represent 10% of the Group’s EBITDA, none are
individually greater than 2% of the Group’s EBITDA. For these components, we performed other
procedures, including analytical review, testing of consolidation journals and intercompany
eliminations and foreign currency translation recalculations to respond to any potential risks of material
misstatement to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
EBITDA
50% Full
scope
components
40% Specific
scope
components
10% Other
procedures
Revenue
40% Full
scope
components
42% Specific
scope
components
18% Other
procedures
Total assets
43% Full
scope
components
44% Specific
scope
components
13% Other
procedures
Changes from the prior year
The approach to audit scope is similar to the prior year audit with the addition of 1 full scope, 2 specific
scope and 4 specified procedures components in response to specific risk factors and also certain
specific scope components to introduce a level of unpredictability through rotational testing.
Integrated team structure
The overall audit strategy is determined by the UK Senior Statutory Auditor, Stephney Dallmann, and
the Spanish Senior Auditor, Ambrosio Arroyo Fernandez-Rañada. Atlantica Sustainable Infrastructure
plc Group is based in the UK. However, due to the structure of the Atlantica Sustainable Infrastructure
plc ownership, the primary audit team includes members from both the UK and Spain. Members of the
primary audit team in both jurisdictions worked together as an integrated team. During the current
year’s audit cycle, a visit was undertaken by the by the UK Senior Statutory Auditor to the Spanish
primary audit team members in Spain. The visit involved discussing the audit approach with the
Spanish primary audit team members and any issues arising from the audit work, attending closing
meetings, and discussing relevant audit working papers on risk areas. The UK primary audit team
members interacted regularly with the Spanish primary audit team members throughout the audit,
reviewed relevant working papers and were responsible for the scope and direction of the audit
process. This, together with the additional procedures performed at Group level, gave us appropriate
evidence for our opinion on the Group financial statements.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to
be undertaken at each of the components by us, as the primary audit engagement team, or by
component auditors from other EY global network firms operating under our instruction. On the full
scope component, audit procedures were performed directly by the primary audit team. For the 23
specific scope components, where the work was performed by component auditors, we determined
the appropriate level of involvement to enable us to determine that sufficient audit evidence had been
obtained as a basis for our opinion on the Group as a whole.
The Group audit team intended to complete site visits to the component teams in the UK, Spain,
Mexico, the United States, South Africa, Peru and Uruguay. Following the outbreak of COVID-19 and
guidance issued by the governments, it was not possible to complete the planned visits. We therefore
completed the site visits virtually through the use of video or teleconferencing facilities. These virtual
visits involved discussing the audit approach with the component teams and any issues arising from
their work, attending planning and closing meetings reviewing key audit working papers on risk areas
and meeting with local management. There was no decrease in the extent of interactions with local
management and the heads of relevant business functions. The primary team interacted regularly with
the component teams where appropriate during various stages of the audit, reviewed key working
papers and were responsible for the scope and direction of the audit process. This, together with the
additional procedures performed at Group level, gave us appropriate evidence for our opinion on the
Group financial statements.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact the Group.
The Group has determined that the most significant future impacts from climate change on their
operations will be from acute and chronic physical risk and transition risk from emerging regulations.
These are explained on pages 36 - 38 in the principal risks and uncertainties, which form part of the
“Other information,” rather than the audited financial statements. Our procedures on these disclosures
therefore consisted solely of considering whether they are materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appear to be materially
misstated.
As explained in Note 6 to the financial statements, the Group has concluded that the recent
development in the Energy and Climate Policy Framework adopted by Spain in 2020 is expected to
have deep transformation of the electricity sector in Spain and would reduce the market price of
electricity in the mid- to long-term period. The Group has reduced the useful life of the CSP plants in
Spain from 35 years to 25 years after COD to take into account the expected effect of long-term price
evolution and technology changes.
Our audit effort in considering climate change was focused on ensuring that the effects of material
climate risks disclosed in Note 6 have been appropriately reflected in asset values and associated
disclosures where values are determined through modelling future cash flows, being contracted
concessional assets, and in the timing and nature of liabilities recognised, being dismantling provision.
We also challenged the Directors’ considerations of climate change in their assessment of going
concern and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.
Key observations
communicated to the Audit
Committee
Based on the audit procedures
performed, we conclude that the
review of the impairment
indicators assessment
performed by management is
appropriate.
For Solana (US Asset), an
impairment charge was
identified by management and
recorded for $43 million. Based
on the evidence obtained and
the audit procedures performed,
we consider that the impairment
charge is fairly stated.
We conclude that the related
disclosures as per IAS 36 are
appropriately presented in the
financial statements.
Risk
Our response to the risk
Recoverability assessment of
contracted concessional
assets ($8,021 million value of
risk, PY comparative $8,155
million)
Refer to the Audit Committee
Report (section 8 pages 15 and
16); Accounting policies (Note 2
of the Consolidated Financial
Statements page 160); and Note
6 of the Consolidated Financial
Statements (page 188).
As described in Note 6 to the
consolidated financial
statements, the Group has
recorded “contracted
concessional” assets of $8,021
million at December 31, 2021,
which are primarily classified as
intangible assets or financial
assets depending on the nature
of the payment entitlements
established in the respective
agreements. Revenue derived
from the Group's contracted
concessional assets are
governed by power purchase
agreements (“PPAs”) with the
Group's customers or by
regulation.
As described in Note 2 to the
consolidated financial
statements, the Group reviews
its contracted concessional
assets for impairment indicators
whenever events or changes in
circumstances indicate that the
carrying amounts of the assets
or group of assets may not be
recoverable, or previous
impairment losses are no longer
adequate.
As discussed in Note 6,
management identified triggering
events at the Solana asset
located in the United States (the
“Solana US Asset”) and
We obtained an understanding,
evaluated the design and tested
the operating effectiveness of
controls over the Group’s
contracted concessional assets
recoverability assessment
process. For example, we
tested controls over
management’s identification of
potential impairment indicators,
as well as controls over the
determination of significant
assumptions used in the Solana
US Asset impairment
calculation, including, among
others, the discount rates and
underlying projections used in
the Group’s impairment.
assessment.
To test the Group’s impairment
indicators assessment for
contracted concessional assets,
our audit procedures included,
among others, comparing actual
energy production versus
budget and assessing the
effects of any identified changes
to regulation impacting
significant locations.
For the Solana US Asset, we
evaluated the design and tested
the operating effectiveness of
controls over the current year
impairment calculation,
including management’s review
of the significant assumptions
used.
As part of our audit procedures
on the Solana US Asset, we
assessed the appropriateness
of the main inputs used in the
cash flow projections, by
comparing the future estimated
performance of the asset to its
historical energy production and
evaluating the consistency of
the actual energy production
versus budget for 2021. As an
additional procedure, we
engaged an external specialist,
Risk
Our response to the risk
Key observations
communicated to the Audit
Committee
an independent engineer, to
assess the reasonableness of
the forecast energy production
volume in Solana US Asset. For
the discount rate, we involved
our valuation specialists to
assist us in calculating and
developing a range of discount
rates, which we compared to
those used by the Group.
We assessed the adequacy of
the related disclosures in the
Group’s financial statements,
including the sensitivity
analyses on the energy
production and discount rate
assumptions.
recorded a $43 million
impairment charge in 2021.
Auditing the Group’s
recoverability assessment
related to the contracted
concessional assets involves
significant judgement in
determining whether impairment
indicator existed and, if an
indicator exists, in the
assumptions used by
management in the
determination of whether an
impairment should be recorded
or reversed.
The main inputs considered
when evaluating for impairment
indicators include the
performance of the plants versus
budget and changes in
applicable regulations. The
significant assumptions which
require substantial judgement or
estimation used in the
impairment calculations of the
Solana US Asset are discount
rates and projections
considering real data based on
contract terms and projected
changes in both selling prices
and costs.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably
be expected to influence the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be $21 million (2020: $21 million), which is 2.5% (2020: 5%
of EBIT) of Adjusted EBITDA. We believe that Adjusted EBITDA provides us with best assessment of
the requirements of the users of the financial statements.
We determined materiality for the Parent Company to be $30 million (2020: $29 million), which is 2%
(2020: 2%) of Equity.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control
environment, our judgement was that performance materiality was 75% (2020: 75%) of our planning
materiality, namely $16m (2020: $17m). We have set performance materiality at this percentage
having considered the nature, the number and the impact of audit differences identified in 2020 as well
as the overall control environment.
Audit work at component locations for the purpose of obtaining audit coverage over significant
financial statement accounts is undertaken based on a percentage of total performance materiality.
The performance materiality set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of misstatement at that
component. In the current year, the range of performance materiality allocated to components was
$2m to $5m (2020: $2m to $7m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of $1m (2020: $1m), which is set at 5% of planning materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to
135, other than the financial statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared
in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for
•
our audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 129, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the group and parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the
prevention and detection of fraud rests with both those charged with governance of the company and
management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to
the group and determined that the most significant are those that relate to the reporting
framework (IFRS, FRS 101 and the Companies Act 2006), the relevant tax compliance
regulations in the jurisdictions in which the Group operates, Anti-Money Laundering
Regulation and General Data Protection Regulation. In addition, the Group is subject to the
laws and regulations set forth by both the Securities and Exchange Commission (“SEC”) and
the National Association of Securities Automated Quotations (“NASDAQ”). Also, the Group
operates in a number of regulated markets; it is subject to extensive regulations from the
national regulatory authorities in the jurisdictions it operates in, as well as additional
regulations at a state, regional and local level in certain countries, including Spain, Mexico,
Peru and the United States.
• We understood how Atlantica Sustainable Infrastructure plc is complying with those
frameworks by making enquiries of management, internal audit and those responsible for legal
and compliance procedures. We corroborated our enquiries through our review of Board
minutes, papers provided to the Audit Committee and correspondence received from
regulatory or licensing authorities. We noted that there was no contradictory evidence.
• We assessed the susceptibility of the group’s financial statements to material misstatement,
including how fraud might occur by meeting with management within various parts of the
business to understand where they considered there was susceptibility to fraud. We also
considered performance targets and their influence on efforts made by management to
manage earnings or influence the perceptions of analysts. Where the risk was considered to
be higher, we performed audit procedures to address each identified fraud risk. These
procedures included performing substantive testing procedures over revenue recognition,
testing manual journals and involving our internal specialists to review key management
estimates (such as the recoverability of contracted concessional assets and fair value
estimates). These procedures were designed to provide reasonable assurance that the
financial statements were free from fraud or error.
• Based on this understanding we designed our audit procedures to identify non-compliance
with such laws and regulations. Our procedures involved a review of board minutes to identify
any non-compliance, a review of reporting to the Audit Committee on compliance with
regulations and enquiries with management, internal audit and the legal and compliance
department.
• The Group owns and manages renewable energy, efficient natural gas, transmission and
transportation infrastructure and water assets which operate in a regulated environment. We
have obtained an understanding of the regulations and the potential impact of these on the
Group. In assessing the control environment, we have considered the compliance of the
Group with these regulations as part of our audit procedures, which included a review of
correspondence received from the regulators where this was received. In addition, revenues
derived from the Group’s contracted concessional assets are governed by power purchase
Consolidated Financial Statement
Consolidated Income Statement
Amounts in thousands of U.S. dollars
Revenue
Other operating income
Employee benefit expenses
Depreciation, amortization, and impairment charges
Other operating expenses
Operating profit
Financial income
Financial expense
Net exchange differences
Other financial income, net
Note (1)
For the year ended December 31,
4
20
24
6
20
21
21
21
21
2021
1,211,749
74,670
(78,758)
(439,441)
(414,330)
2020
1,013,260
99,525
(54,464)
(408,604)
(276,666)
353,890
373,051
2,755
(361,270)
1,873
15,750
7,052
(378,386)
(1,351)
40,875
Financial expense, net
(340,892)
(331,810)
Share of profit of associates carried under the equity
method
7
12,304
510
Profit before income tax
25,302
41,751
Income tax expense
18
(36,220)
(24,877)
Profit/(loss) for the year
Profit attributable to non-controlling interests
Profit/(loss) for the year attributable to owners of the
Company
Weighted average number of ordinary shares outstanding
(thousands) - basic
Weighted average number of ordinary shares outstanding
(thousands) - diluted
Basic earnings per share (U.S. dollar per share)
Diluted earnings per share (U.S. dollar per share)
(10,918)
(19,162)
16,874
(4,906)
(30,080)
11,968
22
22
22
22
111,008
114,523
(0.27)
(0.26)
101,879
103,392
0.12
0.12
(1) Notes 1 to 26 are an integral part of the consolidated financial statements
148
Consolidated Statement of Other Comprehensive Income
Amounts in thousands of U.S. dollars
Note (1)
Year
Ended
December
31, 2021
Year
Ended
December 31,
2020
Profit /(loss) for the year
(10,918)
16,874
Items that may be reclassified subsequently to profit or
loss:
Change in fair value of cash flow hedges
Less: reclassification adjustments for gains transferred to
profit or loss
9
33,846
58,292
(26,272)
58,381
Exchange differences on translation of foreign operations
(41,956)
(9,947)
Income tax relating to items that may be reclassified
subsequently to profit or loss
(23,712)
(8,698)
Other comprehensive income for the year net of tax
26,470
13,464
Total comprehensive income for the year
15,552
30,338
Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests
966
14,586
25,711
4,627
(1)
Notes 1 to 26 are an integral part of the consolidated financial statements
149
Consolidated Balance Sheet
Amounts in thousands of U.S. dollars
Note (1)
Assets
Non-current assets
Contracted concessional assets
Investments carried under the equity method
Financial investments
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Financial investments
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Share premium
Capital reserves
Other reserves
Accumulated currency translation reserve
Accumulated deficit
Equity attributable to the Company
Non-controlling interests
Total equity
Non-current liabilities
Long-term corporate debt
Long-term project debt
Grants and other liabilities
Derivative liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Short-term corporate debt
Short-term project debt
Trade payables and other current liabilities
Income and other tax payables
Total current liabilities
Total equity and liabilities
6
7
8
18
11
8
12
13
13
13
9
13
13
13
13
14
15
16
9
18
14
15
17
(1) Notes 1 to 26 are an integral part of the Consolidated Financial Statements
150
As of
December
31, 2021
As of
December
31, 2020
8,021,568
294,581
96,608
172,268
8,585,025
8,155,418
116,614
89,754
152,290
8,514,076
29,694
307,143
207,379
622,689
1,166,905
23,958
331,735
200,084
868,501
1,424,278
9,751,930
9,938,354
11,240
872,011
1,020,027
171,272
(133,450)
(398,701)
1,542,399
206,206
1,748,605
995,190
4,387,674
1,263,744
223,453
308,859
7,178,920
27,881
648,519
113,907
34,098
824,405
10,667
1,011,743
881,745
96,641
(99,925)
(373,489)
1,527,382
213,499
1,740,881
970,077
4,925,268
1,229,767
328,184
260,923
7,714,219
23,648
312,346
92,557
54,703
483,254
9,751,930
9,938,354
Consolidated Statement of Changes in Equity
The consolidated financial statements of Atlantica Sustainable Infrastructure plc, company
registration no. 08818211, were approved by the board of directors and authorised for issue on 25
February 2022.
They were signed on its behalf by:
Director and Chief Executive Officer
Chief Financial Officer
Santiago Seage
February 25, 2022
Francisco Martinez-Davis
February 25, 2022
151
Consolidated Statement of Changes in Equity
Amounts in thousands of
U.S. dollars
Share
Capital
Share
Premium
Capital
Reserves
Other
reserves
Accumulated
deficit
Accumulated
currency
translation
differences
Total equity
attributable
to the
Company
Non-
controlling
interest
Total
equity
Balance as of January 1,
2021
Profit/(Loss) for the year
after taxes
Change in fair value of cash
flow hedges
Currency translation
differences
Tax effect
Other comprehensive
income
Total comprehensive
income
10,667
1,011,743
881,745
96,641
(99,925)
(373,489)
1,527,382
213,499
1,740,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
97,421
-
-
-
(33,525)
(22,790)
-
(30,080)
(30,080)
19,162
(10,918)
(10,060)
87,361
4,777
92,138
-
-
(33,525)
(8,431)
(41,956)
(22,790)
(922)
(23,712)
74,631
(33,525)
(10,060)
31,046
(4,576)
26,470
74,631
(33,525)
(40,140)
966
14,586
15,552
Capital increase (Note 13)
573
60,268
128,920
Reduction of Share
Premium (Note 13)
Business Combinations
(Note 5)
Share-based
compensation (Note 13)
Distributions (Note 13)
Balance as of December
31,2021
-
-
-
-
(200,000)
200,000
-
-
-
-
-
(190,638)
-
-
-
-
-
-
-
-
-
-
-
-
-
189,761
-
-
-
-
189,761
-
8,287
8,287
14,928
14,928
-
14,928
-
(190,638)
(30,166)
(220,804)
11,240
872,011
1,020,027
171,272
(133,450)
(398,701)
1,542,399
206,206
1,748,605
152
Consolidated Statement of Changes in Equity
Balance as of January 1,
2020
Profit for the year after
taxes
Change in fair value of cash
flow hedges
Currency translation
differences
Tax effect
Other comprehensive
income
Total comprehensive
income
Capital increase (Note
13)
Business Combinations
(Note 5)
Distributions (Note 13)
Balance as of December
31, 2020
10,160
1,011,743
889,057
73,797
(90,824)
(385,457)
1,508,476
206,380
1,714,856
-
-
-
-
-
-
507
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,353
-
-
-
(9,101)
(8,509)
22,844
-
(9,101)
11,968
11,968
4,906
16,874
-
-
-
-
31,353
756
32,109
(9,101)
(846)
(9,947)
(8,509)
13,743
(189)
(279)
(8,698)
13,464
22,844
(9,101)
11,968
25,711
4,627
30,338
161,347
-
(168,659)
-
-
-
-
-
-
-
-
-
161,854
-
161,854
-
25,308
25,308
(168,659)
(22,816)
(191,475)
10,667
1,011,743
881,745
96,641
(99,925)
(373,489)
1,527,382
213,499
1,740,881
(1) Notes 1 to 26 are an integral part of the Consolidated Financial Statements
153
Consolidated Cash Flow Statement
Amounts in thousands of U.S. dollars
Profit/(loss) for the year
For the year ended
Note (1)
2021
2020
(10,918)
16,874
Non-monetary adjustments
Depreciation, amortization and impairment charges
Financial (income)/expense
Fair value (gains)/losses on derivative financial instruments
Shares of (profits)/losses from associates
Income tax
Other non-monetary items
6
21
21
7
18
439,441
359,550
(16,785)
(12,304)
36,220
55,809
408,604
315,151
15,308
(510)
24,877
(21,633)
Profit/(loss) for the year adjusted by non-monetary items
851,013
758,671
Changes in working capital
Inventories
Trade and other receivables
Trade payables and other current liabilities
Financial investments and other current assets/liabilities
11
17
Changes in working capital
Income tax received/(paid)
Interest received
Interest paid
Net cash provided by operating activities
Acquisitions of subsidiaries and entities under the equity method
Investments in contracted concessional assets *
Distribution from entities under the equity method
Other non-current assets/liabilities
5&7
6
7
5,215
48,521
(25,782)
(31,081)
(4,590)
(790)
(9,771)
(18,061)
(3,127)
(33,212)
(51,684)
2,519
(293,098)
(16,425)
5,148
(275,961)
505,623
438,221
(362,449)
(24,682)
34,883
1,093
2,453
(1,361)
22,246
(29,198)
Net cash used in investing activities
(351,155)
(5,860)
Proceeds from project debt
Proceeds from corporate debt
Repayment of project debt
Repayment of corporate debt
Dividends paid to Company´s shareholders
Dividends paid to non-controlling interest
Purchase of Liberty Interactive´s equity interest in Solana
Capital increase
15
14
15
14
13
13
1
13
14,560
429,014
(418,265)
(376,154)
(190,638)
(28,134)
-
189,454
603,949
678,651
(621,691)
(502,042)
(168,659)
(22,944)
(266,850)
162,246
Net cash used in financing activities
(380,163)
(137,340)
Net increase / (decrease) in cash and cash equivalents
(225,695)
295,021
Cash and cash equivalents at beginning of the year
12
Translation differences cash and cash equivalents
868,501
(20,117)
562,795
10,685
Cash and cash equivalents at the end of the year
12
622,689
868,501
*
Includes proceeds for $20.5 million and $7.4 million in 2021 and 2020 respectively (Note 6).
(1)
Notes 1 to 26 are an integral part of the consolidated financial statements
154
Notes to the Consolidated Financial Statements
1. General information
Atlantica Sustainable Infrastructure plc (“Atlantica” or the “Company”) is a sustainable
infrastructure company with a majority of its business in renewable energy assets. Atlantica
currently owns, manages and invests in renewable energy, storage, efficient natural gas and
heat, electric transmission lines and water assets focused on North America (the United States,
Canada and Mexico), South America (Peru, Chile, Colombia and Uruguay) and EMEA (Spain,
Italy, Algeria and South Africa).
Atlantica’s shares trade on the NASDAQ Global Select Market under the symbol “AY”.
Algonquin Power & Utilities Corp. (“Algonquin”) is the largest shareholder of the Company and
owns a 43.6% stake in Atlantica as of December 31, 2021. Algonquin’s voting rights and rights
to appoint directors are limited to 41.5% and the difference between Algonquin´s ownership
and 41.5% will vote replicating non-Algonquin’s shareholders’ vote.
During the year 2020, the Company completed the following acquisitions:
- On April 3, 2020, the Company made an initial investment in the creation of a renewable
energy platform in Chile, together with financial partners, where it owns an
approximately 35% stake and has a strategic investor role. The first investment was the
acquisition of a 55 MW solar PV plant (“Chile PV 1”). The Company’s initial contribution
was approximately $4 million. In addition, on January 6, 2021, the Company closed its
second investment through the platform with the acquisition of a 40 MW solar PV plant
(“Chile PV 2”). The total equity investment for this new asset was approximately $5.0
million. The platform intends to make further investments in renewable energy in Chile
and sign Power Purchase Agreements (“PPAs” ) with credit worthy off-takers.
-
In January 2019, the Company entered into an agreement with Abengoa (references to
“Abengoa” refer to Abengoa, S.A., together with its subsidiaries, or Abenewco1, S.A.
together with its subsidiaries, unless the context otherwise requires) for the acquisition
of a 51% stake in Tenes, a water desalination plant in Algeria. Closing of the acquisition
was subject to certain conditions precedent, which were not fulfilled. On May 31, 2020,
the Company entered into a new agreement, which provided the Company with certain
additional decision rights, including the right to appoint the majority of directors of the
board of Befesa Agua Tenes, and therefore controls the asset.
- On August 17, 2020, the Company closed the acquisition of Liberty Interactive’s equity
interest in Solana. Liberty Interactive was the tax equity investor in the Solana project.
The total equity investment is expected to be up to $285 million of which $272 million
has already been paid.
In January 2021 the Company closed the acquisition of 42.5% of the equity of Rioglass Solar
Holding S.A. (“Rioglass”) a supplier of spare parts and services to the solar industry, increasing
its stake to 57.5%. In addition, on July 22, 2021 the Company exercised the option to acquire
the remaining stake of 42.5%. The investment made in 2021 to acquire the additional 85%
equity, resulting in a 100% ownership, was approximately $17.1 million (Note 5).
155
On April 7, 2021, the Company closed the acquisition of Coso, a 135 MW renewable asset in
California. Coso is the third largest geothermal plant in the United States and provides base
load renewable energy to the California Independent System Operator (California ISO). It has
PPAs signed with an 18-year average contract life. The total equity investment was
approximately $130 million (Note 5). In addition, on July 15, 2021, the Company repaid $40
million of project debt.
On May 14, 2021, the Company closed the acquisition of Calgary District Heating, a district
heating asset of approximately 55 MWt in Canada for a total equity investment of
approximately $22.7 million (Note 5). Calgary District Heating has been in operation since 2010
and provides heating services to a diverse range of government, institutional and commercial
customers in the city of Calgary.
On June 16, 2021, the Company acquired a 49% interest in a 596 MW portfolio of wind assets
in the United States (Vento II) for a total equity investment net of cash consolidated at the
transaction date of approximately $180.7 million (Note 7). EDP Renewables owns the remaining
51%. The assets have PPAs with investment grade off-takers with five-year average remaining
contract life at the time of the investment.
On August 6, 2021, the Company closed the acquisition of Italy PV1 and Italy PV2, two solar PV
plants in Italy with a combined capacity of 3.7 MW for a total equity investment of $9 million
(Note 5). Italy PV1 and Italy PV2 have regulated revenues under a feed in tariff until 2030 and
2031, respectively.
On November 25, 2021, the Company closed the acquisition of La Sierpe, a 20 MW solar PV
plant in Colombia for a total equity investment of approximately $23.5 million. The asset was
acquired under a Right of First Offer (“ROFO”) agreement with Liberty GES. The Company also
acquired two additional solar projects in Colombia which are currently in construction with a
combined capacity of approximately 30 MW, la Tolua and Tierra Linda.
On December 14, 2021, the Company closed the acquisition of Italy PV 3, a 2.5 MW solar PV
portfolio in Italy for a total equity investment of approximately $4 million. Italy PV 3 has
regulated revenues under a feed in tariff until 2032.
The following table provides an overview of the main concessional assets the Company owned
or had an interest in as of December 31, 2021:
156
Assets
Type Ownership Location Currency(9)
(Gross)
Credit Ratings(10) COD*
Remaining(16)
Capacity
Counterparty
Contract
Years
22
18
17
6
6
4
1
Solana
Mojave
Coso
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Geothermal
)
100%
100%
Arizona
(USA)
California
(USA)
100%
California
(USA)
USD
280 MW
BBB+/A3/BBB
+
2013
USD
280 MW BB-/ -- /BB
2014
USD
135 MW Investment Grade(11)
1987-
1989
Elkhorn Valley
Prairie Star
Twin Groves II
Lone Star II
Chile PV 1
Chile PV 2
La Sierpe
Palmatir
Cadonal
Melowind
Mini-Hydro
Solaben 2 & 3
Solacor 1 & 2
PS10 & PS20
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Hydraulic)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Oregon
(USA)
Minnesota
(USA)
Illinois
(USA)
Texas
(USA)
49%
49%
49%
49%
USD
101 MW
BBB/A3/--
2007
USD
101 MW
--/A3/A-
2007
USD
198 MW
BBB-/Baa2/--
2008
USD
196 MW
Not rated
2008
35%(1)
Chile
USD
55 MW
N/A
2016
N/A
35%(1)
Chile
USD
40 MW
Not rated
2017
100% Colombia COP
20 MW
Not rated
2021
100% Uruguay
USD
50 MW
100% Uruguay
USD
50 MW
BBB/Baa2/BBB-
(12)
BBB/Baa2/BBB-
(12)
2014
2014
100% Uruguay
USD
50 MW BBB/Baa2/BBB-
2015
100%
Peru
USD
4 MW BBB+/Baa1/BBB
2012
9
14
12
13
14
11
70%(2)
Spain
Euro
87%(3)
Spain
Euro
2x50
MW
2x50
MW
A/Baa1/A-
2012
16/16
A/Baa1/A-
2012
15/15
100%
Spain
Euro
31 MW
A/Baa1/A-
2007&2009
10/12
Helioenergy 1
& 2
Renewable
(Solar)
Helios 1 & 2
Renewable
(Solar)
Solnova 1, 3 &
4
Renewable
(Solar)
100%
Spain
Euro
100%
Spain
Euro
100%
Spain
Euro
2x50
MW
2x50
MW
3x50
MW
A/Baa1/A-
2011
15/15
A/Baa1/A-
2012
15/16
A/Baa1/A-
2010
13/13/14
157
Solaben 1 & 6
Seville PV
Italy PV 1
Italy PV 2
Italy PV 3
Kaxu
Calgary
ACT
Monterrey
ATN (15)
ATS
ATN 2
Quadra 1 & 2
Palmucho
Chile TL3
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Efficient
natural gas
&heat
Efficient
natural gas &
heat
Efficient
natural gas
&heat
Transmission
line
Transmission
line
Transmission
line
Transmission
line
Transmission
line
Transmission
line
100%
Spain
Euro
2x50
MW
A/Baa1/A-
2013
17/17
80%(4)
Spain
Euro
1 MW
A/Baa1/A-
2006
14
100%
Italy
Euro
1.6 MW BBB/Baa3/BBB
2010
100%
Italy
Euro
2.1 MW BBB/Baa3/BBB
2011
100%
Italy
Euro
2.5 MW BBB/Baa3/BBB
2012
51%(5)
South
Africa
Rand
100 MW BB-/Ba2/BB-(13)
2015
9
9
10
13
100%
Canada
CAD
55 MWt
~41% A+ or
higher(14)
2010
19
100% Mexico
USD
300 MW BBB/ Ba3/BB-
2013
11
30% Mexico
USD
142 MW
Not rated
2018
100%
Peru
USD
100%
Peru
USD
379
miles BBB+/Baa1/BBB
569
miles BBB+/Baa1/BBB
2011
2014
100%
Peru
USD
81 miles
Not rated
2015
17
19
22
11
100%
Chile
USD
49
miles/32
miles
Not rated
2014
13/13
100%
Chile
USD
6 miles
BBB/ -- /A-
2007
16
100%
Chile
USD
50 miles
A/A1/A-
1993
Regulated
Skikda
Water
34.2%(6) Algeria
USD
Honaine
Water
25.5%(7) Algeria
USD
Tenes
Water
51%(8)
Algeria
USD
3.5 M
ft3/day
7 M
ft3/day
7 M
ft3/day
Not rated
2009
12
Not rated
2012
Not rated
2015
16
18
(1)
(2)
(3)
(4)
(5)
65% of the shares in Chile PV 1 and Chile PV 2 are indirectly held by financial partners through the renewable energy
platform of the Company in Chile.
Itochu Corporation holds 30% of the shares in each of Solaben 2 and Solaben 3.
JGC holds 13% of the shares in each of Solacor 1 and Solacor 2.
Instituto para la Diversificacion y Ahorro de la Energia (“Idae”) holds 20% of the shares in Seville PV.
Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu Community
Trust (20%).
(6) Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.8%.
158
(7) Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
(8) Algerian Energy Company, SPA owns 49% of Tenes.
(9) Certain contracts denominated in U.S. dollars are payable in local currency.
(10) Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service
Inc., or Moody’s, and Fitch Ratings Ltd, or Fitch.
(11) Refers to the credit rating of two Community Choice Aggregators: Silicon Valley Clean Energy and Monterrey Bar
Community Power, both with A Rating from S&P and Southern California Public Power Authority. The third off-taker is
not rated.
(12) Refers to the credit rating of Uruguay, as UTE (Administracion Nacional de Usinas y Transmisoras Electricas) is unrated.
(13) Refers to the credit rating of the Republic of South Africa. The off-taker is Eskom, which is a state-owned utility company
in South Africa.
(14) Refers to the credit rating of a diversified mix of 22 high credit quality clients (~41% A+ rating or higher, the rest is
unrated).
Including ATN Expansion 1 & 2.
(15)
(16) As of December 31, 2021.
(*)
Commercial Operation Date
The Kaxu project financing arrangement contains cross-default provisions related to Abengoa
such that debt defaults by Abengoa, subject to certain threshold amounts and/or a
restructuring process, could trigger a default under the Kaxu project financing arrangement.
The insolvency filing by the individual company Abengoa S.A. in February 2021 represents a
theoretical event of default under the Kaxu project finance agreement. In September 2021, the
Company obtained a waiver for such theoretical event of default which was conditional upon
the replacement of the operation and maintenance supplier of the plant. On February 1, 2022,
the Company transferred the employees performing the operation and maintenance services
to an Atlantica subsidiary. The waiver has been extended until April 30, 2022 and is subject to
the lenders receiving certain documentation from the Company, including formal evidence of
the approval by the client and the department of energy of South Africa of the operation and
maintenance internalization and the Company is currently working on obtaining such
documentation. Although the Company does not expect the acceleration of debt to be declared
by the credit entities, as of December 31, 2021 Kaxu did not have what International Accounting
Standards define as an unconditional right to defer the settlement of the debt for at least twelve
months, as the cross-default provisions make that right conditional. Therefore, Kaxu total debt
(Note 15) has been presented as current in the Consolidated Financial Statements of the
Company as of December 31, 2021 for an amount of $315 million, in accordance with
International Accounting Standards 1 (“IAS 1”), “Presentation of Financial Statements”.
Outbreak of COVID-19
The outbreak of the COVID-19 coronavirus disease (“COVID-19”) was declared a pandemic by
the World Health Organization in March 2020 and continues to spread in key markets of the
Company.
Main risks and uncertainties identified by the Company, which may affect its business, financial
condition, results of operations and cash flows, are:
- COVID-19 can affect the operation and maintenance activities of the Company. The
Company may experience delays in certain operation and maintenance activities, or
certain activities may take longer than usual.
- The rapid increase in demand in 2021 after the slowdown in 2020 caused tensions in
the supply chains, including delays to obtain some components and increased prices. If
159
the Company was to experience a shortage of or inability to acquire critical spare parts,
it could incur significant delays in returning facilities to full operation. Supply chain
tensions may also affect its projects in development and construction where the
Company can experience delays or an increase in prices of equipment and materials
required for the construction of new assets.
- The Company could also experience commercial disputes with its clients, suppliers and
partners related to implications of COVID-19 in contractual relations. All the risks
referred to can cause delays in distributions from its assets to the holding company.
- Many governments have implemented and may continue to implement stimulus
measures to reduce the negative impact of COVID-19 in the economy. In many cases,
these measures may increase government spending which may translate into increased
tax pressure on companies in the countries where the Company operates.
Measures taken by the Company so far have focused on reinforcing safety measures in all its
assets while it continues to provide a reliable service to its clients. For example, the Company
has implemented the use of additional protection equipment, reinforced access control to its
plants, reduced contact between employees, changed shifts, tested employees, identified and
isolated potential cases together with their close contacts and taken additional measures to
increase safety measures for its employees and operation and maintenance suppliers’
employees working at its assets. The Company has also reinforced its physical and cyber-
security measures. The Company has implemented protocols to decide which offices to keep
open and under what limitations, depending on health and safety indicators in each specific
region.
COVID-19 did not have any material impact on the business disclosed in these Consolidated
Financial Statements.
2. Significant Accounting Policies
2.1. Basis of Preparation
These Consolidated Financial Statements are presented in accordance with the International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”) and with the International Accounting Standards in conformity with the
requirements of the Companies Act 2006, on a basis consistent with the prior year.
The Consolidated Financial Statements are presented in U.S. dollars, which is the Company’s
functional and presentation currency. Amounts included in these Consolidated Financial
Statements are all expressed in thousands of U.S. dollars, unless otherwise indicated.
The Company presents assets and liabilities in the statement of financial position based on
current/non-current classification. An asset or liability is current when it is expected or due to
be realized within twelve months after the reporting period.
Application of new accounting standards
a) Standards, interpretations and amendments effective from January 1, 2021 under IFRS-
IASB, applied by the Company in the preparation of these Consolidated Financial
160
Statements:
The applications of these amendments have not had any impact on these financial
statements.
Interest Rate Benchmark Reform – Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16
These amendments are mandatory for annual periods beginning on or after January 1,
2021 under IFRS-IASB. The amendments provide temporary reliefs which address the
financial reporting effects when an interbank offered rate (“IBOR”) is replaced with an
alternative risk-free interest rate (“RFR”). The amendments include the following practical
expedients:
- A practical expedient to require contractual changes, or changes to cash flows that
are directly required by the reform, to be treated as changes to a floating interest
rate, equivalent to a movement in a market rate of interest.
- Permit changes required by IBOR reform to be made to hedge designations and
hedge documentation without the hedging relationship being discontinued.
The Company intends to use the practical expedients in future periods if they become
applicable.
b) Standards, interpretations and amendments published by the IASB that will be effective
for periods beginning on or after January 1, 2022:
The Company does not anticipate any significant impact on the Consolidated Financial
Statements derived from the application of the new standards and amendments that will
be effective for annual periods beginning on or after January 1, 2021, although it is
currently still in the process of evaluating such application.
The Company has not early adopted any standard, interpretation or amendment that has
been issued but is not yet effective.
Effect of IBOR reform
Following the financial crisis, the reform and replacement of benchmark interest rates such as
LIBOR and other IBORs has become a priority for global regulators. There remains some
uncertainty around the timing and precise nature of these changes. The Company currently has
several contracts which reference LIBOR and extend beyond 2021. These contracts are disclosed
within the tables below.
It is currently expected that alternative RFRs will replace LIBOR. There remain key differences
between LIBOR and RFRs. LIBOR is a ‘term rate’, which means that it is published for a borrowing
period (such as three months or six months) and is ‘forward looking’, because it is published at
the beginning of the borrowing period. RFRs may be based on overnight rates from actual
transactions and published at the end of the overnight borrowing period. Furthermore, LIBOR
includes a credit spread over the risk-free rate, which RFRs currently may not. To transition
existing contracts and agreements that reference LIBOR to RFRs, adjustments for term
differences and credit differences might need to be applied to RFRs, to enable the two
benchmark rates to be economically equivalent on transition. At the time of reporting, industry
161
working groups are reviewing methodologies for calculating adjustments between LIBOR and
RFRs.
Risks arising from the transition relate principally to the potential impact of rate differences if
the debt and related hedging instruments do not transition to the new benchmark interest rate
at the same time and/or the rates move by different amounts. This could result in hedge
ineffectiveness and a net cash expense to the Company as a result of the IBOR transition.
The following table contains details of the financial instruments that the Company holds as of
December 31, 2021 which reference LIBOR and have not yet transitioned to RFRs:
Non-derivative assets and liabilities referenced to LIBOR
Measured at amortized cost
Project debt
Total non-derivatives items
Derivatives
Total assets and liabilities referenced to LIBOR
Carrying amount as of
December 31, 2021
Assets
Liabilities
-
1,068,501
- 1,068,501
62,571
-
- 1,131,072
The following table contains details of only the hedging instruments used in the Company's
hedging strategies which reference LIBOR and have not yet transitioned to RFRs, such that
relief(s) of phase 1 and phase 2 amendments to IFRS 9 and IFRS 7 for IBOR reform, effective
January 1st, 2020 and January 1st, 2021, respectively, have been applied to the hedging
relationship:
Carrying amount as of December 31, 2021
Notional Assets
Liabilities
Balance
sheet line
item(s)
2021 changes in
fair value used for
calculating hedge
ineffectiveness
Cash flow hedge
Interest rate swaps
939,670
Total cash flow hedges
939,670
-
-
62,571
Derivative
liabilities
62,571
30,013
30,013
In calculating the change in fair value attributable to the hedged risk of floating-rate debt, the
Company has made the following assumptions that reflect its current expectations:
- The floating-rate debt will move to RFRs during 2022, and the spread will be similar to
the spread included in the interest rate swap used as the hedging instrument;
- No other changes to the terms of the floating-rate debt are anticipated.
162
Going concern
Atlantica has prepared the consolidated financial statements on a going concern basis. The
Directors have considered a number of factors in concluding in their going concern assessment
covering the period up to March 31, 2023 and have not identified material uncertainties that
may cast significant doubt about the ability to continue to adopt the going concern basis of
accounting.
A presentation on the going concern assessment, including sensitivity analysis and key
assumptions used, was presented to the Audit Committee. The Committee discussed with
management to ensure the Company has sufficient headroom to continue as a going concern.
The Committee agreed with management that there is no uncertainty in relation to this
assessment, in relation to the Group and the Company.
The Group has a formal process of budgeting, reporting, measuring asset performance,
identifying and mitigating risks, and its overall review. This information is provided to the
directors, which is used to ensure the adequacy of resources available for the Group to meet its
business objectives. The Company’s business activities, together with the factors likely to affect
its future development, performance and position are set out within this report.
The Company has been operating as usual despite the COVID-19 restrictions imposed by
governments and therefore there have been no disruptions in production. Atlantica’s assets are
considered as an “essential” and “critical” activity in all its geographies. Furthermore, Atlantica’s
revenues are predominantly contracted or regulated and thus have not experienced material
impact. This is expected to continue throughout the going concern period.
As of December 31, 2021, Atlantica had $88.3 million cash at the corporate level and $440
million available under its revolving credit facility. Total liquidity was therefore $528.3 million.
Corporate debt position was $1,023.1 million at 31 December 2021, with $983 million of these
facilities maturing in 2025 or later.
During the period, the Group generated $505.6 million from operating activities, used $351.1
million in investing activities and $380.0 million in financing activities. All of these resulted in a
$225.5 million decrease on its cash position by year-end, with a closing cash position of $622.7
million (Note 12). The cash includes $254 million of funds which are held by the projects to
satisfy the customary requirements of certain non-recourse debt agreements (Note 15). The
Group also had access to $440.0 million of available credit facilities, which mature in December
2023.
As of December 31, 2021, all the corporate debt of the Company has long-term maturities
except for $27.9 million of corporate debt which matures during the going concern period
($27.5M of notes and bonds and $0.4 million of credit facilities) (Note 14). Additionally, the
Company has short-term project debt that amounts to $335.4 million, all of which is non-
recourse to the Group (Note 15).
The directors believe that this cash position as of December 31, 2021 is above the level of cash
needed to operate the business for the going concern period and to meet the Group’s liabilities
as they fall due, as well as to be a significant source of funding of future investments, including
those which are already committed in the going concern period.
163
2.2. Principles to include and record companies in the consolidated financial
statements
Companies included in these Consolidated Financial Statements are accounted for as
subsidiaries as long as Atlantica has control over them and are accounted for as investments
under the equity method as long as Atlantica has significant influence over them, in the periods
presented.
a) Controlled entities
Control is achieved when the Company:
•
•
•
Has power over the investee;
Is exposed, or has rights, to variable returns from its involvement with the investee; and
Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee when facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
The Company uses the acquisition method to account for business combinations of companies
previously controlled by a third party. According to this method, identifiable assets acquired
and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date. Any contingent consideration is recognized
at fair value at the acquisition date and subsequent changes in its fair value are recognized in
accordance with IFRS 9 in profit or loss. Acquisition related costs are expensed as incurred. The
Company recognizes any non-controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquirer’s net assets on an acquisition by
acquisition basis.
All assets and liabilities between entities of the group, equity, income, expenses, and cash flows
relating to transactions between entities of the group are eliminated in full.
b) Investments accounted for under the equity method
An associate is an entity over which the Company has significant influence. Significant influence
is the power to participate in the financial and operating policy decisions of the investee but is
not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements
using the equity method of accounting. Under the equity method, an investment in an associate
is initially recognized in the statement of financial position at cost and adjusted thereafter to
recognize changes in Atlantica´s share of net assets of the associate since the acquisition date.
Any goodwill relating to the associate is included in the carrying amount of the investment and
is not tested for impairment separately.
2.3. Contracted Concessional Assets
Contracted concessional assets correspond to the assets of the Company recorded as intangible
or financial assets in accordance with IFRIC 12, property plant and equipment in accordance
with IAS 16 and financial asset in accordance with IFRS 16. The assets accounted for by the
Company as concessions include renewable energy assets, transmission lines, efficient natural
164
gas assets and water plants. The useful life of these assets is approximately the same as the
length of the concession arrangement. The infrastructure used in a concession can be classified
as an intangible asset or a financial asset, depending on the nature of the payment entitlements
established in the agreement.
The application of IFRIC 12 requires extensive judgement in relation to, among other factors, (i)
the identification of certain infrastructures and contractual agreements in the scope of IFRIC 12,
(ii) an understanding of the nature of the payments in order to determine the classification of
the infrastructure as a financial asset or as an intangible asset and (iii) the timing and recognition
of revenue from construction and concessionary activity.
Under the terms of contractual arrangements within the scope of this interpretation, the
operator shall recognize and measure revenue in accordance with IFRS 15 for the services it
performs.
a)
Intangible asset
The Company recognizes an intangible asset to the extent that it receives a right to charge final
customers for the use of the infrastructure. This intangible asset is subject to the provisions of
IAS 38 and is amortized linearly, taking into account the estimated period of commercial
operation of the infrastructure which coincides with the concession period.
Once the infrastructure is in operation, the treatment of income and expense is as follows:
-
-
Revenues from the updated annual revenue for the contracted concession, as well as
revenues from operations and maintenance services are recognized in each period
according to IFRS 15 “Revenue from contracts with Customers”.
Operating and maintenance costs and general overheads and administrative costs are
recorded in accordance with the nature of the cost incurred (amount due) in each period.
b)
Financial asset
The Company recognizes a financial asset when demand risk is assumed by the grantor, to the
extent that the concession holder has an unconditional right to receive payments for the asset.
This asset is recognized at the fair value of the construction services provided, considering
upgrade services in accordance with IFRS 15, if any.
The financial asset is subsequently recorded at amortized cost calculated according to the
effective interest method, using a theoretical internal return rate specific to the asset. Revenue
from operations and maintenance services is recognized in each period according to IFRS 15
“Revenue from contracts with Customers”.
Allowance for expected credit losses
According to IFRS 9, Atlantica recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows
that the Company expects to receive.
There are two main approaches to applying the ECL model according to IFRS 9: the general
approach which involves a three stage approach, and the simplified approach, which can be
applied to trade receivables, contract assets and lease receivables. Atlantica applies the
165
simplified approach. Under this approach, there is no need to monitor for significant increases
in credit risk and entities will be required to measure lifetime expected credit losses at the end
of each reporting period.
The key elements of the ECL calculations, based on external sources of information, are the
following:
-
-
-
the Probability of Default (“PD”) is an estimate of the likelihood of default over a given time
horizon. Atlantica calculates PD based on Credit Default Swaps spreads (“CDS”);
the Exposure at Default (“EAD”) is an estimate of the exposure at a future default date;
the Loss Given Default (“LGD”) is an estimate of the loss arising in the case where a default
occurs at a given time. It is based on the difference between the contractual cash flows due
and those that the Company would expect to receive. It is expressed as a percentage of the
EAD.
c)
Property, plant and equipment
Property, plant and equipment is measured at historical cost, including all expenses directly
attributable to the acquisition, less depreciation and impairment losses, with the exception of
land, which is presented net of any impairment losses.
Once the infrastructure is in operation, the treatment of income and expenses is the same as the
one described above for intangible asset.
d)
Right-of-use assets
Main right of use agreements correspond to land rights. The Company recognizes right-of-use
assets under IFRS 16, at the commencement date of the lease (i.e. the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities (Note 2.11). The
cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the assets.
e) Revenue Recognition
According to IFRS 15, Revenue from Contracts with Customers, the Company assesses the
goods and services promised in the contracts with the customers and identifies as a
performance obligation each promise to transfer to the customer a good or service (or a bundle
of goods or services).
In the case of contracts related to intangible or financial assets under IFRIC 12, the performance
obligation of the Company is the operation of the asset. The contracts between the parties set
the price of the service in an orderly transaction and therefore corresponds to the fair value of
the service provided. The services is satisfied over time. The same conclusion applies to
concessional assets that are classified as tangible assets under IAS 16 or leases under IFRS 16.
All of the transaction prices of assets under IFRIC 12 are fixed and included as part of the long-
term PPAs of the Company as disclosed in Note 26.
In the case of financial asset under IFRIC 12, the financial asset accounts for the payments to be
166
received from the client over the residual life of the contract, discounted at a theoretical internal
rate of return for the project. In each period, the financial asset is reduced by the amounts
received from the client and increased by any capital expenditure that the project may incur
and by the effect of unwinding the discount of the financial asset at the theoretical internal rate
of return. The increase of the financial asset deriving from the unwinding of the discount of the
financial asset is recorded as revenue in each period. Revenue will therefore differ from the
actual billings made by the asset to the client in each period.
In the case of Spain, according to Royal Decree 413/2014, solar electricity producers receive: (i)
the market price for the power they produce, (ii) a payment based on the standard investment
cost for each type of plant (without any relation whatsoever to the amount of power they
generate) and (iii) an “operating payment” (in €/MWh produced). The principle driving this
economic regime is that the payments received by a renewable energy producer should be
equivalent to the costs that they are unable to recover on the electricity pool market where they
compete with non-renewable technologies. This economic regime seeks to allow a “well-run and
efficient enterprise” to recover the costs of building and running a plant, plus a reasonable return
on investment (project investment rate of return). Some of the Company´s assets in Spain are
receiving a remuneration based on a 7.09% reasonable rate of return until December 31, 2025
while others are receiving a remuneration based on a 7.398% reasonable rate of return until
December 31, 2031.
2.4. Asset Impairment
Atlantica reviews its contracted concessional assets to identify any indicators of impairment at
least annually, except for ECL assessment for financial assets which is discussed in note 2.3. When
impairment indicators exist, the company calculates the recoverable amount of the asset.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value
in use, defined as the present value of the estimated future cash flows to be generated by the
asset. In the event that the asset does not generate cash flows independently of other assets,
the Company calculates the recoverable amount of the Cash Generating Unit (‘CGU’) to which
the asset belongs.
When the carrying amount of the CGU to which these assets belong is higher than its recoverable
amount, the assets are impaired.
Assumptions used to calculate value in use include a discount rate and projections considering
real data based in the contracts terms and projected changes in both selling prices and costs.
The discount rate is estimated by Management, to reflect both changes in the value of money
over time and the risks associated with the specific CGU.
For contracted concessional assets, with a defined useful life and with a specific financial
structure, cash flow projections until the end of the project are considered and no relevant
terminal value is assumed.
Contracted concessional assets have a contractual structure that permits the Company to
estimate quite accurately the costs of the project and revenue during the life of the project.
Projections take into account real data based on the contract terms and fundamental
assumptions based on specific reports prepared internally and third-party reports, assumptions
on demand and assumptions on production. Additionally, assumptions on macro-economic
167
conditions are taken into account, such as inflation rates, future interest rates, etc. and sensitivity
analyses are performed over all major assumptions which can have a significant impact in the
value of the asset.
Cash flow projections of CGUs are calculated in the functional currency of those CGUs and are
discounted using rates that take into consideration the risk corresponding to each specific
country and currency.
Taking into account that in most CGUs the specific financial structure is linked to the financial
structure of the projects that are part of those CGUs, the discount rate used to calculate the
present value of cash-flow projections is based on the weighted average cost of capital (WACC)
for the type of asset, adjusted, if necessary, in accordance with the business of the specific activity
and with the risk associated with the country where the project is performed.
In any case, sensitivity analyses are performed, especially in relation to the discount rate used
and fair value changes in the main business variables, in order to ensure that possible changes
in the estimates of these items do not impact the recovery of recognized assets.
In the event that the recoverable amount of an asset is lower than its carrying amount, an
impairment charge for the difference would be recorded in the income statement under the item
“Depreciation, amortization and impairment charges”.
An assessment is made at each reporting date to determine whether there is an indication that
previously recognized impairment losses no longer exist or have decreased. If such indication
exists, the Company estimates the CGU’s recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years. Such reversal is recognized
in the income statement.
2.5. Loans and Accounts Receivable
Loans and accounts receivable are non-derivative financial assets with fixed or determinable
payments, not listed on an active market.
In accordance with IFRIC 12, certain assets under concessions qualify as financial assets and are
recorded as is described in Note 2.3.
Pursuant to IFRS 9, an impairment loss is recognized if the carrying amount of these assets
exceeds the present value of future cash flows discounted at the initial effective interest rate.
Loans and accounts receivable are initially recognized at fair value plus transaction costs and are
subsequently measured at amortized cost in accordance with the effective interest rate method.
Interest calculated using the effective interest rate method is recognized under other financial
income within financial income.
2.6. Derivative Financial Instruments and Hedging Activities
Derivatives are recognized at fair value in the statement of financial position. The Company
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maintains both derivatives designated as hedging instruments in hedging relationships, and
derivatives to which hedge accounting is not applied.
When hedge accounting is applied, hedging strategy and risk management objectives are
documented at inception, as well as the relationship between hedging instruments and hedged
items. Effectiveness of the hedging relationship needs to be assessed on an ongoing basis.
Effectiveness tests are performed prospectively at inception and at each reporting date. The
Company analyses on each date if all these requirements are met:
-
-
-
there is an economic relationship between the hedged item and the hedging
instrument;
the effect of credit risk does not dominate the value changes that result from that
economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the
quantity of the hedged item that the Company actually hedges and the quantity of the
hedging instrument that the Company uses to hedge that quantity of hedged item.
Ineffectiveness is measured following the accumulated dollar offset method.
In all cases, current Company´s hedging relationships are considered cash flow hedges. Under
this model, the effective portion of changes in fair value of derivatives designated as cash flow
hedges are recorded temporarily in equity and are subsequently reclassified from equity to
profit or loss in the same period or periods during which the hedged item affects profit or loss.
Any ineffective portion of the hedged transaction is recorded in the consolidated income
statement as it occurs.
When interest rate options are designated as hedging instruments, the time value is excluded
from the hedging instrument as permitted by IFRS 9. Changes in the effective portion of the
intrinsic are recorded in equity and subsequently reclassified from equity to profit or loss in the
same period or periods during which the hedged item affects profit or loss. Any ineffectiveness
is recorded as financial income or expense as it occurs. Changes in options time value is
recorded as cost of hedging. More precisely, considering that the hedged items are, in all cases,
time period hedged item, changes in time value is recognized in other comprehensive income
to the extent that it relates to the hedged item. The time value at the date of designation of the
option as a hedging instrument, to the extent that it relates to the hedged item, is amortized
on a systematic and rational basis over the period during which the hedge adjustment for the
option’s intrinsic value could affect profit or loss.
When the hedging instrument matures or is sold, or when it no longer meets the requirements
to apply hedge accounting, accumulated gains and losses recorded in equity remain as such
until the forecast transaction is ultimately recognized in the income statement. However, if it
becomes unlikely that the forecast transaction will actually take place, the accumulated gains
and losses in equity are recognized immediately in the income statement.
Any change in fair value of derivatives instruments to which hedge accounting is not applied is
directly recorded in the income statement.
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2.7. Fair Value Estimates
Financial instruments measured at fair value are presented in accordance with the following level
classification based on the nature of the inputs used for the calculation of fair value:
-
-
Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2: Fair value is measured based on inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
-
Level 3: Fair value is measured based on unobservable inputs for the asset or liability.
In the event that prices cannot be observed, management shall make its best estimate of the
price that the market would otherwise establish based on proprietary internal models which, in
the majority of cases, use data based on observable market parameters as significant inputs
(Level 2) but occasionally use market data that is not observed as significant inputs (Level 3).
Different techniques can be used to make this estimate, including extrapolation of observable
market data. The best indication of the initial fair value of a financial instrument is the price of
the transaction, except when the value of the instrument can be obtained from other
transactions carried out in the market with the same or similar instruments, or valued using a
valuation technique in which the variables used only include observable market data, mainly
interest rates. Differences between the transaction price and the fair value based on valuation
techniques that use data that is not observed in the market, are not initially recognized in the
income statement.
Atlantica derivatives correspond primarily to the interest rate swaps designated as cash flow
hedges, which are classified as Level 2.
Description of the valuation method
Interest rate swap valuations consist in valuing separately the swap part of the contract and the
credit risk. The methodology used by the market and applied by Atlantica to value interest rate
swaps is to discount the expected future cash flows according to the parameters of the contract.
Variable interest rates, which are needed to estimate future cash flows, are calculated using the
curve for the corresponding currency and extracting the implicit rates for each of the reference
dates in the contract. These estimated flows are discounted with the swap zero curve for the
reference period of the contract.
The effect of the credit risk on the valuation of the interest rate swaps depends on the future
settlement. If the settlement is favorable for the Company, the counterparty credit spread will
be incorporated to quantify the probability of default at maturity. If the expected settlement is
negative for the Company, its own credit risk will be applied to the final settlement.
Classic models for valuing interest rate swaps use deterministic valuation of the future of variable
rates, based on future outlooks. When quantifying credit risk, this model is limited by considering
only the risk for the current paying party, ignoring the fact that the derivative could change sign
at maturity. A payer and receiver swaption model is proposed for these cases. This enables the
associated risk in each swap position to be reflected. Thus, the model shows each agent’s
exposure, on each payment date, as the value of entering into the ‘tail’ of the swap, i.e. the live
part of the swap.
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Variables (Inputs)
Interest rate derivative valuation models use the corresponding interest rate curves for the
relevant currency and underlying reference in order to estimate the future cash flows and to
discount them. Market prices for deposits, futures contracts and interest rate swaps are used to
construct these curves. Interest rate options (caps and floors) also use the volatility of the
reference interest rate curve.
To estimate the credit risk of the counterparty, the credit default swap (CDS) spreads curve is
obtained in the market for important individual issuers. For less liquid issuers, the spreads curve
is estimated using comparable CDSs or based on the country curve. To estimate proprietary
credit risk, prices of debt issues in the market and CDSs for the sector and geographic location
are used.
The fair value of the financial instruments that results from the aforementioned internal models
takes into account, among other factors, the terms and conditions of the contracts and
observable market data, such as interest rates, credit risk and volatility. The valuation models
do not include significant levels of subjectivity, since these methodologies can be adjusted and
calibrated, as appropriate, using the internal calculation of fair value and subsequently
compared to the corresponding actively traded price. However, valuation adjustments may be
necessary when the listed market prices are not available for comparison purposes.
2.8. Trade and Other Receivables
Trade and other receivables are amounts due from customers for sales in the normal course of
business. They are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest rate method, less allowance for doubtful accounts. Trade
receivables due in less than one year are carried at their face value at both initial recognition
and subsequent measurement, provided that the effect of not discounting flows is not
significant.
An allowance for doubtful accounts is recorded when there is objective evidence that the
Company will not be able to recover all amounts due as per the original terms of the receivables.
The Company has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
2.9. Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, cash in bank and other highly-liquid current
investments with an original maturity of three months or less which are held for the purpose of
meeting short-term cash commitments.
2.10. Grants
Grants are recognized at fair value when it is considered that there is a reasonable assurance
that the grant will be received and that the necessary qualifying conditions, as agreed with the
entity assigning the grant, will be adequately complied with.
Grants are recorded as liabilities in the consolidated statement of financial position and are
recognized in “Other operating income” in the consolidated income statement based on the
171
period necessary to match them with the costs they intend to compensate.
In addition, as described in Note 2.11 below, grants correspond also to loans with interest rates
below market rates, for the initial difference between the fair value of the loan and the proceeds
received.
2.11. Loans and Borrowings
Loans and borrowings are initially recognized at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortized cost and any difference between the
proceeds initially received (net of transaction costs incurred in obtaining such proceeds) and
the repayment value is recognized in the consolidated income statement over the duration of
the borrowing using the effective interest rate method.
In the case of modification of terms of loans and borrowings, the Company determines whether
the modification constitutes an exchange or an extinguishment of the debt instrument. In
determining whether there is an exchange, the Company evaluates whether the redemption of
the old debt and the issuance of new debt were negotiated in contemplation of one another
(qualitative assessment) and performs the 10 per cent test to determine if the terms of the
modified debt are substantially different (the net present value of the modified cash flows,
including any fees paid net of any fees received, is higher than 10% different from the net
present value of the remaining cash flows of the liability prior to the modification, both
discounted at the original effective interest rate). When the terms of the modified liability are
substantially different, the modification is accounted for as an extinguishment of the original
liability and recognition of a new liability.
Loans with interest rates below market rates are initially recognized at fair value in liabilities and
the difference between proceeds received from the loan and its fair value is initially recorded
within “Grants and Other liabilities” in the consolidated statement of financial position, and
subsequently recorded in “Other operating income” in the consolidated income statement
when the costs financed with the loan are expensed.
Lease liabilities are recognized by the Company at the commencement date of the lease at the
present value of lease payments to be made over the lease term. The lease payments include
the exercise price of a purchase option reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the lease term reflects the Company exercising
the option to terminate. In calculating the present value of lease payments, the Company uses
its incremental borrowing rate at the lease commencement date considering that the interest
rate implicit in the lease is not readily determinable.
2.12. Bonds and notes
The Company initially recognizes ordinary notes at fair value, net of issuance costs incurred.
Subsequently, notes are measured at amortized cost until settlement upon maturity. Any other
difference between the proceeds obtained (net of transaction costs) and the redemption value
is recognized in the consolidated income statement over the term of the debt using the
effective interest rate method.
Convertible bonds or notes or debt issued with conversion features must be separated into
liability and equity components if the feature meets the equity classification conditions in IAS
172
32. The issuer separates the instrument into its components by determining the fair value of
the liability component and then deducting that amount from the fair value of the instrument
as a whole; the residual amount is allocated to the equity component. If the equity conversion
feature does not satisfy the equity classification conditions in IAS 32, it is bifurcated as an
embedded derivative unless the issuer elects to apply the fair value option to the convertible
debt. The embedded derivative is initially recognized at fair value and classified as derivatives
in the statement of financial position. Changes in the fair value of the embedded derivatives are
subsequently accounted for directly through the income statement. The debt element of the
bond or note (the host contract), will be initially valued as the difference between the
consideration received from the holders for the instrument and the value of the embedded
derivative, and thereafter at amortized cost using the effective interest method.
2.13.
Income Taxes
Current income tax expense is calculated on the basis of the tax laws in force as of the date of
the consolidated statement of financial position in the countries in which the subsidiaries and
associates operate and generate taxable income.
Deferred income tax is calculated in accordance with the liability method, based upon the
temporary differences arising between the carrying amount of assets and liabilities and their
tax base. Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilized.
2.14. Trade Payables and Other Liabilities
Trade payables are obligations arising from purchases of goods and services in the ordinary
course of business and are recognized initially at fair value and are subsequently measured at
their amortized cost using the effective interest method. Other liabilities are obligations not
arising in the normal course of business and which are not treated as financing transactions.
Advances received from customers are recognized as “Trade payables and other current
liabilities”.
2.15. Foreign Currency Transactions
The Consolidated Financial Statements are presented in U.S. dollars, which is Atlantica’s
functional and presentation currency. Financial statements of each subsidiary within the
Company are measured in the currency of the principal economic environment in which the
subsidiary operates, which is the subsidiary’s functional currency.
Transactions denominated in a currency different from the subsidiary’s functional currency are
translated into the subsidiary’s functional currency applying the exchange rates in force at the
time of the transactions. Foreign currency gains and losses that result from the settlement of
these transactions and the translation of monetary assets and liabilities denominated in foreign
currency at the year-end rates are recognized in the consolidated income statement, unless
they are deferred in equity, as occurs with cash flow hedges and net investment in foreign
173
operations hedges.
Assets and liabilities of subsidiaries with a functional currency different from the Company’s
reporting currency are translated to U.S. dollars at the exchange rate in force at the closing date
of the financial statements. Income and expenses are translated into U.S. dollars using the
average annual exchange rate, which does not differ significantly from using the exchange rates
of the dates of each transaction. The difference between equity translated at the historical
exchange rate and the net financial position that results from translating the assets and
liabilities at the closing rate is recorded in equity under the heading “Accumulated currency
translation differences”.
Results of companies carried under the equity method are translated at the average annual
exchange rate.
2.16. Equity
The Company has recyclable balances in its equity, corresponding mainly to hedge reserves and
translation differences arising from currency conversion in the preparation of these
Consolidated Financial Statements. These balances have been presented separately in Equity.
Non-controlling interest represents interest of other partners in entities included in these
Consolidated Financial Statements which are not fully owned by Atlantica as of the dates
presented.
Share Capital, Share Premium and Capital Reserves represent the Parent’s net investment in the
entities included in these Consolidated Financial Statements.
The costs of issuing equity instruments are accounted for as a deduction from equity.
2.17. Provisions and Contingencies
Provisions are recognized when:
- there is a present obligation, either legal or constructive, as a result of past events;
-
it is more likely than not that there will be a future outflow of resources to settle the
obligation; and the amount has been reliably estimated.
Provisions are measured at the present value of the expected outflows required to settle the
obligation. The discount rate used is a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. The increase in the provision due to the passage of time is then
recognized as a financial expense. The balance of provisions disclosed in the Notes reflects
management’s best estimate of the potential exposure as of the date of preparation of the
Consolidated Financial Statements.
Contingent liabilities are possible obligations, existing obligations with low probability of a
future outflow of economic resources and existing obligations where the future outflow cannot
be reliably estimated. Contingences are not recognized in the consolidated statements of
financial position unless they have been acquired in a business combination.
Some companies of Atlantica have dismantling provisions, which are intended to cover future
expenditure related to the dismantlement of the plants in situations where it is likely to be
settled with an outflow of resources in the long term (over 5 years).
174
Such provisions are accrued when the obligation for dismantling, removing and restoring the
site on which the plant is located, is incurred, which is usually during the construction period.
The provision is measured in accordance with IAS 37, “Provisions, Contingent Liabilities and
Contingent Assets” and is recorded as a liability under the heading “Grants and other liabilities”
of the Financial Statements, and the corresponding entry as part of the cost of the plant under
the heading “Contracted concessional assets.” The estimated future costs of dismantling are
reviewed annually if conditions have changed and adjusted appropriately. The impact of
changes in the estimate of future costs or in the timing of when such costs will be incurred, on
the dismantling provision, is recorded against an increase or decrease of the cost of the plant.
2.18. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share is calculated by dividing the profit for the period attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of ordinary shares that would
be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
2.19. Significant judgements and estimates
Some of the accounting policies applied require the application of significant judgement by
management to select the appropriate assumptions to determine these estimates. These
assumptions and estimates are based on the historical experience, advice from experienced
consultants, forecasts and other circumstances and expectations as of the close of the financial
period. The assessment is considered in relation to the global economic situation of the
industries and regions where the Company operates, taking into account future development
of the businesses of the Company. By their nature, these judgements are subject to an inherent
degree of uncertainty; therefore, actual results could materially differ from the estimates and
assumptions used. In such cases, the carrying values of assets and liabilities are adjusted.
The most critical accounting policies, which reflect significant management estimates and
judgement to determine amounts in these Consolidated Financial Statements, are as follows:
- Assessment of contracted concessional agreements.
-
Impairment of intangible assets and property, plant and equipment.
- Assessment of control.
- Derivative financial instruments and fair value estimates.
-
Income taxes and recoverable amount of deferred tax assets.
As of the date of preparation of these Consolidated Financial Statements, no relevant changes
in the estimates made are anticipated and, therefore, no significant changes in the value of the
assets and liabilities recognized at December 31, 2021, are expected.
Although these estimates and assumptions are being made using all available facts and
circumstances, it is possible that future events may require management to amend such
175
estimates and assumptions in future periods. Changes in accounting estimates are recognized
prospectively, in accordance with IAS 8, in the consolidated income statement of the year in
which the change occurs.
3. Financial Risk Management
Atlantica’s activities are exposed to various financial risks: market risk (including currency risk
and interest rate risk), credit risk and liquidity risk. Risk is managed by the Company’s Risk
Finance and Compliance Departments, which are responsible for identifying and evaluating
financial risks quantifying them by project, region and company, in accordance with mandatory
internal management rules. Written internal policies exist for global risk management, as well
as for specific areas of risk. In addition, there are official written management regulations
regarding key controls and control procedures for each company and the implementation of
these controls is monitored through internal audit procedures.
a) Market risk
The Company is exposed to market risk, such as movement in foreign exchange rates and
interest rates. All of these market risks arise in the normal course of business and the Company
does not carry out speculative operations. For the purpose of managing these risks, the
Company uses a series of interest rate swaps and options, and currency options. None of the
derivative contracts signed has an unlimited loss exposure.
-
Interest rate risk
Interest rate risk arises when the Company’s activities are exposed to changes in interest rates,
which arises from financial liabilities at variable interest rates. The main interest rate exposure
for the Company relates to the variable interest rate with reference to the Libor, Euribor and
RFRs. To minimize the interest rate risk, the Company primarily uses interest rate swaps and
interest rate options (caps), which, in exchange for a fee, offer protection against an increase in
interest rates. The Company does not use derivatives for speculative purposes.
As a result, the notional amounts hedged, strikes contracted and maturities, depending on the
characteristics of the debt on which the interest rate risk is being hedged, are very diverse,
including the following:
o Project debt in Euros: the Company hedges between 75% and 100% of the notional amount,
with hedges maturing up to 2038 and average guaranteed strike interest rate of between
0.00% and 4.87%.
o Project debt in U.S. dollars: the Company hedges between 75% and 100% of the notional
amount, with hedges maturing up to 2038 and average guaranteed interest rate of between
0.86% and 5.89%.
In connection with the interest rate derivative positions of the Company, the most significant
impacts on these Consolidated Financial Statements are derived from the changes in EURIBOR
or LIBOR, which represent the reference interest rate for most of the debt of the Company. In
the event that Euribor and Libor had risen by 25 basis points as of December 31, 2021, with the
rest of the variables remaining constant, the effect in the consolidated income statement would
have been a loss of $2,495 thousand (a loss of $2,897 thousand in 2020) and an increase in
hedging reserves of $22,440 thousand ($22,130 thousand in 2020). The increase in hedging
176
reserves would be mainly due to an increase in the fair value of interest rate swaps designated
as hedges.
A breakdown of the interest rates derivatives as of December 31, 2021 and 2020, is provided in
Note 9.
-
Currency risk
The main cash flows in the entities included in these Consolidated Financial Statements are cash
collections arising from long-term contracts with clients and debt payments arising from project
finance repayment. Given that financing of the projects is always closed in the same currency
in which the contract with client is signed, a natural hedge exists for the main operations of the
Company.
In addition, the Company policy is to contract currency options with leading financial
institutions, which guarantee a minimum Euro-U.S. dollar exchange rate on the net distributions
expected from solar assets in Spain. The net Euro exposure is 100% hedged for the coming 12
months and 75% for the following 12 months on a rolling basis.
b)
Credit risk
The Company considers that it has a limited credit risk with clients as revenues primarily derive
from power purchase agreements with electric utilities and state-owned entities.
c)
Liquidity risk
Atlantica’s liquidity and financing policy is intended to ensure that the Company maintains
sufficient funds to meet its financial obligations as they fall due.
Project finance borrowing permits the Company to finance the project through project debt
and thereby insulate the rest of its assets from such credit exposure. The Company incurs in
project-finance debt on a project-by-project basis.
The repayment profile of each project is established on the basis of the projected cash flow
generation of the business. This ensures that sufficient financing is available to meet deadlines
and maturities, which mitigates the liquidity risk significantly.
Corporate and Project debt repayment schedules are disclosed in Note 14 and 15, respectively.
d) Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue as a
going concern while maximising the return to shareholders through the optimisation of the debt
and equity balance. The capital structure of the Company consists of net debt (borrowings
disclosed in note 14 and 15 after deducting cash and bank balances) and equity of the group
(comprising issued capital, reserves and accumulated deficit). The board of directors review the
capital structure on a regular basis. As part of this review, the Company considers the cost of
capital and the risks associated with each class of capital.
e) Gearing ratio
The gearing ratio at the year-end is as follows:
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Debt
Cash and cash equivalents
Net Debt
Equity
Balance as of
December 31, 2021
Balance as of
December 31, 2020
$’000
$’000
6,059,264
622,689
6,231,339
868,501
5,436,575
5,362,838
1,748,440
1,740,881
Net debt to equity ratio
311%
308%
Corporate and Project debt repayment schedules are disclosed in Note 14 and 15, respectively.
4. Financial information by segment
Atlantica’s segment structure reflects how management currently makes financial decisions and
allocates resources. Its operating and reportable segments are based on the following
geographies where the contracted concessional assets are located: North America, South
America and EMEA. In addition, based on the type of business, as of December 31, 2021, the
Company had the following business sectors: Renewable energy, Efficient natural gas and Heat,
Transmission lines and Water. The business sector “Efficient natural gas” has been renamed
“Efficient natural gas and Heat” in these Consolidated Financial Statements as it includes the
Calgary District Heating asset acquired in May 2021 (Note 5).
Atlantica’s Chief Operating Decision Maker (CODM), which is the CEO, assesses the performance
and assignment of resources according to the identified operating segments. The CODM
considers the revenue as a measure of the business activity and the Adjusted EBITDA as a
measure of the performance of each segment. Adjusted EBITDA is calculated as profit/(loss) for
the period attributable to the parent company, after adding back loss/(profit) attributable to
non-controlling interest, income tax, finance expense net, depreciation, amortization and
impairment charges of entities included in these Consolidated Financial Statements and
depreciation and amortization, financial expense and income tax of unconsolidated affiliates
(pro rata of Atlantica´s equity ownership). Adjusted EBITDA previously excluded share of
profit/(loss) of associates carried under the equity method and did not include depreciation
and amortization, financial expense and income tax expense of unconsolidated affiliates. Prior
periods have been presented accordingly.
In order to assess performance of the business, the CODM receives reports of each reportable
segment using revenue and Adjusted EBITDA. Net interest expense evolution is assessed on a
consolidated basis. Financial expense and amortization are not taken into consideration by the
CODM for the allocation of resources.
In the year ended December 31, 2021, Atlantica had one customer with revenues representing
more than 10% of total revenue, in the renewable energy business sector. In the year ended
December 31, 2020, Atlantica had four customers with revenues representing more than 10%
178
of the total revenue, three in the renewable energy and one in the efficient natural gas and heat
business sectors.
a)
The following tables show Revenues and Adjusted EBITDA by operating segments and
business sectors for the years 2021 and 2020:
Revenue
$’000
Adjusted EBITDA
$’000
For the year ended December 31,
For the year ended December 31,
Geography
North America
South America
EMEA
2021
2020
2021
2020
395,775
154,985
660,989
330,921
151,460
530,879
311,803
119,547
393,038
279,365
120,023
396,735
Total
1,211,749
1,013,260
824,388
796,123
Revenue
$’000
For the year ended December 31,
Adjusted EBITDA
$’000
For the year ended
December 31,
2021
2020
2021
928,525
123,692
105,680
53,852
753,089
111,030
106,042
43,099
602,583
99,935
83,635
38,235
2020
576,285
101,006
87,272
31,560
1,211,749
1,013,260
824,388
796,123
Business sector
Renewable energy
Efficient natural gas & Heat
Transmission lines
Water
Total
The reconciliation of segment Adjusted EBITDA with the loss attributable to the parent
company is as follows:
Profit/(loss) attributable to the Company
Profit attributable to non-controlling interest
Income tax expense
Financial expense, net
Depreciation, amortization, and
charges
Depreciation and amortization, financial expense
and income tax of unconsolidated affiliates pro
rata of Atlantica´s equity ownership
impairment
For the year ended December 31,
2021
$’000
(30,080)
19,162
36,220
340,892
439,441
2020
$’000
11,968
4,906
24,877
331,810
408,604
18,753
13,958
Total segment Adjusted EBITDA
824,388
796,123
179
b)
The assets and liabilities by geography and business sector at the end of 2021 and
2020 are as follows:
Assets and liabilities by geography as of December 31, 2021:
North
America
$’000
South
America
$’000
EMEA
$’000
Balance as of
December 31, 2021
$’000
Assets allocated
Contracted concessional assets
3,355,669
1,231,276
3,434,623
Investments carried under the equity method
Current financial investments
Cash and cash equivalents (project companies)
253,221
135,224
171,744
-
28,155
74,149
41,360
44,000
287,655
3,915,858
1,333,580
3,807,638
8,021,568
294,581
207,379
533,548
9,057,076
268,876
425,978
694,854
9,751,930
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
Liabilities allocated
Long-term and short-term project debt
Grants and other liabilities
Subtotal allocated
Unallocated liabilities
Long-term and short-term corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity unallocated
Total liabilities and equity
North
America
$’000
South
America
$’000
EMEA
$’000
Balance as of
December 31, 2021
$’000
1,792,739
1,051,679
887,497
14,445
2,355,957
197,620
2,844,418
901,942
2,553,577
5,036,193
1,263,744
6,299,937
1,023,071
532,312
148,005
1,703,388
8,003,325
1,748,605
3,451,993
9,751,930
180
Assets and liabilities by geography as of December 31, 2020:
North
America
$’000
South
America
$’000
EMEA
$’000
Balance as of
December 31, 2020
$’000
Assets allocated
Contracted concessional assets
3,073,785
1,211,952
3,869,681
74,660
129,264
206,344
-
27,836
70,861
41,954
42,984
255,530
3,484,053
1,310,649
4,210,149
Investments carried under the equity method
Current financial investments
Cash and cash equivalents (project companies)
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
8,155,418
116,614
200,084
532,735
9,004,851
242,044
691,459
933,503
9,938,354
North
America
$’000
South
America
$’000
EMEA
$’000
Balance as of
December 31, 2020
$’000
1,623,284
1,078,974
902,500
2,711,830
11,355
139,438
2,702,258
913,855
2,851,268
Liabilities allocated
Long-term and short-term project debt
Grants and other liabilities
Subtotal allocated
Unallocated liabilities
Long-term and short-term corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity unallocated
Total liabilities and equity
5,237,614
1,229,767
6,467,381
993,725
589,107
147,260
1,730,092
8,197,473
1,740,881
3,470,973
9,938,354
181
Assets and liabilities by business sectors as of December 31, 2021:
Renewable
energy
$’000
6,533,408
240,302
10,761
442,213
Efficient
natural
gas &
Heat
$’000
517,247
15,358
128,461
25,392
Transmission
lines
Water
Balance as of
December 31, 2021
$’000
$’000
$’000
805,987
-
164,926
38,921
27,813
44,574
40,344
21,369
8,021,568
294,581
207,379
533,548
7,226,684
686,458
878,374
265,560
9,057,076
268,876
425,978
694,854
9,751,930
Renewable
energy
$’000
Efficient
natural
gas &
Heat
$’000
Transmission
lines
Water
Balance as of
December 31, 2021
$’000
$’000
$’000
3,857,313
478,724
602,278
97,878
5,036,193
Assets allocated
Contracted concessional assets
Investments carried under the equity
method
Current financial investments
Cash and cash equivalents (project
companies)
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash
and cash equivalents at holding
company level)
Subtotal unallocated
Total assets
Liabilities allocated
Long-term and short-term project
debt
Grants and other liabilities
1,244,346
11,212
5,795
2,391
Subtotal allocated
5,101,659
489,936
608,073
100,269
and
Unallocated liabilities
Long-term
corporate debt
Other non-current liabilities
Other current liabilities
short-term
Subtotal unallocated
Total liabilities
Equity unallocated
liabilities
Total
unallocated
Total liabilities and equity
and
equity
182
1,263,744
6,299,937
1,023,071
532,312
148,005
1,703,388
8,003,325
1,748,605
3,451,993
9,751,930
Assets and liabilities by business sectors as of December 31, 2020:
Assets allocated
Contracted concessional assets
Investments carried under the equity
method
Current financial investments
Cash and cash equivalents (project
companies)
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash
and cash equivalents at holding
company level)
Subtotal unallocated
Total assets
Renewable
energy
$’000
Efficient
natural
gas &
Heat
$’000
Transmission
lines
Water
Balance as of
December 31, 2020
$’000
$’000
$’000
6,632,611
502,285
842,595
177,927
8,155,418
61,866
15,514
30
39,204
6,530
397,465
124,872
67,955
27,796
46,045
40,886
21,270
116,614
200,084
532,735
7,098,472
710,626
916,466
279,287
9,004,851
242,044
691,459
933,503
9,938,354
Renewable
energy
$’000
Efficient
natural
gas &
Heat
$’000
Transmission
lines
Water
Balance as of
December 31, 2020
$’000
$’000
$’000
Liabilities allocated
Long-term and short-term project
debt
Grants and other liabilities
3,992,512
504,293
625,203
115,606
1,221,176
108
6,040
2,443
Subtotal allocated
5,213,688
504,401
631,243
118,049
and
Unallocated liabilities
Long-term
corporate debt
Other non-current liabilities
Other current liabilities
short-term
Subtotal unallocated
Total liabilities
Equity unallocated
liabilities
Total
unallocated
Total liabilities and equity
and
equity
183
5,237,614
1,229,767
6,467,381
993,725
589,107
147,260
1,730,092
8,197,473
1,740,881
3,470,973
9,938,354
c)
The amount of depreciation, amortization and impairment charges recognized for the
years ended December 31, 2021 and 2020 are as follows:
Depreciation, amortization and impairment by
geography
North America
South America
EMEA
Total
For the year ended December 31
$’000
2021
2020
(152,946)
(57,214)
(229,281)
(439,441)
(197,643)
(39,191)
(171,770)
(408,604)
For the year ended December 31,
$’000
2021
(432,138)
23,910
(31,286)
73
(439,441)
2020
(350,785)
(26,563)
(30,889)
(367)
(408,604)
Depreciation, amortization and impairment
by business sectors
Renewable energy
Efficient natural gas & Heat
Transmission lines
Water
Total
5. Business Combinations
For the year ended December 31, 2021
On January 6, 2021, the Company completed its second investment through its Chilean
renewable energy platform in a 40 MW solar PV plant, Chile PV 2, located in Chile, for
approximately $5 million. Atlantica has control over Chile PV 2 under IFRS 10, Consolidated
Financial Statements. The acquisition of Chile PV 2 has been accounted for in these
Consolidated Financial Statements in accordance with IFRS 3, Business Combinations, showing
65% of non-controlling interests. Chile PV 2 is included within the Renewable energy sector and
the South America geography.
On January 8, 2021, the Company completed the purchase of an additional 42.5% stake in
Rioglass, a supplier of spare parts and services to the solar industry, increasing its stake from
15% to 57.5% and gaining control over the business under IFRS 10, Consolidated Financial
Statements. The purchase price paid was $8.6 million, and the Company paid an additional $3.7
million (deductible from the final payment) for an option to acquire the remaining 42.5% under
the same conditions until September 2021. On July 22, 2021, the Company exercised the option
paying an additional $4.8 million, becoming the sole shareholder of the entity. Rioglass is
included within the Renewable energy sector and the EMEA geography. The acquisition of
Rioglass has been accounted for in these Consolidated Financial Statements in accordance with
IFRS 3, Business Combinations.
On April 7, 2021, the Company closed the acquisition of Coso, a 135 MW renewable asset in
184
California. The purchase price paid was $130 million. Atlantica has control over Coso under IFRS
10, Consolidated Financial Statements and its acquisition has been accounted for in these
Consolidated Financial Statements in accordance with IFRS 3, Business Combinations. Coso is
included within the Renewable energy sector and the North America geography.
On May 14, 2021, the Company closed the acquisition of Calgary District Heating, a district
heating asset of approximately 55 MWt in Canada. The purchase price paid was approximately
$22.7 million. The acquisition has been accounted for in these Consolidated Financial
Statements in accordance with IFRS 3, Business Combinations. Calgary District Heating is
included within the Efficient natural gas and Heat sector and the North America geography.
On August 6, 2021, the Company closed the acquisition of Italy PV 1 and Italy PV 2, two solar
PV plants in Italy with a combined capacity of 3.7 MW for a total equity investment of $9 million.
The acquisition has been accounted for in these Consolidated Financial Statements in
accordance with IFRS 3, Business Combinations. These assets are included within the Renewable
Energy sector and the EMEA geography.
On November 25, 2021, the Company closed the acquisition of La Sierpe, a 20 MW solar PV
plant in Colombia for a total equity investment of approximately $23.5 million. The acquisition
has been accounted for in these Consolidated Financial Statements in accordance with IFRS 3,
Business Combinations. La Sierpe is included within the Renewable energy sector and the South
America geography.
On December 14, 2021, the Company closed the acquisition of Italy PV 3, a 2.5 MW solar asset
in Italy for a total equity investment of approximately $4.0 million. The acquisition has been
accounted for in these Consolidated Financial Statements in accordance with IFRS 3, Business
Combinations. Italy PV 3 is included within the Renewable Energy sector and the EMEA
geography.
The fair value of assets and liabilities consolidated at the effective acquisition date is shown in
the following table:
185
Business combinations
for the year ended December 31, 2021
$’000
Coso
Other
Total
Contracted concessional assets (Note 6)
383,153
158,927
542,080
Deferred tax asset (Note 18)
Other non-current assets
Cash & cash equivalents
Other current assets
-
4,410
4,410
11,024
1,943
12,967
6,363
14,649
21,012
14,378
46,679
61,057
Non-current Project debt (Note 15)
(248,544 )
(39,808 )
(288,352 )
Current Project debt (Note 15)
Deferred tax liabilities (Note 18)
(13,415 )
(25,366 )
(38,781 )
-
(4,910 )
(4,910 )
Other current and non-current liabilities
(22,959 )
(64,825 )
(87,784 )
Non-controlling interests
-
(8,287 )
(8,287 )
Total net assets acquired at fair value
130,000
83,412 213,412
Asset acquisition – purchase price paid
(130,000 )
(80,364 )
(210,364 )
Fair value of previously held 15% stake in Rioglass
Net result of business combinations
-
-
(3,048 )
(3,048 )
-
-
The purchase price equals the fair value of the net assets acquired.
The allocation of the purchase price is provisional as of December 31, 2021 and amounts
indicated above may be adjusted during the measurement period to reflect new information
obtained about facts and circumstances that existed at the acquisition date that, if known,
would have affected the amounts recognized as of December 31, 2021. The measurement
period will not exceed one year from the acquisition dates.
The amount of revenue contributed by the acquisitions performed during 2021 to the
Consolidated Financial Statements of the Company for the year 2021 is $163.5 million, and the
amount of profit after tax is $0.8 million. Had the acquisitions been consolidated from January
1, 2021, the consolidated statement of comprehensive income would have included additional
revenue of $17.7 million and additional profit after tax of $3.3 million.
For the year ended December 31, 2020
On April 3, 2020, the Company completed the investment in a 35% stake in a renewable energy
platform in Chile for approximately $4 million and the acquisition of Chile PV 1, a 55 MW solar
PV plant, through the platform. Atlantica has control over Chile PV 1 under IFRS 10,
Consolidated Financial Statements. The acquisition of Chile PV 1 was accounted for in these
Consolidated Financial Statements in accordance with IFRS 3, Business Combinations, showing
65% of non-controlling interest. Chile PV 1 is included within the Renewable energy sector and
the South America geography.
186
On May 31, 2020, the Company obtained the right to appoint the majority of directors of the
board of Befesa Agua Tenes, which owns a 51% stake in Tenes, and therefore controls the asset,
a water desalination plant in Algeria. The total investment amounted to approximately $19
million as of May 31, 2020. The acquisition had been accounted for in these Consolidated
Financial Statements of Atlantica, in accordance with IFRS 3, Business Combinations, showing
49% of non-controlling interests. Tenes is included within the Water sector and the EMEA
geography.
The amount of assets and liabilities consolidated at the effective acquisition date is shown in the
following table:
Business combinations
for the year ended December 31, 2020
$‘000
Contracted concessional assets (Note 6)
Other non-current assets
Cash and cash and equivalent
Other current assets
Non-current Project debt (Note 15)
Current Project debt (Note 15)
Other current and non-current liabilities
Non-controlling interests
Total net assets acquired at fair value
Asset acquisition - purchase price
Net result of business combinations
172,321
356
17,646
31,421
(149,585)
(8,680)
(15,561)
(25,308)
22,610
(22,610)
-
The purchase price equalled the fair value of the net assets acquired.
The amount of revenue contributed by the acquisitions performed during 2020 to the
Consolidated Financial Statements of the Company for the year 2020 was $22.5 million, and the
amount of profit after tax was $6.3 million. Had the acquisitions been consolidated from January
1, 2020, the consolidated statement of comprehensive income would have included additional
revenue of $14.7 million and additional profit after tax of $3.7 million.
In April and May 2021, the provisional period for the purchase price allocation of Chile PV 1
and Tenes, respectively, closed and did not result in significant adjustments to the initial
amounts recognized.
187
6. Contracted Concessional Assets
Contracted concessional assets correspond to the assets of the Company recorded as intangible
or financial assets in accordance with IFRIC 12, property plant and equipment in accordance
with IAS 16 and financial asset in accordance with IFRS 16.
For further details on the application of IFRIC 12 to assets of the Company, see Note 26.
The following table shows the movements of assets included in the heading “Contracted
a)
Concessional assets” for 2021:
Cost
Financial
assets
under IFRIC
12
Financial
assets
under
IFRS 16
(Lessor)
Intangible
assets under
IFRIC 12
Intangible
assets
under IFRS
16 (Lessee)
Property,
plant and
equipment
under IAS 16
and other
intangible
assets under
IAS 38
Total assets
Total as of January 1,
2021
Additions
Subtractions
Business combinations
(Note 5)
Currency translation
differences
Reclassification and
other movements
936,837
2,941
9,467,309
66,230
350,720
10,824,037
922
442
40,383
2,459
14,204
58,410
-
-
-
-
(348)
-
(21,282)
(21,630)
-
19,148
522,932
542,080
(9,519)
(540)
(334,497)
(5,019)
(20,703)
(370,378)
(53,715)
-
29,692
-
10,539
(13,484)
Total Cost
874,525
2,843
9,202,539
82,818
856,410
11,019,135
Depreciation,
amortization and
impairment
Financial
assets
under
IFRIC 12
Financial
assets
under
IFRS 16
(Lessor)
Intangible
assets under
IFRIC 12
Intangible
assets
under IFRS
16 (Lessee)
Property,
plant and
equipment
under IAS 16
and other
intangible
assets under
IAS 38
Total assets
Total as of January 1, 2021
(87,689)
(418)
24,929
289
-
-
-
-
(2,442,520)
(10,060)
(128,350)
(2,668,619)
(424,181)
(4,759)
(31,003)
(460,361)
-
-
-
24,929
97,356
714
8,125
106,484
Additions
Reversal of impairment
Currency translation
differences
Total depreciation,
amortization and
impairment
(62,889)
-
(2,769,345)
(14,105)
(151,228)
(2,997,567)
188
The increase in the contracted concessional assets cost is primarily due to business
combinations for a total amount of $542 million (Note 5), partially offset by the lower value of
the Euro denominated assets since the exchange rate of the Euro decreased against the U.S.
dollar since December 31, 2020.
This increase is mainly offset by the amortization charge for the year and the impairment
registered in Solana (see below).
The decrease included in “Reclassification and other movement” is mainly due to the
reclassification from the long to the short term of the current portion of the contracted
concessional financial assets.
Solana triggering event of impairment
Considering the delays in the improvements and replacements that the Company is carrying
out in the storage system in Solana and their impact on production in 2021, as well as an
increase in the discount rate, the Company identified an impairment triggering event, in
accordance with IAS 36, Impairment of assets. As a result, an impairment test has been
performed which resulted in the recording of an impairment loss of $43 million as of December
31, 2021.
The impairment has been recorded within the line “Depreciation, amortization and impairment
charges” of the consolidated income statement, decreasing the amount of “Contracted
concessional assets” pertaining to the Renewable energy sector and the North America
geography. The recoverable amount considered is the value in use and amounts to $943 million
for Solana, as of December 31, 2021. A specific discount rate has been used in each year
considering changes in the debt/equity leverage ratio over the useful life of this project,
resulting in the use of a range of discount rates between 4.5% and 5.0%.
An adverse change in the key assumptions which are individually used for the valuation could
lead to future impairment recognition; specifically, a 5% decrease in generation over the entire
remaining useful life (PPA) of the project would generate an additional impairment of
approximately $69 million. An increase of 50 basis points in the discount rate would lead to an
additional impairment of approximately $41 million.
The Company did not identify any other triggering event of impairment of its contracted
concessional assets as of December 31, 2021.
Expected credit losses
The impairment provision based on the expected credit losses on contracted concessional
financial assets, calculated in accordance with IFRS 9, Financial instruments, decreased by $25
million in the year ended December 31, 2021, primarily in ACT following an improvement of its
client’s credit risk metrics.
The following table shows the movements of assets included in the heading “Contracted
b)
Concessional assets” for 2020:
189
Cost
Financial
assets under
IFRIC 12
Financial
assets
under
IFRS 16
(Lessor)
Intangible
assets
under IFRIC
12
Intangible
assets
under IFRS
16 (Lessee)
Property,
plant and
equipment
under AIS 16
and other
intangible
assets under
IAS 38
Total assets
Total as of January
1, 2020
Additions
Subtractions
Business
combinations (Note
5)
Currency
translation
differences
Reclassification and
other movements
872,945
3,459
9,183,011
60,618
264,564
10,384,597
-
-
102,560
-
-
-
29,213
(71,706)
1,832
(954)
4,310
(223)
35,355
(72,883)
-
385
63,916
166,861
(8,166)
(163)
326,791
4,349
18,153
340,964
(30,502)
(355)
-
-
-
(30,857)
Total Cost
936,837
2,941
9,467,309
66,230
350,720
10,824,037
Depreciation,
amortization and
impairment
Financial
assets
under
IFRIC 12
Financial
assets
under
IFRS 16
(Lessor)
Intangible
assets under
IFRIC 12
Intangible
assets
under IFRS
16 (Lessee)
Property,
plant and
equipment
under IAS
16 and
other
intangible
assets
under IAS
38
Total assets
Total as of January 1, 2020
(57,258)
(27,111)
-
-
(3,797)
476
Additions
Subtractions
Reversal of impairment
Business combinations
(Note 5)
Currency translation
differences
Total depreciation,
amortization and
impairment
-
-
-
-
-
-
(2,055,946)
(6,585)
(103,679)
(2,223,468)
(338,393)
(3,527)
(15,958)
(384,989)
17,571
18,787
-
634
49
18,253
-
-
-
-
17,787
(3,797)
(84,538)
(581)
(8,762)
(93,404)
(87,689)
-
(2,442,520)
(10,060)
(128,350)
(2,668,619)
During 2020, the cost of contracted concessional assets increased primarily due to the effect of
190
the appreciation of the Euro against the U.S. dollar for the year ended December 31, 2020,
compared to the year ended December 31, 2019, and to the acquisition of new concessional
assets (Note 5).
This increase was mainly offset by the amortization charge for the year and the write-off
registered in Solana (see below).
The decrease included in “Reclassification and other movements” was mainly due to the
reclassification from the long to the short term of the current portion of the contracted
concessional financial assets.
Solana storage system partial write-off
The availability in the storage system of Solana was lower than expected in 2020 due to certain
leaks identified in the storage system in the first quarter. The Company identified some
elements of the storage system to be replaced, which were written off in these Consolidated
Financial Statements through profit and loss in the line “Depreciation, amortization, and
impairment charges” for an estimated net book value of approximately $48 million.
Solana triggering event of impairment
The Company identified in 2020 a triggering event of impairment for Solana as a result of the
underperformance of the plant in terms of production. The Company therefore performed an
impairment test as of December 31, 2020, which resulted in the recoverable amount (value in
use) exceeding the carrying amount of the asset by 10%. To determine the value in use of the
asset, a specific discount rate had been used in each year considering changes in the
debt/equity leverage ratio over the useful life of this project, resulting in the use of a range of
discount rates between 3.8% and 4.3%.
An adverse change in the key assumptions which are individually used for the valuation would
not have led to future impairment recognition; neither in case of a 5% decrease in generation
over the entire remaining useful life (PPA) of the project nor in case of an increase of 50 basis
points in the discount rate.
Change in the useful life of the solar plants in Spain
Further to the recent developments in the Energy and Climate Policy Framework adopted by
Spain in 2020, the Company concluded that the expected deep transformation of the electricity
sector in Spain would probably significantly reduce the market price at which the electricity is
sold in the mid- to long-term. In particular, the Company believed this may impact the price
captured by the Company’s solar plants in Spain after the end of the regulation in place (2035
to 2038 onwards). As a result, the price captured by the plants after 2035 to 2038 (the end of
the 25 years regulatory period) would likely not be sufficient to cover operating costs. In this
case, the plants would stop operating and be dismantled at that point in time.
The Company believed that it was possible that long-term price evolution and technology
changes could result in scenarios where the plants may continue to operate after the end of the
regulatory period. Nevertheless, given the information currently available, the Company
decided to reduce the useful life of the CSP plants in Spain from 35 years to 25 years after COD.
This change of estimate of the useful life, effective September 1st, 2020, was accounted for as
a change in accounting estimate in accordance with IAS 8, Accounting Policies, Changes in
Accounting Estimates and Errors.
191
The main impacts recorded prospectively in these Consolidated Financial Statements were:
- an increased amortization charge from September 1st, 2020, considering the reduction
in the residual useful life of the plants. The impact was approximately $23 million as of
December 31, 2020, recorded within the line “Depreciation, amortization and
impairment charges” in the profit and loss statement.
- an increase in the discounted value of the dismantling provision, as the dismantling of
the plants would occur earlier. The provision increased by approximately $13 million as
of December 31, 2020 (Note 16).
In addition, reducing the useful life of the solar plants in Spain was a triggering event of
impairment, given that the recoverable amount of the asset is negatively impacted if the plants
stop operating in year 25 after COD.
The Company therefore performed an impairment test as of December 31, 2020, which resulted
in the recoverable amount (value in use) exceeding the carrying amount of the assets by 6%.
To determine the value in use of the assets, a specific discount rate was used in each year
considering changes in the debt/equity leverage ratio over the useful life of these projects,
resulting in the use of a range of discount rates between 3.3% and 3.8%.
An adverse change in the key assumptions which were individually used for the valuation would
not lead to future impairment recognition; neither in case of a 5% decrease in generation over
the entire remaining useful life of the projects nor in case of an increase of 50 basis points in
the discount rate.
Palmatir and Cadonal impairment reversals
As part of the triggering event analysis performed for Palmatir and Cadonal assets in 2020, the
Company identified factors, such as a reduced discount rate according to favourable market
conditions, increasing their recoverable amount (value in use). The Company therefore
performed an impairment test as of December 31, 2020, which resulted in the reversal of
impairments previously recorded, for an amount of $15.6 million and $3.1 million in Cadonal
and Palmatir, respectively, recorded within the line “Depreciation, amortization and impairment
charges” of the profit and loss statement.
No losses from impairment of contracted concessional assets, excluding any change in the
provision for expected credit losses under IFRS 9, Financial instruments, were recorded during
the year ended December 31, 2020. The impairment provision based on the expected credit
losses on contracted concessional financial assets increased by $29 million in the year ended
December 31, 2020, primarily in ACT.
7. Investments Carried Under the Equity Method
The table below shows the breakdown and the movement of the investments held in associates
for 2021 and 2020:
192
Investments in associates
Initial balance
Share of profit
Distributions
Acquisitions
2021
$‘000
116,614
12,304
(36,877)
202,345
Others (incl. currency translation differences)
195
2020
$‘000
139,925
510
(23,703)
-
(118)
Final balance
294,581
116,614
The increase in investments carried under the equity method in 2021, is primarily due to
investment made in Vento II in June 2021, partially offset by the distributions received from this
portfolio since then for $14.8 million, from Honaine for $4.4 million ($4.5 million in 2020) and
from Amherst for $17.7 million ($16.1 million in 2020). A significant portion of the distributions
received from Amherst are distributed by the Company to Algonquin Power Co. (Note 13).
The tables below show a breakdown of stand-alone amounts of assets, revenues and profit and
loss as well as other information of interest for the years 2021 and 2020 for the associated
companies:
Non-
current
assets
%
Shares
Current
assets
Project
debt
Other non-
current
liabilities
Other
current
liabilities
Operating
profit/
(loss)
Revenue
Investment
under the
equity
method
Net
profit/
(loss)
Company
2007 Vento II, LLC
(*)
49.00 459,037 13,511
Windlectric Inc
(**)
30.00 310,751 11,036
-
-
Myah Bahr
Honaine,
62,387
10,259
104,461 34,216
32,806
195,952
207,404
38,126
24,008 10,442
152
41,911
S.P.A.(***)
25.50 151,830 59,020 51,721
18,142
3,293
53,450 33,935
24,899
38,922
Pemcorp SAPI de
CV (****)
30.00 127,892 117,083 146,931 101,439
2,925
40,166 6,561
(6,522 )
15,358
Pectonex, R.F.
Proprietary
Limited
Evacuacion
50.00 2,356
-
-
-
1
-
(186 )
(186 )
1,495
Valdecaballeros,
S.L.
57.16 17,185
976
-
15,022
156
938
(63 )
(93 )
923
Evacuacion
Villanueva del
Rey, S.L
ABY
Infraestructuras
S.L.U.
40.02 2,637
63
-
1,601
172
-
59
-
-
20.00
238
46
-
-
5
-
(54 )
(54 )
21
As of December 31,
2021
294,581
193
%
Shares
Non-
current
assets
Current
assets
Project
debt
Other
non-
current
liabilities
Other
current
liabilities
Revenue
Operating
profit/
(loss)
Net
profit/
(loss)
Investment
under the
equity
method
57.16
19,531
1,130
-
16,721
646
853
(167)
(194)
976
25.50
165,688
57,808
63,356
17,617
3,636
50,739
30,519
12,402
39,204
50.00
2,743
-
40.02
3,201
134
5.00
468,131
156,528
-
-
-
-
1
1,861
257
-
-
(168)
(168)
1,587
52
-
604,986
25,773
80,240
17,415
1,615
-
30
30.00
127,429
121,468
154,937
104,893
3,190
28,832
3,068
(6,237)
15,514
20.00
135
84
30.00
316,251
7,229
50.00
323
210
-
-
-
-
63
-
(53)
(53)
17
216,765
31,403
23,663
10,451
(493)
59,116
-
19
-
(66)
(66)
169
Company
Evacuacion
Valdecaballeros,
S.L.
Myah Bahr
Honaine, S.P.A.(***)
Pectonex, R.F.
Proprietary Limited
Evacuacion
Villanueva del Rey,
S.L
Ca Ku A1, S.A.P.I
de CV (PTS)
Pemcorp SAPI de
CV (****)
ABY
Infraestructuras
S.L.U.
Windlectric Inc (**)
Other renewable
energy joint
ventures (*****)
As of December 31, 2020
116,614
The Company has no control over Evacuacion Valdecaballeros, S.L. as all relevant decisions of
this company require the approval of a minimum of shareholders accounting for more than
75% of the shares.
None of the associated companies referred to above is a listed company.
(*) 2007 Vento II, LLC, is the holding company of a 596 MW portfolio of wind assets in the U.S., 49% owned by
Atlantica since June 16, 2021, and accounted for under the equity method in these Consolidated Financial Statements
(Note 1). Share of profit of 2007 Vento II, LLC. included in these Consolidated Financial Statements amounts to $8.4
million in 2021.
(**) Windlectric Inc., the project entity, is 100% owned by Amherst Island Partnership which is accounted for under
the equity method in these Consolidated Financial Statements.
(***) Myah Bahr Honaine, S.P.A., the project entity, is 51% owned by Geida Tlemcen, S.L. which is accounted for using
the equity method in these Consolidated Financial Statements. Geida Tlemcen, S.L. is 50% owned by Atlantica. Share
of profit of Myah Bahr Honaine S.P.A. included in these Consolidated Financial Statements amounts to $6.4 million
in 2021 and $3.1 million in 2020.
(****) Pemcorp SAPI de CV, Monterrey´s project entity, is 100% owned by Arroyo Netherlands II B.V. which is
accounted for under the equity method in these Consolidated Financial Statements. Arroyo Netherlands II B.V. is
30% owned by Atlantica. Share of profit of Pemcorp SAPI de CV included in these Consolidated Financial Statements
amounts to a loss of $2.0 million in 2021 and a loss of $1.9 million in 2020.
(*****) Other renewable energy joint ventures in 2020 corresponded to investments made in the following entities:
AC Renovables Sol 1 SAS Esp, PA Renovables Sol 1 SAS Esp, SJ Renovables Sun 1 SAS Esp and SJ Renovables Wind
1 SAS Esp. As of December 31, 2021, these entities have been fully consolidated as the Company has gained control
over these entities under IFRS 10, Consolidated Financial Statements.
8. Financial instruments by Category
Financial instruments, in addition to financial assets included within Contracted concessional
assets disclosed in Note 6, are primarily deposits, derivatives, trade and other receivables and
194
loans. Financial instruments by category (current and non-current), reconciled with the
statement of financial position as of December 31, 2021 and 2020 are as follows:
Category
Derivative assets
Investment in Ten West Link
Financial assets under IFRIC 12
(short-term portion)
Trade and other receivables
Cash and other equivalents
Other financial investments
Total financial assets
Corporate debt
Project debt
Trade and other
liabilities
Derivative liabilities
current
Total financial liabilities
Notes
9
11
12
14
15
17
9
Fair value through
Other
Comprehensive
Income
$´000
Fair value
through
profit or loss
$’000
Balance as of
12.31.21
$’000
Amortized Cost
$’000
-
-
188,912
307,143
622,689
87,657
1,206,401
1,023,071
5,036,193
113,907
-
6,173,171
-
14,459
-
-
-
-
14,459
-
-
-
-
-
12,960
-
-
-
-
-
12,960
-
-
-
12,960
14,459
188,912
307,143
622,689
87,657
1,233,820
1,023,071
5,036,193
113,907
223,453
223,453
223,453
6,396,624
Category
Derivative assets
Investment in Ten West Link
Investment in Rioglass
Financial assets under IFRIC 12
(short-term portion)
Trade and other receivables
Cash and other equivalents
Other financial investments
Total financial assets
Corporate debt
Project debt
Related parties – non-current
Trade and other
current
liabilities
Derivative liabilities
Total financial liabilities
Notes
9
11
12
14
15
10
17
9
Amortized Cost
$’000
Fair value through
Other Comprehensive
Income
$´000
Fair value
through
profit or loss
$’000
Balance as of
12.31.20
$’000
-
-
-
178,198
331,735
868,501
94,497
1,472,931
993,725
5,237,614
6,810
92,557
-
6,330,707
-
12,896
-
-
-
-
-
12,896
-
-
-
-
-
-
1,559
-
2,687
1,559
12,896
2,687
-
178,198
-
-
-
4,246
-
-
-
-
331,735
868,501
94,497
1,490,073
993,725
5,237,614
6,810
92,557
328,184
328,184
328,184
6,658,891
Other financial investments as of December 31, 2021 and as of December 31, 2020 include
among others, a loan to Monterrey (Note 7) and restricted cash for repairs or scheduled major
maintenance work.
195
Investment in Ten West Link is a 12.5% interest in a 114-mile transmission line in the U.S.,
currently under development.
The investment in Rioglass corresponded to a 15.12% equity interest as of December 31, 2020.
The Company gained control over the business in January 2021, which is fully consolidated
since then in these Consolidated Financial Statements as of December 31, 2021 (Note 5).
9. Derivative Financial Instruments
The breakdown of the fair value amounts of the derivative financial instruments as of
December 31, 2021 and 2020 are as follows:
Balance as of 12.31.21
Balance as of 12.31.20
Assets
$’000
Liabilities
$’000
Assets
$’000
Liabilities
$’000
Interest rate cash flow hedge
Foreign exchange derivatives instruments
Notes conversion option (Note 14)
Total
9,550
3,410
-
12,960
206,763
-
16,690
223,453
898
661
-
1,559
302,302
-
25,882
328,184
The derivatives are primarily interest rate cash-flow hedges. All are classified as non-current
assets or non-current liabilities, as they hedge long-term financing agreements.
As stated in Note 3 to these consolidated financial statements, the general policy is to hedge
variable interest rates of financing agreements using two types of hedging derivatives:
-
Interest rate swaps under which the Company receives the floating leg and pays
the fixed leg; and
- Purchased call options (cap), in exchange of a premium to fix the maximum
interest rate cost.
The notional amounts hedged, strikes contracted and maturities, depending on the
characteristics of the debt on which the interest rate risk is being hedged, can be diverse:
- Project debt in Euros: the Company hedges between 75% and 100% of the
notional amount, with hedges maturing up to 2038 and average guaranteed
interest rate of between 0.00% and 4.87%.
- Project debt in U.S. dollars: the Company hedges between 75% and 100% of the
notional amount, with hedges maturing up to 2038 and average guaranteed
interest rate of between 0.86% and 5.89%.
The table below shows a breakdown of the maturities of notional amounts of interest rate cash
flow hedge derivatives designated as cash flow hedges as of December 31, 2021 and 2020.
196
Notionals
Balance as of 12.31.21
Balance as of 12.31.20
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
$’000
$’000
Assets
Liabilities
Assets
Liabilities
71,386
304,930
262,973
217,989
106,191
240,197
271,350
860,777
61,364
296,828
257,548
292,011
120,874
249,785
276,111
852,696
857,278
1,478,515
907,752
1,499,466
The table below shows a breakdown of the maturity of the fair values of interest rate cash flow
hedge derivative as of December 31, 2021 and 2020.
Fair value
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
Balance as of 12.31.21
$’000
Balance as of 12.31.20
$’000
Assets
Liabilities
Assets
Liabilities
678
1,810
2,268
4,794
(15,039)
(33,670)
(39,834)
(118,220)
59
255
305
280
(21,042)
(48,276)
(55,220)
(177,764)
9,550
(206,763)
898
(302,302)
The net amount of the fair value of interest rate derivatives designated as cash flow hedges
transferred to the consolidated income statement in 2021 is a loss of $58,292 thousand (loss of
$58,381 thousand in 2020).
The after-tax result accumulated in equity in connection with derivatives designated as cash
flow hedges at the years ended December 31, 2021 and 2020, amount to a $171,272 thousand
gain and a $96,641 thousand gain respectively.
Additionally, the Company has currency options with leading international financial institutions,
which guarantee minimum Euro-U.S. dollar exchange rates. The strategy of the Company is to
hedge the exchange rate for the net distributions from its European assets after deducting euro-
denominated interest payments and euro-denominated general and administrative expenses.
Through currency options, the strategy of the Company is to hedge 100% of its euro-
denominated net exposure for the next 12 months and 75% of its euro denominated net
exposure for the following 12 months, on a rolling basis. Change in fair value of these foreign
exchange derivatives instruments are directly recorded in the consolidated income statement.
Finally, the conversion option of the Green Exchangeable Notes issued in July 2020 (Note 14) is
recorded as a derivative with a negative fair value (liability) of $17 million as of December 31,
2021 ($26 million as of December 31, 2020).
10. Related Party Transactions
The related parties of the Company are primarily Algonquin and its subsidiaries, non-controlling
interests (Note 13), entities accounted for under the equity method (Note 7) as well as the
Directors and the Senior Management of the Company.
197
Details of balances with related parties as of December 31, 2021 and 2020 are as follows:
Credit receivables (current)
Credit receivables (non-current)
Total receivables with related parties
Credit payables (current)
Credit payables (non-current)
Total payables with related parties
Balance as of
December 31, 2021
$’000
Balance as of
December 31, 2020
$’000
19,387
15,768
35,155
9,494
5
9,499
23,067
10,082
33,149
18,477
6,810
25,287
Current credit receivables as of December 31, 2021 mainly correspond to the short-term portion
of the loan to Arroyo Netherland II B.V., the holding company of Pemcorp SAPI de CV.,
Monterrey´s project company (Note 7) for $10.0 million ($15.5 million as of December 31, 2020)
and to a dividend to be collected from Amherst Island Partnership for $6.3 million ($4.3 million
as of December 31, 2020).
Non-current credit receivables as of December 31, 2021 and December 31, 2020 correspond to
the long-term portion of the loan to Arroyo Netherland II B.V.
Credit payables relate to debts with non-controlling partners in Kaxu, Solaben 2 & 3 and Solacor
1 & 2 for an amount of $3.4 million as of December 31, 2021 ($21.1 million as of December 31,
2020). The decrease is primarily due to debt repayment at Kaxu. Current credit payables also
include the dividend to be paid by AYES Canada to Algonquin for $6.1 million as of December
31, 2021 ($4.2 million as of December 31, 2020).
The transactions carried out by entities included in these Consolidated Financial Statements with
related parties not included in the consolidation perimeter of Atlantica, for the years ended
December 31, 2021 and 2020 have been as follows:
Financial income
Financial expense
For the year ended December 31,
2021
$’000
2,069
(97)
2020
$’000
2,017
(155)
The total amount of the remuneration received by the Board of Directors of the Company,
including the CEO, amounts to $4.6 million in 2021 ($3.4 million in 2020), including $1.0 million
of annual bonus ($1.0 million in 2020) and $1.9 million of long-term award vested in 2021 ($0.8
million in 2020). The increase of the total remuneration in 2021 is mainly due to the increase of
the long-term award, as a result of the vesting in 2021 of one-third of the share options awarded
in 2020 and the increase of Atlantica’s share price. None of the directors received any pension
remuneration in 2021 nor 2020.
198
11. Trade and Other Receivables
Trade and other receivables as of December 31, 2021 and 2020, consist of the following:
Trade receivables
Tax receivables
Prepayments
Other accounts receivable
Total
Balance as of
December 31, 2021
$’000
Balance as of
December 31, 2020
$’000
227,343
59,350
9,342
11,108
307,143
258,087
50,663
12,074
10,911
331,735
As of December 31, 2021, and 2020, the fair value of trade and other accounts receivable does
not differ significantly from its carrying value.
Trade receivables in foreign currency as of December 31, 2021 and 2020, are as follows:
Euro
South African Rand
Other
Total
Balance as of
December 31, 2021
$’000
Balance as of
December 31, 2020
$’000
65,854
24,513
13,330
103,697
105,826
24,121
6,929
136,876
The decrease in trade receivables in Euro as of December 31, 2021 is primarily due to the
improvement in the collection of receivables from the Spanish state-owned regulator Comision
Nacional de los Mercados y de la Competencia or “CNMC” (solar assets in Spain).
12. Cash and Cash Equivalents
The following table shows the detail of cash and cash equivalents as of December 31, 2021 and
2020:
Cash at bank and on hand - non-restricted
Cash at bank and on hand - restricted
2021
$’000
368,381
254,308
2020
$’000
588,690
279,811
Total
622,689
868,501
Cash includes funds held to satisfy the customary requirements of certain non-recourse debt
agreements within the Company´s projects (Note 15) amounting to $254 million as of December
31, 2021 ($280 million as of December 31, 2020).
The following breakdown shows the main currencies in which cash and cash equivalent balances
are denominated:
199
US Dollar
Euro
South African Rand
Mexican Peso
Algerian Dinar
Others
2021
$’000
2020
$’000
318,071
575,567
230,136
196,431
38,268
4,926
21,156
10,132
40,561
23,570
21,114
11,258
622,689
868,501
13. Equity
As of December 31, 2021, the share capital of the Company amounts to $11,240,297
($10,667,087 as of December 31, 2020) represented by 112,402,973 ordinary shares
(106,670,866 shares as of December 31, 2020) fully subscribed and disbursed with a nominal
value of $0.10 each, all in the same class and series. Each share grants one voting right.
Algonquin owns 43.6% of the shares of the Company and is its largest shareholder as of
December 31,2021.
On December 11, 2020 the Company closed an underwritten public offering of 5,069,200
ordinary shares, including 661,200 ordinary shares sold pursuant to the full exercise of the
underwriters’ over-allotment option, at a price of $33 per new share. Gross proceeds were
approximately $167 million. Given that the offering was issued through a subsidiary in Jersey,
which became wholly owned by the Company at closing, and subsequently liquidated, the
premium on issuance was credited to a merger reserve account (Capital reserves), net of
issuance costs, for $161 million. Additionally, Algonquin committed to purchase 4,020,860
ordinary shares in a private placement in order to maintain its previous equity ownership of
44.2% in the Company. The private placement closed on January 7, 2021. Gross proceeds were
approximately $133 million ($131 million net of issuance costs).
During the first quarter of 2021, the Company changed the accounting treatment applied to its
existing long-term incentive plans granted to employees from cash-settled to equity-settled in
accordance with IFRS 2, Share-based Payment, as a result of incentives being settled in shares.
The liability recognized for the rights vested by the employees under such plans at the date of
this change, was reclassified to equity within the line “Accumulated deficit” for approximately
$9 million. The settlement in shares was approved by the Board of Directors on February 26,
2021, and the Company issued 141,482 new shares to its employees up to December 31, 2021,
to settle a portion of these plans.
On August 3, 2021, the Company established an “at-the-market program” (the “ATM”) and
entered into the distribution agreement with J.P. Morgan Securities LLC, as sales agent, (the
“Distribution Agreement”) under which the Company may offer and sell from time to time up
200
to $150 million of its ordinary shares. The Company also entered into an agreement with
Algonquin pursuant to which the Company has offered Algonquin the right but not the
obligation, on a quarterly basis, to purchase a number of ordinary shares to maintain its
percentage interest in Atlantica at the average price of the shares sold under the Distribution
Agreement in the previous quarter (the “ATM Plan Letter Agreement”). During the year 2021,
the Company sold 1,613,079 shares at an average market price of $38.43 pursuant to its
Distribution Agreement, representing net proceeds of $61 million. Pursuant to the ATM Plan
Letter Agreement, the Company delivers a notice to Algonquin quarterly in order for them to
exercise their rights thereunder.
Atlantica´s reserves as of December 31, 2021 are made up of share premium account and capital
reserves. The share premium account reduction by $200 million during the year 2021, increasing
capital reserves by the same amount, was made effective upon the confirmation received from
the High Court in the UK, pursuant to the Companies Act 2006.
Other reserves primarily include the change in fair value of cash flow hedges and its tax effect.
Accumulated currency translation differences primarily include the result of translating the
financial statements of subsidiaries prepared in a foreign currency into the presentation
currency of the Company, the U.S. dollar.
Accumulated deficit primarily includes results attributable to Atlantica.
Non-controlling interests fully relate to interests held by JGC in Solacor 1 and Solacor 2, by Idae
in Seville PV, by Itochu Corporation in Solaben 2 and Solaben 3, by Algerian Energy Company,
SPA and Sacyr Agua S.L. in Skikda, by Algerian Energy Company, SPA in Tenes, by Industrial
Development Corporation of South Africa (IDC) and Kaxu Community Trust in Kaxu, by
Algonquin Power Co. in AYES Canada, and by partners of the Company in the Chilean renewable
energy platform in Chile PV 1 and Chile PV 2.
Dividends declared during the year 2021 by the Board of Directors of the Company were:
- On February 26, 2021, the Board of Directors declared a dividend of $0.42 per share
corresponding to the fourth quarter of 2020. The dividend was paid on March 22, 2021
for a total amount of $46.5 million.
- On May 4, 2021, the Board of Directors declared a dividend of $0.43 per share
corresponding to the first quarter of 2021. The dividend was paid on June 15, 2021 for
a total amount of $47.7 million.
- On July 30, 2021, the Board of Directors declared a dividend of $0.43 per share
corresponding to the second quarter of 2021. The dividend was paid on September 15,
2021 for a total amount of $47.8 million.
- On November 9, 2021, the Board of Directors declared a dividend of $0.435 per share
corresponding to the third quarter of 2021. The dividend was paid on December 15,
2021 for a total amount of $48.6 million.
In addition, the Company declared dividends and distributions to non-controlling interests,
primarily to Algonquin (interests in Amherst through AYES Canada, see Note 7) for $17.3 million
201
in 2021 ($14.7 million in 2020), Algerian Energy Company for $6.6 million in 2021 ($3.7 million
in 2020) and Itochu for $5.7 million in 2021 ($1.4 million in 2020).
As of December 31, 2021, there was no treasury stock and there have been no transactions with
treasury stock during the period then ended.
14. Corporate Debt
The breakdown of the corporate debt as of December 31, 2021 and 2020 is as follows:
Non-current
Current
Total Non-current
Balance as of
December 31, 2021
$’000
Balance as of
December 31, 2020
$’000
995,190
27,881
1,023,071
970,077
23,648
993,725
On July 20, 2017, the Company signed a credit facility (the “2017 Credit Facility”) for up to €10
million, approximately $11.4 million, which is available in euros or U.S. dollars. Amounts drawn
down accrue interest at a rate per year equal to EURIBOR plus 2% or LIBOR plus 2%, depending
on the currency, with a floor of 0% on the LIBOR and EURIBOR. As of December 31, 2021, $8.2
million were drawn down. As of December 31, 2020, the 2017 Credit Facility was fully available.
The credit facility maturity is July 1, 2023.
On May 10, 2018, the Company entered into the Revolving Credit Facility for $215 million with
a syndicate of banks. Amounts drawn down accrue interest at a rate per year equal to (A) for
Eurodollar rate loans, LIBOR plus a percentage determined by reference to the leverage ratio of
the Company, ranging between 1.60% and 2.25% and (B) for base rate loans, the highest of (i)
the rate per annum equal to the weighted average of the rates on overnight U.S. Federal funds
transactions with members of the U.S. Federal Reserve System arranged by U.S. Federal funds
brokers on such day plus ½ of 1.00%, (ii) the U.S. prime rate and (iii) LIBOR plus 1.00%, in any
case, plus a percentage determined by reference to the leverage ratio of the Company, ranging
between 0.60% and 1.00%. Letters of credit may be issued using up to $100 million of the
Revolving Credit Facility. During 2019, the amount of the Revolving Credit Facility increased
from $215 million to $425 million and the maturity was extended to December 31, 2022. In the
first quarter of 2021, the Company increased the amount of the Revolving Credit Facility from
$425 million to $450 million and the maturity was extended to December 31, 2023. On
December 31, 2021, the Company had issued letters of credit for $10 million, therefore, $440
million of the Revolving Credit Facility are available ($415 million as of December 31, 2020).
On April 30, 2019, the Company entered into the Note Issuance Facility 2019, a senior unsecured
note facility with a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder for a total amount of €268 million, approximately $305 million, with maturity
date on April 30, 2025. Interest accrues at a rate per annum equal to the sum of 3-month
EURIBOR plus 4.50%. The interest rate on the Note Issuance Facility 2019 is fully hedged by an
interest rate swap resulting in the Company paying a net fixed interest rate of 4.24%. The Note
Issuance Facility 2019 provided that the Company may capitalize interest on the notes issued
202
thereunder for a period of up to two years from closing at the Company´s discretion, subject to
certain conditions, and the Company elected to capitalize such interest until the end of 2020.
The Note Issuance Facility 2019 has been fully repaid on June 4, 2021, and subsequently delisted
from the Official List of The International Stock Exchange.
On October 8, 2019, the Company filed a euro commercial paper program (the “Commercial
Paper”) with the Alternative Fixed Income Market (MARF) in Spain. The program had an original
maturity of twelve months and was extended for another twelve-month period on October 8,
2020. The program allowed Atlantica to issue short term notes over the next twelve months for
up to €50 million (approximately $57 million), with such notes having a tenor of up to two years.
As of December 31, 2021, the Company had €21.5 million (approximately $24.4 million) issued
and outstanding under the program at an average cost of 0.36% (€17.4 million, approximately
$19.8 million, as of December 31, 2020).
On April 1, 2020, the Company closed the secured 2020 Green Private Placement for €290
million (approximately $330 million). The private placement accrues interest at an annual 1.96%
interest rate, payable quarterly and has a June 2026 maturity.
On July 8, 2020, the Company entered into the Note Issuance Facility 2020, a senior unsecured
financing with a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder for a total amount of approximately $159 million, which is denominated in
euros (€140 million). The Note Issuance Facility 2020 was issued on August 12, 2020, accrues
annual interest of 5.25%, payable quarterly and has a maturity of seven years from the closing
date.
On July 17, 2020, the Company issued the Green Exchangeable Notes for $100 million in
aggregate principal amount of 4.00% convertible bonds due in 2025. On July 29, 2020, the
Company closed an additional $15 million aggregate principal amount of the Green
Exchangeable Notes. The notes mature on July 15, 2025 and bear interest at a rate of 4.00% per
annum. The initial exchange rate of the notes is 29.1070 ordinary shares per $1,000 principal
amount of notes, which is equivalent to an initial exchange price of $34.36 per ordinary share.
Noteholders may exchange their notes at their option, at any time prior to the close of business
on the scheduled trading day immediately preceding April 15, 2025, only during certain periods
and upon satisfaction of certain conditions. On or after April 15, 2025, noteholders may
exchange their notes at any time. Upon exchange, the notes may be settled, at the election of
the Company, into Atlantica ordinary shares, cash or a combination thereof. The exchange rate
is subject to adjustment upon the occurrence of certain events.
As per IAS 32, “Financial Instruments: Presentation”, the conversion option of the Green
Exchangeable Notes is an embedded derivative classified within the line “Derivative liabilities”
of these Consolidated Financial Statements (Note 9). It was initially valued at the transaction
date for $10 million, and prospective changes to its fair value are accounted for directly through
the profit and loss statement. The principal element of the Green Exchangeable Notes, classified
within the line “Corporate debt” of these Consolidated Financial Statements, is initially valued
as the difference between the consideration received from the holders of the instrument and
the value of the embedded derivative, and thereafter, at amortized cost using the effective
interest method as per IFRS 9, “Financial Instruments”.
On December 4, 2020, the Company entered into a loan with a bank for €5 million,
203
approximately $5.7 million. This loan accrues interest at a rate per year equal to 2.50%. The
maturity date is December 4, 2025.
On May 18, 2021, the Company issued the Green Senior Notes due in 2028 in an aggregate
principal amount of $400 million. The notes mature on May 15, 2028 and bear interest at a rate
of 4.125% per annum payable on June 15 and December 15 of each year, commencing
December 15, 2021.
The repayment schedule for the Corporate debt at the end of 2021 is as follows:
2022
2023
2024
2025
2026
Subsequent
years
Total
2017 Credit Facility
Commercial paper
2020 Green Private Placement
Note Issuance Facility 2020
Green Exchangeable Notes
Bank Loans
Green Senior Note
Total
5
24,422
359
-
2,121
11
963
27,881
8,199
-
-
-
-
1,895
-
10,094
-
-
-
-
-
1,895
-
1,895
-
-
-
-
104,289
1,862
-
-
-
327,081
-
-
-
-
106,151
327,081
-
-
-
155,814
-
-
394,155
549,969
8,204
24,422
327,440
155,814
106,410
5,663
395,118
1,023,071
The repayment schedule for the Corporate debt at the end of 2020 was as follows:
2021
2022
2023
2024
2025
Subsequent
years
2017 Credit Facility
Notes Issuance Facility 2019
Commercial paper
2020 Green Private Placement
Note Issuance Facility 2020
Green Exchangeable Notes
Bank loan
Total
41
-
21,224
289
-
2,083
11
23,648
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,036
2,036
-
-
-
-
-
-
2,036
2,036
-
343,999
-
-
-
102,144
1,990
448,133
-
-
-
351,026
166,846
-
-
517,872
Total
41
343,999
21,224
351,315
166,846
104,227
6,073
993,725
The following table details the movement in corporate debt for the years 2021 and 2020, split
between cash and non-cash items:
Corporate Debt
Initial balance
Cash changes
Non-cash changes
Final balance
2021
993,725
2020
723,791
14,754 171,182
14,592
98,752
993,725
1,023,071
The non-cash changes primarily relate to interests accrued and to currency translation
differences.
15. Project debt
This note shows the project debt linked to the contracted concessional assets included in Note
6 of these Consolidated Financial Statements.
Project debt is generally used to finance contracted assets, exclusively using as a guarantee the
204
assets and cash flows of the company or group of companies carrying out the activities financed.
In most of the cases, the assets and/or contracts are set up as a guarantee to ensure the
repayment of the related financing. In addition, the cash of the Company´s projects includes
funds held to satisfy the customary requirements of certain non-recourse debt agreements and
other restricted cash for an amount of $254 million as of December 31, 2021 ($280 million as of
December 31, 2020).
The variations in 2021 of project debt have been the following:
Project debt - long
term
$’000
Project debt - short
term
$’000
Balance as of December 31, 2020
Increases
Decreases
Business Combination (Note 5)
Currency translation differences
Reclassifications
Balance as of December 31, 2021
4,925,268
54,908
(85,259)
288,352
(140,502)
(655,093)
4,387,674
312,346
256,581
(564,603)
38,781
(49,679)
655,093
648,519
Total
$’000
5,237,614
311,489
(649,862)
327,133
(190,181)
-
5,036,193
The decrease in total project debt as of December 31, 2021 is primarily due to:
-
the repayment of project debt for the period in accordance with the financing
arrangements; and
-
the lower value of debt denominated in Euros given the depreciation of the Euro against
the U.S. dollar since December 31, 2020.
The decrease of project debt during the year 2021 has been partially offset by the business
combinations, being the acquisitions of Rioglass, Coso, Chile PV 2, Italy PV 1 and Italy PV 3 for
a total amount of $327 million (Note 5). Interest accrued are offset by a similar amount of
interest paid during the year.
The Kaxu project financing arrangement contains cross-default provisions related to Abengoa
such that debt defaults by Abengoa, subject to certain threshold amounts and/or a
restructuring process, could trigger a default under the Kaxu project financing arrangement.
The insolvency filing by the individual company Abengoa S.A. in February 2021 represents a
theoretical event of default under the Kaxu project finance agreement. In September 2021, the
Company obtained a waiver for such theoretical event of default which was conditional upon
the replacement of the operation and maintenance supplier of the plant. On February 1, 2022,
the Company transferred the employees performing the operation and maintenance services
to an Atlantica subsidiary. The waiver has been extended until April 30, 2022 and is subject to
the lenders receiving certain documentation from the Company, including formal evidence of
the approval by the client and the department of energy of South Africa of the operation and
maintenance internalization and the Company is currently working on obtaining such
documentation. Although the Company does not expect the acceleration of debt to be declared
by the credit entities, as of December 31, 2021 Kaxu did not have what International Accounting
Standards define as an unconditional right to defer the settlement of the debt for at least twelve
months, as the cross-default provisions make that right conditional. Therefore, Kaxu total debt,
205
previously presented as non-current as of December 31, 2020, has been presented as current
in the Consolidated Financial Statements of the Company as of December 31, 2021 for an
amount of $315 million (Note 1).
The variations in 2020 of project debt were the following:
Project debt - long
term
$’000
Project debt - short
term
$’000
Balance as of December 31, 2019
Increases
Decreases
Business Combination (Note 5)
Currency translation differences
Reclassifications
Balance as of December 31, 2020
4,069,909
613,604
(272,548)
149,585
150,506
214,211
4,925,268
782,439
268,339
(552,770)
8,680
19,869
(214,211)
312,346
Total
$’000
4,852,348
881,943
(825,318)
158,265
170,375
-
5,237,614
The increase in total project debt as of December 31, 2020 was primarily due to:
- business combinations, being the acquisition of Chile PV I and Tenes for a total amount
of $158 million (Note 5).
- a green project financing agreement entered into by Logrosan Solar Inversiones, S.A.U.,
the holding company of assets Solaben 1, 2, 3 and 6 in Spain, closed on April 8, 2020 for
a €140 million nominal amount (approximately $159 million).
- a non-recourse project debt refinancing of Helioenergy assets by adding a new long
dated tranche of debt from an institutional investor closed on July 10, 2020, providing
with a net refinancing proceeds (net “recap”) of approximately $43 million.
- a non-recourse, project debt financing closed on July 14, 2020 for approximately €326
million (approximately $371 million) in relation to Helios, with institutional investors,
which has refinanced the previous bank project debt with approximately €250 million
outstanding and has cancelled legacy interest rate swaps. After transaction costs and
cancelation of legacy swaps, net refinancing proceeds (net “recap”) were approximately
$30 million. The accumulated impact of the change in fair value of the interest rate swaps
recorded in Other reserves and any difference between the nominal amount of the debt
repaid and the amortized cost of the debt have been transferred to the profit and loss
in line “Other financial income/(expense), net” on transaction date for a total amount of
$73 million (Note 21).
-
the higher value of debt denominated in Euro given the increase in the exchange rate
of the Euro against the U.S. dollar since December 31, 2019.
The increase of Project debt during the year 2020 has been partially offset by the contractual
payments of debt for the year. Interests accrued are offset by a similar amount of interests paid
during the year.
Additionally, on June 12, 2020 the Company refinanced the debt of Cadonal (Uruguay). The
206
terms of the new debts are not substantially different from the original debts refinanced and
therefore the exchange of debts instruments does not qualify for an extinguishment of the
original debts under IFRS 9, ´Financial instruments´. When there is a refinancing with a non-
substantial modification of the original debt, there is a gain or loss recorded in the income
statement. This gain or loss is equal to the difference between the present value of the cash
flows under the original terms of the former financing and the present value of the cash flows
under the new financing, discounted both at the original effective interest rate. In this respect,
the Company recorded a $3.8 million financial income in the profit and loss statement of the
consolidated financial statements (Note 21).
Due to the PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric
Company (“PG&E”), Chapter 11 filings in January 2019, a default of the PPA agreement with
PG&E occurred. On July 1, 2020, PG&E emerged from Chapter 11 and the technical event of
default was cured. As a result, as of December 31, 2020 the debt previously presented as current
(during the year 2019) was reclassified as non-current in accordance with the financing
agreements in these Consolidated Financial Statements.
The repayment schedule for project debt in accordance with the financing arrangements as of
December 31, 2021, is as follows and is consistent with the projected cash flows of the related
projects:
2022
2023
2024
2025
2026
Interest
Payment
Nominal
repayment
Subsequent
years
Total
18,017
317,388
355,956
369,528
498,712
411,514
3,065,078
5,036,193
The repayment schedule for project debt in accordance with the financing arrangements, as of
December 31, 2020, was as follows and is consistent with the projected cash flows of the related
projects:
2021
2022
2023
2024
2025
Interest
Payment
Nominal
repayment
Subsequent
years
Total
19,287
293,059
328,364
355,806
371,548
508,843
3,360,707
5,237,614
The following table details the movement in Project debt for the years 2021 and 2020, split
between cash and non-cash items:
Project Debt
Initial balance
Cash changes
Non-cash changes
Final balance
2021
2020
5,237,614
(636,831)
435,410
5,036,193
4,852,348
(254,495)
639,761
5,237,614
The non-cash changes primarily relate to interest accrued, currency translation differences and
the business combinations for the year.
207
The equivalent in U.S. dollars of the most significant foreign-currency-denominated debts held
by the Company is as follows:
Currency
Euro
South African Rand
Algerian Dinar
Total
Balance as of December 31, 2021
$’000
Balance as of December 31, 2020
$’000
1,942,903
314,471
97,877
2,355,251
2,240,811
355,414
115,606
2,711,830
All of the Company’s financing agreements have a carrying amount close to its fair value.
16. Grants and Other Liabilities
Grants
Other liabilities
Balances as of
December 31, 2021
$’000
Balances as of
December 31, 2020
$’000
970,557
293,187
1,028,765
201,002
Grant and other non-current liabilities
1,263,744
1,229,767
As of December 31, 2021, the amount recorded in Grants primarily corresponds to the ITC Grant
awarded by the U.S. Department of the Treasury to Solana and Mojave for a total amount of
$642 million ($674 million as of December 31, 2020), which was primarily used to fully repay
the Solana and Mojave short-term tranche of the loan with the Federal Financing Bank. The
amount recorded in Grants as a liability is progressively recorded as other income over the
useful life of the asset.
The remaining balance of the “Grants” account corresponds to loans with interest rates below
market rates for Solana and Mojave for a total amount of $326 million ($352 million as of
December 31, 2020). Loans with the Federal Financing Bank guaranteed by the Department of
Energy for these projects bear interest at a rate below market rates for these types of projects
and terms. The difference between proceeds received from these loans and its fair value, is
initially recorded as “Grants” in the consolidated statement of financial position, and
subsequently recorded in “Other operating income” starting at the entry into operation of the
plants.
Total amount of income for these two types of grants for Solana and Mojave is $58.7 million
and $58.9 million for the years ended December 31, 2021 and 2020, respectively (Note 20).
Other liabilities mainly include:
- $59 million of lease liabilities ($52 million as of December 31, 2020);
- $125 million of dismantling provision as of December 31, 2021 ($88 million as of
December 31, 2020); and
- $75 million of provision related to the current high market prices in Spain at which the
solar assets in Spain invoiced electricity up to December 31, 2021 ($0.6 million as of
December 31, 2020), as a result of a negative adjustment to the regulated revenues
208
expected to be recorded progressively over the remaining regulatory life of the solar
assets of the Company, as a compensation.
17. Trade Payables and Other Current Liabilities
Item
Trade accounts payable
Down payments from clients
Other accounts payable
Total
Balance as of December 31, 2021
$’000
Balance as of December 31, 2020
$’000
79,052
542
34,313
113,907
51,421
416
40,720
92,557
Trade accounts payable mainly relate to the operation and maintenance of the plants.
Nominal values of Trade payables and other current liabilities are considered to approximately
equal to fair values and the effect of discounting them is not significant.
18. Income Tax
All the companies of Atlantica file income taxes according to the tax regulations in force in each
country on an individual basis or under consolidation tax regulations.
The consolidated income tax has been calculated as an aggregation of income tax
expenses/income of each individual company. In order to calculate the taxable income of the
consolidated entities individually, the accounting result is adjusted for temporary and permanent
differences, recording the corresponding deferred tax assets and liabilities. At each consolidated
income statement date, a current tax asset or liability is recorded, representing income taxes
currently refundable or payable. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for financial statement and
income tax purposes, as determined under enacted tax laws and rates.
Income tax payable is the result of applying the applicable tax rate in force to each tax-paying
entity, in accordance with the tax laws in force in the country in which the entity is registered.
Additionally, tax deductions and credits are available to certain entities, primarily relating to
inter-company trades and tax treaties between various countries to prevent double taxation.
The Company offsets deferred tax assets and deferred tax liabilities in each entity where the
latter has a legally enforceable right to set off current tax assets against current tax liabilities,
and the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority.
As of December 31, 2021, and 2020, the analysis of deferred tax assets and deferred tax liabilities
is as follows:
209
Deferred tax assets
from
Net operating loss carryforwards (“NOL´s”)
Temporary tax non-deductible expenses
Derivatives financial instruments
Other
Total deferred tax assets
Deferred tax liabilities
from
Accelerated tax amortization
Other difference between tax and book value of assets
Other
Total deferred tax liabilities
Balance as of December 31,
$’000
2021
2020
323,115
128,186
55,217
4,225
510,743
497,184
115,063
83,847
3,021
699,115
Balance as of December 31,
$’000
2021
2020
465,219
180,218
1,897
647,334
652,600
154,969
179
807,748
After offsetting deferred tax assets and deferred tax liabilities, where applicable, the resulting net
amounts presented on the consolidated balance sheet are as follows:
Consolidated balance sheets
classifications
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
Balance as of December 31,
$’000
2021
2020
172,268
308,859
152,290
260,923
136,591
(108,633)
Most of the NOL´s recognized as deferred tax assets corresponds to the entities in the U.S., South
Africa, Peru, Chile and Spain as of December 31, 2021 and 2020.
As of December 31, 2021, deferred tax assets for non-deductible expenses are primarily due to the
temporary limitation of financial expenses deductibles for tax purposes in the solar plants in Spain
for $97 million ($110 million as of December 31, 2020).
Deferred tax assets for derivatives financial instruments as of December 31, 2021 mainly relate to
ACT for $14 million and to solar plants in Spain for $33 million ($22 million and $51 million as of
December 31, 2020, respectively).
As of December 31, 2021, deferred tax liabilities for accelerated tax amortization are primarily in
the solar plants in Spain for $186 million, Solana and Mojave for $184 million and Kaxu for $76
million ($202 million, $361 million and $90 million as of December 31, 2020, respectively).
Deferred tax liabilities for other temporary differences between the tax and book value of
contracted concessional assets relate primarily to ACT for $72 million, the Peruvian entities for $34
million, U.S. entities for $28 million, and the Chilean entities for $27 million as of December 31,
2021 ($75 million, $32 million, $2 million and $29 million as of December 31, 2020, respectively).
In relation to tax losses carryforwards and deductions pending to be used recorded as deferred tax
assets, the entities evaluate their recoverability projecting forecasted taxable result for the
210
upcoming years and taking into account their tax planning strategy. Deferred tax liabilities reversals
are also considered in these projections, as well as any limitation established by tax regulations in
force in each tax jurisdiction.
In addition, the Company has $259 million unrecognized net operating loss carryforwards as of
December 31, 2021 ($290 million as of December 31, 2020), as it considers it is not probable that
future taxable profits will be available against which these unused tax losses can be utilized.
The movements in deferred tax assets and liabilities during the years ended December 31, 2021
and 2020 were as follows:
Deferred tax assets
As of December 31, 2019
Increase/(decrease) through the consolidated income statement
Increase/(decrease) through other consolidated comprehensive income (equity)
Currency translation differences and other
As of December 31, 2020
Increase/(decrease) through the consolidated income statement
Increase/(decrease) through other consolidated comprehensive income (equity)
Business combinations (Note 5)
Currency translation differences and other
As of December 31, 2021
Deferred tax liabilities
As of December 31, 2019
Increase/(decrease) through the consolidated income statement
Currency translation differences and other
As of December 31, 2020
Increase/(decrease) through the consolidated income statement
Business combinations (Note 5)
Currency translation differences and other
As of December 31, 2021
Amount
147,966
6,003
(8,698)
7,019
152,290
46,855
(23,712)
4,410
(7,575)
172,268
Amount
248,996
9,675
2,252
260,923
32,059
4,910
10,967
308,859
Details of income tax for the years ended December 31, 2021 and 2020 are as follows:
Current tax
Deferred tax
Year ended 2021
$’000
(51,016)
14,796
Year ended 2020
$’000
(21,205)
(3,672)
)
)
-
relating to the origination and reversal of temporary
differences
Total income tax benefit/(expense)
14,796
(36,220)
(3,672)
(24,877)
The reconciliations between the theoretical income tax resulting from applying an average statutory
tax rate to profit before income tax and the actual income tax expense recognized in the
consolidated income statements for the years ended December 31, 2021 and 2020, are as follows:
211
Consolidated income before taxes
Average statutory tax rate
Corporate income tax at the average statutory tax rate
Income tax of associates, net
Differences in statutory tax rates
Unrecognized NOLs and deferred tax assets
Purchase of Liberty Interactive´s equity interest in Solana
Other permanent differences
Other non-taxable (expense)
Year ended 2021
$’000
Year ended 2020
$’000
25,302
25%
(6,326)
3,076
(3,359)
(11,232)
-
(4,052)
(14,327)
41,751
25%
(10,438)
128
(94)
(37,183)
36,352
(8,895)
(4,747)
Tax charge for the year
(36,220)
(24,877)
For the year ended December 31, 2021, the overall effective tax rate was different than the average
statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the UK
entities and to provisions recorded for potential tax contingencies in some jurisdictions.
For the year ended December 31, 2020, the overall effective tax rate was different than the statutory
rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the UK entities,
partially offset by the non-taxable gain recorded in the Consolidated Financial Statements on the
purchase of Liberty Interactive´s equity interest in Solana (Note 21).
Any uncertain tax positions identified by the Company as of December 31, 2021 and 2020 has been
provided for in these Consolidated Financial Statements in accordance with IFRIC 23, uncertainty
over income tax treatments.
212
19. Commitments, third-party guarantees, contingent assets and liabilities
Contractual obligations
The following table shows the breakdown of the third-party commitments and contractual
obligations as of December 31, 2021 and 2020:
2021
$’000
Total
2022
2023 and
2024
2025 and
2026
Subsequent
Corporate debt (Note 14)
Loans with credit institutions
(project debt) (Note 15)
Notes and bonds (project debt)
(Note 15)
Purchase commitments (*)
Accrued interest estimate during
the useful life of loans
1,023,071
4,010,825
27,881
289,755
11,989
624,633
433,232
549,969
801,713 2,294,724
1,025,368
45,650
100,850
108,512
770,355
1,570,831
2,029,376
79,261
267,645
191,171
497,587
159,297
427,159
1,141,102
836,985
2020
$’000
Total
2021
2022 and
2023
2024 and
2025
Subsequent
1,113,758
23,648
261,800
2,036
583,259
993,725
4,123,856
517,872
450,169
770,507 2,508,290
Corporate debt (Note 14)
Loans with credit institutions
project debt (Note 15)
Notes and bonds project debt
(Note 15)
Purchase commitments (*)
Accrued interest estimate during
the useful life of loans
* Purchase commitments include lease commitments for lease arrangements accounted for under IFRS 16 for $107.6
million as of December 31, 2021 ($94.6 million as of December 31, 2020), of which $7.3 million is due within one year and
$100.3 million thereafter as of December 31, 2021 ($5.3 million due within one year and $89.3 million thereafter as of
December 31, 2020).
468,060 1,013,161
1,709,660
2,309,597
1,282,8811
109,884
100,911
286,724
541,652
160,211
852,405
50,558
172,776
93,791
Third-party guarantees
As of December 31, 2021, the sum of bank guarantees and surety bonds deposited by the
subsidiaries of the Company as a guarantee to third parties (clients, financial entities and other
third parties) amounted to $92.7 million ($36.3 million as of December 31, 2020). The increase
primarily relates to Coso and Rioglass, which are businesses acquired by the Company in 2021
(Note 5). In addition, Atlantica Sustainable Infrastructure plc had outstanding guarantees
amounting to $174.2 million as of December 31, 2021 ($159.8 million as of December 31, 2020).
Guarantees issued by Atlantica Sustainable Infrastructure plc correspond mainly to guarantees
provided to off-takers in PPAs, guarantees for debt service reserve accounts and guarantees for
points of access for renewable energy projects.
Corporate debt guarantees
The payment obligations under the Green Senior Notes, the Revolving Credit Facility, the Note
Issuance Facility 2020 and the 2020 Green Private Placement are guaranteed on a senior unsecured
basis by following subsidiaries of the Company: Atlantica Infraestructura Sostenible, S.L.U., Atlantica
213
Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited, Atlantica Newco Limited and
Atlantica North America LLC. The Revolving Credit Facility and the 2020 Green Private Placement
are also secured with a pledge over the shares of the subsidiary guarantors.
Legal Proceedings
In 2018, an insurance company covering certain Abengoa obligations in Mexico claimed certain
amounts related to a potential loss. Atlantica reached an agreement under which Atlantica´s
maximum theoretical exposure would in any case be limited to approximately $35 million, including
$2.5 million to be held in an escrow account. In January 2019, the insurance company called on this
$2.5 million from the escrow account and Abengoa reimbursed this amount. The insurance
company could claim additional amounts if they faced new losses after following a process agreed
between the parties and, in any case, Atlantica would only make payments if and when the actual
loss has been confirmed and after arbitration if the Company initiates it. The Company used to
have indemnities from Abengoa for certain potential losses, but such indemnities are no longer
valid following the insolvency filing by Abengoa S.A. in February 2021.
In addition, during 2021, several lawsuits were filed related to the February 2021 winter storm Uri
in Texas against among others Electric Reliability Council of Texas (ERCOT), two utilities in Texas
and more than 230 individual power generators, including Post Oak Wind, LLC, the project
company owner of Lone Star I, one of the wind assets in Vento II where the Company currently has
a 49% equity interest. The basis for the lawsuit is that the defendants failed to properly prepare for
cold weather, including failure to implement measures and equipment to protect against cold
weather, and failed to properly conduct their operations before and during the storm.
Atlantica is not a party to any other significant legal proceedings other than legal proceedings
arising in the ordinary course of its business. Atlantica is party to various administrative and
regulatory proceedings that have arisen in the ordinary course of business.
While Atlantica does not expect these proceedings, either individually or in combination, to have a
material adverse effect on its financial position or results of operations, because of the nature of
these proceedings Atlantica is not able to predict their ultimate outcomes, some of which may be
unfavorable to Atlantica.
214
20. Other Operating Income and Expenses
The table below shows the detail of Other operating income and expenses for the years ended
December 31, 2021, and 2020:
Other Operating income
Grants
Income from various services and insurance
proceeds
Total Other Operating Income
Other Operating Expenses
Raw materials and consumables used
Leases and fees
Operation and maintenance
Independent professional services
Supplies
Insurance
Levies and duties
Other expenses
For the year ended
December 31, 2021
For the year ended
December 31, 2020
$’000
$’000
60,746
13,925
74,670
59,010
40,515
99,525
For the year ended
December 31, 2021
For the year ended
December 31, 2020
$’000
$’000
(70,690)
(9,332)
(154,007)
(39,177)
(40,790)
(45,429)
(29,949)
(24,957)
(7,792)
(2,531)
(110,873)
(40,193)
(27,926)
(37,638)
(39,820)
(9,891)
Total
(414,330)
(276,666)
Grants income mainly relate to ITC cash grants and implicit grants recorded for accounting
purposes in relation to the FFB loans with interest rates below market rates in Solana and Mojave
projects (Note 16).
The increase in other operating expenses in 2021 is primarily due to the business combinations
made effective in 2021 (Note 5).
21. Financial Expense, net
The following table sets forth financial income and expenses for the years ended December 31, 2021
and 2020:
Finance income
Interest income from loans and credits
Profit on interest rate derivatives: cash flow hedges
TOTAL
215
For the year ended
December 31, 2021
$’000
For the year ended
December 31, 2020
$’000
2,066
689
2,755
6,651
401
7,052
Finance expenses
Interest on loans and notes
Interest rate losses derivatives: cash flow hedges
TOTAL
For the year ended
December 31, 2021
$’000
For the year ended
December 31, 2020
$’000
(302,558)
(58,712)
(361,270)
(316,237)
(62,149)
(378,386)
Financial interest income from loans and credits included in 2020 a non-monetary financial income
of $3.8 million resulting from the refinancing of the debt of Cadonal in the second quarter of 2020
(Note 15).
Interest on loans and notes primarily include interest on corporate and project debt.
Losses from interest rate derivatives designated as cash flow hedges primarily correspond to
transfers from equity to financial expense when the hedged item impacts the consolidated income
statement.
Net exchange differences
Net exchange differences primarily correspond to realized and unrealized exchange gains and
losses on transactions in foreign currencies as part of the normal course of the business of the
Company.
Other financial income/(expenses), net
The following table sets out Other net financial income and expenses for the years 2021 and
2020:
Other finance income / (expenses), net
Other finance income
Other finance expense
TOTAL
For the year ended
December 31, 2021
$’000
For the year ended
December 31, 2020
$’000
32,321
(16,571)
15,750
162,290
(121,415)
40,875
Other financial income in 2021 include $7.6 million of income for non-monetary change to the fair
value of derivatives of Kaxu for which hedge accounting is not applied, and $9.2 million income
further to the change in the fair value of the conversion option of the Green Exchangeable Notes
since December 2020 (Note 14). Residual items primarily relate to interest on deposits and loans,
including non-monetary changes to the amortized cost of such loans. The decrease of other
financial income compared to the year 2020 is primarily due to the gain of $145 million further to
the purchase of Liberty Interactive´s equity interest in Solana accounted for in the third quarter of
2020.
Other financial losses include guarantees and letters of credit, other bank fees, non-monetary
changes to the fair value of derivatives which hedge accounting is not applied and of financial
instruments recorded at fair value through profit and loss, and other minor financial expenses. The
decrease compared to the year 2020 is primarily due to $73 million of financial expenses further to
216
the refinancing of the Helios 1&2 debts accounted for in the third quarter of 2020 (Note 15) and a
$16 million expense further to the change in the fair value of the conversion option of the Green
Exchangeable Notes in 2020 (Note 14).
22. Earnings Per Share
Basic earnings per share have been calculated by dividing the profit/(loss) attributable to equity
holders of the Company by the average number of outstanding shares.
Diluted earnings per share for the year 2021 have been calculated considering the potential issuance
of 3,347,305 shares on the settlement of the Green Exchangeable Notes (Note 14) and the potential
issuance of 725,041 shares to Algonquin under the agreement signed on August 3, 2021, according
to which Algonquin has the option, on a quarterly basis, to subscribe such number of shares to
maintain its percentage in Atlantica in relation to the use of the ATM program (Note 13).
Diluted earnings per share for the year 2020 was calculated considering the potential issuance of
3,347,305 shares on the settlement of the Green Exchangeable Notes.
Item
Profit/(loss) from continuing operations
attributable to Atlantica Sustainable
Infrastructure Plc.
Average number of ordinary shares
outstanding (thousands) - basic
Average number of ordinary shares
outstanding (thousands) - diluted
Earnings per share for the year (US dollar
per share) - basic
Earnings per share for the year (US dollar
per share) - diluted
23. Auditor’s Remuneration
For the year ended
December 31, 2021
For the year ended
December 31, 2020
(30,080)
11,698
111,008
114,523
(0.27)
(0.26)
101,879
103,392
0.12
0.12
The analysis of the auditor’s remuneration is as follows:
Fees payable to the company’s auditor and their associates for
the audit of the company’s annual accounts
Fees payable to the company’s auditor and their associates for
other services to the group
–The audit of the company’s subsidiaries
Total audit fees
- Audit-related services
- Tax services
- Other services
Total non-audit fees
217
Year ended
2021
$000
604
Year ended
2020
$000
604
967
1,571
651
633
-
1,284
2,855
787
1,391
516
502
15
1,033
2,424
“Audit Fees” are the aggregate fees billed for professional services in connection with the audit of
the Annual Consolidated Financial Statements, quarterly reviews of the Company interim financial
statements and statutory audits of the subsidiaries’ financial statements under the rules of England
and Wales and the countries in which subsidiaries are organized. The increase in audit fees is mainly
due to new companies under scope and exchange rates.
“Audit-Related Services” include fees charged for services that can only be provided by the auditor
of the Company, such as consents and comfort letters of non-recurring transactions, assurance and
related services that are reasonably related to the performance of the audit or review of the
Company financial statements. Fees paid during 2021 and 2020 related to comfort letters and
consents required for capital market transactions of the major shareholder are also included in this
category ($272 thousand and $212 thousand in 2021 and 2020 respectively). These fees were re-
invoiced and paid by this shareholder.
“Tax Services” include mainly fees charged for transfer pricing services and tax compliance services
in the Company US subsidiaries.
“Other Services” comprises fees billed in relation to financial advisory and due diligence services
and other services which cannot be included under other categories.
The Audit Committee approved all of the services provided by Ernst & Young S.L and by other
member firms of EY.
24. Staff Costs
The average monthly number of employees (including executive directors) was:
Executives
Middle Managers
Engineers and Graduates
Assistants and Professionals
Plant technicians
2021
2020
Number (*)
Number
16
128
177
29
305
655
17
94
132
20
178
441
(*) Average number of employees including Rioglass full-time employees.
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other staff costs
Year ended
2021
$000
(70,375)
(4,592)
(3,791)
Year ended
2020
$000
(47,228)
(3,718)
(3,518)
(78,758)
(54,464)
The increase in employee benefit expenses in 2021 compared to 2020 is primarily due to the
acquisition of Rioglass and Coso made effective in January 2021 and April 2021, respectively.
218
Total compensation received by the key management of the Company, which includes the CEO,
the CFO and 5 key executives, and by the directors of the board of the Company, amounts to $8.5
million in 2021 ($6.1 million in 2020), including $3.4 million (2020: $1.3 million) of long-term awards
received. The long-term awards include one third of the share units under the Special One-Off plan,
and one third of the share options awarded under the Long-Term Incentive Plan, which vested in
2021. Furthermore, information about the remuneration of individual directors’ is provided in the
audited part of the Directors' Remuneration Report.
25. Events After the Balance Sheet Date
On January 17, 2022, the Company closed the acquisition of Chile TL4, a 63-mile transmission line
and 2 substations in Chile for a total equity investment of $39 million. The Company expects to
make an expansion of the line in 2022, which would represent an additional investment of
approximately $8 million. The asset has fully contracted revenues in US dollars, with inflation
escalation and 50-year contract life. The off-takers are several mini-hydro plants that receive
contracted or regulated payments.
On February 25, 2022, the Board of Directors of the Company approved a dividend of $0.44 per
share, which is expected to be paid on March 25, 2022.
26. Service Concessional Arrangements
Below is a description of the concessional arrangements of the Atlantica group.
Solana
Solana is a 250 MW net (280 MW gross) solar electric generation facility located in Maricopa County,
Arizona, approximately 70 miles southwest of Phoenix. Arizona Solar One LLC, or Arizona Solar,
owns the Solana project. Solana includes a 22-mile 230kV transmission line and a molten salt
thermal energy storage system. Solana reached COD on October 9, 2013.
Solana has a 30-year, PPA with Arizona Public Service, or APS, approved by the Arizona Corporation
Commission (ACC). The PPA provides for the sale of electricity at a fixed price per MWh with annual
increases of 1.84% per year. The PPA includes limitations on the amount and condition of the energy
that is received by APS with minimum and maximum thresholds for delivery capacity that must not
be breached.
Mojave
Mojave is a 250 MW net (280 MW gross) solar electric generation facility located in San Bernardino
County, California, approximately 100 miles northeast of Los Angeles. Mojave reached COD on
December 1, 2014.
Mojave has a 25-year, PPA with Pacific Gas & Electric Company, or PG&E, approved by the California
Public Utilities Commission (CPUC). The PPA provides for the sale of electricity at a fixed base price
per MWh without any indexation mechanism, including limitations on the amount and condition of
the energy that is received by PG&E with minimum and maximum thresholds for delivery capacity
that must not be breached.
Palmatir
Palmatir is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50 MW.
Palmatir has 25 wind turbines and each turbine has a nominal capacity of 2 MW. UTE, Uruguay’s
219
state-owned electricity company, has agreed to purchase all energy produced by Palmatir pursuant
to a 20-year PPA. UTE will pay a fixed-price tariff per MWh under the PPA, which is denominated in
U.S. dollars and will be partially adjusted in January of each year according to a formula based on
inflation.
Palmatir reached COD in May 2014.
Cadonal
Cadonal is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50 MW.
Cadonal has 25 wind turbines and each turbine has a nominal capacity of 2 MW. UTE, Uruguay´s
state-owned electricity company, has agreed to purchase all energy produced by Cadonal pursuant
to a 20-year PPA.
Cadonal reached COD in December 2014.
Melowind
Melowind is an on-shore wind farm facility wholly owned by the Company, located in Uruguay with
a capacity of 50 MW. Melowind has 20 wind turbines of 2.5 MW each. The asset reached COD in
November 2015.
Melowind signed a 20-year PPA with UTE in 2015, for 100% of the electricity produced. UTE pays a
fixed tariff under the PPA, which is denominated in U.S. dollars and is partially adjusted every year
based on a formula referring to U.S. CPI, Uruguay’s CPI and the applicable UYU/U.S. dollar exchange
rate.
Solaben 2 & 3
The Solaben 2 and Solaben 3 are two 50 MW Solar Power facilities. Itochu Corporation holds 30%
of Solaben 2 & Solaben 3.
Renewable energy plants in Spain, like Solaben 2 and Solaben 3, are regulated through a series of
laws and rulings which guarantee the owners of the plants a reasonable return for their investments.
Solaben 2 and Solaben 3 sell the power they produce into the wholesale electricity market, where
supply and demand are matched and the pool price is determined, and also receive additional
payments from the CNMC, the Spanish state-owned regulator.
Solacor 1 & 2
The Solacor 1 and Solacor 2 are two 50 MW Solar Power facilities. JGC Corporation holds 13% of
Solacor 1 & Solacor 2.
Solnova 1, 3&4
The Solnova 1, 3 and 4 solar plants are located in the municipality of Sanlucar la Mayor, Spain. The
plants have 50 MW each and reached COD in 2010.
Helios 1&2
The Helios 1 and 2 solar plants are located in Spain. They reached COD in 2012.
Helioenergy 1&2
The Helioenergy 1 and 2 solar plants are located in Ecija, Spain and reached COD in 2011.
220
Solaben 1&6
The Solaben 1&6 50 MW solar plants are located in the municipality of Logrosan, Spain. and reached
COD in 2013.
Kaxu
Kaxu Solar One, or Kaxu, is a 100 MW solar project located in Pofadder in the Northern Cape
Province of South Africa. Atlantica., owns 51% of the Kaxu Project while Industrial Development
Corporation of South Africa owns 29% and Kaxu Community Trust 20%.
The project reached COD in February 2015.
Kaxu has a 20-year PPA with Eskom SOC Ltd., or Eskom, under a take or pay contract for the purchase
of electricity up to the contracted capacity from the facility. Eskom purchases all the output of the
Kaxu Plant under a fixed price formula in local currency subject to indexation to local inflation. The
PPA expires on February 2035.
ACT
The ACT plant is a gas-fired cogeneration facility with a rated capacity of approximately 300 MW
and between 550 and 800 metric tons per hour of steam. The plant includes a substation and a 115-
kilowatt 52 mile transmission line.
On September 18, 2009, ACT entered into the Pemex Conversion Services Agreement, or the Pemex
CSA, with Pemex. Pemex is a state-owned oil and gas company supervised by the Comision
Reguladora de Energia (CRE), the Mexican state agency that regulates the energy industry. The
Pemex CSA has a term of 20 years from the in-service date and will expire on March 31, 2033.
According to the Pemex CSA, ACT must provide, in exchange for a fixed price with escalation
adjustments, services including the supply and transformation of natural gas and water into thermal
energy and electricity. Part of the electricity is to be supplied directly to a Pemex facility nearby,
allowing the Comision Federal de Electricidad (CFE) to supply less electricity to that facility.
Approximately 90% of the electricity must be injected into the Mexican electricity network to be
used by retail and industrial end customers of CFE in the region. Pemex is then entitled to receive
an equivalent amount of energy in more than 1,000 of their facilities in other parts of the country
from CFE, following an adjustment mechanism under the supervision of CFE.
The Pemex CSA is denominated in U.S. dollars. The price is a fixed tariff and will be adjusted annually,
part of it according to inflation and part according to a mechanism agreed in the contract that, on
average over the life of the contract, reflects expected inflation. The components of the price
structure and yearly adjustment mechanisms were prepared by Pemex and provided to bidders as
part of the request for proposal documents.
ATS
ATS is a 569 miles transmission line located in Peru wholly owned by the Company. ATS is part of
the Guaranteed Transmission System and comprises several sections of transmission lines and
substations. ATS reached COD in 2014.
Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the Peruvian
Government, granted ATS a concession to construct, develop, own, operate and maintain the ATS
Project. The initial concession agreement became effective on July 22, 2010 and will expire 30 years
after COD, which took place in January 2014. ATS is obliged to provide the service of transmission
221
of electric energy through the operation and maintenance of the electric transmission line,
according to the terms of the contract and the applicable law.
The laws and regulations of Peru establish the key parameters of the concession contract, the price
indexation mechanism, the rights and obligations of the operator and the procedure that has to be
followed in order to fix the applicable tariff, which occurs through a regulated bidding process. Once
the bidding process is complete and the operator is granted the concession, the pricing of the power
transmission service is established in the concession agreement. ATS has a 30-year concession
agreement with fixed-price tariff base denominated in U.S. dollars that is adjusted annually after
COD of each line, in accordance with the U.S. Finished Goods Less Food and Energy Index published
by the U.S. Department of Labor.
ATN
ATN is a 365 miles transmission line located in Peru wholly owned by the Company, which is part of
the Guaranteed Transmission System and comprises several sections of transmission lines and
substations. ATN reached COD in 2011. On December 28, 2018, ATN S.A. completed the acquisition
of a power substation and two small transmission lines to connect its line to the Shahuindo (ATN
expansion 1) mine located nearby. In October 2019, the Company also closed the acquisition of ATN
Expansion 2.
Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the Peruvian
Government, granted ATN a concession to construct, develop, own, operate and maintain the ATN
Project. The initial concession agreement became effective on May 22, 2008 and will expire 30 years
after COD of the first tranche of the line, which took place in January 2011. ATN is obliged to provide
the service of transmission of electric energy through the operation and maintenance of the electric
transmission line, according to the terms of the contract and the applicable law.
The laws and regulations of Peru establish the key parameters of the concession contract, the price
indexation mechanism, the rights and obligations of the operator and the procedures that have to
be followed in order to fix the applicable tariff, which occurs through a regulated bidding process.
Once the bidding process is complete and the operator is granted the concession, the pricing of the
power transmission service is established in the concession agreement. ATN has a 30-year
concession agreement with a fixed-price tariff base denominated in U.S. dollars that is adjusted
annually after COD of each line, in accordance with the U.S. Finished Goods Less Food and Energy
Index published by the U.S. Department of Labor. In addition, both ATN Expansion 1 and ATN
Expansion 2 have 20-year PPAs denominated in U.S. dollars.
ATN 2
ATN2, is an 81 miles transmission line located in Peru wholly owned by the Company, which is part
of the Complementary Transmission System. ATN2 reached COD in June 2015.
The Client is Las Bambas Mining Company.
The ATN2 Project has an 18-year contract period, after that, ATN2 assets will remain as property of
the SPV allowing ATN2 to potentially sign a new contract. The ATN2 Project has a fixed-price tariff
base denominated in U.S. dollars, partially adjusted annually in accordance with the U.S. Finished
Goods Less Food and Energy Index as published by the U.S. Department of Labor. The base tariff is
independent from the effective utilization of the transmission lines and substations related to the
ATN2 Project. The base tariff is intended to provide the ATN2 Project with consistent and predictable
monthly revenues sufficient to cover the ATN2 Project’s operating costs and debt service and to
222
earn an equity return. Peruvian law requires the existence of a definitive concession agreement to
perform electricity transmission activities where the transmission facilities cross public land or land
owned by third parties. On May 31, 2014, the Ministry of Energy granted the project a definitive
concession agreement to the transmission lines of the ATN2 Project.
Quadra 1 & Quadra 2
Quadra 1 is a 49-miles transmission line project and Quadra 2 is a 32-miles transmission line project,
each connected to the Sierra Gorda substations.
Both projects have concession agreements with Sierra Gorda SCM. The agreements are
denominated in U.S. dollars and are indexed mainly to CPI. The concession agreements each have
a 21-year term that began on COD, which took place in April 2014 and March 2014 for Quadra 1
and Quadra 2, respectively.
Quadra 1 and Quadra 2 belong to the Northern Interconnected System (SING), one of the two
interconnected systems into which the Chilean electricity market is divided and structured for both
technical and regulatory purposes.
in particular:
As part of the SING, Quadra 1 and Quadra 2 and the service they provide are regulated by several
regulatory bodies,
the Superintendent’s office of Electricity and Fuels
(Superintendencia de Electricidad y Combustibles, SEC), the Economic Local Dispatch Center (Centro
de Despacho Economico de Cargas, CDEC), the National Board of Energy (Comision Nacional de
Energia, CNE) and the National Environmental Board (Comision Nacional de Medio Ambiente,
CONAMA) and other environmental regulatory bodies.
In all these concession arrangements, the operator has all the rights necessary to manage, operate
and maintain the assets and the obligation to provide the services defined above, which are clearly
defined in each concession contract and in the applicable regulations in each country.
Skikda
The Skikda project is a water desalination plant located in Skikda, Algeria. AEC owns 49% and Sacyr
Agua S.L. owns indirectly the remaining 16.83% of the Skikda project.
Skikda has a capacity of 3.5 M ft3 per day of desalinated water and is in operation since February
2009. The project serves a population of 0.5 million.
The water purchase agreement is a 25-year take-or-pay contract with Sonatrach / ADE. The tariff
structure is based upon plant capacity and water production, covering variable cost (water cost plus
electricity cost). Tariffs are adjusted monthly based on the indexation mechanisms that include local
inflation, U.S. inflation and the exchange rate between the U.S. dollar and local currency.
Honaine
The Honaine project is a water desalination plant located in Taffsout, Algeria. Myah Bahr Honaine
Spa, or MBH, is the vehicle incorporated in Algeria for the purposes of owning the Honaine project.
Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua S.L., a subsidiary of Sacyr, S.A.,
owns indirectly the remaining 25.5% of the Honaine project.
Honaine has a capacity of 7 M ft3 per day of desalinated water and it has been in operation since
July 2012.
The water purchase agreement is a 25-year take-or-pay contract with Sonatrach / Algerienne des
Eaux, or ADE. The tariff structure is based upon plant capacity and water production, covering
223
variable cost (water cost plus electricity cost). Tariffs are adjusted monthly based on the indexation
mechanisms that include local inflation, U.S. inflation and the exchange rate between the U.S. dollar
and local currency.
Tenes
Tenes is a water desalination plant located in Algeria. Befesa Agua Tenes has a 51.0% stake in Tenes
Lilmiyah SpA. The remaining 49% is owned by AEC.
The water purchase agreement is a 25-year take-or-pay contract with Sonatrach/ADE. The tariff
structure is based upon plant capacity and water production, covering variable cost (water cost
plus electricity cost). Tariffs are adjusted monthly based on the exchange rate between the U.S.
dollar and local currency and yearly based on indexation mechanisms that include local inflation
and U.S. inflation.
224
Assets subject to the application of IFRIC 12 interpretation based on the concession of services as
of December 31, 2021:
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Renewable energy:
Solana
USA
(O)
100.0
30 Years
APS
(I)
1,865,770
(568,911)
(11,377)
Mojave
USA
(O)
100.0
25 Years
PG&E
(I)
1,578,530
(435,937)
49,086
Palmatir
Uruguay
(O)
100.0
20 Years
Cadonal
Uruguay
(O)
100.0
20 Years
Melowind
Uruguay
(O)
100.0
20 Years
Solaben 2
Spain
(O)
70.0
25 Years
Solaben 3
Spain
(O)
70.0
25 Years
Solacor 1
Spain
(O)
87.0
25 Years
Solacor 2
Spain
(O)
87.0
25 Years
Solnova 1
Spain
(O)
100.0
25 Years
Solnova 3
Spain
(O)
100.0
25 Years
Solnova 4
Spain
(O)
100.0
25 Years
Helios 1
Spain
(O)
100.0
25 Years
Helios 2
Spain
(O)
100.0
25 Years
Helioenergy
1
Helioenergy
2
Spain
(O)
100.0
25 Years
Spain
(O)
100.0
25 Years
Solaben 1
Spain
(O)
100.0
25 Years
Solaben 6
Spain
(O)
100.0
25 Years
UTE,
Uruguay
Administ
ration
UTE,
Uruguay
Administ
ration
UTE,
Uruguay
Administ
ration
Kingdom
of Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
147,925
(56,267)
4,278
122,002
(43,465)
1,220
135,988
(36,794)
3,476
315,137
(89,176)
7,111
314,084
(90,477)
6,704
318,557
(96,911)
5,593
331,588
(99,801)
4,689
317,624
(116,464)
7,112
297,046
(105,517)
8,749
277,953
(97,828)
8,720
321,479
(92,943)
5,917
313,182
(89,008)
5,930
307,727
(94,563)
8,510
308,472
(91,879)
8,472
310,257
(79,468)
7,342
307,047
(78,529)
6,884
Fixed price per
MWh with
annual
increases of
1.84% per year
Fixed price per
MWh without
any indexation
mechanism
Fixed price per
MWh in USD
with annual
increases based
on inflation
Fixed price per
MWh in USD
with annual
increases based
on inflation
Fixed price per
MWh in USD
with annual
increases based
on inflation
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
30-year PPA with APS
regulated by ACC
25-year PPA with
PG&E regulated by
CPUC and CAEC
20-year PPA with UTE,
Uruguay state-owned
utility
20-year PPA with UTE,
Uruguay state-owned
utility
20-year PPA with UTE,
Uruguay state-owned
utility
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
225
Kaxu
South
Africa
(O)
51.0
20 Years
Eskom
(I)
481,776
(167,171)
45,779
Take or pay
contract for the
purchase of
electricity up to
the contracted
capacity from
the facility.
different laws and
rulings in Spain
20-year PPA with
Eskom SOC Ltd. With a
fixed price formula in
local currency subject
to indexation to local
inflation
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Efficient Natural Gas:
ACT
Mexico
(O)
100.0
20 Years
Pemex
(F)
537,579
-
124,799
Fixed price to
compensate
both
investment and
O&M costs,
established in
USD and
adjusted
annually
partially
according to
inflation and
partially
according to a
mechanism
agreed in
contract
20-year Services
Agreement with
Pemex, Mexican oil &
gas state-owned
company
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Transmission lines:
ATS
Peru
(O)
100.0
30 Years
Republic of
Peru
(I)
532,675
(139,789)
28,451
ATN
Peru
(O)
100.0
30 Years
ATN 2
Peru
(O)
100.0
18 Years
Quadra I
Chile
(O)
100.0
21 Years
Quadra II
Chile
(O)
100.0
21 Years
Republic
of Peru
Las
Bambas
Mining
Sierra
Gorda
Sierra
Gorda
(I)
360,271
(118,116)
7,413
(F)
76,210
-
11,428
(F)
38,993
-
5,358
(F)
55,561
-
4,711
Tariff fixed by
contract and
adjusted
annually in
accordance with
the US Finished
Goods Less
Food and
Energy inflation
index
Tariff fixed by
contract and
adjusted
annually in
accordance with
the US Finished
Goods Less
Food and
Energy inflation
index
Fixed-price
tariff base
denominated in
U.S. dollars with
Las Bambas
Fixed price in
USD with
annual
adjustments
indexed mainly
to US CPI
Fixed price in
USD with
annual
adjustments
indexed mainly
to US CPI
30-year Concession
Agreement with the
Peruvian Government
30-year Concession
Agreement with the
Peruvian Government
18 years purchase
agreement
21-year Concession
Contract with Sierra
Gorda regulated by
CDEC and the
Superentendencia de
Electricidad, among
others
21-year Concession
Contract with Sierra
Gorda regulated by
CDEC and the
Superentendencia de
Electricidad, among
others
226
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Project
name
Water:
Skikda
Argelia
(O)
34.2
25 Years
Honaine
Argelia
(O)
25.5
25 Years
Tenes
Argelia
(O)
51.0
25 Years
Sonatrach
& ADE
Sonatrach
& ADE
Sonatrach
& ADE
(F)
70,969
14,654
-
(F)
N/A(9)
N/A(9)
N/A(9)
(F)
99,438
-
16,671
U.S. dollar
indexed take-
or-pay contract
with Sonatrach
/ ADE
U.S. dollar
indexed take- or-
pay contract with
Sonatrach / ADE
U.S. dollar
indexed take- or-
pay contract with
Sonatrach / ADE
25 years purchase
agreement
25 years purchase
agreement
25 years purchase
agreement
(1) In operation (O), Construction (C) as of December 31, 2021.
(2) Itochu Corporation holds 30% of the economic rights to each of Solaben 2 and Solaben 3. JGC Corporation holds 13% of the economic
rights to each Solacor 1 and Solacor 2. Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua, S.L., a subsidiary of Sacyr,
S.A., owns the remaining 25.5% of the Honaine project. AEC owns 49% and Sacyr Agua S.L. owns the remaining 16.83% of the Skikda
project. Industrial Development Corporation of South Africa (29%) & Kaxu Community Trust (20%) for the Kaxu Project. AEC owns 49%
of the Tenes project.
(3) Classified as concessional financial asset (F) or as intangible assets (I).
(4) The infrastructure is used for its entire useful life. There are no obligations to deliver assets at the end of the concession periods, except
for ATN and ATS.
(5) Generally, there are no termination provisions other than customary clauses for situations such as bankruptcy or fraud from the operator,
for example.
(6) Sales to wholesale markets and additional fixed payments established by the Spanish government.
(7) In each case the off-taker is the grantor.
(8) Figures reflect the contribution to the Consolidated Financial Statements of Atlantica Sustainable Infrastructure plc. as of December 31,
2021.
(9) Recorded under the equity method.
227
Assets subject to the application of IFRIC 12 interpretation based on the concession of services as
of December 31, 2020:
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Renewable energy:
Solana
USA
(O)
100.0
30 Years
APS
(I)
1,830,148
(468,323)
(5,722)
Mojave
USA
(O)
100.0
25 Years
PG&E
(I)
1,557,559
(374,193)
48,436
Palmatir
Uruguay
(O)
100.0
20 Years
Cadonal
Uruguay
(O)
100.0
20 Years
Melowind
Uruguay
(O)
100.0
20 Years
Solaben 2
Spain
(O)
70.0
25 Years
Solaben 3
Spain
(O)
70.0
25 Years
Solacor 1
Spain
(O)
87.0
25 Years
Solacor 2
Spain
(O)
87.0
25 Years
Solnova 1
Spain
(O)
100.0
25 Years
Solnova 3
Spain
(O)
100.0
25 Years
Solnova 4
Spain
(O)
100.0
25 Years
Helios 1
Spain
(O)
100.0
25 Years
Helios 2
Spain
(O)
100.0
25 Years
Helioenergy
1
Helioenergy
2
Spain
(O)
100.0
25 Years
Spain
(O)
100.0
25 Years
Solaben 1
Spain
(O)
100.0
25 Years
Solaben 6
Spain
(O)
100.0
25 Years
UTE,
Uruguay
Administ
ration
UTE,
Uruguay
Administ
ration
UTE,
Uruguay
Administ
ration
Kingdom
of Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
Kingdom of
Spain
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
(I)
147,911
(48,843)
7,971
121,986
(37,315)
15,293
135,977
(29,598)
4,673
337,506
(80.255)
10,222
336,556
(81,998)
10,802
341,674
(88,382)
9,359
355,614
(90,861)
9,248
340,713
(108,908)
14,090
318,415
(98,755)
14,331
297,118
(91,251)
13,865
344,533
(84,144)
11,285
335,550
(80,361)
11,677
330,497
(87,496)
11,149
331,206
(84,360)
11,560
332,537
(70,486)
11,542
329,203
(69,659)
12,161
Fixed price per
MWh with
annual
increases of
1.84% per year
Fixed price per
MWh without
any indexation
mechanism
Fixed price per
MWh in USD
with annual
increases based
on inflation
Fixed price per
MWh in USD
with annual
increases based
on inflation
Fixed price per
MWh in USD
with annual
increases based
on inflation
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue
base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
Regulated
revenue base(6)
30-year PPA with APS
regulated by ACC
25-year PPA with
PG&E regulated by
CPUC and CAEC
20-year PPA with UTE,
Uruguay state-owned
utility
20-year PPA with UTE,
Uruguay state-owned
utility
20-year PPA with UTE,
Uruguay state-owned
utility
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
different laws and
rulings in Spain
Regulated revenue
established by
228
Kaxu
South
Africa
(O)
51.0
20 Years
Eskom
(I)
521,523
(154,962)
41,483
Take or pay
contract for the
purchase of
electricity up to
the contracted
capacity from
the facility.
different laws and
rulings in Spain
20-year PPA with
Eskom SOC Ltd. With a
fixed price formula in
local currency subject
to indexation to local
inflation
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Efficient Natural Gas:
ACT
Mexico
(O)
100.0
20 Years
Pemex
(F)
580,141
-
75,349
Fixed price to
compensate
both
investment and
O&M costs,
established in
USD and
adjusted
annually
partially
according to
inflation and
partially
according to a
mechanism
agreed in
contract
20-year Services
Agreement with
Pemex, Mexican oil &
gas state-owned
company
Project
name
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Transmission lines:
ATS
Peru
(O)
100.0
30 Years
Republic of
Peru
(I)
531,887
(122,005)
29,339
ATN
Peru
(O)
100.0
30 Years
ATN 2
Peru
(O)
100.0
18 Years
Quadra I
Chile
(O)
100.0
21 Years
Quadra II
Chile
(O)
100.0
21 Years
Republic
of Peru
Las
Bambas
Mining
Sierra
Gorda
Sierra
Gorda
(I)
359,912
(105,618)
6,474
(F)
78,743
-
12,332
(F)
40,381
-
5,362
(F)
55,417
-
4,922
Tariff fixed by
contract and
adjusted
annually in
accordance with
the US Finished
Goods Less
Food and
Energy inflation
index
Tariff fixed by
contract and
adjusted
annually in
accordance with
the US Finished
Goods Less
Food and
Energy inflation
index
Fixed-price
tariff base
denominated in
U.S. dollars with
Las Bambas
Fixed price in
USD with
annual
adjustments
indexed mainly
to US CPI
Fixed price in
USD with
annual
adjustments
indexed mainly
to US CPI
30-year Concession
Agreement with the
Peruvian Government
30-year Concession
Agreement with the
Peruvian Government
18 years purchase
agreement
21-year Concession
Contract with Sierra
Gorda regulated by
CDEC and the
Superentendencia de
Electricidad, among
others
21-year Concession
Contract with Sierra
Gorda regulated by
CDEC and the
Superentendencia de
Electricidad, among
others
229
Country
Status % of
nominal
Share(2)
Period of
Concession
(4)(5)
Off-
taker(7)
Financial/
Intangible (3)
Assets/
Investment
Accumulated
Amortization
Operating
Profit/
(Loss)(8
Arrangement
Terms (price)
Description of the
Arrangement
Project
name
Water:
Skikda
Argelia
(O)
34.2
25 Years
Sonatrach
& ADE
(F)
77,702
-
13,909
Honaine
Argelia
(O)
25.5
25 Years
Tenes
Argelia
(O)
51.0
25 Years
Sonatrach
& ADE
Sonatrach
& ADE
(F)
N/A(9)
N/A(9)
N/A(9)
(F)
106,071
-
10,610
U.S. dollar
indexed take-
or-pay contract
with Sonatrach
/ ADE
U.S. dollar
indexed take- or-
pay contract with
Sonatrach / ADE
U.S. dollar
indexed take- or-
pay contract with
Sonatrach / ADE
25 years purchase
agreement
25 years purchase
agreement
25 years purchase
agreement
Classified as concessional financial asset (F) or as intangible assets (I).
The infrastructure is used for its entire useful life. There are no obligations to deliver assets at the end of the concession periods,
(1)
In operation (O), Construction (C) as of December 31, 2020.
Itochu Corporation holds 30% of the economic rights to each of Solaben 2 and Solaben 3. JGC Corporation holds 13% of the
(2)
economic rights to each Solacor 1 and Solacor 2. Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua, S.L., a subsidiary
of Sacyr, S.A., owns the remaining 25.5% of the Honaine project. AEC owns 49% and Sacyr Agua S.L. owns the remaining 16.83% of the
Skikda project. Industrial Development Corporation of South Africa (29%) & Kaxu Community Trust (20%) for the Kaxu Project. AEC
owns 49% of the Tenes project.
(3)
(4)
except for ATN and ATS.
(5)
operator, for example.
(6)
(7)
(8)
December 31, 2020.
(9)
Sales to wholesale markets and additional fixed payments established by the Spanish government.
In each case the off-taker is the grantor.
Figures reflect the contribution to the consolidated financial statements of Atlantica Sustainable Infrastructure Plc. as of
Generally, there are no termination provisions other than customary clauses for situations such as bankruptcy or fraud from the
Recorded under the equity method.
230
Company Financial Statements
Company Balance Sheet
Amounts in thousands of U.S. dollars
Non Current assets
Intangible and tangible assets
Investments in subsidiaries
Amounts owed by group undertakings
Financial investments
Derivative assets
Current assets
Trade and other receivables
Amounts owed by group undertakings
Financial investments
Derivative assets
Cash and cash equivalents
Total assets
Creditors: Amounts falling due within one year
Trade and other payables
Amounts owed to group undertakings
Borrowings
Net current assets
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Borrowings
Amounts owed to group undertakings
Derivative liabilities
Other liabilities
Total liabilities
Net assets
(1) Notes 1 to 10 are an integral part of the financial statements
231
Notes
(1)
2021
2020
3
4
6
4
6
9
7
4
5
5
4
6
95
1,779,817
885,991
971
1,607
201
1,846,157
475,819
4,271
325
2,668,481
2,326,773
510
47,771
-
2,153
88,294
697
48,686
-
460
335,193
138,728
385,036
2,807,209
2,711,809
8,777
4,266
25,749
5,652
14,215
21,554
38,792
41,421
99,936
343,155
2,768,417
2,670,388
885,249
343,498
16,690
12,288
861,871
360,521
1,481
6,261
1,257,725
1,230,134
1,296,517
1,271,555
1,510,692
1,440,254
Capital and Reserves
Share capital
Share premium account
Capital reserves
Other reserves
Accumulated deficit
Shareholders’ funds
8
8
11,240
872,011
1,020,027
15,152
(407,738)
10,667
1,011,743
881,745
(1,481)
(462,420)
1,510,692
1,440,254
(1) Notes 1 to 10 are an integral part of the financial statements
The Company has taken the exemption under Companies Act 2006 section 408 not to publish the
parent company profit and loss account. The Company recorded a profit after tax of $54.7 million
for the period ended 31 December 2021 (2020: loss after tax of $165.6 million).
The financial statements of Atlantica Sustainable Infrastructure plc, company registration no.
08818211, were approved by the board of directors and authorised for issue on 25 February 2022.
They were signed on its behalf by:
Director and Chief Executive Officer
Chief Financial Officer
Santiago Seage
February 25, 2022
Francisco Martinez-Davis
February 25, 2022
232
Company Statement of Changes in Equity
Amounts in thousands of U.S. dollars
Balance at 1
January 2020
Capital increase
Loss for the year
Dividends
Change in fair value
of cash flow hedges
(net of deferred
taxation)
Balance at 31
December 2020
Capital increase
Profit for the year
Dividends
Change in fair value
of cash flow hedges
(net of deferred
taxation)
Share-based
compensation
Reduction of Share
Premium
Balance at 31
December 2021
Share
capital
Share
premium
account
Capital
reserves
Other
reserves
Accumulated
deficit
Total
Shareholder´s
funds
10,160
1,011,743
889,056
(637)
(296,808)
1,613,514
507
-
-
-
-
-
-
-
161,348
-
(168,659)
-
-
-
-
(165,612)
-
161,855
(165,612)
(168,659)
-
(844)
-
(844)
10,667
1,011,743
881,745
(1,481)
(462,420)
1,440,254
573
-
-
-
60,268
-
-
128,920
-
(190,638)
-
-
-
-
54,682
-
189,761
54,682
(190,638)
-
-
1,705
14,928
-
(200,000)
200,000
-
-
-
1,705
14,928
-
11,240
872,011
1,020,027
15,152
(407,738)
1,510,692
233
Notes to the Company Financial Statements
1. Significant Accounting Policies
The separate financial statements of the Company are presented as required by the
Companies Act 2006. The Company meets the definition of a qualifying entity under FRS
100 (Financial Reporting Standard 100) issued by the Financial Reporting Council. These
financial statements were prepared in accordance with Financial Reporting Standard 101
“Reduced Disclosure Framework (“FRS 101”)”.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payment, financial instruments,
capital management, presentation of comparative information in respect of certain
assets, presentation of a cash-flow statement and certain related party transactions.
Where required, equivalent disclosures are given in the consolidated financial
statements.
The financial statements have been prepared on the historical cost basis except for the
remeasurement of certain financial instruments to fair value. The principal accounting
policies adopted are the same as those set out in note 2 to the consolidated financial
statements except as noted below.
The Company has prepared these financial statements on a going concern basis. For
further information, please refer the “going concern basis” in note 2.1 of the consolidated
financial statements.
Investments in subsidiaries and impairment
Investments in subsidiaries are stated at cost less, where appropriate, provisions for
impairment.
At each balance sheet date, the Company reviews the carrying amounts of its investments
to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated to determine the extent of the impairment loss.
Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount,
the carrying amount of the asset is reduced to its recoverable amount. An impairment
loss is recognised immediately in the profit and loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset in prior years. A reversal of an
impairment loss is recognised immediately in the profit and loss.
234
Receivables arising from interest-free intercompany loans are recognised when the
Company becomes party to the related contracts and are measured initially at the fair
value represented by the present value of future cash flows discounted at market interest
rate. Another equity reserve increasing the cost of investment in subsidiary is recognised,
being the difference between the above and the consideration advanced.
After initial recognition, interest-free intercompany loans are subsequently measured at
amortised cost using the effective interest method. The finance income is recognised in
the statement of comprehensive income
Significant judgements and estimates
The most critical accounting policies, which reflect significant management estimates
and judgement to determine amounts in the Company’s financial statements, are as
follows:
-
Impairment of investments (see Note 3)
To assess the potential impairment on the Company´s investments, the recoverable
amount of the investment is calculated if there is an indicator of impairment.
Determination of the recoverable amount requires a significant amount of judgement
and estimates to calculate future cash flow projections and pre-tax discount rates, among
others.
- Derivative financial instruments and fair value estimates (see Note 6)
The Company uses valuation techniques that are appropriate in the circumstances and
for which sufficient data is available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs. The inputs to the
models used are taken from observable markets where possible, but where this is not
feasible, a degree of judgement is required in establishing fair values. Judgements
include considerations of inputs such as credit risk and volatility.
2. Profit/(loss) for the year
As permitted by section 408 of the Companies Act 2006, the Company has elected not
to present its own profit and loss account for the year. The Company reported a profit
for the financial year ended 31 December 2021 of $54.7 million (2020: loss of $165.6
million).
The auditor’s remuneration for audit and other services is disclosed in note 23 to the
consolidated financial statements.
235
3. Investments in Subsidiaries
Details of the Company’s subsidiaries at 31 December 2021 are as follows:
Name
Place of
incorporation
and principal
place of business
Proportion
of
ownership
interest
Proportion
of voting
power
held
Registered office
AC Renovables Sol 1 S.A.S. E.S.P.
Colombia
%
70,00%
%
70,00%
ACT Energy Mexico, S.A. de C.V.
Mexico
99.99%
99.99%
ACT Holdings, S.A. de C.V.
Mexico
99.99%
99.99%
Agrisun, S.R.L.
Italy
100.00%
100.00%
Aguas de Skikda, S.P.A.
Algeria
51.00%
51.00%
Arizona Solar One, LLC (USA)
USA
100.00%
100.00%
ASHUSA Inc
ASI Operations, LLC
USA
USA
100.00%
100.00%
100.00%
100.00%
ASO Holdings Company, LLC
USA
100.00%
100.00%
ASUSHI Inc.
Atlantica Chile, S.P.A.
USA
Chile
100.00%
100.00%
100.00%
100.00%
Atlantica Colombia S.A.S. E.S.P.
Colombia
100,00%
100,00%
Atlantica Corporate Resources, S.L.
Spain
100.00%
100.00%
Atlantica DCR, LLC.
Atlantica Energia Sostenible Italia,
S.r.l
Atlantica España O&M, S.L.U.
USA
Italy
100.00%
100.00%
100.00%
100.00%
Spain
100.00%
100.00%
Atlantica Holdings USA, LLC
USA
100.00%
100.00%
236
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fraccion C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
MeXico
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fraccion C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
Mexico
Via de la Mercede, 11, 00187,
Roma (Italy)
162 Bois des Cars III
DelyIbrahim — Alger - Algerie
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Carrera 7, 71 – 21 Torre B, piso
15,Bogota
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Via de la Mercede, 11, 00187,
Roma (Italy)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Atlantica Infraestructura Sostenible,
S.L.U.
Atlantica Investments Ltd
Spain
UK
100.00%
100.00%
100.00%
100.00%
Atlantica Newco, Ltd
UK
100.00%
100.00%
Atlantica North America, LLC.
USA
100.00%
100.00%
Atlantica Peru, S.A.
Peru
100.00%
100.00%
Atlantica South Africa (Pty) Ltd
South Africa
100.00%
100.00%
Atlantica Sustainable Infrastructure
Jersey Ltd.
Atlantica Transmision Sur, S.A.
Jersey
Peru
100.00%
100.00%
100.00%
100.00%
Atlantica Yield Energy Solutions
Canada Inc.
ATN 2, S.A.
Canada
10.00%
66.66%
Peru
100.00%
100.00%
ATN, S.A.
Peru
99.99%
99.99%
AY Holding Uruguay S.A.
Uruguay
100.00%
100.00%
AYES International UK Ltd.
UK
100.00%
100.00%
Banitod, S.A.
Uruguay
100.00%
100.00%
237
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima (Peru).
Office 103 Ancorley Building;
45 Scott Street
Upington
8801 (South Africa)
47 Esplanade, St Helier,
Jersey JE1 0BD UK
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
354 Davis Road Suite 100
Oakville On L5J 2X1
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Befesa Agua Tenes, S.L.U.
Spain
100.00%
100.00%
BPC US Wind Corporation
USA
100.00%
100.00%
Cadonal, S.A.
Uruguay
100.00%
100.00%
Calgary District Heating Inc.
Canada
100.00%
100.00%
Carpio Solar Inversiones, S.A.
Spain
100.00%
100.00%
CGP Holding Finance, LLC
USA
100.00%
100.00%
Ecija Solar Inversiones, S.A.
Spain
100.00%
100.00%
Estrellada S.A.
Uruguay
100.00%
100.00%
Extremadura Equity Investment
S.a.r.l.
Fotovoltaica Solar Sevilla, S.A.
Geida Skikda, S.L.
Luxembourg
100.00%
100.00%
Spain
Spain
80.00%
80.00%
67.00%
67.00%
Helioenergy Electricidad Uno, S.A.
Spain
100.00%
100.00%
Helioenergy Electricidad, Dos, S.A.
Spain
100.00%
100.00%
Helios I Hyperion Energy
Investments, S.L.
Helios II Hyperion Energy
Investments, S.L.
Hidrocañete, S.A.
Spain
Spain
Peru
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Hypesol Energy Holding, S.L.
Spain
100.00%
100.00%
Hypesol Solar Inversiones S.A.U
Spain
100.00%
100.00%
Kaxu Solar One (Pty) Ltd
South Africa
51.00%
51.00%
Logrosan Equity Investment S.a.r.l.
Luxembourg
100.00%
100.00%
Logrosan Solar Inversiones Dos, S.L. Spain
100.00%
100.00%
238
Calle Energia Solar, 1
41014 Sevilla
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Suite 2500 Park Place
666 Burrard Street
Vancouver BC V6C 2X8
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
251 Little Falls Drive,
Wilmington, New Castle,
Delaware, 19808 (USA)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
6, rue Eugène RuppertL-2453
Luxembourg
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Paseo de la Castellana 83-85,
28046 Madrid (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Office 103 Ancorley Building;
45 Scott Street
Upington
8801 (South Africa)
6, rue Eugène RuppertL-2453
Luxembourg
C/ Albert Einstein, s/n
Logrosan Solar Inversiones, S.A.
Spain
100.00%
100.00%
Mojave Solar Holdings, Llc
Mojave Solar, Llc
Montesejo Piano, S.r.l.
USA
USA
Italy
100.00%
100.00%
100.00%
100.00%
100,00%
100,00%
Nesyla, S.A.
Uruguay
100.00%
100.00%
Overnight Solar LLC
USA
100.00%
100.00%
PA Renovables Sol 1 S.A.S. E.S.P.
Colombia
70,00%
70,00%
Palmatir, S.A
Uruguay
100.00%
100.00%
Palmucho, S.A. Chile
100.00%
100.00%
Parque Fotovoltaico La Sierpe S.A.S.
Colombia
100.00%
100.00%
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Via XX Settembre 1 cap 00187,
Roma.
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Avda. Luis Alberto de Herrera,
1248, World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Parque Fotovoltaico La Tolua S.A.S Colombia
100,00%
100,00% MZ D CA 23 Urb. Bosques de
Parque Solar Tierra Linda, S.A.S
Colombia
100,00%
100,00%
Re Sole, S.R.L.
Italy
100.00%
100.00%
Rioglass Solar Holding, S.A.
Spain
100.00%
100.00%
RRHH Servicios Corporativos S. de
R.L. de C.V.
Mexico
100.00%
100.00%
Sanlucar Solar, S.A.
Spain
100.00%
100.00%
SJ Renovables Sun 1 S.A.S. E.S.P.
Colombia
70,00%
70,00%
SJ Renovables Wind 1 S.A.S. E.S.P.
Colombia
70,00%
70,00%
239
Varsovia, Ibague, Tolima,
Colombia.
CC Arkacentro Mod T OF A 07
Sec. Arkacentro, Ibague,
Tolima, Colombia.
Via de la Mercede, 11, 00187,
Roma (Italy)
Poligono Industrial de Sevilla,
Santa Cruz de Mieres, Mieres,
Asturias (Spain)
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fraccion C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
Mexico
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Solaben Electricidad Dos, S.A.
Spain
70.00%
70.00%
Solaben Electricidad Seis, S.A.
Spain
100.00%
100.00%
Solaben Electricidad Tres, S.A.
Spain
70.00%
70.00%
Solaben Electricidad Uno, S.A.
Spain
100.00%
100.00%
Solaben Luxembourg S.A.
Luxembourg
100.00%
100.00%
Solacor Electricidad Uno, S.A.
Spain
87.00%
87.00%
Solacor Electricidad Dos, S.A.
Spain
87.00%
87.00%
Solar Processes, S.A.
Spain
100.00%
100.00%
Solnova Electricidad Cuatro, S.A.
Spain
100.00%
100.00%
Solnova Electricidad Tres, S.A.
Spain
100.00%
100.00%
Solnova Electricidad Uno, S.A.
Spain
100.00%
100.00%
Solnova Solar Inversiones, S.A.
Spain
100.00%
100.00%
Tenes Lilmiyah SPA
Algeria
51.00%
51.00%
Transmisora Baquedano, S.A.
Chile
100.00%
100.00%
Transmisora Mejillones, S.A.
Chile
100.00%
100.00%
VO Renovables SOL 1 S.A.S. E.S.P.
Colombia
70,00%
70,00%
White Rock Insurance (Europe) PPC
Limited
Malta
100.00%
100.00%
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosan (Caceres,
Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosan (Caceres,
Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosan (Caceres,
Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosan (Caceres,
Spain)
6, rue Eugène RuppertL-2453
Luxembourg
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
19 Lot Bois des Cars III.
Dely Ibrahim, Alger.
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Carrera 7, 71 – 21 Torre B, piso
15, Bogota
Central Business District.
CBD1070, Birkirkara (Malta)
240
The investments in subsidiaries are all stated at cost. Information on the investments acquired
in the year is disclosed in Note 5 in the consolidated financial statements. As of 31 December
2021 and 2020, the carrying amount of the investments held directly by the Company were as
follows:
77
Palmucho, S.A.
Atlantica Corporate Resources, S.L.
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
ASUSHI Inc.(**)
ACT Holdings, S.A. de C.V.
Atlantica Peru, S.A.
Atlantica Infraestructura Sostenible, S.L.U.
ASHUSA, Inc.(**)
ATN, S.A. (*)
Atlantica Transmision Sur, S.A. (*)
Atlantica Investments Ltd.
ATN 2, S.A.
Atlantica North America, LLC. (**)
Atlantica DRC, LLC. (**)
CKA1 Holding S. de R.L. de C.V.
AYES International UK Ltd.
Atlantica Sustainable Infrastructure Jersey Ltd.
Atlantica Newco, Ltd.
2021
$’000
2020
$’000
-
8,954
-
-
-
98,543
261,920
888,823
-
13,863
11,847
56,998
13,720
420,288
-
7
4,854
-
-
-
8,954
-
-
78,473
98,543
261,920
887,039
381,493
13,116
11,847
56,998
13,720
16,255
12,938
7
4,854
-
-
Total investments in subsidiaries
1,779,817 1,846,157
(*) Includes initial difference between the amortized cost and nominal amount of interest free loans (classified as
amounts owed by group undertakings, see note 4), classified as capital contribution in accordance with IFRS 9.
(**) Asushi Inc, Ashusa Inc and Atlantica DCR, LLC were contributed to Atlantica North America LLC during the year
2021 and are no longer investments held directly by the Company.
241
Movements in the carrying value of investments during the years 2021 and 2020 were as
follows:
As at 1 January 2021
Increase
Impairment
As at 31 December 2021
As at 1 January 2020
Increase
Impairment
As at 31 December 2020
$ ´000
$ ´000
1,846,157
4,094
(70,434)
1,779,817
$ ´000
1,909,066
9,771
(72,680)
1,846,157
The increase in 2021 mainly relates to a capital increase in Atlantica DDR, LLC for $1.6 million.
The impairment for $70.4 million corresponds to the investment held in Atlantica North
America LLC.
The increase in 2020 mainly relates to a capital increase in Atlantica North America LLC for
$5.3 million and Atlantica DDR, LLC for $3.0 million. The impairment for $72.7 million
corresponds to the investment held in ASUSHI Inc. for $68.1 million, ATN 2, S.A. for $2.2 million
and Atlantica Corporate Resources, S.L. for $2.4 million.
4. Amounts Owed by/to Group Undertakings
7
Non-current receivables from group companies
Current amounts owed by group undertakings
2021
$’000
885,991
47,771
2020
$’000
475,819
48,686
Total amounts owed by group undertakings
933,762
524,505
Current amounts owed to group undertakings
Non-Current amounts owed to group undertakings
Total amounts owed to group undertakings
4,266
343,498
347,764
14,215
360,521
374,736
242
As of 31 December 2021 and 2020, the details of the non-current amounts owed by group
undertakings were as follows:
7
ATN, S.A.
Carpio Solar Inversiones, S.A.
Atlantica Transmision Sur, S.A.
Atlantica South Africa (Pty), Ltd.
ASUSHI, Inc
Atlantica Corporate Resources, S.L.
Atlantica Investments, Ltd.
Solnova Electricidad Cuatro, S.A.
Helios I Hyperion Energy Investments, S.A.
Helios II Hyperion Energy Investments, S.A.
Atlantica North America, LLC
Sanlucar Solar, S.A.
Atlantica Newco, Ltd.
ASHUSA, Inc
Other
2021
$’000
22,897
13,163
3,421
7,903
60,320
-
102,795
4,321
6,591
6,679
455,368
17,038
99,217
68,762
17,516
2020
$’000
33,430
29,227
10,335
6,579
57,701
3,684
50,546
2,584
4,067
3,459
266,932
-
-
-
7,275
Amounts owed by group undertakings
885,991
475,819
The principal features of the most significant loans to subsidiary undertakings are as
follows:
ATN, S.A.
Carpio Solar Inversiones, S.A.
Atlantica Transmision Sur, S.A.
Atlantica South Africa (Pty) Ltd.
ASUSHI, Inc
ASUSHA Inc.
Atlantica Investments Ltd.
Atlantica North America LLC
Atlantica Newco Limited
Sanlucar Solar, S.A.
Interest Rate
Maturity
2.5% plus Euribor 12 months
31 July 2031
0%
Not applicable
0%
Not applicable
5.9%
4.5%
4.5%
4.5%
4.5%
4.5%
Not applicable
Not applicable
31 December 2024
31 December 2030
31 December 2030
31 December 2030
31 December 2030
31 December 2030
As at 31 December 2021, the amounts owed to group undertakings primarily relate to ACT
Energy Mexico, S.A. de C.V. for $172.1 million ($203.4 million as of 31 December 2020), to
Atlantica Sustainable Infrastructure Jersey Ltd for $105.3 million ($112.1 million as of 31
December 2020) and to Atlantica Infraestructura Sostenible, S.L.U. for $58.2 million (nil as of
31 December 2020)
243
5. Borrowings
As of 31 December 2021 and 2020, the details of the amounts owed to third parties were as
follows:
Secured borrowing at amortised cost
Bonds
Borrowings
Total borrowings
Amount due for settlement within 12
months
Amount due for settlement after 12
months
2021
$’000
2020
$’000
24,422
886,576
21,224
862,201
910,988
883,425
25,749
21,554
885,249 861,871
The main features of the borrowings and bonds are as follows:
On July 20, 2017, the Company signed a credit facility (the “2017 Credit Facility”) for up to €10
million, approximately $11.4 million, which is available in euros or U.S. dollars. Amounts drawn
down accrue interest at a rate per year equal to EURIBOR plus 2% or LIBOR plus 2%, depending on
the currency, with a floor of 0% on the LIBOR and EURIBOR. As of December 31, 2021, $8.2 million
were drawn down. As of December 31, 2020, the 2017 Credit Facility was fully available. The credit
facility maturity is July 1, 2023.
On May 10, 2018, the Company entered into the Revolving Credit Facility for $215 million with a
syndicate of banks. Amounts drawn down accrue interest at a rate per year equal to (A) for
Eurodollar rate loans, LIBOR plus a percentage determined by reference to the leverage ratio of the
Company, ranging between 1.60% and 2.25% and (B) for base rate loans, the highest of (i) the rate
per annum equal to the weighted average of the rates on overnight U.S. Federal funds transactions
with members of the U.S. Federal Reserve System arranged by U.S. Federal funds brokers on such
day plus ½ of 1.00%, (ii) the U.S. prime rate and (iii) LIBOR plus 1.00%, in any case, plus a percentage
determined by reference to the leverage ratio of the Company, ranging between 0.60% and 1.00%.
Letters of credit may be issued using up to $100 million of the Revolving Credit Facility. During
2019, the amount of the Revolving Credit Facility increased from $215 million to $425 million and
the maturity was extended to December 31, 2022. In the first quarter of 2021, the Company
increased the amount of the Revolving Credit Facility from $425 million to $450 million and the
maturity was extended to December 31, 2023. On December 31, 2021, the Company had issued
letters of credit for $10 million, therefore, $440 million of the Revolving Credit Facility are available
($415 million as of December 31, 2020).
On April 30, 2019, the Company entered into the Note Issuance Facility 2019, a senior unsecured
note facility with a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder for a total amount of €268 million, approximately $305 million, with maturity
date on April 30, 2025. Interest accrues at a rate per annum equal to the sum of 3-month EURIBOR
plus 4.50%. The interest rate on the Note Issuance Facility 2019 is fully hedged by an interest rate
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swap resulting in the Company paying a net fixed interest rate of 4.24%. The Note Issuance Facility
2019 provided that the Company may capitalize interest on the notes issued thereunder for a
period of up to two years from closing at the Company´s discretion, subject to certain conditions,
and the Company elected to capitalize such interest until the end of 2020. The Note Issuance Facility
2019 has been fully repaid on June 4, 2021, and subsequently delisted from the Official List of The
International Stock Exchange.
On October 8, 2019, the Company filed a euro commercial paper program (the “Commercial
Paper”) with the Alternative Fixed Income Market (MARF) in Spain. The program had an original
maturity of twelve months and was extended for another twelve-month period on October 8, 2020.
The program allowed Atlantica to issue short term notes over the next twelve months for up to €50
million (approximately $57 million), with such notes having a tenor of up to two years. As of
December 31, 2021, the Company had €21.5 million (approximately $24.4 million) issued and
outstanding under the program at an average cost of 0.36% (€17.4 million, approximately $19.8
million, as of December 31, 2020).
On April 1, 2020, the Company closed the secured 2020 Green Private Placement for €290 million
(approximately $330 million). The private placement accrues interest at an annual 1.96% interest
rate, payable quarterly and has a June 2026 maturity.
On July 8, 2020, the Company entered into the Note Issuance Facility 2020, a senior unsecured
financing with a group of funds managed by Westbourne Capital as purchasers of the notes issued
thereunder for a total amount of approximately $159 million, which is denominated in euros (€140
million). The Note Issuance Facility 2020 was issued on August 12, 2020, accrues annual interest of
5.25%, payable quarterly and has a maturity of seven years from the closing date.
On May 18, 2021, the Company issued the Green Senior Notes due in 2028 in an aggregate
principal amount of $400 million. The notes mature on May 15, 2028 and bear interest at a rate of
4.125% per annum payable on June 15 and December 15 of each year, commencing December 15,
2021.
6. Derivative assets and liabilities
The breakdowns of the fair value amount of the derivative financial instruments as of December
31, 2021 and 2020 are as follows:
Balance as of December 31,
2021
Balance as of December 31,
2020
Assets
Liabilities
Assets
Liabilities
Foreign exchange derivatives
instruments
Notes conversion option
Interest rate cash flow hedge
3,410
-
350
-
16,690
-
Total
3,760
16,690
660
-
125
785
-
-
1,481
1,481
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The Company owns the following derivatives instruments:
-
Interest rate cash flow hedge classified as non-current assets relate to an interest rate cap
hedging the Note Issuance Facility 2020 interest with a strike of 0%. Interest rate cash flow
hedge classified as non-current liabilities as of December 31, 2020 related to an interest rate
swap hedging the Note Issuance Facility 2019 interest resulting in the Company paying a net
fixed interest rate of 4.24%. This swap instrument was cancelled together with the Note
Issuance Facility 2019 during 2021.
- Currency options with leading international financial institutions, which guarantee minimum
Euro-U.S. dollar exchange rates. The strategy of the Company is to hedge the exchange rate
for the distributions from its assets in Spain after deducting euro-denominated interest
payments and euro-denominated general and administrative expenses. Through currency
options, the Company hedges 100% of its euro-denominated net exposure for the next 12
months and 75% of its euro denominated net exposure for the following 12 months, on a
rolling basis. Hedge accounting is not applied to these options.
On July 17, 2020, Atlantica Sustainable Infrastructure Jersey Limited, a subsidiary of the Company
issued $100 million aggregate principal amount of 4.00% convertible bonds (the “Green
Exchangeable Notes”) due 2025. On July 29, 2020, Atlantica Sustainable Infrastructure Jersey
Limited closed an additional $15 million aggregate principal amount of the Green Exchangeable
Notes. The notes mature on July 15, 2025 and bear interest at a rate of 4.00% per annum. The initial
exchange rate of the notes is 29.1070 ordinary shares of the Company per $1,000 principal amount
of notes, which is equivalent to an initial exchange price of $34.36 per ordinary share. Noteholders
may exchange their notes at their option at any time prior to the close of business on the scheduled
trading day immediately preceding April 15, 2025, only during certain periods and upon satisfaction
of certain conditions. On or after April 15, 2025, noteholders may exchange their notes at any time.
Upon exchange, the notes may be settled, at the election of the Company, into its ordinary shares,
cash or a combination thereof. The exchange rate is subject to adjustment upon the occurrence of
certain events.
The conversion option of the Green Exchangeable Notes is an embedded derivative associated to
the option to convert into the Company´s shares, with no obligation for Atlantica Sustainable
Infrastructure Jersey Limited to deliver itself these shares to the Noteholders. It is therefore
classified within the line “Derivative liabilities” of these financial statements. As of December 31,
2021, the fair value is $16.7 million. The prospective changes to its fair value are accounted for
directly through the income statement.
7. Trade and Other Payables
As of 31 December 2021, and 2020, Trade and other payables primarily relate to independent
professional services.
8. Equity
As of December 31, 2021, the share capital of the Company amounts to $11,240,297 represented
by 112,402,973 ordinary shares fully subscribed and disbursed with a nominal value of $0.10 each,
all in the same class and series. Each share grants one voting right.
Algonquin owns 43.6% of the shares of the Company and is its largest shareholder as of December
31,2021.
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On December 11, 2020 the Company closed an underwritten public offering of 5,069,200 ordinary
shares, including 661,200 ordinary shares sold pursuant to the full exercise of the underwriters’
over-allotment option, at a price of $33 per new share. Gross proceeds were approximately $167
million. Given that the offering was issued through a subsidiary in Jersey, which became wholly
owned by the Company at closing, and subsequently liquidated, the premium on issuance was
credited to a merger reserve account (Capital reserves), net of issuance costs, for $161 million.
Additionally, Algonquin committed to purchase 4,020,860 ordinary shares in a private placement
in order to maintain its previous equity ownership of 44.2% in the Company. The private placement
closed on January 7, 2021. Gross proceeds were approximately $133 million ($131 million net of
issuance costs).
During the first quarter of 2021, the Company changed the accounting treatment applied to its
existing long-term incentive plans granted to employees from cash-settled to equity-settled in
accordance with IFRS 2, Share-based Payment, as a result of incentives being settled in shares. The
liability recognized for the rights vested by the employees under such plans at the date of this
change, was reclassified to equity within the line “Accumulated deficit” for approximately $9 million.
The settlement in shares was approved by the Board of Directors on February 26, 2021, and the
Company issued 141,482 new shares to its employees up to December 31, 2021, to settle a portion
of these plans.
On August 3, 2021, the Company established an “at-the-market program” (the “ATM”) and entered
into the distribution agreement with J.P. Morgan Securities LLC, as sales agent, (the “Distribution
Agreement”) under which the Company may offer and sell from time to time up to $150 million of
its ordinary shares. The Company also entered into an agreement with Algonquin pursuant to which
the Company has offered Algonquin the right but not the obligation, on a quarterly basis, to
purchase a number of ordinary shares to maintain its percentage interest in Atlantica at the average
price of the shares sold under the Distribution Agreement in the previous quarter (the “ATM Plan
Letter Agreement”). During the year 2021, the Company sold 1,613,079 shares at an average market
price of $38.43 pursuant to its Distribution Agreement, representing net proceeds of $61 million.
Pursuant to the ATM Plan Letter Agreement, the Company delivers a notice to Algonquin quarterly
in order for them to exercise their rights thereunder.
Atlantica´s reserves as of December 31, 2021 are made up of share premium account and capital
reserves. The share premium account reduction by $200 million during the year 2021, increasing
capital reserves by the same amount, was made effective upon the confirmation received from the
High Court in the UK, pursuant to the Companies Act 2006.
Accumulated deficit are the results of the Company, which have been as follows in 2021 and 2020:
Accumulated deficit
Balance at 1 January 2020
Net loss for the year
Balance at 31 December 2020
Net profit for the year
Balance at 31 December 2021
$’000
(296,808)
(165,612)
(462,420)
54,682
(407,738)
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9. Cash and cash equivalents
Cash and cash equivalents as of December 31, 2021, include $88.3 million of cash at bank and on
hand ($265.2 million as of December 31, 2020) and nil of highly liquid remunerated deposits ($70
million as of December 31, 2020).
10. Third-party guarantees
The Company issued guarantees on behalf of subsidiaries amounting to $174.2 million as of
December 31, 2021 ($159.8 million as of December 31, 2020), which correspond mainly to
guarantees provided to off-takers in PPAs, guarantees for debt service reserve accounts and
guarantees for points of access for renewable energy projects.
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